Audit: Denver can’t tell if Red Rocks vendor pays up on concessions
Author: Joey Bunch - April 24, 2018 - Updated: May 10, 2018
Denver can’t tell if it’s collecting all it should from concessions sold at Red Rocks Amphitheater and the Denver Coliseum, a new audit finds.
“Weak oversight” of inventory and the way cash is handled at the venues present a risk of theft and other security issues, according to Denver Auditor Tim O’Brien.
Denver Arts & Venues, the agency in charge of operating the city-owned cultural facilities, needs to better monitor its contract with vendor Aramark Sports and Entertainment, O’Brien said in a statement.
“They risk losing profits owed to the city,” he said.
The past three years, the city received $37 million from Aramark in gross concessions profits. The city pays the company about $1 million a year in incentives and fees if they meet certain goals, including assuring the city collects “100 percent” of the gross profits from concessions.
Nonetheless, the city paid up on the incentive agreement in 2016, even though the city agency did not verify it collected all it should through established protocols.
“The audit team tested sales documentation for 80 stands for three events at Red Rocks and the Coliseum and found 55 percent of the stands did not get the dual signatures needed for inventory transfers,” the auditors office said Tuesday. “Twenty-three percent of the stands did not properly document inventory transfers.
“Twenty-one percent also did not have or had inadequate documentation for management inventory adjustments. Each of these issues could have a direct effect on the gross profit calculation and the amount the city should receive from Aramark.”
Auditors found that Aramark did not reconcile inventory for each event but instead does so monthly, making it difficult to catch errors and reconcile discrepancies.
The Coliseum also doesn’t centralized is sales system, relying instead counting cash at each register, which creates opportunities for theft, auditors found.
The city agency also is not monitoring unsold food, damaged items or employee meals to ensure it’s below the one-half percent threshold spelled out in the contract, the audit said.
Amounts above that threshold should be paid by the vendor, not from profits paid to the city.
“The risk of theft and inaccuracies cannot be swept aside, even at relatively small dollar amounts,” O’Brien stated.
The auditor’s office cautioned that though the risks are possible, it doesn’t mean theft or other impropriety is occurring.
The auditor’s office made six recommendations for improvement that Denver Arts & Venues has agreed to implement.