Summary

General Management Controls

Finding No. 1: Several findings included in the Town’s 1999-2000 annual financial audit report had been reported for two to four years without correction. These included findings related to inadequate separation of duties, lack of general ledger control accounts, budget overexpenditures, improper assessment of late fees, failure to reconcile utility escrow deposit subsidiary records to the general ledger, and failure to file Internal Revenue Service Forms 1099 for contracted services.

Finding No. 2: The Town did not have written policies or procedures for many of its accounting and other business-related functions. Such policies and procedures are essential to providing both management and employees with guidelines regarding the proper conduct of Town business and the effective safeguarding of assets, and help ensure that Town records provide reliable information necessary for management oversight.

Finding No. 3: The Town had not provided for an adequate separation of duties in certain areas of operation, and had not adequately implemented certain compensating controls.

Budgetary Controls

Finding No. 4: Contrary to Section 166.241(3), Florida Statutes, the Town did not consider all beginning fund equities available from prior fiscal years when preparing the 1999-2000 and 2000-2001 fiscal years budgets. In addition, the 1999-2000 and 2000-2001 fiscal year budgets did not include appropriations for all funds.

Finding No. 5: The Town, in adopting the 1999-2000 fiscal year budget ordinance, did not of record comply with the notice requirements prescribed by Section 166.041(3)(a), Florida Statutes.

Finding No. 6: Contrary to Section 166.241(3), Florida Statutes, actual 1999-2000 fiscal year expenditures and other financing uses exceeded amounts budgeted for certain expenditure object categories for the General Fund and in total for the Utility (Water and Sewer) Fund.

Cash in Bank

Finding No. 7: The Town’s bank reconciliation procedures were not sufficient to ensure that bank accounts were adequately and promptly reconciled.

Finding No. 8: Contrary to Sections 717.117 and 717.119, Florida Statutes, checks written by the Town that had been outstanding for over a year and constituting unclaimed property as defined by Sections 717.113 and 717.115, Florida Statutes, had not been reported or remitted to the Florida Department of Banking and Finance.

Finding No. 9: During the 1999-2000 fiscal year, the Town invested significant amounts of surplus moneys in certificates of deposit. Additional interest earnings could have been earned had the excess moneys been invested through the Florida State Board of Administration, and the Town may have been able to avoid short-term borrowings.

Finding No. 10: Contrary to the Florida Department of Banking and Finance’s Uniform Accounting System Manual, the Town did not maintain separate accountability for the use of certain restricted revenues through the use of special revenue funds.

Cash Controls and Administration

Finding No. 11: Our audit disclosed deficiencies in management controls relating to accountability for, and safeguarding of, forms used to document collections and other transactions affecting cash resources.

Finding No. 12: Collections received through the mail were not documented at the initial point of collection, and checks were not immediately restrictively endorsed. In addition, collections were transferred between employees without the use of a transfer document.

Finding No. 13: The Town has not established adequate controls to ensure that amounts collected are recorded in the accounting records and deposited intact in a timely manner. Our tests disclosed instances where amounts collected were not, of record, posted to the accounting records and/or deposited.

Revenues and Other Receipts

Finding No. 14: The Town had not established adequate controls to ensure the timely collection of amounts due from a local camp resort for lots sold pursuant to a written agreement related to the Town’s providing of water and sewer services to the camp resort. We determined that as of April 2001, the camp resort owed the Town $4,550 for lots sold since the inception of the agreement in May 1994.b

Finding No. 15: The Town had not established adequate controls to ensure that annual fire safety inspections are performed for all the Town’s existing commercial buildings and new construction projects, and that all fees assessed are collected. Our tests disclosed that the Town’s records did not adequately support the basis for fire safety inspection fees assessed and also disclosed numerous inconsistencies between fees assessed and fees authorized to be assessed.

Personnel and Payroll Administration

Finding No. 16: Increases in Town Council members’ compensation pursuant to Ordinances 96-3 and 98-13 may have been contrary to law and, as a result, Council members may have been overpaid $33,900 during the period October 1996 through February 2001.

Finding No. 17: The Town has not established adequate controls to ensure that only qualified applicants were hired. Our tests disclosed several instances of noncompliance with Resolution 94-2B, which establishes requirements for hiring new employees.

Other Matters

Finding No. 18: Contrary to law and good business practices, the Town acquired certain professional services without using a competitive selection process and, in some instances, without benefit of formal written agreements. In addition, invoices submitted by contractors for financial services were not in sufficient detail to allow a determination as to whether fees charged were appropriate, and some fees charged appeared to be inconsistent with those agreed upon.

Finding No. 19: During the course of our audit, the Town was unable to provide certain public records. Town personnel were unable to provide explanations for the missing public records and there was nothing, of record, to indicate that the records were disposed of in accordance with a disposal program established pursuant to Section 119.01(4), Florida Statutes.

Finding No. 20: The Town, for a public records request that required extensive effort by Town personnel, did not demonstrate that related charges were calculated in accordance with Section 119.07(1)(b), Florida Statutes, and the Town’s Public Records Ordinance, and has been unable to recover costs associated with the request. Also, the Town’s Public Records Ordinance may not be consistent with State law.

Finding No. 21: Contrary to Section 286.011, Florida Statutes, minutes of meetings of the budget committee, which made recommendations to the Town Council regarding the preparation of the Town’s annual budget, were not recorded.

The Town's written response, in its entirety, is presented as Appendix B to audit report No. 02-027.