Riviera accounting still shaky

By WILLIE HOWARD
Palm Beach Post Staff Writer
Saturday, January 17, 2009

RIVIERA BEACH — Following up on a 2006 audit of Riviera Beach and the city's community redevelopment agency, the state auditor general found continued problems with accounting for cash and the use of credit cards, a lack of competitive bids for some purchases, lax accounting for city property and vague contracts with consultants.

The follow-up audit, released in December, noted that the city and the CRA had corrected three of 25 problems found in the original audit, partially corrected 14 others and either did not correct, took no action or had no occasion to correct eight of the original findings.

Follow-up on audit report

Latest audit raises various issues

A sample of findings from the state auditor general's follow-up audit of Riviera Beach:

  • Procurement credit card transactions in 2007 and 2008 included six ranging from $1,134 to $4,536 that exceeded the $1,000 transaction limit. Four transactions were for gasoline and other purchases not allowed in the policy manual. In response, the city said it would step up enforcement of procurement rules.
     
  • Three vans were purchased without competitive bids for $68,643. City staffers told auditors that time constraints required the vans to be purchased after receiving quotes, but auditors noted that grant money was available three months before the vans were purchased.
     
  • The city's community redevelopment agency issued bond anticipation notes without a written plan showing how the proceeds would be used and pooled the money with tax increment financing and other sources of revenue. In response, the CRA said debt management policies and procedures were adopted in October.
     
  • CRA consultants were hired with no written contract. In two cases, the agreements did not include the total contract price. One contract for an attorney did not require invoices to support expenses or rates for reimbursable expenses. In response, the CRA said it had amended its professional services contract to require documentation and support for payments and expenses. A contract approval checklist has been developed.
     
  • A test of nine items purchased in 2007 found that purchases totaling $333,447 were properly recorded but not correctly tagged. The city said it continues to improve property management through training and the use of fixed-asset software.
     
  • Estimates of Jazz & Blues Festival revenue continued to exceed collections. The revenue estimate for the 2008 festival was 47 percent higher than actual revenue, resulting in a transfer from the city's general fund of $369,150. In response, the city said the actual transfer from the general fund was $355,884 and was 'less than the originally authorized transfer.'
     
  • During the 2007 Jazz & Blues Festival, cash collections recorded in one deposit summary were $417 greater than the amount deposited. In another case, auditors were not able to determine whether collections were deposited 'intact.'
     
  • The city established procedures to hold parents responsible for unreturned football equipment, but the city did not request payment for unreturned gear issued to 20 players during the 2007 season. In response, city officials said they had received football gear from five of the parents and made several attempts to contact the other 15.
     
  • The city hired a consultant to develop written policies and procedures for accounting and other business-related functions. Some policies and procedures were developed, but as of June they had not been implemented or approved by the city council.
     
  • The city had taken no action to correct conflicts of interest in which services were purchased from vendors who serve on city advisory boards. In response, the city said it updated its standard contract and added language to advisory board applications to prevent future conflicts.
     
  • The CRA had not developed a revised master plan. In response, the agency said changing market conditions and changes in eminent domain laws will require a major overhaul of the plan, which could take 18 months or more.
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    One section focuses on a missed revenue opportunity stemming from a low lease rate at the city marina.

    Before renewing the lease for Tiki Waterfront Sea Grill at the marina, the audit states, an appraisal estimated the annual rent value at $228,900, or $19,075 a month.

    In August, Riviera Beach officials renewed the lease with the R.G. Group for $6,500 a month.

    City officials said the owner, Bob Gregory, invested large sums of money in the waterfront restaurant and noted that the city should charge less because redevelopment plans call for tearing down and rebuilding the marina.

    "How is $6,500 the best deal for the city?" asked Fane Lozman, a marina resident.

    At $800 a month for garbage, water, sewer and electricity services, the city undercharged the Tiki restaurant for utilities, auditors noted. Waste collection fees alone were $1,357 a month during the 2007-08 fiscal year. The city has since raised the monthly utility fee to $7,000.

    In response to several points in the follow-up audit, city officials said they either disagreed with the auditor's conclusions or recently had taken corrective action.

    For example, the follow-up audit notes that Riviera Beach officials never evaluated whether it would be less expensive to hire another city attorney to reduce the cost of hiring outside legal counsel.

    Auditors noted that the city spent $726,000 for outside legal services from January 2007 to mid-April 2008. In response, the city noted that it recently had hired an assistant city attorney.

    At the parks and recreation department, auditors noted that a mail log was established to record money received by mail before the receipts were transferred to the cashier. But the follow-up audit states that the log was used to record other transactions, making it difficult to reconcile the mail log with recorded collections.

    In response, the city said it will implement a system that allows the parks department to accept checks and credit cards, thus reducing the amount of cash handled.

    In the building inspection department, cash-handling procedures were developed for inspection permit collections. But the procedures were not implemented, the follow-up audit states.

    No forms were used to document the transfer of money between employees. Several clerks worked out of the same change fund, but only one clerk was responsible for recording daily collections, auditors noted. Permit applications were not checked against fees collected.

    In response, Riviera Beach officials said they have set up separate cash drawers for building inspections and are "continually improving" cash-receipt controls.

    "We've never been charged with mismanagement of funds," Councilwoman Lynne Hubbard said, referring to the state audit. "We've mostly been asked to put written policies and procedures in place."

    Councilman Shelby Lowe said the audit should be presented to candidates for city manager to be interviewed in February to replace Bill Wilkins, who resigned in September. "Put it before them to see how they'd handle it," Lowe said.

    Tony Gigliotti, chairman of the Singer Island Civic Association, wrote to state Rep. Carl Domino, R-Jupiter, in 2007 asking for a state oversight committee to take over the city, citing misspending and overall bad government.

    Gigliotti said the state audit is unlikely to solve Riviera Beach's operational problems.

    "What we have here is systemic failure," he said. "What we're addressing is the symptoms."