AUDIT COMMITTEE SUMMARY
January 19, 2016
Audit of Aviation Department Concession Contracts
Report Issued October 28, 2015
Background
The Department of Aviation manages operations at the San Antonio International Airport (SAT) and Stinson Municipal Airport. One of their responsibilities is to manage the City's Concession contracts with retail, food, beverage, and other business service establishments. At the time of the audit, SAT was home to approximately 44 various concessionaires. During FY2015, SAT had 42 active concession contracts while Stinson had two concession contracts.
According to concession contracts, concessionaires must report gross sales and pay rent revenue to the City each month. Revenue consists of the greater of Minimum Annual Guaranteed (MAG) Rent or a Percentage Rent based on gross sales. In FY2015, concessionaires reported approximately $43.8 million in gross sales and paid approximately $7.5 million in rent revenue to the City.
Audit Objective
Are Aviation concessions properly managed in accordance with contract terms?
Audit Scope & Methodology
The audit scope included contract agreements for airport concessionaires in effect during fiscal year 2014 and revenue generated from concessionaires between October 2013 and January 2015.
Our methodology consisted of conducting interviews and walkthroughs with key personnel. We also reviewed the City's Procurement Policy and Procedures Manual, and key support documents that served as support for compliance with contract terms. Additionally, we verified concessionaires' self-reported gross sales by examining their state sales tax returns.
Audit Conclusions
Internal controls need improvement to ensure the City's airport concession contracts are properly managed and are in compliance with key contractual terms.
Aviation Concession Management has made recent improvements to their processes; however, we identified the following control deficiencies:
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