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NewsCVB Audit Is Actually "Report of Independent Accountants on Applying Agreed-Upon Procedures"
(September 29) An audit of certain bookings and sales incentives at the Long Beach Area Convention and Visitors Bureau (CVB) has turned out to be a "Report of Independent Accountants on Applying Agreed-Upon Procedures" prepared by Ernst & Young, LLP performed on terms agreed to by CVB's Board of Directors and management.
Ernst & Young prepared the report for CVB's Board of Directors and management. CVB released the report to LB print media and certain LB officials. LB City Auditor Gary Burroughs released a copy to LBReport.com.
The report (two pages with three attachments of itemized computations) includes noteworthy caveats and qualifications by Ernst & Young:
"We have performed the procedures enumerated below, which were agreed to by the Board of Directors and management of the Long Beach Area Convention [sic] Center and Visitors Bureau, Inc. (LBACVB), solely to assist you in evaluating the sales incentive compensation program amounts allocated to individuals for the period October 1, 1998 through June 30, 2000...The sufficiency of these procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose."
Within these limitations, the report in salient part basically found certain room night booking numbers in CVB's internal records didn't agree with each other. The report indicated these occurred primarily in the 4th quarter of the 1999 fiscal year and were in most cases not supported by third party documentation. The report also noted certain room nights on "Meeting Detail Reports" were not supported by third party documentation and/or the sales representative credited was not mentioned in the file.
In an attachment, the report included a comparison of "Sales Goal Reports" (SGR) to "Meeting Detail Reports" (MDR).
In FY 1998-1999:
| Total room nights per "Sales Goal Reports" (SGR) |
379,766 |
| Total room nights per "Meeting Detail Reports" (MDR) |
344,834 |
| Unsupported Allocations (in SGR not MDR) |
34,932 |
| Unsupported room nights in MDR per Ernst & Young review |
12,097 |
| Authentic room nights in MDR -- However, SR not mentioned in 3rd Party Correspondence file |
22,093 |
In FY 1999-2000:
| Total room nights per "Sales Goal Reports" (SGR) |
255,620 |
| Total room nights per "Meeting Detail Reports" (MDR) |
259,083 |
| Unsupported Allocations (in SGR not MDR) |
(3,463) |
| Unsupported room nights in MDR per Ernst & Young review |
6,422 |
| Authentic room nights in MDR -- However, SR not mentioned in 3rd Party Correspondence |
28,693 |
The report concluded that roughly $19,500 in sales incentives were incorrectly calculated and awarded to individuals. It also concluded that roughly $73,700 in incentive compensation payments for FY 1999 and 2000 were correctly calculated.
The Ernst and Young report concluded by stating (with bracketed material by LBReport.com):
"We were not engaged to, and did not, perform an examination, the objective of which would be the expresion of an opinion on the schedules mentioned above [the CVB documents examined and compared by Ernst & Young]. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
"The report...should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes."
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