Assessment finds weaknesses in management and reporting requirements.
SANTA ANA — A second audit report on Dana Point Harbor’s operations was officially released by the Orange County Auditor-Controller’s office on March 3, following up on an initial assessment of the waterfront venue’s affairs published in May 2016.
The new audit, titled “Revenue Generating Operating Agreement between OC Community Resources/OC Parks and Vintage Marina Partners LP,” revealed 14 findings of the vendor’s operations at Dana Point Harbor. The audit specifically studied work completed between April 1, 2015 and March 31, 2016.
Auditor-Controller Eric Woolery’s staff said the audit report, which found “significant control weaknesses,” had three objectives.
“The primary objective of the audit was to determine whether Vintage Marina’s records adequately supported their monthly gross receipts reported to the county and that these receipts were properly remitted to the county,” Woolery’s staff stated in a released statement. “The secondary objective was to determine whether Vintage Marina’s records adequately supported their monthly operating expenses (which are reimbursed by the county) and that the Vintage Marina’s management’s fee was properly calculated. The third objective was to determine whether Vintage Marina complied with certain financial and other provisions of the agreement with the county, such as annual financial statement requirements.”
Three “significant control weaknesses” were listed in the audit report. Woolery’s office specifically found a lack in management and oversight of Vintage Marina, a need to reconcile and validate gross receipts of the harbor’s tenants and a failure to calculate or report tenant rent payments as required by lease agreements.
The audit report also found 11 areas where corrective action was needed for internal controls, compliance or efficiency/effectiveness issues.
“While there were several significant control weaknesses, we are confident that OC Community Resources will work with Vintage Marina Partners to correct any weaknesses going forward,” Woolery stated.
Findings are placed in one of three categories: critical control weaknesses; significant control weaknesses; and, control findings.
None of the 14 findings, which are detailed in the audit report published on the Auditor-Controller’s website, were in the “critical control weaknesses” category.
A critical control weakness, according to Woolery’s office, occurs when an audit reveals “critical exceptions to [its] objective(s) and/or business goals.”
“Such conditions may involve either actual or potential large dollar errors or be of such a nature as to compromise the department’s or county’s reputation for integrity,” the audit report stated.
Significant control weaknesses, which applied to three of the audit reports findings, represent a “significant deficiency in the design or operation of internal controls” and “require prompt corrective actions.”
Orange County signed a 20-year operating agreement with Vintage Marina in 2001. The agreement, according to the Audit-Controller’s office, called for Vintage Marina to “operate certain facilities and services located in the Dana Point Harbor.”
“During the 12-month audit period ended March 31, 2016, Vintage Marina reported approximately $42.1 million in gross receipts and remitted approximately $6 million in rent to the County, was reimbursed by the County for approximately $2.2 million of operating expenses and was paid a management fee of $1.3 million,” according to the audit report.
The first audit report, released in May 2016 and revealed misuse of an unauthorized hotel discount program, coincided with the resignation of Dana Point Harbor manager Brad Gross.
Dana Point Harbor is currently in the midst of realizing its long-planned revitalization, though it could still be a while before waterside work begins.
(Parimal M. Rohit photo)