Summary

GENERAL MANAGEMENT CONTROLS

Finding No. 1:  Several finding included in the Town’s 2000-2001 fiscal year annual financial audit report had been reported for several 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.  In addition, the Town has experienced a significant amount of employee turnover in key management positions, which weakened the Town’s control environment and ability to provide consistent application of its policies and procedures.

Finding No. 3:  The Town had not provided for an adequate separation of duties, or established adequate compensation controls, in certain areas of its business operations.

Finding No. 4:  Contrary to law, the Town’s 1999-2000 and 2000-2001 fiscal year audits were not completed, and copies of the audit reports filed with us until February 18, 2002, and June 30, 2003, respectively.  In addition, as of February 2004, the 2001-2002 fiscal year audit was not complete.

Finding No. 5:  The Town, for the 2000-2001 fiscal year, appears to have met the financial emergency condition specified in Section 218.503(1)(b)2.b., Florida Statutes, in that it failed to make contributions for an employee retirement plan due to lack of funds.

Finding No. 6:  The Town’s overall financial condition is showing signs of deterioration.  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, timely completion of financial audits, and interim financial statements.

BUDGETARY CONTROLS

Finding No. 7:  Contrary to Section 166.241(3), Florida Statutes, the Town’s 2001-2002 through 2003-2004 fiscal year budgets did not consider the effect of beginning fund equities available from prior years, and did not include appropriations for some funds and expenditures.  Also, the individual 2001-2002 fiscal year budgets for the General and Enterprise Funds were not balanced.

Finding No. 8:  Contrary to the Town’s Charter, the Town’s budgets were not timely adopted for the 2000-2001, 2001-2002, and 2003-2004 fiscal years.  Budgets for those fiscal years were adopted from 14 to 22 days after the Charter deadline, which is the third Monday of September of each fiscal year.

Finding No. 9:  Contrary to Section 166.241(3), Florida Statutes, actual 1999-2000 fiscal year expenditures exceeded amounts budgeted by $2,498,977 in the General Fund for the 1999-2000 fiscal year, and by $122,479 in the Enterprise Funds for the 2000-2001 fiscal year.  In addition, our review of the Town’s accounting records disclosed six cost center budget overexpenditures totaling $98,500 in the General Fund for the 2001-2002 fiscal year.

Finding No. 10:  The Town received deficiency notices from the Florida Department of Revenue regarding the Town’s Truth in Millage Certification correspondence filed pursuant to Section 200.068, Florida Statutes, for the 2000-2001, 2001-2002, and 2003-2004 fiscal years.

CASH

Finding No. 11:  Petty cash disbursements were not always supported by vendor invoices or receipts, or by other documentation demonstrating the public purpose served by such disbursements.  Also, vendor invoices and receipts supporting petty cash disbursements were not cancelled upon reimbursement.

Finding No. 12:  The Town did not timely reconcile monthly bank statements to the Town’s accounting records, and reconciliations prepared were not signed and dated by the preparer and reviewer.  Also, the Town incurred $2,652 of insufficient funds charges due to numerous overdrafts.

Finding No. 13:  The Town did not always notify the bank of changes to the Town’s authorized check signers in a timely manner, resulting in several checks being signed by Council members who were not authorized signers at the time the checks were signed.

Finding No. 14:  The Town did not enter into a written agreement with a bank from which it periodically made electronic funds transfers.

INVESTMENTS

Finding No. 15: Contrary to Section 218.415, Florida Statutes, the Town invested in repurchase agreements without benefit of a written investment policy.

Finding No. 16:  The Town’s current banking agreement regarding moneys on deposit does not appear to be beneficial to the Town as bank charges exceeded credits realized by $7,613 for the period October 2001 through August 2003.  Also, the Town could have earned $5,215 of additional interest earnings had proceeds from the library improvement loan been invested with the State Board of Administration during the period October 2001 through September 2002.

FIXED ASSETS

Finding No. 17:  The Town had not established adequate controls over tangible personal property.  Complete and accurate property records were not maintained, physical inventories of property were not done timely, some laptop computers were not properly marked to identify them as Town property, and documentation evidencing the disposal of ten surplus motor vehicles was not maintained.

Finding No. 18:  The Town paid $145,000 in excess of the appraised value for the Town Hall building, and did not document, of record, the justification for the purchase price.  Subsequent to the purchase, the Town paid $6,686 of property taxes on the property relating to the period of time prior to the Town’s purchase although the taxes had already been collected from the seller by the title company upon closing.

LONG-TERM DEBT

Finding No. 19:  The Town did not adequately document the basis for obtaining two bank loans totaling $1,880,000, which were subsequently refinanced only a few months later with a $1,940,000 loan from the Florida Municipal Loan Council.  Also, the Town did not, of record, consider other financing options prior to obtaining the loans, and prematurely transferred to the paying agent moneys needed for scheduled debt service payments, resulting in lost opportunities for earning interest and possible delays in paying costs associated with the library improvements project.  In addition, contrary to the loan agreement with the Florida Municipal Loan Council, investment earnings on unused loan proceeds prior to October 10, 2001, were not used for the library project.

Finding No. 20:  The Town did not comply with several reporting or reserve covenants relating to a $1,940,000 loan from the Florida Municipal Loan Council and $310,000 of Water and Sewer Revenue Bonds.

RESTRICTED RESOURCES

Finding No. 21: Contrary to Section 218.33(2), Florida Statutes, the Town did not separately account for restricted resources in the manner required by the Florida Department of Financial Service’s Uniform Accounting System Manual.

Finding No. 22:  The Town expended $186,800 of local option and municipal fuel tax proceeds for Public Works Department expenses.  However, the Town’s records did not document the extent to which Public Works Department employees’ activities related to construction, reconstruction, or maintenance of roads and streets, or to other activities for which expenditures of such moneys are allowable under Sections 336.025(1)(a)2. and 206.605(2), Florida Statutes.

Finding No. 23:  Contrary to generally accepted accounting principles, the Town did not properly report fund equity related to restricted resources, which resulted in a significant misstatement of the Town’s financial position.

CONTRACTS AND GRANTS

Finding No. 24:  The Town was awarded a $200,000 grant to construct a boat ramp; however, although the Town incurred $20,800 of costs related to design work on the project, the Town did not receive the $200,000 because it did not construct the boat ramp within the project deadline, and did not timely submit a request for an extension of the deadline.

Finding No. 25:  The Town did not seek reimbursement from the Florida Department of Education for $1,600 of food costs for the 2002 Summer Food Program, and may also be entitled to reimbursement for $5,400 of food costs and related administrative costs for the 2003 Summer Food Program.

Finding No. 26:  The Town has not taken appropriate action regarding losses from money order thefts and stamp shortages incurred in connection with its operation of a post office.  In addition, the Town has experienced operating losses at the post office for four consecutive fiscal years.

Finding No. 27:  The Town has not taken action to obtain moneys, to which it appears it is legally entitled, being held in an escrow account established to facilitate infrastructure improvements by a developer.

REVENUES AND OTHER RECEIPTS

Finding No. 28:  The Town had not established adequate controls over building permit fee collections through the use of prenumbered receipt forms or building permits.  Although prenumbered receipts were used for other collections, an accounting for the prenumbered receipt forms was not done.

Finding No. 29:  The Town did not perform monthly reconciliations between gallons of water produced and gallons of water billed to customers to ensure that customers were being properly billed for water provided and to detect water leaks or other problems contributing to an abnormally high water loss rate.

Finding No. 30:  For delinquent utility billings, service was disconnected and deposits applied against unpaid balances; however, the Town had not implemented any further procedures to collect these delinquent accounts, such as referral to a collection agency, nor has the Town attempted to prepare an aging of these accounts, which would assist in determining which accounts are collectible.

Finding No. 31: The Town assessed fees for use of the Denton Johnson Center; however, there was no apparent legal authority for such fees, and fees were assessed inconsistently.  Also, the Town failed to collect applicable sales tax, and did not always require facility users to sign a Facility Use Contract indicating their agreement with a hold harmless clause.

Finding No. 32:  The Town’s Code Enforcement Board waived code enforcement fines totaling $16,950 without documenting, of record, the reason for the fee waivers.

Finding No. 33:  The Town Council improperly amended by resolution an ordinance establishing building permit fees, which brings into question the validity of the revised fee schedule.  As such, individuals issued building permits after the revised fee schedule was implemented may have been under- or over-assessed fees based on fees authorized by the ordinance.

Finding No. 34:  Although the Town may be entitled to an additional $121,063 of pledged donations from a developer, it has not sought to obtain the money. 

PERSONNEL AND PAYROLL ADMINISTRATION

Finding No. 35:  The Town Council had not, of record, approved job descriptions to be used as a basis for establishing minimum recruitment qualifications for attracting candidates for employment.

Finding No. 36:  Authorization to add new employees to the payroll was not, in several instances, documented of record.  Also, the Town Council appointed a Chief Administrative Officer on an interim basis without conducting a proper screening of the applicant and reference checks.  In addition, another employee who occupied two positions at different times did not meet the minimum experience and education requirements for either position.

Finding No. 37:  Contrary to the Town’s Personnel Manual, employee personnel evaluations were not, in many instances, completed of record.

Finding No. 38:  Contrary to the Town’s Personnel Manual, the Town had not implemented a Compensation Plan to use to specify salary rates for authorized Town positions.

Finding No. 39:  Several employees received pay raises, as a result of promotions or merit increases, ranging from 12.5 to 41.7 percent.  Contrary to the Town’s Personnel Manual, the merit increases were not based on a Merit Adjustment Schedule and the pay increases for promotions exceeded allowable rates specified in the Manual.  In addition, there were conflicting provisions within the Personnel Manual regarding allowable pay increases for promotions.

Finding No. 40:  Contrary to the Personnel Manual, two employees were paid for accumulated compensatory time totaling 42.5 and 77.6 hours, respectively, that had not been earned in the prior 30 days.

Finding No. 41:  Our review of leave and attendance records maintained during the audit period disclosed situations in which the leave provisions of the Personnel Manual may not have been applied in the manner intended by the Town Council because of conflicting provisions or undefined terms.

Finding No. 42:  The Town Council did not, of record, approve employee holiday bonuses paid during the 1998 and 1999 calendar years.  Also, the Town did not always document actual rates of pay used to compensate employees and pay adjustments, and approval thereof, and payments for fire inspections.  In addition, police salary incentives were not paid in accordance with amounts authorized by the Florida Department of Law Enforcement.

Finding No. 43:  Town Council members receive salary, travel allowance, and cash in lieu of insurance payments for serving on the Council; however, such compensation is not provided for in the Town Charter and the Town Council has not properly enacted an ordinance authorizing such compensation.

Finding No. 44:  Certain Council members’ and employees’ fringe benefits and other compensation, including travel allowances, bonuses, and cash in lieu of insurance payments, were not were not reported as wages or other compensation to the Internal Revenue Service and were not subjected to the withholding of Federal income tax or the payment of other employment taxes.

Finding No. 45:  Contrary to Florida Department of Management Services Rule 60T-1.006, Florida Administrative Code, the Town did not timely submit information regarding the General Employees Pension Fund to the Florida Department of Management Services, Division of Retirement, for the 1999-2000 through 2002-2003 fiscal years.  In addition, budgeted contributions to the Fund were not made, nor did the Town document, of record, the Town Council’s approval to forego the contributions or the basis for doing so. 

Finding No. 46:  The Town records indicate that the Police Officers’ Pension Fund was established by ordinance in 1973; however, the Town was unable to provide the adopted ordinance.  In addition, the Town’s failure to provide for timely audits of the Fund resulted in delayed receipt of premium tax revenues for the 1999-2000 through 2001-2002 fiscal years.

PROCUREMENT OF GOODS AND SERVICES

Finding No. 47:  Deficiencies in the processing of disbursements for goods and services included lack of properly approved and dated contracts or purchase orders; payment of invoices that were not in agreement with contracts, purchase orders, or quotes; lack of signatures or dates for receipt of goods or services; and invoices that were not properly cancelled or stamped as paid after payment.

Finding No. 48:  Expenditures totaling $9,570 were not supported by documentation demonstrating the public purpose served by the expenditures.

Finding No. 49:  The Town, for $299,869 of vehicles acquired through installment purchases, did not document that a competitive selection process was used to obtain the best interest rate available at the time that each purchase was financed.  In addition, the Town did not always retain documentation related to such purchases, including payment schedules, invoices, or financing agreements.

Finding No. 50:  The Town did not, in several instances, purchase goods or services using a competitive selection process in the manner required by Ordinance No. 89-116.

CONTRACTUAL SERVICES

Finding No. 51:  Contrary to good business practices, the Town, in some instances, incurred expenditures for contractual services without benefit of signed written agreements.

Finding No. 52:  The Town’s written agreement with the City of Apopka, whereby the City provided dispatch services for the Town’s Police Department, provided for an increase in fees if the number of calls increased by more than ten percent over the previous year; however, the agreement does not specify the amount of the fee increase.  Although the City increased its fee for such services, the Town did not verify that the City was entitled to the fee increase.

Finding No. 53:  The Town paid a contractor $32,600 for grant administration services; however, $11,700 of the payments was not supported by invoices, and although the remaining $20,900 of payments was supported by invoices, such invoices were not sufficiently detailed.  In addition, some of the payments were not made pursuant to written agreements.

Finding No. 54:  The Town’s contracted building inspectors, in several instances, did not comply with the Town’s Development and Technical Codes.

Finding No. 55:  The Town’s contract with Orange 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 dual referenda for the transfer of any power or function from a municipality to a county.

Finding No. 56:  The Town made advance payments to contractors contrary to Article VII, Section 10 of the State Constitution.

TRAVEL EXPENSES

Finding No. 57:  Pursuant to Section 166.021(10)(b), Florida Statutes, since the Town has established travel expense policies and procedures in its Personnel Manual, it is exempt from all provisions of Section 112.061, Florida Statutes, effective January 1, 2003.  Accordingly, it is critical that the Personnel Manual provide adequately detailed guidance regarding all aspects of travel previously provided by Section 112.061, Florida Statutes; however, the Personnel Manual does not provided adequate guidance regarding travel and meal allowances.

Finding No. 58:  Travel-related expenditures were not always adequately supported or in accordance with Section 112.061, Florida Statutes, or the Town’s travel policies and procedures.

Finding No. 59:  Travel allowances paid to Council members were not supported by documentation demonstrating that such allowances were reasonable based on applicable mileage reimbursement rates and the amount of typical miles traveled during a given month for official Town business.

COMMUNICATIONS EXPENSES

Finding No. 60:  During the audit period, the Town did not have Town Council adopted policies and procedures relating to cellular telephone usage, and had not otherwise established adequate controls over the usage of cellular telephone.  Consequently, several Council members and employees made numerous calls that were personal in nature and did not serve a public purpose.  The Town has recovered $6,709 from the Council members and employees but, as of February 2004, had still not been reimbursed $5,256.

Finding No. 61:  The Town paid Federal, State, and local telecommunication taxes from which it is exempt.

Finding No. 62:  During the audit period, the Town paid about $21,700 for the 47 telephone lines for which it either received no services or did not use.

VEHICLE MAINTENANCE AND USAGE

Finding No. 63:  During the audit period, the Town did not maintain vehicle maintenance logs, and records of vehicle usage were often incomplete as to destination, public purpose served, or beginning and ending odometer readings.

Finding No. 64:  The Town Council had not established a policy regarding the usage of gas credit cards, and credit card users were not required to sign written agreements specifying acceptable use of the credit cards.  Also, credit card charges were not always supported by receipts.

Finding No. 65:  The Town Council did not approve the assignment of a Town-owned vehicle on a full-time (24-hour basis) to the Public Works Director, nor was it apparent why he was assigned a vehicle on a full-time basis.  In addition, the Public Works Director did not maintain a vehicle usage log to demonstrate the extent to which the vehicle was used for personal use (i.e., driving the vehicle home overnight or elsewhere) so that the value of such personal use could be reported as compensation to the Internal Revenue Service.

RISK MANAGEMENT

Finding No. 66:  Contrary to Section 112.08(2)(a), Florida Statutes, and good business practices, the Town had not bid for employee health, dental, vision, property, general liability, automobile, and workers’ compensation insurance coverage.

Finding No. 67:  The Town had not established procedures to ensure that insurance coverage for property was adequate in the event of damage or loss of property.  In addition, property insurance schedules were inaccurate and provided for insurance coverage of several vehicles no longer owned by the Town.

Finding No. 68:  The Town paid the health, dental, and vision insurance premiums for a former employee who retired from the Town in 1995; however, the Town’s Personnel Manual does not provide for payment of insurance premiums for retired employees and the Town Council did not, of record, approve the agreement.

COMMUNITY REDEVELOPMENT AGENCY

Finding No. 69:  The Town has not made required annual contributions of tax increment revenues to the Eatonville Community Redevelopment Agency (CRA).  The amount owed to the CRA as of August 31, 2003, including late fees and interest, totaled approximately $516,000.  The Town and the CRA, without authority to do so, waived the late fees and interest, and established a plan for the Town to pay monthly installments to the CRA over an extended period of time. 

Finding No. 70:  The Town and the CRA entered an interlocal agreement whereby the CRA agreed to provide municipal services to the Town, and the Town agreed to make quarterly payments to the CRA to compensate it for such services; however, the Town did not make $94,268 of required payments to the CRA.  Because the services provided by the CRA, at least to some extent, are unrelated to approved CRA projects as specified in the CRA Plan, the validity of this contractual arrangement is questionable.  In addition, neither the Town nor the CRA’s records documented the actual percentage of time that CRA employees spend on CRA related activities versus activities related to non-CRA related activities.

Finding No. 71:  Audit tests disclosed several CRA Trust Fund expenditures that were not supported by documentation demonstrating how the expenditures benefited the CRA and complied with the CRA Plan and Sections 163.387(6) and 163.370(2), Florida Statutes.  Also, the basis for paying $9,028 of severance pay to the former CRA Executive Director was not apparent of record.

Finding No. 72:  Contrary to Section 189.418(2), Florida Statutes, several resolutions and ordinances amending the CRA Board’s composition were not timely submitted to the Florida Department of Community Affairs.

Finding No. 73:  Contrary to Section 189.418(3), Florida Statutes, the CRA did not adopt budgets for the 1997-1998 through 2001-2002, and 2003-2004, fiscal years.

Finding No. 74:  Contrary to Ordinance No. 97-08 and Section 163.387(8), Florida Statutes, the CRA did not provide for audits for the 1997-1998 through 1999-2000 fiscal years, and the audits for the 2000-2001 and 2001-2002 fiscal years were not completed in a timely manner, and were not, of record, provided to one of its taxing authorities.

OTHER MATTERS

Finding No. 75:  The Town Council enacted ordinances providing for the voluntary annexation of certain property by an affirmative vote of two then Council members; however, since two members do not constitute a quorum as defined by Section 166.041(4), Florida Statutes, the validity of the annexations is questionable.

Finding No. 76:  Our audit disclosed several situations that may represent conflicts of interest as contemplated by Sections 112.313 or 112.3143(3)(a), Florida Statutes.

Finding No. 77:  During the course of our audit, the Town was unable to provide certain documents, including ordinances and resolutions.  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. 78:  Town Council meeting minutes were not always approved in a timely manner, and approvals of minutes for some meetings were not made a part of the transcribed minutes.

Finding No. 79:  The Town Charter was amended by voter referendum in March 1998; however, the Town did not file the amended Charter with the Florida Department of State until April 2003, more than five years after the Charter was revised.

The Town's written response, in its entirety, is presented on the Auditor General Web site.