FULTON COUNTY, Ga. -- A county audit of a Fulton County venue after an 11Alive investigation is revealing some serious problems.
Earlier this year, the 11Alive Investigators questioned Fulton County Commissioner Marvin Arrington’s use of the Wolf Creek Amphitheater to host private parties.
Arrington insisted his regular presence at Wolf Creek Amphitheater was to work on behalf of the county, and called it “an additional work day for us.”
Days after the story aired, the Board of Commissioners voted to end those parties at the county-owned venue and adopt new policies.
On Monday, a scathing county audit was released that was critical of operations at the venue.
Board Chairman John Eaves promised change was coming.
“We now know what we didn't know, and I assure you that the proper corrective actions will be taken,” Eaves said.
Among the findings, the audit said amphitheater management misappropriated funds, issued a no-bid contract to a music promoter, printed between 500 and 700 complimentary tickets per show, gave manager's spouses special privileges, and improperly used the skybox.
Eaves said he wasn’t sure if any criminal activity was found in the audit, but said they were “putting the report in the hands of authorities who can do the review that's necessary.”
While Arrington didn't technically hold a management role at the venue, he was active in its operations.
"I think that Commissioner Arrington has to be held accountable and asked those questions,” Eaves said.
Arrington declined to answer questions. But Eaves assures us a deeper review of the facts in underway and the legal measure are being considered.
“We do now have the information so now it's a matter of making the appropriate decision,” Arrington said.
Full audit findings
Inadequate accountability and oversight
Wolf Creek Amphitheatre management was unable to provide written documentation detailing their cash handling. The audit concluded that lack of accountability "will not give a true and fair view of the activities of the venue and step the tide of financial mismanagement".
The auditors recommended strict policies be put in place to track cash. "Cash will always be a high-risk area of vulnerability when it comes to fraud. Stringent controls must be in place."
Failure to properly Safeguard funds
Auditors found cash funds went home with an employee, sometimes for several days, before it was deposited. "This action increased the risk of funds being lost or stolen." Funds are now transported by an armored courier. The auditors suggest taking the fix to the next level by "developing a county-wide system of cash management practices".
Lack of segregation of duties
There was not a system of check and balances within the Wolf Creek Amphitheatre system. The same employee verified cash collections, conducted recordkeeping, and dictated how proceeds were dispersed. The auditors said the system increased the risk of fraud.
Inaccuracies in settlement statements
Auditors found ticket statements "contained errors and were mathematically inaccurate." They suggested Wolf Creek Amphitheatre should work with the county finance department to improve methods.
Cash collections not recorded and receipted in a timely manner
Auditors found "in some cases the rental deposits were held for an extended length of time; up to approximately three months". All cash should be deposited "no later than the following business day".
Failure to Deposit Collected funds
The audit found $1,093.05 in Wolf Creek Amphitheatre financial files that was never deposited with the county. The auditors pointed to the lack of financial oversight, allowing the un-deposited funds to go unnoticed.
Misappropriation of funds
Audits found several instances where the cash collected from box office sales was used as petty cash for employees. At times, that cash was also used to reimburse box office and fire personnel for services rendered. "As a result, the actual amount of cash collected from the box office was not accurately recorded."
Overpayments to an independent contractor
Auditors found one contractor was overpaid by $14,631.90. An employee told auditors it was a mistaken duplicate payment. "To date, we have not been able to determine if the funds related to the duplicate payment were reimbursed to the County."
Inadequate and inaccurate supporting documentation
Auditors found missing invoices and incorrect payee information. "Poor record keeping can result in purchased that are not properly documented and hinder the department's ability to provide accurate information for sound decisions for the venue in the future."
Circumvention of the procurement process
Auditors found several payments to contractors for services that should have been procured through a Request for Quote (RFQ) or Request for Proposal (RFP). Those included payments for a security company, box office personnel and production assistants.
These payments were done against the advice of the purchasing director, auditors noted.
"As a result of how these funds were disbursed, we were unable to determine if the process for selecting these contractors were competitive as well as guarded against favoritism, extravagance and fraud," auditors wrote.
Lack of transparency
Revenues and expenses were not properly reflected in financial records, auditors wrote.
Irregularities included revenues and expenses related to renting the facility, as well as expenses that were paid by Ticket Alternative which were not recorded in financial statements. In other instances, auditors said that proceeds from ticket sales were applied to expenses of future shows and therefore not recorded.
Failure to request proper authorization
The county failed to get proper authorization to procure advances to promoters. In some instances, the amount of the advance exceeded $150,000. These advances were disbursed without county manager of board of commissioners' approval, auditors said.
Noncompliance with written agreements
Auditors found that Ticket Alternative, LLC, made payments on behalf of Wolf Creek many entities, including independent contractors, box office personnel and off-duty county personnel. These actions went against written agreements that required Board of Commissioners' approval.
Failure to properly execute contracts in county-partnered concerts
Auditors said that it appeared that Wolf Creek officials failed to get required written permission from the county manger and legal department to execute $379,000 of payments for events in 2015 and 2016.
Failure to enforce insurance requirements
Wolf Creek Ampitheatre management failed to require renters of the venue to properly submit proof of insurance, auditors found. That could have left the county at risk for liability if a concert patron was injured at the venue.
Conducting business with unlicensed company
WCA management failed to validate the licensure status of J.D. Entertainment, which hosted events at the venue in 2016, auditors found.
Exposing Fulton County to unnecessary risks
At times, WCA management allowed promoters to not assume their share of responsibility for promoting a show, and the county assumed most of the financial responsiblity at some shows, auditors found.
Yielding an unfair advantage
Auditors found that two companies hosted an average of 74% of events at the venue. One company, J.D. Entertainment, was the only promotion company allowed to partner with the county to host events, auditors said. The venue was booked by the end of January, which blocked other companies from being able to partner with the county, auditors said. Also, auditors said that there was no documentation to determine if any other promoters had the chance to partner with the county.
Lack of standard operating procedures for county-partnered events
Auditors said there were no standard operating procedures for county-partnered events at the venue.
Issuance of tickets beyond facility capacity
Auditors found that in some instances, tickets issued exceeded maximum venue capacity. Most of those overages were caused by excessive issuance of complimentary tickets, auditors said.
Excessive issuance of complimentary tickets
Management issued between 500 and 700 complimentary tickets. With a maximum capacity of 5,300, the number of complimentary tickets issued far exceeded the industry standard of 1 percent, auditors said. There was also found to be a lack of documentation for where those tickets went, auditors siad.
Involvement of Non-county employees in WCA operations
Auditors found numerous instances where non-county employees acted in integral roles in the venue's operations. According to auditors, the WCA manager's spouse performed high-level management duties.
Also, spouses of management were provided all-access badges, according to auditors. That allowed them to areas that should have been restricted.
Additional tables places in VIP seating area
Management at the venue placed as many as 10 more tables than the allotted 30 tables in the VIP seating area. Between 75 and 88 complimentary tickets were issued for those VIP tables in some popular shows, auditors said.
Changes to WCA rates established by BOC
WCA management set a rate for rental of the venue without approval by the Board of Commissioners. In some instances, the actual cost of the services may have exceeded the costs involved in the price, and those differences were not charged to promoters, auditors said. That could have resulted in losses for the county.
Improper use of the WCA Skybox One
The Reconstituted Friends of Camp Creek, a group responsible for soliciting donations and raising funds, allowed unauthorized access to the venue's Skybox One. This was done through a raffle during a fundraiser held by the Atlanta Business League, auditors said.
AUDIT | Read the full audit here