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SAN FRANCISCO PUBLIC LIBRARY 5/S AIRPORT ^COMMISSION: inciscoPublicLibrary Concession Audit of )ernmentInformation Center Francisco Public Library The Fog Bank Bar Larkin Street, 5th Floor iFrancisco, CA 94102 RENCE BOOK DOCUMENTS DEPT. takenfrom the Library OCT 2 3 2001 SAN FRANCISCO PUBLIC LIBRARY Audit Number 01032 October 18,2001 9579 7 . 578cf AIRPORT COMMISSION: Concession Audit of The Fog Bank Bar DOCUMENTS DEPT. OCT 2 3 2001 SAN FRANCISCO PUBLIC LIBRARY Audit Number 01032 October 18,2001 . CITY AND COUNTY OF SAN FRANCISCO OFFICE OF THE CONTROLLER AUDITS DIVISION Edward Harrington Controller Matthew H. Hymel ChiefAssistant Controller October 18, 2001 Audit Number 01032 San Francisco Airport Commission San Francisco International Airport CA San Francisco, 94128 President and Members: The Controller's Audits Division contracted with Hood & Strong LLP to conduct an audit ofThe Fog Bank Bar, a subtenant ofHost. Attached is the report prepared by Hood & Strong LLP concerning its review ofThe Fog Bank Bar. Host has a contract with the Airport Commission ofthe City and County ofSan Francisco to provide food and beverage concessions atthe San Francisco International Airport, and subcontracts some of the stores to subtenants. Reporting Period: July 1, 1998, through June 30, 2000 Revenue Reported: $454,663 Results: Hood & Strong LLP found that The Fog Bank Bar made errors in reporting its gross revenues to Host. As a result, The Fog Bank Bar underreported gross revenues of$7,335 in FY 1998-99 and $7,564 in FY 1999-00. In addition, The Fog Bank Bar underreported sales of$355,410 to the State Board ofEqualization for 1998 and the firstthree quarters of 1999. The Fog Bank Bar's response is attached to this report. The Controller's Audits Division will be working with the Airport to follow up every six months on the status ofthe recommendations Respectfully submitted, NORIAKI HIRASUNA Director CityHall•1 Dr.CarltonB.GoodlettPlace•Room388 SanFranciscoCA94102-4694 FAX415-554-7664 Digitized by the Internet Archive 2014 in https://archive.org/details/airportcommissi1801 sanf_0 STRQNG LLP Consultants and Independent Accountants' Report Business Advisors CITY AND COUNTY OF SAN FRANCISCO CONTROLLER'S OFFICE San Francisco, California 101 California We have performed the procedures, enumerated below, which were agreed to by the management of the CONTROLLER'S OFFICE, CITY AND COUNTY OF SAN Suite 1500 FRANCISCO (the City), to certain accounting records ofThe Fog Bank Bar (the Tenant) for the period July 1, 1998 through June 30, 2000 solely to assist you in determining San Francisco compliance by the Tenant with respect to certain provisions of a lease agreement between Host International, Inc. (Host) and the Tenant. This engagement to apply agreed-upon CA 'Mill procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the City. Consequently, we make no representation regarding the 415JSI.079i sufficiency ofthe procedures described below either forthe purpose for which this report has been requested orfor any otherpurpose. fax 415.421.2976 The objectives and procedures and the associated findings are as follows: Objective: The monthly gross revenue reports submitted by the Tenant to Host (Host reports) are correct based on the Tenant's records. Summary ofGross Revenue Reported (including sales tax): July 1, 1998 - June 30, 1999 $ 202,148 July 1, 1999- June 30, 2000 $ 252,515 Summary ofErrors Noted: Revenues for rent calculation over (under) reported as follows: 98/99 99/00 Estimated footing errors $ (6,064) $ (7,545) Sales tax incorrectly calculated (1,271) (1,461) September 1999 ,442 1 Revenues underreported $ (7,335) $ (7.564) San Francisco Men/o Pari Procedure: Obtain an understanding ofthe procedures and controls. Finding: See attached forobservations and recommendations. Procedure: Do a trend analysis for each month of the period under review. Detect any variations that appear significant. Finding: No significant variations noted. Procedure: Obtain monthly gross receipts reports from both the tenant and Host. Compare to see ifthe reports have any discrepancies with each other. Finding: Host could not supplythe monthly reports for 1998. No exceptions were noted for 1999 and 2000. Procedure: Determine ifHost reports agreed with the Tenant's Quarterly Sales Tax Reports for the period under review. Finding: The net revenue amounts per Host Reports used for this procedure are the net revenues for the two locations operated by the tenant at the San Francisco Airport. We reconciled the amounts per Host Reports to the Quarterly Sales Tax Reports filed for each ofthe quarters for the period under review. For 1998 and the first 3 quarters of 1999, sales perthe Host report were significantly higher than sales perthe sales tax returns. The total difference in reported sales forthe 5 quarters was $355,410. The Tenant believes that the sales on the Quarterly Sales Tax Reports for both 1998 and 1999 are understated. The Tenant stated that they have notified the State Board of Equalization about the discrepancies. Procedure: Determine ifHostreports are supported bythe Tenant's monthly summary records. Finding: Tenant reports submitted to Host (Host reports) were compared to the Tenant's monthly summary records every month for the period under review. The Tenant reports gross revenues by food type per the monthly summary records to Host.