Summary
Summary
| Report Number: | 03-098 |
| Report Title: | Town of Callahan |
| Report Period: | 10/01/2000-01/31/2002 and Selected Actions Taken Prior and Subsequent Thereto |
| Release Date: | 12/20/2002 |
The results of our operational audit of the Town of
GENERAL MANAGEMENT CONTROLS
Finding No. 1: The Town had not
established written policies and procedures necessary to assure the efficient
and effective conduct of accounting and other business-related functions and
the safeguarding of assets.
Finding No. 2: The Town had not
provided for an adequate separation of duties, or established compensating
controls, in certain areas of its business operations.
Finding No. 3: 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 periodic cash analysis and forecast, financial
plans, and interim financial statements.
BUDGETARY CONTROLS
Finding No. 4: The Town, for the
2000-2001 and 2001-2002 fiscal year budgets, did not maintain adequate
documentation to support the estimated beginning fund equities, and did not
amend the budgets to show actual beginning fund equity balances. In addition, contrary to Section 166.241(3),
Finding No. 5: Contrary to Section
166.241(3),
Finding No. 6: The final budget
adopted by the Town Council for the 2001-2002 fiscal year was $25,230 less than
the budget advertised and used by the Town to control its expenditures.
Finding No. 7: Contrary to Section
166.241(3), Florida Statutes, actual 2000 2001 fiscal year expenditures
exceeded amounts budgeted for certain object level expenditure categories
totaling $56,961 for the General Fund, and total actual expenditures/expenses
and other financing uses for the Utility and Excise Tax Funds exceeded budgeted
amounts by $7,679 and $15,828, respectively.
CASH AND INVESTMENTS
Finding No. 8: The Town’s
records did not demonstrate that a public purpose was served for petty cash
fund disbursements totaling $1,610. In
addition, $125 of petty cash fund disbursements were not supported by receipts.
Finding No. 9: The Town could have
earned additional investment income of approximately $10,000 by investing more
moneys with the
FIXED ASSETS
Finding No. 10: The Town had not established general ledger control
accounts for its classes of fixed assets.
In addition, the Town has not established a uniform property numbering
system and tangible personal property records did not include all information
necessary to properly identify and evidence the establishment of accountability
for property items and did not include all property items. Further, some items could not be located or
were not marked as property of the Town.
Finding No. 11: The Town did not
perform a physical inventory of tangible personal property during the period
October 1, 2000, through January 31, 2002.
CASH CONTROLS AND ADMINISTRATION
Finding No. 12: Prenumbered forms
used to document collections and other transactions affecting cash resources
were not properly accounted for.
Finding No. 13: 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.
REVENUES AND OTHER RECEIPTS
Finding No. 14: The Town assessed
and collected $5,700 for water and sewer connection fees in excess of the
amount authorized by ordinance. In
addition, several Town citizens had not, of record, paid the required water and
sewer connection fees.
Finding No. 15: The Town had not
established adequate controls to ensure the collection of unpaid water and
sewer fees.
Finding No. 16: The Town assessed
and collected $1,138 for building permit fees in excess of the amount
authorized by ordinance. In addition,
the Town’s records were not adequate to support the basis for $1,164 of
building permit fees assessed.
Finding No. 17: The Town had not
established adequate controls to ensure the assessment and collection of
amounts owed to the Town for occupational license fees and fire inspection
fees. Our tests disclosed $1,134 of
occupational license fees, and $2,640 of annual fire inspection fees, that were
not collected, recorded, or deposited of record.
PERSONNEL AND PAYROLL ADMINISTRATION
Finding No. 18: The Planning and
Zoning/Grant Administrator was paid compensation totaling $190,590 for the
2000-2001 fiscal year. The
reasonableness of such compensation was questionable and the Town had not, of
record, documented how such compensation was commensurate with the Planning and
Zoning/Grant Administrator’s assigned responsibilities. In addition, the Planning and Zoning/Grant
Administrator was overpaid $80,168.
Finding No. 19: A 5 percent pay
raise for employees approved by the Town Council at its
Finding No. 20: The Town has not
established adequate controls to ensure the accuracy of employee leave and
attendance records. Sick leave used by
two employees was not recorded in the employees’ leave and attendance
records. In addition, one of the
employees, as approved by the Town Council, was paid for 30 hours for the last
week in February 2002, although the employee was absent from work during that
week and had no leave available.
Although requested, we were not provided with an explanation as to why
the Town Council approved this payment.
PROCUREMENT OF GOODS AND SERVICES
Finding No. 21: Deficiencies in
the Town’s disbursement processing procedures included a lack of vendor
invoices to support payments, a lack of signatures of approval on checks,
failure to use purchase orders, and failure to cancel or stamp as paid invoices
to prevent duplicate payments.
Finding No. 22: Contrary to
Ordinance 2-O-1995, seven purchases totaling $5,156, each exceeding an
aggregate total of $500, were not approved by a majority of the Town Council at
a regular or special meeting.
Finding No. 23: Contrary to
Ordinance 2-O-1995, purchases totaling $1,300,087 for goods or services were
acquired without the benefit of a competitive selection process.
Finding No. 24: The Town made
contributions totaling $1,650 to three nongovernmental organizations without
benefit of agreements setting forth the specific purposes for using the moneys
and follow-up procedures to determine such use.
In addition, contrary to Ordinance O-11-1988, the contributions included
$500 paid to a for-profit organization and $150 paid to a nonprofit
organization without enacting a resolution authorizing the contribution and
identifying the specific public purpose served.
Finding No. 25: Our audit
disclosed expenditures totaling $9,929 for which the Town’s records did not
clearly demonstrate that a public purpose was served.
CONTRACTUAL SERVICES
Finding No. 26: Contrary to law
and good business practices, the Town acquired certain contractual services
without using a competitive selection process and, in some instances, without
benefit of formal written agreements.
Invoices submitted by some contractors for services rendered were not in
sufficient detail to allow a determination as to whether fees charged, and
expenses submitted for reimbursement, were appropriate. In addition, $19,927 paid to an individual
that the Town had contracted with to act as building inspector was not
supported by invoices or other documentation.
However, we determined, based on the terms of the written agreement with
this individual and the amount of building permits revenue as recorded in the
Town’s accounting records, that this contractor appeared to have been
overpaid $3,617 to $7,987 depending on the types of inspections provided.
Finding No. 27: The Town had not
ensured that the building inspector had complied with the terms of his written
agreement. Contrary to the written
agreement and Ordinance 1-O-1986, the Planning and Zoning/Grant Administrator,
rather then the building inspector, approved the issuance of numerous building
permits. Also, the Town was unable to
provide documentation that several building inspections were performed or were
not necessary.
TRAVEL EXPENSES
Finding No. 28: The Town Council
had not adopted an ordinance or resolution, or otherwise provided guidance, as
to the assignment and proper use of Town gas credit cards. Nor did the Town require users of the credit
cards to sign written agreements specifying acceptable uses of credit
cards. In addition, our audit disclosed
20 instances in which gas expenses totaling $493 were charged to a gas credit
card that appeared to be of a personal nature that served no public
purpose.
Finding No. 29: The Town had not
established adequate controls to ensure that travel expenditures are adequately
supported and in accordance with Section 112.061,
Finding No. 30: Contrary to
Federal regulations, payments for nondeductible travel expenses (Class C meal
allowances) were not subjected to withholding for payment of Federal income tax
and employment taxes.
COMMUNICATION EXPENDITURES
Finding No. 31: The Town had not
established adequate controls to ensure that communication expenditures served
an authorized public purpose. In
addition, our audit disclosed numerous cellular and long-distance telephone
calls that appeared to be of a personal nature that served no public purpose.
Finding No. 32: The Town paid $861
of Federal, State, and local telecommunication taxes from which it is exempt.
VEHICLE USAGE
Finding No. 33: The Town Council
did not approve the assignment of Town-owned vehicles on a 24-hour basis to two
employees who drove the vehicles home overnight. In addition, the Town’s records did not
demonstrate that the assigned vehicles were used primarily for a public purpose
and used only incidentally for the personal benefit of the employees assigned
the vehicles. 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. 34: The Town did not
maintain vehicle maintenance logs for its vehicles, including the two fire
trucks, that identified preventative maintenance services and repairs and the
dates such services were performed.
RISK MANAGEMENT
Finding No. 35: The Town has not
established adequate procedures to ensure that insurance coverage for real and
tangible personal property was adequate in the event of damage or loss of
property. As a result, the Town did not
insure its fire station and insured a trash truck that was not owned by the
Town.
COMMUNITY DEVELOPMENT BLOCK GRANT - HOUSING PROGRAM
Finding No. 36: The Town had not,
of record, documented that CDBG Housing Program services were provided to
applicants having the greatest need for assistance. As such, it is questionable as to whether the
Town was entitled to receive $457,000 of funding for the Program from the
Florida Department of Community Affairs.
Finding No. 37: The Town overpaid
a contractor $18,040 for the construction of two houses funded from the CDBG
Housing Program.
OTHER MATTERS
Finding No. 38: The Town did not
comply with Section 166.041(3)(a),
Finding No. 39: The Town purchased
bakery items from the wife of the Town Council President, who approved payments
to his wife for such services, which appears to be a conflict of interest in
violation of Section 112.313(3),
The Town's written response to the audit findings and recommendations can be viewed in its entirety on the Auditor General Web site.