In April, we reported that Muni is taking a serious look at whether or not to discontinue cash fares on the city's cable car lines.

The news came after a conductor was arrested on suspicion of embezzling fares. A few days later, a second conductor was arrested as well.

Now, the City Services Auditor Division released a full report on its investigations, concluding that fare-collection practices are unsatisfactory, citing inadequate controls and unmanaged risks.

The reports also notes that the audit was ordered to determine whether cable car conductors properly collected fares from passengers and properly issued receipts to passengers when collecting those fares.

Between December 13th and 30th last year, plainclothes auditors took 30 rides on all three cable car lines on weekdays and weekends during different times of day.

The audit notes that cash fares are so relevant, because more than $10 million of cable car fares in fiscal year 2015 to 2016 were collected in cash.

During the audit, auditors discovered that conductors failed to collect fares from them on 11 of the 30 sample cable car rides.

Conductors also did not collect fares from an estimated 178 other passengers during these 30 rides, resulting in forgone revenue of $1,323.

Recommendations now include the consideration of a cashless fare system on cable cars.

If a cashless system isn't possible, the audit recommends exploring options for fare collection boxes on the cable cars and requiring passengers who pay cash to enter the area of the cable car where the fare collection box is located.

The report also calls for periodic undercover rides on cable cars and providing cash-handling training to cable car conductors.

SMTA's director of transportation has already responded with a letter, noting that the agency is evaluating all options to increase pre-payment of fares for cable car service and reduce cash collections.

"It is unlikely, however, given the ridership demographics, including tourists, that a full cashless system will be possible," the SFMTA noted in its letter.

But plans are also underway to develop a pilot program to require pre-paid fares during SFMTA kiosk sales hours.

The agency's security team will further coordinate an undercover detail with SFPD's Muni Response Team to observe cash fare collection starting in the third quarter this year.