Audit Report- 1993-1994 mkt,1
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CITY OF
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FINANCIAL STATEMENTS
AND
INDEPENDENT END i'NT AUDITORS' REPORT
SEPTEMBER 30, 1994
Purvis
Gray &
Company
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CITY OF
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�. 800 SEMI OLE ROAD
ATLANTIC BEACH,FLORIDA 32233-5445
sN.:i TELEPHONE(904)247-5800
.so . • • FAX(904)247-5805
May 16, 1994
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
• Atlantic Beach, Florida 32233
RE: Management Letter- City of Atlantic Beach, September 30, 1994
Honorable Mayor, City Commission and City Manager:
On February 17, 1994, as the new Finance Director for the City of Atlantic Beach, I met
with the City's auditors, Purvis Gray and Company to discuss the financial condition of the
City and the condition of the City's books and records. The auditors reported that the
financial condition of the City was sound, with adequate rates and charges to recover cost
of operations and cash reserves on hand to cover most contingencies; however, the
auditors did identify several areas of weaknesses in internal controls which they have
described in their management letter.
With the support of the City administration and assistance from the City's auditors, Purvis.
Gray and Company and the accounting department staff, the weaknesses identified in the
management letter have been corrected or are in the process of being corrected. The
accounting department has been reorganized and internal controls have been set in place.
The following actions have been taken or are being taken to resolve the weaknesses
identified in the management letter.
Utility Billing
• Utility accounts receivable are reconciled to the General Ledger and are
being reconciled an a monthly basis.
•Customer deposit subsidiary listings have not been reconciled to the
General Ledger. A reconciliation will be performed prior to fiscal year end.
▪ All errors on Utility bills caused by conversion to the new computer
system have been corrected and all customers' accounts have been
adjusted. Utility bill calculations have been reviewed and are working
properly. An audit sample of bills from 1993 will be coordinated with the
auditors.
•All manual bills are being calculated correctly.
•
• -
Page 2.
Restricted Cash
•The Debt Service Reserve required by the loan agreement with Barnett
Bank has been established and funded.
•Transfers to the Debt Service Reserve will be budgeted in future fiscal
years as well as prescribed account structure. •
Unrestricted Cash
• Bank accounts are reconciled on a monthly basis.
• • Cash controls have been implemented requiring cashiers to validate all
receipts and balance cash drawers nightly. Cash deposits are reconciled
daily to bank deposits. •
Grants
•The City has received $150,718.04 in grant reimbursement requests.
Grant reimbursements are being monitored on a timely basis.
File Backup
•The City has acquired an 8mm tape drive which allows daily backup. All
data is currently backed up daily.
Payroll
• Corrected 941's were prepared for 1993 and filed with the IRS. Corrected
941's have not been prepared for 1992, 1991 and 1990 due to limited
staff but will be addressed when staff is available.
Enterprise Fund Operating Transfers
•The City is establishing Internal Service Funds in the 1994/95 Fiscal year
budget to properly account for and charge administrative and overhead
expenses to the Enterprise Funds.
Outfall Line Joint Venture
•The City has requested payment from Neptune Beach for their share of the
1992 Outfall Line expenditures.
Page 3. -
Computer System
• The City has contracted with a computer operator to provide computer
support. The City reports are properly organized and filed and reports are
being micro tithed directly from the AS/400. Reports are being
customized to provide the City with the information it needs.
•The computer operator position is being proposed for the Fiscal year
1994/95 budget.
One of the major goals of the Accounting Department is to provided timely financial data
to City Administration and monthly financial statements to the City Commission.The
Accounting Department has a new staff member who is a CPA with experience in
government utilities. The addition of this staff member will be a great asset in achieving
the Accounting Department's goals.
Conclusion
As stated by the City's auditors,the financial condition of the City is "very good."
Weaknesses have been addressed and internal controls have been implemented. The
accounting department has made great strides to achieve a desired quality of work and
level of professionalism and looks forward to reaching ever higher levels and
accomplishments.
Sincerely,
Ann B. Meuse, CPA
Finance Director
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FOR DISCUSSION PURPOSES ONLY
•
ADDITIONAL ELEMENTS OF REPORT PREPARED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS, ISSUED BY THE
COMPTROLLER GENERAL OF THE UNITED STATES, THE
PROVISIONS OF THE OFFICE OF MANAGEMENT AND BUDGET
(OW CIRCULAR A-US, AND THE RULES OF THE
AUDITOR GENERAL OF THE STATE OF FLORIDA
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PRELIMINARY DRAf I r G! visy &
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Company
INDEPENDENT AUDITORS' REPORT ON
SCHEDULE OF FEDERAL AND STATE FINANCIAL ASSISTANCE
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have audited the general purpose financial statements of the City of Atlantic Beach,Florida for the year
ended September 30, 1993, and have issued our report thereon dated January 14, 1994. These general
purpose financial statements are the responsibility of the City's management. Our responsibility is to express
an opinion on these general purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards, Government Auditing
Standards, issued by the Comptroller General of the United States, and the provisions of Office of
Management and Budget(OMB)Circular A-128,Audits of State and Local Governments. Those standards
and OMB Circular A--12S require that we plan and perform the audit to obtain reasonable assurance about
whether the general purpose financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial
statements. An audit also includes assessing the accounting principles used and significant estimates made
by management,as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements
of the City of Atlantic Beach,Florida taken as a whole. The accompanying Schedule of Federal and State
Financial Assistance is presented for purposes of additional analysis and is not a required part of the general
purpose financial statements, The information in that schedule has been subjected to the auditing procedures
applied in the audit of the general purpose financial statements and, in our opinion,is fairly presented in all
material respects in relation to the general purpose financial statements taken as a whole.
•
January 14, 1994 ,.-�tr44ttl4 {2�jG -1d1/4241b7
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� - Gainesville, Florida � '"-�'.`
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Certified Public Accountants
P.O.Box 23999•222 N.E. 1st Street•Gainesville,Florida 32602 • (904)378-2461
Laurel Ridge Professional Center•2347 S.E.17th Street•Ocala,Florida 34471 •(904)732-3872
1415 Piedmont Drive,East,Suite 2•Tallahassee,Florida 32312 • (904)385-0554
weans Of AN.YRKAN AND fKOWA APSTtrLTES of CERTir1EO/Vil1C AccousTA.YIS
NAMUR Of A), I ANN INSTITUTE Of C1RTAl(D•t4L C AC(OUKTANIS/RJVATt GOWAMll3AND s1.C.PAACTKC1 SECTKONvS
•
•
•
Nil II MI M I MN M MI INN — r - - MI NM O M r
SCHEDULE OF FEDERAL AND STATE FINANCIAL ASSISTANCE
FOR THE YEAR ENDED SEPTEMBER 30, 1993
CITY OF ATLANTIC BEACH, FLORIDA
(Aocaaabi Attests
Revivable)/ Rtrd►abid
Federal Dere red bared i leferred Pilar Year
CFDA PaN-7hrvgli Awed . Remade rd Rte) p, es
Number _GnNer's Mother Apart 1001)92 Recdits Mata 1EPeail>Qet) 934193 (M s)
Federal Piurdal Azatataace
US.Department of Morin ad tribes Dmioweet
Pawed Wadi City al lackaeasidle,1'iorida:
Commturity Development Block Gra,UFraidaomtGrant 14.218 56924 5 115.179 $ 0 2 340 S 0 $ (173,881)3 173,544 3 0
US.Departaaat of hada
Passed'Drrou City of Jadoarrie,Florida:
Ataii--Drug Mare Grant 09EA7) 16.579 Noce 3 11,029 3.375 0 295
12,E 0 7.654
Anti-Drug Afore Graz(PAVE) 16379 None $ 11,875 8,906 0 3,506
Anti•Drug Abase Grin(BLEND) 16.579 Noce S 25,803 0 14,824 5,857 (12,412)20
0 0
ToUS.Department J�Nce 12,281 14,824 9,658 (39,511Totaltd
2,748 7,654
Total Federal Piaaisl Aaduaere S 12,281 S 15,164 $ 9,658 S (213.395)3 176,292 S 7,654
Slate Plaadal Aa stare
None.
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57
Purvis
PRELIMINARY DRAFT Gray
Company
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE RELATED MATTERS
NOTED IN A GENERAL PURPOSE FINANCIAL STATEMENT AUDIT
CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS,
AND MANAGEMENT LETTER
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have audited the general purpose financial statements of the City of Atlantic Beach, Florida for the
year ended September 30, 1993, and have issued our report thereon dated January 14, 1994.
We have conducted our audit in accordance with generally accepted auditing standards and Government
Auditing Standards,issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial
I ` statements are free of material misstatement.
In planning and performing our audit of the general purpose financial statements of the City of Atlantic
Beach, Florida for the year ended September 30, 1993, we considered its internal control structure in
order to determine our auditing procedures for the purpose of expressing our opinion on the general
purpose financial statements and not to provide assurance on the internal control structure.
The management of the City of Atlantic Beach, Florida is responsible for establishing and maintaining
an internal control structure. In fulfilling this responsibility,estimates and judgments by management
are required to assess the expected benefits and related costs of internal control structure policies and
procedures. The objectives of an internal control structure are to provide management with reasonable,
but not absolute,assurance that assets are safeguarded against loss from unauthorized use or disposition,
and that transactions are executed in accordance with management's authorization and recorded properly
to permit the preparation of financial statements in accordance wit)• generally accepted accounting
principles. Because of inherent limitations in any internal control stru:ture,errors or irregularities may
nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future
} periods is subject to the risk that procedures may become inadequate because of changes in conditions
or that the effectiveness of the design and operation of policies and procedures may deteriorate.
Certified Public Accountants
P.O.Box 23999•222 N.E.1st Street•Gainesville,Florida 32602• (4041 378-2461
Laurel Ridge Professional Center•2347 S.E. 17th Street•Ocala,Florida 34471 •(904)732-3872
1415 Piedmont Drive,East,Suite 2 •Tallahassee,Florida 32312•(904)385-0554
WATERS OF AMERICAN ANE)FLORIDA 1WS7RUrESOr CER7NIED PUiUC ACCOUNTANTS
MEA+dER Oi AMMAN WSTrrUTE OF CERTIFIED PUBLIC ACCOUNTANts PRIVAtr COW ANIESASO S-E C.PRAC71Cf SECTIONS
1
•
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Purvis
PREL(M NAR Y DRAFL Gray 8,
Company
INDEPENDENT AUDITORS' REPORT ON
COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN
AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have audited the general purpose financial statements of the City of Atlantic Beach,Florida as of and
for the year ended September 30, 1993,and have issued our report thereon dated January 14, 1994.
We conducted our audit in accordance with generally accepted auditing standards, Government Auditing
Standards, issued by the Comptroller General of the United States, and the provisions of Office of
Management and Budget (OMB) Circular A-128, Audits of State and Local Governments. Those
standards and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable
assurance about whether the general purpose financial statements are free of material misstatement.
Compliance with laws,regulations,contracts,and grants applicable to the City of Atlantic Beach,Florida
is the responsibility of the City's management. As part of obtaining reasonable assurance about whether
the general purpose financial statements are free of material misstatement, we performed tests of the
City's compliance with certain provisions of laws, regulations, contracts, and grants. However, our
objective was not to provide an opinion on overall compliance with such provisions. Accordingly,we
do lsot express such an opinion.
The results of our tests indicate that,with respect to the items tested,the City of Atlantic Beach, Florida •
complied, in all material respects, with the provisions referred to in the preceding paragraph. With
respect to items not tested, nothing came to our attention that caused us to believe that the City had not
complied, in all material respects, with those provisions.
However, we did notice instances of noncompliance which did not materially affect the City's financial
statements which we reported to the management of the City of Atlantic Beach, Florida in our
"Management Letter"dated January 14, 1994.
This report is intended for the information of the City Commission, management, and the Auditor
General of the State of Florida. This restriction is not intended to limit the distribution of this report,
which is a matter of public record.
January 14, 1994a-ey a4va✓ leimtvez-fr
Gainesville,Floridai , "�L- O
Certified Public Accountants
P.O.Box 23999•222 N.E.1st Street•Gainesville,Florida 32602• (904)378-2461
Laurel Ridge Professional Center•2347 S.E.17th Street•Ocala,Florida 34471 •(904)732-3872
1415 Piedmont Drive,East,Suite 2•Tallahassee,Florida 32312 •(904)385-0554
ME/.KERS Of AMERICAN AND'IOWA INSTITUTES Or CI RIMED FUSLiC ACCOUNTANTS
WALKER DI AAERL AN►NSTRUVE Or cUWAD Pui(IC ACCOUNTANTS PfWATE COMPANe-S AND SIC.PlIACnCE SIC-DONS
•
•
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE RELATED MATTERS
NOTED IN A GENERAL PURPOSE FINANCIAL STATEMENT AUDIT •
CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS,
AND MANAGEMENT LETTER
(Continued)
For the purpose of this report, we have classified the significant internal control structure policies and
procedures in the following categories.
■ Fixed Asset Record Maintenance
• Customer Billings and Receivables • General Ledger Maintenance
• Cash Receipts and Disbursements • Debt Administration
• Investments • Budgets
• Purchasing and Accounts Payable
For all of the control categories listed above, we obtained an understanding of the design of relevant
policies and procedures and whether they have been placed in operation,and we assessed control risk.
We noted certain matters involving the internal control structure and its operation that we consider to be
reportable conditions under standards established by the American Institute of Certified Public
Accountants. Reportable conditions involve matters coming to our attention relating to significant
deficiencies in the design or operation of the internal control structure that, in our judgment, could
adversely affect the City's ability to record,process,summarize,and report financial data consistent with
the assertions of management in the general purpose financial statements.
1. Finance Department
Certain finance-related areas within the City have deteriorated significantly since our last audit.
Conversion to new hardware and software applications, plus major changes in utility billing and
collection procedures have put a severe strain on finance operations. The City is currently three to
four months behind on many routine accounting and bookkeeping functions, including the
reconciliation of cash accounts and the posting of transactions to the general ledger. Utility customer
final bills have not been processed in several months, and stacks of billing adjustments remain
unposted.
In our opinion,the City does not have sufficient personnel and expertise to catch up this backlog,
and return the Finance Department's operations to normal_ We are very encouraged by the new
addition of Ann Meuse as Finance Director, but she will need outside help to do everything that
needs to be done. We would be happy to assist in any way we can.
We recommend that the City Commission and City Manager do everything in their power to help
the new Finance Director in this area, including the allocation of needed resources. Our discussions
with her indicate that she understands the severity and urgency of the problems and what needs to
be done. Utility billing is the highest priority since that is the City's largest revenue source and loan •
covenants and restrictions must be met.
60
1
PRELIMINARY D 1
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE RELATED MATTERS
NOTED IN A GENERAL PURPOSE FINANCIAL STATEMENT AUDIT
CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS,
AND MANAGEMENT LETTER
(Continued)
2.* Utility Billing
In prior audits,we reported that utility accounts receivable and customer deposits subsidiary listings
were not being reconciled to the general ledger control accounts. The reconciliation process should
have been made easier under the new billing system, but the appropriate procedures have not been
performed. Our ability to audit the billing cycle properly was hampered by our inability to obtain
any customer accounts receivable or deposits subsidiary listings which could be reconciled to the
City's books at year end, at time of conversion, or at any month thereafter. These reconciliations
are routine month-end procedures in any billing system, and we recommend the City institute
procedures to assure these reconciliations are performed timely in the future.
We noted numerous instances where utility bills were calculated incorrectly and adjustments were not
made to the customer accounts. Some errors occurred because the new billing system was not
tailored to accommodate all rate variations,e.g.,the system was not reducing mobile home and motel
bills by the appropriate adjustment factor. Other errors occurred because the consumption charge
did not reflect the correct volume allowance. We feel that the City should have run parallel billings
under both the old and new systems to ensure the new system was accurately calculating all bills.
At this point,however,we recommend a sample of bills be recalculated from 1993 to determine the
pervasiveness of the errors before deciding on what action to take.
The City has six large utility customers whose monthly bills are calculated manually. Our review
of those bills during 1993 showed instances where the bills were calculated incorrectly. In some
cases, rates were not changed when rates changed for other City customers. In other cases, the
volume allowances were miscalculated and/or not adjusted as number of units changed. We
recommend these bills be recalculated for 1993 and appropriate adjustments be made to the
customers' accounts.
.—, 3.* Cash
As reported in the prior year,the balances in the City's payroll and operating cash accounts were not
reconciled to the book balances on a timely basis during 1993. We recommend the City stress the
importance of timely cash reconciliation procedures,
Other standard cash procedures, such as daily cash receipt reconciliations and comparisons of cash
register receipt summaries to bank deposit slips have been lax. It is our understanding that
procedures are now in place to correct these deficiencies.
vl
61
I '
. _ PRE_
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE RELATED MATTERS
NOTED IN A GENERAL PURPOSE FINANCIAL STATEMENT AUDIT
CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS,
AND MANAGEMENT LETTER
(Continued)
4. File Backup
Tests performed during audit fieldwork revealed that the City was not backing up essential computer
files on a regular basis. By not backing up files timely, extensive administrative work:will be
required in recreating files in the event data is Iost. It appears the City's current hardware
configuration does not easily accommodate routine backups. We have discussed options with City
personnel which will facilitate this process. -.
A material weakness is a reportable condition in which the design or operation of one or more of the
internal control structure elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the general purpose financial statements
being audited may occur and not be detected within a timely period by employees in the normal course
of performing their assigned functions.
Our consideration of the internal control structure would not necessarily disclose all matters in the internal
control structure that might be reportable conditions and, accordingly,would not necessarily disclose all
reportable conditions that are also considered to be material weaknesses as defined above. However,we
believe the reportable conditions described above are material weaknesses.
The following comments and recommendations are not considered by us to be material weaknesses but
are set forth to comply with the Rules of the Auditor General,State of Florida:
5*. Enterprise Fund Operating Transfers
As reported in preceding audits,certain administrative and overhead expenses of the City are charged
entirely to general government services in the General Fund,then transfers are made from Enterprise
Funds to cover these costs. We feel that these overhead costs are more appropriately recorded as
operating expenses in the Enterprise Funds (instead of transfers) and we recommend the transfer
method be discontinued and replaced by direct allocation.
6. Outfall Line Joint Venture
The terms of the joint venture agreement among the beach communities to maintain the outfall line
require the City to incur maintenance costs, then request reimbursement from the other beach
communities for their proportionate share. Over $14,000 remains uncollected from the City of
Neptune Beach, Florida for 1992 expenditures. We recommend that City personnel monitor
expenditures and collections on this project to ensure all monies due the City are collected.
62
1
•
1 Honorable Mayor, City Commission and City Manager ` " '
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE RELATED MATTERS
NOTED IN A GENERAL PURPOSE FINANCIAL STATEMENT AUDIT •
CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS,
AND MANAGEMENT LETTER
(Continued)
•
7. Computer System/Data Accumulation and Storage
The AS/400 computer and the HTE software which the City has acquired can effectively satisfy the
City's data processing needs. However, the City needs to establish a program to manage disk space
on the AS/400,so that it will operate more efficiently. Otherwise,upgrading may be required.
The LITE software is a complicated but versatile set of programs which is relatively easy to customize
to the City's needs. We recommend the City identify those needs and perform the necessary
customizations. Reports which are not needed should be discarded or not run at all. Reports which
are needed should be customized to give the City the exact information they need, then properly
filed.
We do not feel that the City currently has an employee capable of making these data processing
decisions. Assistance may be needed from consultants outside City Hall, and we recommend that
the City Commission allocate the appropriate resources.
8. Conclusion
The financial condition of the City is very good, and rates and charges are adequate to recover costs
of operations. Adequate cash reserves are on hand to cover most contingencies, and financing is in
place for needed capital improvements. The concerns we have identified above are administrative
only and we feel are due to the fact that the City did not have a strong,experienced Finance Director
during 1992 or 1993.
Furthermore, during a transition period with a new Finance Director, the City acquired new
hardware,new software,changed utility rates,and shortened the billing/collection cycle. It has been
difficult for City personnel to keep up with all these changes.
It is our opinion that the City needs a strong, experienced Finance Director overseeing all financial
operations of the City. We support the City in their decision, and are very.encouraged by the
addition of Ms. Ann Meuse. We recommend that the City Commission assist her in every way
possible in organizing and restructuring the City's financial operations.
•
63
•
•rr-r
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON •
INTERNAL CONTROL STRUCTURE RELATED MATTERS
NOTED IN A GENERAL PURPOSE FINANCIAL STATEMENT AUDIT
CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS,
AND MANAGEMENT LETTER
(Concluded)
Compliance Violations
9. Restricted Cash
Terms of the loan agreement with Barnett Bank required the establishment of various funds and
accounts on the books of the City, including the Gross Revenue Fund, the Debt Service Reserve
Fund, the Restricted Reserve Fund and the Improvements Impact Fee Fund. As of September 30,
1993,the City had not established these funds. Furthermore,required transfers to the Debt Service
Reserve Fund have not been included in the City's 1993 or 1994 budgets. We recommend that the
required funds and accounts be established as soon as possible and that provisions for required
transfers to the Debt Service Reserve Fund be incorporated into the 1994 budget.
_ 10. Payroll
After audit fieldwork,the City's new Finance Director informed us of errors in the City's quarterly
payroll returns,and unresolved tax discrepancies with the Internal Revenue Service. These matters
should be followed up on and resolved as soon as possible.
Prior year comments and recommendations, unless otherwise indicated, have been resolved to our
satisfaction.
The City's financial reports filed with the Department of Banking and Finance for the fiscal year ended •
September 30, 1992 are in agreement with the Annual Financial Audit Report for the same period. The
1993 report has not yet been prepared.
There were no irregularities, illegal expenditures or compliance violations uncovered during the current
audit. The new Auditor General rule relating to the disclosure of financial emergencies is not applicable.
Other requirements of the Rules of the Auditor General,if not addressed above, are not applicable to the
City of Atlantic Beach, Florida.
This report is intended for the information of the City Commission,management and the Auditor General
1 of the State of Florida. This restriction is not intended to limit the distribution of this report, which is
a matter of public record.
January 14, 1994 'gC..` ,a-srGe ea
°'t
Gainesville, Florida
* Indicates a repeat of a prior year recommendation not completely corrected.
Purvis
P ELI Pi'it4AR')r DRA:F1 Gray &
Company
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING
FEDERAL FINANCIAL ASSISTANCE PROGRAMS •
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have audited the general purpose financial statements of the City of Atlantic Beach, Florida for the
year ended Septemocr 30, 1993, and have issued our report thereon dated January 14, 1994.
We conducted our audit in accordance with generally accepted auditing standards, Government Auditing
Standards,issued by the Comptroller General of the United States,and Office of Management and Budget
(OMB) Circular A-128, Audits of State and Local Governments. Those standards and OMB Circular
A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the
general purpose financial statements are free of material misstatement.
In planning and performing our audit for the year ended September 30, 1993, we considered the City's
internal control structure in order to determine our auditing procedures for the purpose of expressing our
opinion on the City's general purpose financial statements and to report on the internal control structure
in accordance with OMB Circular A-128. This report addresses our consideration of internal control
structure policies and procedures relevant to compliance with requirements applicable to federal financial
assistance programs. We have addressed internal control structure policies and procedures relevant to
our audit of the general purpose financial statements in a separate report dated January 14, 1994.
The management of the City of Atlantic Beach, Florida is responsible for establishing and maintaining
an internal control structure. In fulfilling this responsibility,estimates and judgments by management
are required to assess the expected benefits and related costs of internal control structure policies and
procedures. The objectives of an internal control structure are to provide management with reasonable,
but not absolute,assurance that assets are safeguarded against loss from unauthorized use or disposition,
that transactions are executed in accordance with management's authorization and recorded properly to
permit the preparation of general purpose financial statements in accordance with generally accepted
accounting principles, and that federal financial assistance programs are managed in compliance with
applicable laws and regulations. Because of inherent limitations in any internal control structure, errors
irregularities or instances of noncompliance may nevertheless occur and not be detected. Also,projection
of any evaluation of the structure to future periods is subject to the risk that procedures may become
inadequate because of changes in conditions or that the effectiveness of the design and operation of
policies and procedures may deteriorate.
Certified Public Accountants
P.O.Box 23999•222 N.E. 151 Street •Gainesville,Florida 32602• (904)378-2461
laurel Ridge Professional Center•2347 5.E. 17th Street•Ocala,Florida 34471 •(9041732-3872
1415 Piedmont Drive,East,Suite 2• Tallahassee,Florida 32312•(904)385-0554
whetit5 Of AMtIJCAN AND ILOt1OA*WOW'S Of CERig SD Rai IC ACCOLI TAv1S
111
MEAOt,Of AMEgCA..minim Of CERTM{ED rustic ACCOIP(TANTS ntrvATE COMPANIES AND 51C PRACTICE SfCriONS
Honorable Mayor and Council Members
City of St. Cloud
St. Cloud, Florida
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
(Continued)
For the purpose of this report, we have classified the significant internal control structure policies and
procedures used in administering federal financial assistance programs in the following categories:
General Requirements Specific Requirements
Political Activity Types of Services Allowed or Unallowed
Cash Management
Civil Rights
Federal Financial Reports
Allowable Costs
Drug-Free Workplace Act
Administrative Requirements
For all of the internal control structure categories listed above, we obtained an understanding of the
design of relevant policies and procedures and determined whether they have been placed in operation,
and we assessed control risk.
During the year ended September 30, 1993, the City of Atlantic Beach, Florida had no major federal
financial assistance programs and expended 81% of its total federal financial assistance under the
following nonmajor federal financial assistance program:
U.S. Department of Housing and Urban Development, Passed Through
City of Jacksonville, Florida:
Community Development Block Grant/Entitlement Program
I
CFDA Number: 14.218
Contract Number: 5692-4
We performed tests of controls,as required by OMB Circular A-128,to evaluate the effectiveness of the
design and operation of internal control structure policies and procedures that we have considered relevant
to preventing or detecting material noncompliance with specific requirements, general requirements, and
requirements governing claims for advances and reimbursements and amounts claimed or used for
matching that are applicable to the aforementioned nonmajor program. Our procedures were less in scope
than would be necessary to render an opinion on these internal control structure policies and procedures.
Accordingly,we do not express such an opinion.
66
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Honorable Mayor, City Commission and City Manager
City of Atlantic Beach •
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL STRUCTURE USED IN ADMINISTERING
•
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
(Concluded)
We noted certain matters involving the internal control structure and its operation that we consider to be
reportable conditions under standards established by the American Institute of Certified Public
Accountants. Reportable conditions involve matters coming to our attention relating to significant
deficiencies in the design or operation of the internal control structure that, in our judgment, could
adversely affect the City's ability to administer federal financial assistance programs in accordance with
applicable Iaws and regulations.
1. Amounts requested for reimbursement from the City of Jacksonville,Florida, under the Community
Development Block Grant Program, exceeded the amount recorded in the City's books by
approximately$5,985. It is our understanding that the City of Jacksonville,Florida has been notified
of this discrepancy and an amended reimbursement request has been filed. In the smaller Police
Grants, it was difficult to reconcile the grant reports to the City's books because the expenditures
were not recorded in the appropriate fund. We recommend care be taken in the future to assure grant
reports agree with grant fund expenditures on the City's books.
2. Grant reimbursement requests by the City for May,July,August and September 1993,under the City
, of Jacksonville Community Development Block Grant had not been received by the City as of
January 14, 1994. At that date, only $340 out of$173,500 in requests had been collected. We
recommend, in the future, that grant reimbursement requests be monitored for timely receipt.
A material weakness is a reportable condition in which the design or operation of the internal control
structure elements does not reduce to a relatively low level the risk that noncompliance with laws and
regulations that would be material to a federal f nancial assistance program may occur and not be detected
within a timely period by employees in the normal course of performing their assigned functions.
Our consideration of the internal control structure policies and procedures used in administering federal
financial assistance would not necessarily disclose all matters in the internal control structure that might
be reportable conditions and,accordingly,would not necessary disclose all reportable conditions that are
also considered to be material weaknesses as defined above. However, we believe the reportable
conditions described above are material weaknesses.
This report is intended for the information of the City Commission,management,Auditor General of the .
State of Florida, and grantor agencies. This restriction is not intended to limit the distribution of this
report, which is a matter of public record.
1
January 14, i
Gainesville, Florilori da ,��r�, 'r'� �''�a 44
67
1
• ,
•
•
Purvis
PRELIMINARY DRAFT, Gray &
Company
INDEPENDENT AUDITORS' REPORT ON
COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have audited the financial statements of the City of Atlantic Beach, Florida as of and for the year
ended September 30, 1993, and have issued our report thereon dated January 14, 1994.
We have applied procedures to test the City's compliance with the following requirements applicable to
its federal financial assistance programs, which are identified in the Schedule of Federal and State
Finanrial Assistance, for the year ended September 30, 1993:
• Political Activity • Allowable Costs
• Cash Management • Drug-Free Workplace Act •
• Civil Rights ■ Administrative Requirements
• Federal Financial Reports
Our procedures were limited to the applicable procedures described in the Office of Management and
Budget's Compliance Supplement for Single Audits of State and Local Governments. Our procedures
were substantially less in scope than an audit, the objective of which is the expression of an opinion on
the City of Atlantic Beach,Florida's compliance with the requirements listed in the preceding paragraph.
Accordingly, we do not express such an opinion.
Material instances of noncompliance consist of failures to follow the general requirements that caused us
to conclude that the misstatements resulting from those failures are material to the federal financial
assistance programs. The results of our tests of compliance disclosed the following material instance of
noncompliance that has been adjusted in the financial statements.
to Amounts requested for reimbursement from the City of Jacksonville, Florida,under the Community
Development Block Grant Program, exceeded the amount recorded in the City's books by
approximately$5,985. It is our understanding that the City of Jacksonville,Florida has been notified
of this discrepancy and an amended reimbursement request has been filed.
We considered this material instance of noncompliance in forming our opinion on whether the City of
Atlantic Beach, Florida's 1993 general purpose financial statements are presented fairly, in all material
respects, in conformity with generally accepted accounting principles,and this report does not affect our
report dated January 14, 1994, on those financial statements.
Certified Public Accountants
P.O.pox 23999•222 N.E.1st Street•Gainesville,Florida 32602 • (904)378-2461
Laurel Ridge Professional Center•2347 S.E.17th Street•Ocala,Florida 34471 •(904)732-3872
1415 Piedmont Drive,East,Suite 2•Tallahassee,Florida 32312 • (904)385-0554
T.gMa(45OT AMERICAN AND ILORMAkIST1TMIA O1 CEKtRTvED PUSUC MCCOIIMAMS
MME•MEER Or AMLbCAS&' TrrUTE Or Clamp(D PU4LIC ACCOUNTAr[Ts PRTVATL COMPANIES AND 5 E.C.PRACTICE SECTIONS
U
•
•
•
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
INDEPENDENT AUDITORS' REPORT ON
COMPLIANCE WITH THE GENERAL REQUIREMENTS APPLICABLE TO
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
(Concluded)
Except as described above, the results of our procedures to determine compliance indicate that, with
respect to the items tested, the City of Atlantic Beach, Florida complied, in all material respects, with
the requirements listed in the second paragraph of this report. With respect to items not tested, nothing
came to our attention that caused us to believe that the City of Atlantic Beach,Florida had not complied,
in all material respects,with those requirements.
This report is intended for the information of the City Commission, management, the Auditor General
of the State of Florida, and grantor agencies. However, this report is a matter of public record and its
distribution is not limited.
January 14, Florida
'''�C.r
94
Gainesville, FFlorida £ 41 /7
I •
. .
r� ..,. ; r) - Purils
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Company
INDEPENDENT AUDITORS' REPORT ON •
COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO
NONMAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS •
Honorable Mayor, City Commission and City Manager
City of Atlantic Beach
Atlantic Beach, Florida
We have audited the general purpose financial statements of the City of Atlantic Beach, Florida, as of
and for the year ended September 30. 1993,and have issued our report thereon dated January 14, 1994.
In connection with our audit of the general purpose financial statements of the City of Atlantic Beach,
Florida, and with our consideration of the City's control structure used to administer federal financial
assistance programs,as required by the Office of Management of Budget(OMB)Circular A-128,Audits
of State and Local Governments, we selected certain transactions applicable to certain nonmajor federal
financial assistance programs for the year ended September 30, 1993.
As required by OMB Circular A-128, we have performed auditing procedures to test compliance with
the requirements governing types of services allowed or unallowed that are applicable to those
transactions. Our procedures were substantially less in scope than an audit,the objective of which is the
expression of an opinion on the City of Atlantic Beach, Florida's compliance with those requirements.
Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no material instances of
noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested,
nothing came to our attention that caused us to believe that the City of Atlantic Beach, Florida had not
complied, in all material respects, with those requirements.
•
{
This report is intended for the information of the City Commission, management, the Auditor General
of the State of Florida, and grantor agencies. However, this report is a matter of public record and its
distribution is not limited.
January 14, 1994
Gainesville.Florida ,ul dc4cord""7612'/Y)
Certified Public Accountants
P.O.Box 23999•222 N.E.1st Street•Gainesville,Florida 32602• (904)3782461
Laurel Ridge Professional Center•2347 S.E.17th Street•Ocala,Florida 34471 •(904)732-3872
1415 Piedmont Drive,East,Suite 2•Tallahassee,Florida 32312•(904)385-0554
MIAOERS Or AAIERICArs AND FLORIDA InSTR XIS OF[Wigan PUNIC ACCOUNTANTS
64949&1 Or Ar,1(RICAr+in/MUTE Or CERt.7RD P.*E ACCOOHTANTS PRNATt COMPANITS AND C.KACTIC!S5CTIDNS