Summary

Our performance audit of the State of Florida local government financial reporting system disclosed the following:

Finding No. 1:  Auditor selection procedures were not used by all local governments and some local government officials and staff indicated they were unaware of the statutory requirements.

Finding No. 2:  Local governments had not always established and used an audit committee to select an auditor, contrary to law, or used the audit committee to perform other audit oversight duties.

Finding No. 3:  Factors to be used to evaluate audit services, or procedures to publicly announce and evaluate requests for proposals for audit services, were not established by all local governments.

Finding No. 4:  Local government contracts for audit services did not always include the required elements, such as a finite contract term or conditions for renewal or termination.  Additionally, in many instances, invoices for audit services were not in sufficient detail to determine compliance with the contracts.

Finding No. 5:  Although greatly improved, some local governments continued to file paper-based annual financial reports with the Department of Financial Services (DFS) rather than file electronically.

Finding No. 6:  DFS’s required notification to the Legislative Auditing Committee of unaudited local governments that had not submitted an annual financial report for the 2005-06 fiscal year did not include 12 special districts.

Finding No. 7:  Although greatly improved due to the implementation of the Local Government Electronic Reporting System, some unaudited local governments were still not reporting the required financial information on their annual financial reports to DFS.

Finding No. 8:  Department of Management Services, Division of Retirement (DMS), did not always acknowledge the receipt of the local governments’ actuarial reports or actuarial impact statements pertaining to public employee retirement systems and plans, contrary to Section 112.63(4), Florida Statutes.  Furthermore, DMS did not prioritize its backlog of actuarial reports and impact statements pending review to ensure that the reviews were performed in a timely manner.

Finding No. 9: DMS did not include the required response time, or notification of the consequences for failure to provide requested information, in its correspondence with pension plan administrators.  Also, DMS did not maintain a system for tracking and timely following up on requests for additional information relating to its review of public employee retirement systems and plans.

Finding No. 10: Executive Office of the Governor staff did not, in some instances, timely contact local governments that met a financial emergency condition specified in law.   

The Department of Financial Services, the Department of Management Services, and the Executive Office of the Governor responses are included in this report as Appendix D.