Purpose

To determine whether the New York Wine and Grape Foundation (Foundation) has spent State funding in compliance with relevant statutory and contractual requirements, including the need to leverage the appropriations with funds from other sources. The audit covers the period April 2012 through March 2016.

Background

The Foundation is a public authority, located in Canandaigua, which supports New York State’s wine and grape industry through research, promotion, and education. It is governed by a Board of Directors, most of whom are involved in the wine and grape industry, and has six employees. The Foundation receives State funding through a contract with the New York State Department of Agriculture and Markets (NYSDAM). Its most recent contract was for $3.7 million and covered the four years ending March 2016. As of January 2016, the Foundation had received $3.4 million of this funding.

Key Findings

• The Foundation has appropriately used its State money to fund allowable activities. The contract requires at least 30 percent of the State money be spent on research. Over the term of its contract, the Foundation has spent 34 percent on research, although spending in the first year was just 27 percent.
• The Foundation has also exceeded its contractual commitment to leverage State money. Although it is only required to obtain outside funding equal to what the State provides, it has obtained nearly double that. The State provided $3.4 million, and the Foundation obtained $6.5 million from other sources.
• The Foundation has established effective internal controls over most of its financial operations. However, we found that certain revenue payments were being sent directly to an employee’s home and not to the Foundation’s business office. We discussed this issue with Foundation officials, who immediately rectified the problem.

Key Recommendation

• No recommendation required. Foundation officials took prompt action during the course of the audit to address the issue we identified.