HomeMy WebLinkAbout01/24/1972 Item #F-2�l
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JAN 2 4 197
%�`� ITY OF
OFFICE OF
NEWPORT BEACH
THE CITY MANAGER
January 24, 1972
By the CITY COUNCIL
CITY OF "W10"T SmCH Agenda Item
TO: MAYOR AND CITY COUNCIL
FROM: City Manager
SUBJECT: SPECIAL AUDITS PROGRAM - BALBOA BAY CLUB UNIMPROVED PROPERTY LEASE
RECOMMENDATION:
Instruct staff to proceed with contract compliance audit of Balboa Bay
Club lease at a sum not to exceed $1,500.00.
DISCUSSION:
During the Council budget study session on June 7; 1971, the staff -and
contract auditor were instructed to review the need for an audit of all the existing
city property leases. Such work should be undertaken to insure that the contract
terms are maintained and city revenues are received in accordance with established
agreements.
It was determined in a.subsequent June 21 study session that for
efficiency and economy, it would be advisable for the city's contract auditor,
Binder, Mestyanek, Johnson and Co.Accountants Professional Corporation; to perform
these special examinations. The sure of-$3,000 was appropriated to the Nondepart-
mental - Services, Professional and Technical account for a pilot program to under-
take this work.
Binder, Mestyanek and Johnson suggested that the Balboa Bay Club, as the
city's most substantial contributor, of property lease revenues, should be among
the first contracts examined under this special audits program: The firm uses the
following,hourly billing rates for respective grades of staff members and partners
who perform the work as specified in Paragraph Six of the city's June 28, 1971,
agreement for independent audit services:
-2-
Job Classification
Partner
Supervisors
Senior Auditors -
Assistant Auditors
Typists and Clerical
Assistants
Hourly Rate
$ 25.00
20.00
15.00
12.00
will]
It was indicated in a preliminary analysis that the fees for each of,
the special property management examinations and reviews would normally be in the
range of $500 to $1,500.
The "Unimproved Property Lease Between the City of Newport Beach and the
Balboa Bay Club as .amended to date, and dated September 7, 1965, contains the
following clause on Page.Ten:
Books of Account: The club shall maintain and keep a full,
accurate and correct account of all of its business carried
on and conducted at, in or about the demised premises and all
of its books.and records in. respect to said business shall be
open to the inspection of the City and -of any authorized
agent, accountant or employee of the City, and it is specifically
agreed between the parties that the City shall have the right
through its authorized agents, accountants and employees to
enter in and upon the demised premises at any time and from
time to time during reasonable business hours for making an
inspection of said premises, and that upon demand of the City
the Club will produce,all books and records of its business
done at, in or about the demised premises at said premises
for audit and inspection by the City.
At the City Council meeting, of January 10, 1972, the Council determined
that the recent sale of the assets of the Balboa Bay,Club to International Bay Clubs,
Inc. provides an excellent opportunity.to now undertake this audits program. The
city.'s own quarterly audit for the 1970 -71 fiscal period is substantially complete.
The city staff and contract auditors met with the new Balboa Bay Club controller on
January 12 and they are prepared to proceed with the actual examination upon the
receipt of City Council instructions,.
ROBERT L. WYNN
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