Purpose

To determine whether the New York State Olympic Regional Development Authority (ORDA) has established adequate controls over the following financial management functions: cash and grant management, revenue and collection activities, procurement and contracting, payroll, and financial planning and budgeting. The audit covers from April 1, 2010, through September 26, 2013.

Background

ORDA operates the Whiteface and Gore Mountain Ski Centers, and the Olympic facilities in Lake Placid. In November 2012, it assumed management responsibility of the Belleayre Ski Area in Highmount, New York, from the New York State Department of Environmental Conservation (DEC). The Public Authorities Law requires ORDA to develop and implement a plan to maximize year-round utilization of its facilities for local economic benefit of the community, and to minimize the costs of maintenance to the State and local governments. ORDA's personal service costs totaled $58.3 million from April 1, 2010, through March 31, 2013, comprising about 45 percent of its overall operating costs.

Key Findings

• ORDA needs to improve its financial management practices, particularly cash management. During the three fiscal years ended March 31, 2013, ORDA has used a line of credit (LOC) to cover its basic operating costs including payroll. In some cases, other State agencies have paid ORDA's bills, including $1.5 million of capital lease payments ORDA could not pay since December 2008.
• Although ORDA prepares four-year financial plans as required by the Public Authorities Reform Act of 2009, from fiscal 2008-09 through 2012-13 it over-projected revenues by $7.1 million and under-projected expenditures by $18.3 million. Furthermore, ORDA's fiscal 2010-11 budget had a net $800,141 deficit even though Section 2613 of the Public Authorities Law requires ORDA to submit a budget without an operating deficit.
• ORDA has a $2.109 million accounts receivable related to accounts of the Empire State Development Corporation (ESDC) and the Lake Placid Regional Winter Sports Committee, a not-for-profit organization. Of this amount, $1.7 million was originally promised in 2009 by a local not-for-profit organization from a grant it would receive from ESDC. The grant was delayed because the organization had not filed all of the required annual reports. Although the organization has subsequently filed the reports, the State Division of the Budget (DOB) has not released the funds. ORDA officials advised that without the $1.7 million, it incurred operating expenses which had to be paid from its LOC and that it was awaiting collection of this amount to pay down its interest-bearing debt. ORDA advised it received the $1.7 million on April 8, 2014.
• We reviewed a judgmental sample of 29 procurements totaling $8.2 million to determine if ORDA followed its procurement procedures. We identified 11 procurements totaling $427,000 that were not competitively bid. ORDA did not provide sufficient documentation as required by its purchasing policy to support why the contractor was selected or why a competitive process was not used.

Key Recommendations

• Develop a more accurate method for estimating expense and revenue amounts used in the multiyear financial plan to ensure that the budgets are balanced, operating expenses are closely scrutinized during the year, and estimates are reviewed to determine that they are still valid. Maintain support for budget assumptions and calculations as required by Office of the State Comptroller regulations.
• Conduct a top-to-bottom review of ORDA's organization and spending to identify costcontainment opportunities.
• Contact DOB to determine the status of its accounts receivable due from ESDC.
• Award contracts on a competitive basis to the extent possible. Fully document any waivers permitting non-competitive procurements including the reason(s) for the decision.