Finance Dept. Needs to be Declared a Disaster Zone

moe-larry

From: Ted Noftall [mailto:Ted@TedNoftall.com]
Sent: Monday, December 23, 2013 6:58 PM
To: Bob Ford; Dennis Kennedy; don@amlsfl.com; Drew Bastian; Mayor Green
Cc: ‘Kisela, Greg’
Subject: Finance needs to be declared a Disaster Zone

Well Mayor and Council,
Another embarrassing error,  and another analysis  purporting to show that everything is all well on the Finance plantation.  Well all is not well,  and this analysis as with the YMCA reserve analysis has not been vetted by anyone other than those responsible for the errors in the first place.
This multiyear analysis is so amazing that it takes us right through the fuel theft allegations  that started the Warren Pike firing process in  the first place without so much as  footnote,   AND  through records so sloppy and so spread sheet shopped that the Police said they could not proceed with charges in that instance.
You can’t have it both ways. Either the fuel purchase and dispensing records were bullet proof in 2011 and 2012 and the Police did not know what they were doing,   OR they were a spread  sheet nightmare  then and this analysis is a happy face production now.
The whole purpose of the smart card dispensing system was to eliminate the need for exactly  this sort of analysis where the numbers can be made to total anything you desire  —  as was the case with a certain  public works vehicles  that was getting anywhere between 3 and about 300 miles to the gallon depending on how those numbers were applied or misapplied.
The first  tragedy here is that nothing of substance has really  changed in Finance.   As late as Dec 9th the A&B advisory board was assured that the smart card dispensing system was working right down to the jerry can.  Imagine my surprise to discover on  Dec 12th with the release of 4 fuel tax refund returns that Finance has been processing these refund returns with calculation errors and reported gallon shortages in the thousands each and every month without ever asking why or bringing it to anyone’s attention.
As with the YMCA reserve errors,  the pattern at Finance was the same with the fuel refund errors.   STALL  with the perennial we are overworked excuse,  and refuse  to disclose anything further  until an analysis and an explanation could be concocted.  In this instance it took Finance 10 days to release  fuel tax refund returns for the first 9 months of FY 2013  —   10 days for something that should have taken 10 minutes.  WHY WAS THAT EXACTLY ??
The 2nd tragedy is that it has taken  2 weeks to produce a couple of fuel rebate returns.  Nothing has been answered regarding the critical inner workings of Finance as asked in my e-mail of Dec 17th   AND the possible implications of the Finance Director’s Dec  18th  comments  are mind-numbing in a  $65 million dollar annual operation which is what the City of Port Orange is.
None of this is acceptable to me as a taxpayer and neither should it be to you as the elected representatives of Port Orange taxpayer.
Nothing less than comprehensive financial reporting on an interim basis should be acceptable,    and for that to occur comprehensive bookkeeping would need to be done on a monthly basis throughout the year,  AND  that would require a major change in the focus of that department,  AS EVIDENCED by the fact that it is now nearly 3 months after the fiscal  year end  and to my knowledge Finance has not even completed an adjusted trial balance for September 30th
Where do you suggest we go from here Mayor and Council ??
If you opt for more unlicensed therapy and another round of pizza parties for Finance,   instead of the needed change we thought we were going to get with Mr. Kisela would you also apply for federal disaster aid  and  ensure a supply of hard hats are on hand for all those entering that department.
Ted Noftall


 

From: Kisela, Greg [mailto:gkisela@port-orange.org]
Sent: Monday, December 23, 2013 2:39 PM
To: City Council
Cc: Saunders, Wayne; Lewis, Shannon; Anderson, Mary
Subject: FW: fuel tax refund

 

Mayor and City Council: FYI.  We are reviewing the  procedures in Public Works and Finance to ensure that we have the proper internal controls in place.  If you have any questions, please call.
 
Greg Kisela


 

From: Saunders, Wayne
Sent: Monday, December 23, 2013 2:35 PM
To: Kisela, Greg
Cc: Lewis, Shannon
Subject: fuel tax refund

 
We have discovered errors in four of the FY13 monthly fuel tax refund submittals and backup materials.  Attached is a revised spreadsheet showing the corrected amounts for April, July, August and September.  The errors were due to a combination of issues. A new system (EJ Ward) was installed during the year which resulted in some reporting problems during the transition.  We found that there were times the physical inventory reading was not consistent with the fuel usage reporting dates which would create false over/under numbers for individual months.  For this reason the annual net over/under numbers are more important.  Also, at the time of transition, the old system data was not accurately pulled prior to shutting down. We discovered that a manual log was used for a time during the transition when no automated system was in place and was not included in total reported usage.  The final issue was a formatting question with the new report that caused subtotals rather than total to be used.
The revised spreadsheet shows a net over amount for the year of 481.1 gallons of unleaded and a net short of 306.9 gallons of diesel for the year.  It is also my understanding that a 2% variance could be expected due to environmental conditions and other factors affecting fuel storage.  Considering this factor, the over/short amounts shown on the chart are within the acceptable parameters.
We will be submitting amended fuel tax refund reports for the four months where reporting errors occurred.
 


—Original Message—–
From: Ted Noftall [mailto:Ted@TedNoftall.com]
Sent: Friday, December 20, 2013 8:39 AM
To: ‘Saunders, Wayne’
Subject: RE: Fuel Tax Rebate Returns
 
Wayne,
Where do you stand with being able to e-mail over the remaining FY 2013 Fuel Tax returns requested.
Shouldn’t this be as simple a task as possible, OR is there another reason for the delay at this time.
 
Ted


Original Message—–
From: Saunders, Wayne [mailto:wsaunders@port-orange.org]
Sent: Thursday, December 19, 2013 8:18 AM
To: Ted Noftall
Subject: RE: Fuel Tax Rebate Returns
 
Will do and thanks for your patience.
Wayne Saunders
Finance Director
City of Port Orange, FL


 
From: Ted Noftall [mailto:Ted@TedNoftall.com]
Sent: Wednesday, December 18, 2013 11:09 AM
To: Saunders, Wayne
Cc: Fenwick, Robin
Subject: RE: Fuel Tax Rebate Returns
Thanks Wayne,
This is a lot to digest and at this point  I will wait patiently until you are able to supply the remaining Fuel Credit Refund Returns  and the other information that has been requested.
I have one additional request at this time and  that is you e-mail me a copy of the “adjusted 09/30/2013 trial balance ”  at the same time it is provided to the yearend Auditors.
Thanks
Ted Noftall
 


 
—–Original Message—–
From: Saunders, Wayne [mailto:wsaunders@port-orange.org]
Sent: Wednesday, December 18, 2013 8:46 AM
To: Ted Noftall
Subject: RE: Fuel Tax Rebate Returns
Good morning Ted,
Reconciliations are supposed to be done each month.  I have not had time to review when they were actually completed last year.  As far as my “inconsistently” comment, I was speaking from past experience when state shared revenues have not always been received each month on a routine basis.  I have seen two or three come in the same month.  I was not saying that happened with these revenues last year, I was saying that is a possible reason for you not seeing an entry every month.  Your other question regarding “received but not recorded” was explaining how this situation would be handled with regard to a bank reconciliation as you asked.  Again, I do not know if this actually occurred, I was simply answering your question as to how it would be handled if it did happen.  I will get the additional info you are asking for but it will be a few days.  We are very busy finalizing all information for the auditors and putting together information for the rate consultants which are priorities, but I will get it for you.
Wayne Saunders
Finance Director
City of Port Orange


 
From: Ted Noftall [mailto:Ted@TedNoftall.com]
Sent: Tuesday, December 17, 2013 8:30 AM
To: ‘Saunders, Wayne’
Subject: FW: Fuel Tax Rebate Returns
Thanks again Wayne,
As I read your reply I realize  I am making an assumption that may not be correct.  Accordingly I would inquire as follows;

  • *)   Are the monthly bank reconciliations  prepared and approved on a timely basis each month,   and that is to say not later than the 20th of the following month.  If  that is not the case what were the actual dates  on which  the bank reconciliations   were prepared and approved throughout FY 2013

I am confused as to why the fuel tax refunds are being received ” inconsistently ” throughout the year  considering  that the 4 monthly fuel tax returns  you supplied  were submitted on a timely basis.
Also not sure what you mean by  ” If received but not recorded prior to bank reconciliation,  it would appear as an outstanding item on the GL side of the bank reconciliation “.
Why wouldn’t the credit  be recorded at the time of the bank rec ?   AND for how many months would they be so carried  a reconciling item ??.
In this regard would you please advise as to dates and amounts of Fuel tax refunds received throughout FY 2013
Ted Noftall


 
—–Original Message—–
From: Saunders, Wayne [mailto:wsaunders@port-orange.org]
Sent: Monday, December 16, 2013 6:20 PM
To: Ted Noftall
Subject: RE: Fuel Tax Rebate Returns
Ted, we are looking at the over(under) fluctuations with public works and will get back to you asap.  As for your other questions:   Refunds are received electronically, not by check, and then recorded as a journal entry.  The only time we would accrue is at the end of the fiscal year.   When we actually receive the funds is at times inconsistent and multiple receipts could be recorded with one entry.  If received but not recorded prior to bank reconciliation, it would appear as an outstanding item on the GL side of the bank reconciliation.
Wayne Saunders
Finance Director
City of Port Orange, FL
 


 
From: Ted Noftall [mailto:Ted@TedNoftall.com]
Sent: Monday, December 16, 2013 10:17 AM
To: ‘Saunders, Wayne’
Subject: RE: Fuel Tax Rebate Returns
Thank you Wayne,
While I  understand your referral of part of this inquiry to Public Works shouldn’t Finance have made that inquiry  the first time a shortage was indicated   AFTER   assurances were given  that ALL fuel withdrawals were being accounted for ?
While we are waiting on Works are you able to answer and supply the information requested of Finance that I have highlighted below  for your convenience.
Since framing those questions on Friday I scanned the City G/L and it would appear that fuel tax refunds were only booked in July and August of FY 2013.  If  refunds are being received  AND DEPOSITED more frequently  than twice a year an additional question will arise as to the frequency with which the city’s bank accounts are being reconciled,  AND how exactly they are being reconciled without recording that months  fuel tax refund deposit .
 
Ted Noftall
 


-Original Message—–
From: Saunders, Wayne [mailto:wsaunders@port-orange.org]
Sent: Monday, December 16, 2013 8:45 AM
To: Ted Noftall
Cc: Anderson, Mary; Fontane, Jeff
Subject: RE: Fuel Tax Rebate Returns
Good morning Ted.
I will get the other reports and information requested to you asap.  By copy of this to Public Works, I am asking that they respond to your question regarding the gains and losses in inventory.
Wayne Saunders
Finance Director
City of Port Orange, FL
 


 
From: Ted Noftall [mailto:Ted@TedNoftall.com]
Sent: Friday, December 13, 2013 11:38 AM
To: ‘Saunders, Wayne’
Subject: Fuel Tax Rebate Returns
 
Thank you Wayne,
The returns you supplied have triggered two  questions regarding  accounting and physical inventory.
Accounting:       The fuel tax refund is calculated and applied for monthly.

  • *)   Are those refunds recorded monthly on an accrual or cash basis.  Are refunds received as a direct deposit or as a check.  Are those checks deposited when received.

How are those refunds  recorded In the General Ledger  throughout year and  what adjusting entries were required for the FY 2013 year end  ( Please indicate the monthly postings and provide a copy of the year end adjusting entry or entries. )
Physical Inventory:     The fuel tanks are dipped at month end to determine remaining inventory.

  • *)  What is the explanation for the huge swings in gains and losses within the fuel tanks themselves  ( July/13  Gas gain 2,561.8 gal,,, Aug/13  Diesel loss 2,799.6 gal,,, Sept/13 Diesel loss 2,457.2 gal,,, Oct/13 Diesel loss 2,927.7 gal )

At this point would you please supply the Fuel tax rebate returns for the  9 months in FY 2013 that I had not requested previously  ( Oct/12 through June/13 ).
Thanks
Ted
 


 
—–Original Message—–
From: Saunders, Wayne [mailto:wsaunders@port-orange.org]
Sent: Thursday, December 12, 2013 3:06 PM
To: Ted Noftall
Subject: RE: Fuel Tax Rebate Returns
Ted,
See attached.
Wayne Saunders


 
From: Ted Noftall [mailto:Ted@TedNoftall.com]
Sent: Wednesday, December 11, 2013 9:56 AM
To: ‘Saunders, Wayne’; ‘Fenwick, Robin’
Subject: Fuel Tax Rebate Returns
 
Wayne,
I had asked about the City’s   Fuel Tax  Rebate  Returns  the other evening because both the initial and revised  Milestone  Internal Monitoring Reports  for 2011-2012 noted on page 5

  •  *         It was noted during our review that fuel rebates to the State did not include activity from the fire station #4 location, golf course station, and fuel used in City vehicles purchased on the City’s credit account with a local gas station ( mostly used by police motorcycles requiring higher octane fuel ).

In that regard would you please send me a copy of the last 4  Fuel Tax Rebate Returns the City has filed.  I do not wish to create an inordinate amount of work for you in this request and would suggest you call to discuss back-up detail required to ensure the Milestone comment above is being addressed.
Ted

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