Summary

The results of our operational audit of the City of Cape Coral are as follows:

Finding No. 1:  The City had not maintained its accounting records on a current basis, or periodically reviewed them for completeness and accuracy.

Finding No. 2:  Written policies and procedures necessary to assure the efficient and consistent conduct of accounting and business-related functions were not established in all cases.

Finding No. 3:  The City had not provided for an adequate separation of duties in certain areas of operation, and had not provided for the proper safeguarding of blank checks.

Finding No. 4:  The City did not consider all available net assets from prior fiscal years in adopting its 2003-04 or 2004-05 fiscal year budgets for the funds combined and reported as “Water and Sewer” and “Stormwater Utility,” contrary to Section 166.241(2), Florida Statutes.

Finding No. 5:  The City reported budget overexpenditures totaling approximately $39 million in 7 of the 27 funds reported as “Water and Sewer” and “Stormwater Utility,” contrary to Section 166.241(2), Florida Statutes.  Furthermore, budget-to-actual comparisons were provided to the City Council only through the 3^rd quarter of the 2004 fiscal year. 

Finding No. 6:  Bank reconciliations were not always performed timely, were not adequately reviewed, and contained errors.

Finding No. 7:  The City failed to timely report and remit unclaimed property to the Florida Department of Financial Services, contrary to Chapter 717, Florida Statutes. 

Finding No. 8:  The City did not prepare a financial analysis, including a calculation of the economic gain or loss, prior to issuing refunding debt totaling $53 million.

Finding No. 9:  The City did not timely refund special assessments in excess of project costs for three completed utility expansion areas.

Finding No. 10:  The City’s methodology for determining contributions in aid of construction (CIAC) fees may not appropriately match fees charged to actual costs incurred and, as a result, may be subject to challenge by property owners.

Finding No. 11:  The City does not have adequate controls in place to ensure that CIAC fees are timely collected.

Finding No. 12:  City Council approved, via vote of City Council members rather than enactment of an ordinance, a change in CIAC fees established by ordinance, contrary to Section 166.041, Florida Statutes.  Further, City staff’s actions regarding CIAC and capital expansion fees charged regarding the North Loop CIAC project may have been contrary to the City Council’s intentions.

Finding No. 13:  Capital expansion fees and CIAC fees were not always expended in accordance with the City’s Code of Ordinances and applicable case law.

Finding No. 14:  The City did not always charge utility users appropriate fees or timely bill for services rendered.

Finding No. 15:  Costs for shared administrative expenses from departments other than utilities were not always allocated to the Water and Sewer Fund and Stormwater Fund in a systematic and rational manner.  In addition, some costs directly charged from other departments were not supported by documentation to evidence the basis for the direct charge.

Finding No. 16:  Expenditures totaling $131,859 were not supported by documentation demonstrating the public purpose served.

Finding No. 17:  The City did not select its bond counsel through a competitive selection process.

Finding No. 18:  The City did not have written agreements with several bond professionals.  Additionally, City practice and its procurement policies and procedures are contrary to Section 2-148 of the City’s Code of Ordinances regarding required signatures on contracts.

Finding No. 19:  The City did not properly monitor contracts for services to ensure contractors performed in accordance with terms of the contract.

Finding No. 20:  The City did not fully comply with provisions of Section 287.055, Florida Statutes, in procurement of its contract for its utility expansion program.  Additionally, invoices submitted for payment by the contractor were not adequately supported.  Finally, the City’s consultant hired to audit selected work authorizations relating to its utility expansion program included several findings and made several recommendations.

Finding No. 21:  Although the City has taken some actions to reduce water loss, unaccounted for water remains in excess of 10 percent.  Additionally, preliminary data from a water audit obtained by the City indicated several factors, including excessive service leaks, meter testing and replacement, and inconsistencies in meter size, that contributed to the City’s unaccounted for water.

Finding No. 22:  Some of the City’s staff may have inappropriate access to information technology system resources.  We also noted another deficiency in controls over the City’s information systems.

Finding No. 23:  The City has not prepared and executed a lease agreement for its charter school and the frequency and timing of billings to the charter school for services provided by the City were not addressed in Ordinance 41-04.

Finding No. 24:  The City conducted discussions regarding the calculation of the charter school lease payments through a liaison rather than in a publicly noticed meeting.