‘Bringing Nothing To The Job’

·         Three significant deficiencies related to internal control over financial report were disclosed by the audit of the basic financial statements … ( P 176 )

·         It was noted that no documentation could be produced for 9 of the 39  ( police pension ) participants actively receiving benefit payments. We also noted there to be no active review process over ongoing benefit payments to ensure no participants are over or underpaid. ( P 176 )

·         A significant journal entry in the amount of over $90,000 was required to record an additional allowance for doubtful accounts in the General Fund.  ( P 177 )

·         The City’s bank reconciliations for fiscal year 2013 were not completed and reviewed in a timely manner.  ( P 177 )

·         We noted certain matters that we reported to the City Council and management of the City in a separate letter dated March 18, 2014.  ( P 183 )

·         2013-004 Time Clock System (Repeat Comment) – we recommend the City implement and make use of its automated time clock system within all departments. ( P 186 )

·         2013-005 Tracking of Electronic Funds Transfers (Repeat Comment) –  all such transfers are recorded in the general ledger as journal entries, and no specific tracking mechanism is in place for EFT transactions. ( P 186 )

·         2013-006 Waverly Media Bus Bench Revenue –  we noted no analysis had been performed over fiscal year 2011 revenues. As a result, we performed a preliminary calculation and identified over $7,000 of monies for which the City may be entitled to. ( P 186 )

·         2013-007 Pension Actuaries and Custodians – We noted the City’s three (3) pension plans all employ different actuaries and custodians. For increased accuracy, comparability, and efficiency in financial reporting – particularly given the upcoming changes to financial reporting standards for pensions – we recommend the City and its pension boards look into potential efficiencies and cost savings of having the same firms performing the respective actuarial and custodian duties. P 187

·         2013-008 Consolidation and/or Elimination of Funds –  To improve efficiency and clarity of financial reporting, we recommend the City perform an analysis of all open funds and identify any applicable instances in which it may be beneficial to close out the fund for increased efficiency and clarity in financial reporting. ( P 187 )

·         2013-009 Modified Approach for Reporting Infrastructure Assets –. In order to utilize the modified approach, generally accepted accounting principles require the following: a current inventory of eligible infrastructure assets be maintained; a condition assessment of all eligible assets be performed and summarized on a measurable scale no less than once every three years; and documentation be prepared showing that roads are being preserved at or above the established condition level. Upon inquiry, it was noted that such documentation is not be maintained at the level required to utilize the modified approach. ( P 187 )

·         2013-010 Information Technology –. The subject matter of some of the areas of risk identified is confidential in nature, and thus specific details of these risks are disclosed separately to avoid the possibility of compromising the City’s information and security.  This separate letter is exempt from public access provided by Florida Statutes 119.07(1) and 286.001 and other laws and rules requiring public access or disclosure. ( P 187 )

·         Significant Difficulties Encountered during the Audit
Although we ultimately received full cooperation of management and believe that we were given direct and unrestricted access to the City’s books and records, we experienced significant difficulties in the performance of the audit due to the requested audit schedules and final trial balance not being ready for audit within the timeframe initially agreed upon. We were originally scheduled to start the audit on December 2, 2013, but finally started fieldwork on January 6, 2014. However, upon this delayed start, many requested schedules and year-end adjustments had not been completed by the City, and supporting work papers for some of the significant audit areas were not received until the last week of January. The related rescheduling, follow-up, and recording of management-provided journal entries significantly added to the time and related cost of the audit. Considering this is a fixed-price engagement, this situation will not be allowed to occur in future years. We will not begin fieldwork for the 2014 audit until all of the City’s year-end adjustments have been recorded and all requested work papers have been completed and provided to us. If we need to reschedule, this will likely result in delaying the start of the audit to late March or April.  ( Mgt Ltr P 3 )

·         Uncorrected and Corrected Misstatements

For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. The following summarizes uncorrected financial statement misstatements whose effects in the current and prior periods, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole and each applicable opinion unit:

• • $92,000 prior period adjustment for two disbursements paid and recorded in fiscal year 2013 relating to fiscal year 2012 expenditures.
• • $2 million prior period adjustment to record easements granted during or before fiscal year 2012 that were recorded in fiscal year 2013.
• • $300,000 prior period adjustment for outstanding estimate at end of fiscal year 2012 for bad debt related to Daytona Beach Shores utility billing.

 In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The following material misstatements that we identified as a result of our audit procedures were brought to the attention of, and corrected by, management:

• • $90,000 adjustment to accrue an additional allowance for doubtful accounts related to uncollectible penalties and interest in the general fund.

• • $97,000 adjustment to accrue an additional allowance for doubtful accounts in water and sewer, solid waste, and storm water funds.  ( Mgt Ltr  P 3 )