Audit: Northern fair earns over $36K in profits, but $65K in lost revenue

By Bill Donovan
Special to the Times

WINDOW ROCK, April 11, 2013

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A n audit by the Navajo Nation shows that despite all of the controversy and turmoil, the 2012 Northern Navajo Fair ended up making a profit.

The audit, done by the Navajo Nation Office of the Auditor General, showed that the fair had revenues of $428,230 and expenses of $391,654. That gave it a profit of $36,576.

That's the good news. The bad news uncovered by the audit was that there were some funds that were reported as being "lost."

Because of all of the disputes in the past about the running of the fair and the accounting of the funds, supervision of that year's fair was turned over to Navajo Nation Museum and Manuelito Wheeler, the museum's director, was put in charge.

The audit points out that the agreement signed by the Shiprock Fair Board to turn over the management of the fair was signed on September 26, 2012, less than two weeks before the fair was to be held.

The audit showed that the fair's biggest expense was paying out the prize money for the rodeo, powwow and other events totaling $100,344. After that, the fair paid out $63,356 to the workers, $33,717 for contractors and $26,299 for advertising and gifts.

The biggest source of revenue was ticket sales, which brought in $184,919. The carnival brought in $75,000, followed by the Indian Market ($60,680), the rodeo ($41,879), sponsors ($29,100, which includes $8,500 from various tribal departments), parade ($27,112), horticulture ($4,425), poster sales ($2,443), baby pageant ($1,800) and 4-H ($872).

The audit discovered $65,000 in lost revenue.

Most of this, some $43,920, came from the Indian Market. The auditors said space at the Indian Market was sold at prices ranging from $300 to $500 depending on the size of the space.

"We calculated that the Indian Market should have generated $104,600 in revenue if all of the vendor spaces were rented," the audit stated. "During the fair, we noted vendors looking for available spaces."

The auditors also observed on Saturday and Sunday that there were available spaces to rent but a sign was posted at the fair office on Saturday that all of the spaces had been rented.

The $60,680 brought in by the Indian Market translated to 183 spaces being rented out. Another spaces were available and not rented out, the auditors stated.

Wheeler, in response the audit, said that while the tribal museum was given full authority over the fair, he felt it would be too drastic a measure to replace all of the coordinators. He added that while he and other tribal officials made efforts to communicate with the coordinators and members of the fair board, "we encountered resistance from a few, which complicated our purpose."

As for the possible lost revenue at the Indian Market, Wheeler said he and his staff received verbal confirmation from the coordinator of that event that the spaces were all full on a given day.

"There were instances where spaces were paid for, however, and due to unknown reasons, the vendor did not occupy the space," Wheeler said, "which may have led to the appearance that it was available for rent."

He said that the coordinator was constantly tending to customers and vendors, which caused delay of services to others.

The auditors suggested establishing an on-site office to run the operation more effectively and Wheeler said he agreed with that.

For example, with the fair posters, a total of 2,500 fair posters were ordered with 500 going to the person who designed it so he could sell it. The auditors found that the fair personnel sold 304 posters at $7 each for $2,128, leaving 1,696 unsold. That translated to an $11,872 loss.

"We observed that the only place the fair posters were being sold was at the fair office, which was not easily accessible to the public," the auditors stated.

More would have been sold if they were available at places like fair entrances, exhibit halls and on the fairgrounds.

Wheeler said the fair poster logistics was developed and approved before the tribe got involved so "we had no choice but to proceed with the commitment."

He also pointed out that the fair board president assumed the task of selling the posters and Wheeler said he decided not to intervene. He added that his understanding was that the fair poster was available at other places in the community, such as the chapter and at convenience stores.

He added that his fair office was given only a certain number of posters and those were sold only at the fair office to make sure all of the sale money was accounted for. He agreed that in the future it would be a good idea to sell posters at the ticket booths and entrance gates.

The auditors said there were also serious problems with the number of free passes that were given out during the fair.

The fair office reported issuing 456 free walk-in passes, 117 free parking passes, 20 VIP passes and 32 four-day walk-in passes.

"We calculated 625 free passes were issued during the fair, which translated into approximately $9,000 loss revenue," the audit report stated.

Wheeler said that fair passes were distributed to select individuals such as landowners, who had been promised free entrance for an x number of years.

Board members were also given a certain number of free passes and dignitaries and special guests were given free passes.

"We do agree that too many passes were freely distributed," Wheeler said, adding that it would be better for the board to determine that only a certain number of free passes will be distributed and that "number is not to be exceeded for any reason."

The auditors also noted that $7,400 in vendor fees and $7,000 in parade fees were not collected.

Wheeler pointed out that collection of these fees was the responsibility of fair board members.

He said that on the final day of the event - and the final day that the Navajo Nation would be involved, a recommendation was made to members of the board to make sure they accounted for all of the money that was due.

In the future, he said, no vendor should be allowed to occupy a space without paying up front in full.

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