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New York City Comptroller William C. Thompson, Jr. today issued an audit finding significant internal control weaknesses over the financial operations of the Central Park Tennis Center (CPT).

“As a result of the weaknesses, we could not ascertain whether all of the revenue received by CPT was in fact recorded and was accurately reported to Parks,” Thompson said. “Nor could we determine whether CPT paid Parks all fees due.”

Auditors analyzed the Central Park Tennis Center’s compliance with its license agreement with the New York City Department of Parks and Recreation for the operation of a tennis center located between West 94th and 96th Streets on the west side of Central Park.

The agreement requires CPT to pay the City a minimum annual fee escalating to $70,834 in the final, sixth year, or 10 percent of the gross receipts derived from the operation of the tennis center, whichever is greater.

The license agreement also required CPT to spend a minimum of $120,000 on capital improvements to the facility. The agreement expired on November 15, 2007. In the final year of the license agreement covering the 2007 tennis season, CPT reported to Parks a total of $838,056 in gross receipts and paid Parks $84,600 in license and late fees. CPT also operated the facility for the 2008 tennis season.

The audit – which covered January 2006 to December 2007 – is available at www.comptroller.nyc.gov.

Auditors determined that CPT owes additional license fees and late charges totaling $110,347 for the audit period. Specifically, auditors found that CPT: incorrectly deducted wages paid to tennis instructors and did not report all of the revenue received; did not pay utility charges associated with the operation of the licensed premises; underreported $24,116 in taxable sales and as a consequence underpaid its sales tax by $2,065; and, failed to maintain the insurance coverage required in the license agreement.

“CPT did not comply and fulfill the provisions in its license agreement, and Parks failed to adequately monitor CPT’s performance and enforce the terms and conditions of the agreement,” Thompson said.

The Comptroller made 10 recommendations to CPT. Among them: CPT should pay the City the $110,347; should implement a system of internal controls and keep complete and accurate records as well as books of account and data; issue receipts for all payments received; make arrangements with Parks to pay for water and electricity use, obtain the proper insurance coverage and pay back sales tax to New York.

Additionally, he recommended Parks issue a Notice of Cure to CPT requiring that it pay the $110,347, require CPT to comply with the terms and conditions of the license agreement, and arrange for the installation of separate electric and water meters for the licensed premises. To date, CPT has paid only $33,782 in response to the audit.

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