New York Racing Association
Travel and Entertainment Expenses The New York Racing Association, Inc. (NYRA) is a not-for-profit organization franchised by New York State to conduct racing and pari-mutuel wagering at the State’s three major thoroughbred racetracks: Aqueduct, Belmont Park and Saratoga. We audited the travel and entertainment expenses claimed by NYRA for 2002, 2003 and the first five months of 2004. We identified about $953,000 in unsupported and inappropriate expenses. The inappropriate expenses included more than $42,000 in country club memberships for two top executives and more than $500,000 in excess business-related meal and entertainment expenses (generally, the full amount of certain business-related meal and entertainment expenses was claimed by NYRA as tax deductible, when only 50 percent of the expenses should have been claimed). As a result of these inappropriate deductions, NYRA understated its federal tax liability by more than $900,000 for 2002 and 2003, and similarly understated its annual franchise fee to New York State (this fee is based in part on NYRA’s taxable net income). We noted that the inappropriate deductions were the result of poor financial controls, and these poor controls were tolerated by NYRA management. We recommended that NYRA revise its tax returns and recalculate its franchise fee for the affected years.
For a complete copy of Report 2004-S-40 click here.
For a copy of the 90-day response click here.
For a copy of the associated follow-up report click here.