HomeMy WebLinkAboutSEOPW-CRA-M-03-0064•
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OFFICIAL REPORT
CRA External Audit Report for Fiscal Year 2002
by KPMG, LLP.
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O CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
O (COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
O Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
O Year ended September 30, 2002
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Executive Summary
O KPMG LLP (KPMG) hereby submits this management letter to the City of Miami Southeast Overtown
O Parkwest Redevelopment Agency and City of Miami Omni Community Redevelopment Agency,
(the Agencies), Component Units of the City of Miami, Florida for the fiscal year ending September 30,
O 2002. The management letter is presented in accordance with the Rules of the Auditor General of the State
of Florida. In accordance with Government Auditing Standards, we are required to consider the Agencies'
O internal control during our planning and performing of our audit of the financial statements in order to
O determine our auditing procedures for the purpose of expressing our opinion on the financial statements
and not to provide assurance on the internal control. In fulfilling this responsibility, estimates, and
® judgments made by management are required to assess the expected benefits and related costs of internal
control policies and procedures. The objectives on internal control are to provide management with
O 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
O recorded properly to permit the preparation of its financial statements in accordance with accounting
principles generally accepted in the United States of America.
O The management letter is organized in the following manner:
O • Executive summary;
O • Responses to the Rules of the Auditor General and current year's observations, recommendations,
and management's responses; and
• Status of prior years' observations, recommendations, and management's responses.
Only comments issued in the prior years that are still relevant are included in this management letter.
O We would be pleased to discuss these comments with you and, if desired, to assist you and management in
O implementing corrective action steps. KPMG appreciates the cooperation we received from the Agencies'
staff and management and is honored to serve the Agencies as its external auditors.
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O Management Letter in Accordance with the
Rules of the Auditor General of the State of Florida
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O To the Board of Directors of the
City of Miami Southeast Overtown Parkwest
O Redevelopment Agency and City of Miami Omni
Community Redevelopment Agency, Component
O Units of the City of Miami, Florida:
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We have audited the financial statements of the City of Miami Southeast Overtown Parkwest
O Redevelopment Agency and City of Miami Omni Community Redevelopment Agency, Component Units
of the City of Miami, Florida (the Agencies), as of and for the fiscal year ended September 30, 2002, and
have issued our report thereon dated February 28, 2003, which referred to the Agencies' adoption of new
accounting and reporting standards.
O
We conducted our audit in accordance with auditing standards generally accepted in the United States of
O America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. We have issued our Independent Auditors' Report
0 on Compliance and Internal Control over Financial Reporting. Disclosures in that report, which is dated
February 28, 2003, should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General.
O Those rules (Section 10.554(1)(g)1.a.) require that we address in the management letter, if not already
addressed in the auditors' report on compliance and internal controls, whether or not inaccuracies,
O shortages, defalcations, fraud, and violations of laws, rules, regulations, and contractual provisions reported
O in the preceding annual financial audit report have been corrected. We noted no inaccuracies, irregularities,
shortages, defalcations, and violations of laws, rules, regulations, and contractual provisions disclosed in
the preceding annual financial audit.
The Rules of the Auditor General (Section I0.554(1)(g)1.b.) require that we disclose in the management
O letter, if not already disclosed in the auditors' report on compliance and internal controls, whether or not
O recommendations made in the preceding annual financial audit report have been followed. The
recommendations made in the preceding annual financial audit report have been corrected, except for those
O reported below under the heading "Status of prior years' observations, recommendations, and
management's responses."
O The Rules of the Auditor General (Section 10.554(1)(g)2.), state that a management letter shall include a
O statement as to whether or not a local governmental entity complied with Section 218.415, Florida Statutes,
regarding the investment of public funds. In connection with our audit, we determined that the Agencies
O complied with Section 218.415, Florida Statutes, relating to local governmental investment policies.
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Q The Rules of the Auditor General (Section 10.554(1)(g)3.) state that a management letter shall include
recommendations to improve the local government entity's present financial management, accounting
procedures and internal accounting controls. The recommendations made in the current year are listed in
the section titled "Current year's observations, recommendations, and management's responses."
O The Rules of the Auditor General (Section 10.554(1)(g)4.) require disclosure in the management letter of
the following matters if not already addressed in the auditors' reports on compliance and internal controls
(1) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to
O have occurred, and were discovered within the scope of the audit; (2) improper or illegal expenditures
discovered within the scope of the audit that may or may not materially affect the financial statements;
(3) improper or inadequate accounting procedures (for example, the omission of required disclosures from
the financial statements); (4) failures to properly record financial transactions; and (5) other inaccuracies,
shortages, defalcations, and instances of fraud discovered by, or that come to the attention of, the auditor.
No such conditions were noted during the audit.
O
The Rules of the Auditor General Section (Section 10.554(1)(g)5.) state that a management letter shall
include the name or official title and legal authority for the primary government and each component unit
of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial
O statements. Such disclosure is made in note 1 to the Agencies financial statements.
Q The Rules of the Auditor General (Section 10.554(1)(g)6.a.), state that a management letter shall include a
statement as to whether or not a unit of local government is in a state of financial emergency as a
O consequence of conditions described in Section 218.503(1), Florida Statutes. Section 218.503(1) states that
O a local governmental entity is in a state of financial emergency when any of the following conditions
occur:
0 a. Failure, within the same fiscal year in which due, to pay short-term loans from banks or failure to
O make bond debt service payments when due.
b. Failure to transfer at the appropriate time, due to lack of funds: (1) taxes withheld on the income of
O employees; or (2) employer and employee contributions for a) federal Social Security, or b) any
pension, retirement, or benefit plan of an employee.
c. Failure for any one period to pay, due to lack of funds: (1) wages and salaries owed to employees;
O or (2) retirement benefits owed to former employees.
O d. An unreserved or total fund balance or retained earnings (deficit) for which sufficient resources of
the local government entity are not available to cover the deficit for two successive years.
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e. Noncompliance of the local government retirement system with actuarial conditions provided by
Q law.
Q Section 218.503(2) states that local government entity shall notify the Governor and the Legislative
Auditing Committee when one or more of the conditions specified in Section 218.503(1), Florida Statutes
Q have occurred or will occur if action is not taken to assist the local governmental entity.
Q Nothing came to our attention that caused us to believe that the Agencies are, or during the fiscal year was
in a state of financial emergency as a consequence of conditions in Section 218.503(1), Florida Statutes.
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As required by the Rules of the Auditor General (Sections 10.554(g)(6)c. and 10.556(8)), we applied
O financial condition assessment procedures. It is management's responsibility to monitor the Agencies
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O financial condition, and our financial condition assessment was based in part on representations made by
management and the review of financial information provided by same.
With respect to the financial report for the fiscal year 2002 required to be filed with the State of Florida
O Department of Banking and Finance pursuant to Section 218.32 Florida Statutes, the Agencies do not file a
separate report with the State of Florida Department of Banking and Finance. The financial operations of
O the Agencies are included in the basic financial statements of the City of Miami, Florida for the year ended
September 30, 2002.
O This management letter is intended solely for the information and use of the board of directors,
O management of the Agencies, the State of Florida Office of the Auditor General, and federal and state
awarding agencies and pass - through entities, and is not intended to be and should not be used by anyone
other than these specified parties.
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O February 28, 2003
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CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
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O Current Year's Observations, Recommendations
and Management's Responses
Q ! Summary
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O No. Current Year's Observation
O REPORTABLE CONDITIONS:
O 2002 — 1 Grants Management and Accounting
2002 — 2 Contract Agreements
O OTHER OBSERVATIONS:
Appendix A
O 2002 — 3 Improper Use of Tax Increment Funds
O 2002 — 4 Loan Administration
O 2002 — 5 Insurance Bonding for Executives and Other
Employees
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Recommendation
CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Condition Found
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Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
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Appendix A
REPORTABLE CONDITIONS
2002 -1 GRANTS MANAGEMENT AND ACCOUNTING
Criteria/Specific Requirements
The Agencies provide grant funding, as grantor, to various organizations for the purpose of
encouraging and fostering economic and cultural stimulus within the Agencies' boundaries. Grantor
organizations should be able to readily provide information relating to the organizations funded, the
amount funded, the expected outcomes and goals, and the status /monitoring of expected goals.
The Agencies do not maintain adequate records that allows for readily available information with
respect to the names of organizations funded along with the amounts granted, purpose, and status of
the grant.
Perspective
The condition noted is considered to be systemic in nature.
Effect
The inability to access this information in a timely manner hampers management from making a
determination if amounts granted have been funded and if they properly complied with the intended
requirements.
The Agencies should establish a database system that allows it to set up and track grants awarded
and funded. The database system should be able to identify the Board resolution authorizing the
grant, amount and date funded, purpose of grant and a narrative indicating that there was some type
of monitoring done to help ensure that the grantee complies with the stated objectives.
Management's Response
The Administration engaged the CPA firm of Harvey, Branker & Associates on February 24, 2003,
at the direction of the Board of Directors, to address concerns of this nature and to develop policies
and procedures for staff to follow to prevent similar occurrences.
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Condition Found
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CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
2002 -2 CONTRACT AGREEMENTS
Recommendation
Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
DRAFT
Appendix A
Criteria/Specific Requirements
The Agencies have established policies by which professional services are procured and contracted
for. Such policies include, but are not limited to, approved resolutions and signed agreements, which
includes the terms and conditions of the services to be provided, for services procured over a certain
dollar threshold.
We noted that the Agencies paid numerous third -party contractors for services in fiscal year 2002.
However, in several instances a formal agreement between the contractor and the Agencies has not
been executed and/or approved resolutions could not be located.
Perspective
The condition noted is considered to be systemic in nature.
Effect
The absence of an executed agreement and approved resolutions does not provide evidence that all
terms, conditions and expectations are properly outlined between the parties and authorized by the
appropriate individuals.
Management should enforce its policy of ensuring that all third party contracts are properly executed
and approved resolutions provided prior to the commencement of any work.
Management's Response
The current Administration is reviewing all contracts and agreements to determine if Board action
was required and, if so, if it took place. Those found to be lacking Board approval are being
evaluated and, if deemed necessary or required, are being scheduled for Board action. In addition,
some contracts and agreements have been found to have Board approval, but no funding identified or
in place to allow the execution of said contract or agreement. Again, if found to be necessary or
required, funding is being identified and brought back to the Board for approval as required.
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Recommendation
We recommend that proper financial management policies be adopted that allow for the proper
segregation and use of TIF for each of the redevelopment districts.
® Management's Response
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CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
OTHER OBSERVATIONS
2002 -3 IMPROPER USE OF TAX INCREMENT FUNDS
Condition Found
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Appendix A
Criteria/Specific Requirements
The Community Redevelopment Agency Interlocal Cooperation Agreement (the Interlocal
Agreement) between the agencies and Miami -Dade County, Florida, (the County) requires that tax
increment funds be used in accordance with the redevelopment plan and the budget as approved by
the County.
The City of Miami Omni Community Redevelopment Agency (the Omni) has been charged with the
responsibility of the redevelopment of various projects within the corporate limits of the Omni. We
noted a project (Margaret Pace Park) was paid from tax increment funds (TIF) collected by and
earmarked for the City of Miami Southeast Overtown Parkwest Redevelopment Agency (SEOPW).
The condition noted is considered to be systemic in nature with regard to the Margaret Pace Park
project (i.e. multiple payments were made on this project using tax increment funds).
Effect
The use of SEOPW TIF to finance projects not within its own district or for items not within its
approved budget is a violation of the Interlocal Agreement.
Administrative procedures have been put in place to ensure multiple signatory approvals in the use of
TIF funding. The processing of the budget "Financing Information Form" requires approval by the
Agencies' in -house budget/finance staff, the Agencies' CPA firm, as well as the Executive Director.
This form must accompany all agenda items requiring funding and Board approval. In addition, the
CPA firm of Harvey, Banker & Associates was engaged on February 24, 2003, at Board direction to
establish policies and procedures as required by Section 163, Florida Statute as well as industry
standards.
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CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
2002 -4 LOAN ADMINISTRATION
Criteria/Specific Requirements
The Agencies occasionally provide loans to various organizations in an effort to encourage business
development. Proper administrative procedures require readily available information and the status
of outstanding loans.
Condition Found
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Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
• DRAFT
Appendix A
The Agencies do not have information on the status of outstanding loans. In some instances, the
Agencies do not have a complete inventory of all loans that have been disbursed to recipients.
Perspective
The condition noted is considered to be systemic in nature.
Effect
The Agencies inability to properly track the status of outstanding loans could result in the Agencies
inability to collect funds that are due and therefore, lose resources that are pivotal to their operation.
Recommendation
The Agencies should establish a loan database system. The database should also be able to identify
the Board resolution authorizing the loan, key terms of this loan and amortization schedule.
Management should monitor the status of each loan, at least monthly, to help ensure that principal
and interest agreements are timely and accurately recorded in the accounting ledgers. The Agencies
should also maintain a record file system of all outstanding loan indenture agreements.
Management's Response
The Administration engaged the CPA firm of Harvey, Branker & Associates on February 24, 2003,
at the direction of the Board of Directors to address concerns of this nature and to develop policies
and procedures for staff to follow to prevent similar occurrences.
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CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
2002 -5 INSURANCE BONDING FOR EXECUTIVES AND OTHER EMPLOYEES
Criteria/Specific Requirements
Employees who directly manage cash and investments and top executive management personnel
should be insured against theft and fraud.
Condition Found
Key employees and executive management are not insured to protect the Agencies from theft and
acts of fraud.
Perspective
The condition noted is considered to be systemic in nature.
Effect
The Agencies do not have adequate loss protection in the event employees embezzle, steal or commit
acts of fraud with respect to the Agencies' cash, investments, and other "liquid assets."
Recommendation
The Agencies should insure all employees that directly manage cash, investments, and other liquid
assets, and all top management personnel, against theft, and other acts of fraud.
Management's Response
The Executive Director, Frank Rollason, has instructed staff to contact the Agencies' Insurance
Broker (AON), to obtain quotes to put in place insurance bonding for all staff members who meet
bonding criteria as determined by the Agencies' CPA firm (Harvey, Branker & Associates) and
external auditors (KPMG).
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Appendix A
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O Appendix B
® CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
O REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
O (COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
O Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
O Year ended September 30, 2002
O
Status of Prior Years' Observations, Recommendations,
and Management's Responses
O Summary
O
Comment
O Addressed or No Comment is Still
No. Prior Year's Observations Longer Relevant Relevant
REPORTABLE CONDITIONS:
O 2001 -1 Level of Staff Within the Finance
® Department X
2001 -2 Budget Compliance X
O 2001 -3 Encumbrance Accounting X
O 2001 -4 Payroll File Maintenance X
O 2001 -5 Project Cost Accounting X
2000 -1 Establishing Controls Over General X
O Ledger
O 2000 -2 Timely Preparation of Financial X
Statements
O 99 -1 Leased Properties X
O 99 -2 Fixed Assets Records X
OTHER OBSERVATIONS:
O 2001 -6 Operational Review X
O 2001 -7 Authorized Check Signing X
O 2001 -8 Budgetary Accounting X
O 2000 -3 Timely Recording of Board Minutes X
2000 -5 Changes in the Government X
O Reporting Model
O 99 -3 Department of Off - Street Parking X
99 -4 Fund Structure X
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O Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
O REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
O Year ended September 30, 2002
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O REPORTABLE CONDITIONS
O 2001 -1 LEVEL OF STAFF WITHIN THE FINANCE DEPARTMENT
Observation
The Agencies' Finance Department is presently short- staffed of the qualified personnel required to manage
and maintain the accounting processes of the agencies. The absence of qualified staff has significantly
0 delayed the financial reporting process, and the progress of the current year's audit, because most if not all
of the analysis and reconciliation of general ledger accounts are not performed on a timely basis.
O Recommendation
O The Agencies' Finance Department is responsible for maintaining the general ledger, which is the official
record of the Agencies' financial activities and serves as the basis for the preparation of the financial
O statements in accordance with accounting principles generally accepted in the United States of America.
Accordingly, providing complete and accurate financial information in a timely manner is crucial, in order
0 to effectively manage the operations of the Agencies.
O The Department should be staffed with a qualified person who should be responsible for the accounting
and financial reporting process. The Finance Director's duties should include, but not be limited to, the
O following:
O The design and implementation of an internal control system that provides for the processing and recording
of accounting transactions:
O 1. the review and approval of all accounting journal entries;
O 2. the reconciliation of subsidiary accounts and other detail account listing to that of the general ledger;
3. the proper maintenance of the Agencies' operating budget; and
4. the preparation of monthly and annual financial reports for both internal and external presentation.
Prior Year's Management's Response
O Management agrees.
O Current Year's Status
O This observation is still applicable in fiscal year 2002.
O Current Year's Management's Response
Management has engaged the CPA firm of Harvey, Branker & Associates to evaluate Agencies' financial
0 operations, policies and procedures, and to submit a written report of their findings along with
recommended solutions.
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
O REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
O Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
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2001 -3 ENCUMBRANCE ACCOUNTING
Observation
We noted that the Agencies do not use a purchase order system to encumber the purchase of goods and
services.
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Recommendation
O We recommend that a purchase order (PO) system be implemented, whereby a PO document is created for
O each expenditure. The PO document should provide information which includes a description of the goods
and services being purchased, the name of the authorized vendor, the balance of available budgeted
O amounts, and the signature of the appropriate personnel authorizing the purchase.
0 Additionally, the Agencies should utilize an encumbrance accounting system. Under the encumbrance
system, purchase order contracts and other commitments for the expenditure of monies are recorded in
O order to reserve that portion of the applicable appropriation. The encumbrance outstanding should be
reported as reservation of fund indicating that portion of fund balance that may not be used for additional
O appropriations.
Prior Year's Management's Response
O Even though the CRA is in the practice of issuing purchase orders, it does not have a governmental
accounting software package with encumbrance capabilities. It is the intention of the CRA to purchase
such a package.
O Current Year's Status
This observation is still applicable in fiscal year 2002.
Current Year's Management's Response
Management has engaged the CPA firm of Harvey, Branker & Associates to evaluate the Agencies'
0 financial operations, policies and procedures, and to submit a written report of their findings along with
recommended solutions. On this particular item of concern, Harvey, Branker & Associates has already
O instituted a manual encumbrance system and is working with the City's Finance Department to tie into the
on -line encumbrance system available in the City's Financial System, SCI.
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Appendix B
O CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
O REDEVELOPMENT. AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
® Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
O Year ended September 30, 2002
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2001 -4 PAYROLL FILE MAINTENANCE
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Observation
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We noted several instances in which documentation supporting staff salaries and pay rates were not
included in the employee personnel file.
Recommendation
O Each employee personnel file should immediately be updated to include appropriate documentation to
support current payroll rates and salaries. Each subsequent payroll adjustment should be accompanied by
O a pay rate adjustment form which should be maintained in their respective payroll file.
O Prior Year's Management's Response
O As a result of inadequate levels of staffing management agrees with this comment. A review will be
O performed on all files of existing employees of the CRA for compliance.
O Current Year's Status
This observation is still applicable in fiscal year 2002.
Current Year's Management's Response
Management concurs with this finding and agrees it is still relevant for FY 2002. Management is in the
O process of updating or providing required documentation in all personnel files as identified by the
external auditor, KPMG, as well as the City's Internal Auditor.
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O Appendix B
O REDEVELOPMENT OF MIAMI SOUTHEAST OVERTOWN PARKWEST
ELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
O REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
O Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
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2001 -5 PROJECT COST ACCOUNTING
Observation
The Agencies do not have a formal system to account for ongoing capital projects. As a result, there is no
readily available information regarding the financial status of each capital project.
Recommendation
O We recommend that the Agencies develop a project costing accounting system. Such system should be
able to account for the initial estimated project cost, identify project -to -date expenditures and an estimate
of expenditures remaining to complete each project. Each project should be reviewed periodically to ensure
O compliance with contractual terms and conditions and status /percentage of project completion.
Prior Year's Management's Response
O Management agrees; the level of staffing as well as the lack of the proper accounting software package has
a direct impact. This feature is one, that will be included in the software that will be acquired by the CRA.
O Current Year's Status
0 This observation is still applicable in fiscal year 2002.
O Current Year's Management's Response
O Management concurs with this finding and agrees it is still relevant for FY 2002. Management has engaged
the CPA firm of Harvey, Branker & Associates to evaluate the Agencies' financial operations and policies
0 and procedures, and to submit a written report of their findings along with recommended solutions.
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® Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
O
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
0 REDEVELOPMENT AGENCY .
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
0
0 2000 -1 ESTABLISHING CONTROLS OVER GENERAL LEDGER
O Observation
O The City of Miami, Florida (the City) performs certain key accounting functions on behalf of the Agencies,
which includes the recording and summarization and processing of accounting transactions, including cash
O disbursements and cash collections. The City provides the Agencies with detailed general ledger reports
that summarize the accounting transactions. The Agencies rely only on the general ledger reports prepared
0 by the City, and do not perform an independent reconciliation of account balances and activity, including
cash balances.
0 Recommendation
We recommend that the Agencies develop appropriate accounting controls to monitor and reconcile
O account balances reported by the City. This should include a review of the account activity and analysis of
ending account balances. Such review and analysis should be performed monthly, and significant
differences and exceptions should be investigated and resolved in a timely manner. The completeness and
accuracy of the financial statements are the responsibility of the respective Agencies' management and this
process will help to meet such responsibility.
O Prior Year's Management's Response
O As of the 2001 fiscal year, the CRA is in the process of establishing separate books from the City and
intends to perform a monthly reconciliation of the accounts (inclusive of cash).
O Current Year's Status
O This observation is still applicable in fiscal year 2002.
Current Year's Management's Response
O Management concurs with this finding and agrees it is still relevant for FY 2002. Management has engaged
the CPA firm of Harvey, Branker & Associates to evaluate the Agencies' financial operations and policies
and procedures, and to submit a written report of their findings along with recommended solutions.
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0 Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
O REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
41110 REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
O Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
0 Year ended September 30, 2002
0
2000 -2 TIMELY PREPARATION OF FINANCIAL STATEMENTS
O Observation
The Agencies do not have a formalized year -end financial reporting process to facilitate the preparation of
their financial statements. The current financial reporting system is not adequate to provide management
0 with complete, accurate, and timely information needed to prepare the financial statements in accordance
with accounting principles generally accepted in the United States of America.
Recommendation
0 The Agencies' management is responsible for the preparation of its financial statements. We recommend
O that a financial reporting system be established which will ensure the timely compilation of the financial
statements. These should include detailed closing procedures, the assignment of each area to specific
0 personnel and timeline for the completion of each assigned task. The development and implementation of a
formal financial reporting system will improve the timeliness and accuracy of financial information and
0 thereby assist management in meeting their reporting requirements, and provide them with a reliable tool
for monitoring the Agencies' progress and making informed financial decisions.
Prior Year's Management's Response
O This is contemplated as indicated in management's response to reportable condition 00 -1. Monthly
O reconciliation of the CRA's ledgers to that of our fiduciary will become a part of the CRA's control of the
balances reported by the City.
Current Year's Status
O This comment is still applicable in fiscal year 2002. This comment has been updated to include additional
0 observation and recommendation. See comments 2001 -2.
Current Year's Management's Response
0 Management concurs with this finding and agrees it is still relevant for FY 2002. Management has engaged
the CPA firm of Harvey, Branker & Associates to evaluate the Agencies' financial operations and policies
and procedures, and to submit a written report of their findings along with recommended solutions.
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0
O Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
® REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Q Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Q Year ended September 30, 2002
0
® 99 -1 LEASED PROPERTIES
Observation
O The Agencies, through its operations, leases various properties to third parties. However, the Agencies do
not have a system that allows for the identification of all properties held for lease. As a result, the Agencies
are not in a position to properly enforce the timely collection of rental revenue from its tenants. In fact, the
O Agencies recently discovered, through the receipt of a payment subsequent to the Agency's year -end, lease
revenue that was due from a developer.
The Agencies are not able to determine if other properties are leased and the nature of the lease
o agreements.
Recommendation
o We recommend that the Agencies perform extensive research of all of their available records (for example,
O minutes, resolutions, lease agreements, development agreements, other contracts /agreements, and so on) in
order to identify all properties held for leasing.
O In addition, the Agencies should attempt to locate all agreements and contracts associated with the leased
properties and establish procedures for monitoring and enforcing all the terms of the contract.
O Without the proper knowledge of all revenue that is due to the Agencies, the Agencies revenue could be
understated, thus understating fund balance.
Management's Response
O Management agrees.
O Current Year's Status
• This observation is still applicable in fiscal year 2002.
O Current Year's Management's Response
Management concurs with this finding and agrees it is still relevant for FY 2002. Management has engaged
O the CPA firm of Harvey, Branker & Associates to evaluate the Agencies' financial operations and policies
o and procedures, and to submit a written report of their findings along with recommended solutions.
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O Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
O REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
Q REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Q Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
O Year ended September 30, 2002
O
OTHER OBSERVATIONS
O 2001 -6 OPERATIONAL REVIEW
Q Observation
O The City of Miami, Florida has experienced significant population growth and economic development over
the past decade. The mission and importance of the Agencies has become increasingly important with
O respect to redevelopment activities pertaining to residential and commercial areas. Accordingly, the present
organizational structure does not support the demands on staff to maintain an efficient and effective
O operation.
Recommendation
We recommend that a comprehensive review of the operations of the Agencies be performed. The review
O should focus on the organizational structure of the Agencies and provide recommendations for operational
improvements. The review would include but not limited to the following:
O 1. Staffing requirements — An assessment of and evaluation of staff levels including job description,
O qualifications, and pay structure and benefits;
2. Services provided — An assessment and evaluation of the current level of services provided by the
O Agencies, including the use of performance measures and benchmarking against peer groups; and
O 3. Legal compliance — A review of state and local laws and regulations including the various inter -local
and contractual agreements to ensure compliance, and a design of a system to monitor compliance
O with such provisions.
Q Prior Year's Management's Response
Management agrees.
Current Year's Status
Q This comment is still applicable in fiscal year 2002.
Current Year's Management's Response
Management concurs with this finding and agrees it is still relevant for FY 2002. Management has engaged
O the CPA firm of Harvey, Branker & Associates to evaluate the Agencies' financial operations and policies,
O and procedures, and to submit a written report of their findings along with recommended solutions. In
addition, the Agencies' General Counsel has physically reassigned the Assistant General Counsel for the
Q Agencies to operate out of the Agencies' offices and has also assigned a legal assistant to work with him at
the Agencies office location. Also, current management has become active with the Florida
Q Redevelopment Association, a state -wide association made up of Community Redevelopment Agencies
throughout the State with common problems and goals. Management has attended two Board workshops in
O recent months and plans on attending the annual conference to be held in September '03 in Tampa.
O 18 (Continued)
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Appendix B
O CITY OF MIAMI SOUTHEAST OVERTOWN PARKWEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
O REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
Management Letter in Accordance With the
O Rules of the Auditor General of the State of Florida
Year ended September 30, 2002
0
2001 -8 BUDGETARY ACCOUNTING
O Observation
O The Agencies currently use the governmental fund accounting model for external financial reporting
purposes, which includes a general fund, special revenue fund, debt service fund and a capital projects
O fund. However, the Agencies prepare their annual budget on a combined entitywide basis, as opposed to a
0 fund basis.
Recommendation
We recommend that the Agencies adopt a separate annual budget for the general fund, special revenue
fund and the debt service fund. This will provide financial information on a more comprehensive level to
aid in the evaluation of operating results.
O Prior Year's Management's Response
O The CRA will correct this in fiscal year 2001 -2002, by preparing budgets at the project level of accounts,
which represent the required governmental funds including general, special revenue and debt service.
O Current Year's Status
This observation is still applicable in fiscal year 2002.
0
Current Year's Management's Response
O In fiscal year 2002 -2003, the budgets were prepared at the project level of accounts, which represented the
required governmental funds. In fiscal year 2003 -2004, the Agency will prepare budgets on the project
level and by governmental funds including general, special revenue, capital projects and debt service
O funds.
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