Christian Peterson
reporter.riverbendnews@gmail.com
An operational audit of the Town of White Springs, requested by Senator Corey Simon and conducted by Florida Auditor General Sherrill F. Norman, has revealed multiple failures in proper management. The audit discovered 16 areas that require improvement, indicating a "pervasive lack of adequate controls necessary to promote and encourage compliance with state laws, town ordinances and regulations, contracts, grant agreements and other applicable guidelines; reliability of records and reports; and the safeguarding of assets."
Finding 1:
The audit report identified the town's financial condition as the first problem. The most recently audited financial statements, as of July 2023, were for the 2019-20 fiscal year. The certified public accountant (CPA) for the audit reported that the Town of White Springs had a "deteriorating financial condition."
The Enterprise fund for the town had a $291,511 operating loss at the end of Sept. 30, 2020, which was $153,343 more than the previous year. The audit attempted to assess the town's current state, but found that "the town's accounting records were incomplete and contained significant errors." Auditor General Norman recommended the town implement strict measures to bring its However, the report concluded that "given the town's insufficient accounting records, various control deficiencies and instances of noncompliance disclosed in [the] report, there is an increased risk that the town's financial condition may continue to deteriorate."
In response to the first finding, the town stated that "concerted efforts" were being made "to bring its financial records up to date as well as its annual audits. We are confident that this will show improved financial condition for both of its funds, which will reverse the town's deteriorating financial condition."
Finding 2:
Auditor General Norman's second finding related to the General fund unrestricted fund balance and Enterprise fund working capital requirements. According to the Government Finance Officers Association (GFOA) best practices, governments should establish a formal policy to ensure that adequate funds are available to mitigate current and future risks, such as revenue shortfalls or unanticipated expenditures.
The policy should provide a level of unrestricted fund balance that should be maintained in the government's General fund, and it should be set by the appropriate ruling body, in this case, the Town of White Springs.
Similarly, the GFOA "recommends that governments develop a target amount of working capital to maintain in each Enterprise fund and include such targets in a formal financial policy or plan." However, Auditor General Norman found that no such measures were in place, and the town personnel were not aware of these recommendations.
"Although this is not a requirement of law, the town will develop guidelines for unrestricted reserves in both the General and Enterprise funds for the next fiscal year and ensuing year budgets," the town wrote in its response to the finding. The town also clarified that they had retained a CPA firm that would assist them in setting these guidelines.
Finding 3:
One of the major findings was the town's failure to submit audits and annual financial reports (AFR) on time. As per state law, a town is required to obtain a financial audit from an independent CPA, which consists of accounts and records. "The resulting audit report must be filed with the Auditor General within 45 days after delivery of the audit report to the governing body of the town, but no later than nine months after the end of the town's fiscal year," the report states. Additionally, the law requires that the town "submit a copy of its audit report and AFR to the Department of Financial Services (DFS) within 45 days of the completion of the audit report, but no later than nine months after the end of the fiscal year."
During the investigation, the audit uncovered some concerning issues. The town had submitted its audit reports for the 2018-19 and 2019-20 fiscal years. However, the report for 2018-19 was submitted 463 days late in October 2021, and the report for 2019-20 was submitted 391 days late in July 2022. As of July 2023, the reports for both 2020-21 and 2021-22 had yet to be filed. The 2020-21 audit report was 13 months late, and the 2021-22 report was one month late. Additionally, the 2018-19 AFR was filed in November 2021, 503 days late, and the 2019-20 AFR was filed in August 2022, 399 days late. Both the 2020-21 and 2021-22 AFRs were also filed late, just like their audit counterparts.
This has resulted in the Florida Department of Revenue and the DFS "withholding from the town half-cent sales tax revenues totaling $25,312 and municipal revenue sharing revenues totaling $23,935 for the untimely filed 2018-19, 2019-20 and 2020-21 fiscal year audit reports."
The town explained that, due to significant employee turnover and a CPA firm that failed to complete the audits, they were unable to complete the audits in a timely manner. "The town should enhance efforts to comply with state law and ensure that annual financial audit reports and AFRs are timely completed and filed with the Auditor General and the DFS," Auditor General Norman recommended.
In response, the town acknowledged "it has been delinquent in having completed its annual audits for the past several fiscal years." It added how the town "has contracted with a CPA firm to perform these audits promptly, which will at last bring the town in compliance with this important requirement."
Keep an eye out for further coverage and an in-depth look at the remainder of the audit in upcoming editions of the Riverbend News.Enterprise and General funds back to a solid status.