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January 27, 2005

 

ORDA Audit Finds Problems With Board Oversight and
Attention to Financial Issues, Internal Controls

Authority Depends on Millions in State and Local Subsidies
To Cover Annual Operating Loss

The Olympic Regional Development Authority’s (ORDA) Board of Directors is not adequately addressing the Authority’s ongoing financial deficits, not providing effective oversight and not adhering to the Governor’s Model Governance Principles for Authorities, according to an audit released today by State Comptroller Alan Hevesi.

In the first major audit of the Authority in nearly ten years, auditors found that ORDA’s internal financial controls have improved over the past decade but still need to be strengthened. Auditors also found weaknesses in some billing, collection and procurement procedures and lax financial controls at the Gore Mountain ski area.

“A decade after our auditors outlined needed changes in Board governance and financial controls, ORDA still has not done what is necessary to put its own house in order,” Hevesi said. “Despite the fact that it receives millions in state and local support, ORDA still does not meet the Governor’s basic operating standards for authorities. There is an increasing demand across New York State for public authority accountability. ORDA should recognize this now, and take immediate steps to improve its operations.”

In fiscal year 2003-2004, the State General Fund provided 30 percent – $7.4 million – of ORDA’s $25 million operating budget. The State provided ORDA with $5,596,405 in fiscal year 2002-2003 and $5,524,104 in 2001-2002. ORDA also receives financial support from the Town of North Elba, which provided $690,630 for ORDA’s 2003 budget and $645,904 for 2002.

The Executive Budget presented earlier this month recommends $7.35 million in General Fund spending for ORDA in 2005-2006, which is 27 percent of the Authority’s budget and approximately the same amount available to it in the current fiscal year.

Auditors found that ORDA’s Board of Directors met ten times in four years, 2000 through 2003, rather than the 16 meetings (four each year) required in the Authority’s by-laws. Auditors reviewed minutes from the ten Board meetings and found no indication that Board members were raising issues or asking questions regarding the financial or other information presented at the meetings. Auditors also found that the ORDA Board does not approve the Authority’s budget until two or three months after the start of the fiscal year.

Given that ORDA depends on support from State and local governments to fund its annual operations budget, auditors determined that the Board is not sufficiently focused on the Authority’s financial challenges, and suggested that it should consider meeting more often than required to address these matters.

The Model Governance Principles for Authorities stipulate that Board members receive training in their legal, fiduciary and ethical responsibilities. However, auditors found that ORDA Board members do not receive any training in these areas.

Auditors identified weaknesses in ORDA’s internal financial controls including failure to adequately separate billing and collection procedures. Officials also failed to obtain competitive bids for purchases as required, and did not provide justification. Auditors found that
controls over cash and ticketing procedures at Gore provided only limited accountability and therefore created an increased risk for theft and abuse.

ORDA was created in 1981 to devise uses for and manage the Lake Placid facilities used for the 1980 Winter Olympics. In 1984, the Authority’s responsibilities expanded to include management of the Gore Mountain ski center in North Creek. The Authority has 180 full-time and up to 800 seasonal employees, and is viewed as an important economic engine in the Adirondack region.

In the last Comptroller’s office audits of ORDA (see links below) , released in 1995, auditors identified a number of problems with the Authority’s Board governance practices and procedures. Those audits also found possible conflicts of interest and inadequate financial disclosure by some Board members, and these matters were referred to the State Ethics Commission and the Attorney General’s office for further investigation.

In a response to the current audit, ORDA indicated that it was taking steps to address the issues raised by auditors regarding meetings and training for Board members. ORDA disputed several of the auditors’ other findings, and two of those findings were removed from the final version of the document. ORDA’s complete response is included in the audit.

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Click here for a copy of the ORDA audit released today [2004-S-78]
Click here for a copy of the1995 ORDA audit on Board Governance and Oversight [95-S-41]
Click here for a copy of the1995 ORDA audit on Financial Management Practices [94-S-49]
Click here for a copy of the 1996 follow-up to the 1995 ORDA audits [95-F-51]

 

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