‘Bringing Nothing To The Job’

                From:  Palmetto Pal (palmettopal95@gmail.com)
                Sent:                 Thu 4/17/14 5:24 PM
                To:                  (port.orange.us@gmail.com)  …..
incompetent Finance director Saunders is giving new meaning to the expression  ‘bringing nothing to the job’.  Not only is he using old schedule templates prepared by the former disgraced Finance director he is borrowing an old refrain from the  Comptroller who is currently banned from council chambers for making faces at Council when they observed that what they were being spoon fed was in-comprehensible. That refrain explains why most everything Finance presents is habitually late and incomplete, difficult to understand and near impossible to compare with anything else and it goes something like this  ….. “ look, what we are doing here is complicated stuff and you all are too stupid to understand it”  
That old refrain is particularly galling  as accountants with professional qualifications and auditing experience far greater than Mr. Saunders and his Comptroller combined, have had this to say about the accounting prowess of Port Orange finance.
·        This condition ( account coding)  is further complicated by the expanded use of multiple operating funds which are ultimately consolidated and rolled-up into other major operating funds for financial reporting purposes. The use of multiple funds, many of which are for insignificant financial activities, severely complicates the budgetary and financial reporting processes throughout the year, and especially at year-end.
Mr Saunders  has also yet to learn that accolades are meant to bestowed by others and not by oneself, YET there he is telling us what a great job he has done this past year because the first peak we had as to how the City finances fared for the year ended 09-30-2013 was  only 5 months and 18 days late. He neglected to mention the reason a monthly financial summary is not presented for September is to avoid the obvious comparisons of inaccuracy between the budgeted and actual numbers, and inconsistency with the CAFR
Interestingly Councilman Burnett got close to this  issue while discussing the August 2013 monthly financial report at the September 24th  2013 council meeting when he asked Saunders if the annual budget numbers such as for Tax revenue of $17.345 million would be met in the month of September considering that only  $15.669 million had been received through the 11 months ended August. ( remember 95% or more of the City’s tax revenue is already collected by August )
Saunders likely not understanding the question or not knowing the basis on which the budget numbers had been prepared anyway said they would, AND LIKE most questions asked in Port Orange it has never been answered.  This is exactly why Port Orange finance distributes monthly financial summaries for 8 months a year only and not the full 12 months.
The other salient point Mr.Saunders failed to disclose as he repeated the “this is complicated and you are stupid mantra”  is that with hundreds and hundreds of year end adjusting entries any comparison with anything presented  previously is suspect at best. Port Orange finance is not so much running a complicated accounting system as they are running an adjustments system for corrections that they are not anxious to have anyone understand. Councilman Ford was correct in his observation to the effect that looking at Port Orange finance is like looking through a blanket.
Mr. Saunders exception to the notion that his staff is running in circles because of poor management while predictable is hard to accept considering:  that payroll preparation at the City after all the departments have reported in goes through the following hands  –  Jamie,  Bridget,  Lori,  Rose  and  Stella; or that during the year he hired a staff person to prepare the City’s bank reconciliations who was unable to do those reconciliations  without extensive time and assistance from other staff, and even then the matter was resolved by simply not doing those monthly reconciliations on a timely basis for most of last year.
Mr. Saunders has implied that the Auditor said little of a critical nature regarding his department. Actually the Auditor had the following to say in the CAFR and in his Management letter.
·         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 )
 About the only statement the Auditor did not make was that if  Mr. Saunders has any qualifications for the position he holds beyond being a ex-city manager those qualifications are a better kept secret than next week’s winning lottery numbers.  But then again the Auditor is hoping for a repeat engagement again next year !!

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