U.S.

CELLULAR CENTER NON-PROFIT ORGANIZATION

CONCESSIONS PROGRAM ASSESSMENT
SPECIAL CONSULTING REQUEST
City of Asheville
Finance Department
Business Performance Consulting Program
Preliminary Project Report 2014-2
April 29, 2014

Rhonda K. Devan, CPA

Internal Auditor

Frank McGowan, MBA

Strategic Planning/Performance

NON-PROFIT CONCESSIONS PROGRAM ASSESSMENT

EXECUTIVE SUMMARY

The Business Performance Consulting Program Team was engaged to review and
assess the efficiency and effectiveness of the U.S. Cellular Centers Non-Profit
Organization Concession Partnership Program and event cash handling processes.
We conducted event observations and walkthroughs, and interviewed various
employees and non-profit organizations. We did not review or assess
management or staffs overall customer service or performance.

Overall, the Non-Profit Organization Concession Partnership Program is effectively

meeting its objective of providing affordable staffing of the concession stands for
high-demand events while in turn providing community organizations with the
opportunity to raise additional funds for their organizational purposes. In
addition, USCC appears based on our walkthroughs and observations to have
several layers of checks and balances in place when handling cash at the events
concession stands and in the box office.

Based on our review and assessment, this report contains two categories of
recommendations that address the opportunities we identified to further improve
1) the communication, application, selection and performance of the volunteer
program, and 2) cash handling procedures and segregation of duties. Our findings
are discussed in greater detail in the Findings and Recommendations section of
this report. The project objectives, scope, and methodology are also provided in
the following report pages.

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CITY OF ASHEVILLE
NON-PROFIT CONCESSIONS PROGRAM ASSESSMENT
BACKGROUND

The U.S. Cellular Center (USCC) has 16 full-time employees budgeted (only 14
FTE filled as of the date of this report). Even with the assistance of tempseasonal staff, the USCC does not have the capacity to cost-effectively manage
all of the concession stations for events that generate high-volume demand.
Therefore in order to cover larger events, USCC utilizes non-profit volunteer
groups to provide labor at the concessions stands as a fundraising
opportunity for them and a more economical solution operationally for USCC.
The non-profit groups at each stand are overseen and assisted by USCC
employees -- one Stand Manager and one Bartender (as needed to dispense
alcohol). This program is mutually beneficial for both the City and the
participating non-profit organizations, whereby fulfilling an operational need
that is cost effective and providing external organizations an opportunity to
provide community service and raise funds for their organization.
Non-profit organizations interested in participating in the USCC Volunteer
Concession Program are required to submit an application, attend mandatory
training and agree to the standard contractual conditions. The signed contract
outlines the responsibilities of the non-profit organization as well as the funds
the volunteer group will raise based on performance and sales. Groups are
selected to work events based on past performance and their ability to
provide sufficient volunteers for scheduled shift. If a group is unable to fulfill
the requirements of the contract or violate any terms, they may be removed
from the list of groups eligible to work an event in the future. Moreover,
groups that fail to provide enough volunteers for a shift may have their
commission/tips reduced in order to compensate for the additional required
USCC staff needed to cover the respective concession stand.

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STATISTICS
Graph 1 presents the total amount of payouts to non-profit groups from 2010 to
present. (2014 is partial up to Feb. 22, 2014.)
Graph 1
Concessions Program Payouts (2010-Present)
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
2010

2011

2012

2013

2014

Total Payouts to all Non-profit Groups

Graph 2 presents the total amount of concession shifts per year from 2010 to
present. (2014 is partial up to Feb. 22, 2014.)
Graph 2
Total Non-Profit Concessions Shifts per Year
60
50
40
30
20
10
0
2010

2011

2012

2013

2014

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Table 1 Presents list of not-for-profit organizations, number of events they

volunteered at, number of years in program, average payout per year and
average payout by event.

Organization

# of
Events

# of
Years in
Program

Avg
Payout/Yr

Avg
Payout/Ev
ent

AB Tech Hospitality

$ 871

$ 871

Asheville Eclipse Baseball

2,534

724

Asheville Gators

24

4,252

709

Asheville Youth League

16

6,051

756

Basketball Club of WNC

49

8,337

851

Carolina Vipers

440

440

Hall Fletcher Elementary

534

267

McDowell Blaze

616

616

Mediation Center

4,155

1,385

North Buncombe HS Band

Boosters

7,016

1,403

North Buncombe HS Baseball

18

1,944

540

South Eastern Bobcats

494

494

US Air Force

196

196

Veterans Helping Veterans

1,733

578

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OBJECTIVES
The overall objectives of the Non-Profit Concessions Program Assessment
project were to determine whether the City and Civic Center Management:
Manage and use resources in an efficient, effective, and economical
manner
Administer funds in compliance with applicable laws, regulations,
policies, and procedures
Implement internal controls to prevent or detect material errors and
irregularities
The specific objectives of this project were to:
Identify inefficiencies and risks related to the program and identify
opportunities to improve the Non-Profit Organization Concessions
Program.
Evaluate management controls over the administration of the NonProfit Organization Concessions Program.
Determine if the Citys policies and procedures adequately assured
compliance with any applicable federal, state, and local laws.
Determine if systems of internal controls implemented were adequate
to assure that cash collected and paid were valid and appropriate.

SCOPE
The scope of the work did not constitute an evaluation of the overall control
environment of the City. Our consulting services were designed to assess the
current policies, procedures, contracts, and effectiveness of the Non-profit
Concessions Partnership Program, and the compliance and controls related
the cash handling policies and tips. The scope of our work included the U.S.
Cellular Center only and not the Thomas Wolfe Auditorium.
City management is responsible for establishing and maintaining a system of
internal controls to adequately comply with approved policy and procedures.
The objectives of an internal control system are to provide management with
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reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or theft, and that transactions are executed in
accordance with managements authorization and are properly recorded.
Because of inherent limitations in any system of internal accounting control
errors or irregularities may occur and not be detected in a timely manner.
Also, projection of any evaluation of the system to future periods is subject to
the risk that procedures may become inadequate because of changes in
conditions, or that the degree of compliance with procedures may deteriorate.
The purpose of this project report is to furnish management independent,
objective analyses, recommendations, and information concerning the
activities reviewed. This project report is a tool to help management discern
and implement specific improvements. This project report is not an appraisal
or rating of management.
Although due professional care in the performance was exercised, this should
not be construed to mean that unreported noncompliance or irregularities do
not exist. The deterrence of fraud is the responsibility of management.
Assessment and review procedures alone, even when carried out with
professional care, do not guarantee that fraud will be detected. Specific areas
for improvement are addressed later in this report.
The Business Performance Consulting Team would like to thank Civic Center
management and staff for their cooperation throughout the assessment
process.

METHODOLOGY
In order to meet objectives, we reviewed and assessed the current non-profit
organization application process and selection criteria process. We reviewed
the current non-profit organization contract agreements and assessed for
effectiveness and thoroughness in meeting event objectives and mitigating
any potential risk. We reached out to all current and old organizations (those
no longer participating in program). We connected and interviewed several
currently participating organizations; however we did not connect with many
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organizations that are no longer participating in the program. We also

interviewed various staff.
Volunteer groups were observed at work during an event (Darius Rucker).
Additionally, the cash handling and tip processes were directly observed
during a live event from opening to closing.

STATEMENT OF AUDITING STANDARDS

The project was conducted in accordance with generally accepted government
auditing standards (GAGAS). Those standards require that we plan and
perform our work to afford a reasonable basis for the judgments and
conclusions regarding the organization, program, activity, or function under
review. Our work also includes assessments of applicable internal controls
and compliance with requirements of laws and regulations when necessary to
satisfy the project objectives. Our work also includes assessing the estimates,
judgments, and decisions made by City management. It is believed that this
project provides a reasonable basis for the findings, conclusions, and
recommendations.
FINDINGS AND RECOMMENDATIONS
1) Non-Profit Organization Concessions Program
a. Finding: The Non-profit Concessions Program relies on word of mouth
in order to publicize the program. New groups are not necessarily
recruited, but rather, must learn of the program on their own and then
connect with staff in order to become involved with the program.
Contact information and an application are available on the website, but
little detail about the program exists without inquiring with staff.
It should be noted that staff are generally responsive to inquiries and
new groups have become increasingly involved in the program in the
past three years.

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Recommendation: Awareness of the program could be greatly

enhanced by issuing an open call for volunteer groups to apply on an
annual basis. Issuance of an open call could be promoted via the USCCs
website and the social media channels as well as through the City of
Ashevilles Community Relations Division. Additionally, an annual
information session for interested parties, outlining the expectations,
requirements and perhaps providing an opportunity for members of a
new group to observe the program in action before committing to it may
help groups self-select out before committing to signing the contract,
recruiting volunteers, and participating in training. It should be
acknowledged that increased interest in the program may create
administrative challenges for staff.
Further, interest in the program could potentially be tracked using The
Asheville App or by posting the roster of interested groups on the USCC
website.
Managements Response: Agree to promote and conduct a call for new
volunteer groups on a biennial basis.

b. Finding: The selection process and criteria for non-profit groups lacks
transparency and leads some groups to question why they are not
selected. When interviewed, some groups new to the program
speculated that there is an unspoken tenure system in place. Overall,
groups expressed appreciation when asked to participate; however, it
was unclear to some how one group is chosen over another.
Recommendation: The operations and events of the USCC are not
firmly planned out for the year and some variability should be expected
(this is communicated upfront to the volunteer groups). Consequently,
volunteer staffing needs may vary from event to event and the
Concessions Manager and USCC Manager must judge the number of
groups needed to adequately staff the appropriate number of
concessions stands per event. This can unfortunately be a very fluid
process based on ticket sales which may not be solidified until the night
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before or day of event.

The Non-profit Concession Contract does outline the general
guidelines for groups involved in the program including the expected
number of volunteers for each assigned concession stand. However, the
program could greatly benefit from developing and sharing
documentation that gives a general program overview that outlines the
following:
Intent of the program as a partnership that benefits both the
USCCs need to maximize income and the non-profit groups
need to fundraise;
Revenue expectations based on previous year data
providing payout ranges, payouts to groups involved in the
program, etc. Providing such data up front may help an
organization decide if involvement is worthwhile;
The selection criteria for groups (be it, on rotation, as they
applied or other) and perhaps a guaranteed number of shifts
per year if they commit to the program;
A selection of must work events (as much as are known)
such as SoCon Basketball Conference, MoogFest or the like;
Clear performance measures for groups and eligibility for
future involvement in the program. Performance measures
around the program should be given careful consideration,
since sales volume and profitability are not fully in control of
the group.
Managements Response: Agree with finding and will work to
implement recommendations by updating communication materials
(contract, informational packets, training, etc.).

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c. Finding: Turnover of groups from year to year is occurring, and new

groups are joining the program. However, groups with a longer tenure
in the program appear to be scheduled for more shifts than newer
groups. Consequently, the longer-tenured groups consistently have
higher cumulative payouts.
It is unclear if some groups are being scheduled more because other
groups are unable to fulfill the need, unable to supply the volume of
volunteers, or for some other reason.
Recommendation: This recommendation comes with a caution the
sales volume of the USCC might be harmed in the short run.
Since the learning curve for any group improves with more experience,
it is understandable that staff may prefer working with groups that have
more experience, since there is less direction they need to give, and
because with experienced groups generating higher volume sales,
Concessions staff (Stand Managers, Bartenders, and Runners) can
financially benefit from increased tips.
Still, the number of scheduled shifts for all groups needs to be regularly
reviewed to ensure no one group dominates the program. Ensuring
fairness in participation and giving new groups more opportunity to
gain experience, helps everyone become better participants in the
program.
Managements Response: Agree with finding and recommendation.
We will work to review on a regular basis and also clearly define
selection criteria for events with clear performance measures for future
selection and communication to groups up front.

d. Finding: The language of the Non-profit Concession Contract is

outdated and in need of review. In some areas, language should be
strengthened to eliminate ambiguity.

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Recommendation: Review and update the Non-profit Concession

Contract. Strengthen language to eliminate any confusion around
failure to perform the duties outlined.
Managements Response: Agree with finding and recommendation.
We will work to update contract as we implement the various other
recommendations in this report.

e. Finding: Volunteers reported training by USCC staff to be adequate,

although some gaps in detail existed. (Note: a few reported the training
as comprehensive to the level of overkill.) Training format and training
materials need to be reviewed and updated.
Recommendation: Update the training materials and review for
changes on an annual basis. Consider posting materials online.
Managements Response: Agree with finding and recommendation.
We will work to implement immediately.

f. Finding: Long-established non-profit groups are satisfied with the

program and appear to have a strong working relationship with staff;
however, groups new to the program often feel rushed to fill shifts and
do not feel that enough lead-time is given. Some reported being asked to
fill a concession stand shift with volunteers in less than a week.
Recommendation: Operationally, filling shifts with non-profit groups
presents challenges when attendance is less predictable. Still, newer
volunteer groups felt rushed to attend training or fill a shift.
Strive to provide at least a two-week lead time to volunteer groups.
Managements Response: Organizations are made aware upfront of
the potential of last minute scheduling due to event unknowns and last
minute event changes in demand/attendance. This is an external factor
that we work hard to plan for and adjust accordingly as event details
come together.
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g. Findings: Performance feedback to non-profit groups from staff is

provided, although generally verbal in nature. The Non-profit
Concession Program applicants and selected groups are not currently
shared with the public.
No formal review of the Non-profit Concessions Program is being
reported.
Recommendation: Managers should consider providing an annual
written performance assessment to each non-profit group. The
assessment should be brief, standardized, and objective based on the
letter of the standard contract.
Additionally, consider providing annual reports to the Civic Center
Commission on key milestones reached and the overall success of the
program.
Recommended reporting (not exhaustive):
Number of groups applying for participation
Number and names of groups selected
Number of available shifts filled annually
Number of shifts filled by group
Annual payouts by group
Number of groups exiting the program and overall turnover
Managements Response: Agree with finding and recommendations.

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2) Cash Handling and Tips

a) Finding: Based on our observations of concession operations during an
event walkthrough of the cash handling processes, appropriate checks
and balances appear to exist from verifying inventory, multiple cash
count points, and a thorough reconciliation before and after event.
However, no single employee should have complete control over all
components of the asset/cash handling process.
Recommendation: Segregation of duties is a type of internal control
created to prevent or reduce the occurrence of omissive errors or fraud.
We recommend management continue to monitor and verify that no
one person has complete control over the authorization, custody, record
keeping and reconciliation of cash and/or other assets (e.g. inventory).
A separate individual should be in charge of each aspect of this process,
eliminating exclusive control over the assets.
Managements Response: We request further study and assistance
with improving the cash handling processes and strengthening
segregation of duties.

b) Finding: Because cash is a very liquid asset, strong controls are critical.
Cash should never be left unsecured, and only certain qualified
individuals should be granted access to registers, safes and cash boxes.
Cash-on-hand must, by statute, be deposited on a daily basis.
Recommendations: Management should continue to monitor daily
cash handling processes to insure proper safeguards are in place and
functioning properly.

Managements Response: We request further study and assistance

with monitoring the daily cash handling processes to insure proper
safeguards are maintained and in place.

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c) Finding: Observation of ticket office cash handling for an event

indicates that although cash receipts appear thoroughly reconciled to
cash registers at the end of each the day, we did not verify that credit
card receipts were properly reconciled to ticket office reports when the
cash is received by the Fiscal Services Division on a weekly basis.
Recommendations: That the U.S. Cellular Center staff reconcile weekly
the credit card funds received to the corresponding ticket sale report
from the Ticketmaster system to insure complete revenue recognition
of sales. This will further insure proper reporting and payouts to event
host.

Managements Response: Agree with finding and recommendations.

Steps have already been taken to connect these two sources of data to
improve the reconciliation process.

d) Finding: Each concession stand offers a tip jar for customers at each
register. At the end of each event, the tips are divided up pursuant to the
signed contract with the respective non-profit organization. There does
not appear to be any controls in place to verify funds are accounted for,
distributed or reported properly.
Recommendations: The following are the employers responsibilities
(the employee receiving the tips has other additional reporting
responsibilities as well) when there is tip income:
1. Receive tip revenue information from each employee for every
month the employee earns $20 or more in tip income.
2. Calculate and report allocated tips for each employee to the IRS
(Form 8027).
Managements Response: We request further study and assistance with
exploring options for complying with IRS requirements and what will work
the most economically for the USCC and the employee/volunteer groups.
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