This section of our report summarizes the results of our operational audit of the City of Weeki Wachee, Florida, for the period October 1, 2002, through April 30, 2004, and selected actions taken prior and subsequent thereto.

Finding No. 1:  The City acquired Weeki Wachee Springs, LLC (LLC), effective July 31, 2003.  Depending on the outcome of related civil actions, and the LLC’s ability to improve its financial condition, the City’s financial condition may have been adversely impacted by the acquisition and retention of the LLC.  Additionally, the City appears to be experiencing financial difficulties, raising questions as to the ability of the City to continue as a going concern. 

Finding No. 2:  Contrary to City Charter provisions, the City attempted the condemnation of a utility system that was engaged in the sale, transportation, or delivery of water, and incurred approximately $63,200 of legal fees in doing so.

Finding No. 3:   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, had not been established. 

Finding No. 4:   The City had not provided for an adequate separation of duties, or established adequate compensating controls, in certain areas of operations.

Finding No. 5:   Contrary to law, the City has not provided for a 2002-2003 fiscal year audit.  In addition, the City’s annual financial reports for the 1999-2000, 2000-2001, and 2001-2002 fiscal years were not submitted timely.

Finding No. 6:   The City failed to deposit in its accounts State warrants totaling $3,713 issued to the City by the Florida Department of Revenue from September 2001 through March 2003 for the City’s share of municipal revenue sharing and communication services taxes.  Although the State warrants were canceled, the City has recovered most of the moneys, but still has not recovered $579 of this amount.

Finding No. 7:   For certain bank accounts, monthly bank statements were not timely reconciled to the accounting records, and reconciliations prepared were not signed and dated by the preparer and reviewer.

Finding No. 8:   General ledger control accounts had not been established for classes of fixed assets, and complete and accurate property records were not maintained.

Finding No. 9:   The City did not maintain separate accountability for moneys previously held in a bank account titled Federal Revenue Sharing, and did not maintain documentation evidencing the original source, and the nature, of these moneys.  Consequently, the City cannot be assured that disbursements of these moneys were for allowable purposes.

 Finding No. 10:   Two loans received totaling $50,000 were not reduced to writing in the form of documented loan notes setting forth the repayment schedules, interest rates, if any, and other provisions generally found in similar business loans.  As such, we could not conclusively determine the nature of the loans, the amount of loans actually received, any restrictions as to the use of the loan proceeds, and whether there were any loan terms that had not been complied with, including scheduled repayments.

Finding No. 11:   In many instances, leased employee timesheets were manually overridden without evidence of supervisory approval.  One leased employee had either clocked in or out for an entire week but never both in the same day.  Instead, the time worked and total hours worked each day were manually recorded.  In addition, worksheets generated from the time management system, although reviewed, were submitted to the payroll leasing company for the preparation of payroll checks without any evidence of supervisory approval.

Finding No. 12:  City Commission members, the City Clerk, and an animal trainer were classified as independent contractors rather than as employees and, as such, no employment taxes were withheld or paid on their compensation; however, it appears that some or all of these individuals should have been treated as employees pursuant to Internal Revenue Service (IRS) regulations.  In addition, no compensation, as either an employee or an independent contractor, was reported to the IRS for a deputy sheriff and a City Commission member who was provided free living accommodations at the LLC park in return for providing park security. 

Finding No. 13:   Contrary to United States Treasury Regulations and the Internal Revenue Code, the LLC did not include certain fringe benefits provided to employees in the employees’’ Forms W-2, Wage and Tax Statements.

Finding No. 14:   Expenditures totaling $3,348 were not supported by documentation demonstrating the public purpose served by the expenditures.

Finding No. 15:   Deficiencies in the processing of disbursements for goods and services included lack of properly approved purchase orders, and lack of adequate supporting documentation for disbursements.

Finding No. 16:   Contrary to good business practices, contractual services were generally acquired without using a competitive selection process and without benefit of formal written agreements.  In addition, invoices submitted by firms that provided legal and medical services were not in sufficient detail to allow a determination as to whether fees charged, and expenses submitted for reimbursement, were appropriate.

Finding No. 17:   The City had not established written policies and procedures relating to cellular telephone usage, and had not otherwise established adequate controls over the usage of cellular telephones. 

Finding No. 18:  Contrary to the City Commission’s approved action at its September 2002 meeting, the City has not collected from the LLC its $3,200 share of a $6,400 lawn mower purchased for use by both the City and the LLC through a reduction in City rent payments to the LLC for office space.

Finding No. 19:   Contrary to Section 14 of the City Charter, the City Commission did not enact an ordinance fixing regular meetings, and regular Commission meetings were not held monthly.  Also, City records did not adequately document the reasons for cancelled meetings. 

Finding No. 20:  Contrary to Section 112.3145(2), Florida Statutes, two City Commissioners failed to annually file statements of financial interest.

The Mayor’s response to our findings and recommendations is included in this report as Exhibit B.