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Audit of the Massachusetts Convention Center Authority Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Massachusetts Convention Center Authority.

Table of Contents

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Massachusetts Convention Center Authority for the period July 1, 2017 through June 30, 2019.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is our audit objective, indicating the question we intended our audit to answer, the conclusion we reached regarding the objective, and where the objective is discussed in the audit findings.

Objective

Conclusion

  1. Did the Authority effectively administer its management services agreement with MGM Springfield to operate the MassMutual Center (MMC) in accordance with the agreement’s terms and the Authority’s “Procurement Guidelines: Goods and Services”?

No; see Findings 1, 2, and 3

 

In addition to our findings, we identified an issue we believe warrants the Authority’s attention, which we have disclosed in the “Other Matters” section of this report.

To achieve our objectives, we gained an understanding of the internal controls we deemed significant to our audit objectives through inquiries with Authority and MMC personnel and observations of various activities related to the MMC’s administration and operation. We evaluated the design and effectiveness of controls over arena and convention event income, box office sales, food and beverage revenue, and operating expenses, and we assessed whether these controls operated as intended during the audit period.

We performed the following procedures to obtain sufficient, appropriate audit evidence to address the audit objectives.

We obtained a list of all 371 events that were held at the MMC during the audit period from the Authority’s Financial Management System (FMS).1

Using a nonstatistical judgmental sampling method, we selected all 8 direct buys or co-promotions at the MMC from the population of 371 events and also selected 25 rental events from the remaining 363 events, based on event type, size, and profitability, for review. From this sample of 33 events, we performed the following procedures:

  • We inspected each event file for completeness according to documentation requirements established by MMC management, including event contracts or license agreements, event cost estimates, third-party invoices for goods and services, proof of client advance payments when required by contract, client invoices, and invoice approval forms.
  • We recalculated event settlements or final billings to clients by applying the terms of the event contracts or license agreements to the information in the event files.
  • We reviewed the contract between the Authority and MGM Springfield. We compiled a list of contract deliverables; traced each deliverable to supporting documents such as operating procedure manuals, maintenance and warranty schedules, operating budgets, and management reports; and inspected the supporting documents for compliance with the terms of the contract.
  • We reviewed the contract renewal process to determine whether the Authority reviewed and documented MGM Springfield’s performance under the contract before renewal.

Because we used a nonstatistical approach to our audit sample, we did not project our results to the entire population.

Data Reliability

Blackline Accounting System

We obtained and reviewed the fiscal year 2018 and 2019 Service Organization Control (SOC)2 reports for Blackline Software.3 We confirmed that tests of certain information system general controls (access controls, application controls, configuration management, contingency planning, and segregation of duties) were performed during these SOC reviews and there were no exceptions. As a result, we were able to rely upon the data obtained from the Blackline accounting system for the audit period for the purposes of our audit work.

FMS

We reconciled the Blackline accounting system’s monthly totals for revenue and expenses to FMS and its audited financial statements. From 20 monthly income statements, we selected 10 revenue and expense line items and traced them to journal entries. In addition, we traced 10 items from the MMC’s check register to journal entries and found no exceptions. As a result, we were able to rely on the data obtained from FMS for our audit period for the purposes of our audit work.

1.     FMS was developed by the Authority’s Information Technology Department and was in use throughout the audit period.

 

2.     SOC reports are attestation reports that provide third-party assurance that best practices have been incorporated into the service delivery processes and controls for a product. They must be issued by certified public accountants.

3.     Blackline Software is the developer of the accounting software used by MGM Springfield and the Authority to consolidate financial activity from MGM Springfield’s general ledger and the Authority’s general ledger.

Date published: February 16, 2021

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