YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

February 21, 2002

Report No. 2002-15

The following problems were discovered as a result of an audit conducted by our office of the H. Roe Bartle Hall.

Since August 1996, the city�s contract with its food service vendor has resulted in payments of management fees and sales incentives totaling approximately $2.1 million. Office space and utilities are provided to the vendor in return for 100 percent of the food service vendor�s net profit.� The Convention and Entertainment Centers Department (CECD) did not solicit proposals for the food service contract which was signed in 1996.� The contract was negotiated with the vendor with the aid of an independent consultant.� Because the food service contract was not bid, convention center officials have little assurance that food services are being obtained from the most qualified vendor at the lowest and best cost.  

In March 2001, the CECD allowed the food service vendor to retain approximately $173,000 in profits owed to the city due to anticipated losses in future months.� The contract with the vendor states the net profits will be remitted to the CECD within 20 days after the close of the month. 

The terms of the contract with the food service vendor appear to place the full burden for any net losses incurred by the vendor on the department.� The contract states that the department shall compensate the food service vendor for any net losses incurred, in addition to the management and incentive fees.� Additionally, the department has not performed adequate procedures to monitor compliance with provisions in the food service contract. 

The box office collects approximately $100,000 in ticket sales monthly.� The problems noted with the box office accounting include: 

• Deposits are not always made on a timely basis.

• Independent verification of the box office ticket sales is not always performed at the end of the day by the box office manager.

• Access to the box office vault and safe is not adequately restricted.

• Internal audits of the box office are not performed on a timely basis nor have these audits been effective in noting areas where procedural changes or improvements were needed.

The CECD collects monies related to conventions and other events.� These monies are held in the city treasury until the account is settled at the end of the event.� Prenumbered receipts are not issued nor is an immediate record of receipts maintained and checks are not restrictively endorsed until deposits are prepared.�  

The Convention and Entertainment Centers Department of the city of Kansas City had over $2.2 million in fixed assets recorded on the inventory listing based on the physical inventory performed during February 2001.� Prior to February 2001, the most recent physical inventory had been performed in 1997.� The detailed fixed asset records are not complete and fixed asset additions are not recorded in the fixed asset records in a timely manner.� In addition fixed asset duties are not adequately segregated. 

The management of the CECD has not developed criteria for determining and limiting access to the Kansas City Convention Center complex.� The structure contains approximately 1.8 million square feet of space and has approximately 500 exterior doors.� Many of the exterior doors to the convention center, including revolving doors and employee entrances, remain unlocked at all times.� The KCCC currently has a staff of nine security officers.� Only 2-3 security officers are on duty during various times of the day, including one officer who remains in the security office monitoring internal cameras.� Security for events is handled through a contracted security company, but this only covers the portion of the complex where the event is being held.� Security standards for granting and maintaining access to the KCCC complex should be in place to ensure that the CECD can safeguard its assets and ensure the safety of the public, its employees and clients.

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