An audit released at the last Carrabelle meeting said things look slightly brighter there.
At the July 11 meeting, Mark Payne, representing certified public accountants James Moore and Company, presented results of an audit of Carrabelle’s 2011-12 fiscal year. Auditors found some slight improvements in the financial outlook but procedural problems noted last year are ongoing.
The bottom line has not changed much. Carrabelle had $72 million in assets, an increase of $1 million over 2011. Liabilities remain the same, $32 million, leaving net assets of $40 million. Of that, $2.3 million is in unrestricted assets, which is a $500,000 increase over the last audit. Most of the city’s wealth is tied up in property and vehicles.
Once again, the city showed a small increase in government funds at the end of the fiscal year, with almost $4 million in receivables, including taxes owed, grants awarded and liquid assets. Last year’s audit found $3.2 million, which was an increase of $29,000 over the 2009-10 fiscal year.
While governmental funds earned $80,000, the water and sewer and port authority lost $40,000.
Payne praised the city for the surplus, and said that many small cities consistently wind up in the red.
Mayor Curley Messer loudly agreed with Payne’s observation that the city has gone over budget in some areas. He called for more fiscal conservatism.
Payne said the city has roughly $30 million in debt, most relating to the expansion of the sewer system. Commissioner Brenda La Paz said she would explore that issue in an upcoming meeting with the Florida Department of Environmental Protection, which funded the construction of the system.
The audit found material weaknesses in the city’s financial statements.
There have been improvements over last year’s situation. Water and Sewer has employed a collection agency to collect past due fees, but Payne still warned that uncollected receivables were an issue.
“On water and sewer, you need to be looking at accounts that are past due,” Payne said. “Make sure you adhere to your policies.”
He noted bank statements are not being reconciled in a timely fashion and recommended this procedure be carried out monthly immediately after the statements are issued.
Payne found that reports requesting reimbursement from federal Community Development Block Grants are not being filed in a timely manner. He said this could affect the city’s ability to acquire this kind of funding in the future.
The auditor said overlapping duties of employees on the small city staff remains a problem. “You don’t have enough people to do everything with regards to checks and balances,” he said.
The report said the city still does not have an employee trained to prepare the necessary reports for an audit.
Like last year, Moore and Company’s audit said duties related to spending and receiving funds should be formally assigned to employees with checks and balances in place. It recommended mail be opened by an employee not responsible for accounting who would record cash receipts and that bank statements and cancelled checks should also be received by someone other than the employee maintaining cash records. Anything out of the ordinary should be promptly investigated, cash deposited daily, and signed checks mailed by someone other than the person responsible for accounts payable, the audit advised.
The report repeated a request for an inventory of physical assets and recommended that invoices document all expenses, and that better records be kept. Journal entries should include adequate documentation and be approved by an employee other than the one who prepared the entry, and all employee time sheets should be signed and approved by a supervisor, read the audit. It also advised that the city maintain an approved vendor list and seek bids for significant expenses.
The report also recommended the city prepare a detailed disaster recovery plan and an accounting procedures manual.
In a letter responding to the findings prepared by the commission and city staff including City Attorney Dan Hartman, the city promised to segregate financial reporting duties. The letter said preparation of the accounting manual and inventory and the disaster response program are under way.