|Report Title:||Town of Lake Park|
|Report Period:||10/01/2000-01/31/2002 and Selected Actions Taken Prior and Subsequent Thereto|
The results of our operational audit of the Town of Lake Park, Florida, for the period October 1, 2000, through January 31, 2002, and selected actions taken prior and subsequent thereto are summarized below.
GENERAL MANAGEMENT CONTROLS
Finding No. 1: Several findings included in the Town’s 1999-2000 fiscal year annual financial audit report had been reported for many years without correction.
Finding No. 2: The Town had not established written policies and procedures necessary to assure the efficient and consistent conduct of accounting and other business-related functions and the proper safeguarding of assets.
Finding No. 3: The Town had not provided for an adequate separation of duties, or established adequate compensating controls, in certain areas of its business operations.
Finding No. 4: Contrary to law, the Town’s 1999-2000 fiscal year audit was not completed, and a copy of the audit report filed with the Auditor General, until August 12, 2002, after the September 30, 2001, deadline.
Finding No. 5: The Town’s overall financial condition is showing signs of deterioration which, if not corrected, could result in a future financial emergency. In addition to the effects of control deficiencies, as discussed throughout this report, factors that have contributed to this condition include a lack of targeted fund equity levels, periodic cash analysis and forecast, and financial plans.
Finding No. 6: Contrary to Section 166.241(3), Florida Statutes, the Town’s 2000-2001 and 2001 2002 fiscal year budgets did not include appropriations for some funds, and the 2001-2002 fiscal year budget did not include beginning fund equities available from the prior fiscal year.
Finding No. 7: Contrary to Section 166.241(3), Florida Statutes, the 2000 2001 and 2001-2002 fiscal year budgets and a budget amendment for the 2000-2001 fiscal year were not adopted by ordinance.
Finding No. 8: Contrary to Section 166.241(3), Florida Statutes, actual 1999-2000 fiscal year expenditures exceeded amounts budgeted for certain departmental expenditure categories in the General Fund by $1,076,836, and expenditures in the Debt Service Fund exceeded budgeted amounts by $38,107. For the 2000-2001 fiscal year, the Town’s financial records disclosed budget overexpenditures totaling $500,910 in various departments in the General Fund, and $41,155 in three proprietary funds.
CASH AND INVESTMENTS
Finding No. 9: The Town’s bank reconciliation procedures were not sufficient to ensure that bank accounts were adequately and promptly reconciled.
Finding No. 10: Contrary to Chapter 717, Florida Statutes, checks totaling $7,764 that had been outstanding for over a year, thus constituting unclaimed property as contemplated by Chapter 717, Florida Statutes, had not been reported or remitted to the Florida Department of Banking and Finance.
Finding No. 11: The Town had not established adequate controls over signature stamps and it was not apparent why the Town required three signatures for all check disbursements.
Finding No. 12: The Town did not enter into written banking agreements regarding electronic transfers of funds. Such agreements should specify the location and accounts to which transfers can be made, amounts that can be transferred, and the employees authorized to make such transfers and make changes in locations where funds can be transferred.
Finding No. 13: The Town could have earned additional interest earnings of approximately $25,000 had more surplus moneys been invested with the Florida State Board of Administration.
Finding No. 14: The Town’s tangible personal property records did not provide adequate accountability over tangible personal property as they did not contain all necessary information and all property items. Further, some items could not be located or were not properly tagged.
Finding No. 15: The Town did not perform a complete inventory of tangible personal property during the 2000-2001 fiscal year. In addition, the Town did not perform a complete equipment inventory of its police department prior to outsourcing police services to the Palm Beach County Sheriff’s Office (PBSO), although title to such property was transferred to the PBSO.
Finding No. 16: The Town had not established adequate controls over the administration of proceeds from its 1997 and 1998 bond issues totaling $9,800,000.
Finding No. 17: The Town entered into a property renovation loan agreement with a term length contrary to that approved by the Town Commission. In addition, contrary to good business practice, the Town did not use a competitive selection process to obtain financing for the renovations.
Finding No. 18: Contrary to Section 218.33(2), Florida Statutes, the Town did not separately account for motor fuel tax revenues in the manner required by the Florida Department of Banking and Finance’s Uniform Accounting System Manual.
Finding No. 19: The Town’s comprehensive plan did not provide for the specific uses of the additional $0.05 Local Option Fuel Tax. Further, the Town’s use of these moneys included expenditures that did not appear to be consistent with the restrictions imposed by Section 336.025(1)(b)3., Florida Statutes.
Finding No. 20: The Town did not always timely request reimbursement for expenditures incurred under grant agreements.
CASH CONTROLS AND ADMINISTRATION
Finding No. 21: Collections received through the mail were not documented at the initial point of collection. In addition, collections were transferred between employees without the use of a transfer document.
Finding No. 22: The Town lacked adequate procedures to monitor and collect unpaid sanitation fees.
PERSONNEL AND PAYROLL ADMINISTRATION
Finding No. 23: The Town had not established adequate controls to ensure that only qualified applicants were hired. One employee was hired under a conditional employment arrangement although the Town lacked procedures for granting conditional employment and following up on conditional employment requirements.
Finding No. 24: The Town had not established adequate records of compensatory and executive leave earned, used, and available for employees.
Finding No. 25: The Town did not timely notify employee benefit providers of employee terminations, resulting in insurance overpayments of $163,951 during the audit period, including $40,694 that was unrecoverable.
PROCUREMENT OF GOODS AND SERVICES
Finding No. 26: The Town Commission had not adopted an ordinance or resolution, or otherwise provided guidance, as to the assignment and proper use of Town credit cards. Nor did the Town require users of the credit cards to sign written agreements specifying acceptable uses of credit cards.
Finding No. 27: Deficiencies in the Town’s disbursement processing procedures included a lack of properly signed purchase requisitions or purchase orders and signatures indicating the receipt of goods or services.
Finding No. 28: Our audit disclosed expenditures totaling $939 for which the Town’s records did not clearly demonstrate that a public purpose was served.
Finding No. 29: Contrary to good business practice, the Town did not maintain copies of written agreements for several contractors.
Finding No. 30: Contrary to good business practices or State law, the Town did not, of record, use a competitive selection process to find a replacement bank and to hire an architect in connection with Town Hall renovations.
Finding No. 31: Payments totaling $83,077 for contractual services were not adequately supported by detailed invoices.
Finding No. 32: We noted several deficiencies regarding a contract between the Town and the Palm Beach County Sheriff’s Office (PBSO) governing the transfer of law enforcement functions from the Town to the PBSO.
Finding No. 33: The Town’s contract with Palm Beach County, whereby the County agreed to provide fire and emergency services to the Town’s citizenry may be contrary to Article VIII, Section 4 of the State Constitution, which requires a voter referendum to transfer ultimate responsibility for such services to the County.
Finding No. 34: The retainage withholding percentage on a construction contract was reduced without written approval from Town personnel or the Town Commission. In addition, invoices supporting payments totaling $16,076 to a contractor in connection with the Town Hall renovations were not, of record, subjected to architect approval or to retainage withholding.
Finding No. 35: The Town utilized an investment advisor for the Town’s Police Officers’ and Firefighters’ Pension Plans. We were unable to determine how much was paid to the investment advisor during the audit period and, as such, whether fees were paid in accordance with the terms of the agreement.
Finding No. 36: The Town Commission established an Employee Handbook that included allowances for subsistence expenses that differed from those provided for in Section 112.061(6)(b), Florida Statutes. However, because the Handbook was adopted by resolution rather than by ordinance or charter amendment, Town employees and officials traveling on official business were only entitled to the subsistence allowances prescribed in Section 112.061(6)(b), Florida Statutes. In addition, the Handbook was not specific regarding application of certain provisions relating to subsistence reimbursements.
Finding No. 37: Contrary to Section 112.061(7)(f), Florida Statutes, two Town employees were granted monthly travel allowances without signed statements showing places and distances for a typical month’s travel. One of these employees was also assigned a Town vehicle on a full-time basis for no apparent reason.
Finding No. 38: The Town had not established adequate controls to ensure that travel expenditures are adequately supported and in accordance with Section 112.061, Florida Statutes.
Finding No. 39: Contrary to Federal regulations, payments for nondeductible travel expenditures (Class C meal allowances) were not subjected to withholding for payment of Federal income tax and other employment taxes.
Finding No. 40: The Town paid $6,243 in Federal, State, and local telecommunication taxes from which it is exempt.
Finding No. 41: Contrary to good business practice, the Town incurred $1,706 of telecommunication charges that appeared to be avoidable, including late fees and associated interest, directory assistance calls, call return fees, fees associated with making long distance calls without having a designated long distance carrier, and fees for calling “900” numbers.
Finding No. 42: The Town assigned vehicles to employees on a 24-hour basis without demonstrating that the vehicles were used primarily for a public purpose and used only incidentally for the personal benefit of the employee assigned the vehicle. Vehicle usage logs were not maintained and the personal use of the vehicles was not included in the employees’ gross compensation reported to the Internal Revenue Service.
Finding No. 43: Contrary to the Town’s Code of Ordinances, the Town’s senior engineer authorized payments to his wife as an independent contractor during the 1999-2000 and 2000-2001 fiscal years. In addition, during the 1997-1998 fiscal year, the Town purchased engineering services from a firm owned by the Town’s senior engineer while he was a Town employee.
Finding No. 44: Four Commission members attended a reception, the purpose of which was to obtain information as to the qualifications of candidates for the Town Manager position. As such, the possibility existed that two or more Commissioners may have had discussions regarding this matter at the reception, which would appear to be a violation of the Sunshine Law (Section 286.011(1), Florida Statutes). In addition, several Commission meeting minutes were either not timely approved by the Commission or not approved at all of record.
The Town's written response to the audit findings and recommendations can be viewed in its entirety on the Auditor General Web site.