New York State Thoroughbred Breeding and Development Fund

Internal Controls Over Financial Operations

The New York State Thoroughbred Breeding and Development Fund oversees the registration of State-bred horses, and distributes incentives and awards to breeders and owners of these horses. The Fund receives a portion of the amounts wagered on thoroughbred races in New York State. We examined the adequacy of the Fund’s system of internal controls over its financial operations. We identified a number of significant weaknesses in these controls, particularly in the areas of revenue accountability, revenue collection, procurement, and the Fund’s Executive Director.

For example, the Fund’s offices are located in Manhattan; however, the Fund’s Executive Director, who lives in the Albany area, was allowed to work at an office in the Albany area on Mondays and Fridays. We were unable to locate the Executive Director at that office on those days; we also determined that the Executive Director maintained no appointment log indicating whom he met while in Albany, and found no documentation of the activities performed by the Executive Director while in Albany. The Fund paid for the Executive Director’s travel between Albany and Manhattan, and for the Executive Director’s per-diem expenses and daily commuting costs (e.g., train tickets and E-Z Pass costs) when he worked in Manhattan. The Executive Director was also allowed make personal purchases on a routine basis with the Fund’s corporate credit card; the Executive Director later reimbursed the credit card company for amounts said to be personal purchases, but maintained no documentation to differentiate his personal purchases from his business purchases.

In addition, the Fund relies on racetracks and off-track betting corporations to remit the correct amount of revenue; it does not verify the amounts owed against pari-mutuel wagering records. We also found that related financial duties are not separated among different employees and, as a result, a single individual has complete control over the cash receipt and purchasing functions. We made several recommendations aimed at strengthening the Fund’s internal controls over its financial operations.

For a complete copy of Report 2004-S-57 click here.
For a copy of the associated follow-up report click here.