Century Approves Audit, Action Plan To Get Out Of Financial Problems

February 18, 2020

The Century Town Council voted unanimously Monday night to accept the findings in their audit for the fiscal year ended September 30, 2019.

As NorthEscambia.com reported Monday morning, the audit shows signs of a financial emergency as defined by state law and a multi-million deficit.  The audit found the financial emergency conditions exist due to missed debt service payments, not transferring payroll taxes in a timely manner and issuing payroll checks without sufficient funds in the payroll account.

As part of Monday nights vote, the council also approved their response in the form of a corrective action plan as recommending by the auditors. The council did not specifically discuss the plan or its contents.

Below is a summary of audit findings, with recommendations as made by the auditor and Century’s plan to correct the problems. For more specific details on the audit findings, click here for our previous story.

FINANCIAL CONDITION

Finding

The town’s overall financial condition demonstrates signs of a state of financial emergency as described in Florida statutes. Overall factors contributing to this condition include lack of short and long-term financial planning, improper cash management activities and lack of analysis of existing tax rates and fee structures for proprietary operations. This condition has existed for the past three audited periods.

Recommendation

Develop long and short-term financial plans to improve its financial condition. The financial plans should include: (1) a review of spending needs; (2) a system for monitoring revenues and expenditures; (3) budget reserves to provide for future capital needs and unexpected costs; and (4) projected revenues sufficient to cover projected costs. The town should analyze existing rate structures for proprietary operations to determine their sufficiency in covering expenses and should explore all available options to increase revenues or decrease expenditures. In an effort to improve the financial stability of the Natural Gas Fund, the Town should actively monitor natural gas usage against the purchased gas to evaluate areas of weakness in system.

Town Response

The town is aware of the deteriorating financial condition caused by the gas fund. Currently, the town is working on procedures to resolve the deficit in the gas fund. The town has hired a former city manager to act in the capacity of city manager and make recommendations to the council. All other funds are self-sustaining. Once this is resolved, the town will be able to set aside reserves for each fund. The town is in the process of computing a bill for previous usage not billed as a result of a faulty meter.

The amount owed to the special revenue fund by the general fund and natural gas fund are currently being evaluated for forgiveness based on eligible prior year allowable expenditures incurred.

The 2019-2020 budget will be amended to reflect payments on bonds for the gas and water/sewer Fund from the LOST funds not recognized in prior years. This will alleviate the pressure on these funds to fund the bond payment and allow the town to fund reserves needed to maintain these funds pursuant to an asset management plan being developed.

CASH MANAGEMENT

Findings

Cash management findings included a payroll account that was overdrawn numerous times, late payroll tax submissions to the IRS, payroll checks provided to employees and cashed before the issued date of the check, an overdrawn payroll account, late fees on credit cards, and late and missing debt service payments.

Recommendation

The town council should receive timely information about the cash position and cash needs of the town to ensure adequate funds available for weekly paychecks, payroll taxes, and debt service payments. the town management should review the payroll bank account weekly and ensure adequate transfers from other available cash accounts are completed on a timely basis for adequate payment of paychecks, payroll taxes and other payroll items. In addition, credit card invoices should be paid timely to avoid late fees and interest charges.

Planned Correction Action

We agree with the recommendation. The town’s payroll account is now reviewed weekly (on Fridays), and anytime shortages occur, the council is made aware through an emergency meeting the following Monday. The town clerk will monitor all payments on credit cards to ensure timely payment on or before the due date.

CREDIT CARD USAGE POLICY AND RECEIPTS

Findings

The audit noted that multiple receipts and supporting documentation for credit card charges was not maintained. The business purpose of several credit card transactions was not documented, particularly on purchases of food, fuel and various supplies. The town does not have a policy requiring employees to provide receipts for transactions nor document purpose of purchases.

Recommendation

The town should require supporting receipts be submitted for all charges and that the business purpose of the expense be clearly documented. In addition, the town should adopt a policy that clearly outlines the appropriate uses of the town’s credit card and responsibilities for each card holder.

Planned corrective action

We agree with the recommendation. The town will adopt a policy where credit cards are “checked out” from the main office and returned with the receipts upon “check in”.

RECONCILIATION OF ACCOUNTS

Findings

Interfund general ledger accounts were not reconciled. Audit adjustments were required to adjust for the actual audited amounts and allow for proper balancing of the interfund accounts. The same problem has existed for three consecutive years.

Recommendation

We recommend all general ledger accounts be reconciled monthly subsidiary ledgers, and any reconciling items be promptly investigated and adjusted, adequate supporting documentation for the adjustments be maintained.

Planned corrective action

We agree with the recommendation. The town reconciles accounts on a monthly basis; however, these required adjustments were isolated, and management will ensure the interfund accounts are reconciled in the future.

CAPITAL ASSET TRACKING

Findings

There are capital assess that have not been correctly recorded in the town’s records, and the town has not completed an inventory of assets. The condition was also found in the 2018-2019 audit.

Recommendation

We recommend town management procedures surrounding capital asset identification and tracking to ensure the capitalization threshold is properly and consistently applied. In addition, town management should ensure are consistently tagged for inventory and added to the town’s capital asset record.

Planned corrective action

We agree with the recommendation. Currently, the twn tags assets and accounts for assets on a “tagging” basis. The town also uses this list for insurance purposes as well. However, the actual depreciation schedule reconciliation has not been done and this procedure will be implemented.

Pictured top: Councilman Luis Gomez (right) listens as  Kristen McAllister of the auditing firm Warren Averett addresses the Century Town Council Monday night. NorthEscambia.com photo, click to enlarge.

Comments

11 Responses to “Century Approves Audit, Action Plan To Get Out Of Financial Problems”

  1. alan on February 18th, 2020 9:23 pm

    From Florida Statute 165.051, Dissolution Procedures, The city may be dissolved by either a special act of the legislature or by an ordinance of the governing body of the municipality, approved by a vote of the qualified voters.

    So all you need is to convince a majority of council members to approve an ordinance for dissolution and to put it to a vote of the citizens for approval. I would think the council would want to know what the citizens think and this would be the perfect way to find out. Act now and it could probably be on the November presidential ballot.

  2. charlie Mike on February 18th, 2020 7:47 pm

    Turn in your credit cards. Pay off your personal (loans) from the city. Then resign. That’s the best first steps for Century.

  3. Northendbratt on February 18th, 2020 5:45 pm

    I don’t know how Century can be short on money,I hear stories every week of people paying one bill or the other and the clerk short changing them,and they have to argue to get their money back!!!

  4. chris on February 18th, 2020 2:53 pm

    I just read some of these items more slowly than I did last time. “The town does not have a policy requiring employees to provide receipts for transactions nor document purpose of purchases.” And there are those who scratch their heads and wonder why Century has the problems they do. So the fuel could have been their own vehicle. Or the food could have been for their own personal use.

  5. Bob on February 18th, 2020 1:56 pm

    Corrective Action Plan?

    Shirley you can’t be serious?

    What a joke! I guess it will take another 20 years to shut down this corrupt and incompetent city?

    William, I come to your site every day religiously to read the latest on this train wreck that they call a city. If they ever shut down this dog and pony show I might not need to come to your site (Just Joking).

  6. chris on February 18th, 2020 1:42 pm

    So, another gut wrenching and hand wringing meeting by the circus. Rubber stamp, I mean, approve the findings, and then move on. Next month it will happen all over again.

  7. Alan on February 18th, 2020 1:33 pm

    Dave, that was hilarious.

  8. Nod on February 18th, 2020 12:43 pm

    $200 a month for 1500 years, this time.

  9. sam on February 18th, 2020 10:59 am

    i fear when it is all said and done the same people that have been getting the dirty end of the stick will get it again. the tax payers in century. that doesn’t mean the free loaders that get free gas, water, and in some cases electricity. get ready folks it’s coming.

  10. Dave on February 18th, 2020 8:55 am

    I thought they already had 100 audits…they think a Audit in Century is a Japanese subcompact car..get a new one every week

  11. tg on February 18th, 2020 8:51 am

    Is this plan number 32 i forget.

Written by William Reynolds · Filed Under News