Verbatim Text of Auditor Burroughs' Letter To LB Convention & Visitors' Bureau Board of Directors
(September 8, 2000) The following is the verbatim text of a letter from City Auditor Gary Burroughs to the LB Convention & Visitors Bureau Board of Directors. It was released to LBReport.com by the City Auditor's Office:
September 7, 2000
Board of Directors
Long Beach Convention and Visitors' Bureau
One World Trade Center, 3rd Floor
Long Beach, CA 90831-0300
The accounting firm of Ernst & Young has been retained to review the accuracy of the room night sales reported by the Convention and Visitors' Bureau for FY 1998-99 and FY 1999-00 to date and the related sales incentive amounts allocated to individuals. The City Auditor's Office has reviewed and expanded the specific procedures outlined in the agreement with Ernst & Young. We have also reviewed their work to date.
Ernst & Young has completed their procedures and developed their findings. They are in the process of completing their written report. The final draft of Ernst & Young's report is due next week.
On September 6th, 2000, we held discussions with the Ernst & Young team and reviewed their progress and findings. Our conclusions from this discussion are as follows:
- Room night sales as reported to the Board of Directors were overstated for FY 1998-99
- The Convention and Visitors' Bureau reported that it exceeded its room night sales goal for FY 1998-99 when in fact it fell materially short of its goal.
- Incentive pay or bonuses of approximately $23,000 were overpaid to 10 individuals as a result of the overstatement of room night sales.
- The sales reporting system lacks the necessary internal controls to provide the integrity required of such a system.
- Because of the lack of internal controls over the rporting system it is not possible to determine how or why the system was compromised and the misreporting occurred.
- Management has proposed improvements to the internal controls of the reporting system, and Ernst & Young will include recommended improvements in their final report. The City Auditor's Office will evaluate these proposed enhancements and suggest additional improvements if necessary.
s/ Garry L. Burroughs, CPA