HomeMy WebLinkAboutOMNI-CRA-M-04-0020•
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•CRA Board of Directors Meeting
r March 29, 2004
ITEM 1
OFFICIAL REPORT
Sanson, Kline, Jacomino & Company, LLP, CRA Extemal Auditor.
Report on Omni and SEOPW Extemal Audit for FY'03
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• W Board of Directors Meeting
March 29, 2004
ITEM 'I
SOUTHEAST OVERTOWN/PARK WEST
AND OMNI
COMMUNITY REDEVELOPMENT AGENCIES
INTER -OFFICE MEMORANDUM
To: Chairman Arthur E. Teele, Jr
And Members of CRA Board
From: Frank K. Rollason
Executive Director
Date: MAR 19 2004 File:
Subject: Sanson Kline, Jacomino &
Company, LLP: FY '03 CRA External
Audit Report Presentation
References:
Enclosures: Management Letter
Please be advised that Mr. Richie Tandoc from the CRA's External Auditor for Fiscal
Year 2003, Sanson, Kline, Jacomino & Company, LLP, will present a report on the
current audit. No action is required by the CRAB Board of Directors.
FKR/ap
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SEOPW/CRA OMM/CRA
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
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Executive Summary.
Sanson, Kline, Jacomino & Company, LLP (SKJ) hereby submits this management letter to the City of
Miami Southeast Overtown Park West 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, 2003. 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' internal control during our planning and performing of our audit of the
financial statements in order to determine our auditing procedures for the purpose of expressing our
j 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 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 its financial statements in
accordance with accounting principles generally accepted in the United States of America.
The management letter is organized in the following manner:
Executive summary;
• Responses to the Rules of the Auditor General of the State of Florida;
• Current year's observations, recommendations, and management's responses; and
• Status of prior years' observations, recommendations, and management's responses.
Certain areas have been shaded gray or bolded to emphasize such areas to the readers of this report.
We would be pleased to discuss these comments with you and, if desired, to assist you and management
in implementing corrective action steps. SKJ 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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Sanson, Kline, Jacomino
& Company,LLP
Certified Public Accountants
LeJeune Centre 782 N.W. LeJeune Road - Suite 650 - Miami, Florida 33126
Management Letter in Accordance with the
Rules of the Auditor General of the State of Florida
To the Board of Directors of the
City of Miami Southeast Overtown Park West
Redevelopment Agency and City of Miami Omni
Community Redevelopment Agency:
:_•
Tel. (305) 442-2470
Fax (305) 442-2850
www.skjnet.com
We have audited the financial statements of the City of Miami Southeast Overtown Park West
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, 2003, and:
have issued our report thereon dated February 6, 2004.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
® 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 on Compliance and Internal Control over Financial Reporting. Disclosures in that report, which is
dated February 6, 2004, 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.
Those rules (Section 10.554(1)(g)l .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,
shortages, defalcations, fraud, and violations of laws, rules, regulations, and contractual provisions
reported 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 10.554(1)(g)l.b.) require that we disclose in the management
letter, if not already disclosed in the auditors' report on compliance and internal controls, whether or not
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 reported in Appendix B, titled "Status of Prior .Years' Observations,
Recommendations, and Management's Responses."
The Rules of the Auditor General (Section 10.554(1)(g)2.), state that a management letter shall include a.
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 complied with Section 218.415, Florida Statutes, relating to local governmental investment
policies.
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 reported
in Appendix A, titled "Current Year's Observations, Recommendations, and Management's Responses."
SWIPW/CRA i)MK/QtA
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
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.
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
statements. Such disclosure is made in note 1 to the Agencies' financial statements.
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
consequence of conditions described in Section 218.503(1), Florida Statutes. Section 218.503(1) states
that a local governmental entity is in a state of financial emergency when any of the following conditions
occur:
a. Failure, within the same fiscal year in which due, to pay short-term loans from banks or failure to
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
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;
or (2) retirement benefits owed to former employees.
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.
e. Noncompliance of the local government retirement system with actuarial conditions provided by
law.
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
have occurred or will occur if action is not taken to assist the local governmental entity.
Nothing came to our attention that caused us to believe that the Agencies are, or during the fiscal
year were in a state of financial emergency as a consequence of conditions in Section 218.5030),
Florida Statutes.
As required by the Rules of the Auditor General (Sections 10.554(g)(6)c. and:10.556(8)), we applied
financial condition assessment procedures. It is management's responsibility to monitor the Agencies
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 2003 required to be filed with the State of Florida
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 the Agencies are included in the basic financial statements of the City of Miami, Florida for the year
0 ended September 30, 2003.
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This management letter is intended solely for the information and use of the board of directors,
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.
J
I -AT
February'6, 2004
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Appendix A
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
Current Year's Observations, Recommendations
and Management's Responses
Summary
No.
Current Year's Observation
2003-1
Capital Assets Additions and Disposals
2003-2
Line Item Expenditure Classifications
2003-3
Maintaining Authoritative Accounting Literature
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Appendix A
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
2003-1 CAPITAL ASSETS ADDITIONS AND DISPOSALS
Criteria/Specific Requirements
An updated listing of all capital assets held by the Agencies is integral in determining the accuracy and
existence of its capital asset balances.
Condition Found
Updating the capital assets listing (i.e. updating additions and disposals) is not performed throughout the
year, but instead is performed at the end of the year through a search of invoices paid. We noted several.
items that were not included on the capital assets listing at year-end.
Perspective
The condition noted is considered to be systemic in nature.
Effect
Updating the capital assets listing at year-end may not capture all additions or disposals that occurred
during the year, due to the voluminous transactions that occur. This could result in the understatement or
overstatement of the capital asset balances.
Recommendation
We recommend that the Agencies consider creating line item expenditure accounts for purchases of all
furniture and equipment, land, and. infrastructure greater than $1,000. This will assist the Agencies in
updating the capital assets listing, including the calculation of any applicable depreciation / accumulated
depreciation, as the assets are purchased or disposed of throughout the year.
Management's Response
Management agrees with the observation. A procedure has been instituted whereby all capital purchases
in the amount of $1000 or more go through the office of the Agencies' Financial Officer to be added to the
capital assets listing (current inventory) at the time of delivery, rather than waiting for the annual inventory
update.
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Appendix A
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY
(COMPONENT UNITS OF THE CITY OF MIAMI, FLORIDA)
i Management Letter in Accordance With the
Rules of the Auditor General of the State of Florida
Year ended September 30, 2003
2003-2 LINE ITEM EXPENDITURE CLASSIFICATIONS
Criteria/Specific Requirements
Properly recording expenditures in the correct line item classification ensures the accuracy of the
Agencies' expenditure balances reported to management, and assists management in making informed
business decisions.
Condition Found
On several occasions, we noted expenditures that were recorded in the incorrect line item classification.
For example, we noted:
■ a forgivable loan (grant) incorrectly recorded in the membership dues expenditure line item
iaccount.
■ a forgivable loan (grant) incorrectly recorded in the promotional activities line item account.
■ construction -in -progress (services performed by HJ Ross) incorrectly recorded in the
professional services line item account.
Perspective
The condition noted is considered to be systemic in nature.
Effect
j For year-end financial statement purposes, this .is not a significant issue, as expenditures are reported by
function (e.g., general government, community redevelopment and capital outlay). However, for internal
reporting purposes and project monitoring, recording expenditures in the incorrect line item classification
would not accurately reflect the total expenditure balance for that particular line item classification, and
potentially affect the budgeting of that particular line item classification for the next year.
Recommendation
We recommend that the Agencies ensure that all expenditures are properly recorded in the correct line
item classification.
Management's Response
Management agrees with the observation. A procedure has been instituted whereby all expenditures are
entered in both the City's GEMS system and in the Agencies' in-house computerized accounting system.
On a monthly basis, the Agencies' system will be reconciled against the City's financial system to capture
any inconsistencies and allow for a more accurate recording of all expenditures in the proper line item
classification.
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Appendix A
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
REDEVELOPMENT AGENCY J
(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, 2003
2003-3 MAINTAINING AUTHORITATIVE ACCOUNTING LITERATURE
Criteria/Speciric Requirements
The use of government accounting literature for reference and guidance, in addition to attending periodic
training on government accounting issues and updates, will help to ensure the accuracy and propriety of
the Agencies' accounting of its financial transactions.
Condition Found
The Agencies' Finance Department does not maintain any government accounting literature for reference'
and guidance.
• Perspective
The condition noted is considered to be systemic in nature.
Effect
I
Without the proper government accounting reference and guidance material and the appropriate training,
the accounting of financial transactions of the Agencies may be inaccurate and/or improper, in
accordance with government accounting standards.
Recommendation
Although the external auditors can be used as a source for determining proper government accounting,
we recommend that the Agencies' Finance Department maintain the appropriate government accounting
literature for reference and guidance (e.g. the GASB Codification, the Governmental Accounting,
Auditing, and Financial Reporting book, a.k.a. the "Blue Book", and any new GASB Pronouncements
issued), in addition to attending periodic training on government accounting issues and updates.
Management's Response
Management agrees with the observation. The Agencies' Financial Officer in concert with the Agencies'
external CPA consultant will establish an in-house library of appropriate accounting literature, either
through printed material or available computerized subscription.
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
Status of Prior Years' Observations, Recommendations,
and Management's Responses
Summary
No.
Prior Year's Observations
REPORTABLE CONDITIONS:
2002-1
Grants Management and Accounting
2002-2
Contract Agreements
2001-1
Level of Staff Within the Finance
Department
2001-3
Encumbrance Accounting
2001-4
Payroll File Maintenance
2001-5
Project Cost Accounting
2000-1
Establishing Controls Over General Ledger
2000-2
Timely Preparation of Financial Statements
99-1
Leased Properties
OTHER OBSERVATIONS:
2002-3
Improper Use of Tax Increment Funds
2002-4
Loan Administration
2001-6
Operational Review
2001-8
Budgetary Accounting
Comment
Partially
Addressed or
No Longer
Relevant
X
X
X
X
X
X
X
X
X
X
X
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Comment is
Still Relevant at
9/30/03
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
REPORTABLE CONDITIONS
i
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.
Condition Found
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.
4
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
j determination if amounts granted have been funded and if they properly complied with the intended
requirements.
Recommendation
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.
Prior Year's 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.
Current Year's Status
The Agency has developed a process to
manually track all grants awarded to third -party organizations. In addition, the Agency is in the process of
formalizing policies and procedures with regards to the grants management and accounting process.
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
2002-2 CONTRACT AGREEMENTS
Criteria/Speciric 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.
Condition Found
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.
i Perspective
!0 I
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.
Recommendation
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.
Prior Year's 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 contractor agreement. Again, if found to be necessary or required, funding is being
identified and brought back to the Board for approval as required.
Current Year's Status
se er The Agency has implemented a process to
ensure that all third party contracts and agreements are properly executed and resolutions provided prior
to the commencement of work, as applicable. In addition, the Agency is in the process of formalizing
policies and procedures with regards to the contract management process
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
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 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.
Recommendation
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
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.
•
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
following:
The design and implementation of an internal control system that provides for the processing and
recording of accounting transactions:
• The review and approval of all accounting journal entries;
■ The reconciliation of subsidiary accounts and other detail account listing to that of the general
ledger;
■ The proper maintenance of the Agencies' operating budget; and
■ The preparation of monthly and annual financial reports for both internal and external
presentation.
Prior Year's Management's Response
Management has engaged the CPA firm of Harvey, Branker & Associates to evaluate the Agencies'
financial operations, policies and procedures, and to submit a written report of their findings along with
recommended solutions
Current Year's Status
'iC., 3.1r3 The Agency contracted a Financial Consultant
during the fiscal year to perform the functions of the Finance Director in the interim. In addition, we noted
that the Agency hired a full time Financial Officer subsequent to year-end.
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
L._
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.
Recommendation
We recommend that a purchase order (PO) system be implemented, whereby a PO document is created
for 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 amounts, and the signature of the appropriate personnel authorizing the purchase.
Additionally, the Agencies should utilize an encumbrance accounting system. Under the encumbrance
N; system, purchase order contracts and other commitments for the expenditure of monies are recorded in
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
appropriations.
Prior Year's Management's Response
Management has engaged the CPA firm of Harvey, Branker & Associates to evaluate the Agencies'
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
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.
Current Year's Status
F•=p t The Agency implemented a manual
encumbrance system during fiscal year 2003 and, subsequent to year-end, implemented the GEMS
procurement and encumbrance system.
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
2001-4 PAYROLL FILE MAINTENANCE
Observation
We noted several instances in which documentation supporting staff salaries and pay rates were not
included in the employee personnel file.
Recommendation
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
bya pay rate adjustment form which should be maintained in their respective payroll file.
Prior Year's Management's Response
Management concurs with this finding and agrees it is still relevant for FY 2002. Management is in the
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.
Current Year's Status
The Agency has properly updated all
personnel files to include the appropriate documentation to support current payroll rates and salaries.
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
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
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 compliance with contractual terms and conditions and status/percentage of project completion.
Prior Year's Management's Response
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.
Current Year's Status
0001-INA! ! " ' x C : �7 �r The Agency has implemented a process with
the City to ensure that all projects are properly coded in the SCI System, giving the Agency the capability
to adequately monitor the project. In addition, the Agency is utilizing the QuickBooks accounting
software, which gives them the ability to track expenditures for each on -going project. Detailed files are
maintained for each on -going project, including items such as contracts, resolutions, cost / expenditure
detail, and correspondence.
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Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
2000-1 ESTABLISHING CONTROLS OVER GENERAL LEDGER
Observation
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 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 by the City, and do not perform an independent reconciliation of account balances and activity,
including cash balances.
Recommendation
We recommend that the Agencies develop appropriate accounting controls to monitor and reconcile
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
I. 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.
•
Prior Year's Management's Response
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.
Current Year's Status
The Agency is utilizing the QuickBooks
accounting software to input its financial transactions, paralleling the City's SCI system. On a monthly
basis, the Agency reconciles their accounting records with the City's SCI system to determine
completeness and accuracy.
SWPW/CRA
04- 22
OY/CRA
04-. 20
15
Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
2000-2 TIMELY PREPARATION OF FINANCIAL STATEMENTS
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
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
The Agencies' management is responsible for the preparation of its financial statements. We recommend
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
personnel and timeline for the completion of each assigned task. The development and implementation of
}r, a formal financial reporting system will improve the timeliness and accuracy of financial information and
01 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
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
i solutions.
•
Current Year's Status
The Agency has developed a year-end
financial reporting process to facilitate the preparation of their financial statements. In addition, the
Agency is in the process of formalizing policies and procedures with regards to the year-end financial
reporting process.
7 Pi CRA OMM/CR1
16
•
Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
99-1 LEASED PROPERTIES
Observation
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 Agencies recently discovered, through the receipt of a payment subsequent to the Agency's
year-end, lease revenue that was due from a developer.
i
The Agencies are not able to determine if other properties are leased and.. the nature of the lease
agreements.
Recommendation
i We recommend that the Agencies perform extensive research of all of their available records (for
:. example, minutes, resolutions, lease agreements, development agreements, other contracts/agreements,
' and so on) in order to identify all properties held for leasing.
In addition, the Agencies should attempt to locate all agreements and contracts associated with the
j leased properties and establish procedures for monitoring and enforcing all the terms of the contract.
Without the proper knowledge of all revenue that is due to the Agencies, the Agencies revenue could be
understated, thus understating fund balance.
Prior Year's Management's Response
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.
•
Current Year's Status
This observation is still relevant in fiscal year 2003. The Agencies have not yet performed the necessary
research to determine that all Agency -owned properties, including those that are being leased out to third
parties, are included on the Agencies' capital assets / leased properties accounting records.
Current Year's Management's Response
Management is currently reconciling .its known real estate holdings against the entire universe of
properties in both the SEOPW and Omni CRA areas. The result will allow comparing what is assumed to
be the total holdings against what may be found. . ° l ° A p rn` �
S,E01?W/C A ORS/CRA
17 �� 41 - 22 - 20
i
Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
OTHER OBSERVATIONS
2002-3 IMPROPER USE OF TAX INCREMENT FUNDS
Criteria/Speciric 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.
Condition Found
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 Park West Redevelopment Agency (SEOPW).
Perspective
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.
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.
Prior Year's Management's Response
Administrative procedures have been put in place to ensure multiple signatory approvals in the use of TIF
funding. The processing of the budget "Financial 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,
Branker & 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.
Current Year's Status
The Agency has implemented a process to
ensure the proper segregation and use of TIF.
SEOPW/ OMK/CRA
Appendix B
• CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
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.
j Condition Found
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.
Prior Year's 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.
Current Year's Status
isIii3 s eri ' ea 3 The Agency has contracted with NDC for Grow
Miami Fund to perform its loan administration function.
S'WPW/
•
•
I
Appendix B
• CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
REDEVELOPMENT AGENCY AND CITY OF MIAMI OMNI COMMUNITY
i 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, 2003
2001-6 OPERATIONAL REVIEW
Observation
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
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
j effective operation.
1 Recommendation
We recommend that a comprehensive review of the operations of the Agencies be performed. The review
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:
1. Staffing requirements — An assessment of and evaluation of staff levels including job description,
qualifications, and pay structure and benefits;
2. Services provided — An assessment and evaluation of the current level of services provided by the
Agencies, including the use of performance measures and benchmarking against peer groups; and
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
with such provisions.
Prior Year's Management's Response
. Management concurs with this finding and agrees it is still relevant for FY '02. 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. In
addition, the Agencies' General Counsel has physically reassigned the Assistant General Counsel for the
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
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 recent months and plans on attending the annual conference to be held in September '03 in.
Tampa.
Current Year's Status
a r "s'ai See response above.
OMM/cm
SE01?W/CRA — 9 A
20 4 22
• •
Appendix B
CITY OF MIAMI SOUTHEAST OVERTOWN PARK WEST
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, 2003
2001-8 BUDGETARY ACCOUNTING
Observation
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
fund. However, the Agencies prepare their annual budget on a combined entity -wide basis, as opposed to
a 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
a aid in the evaluation of operating results.
Prior Year's Management's Response
;' 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
funds.
•
Current Year's Status
This observation was still applicable in fiscal year 2003. However, we noted that management addressed
this observation for the fiscal year-2004 budget, which was prepared at the governmental fund level as
recommended.
Current Year's Management's Response
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tLlWG/CM
SEOPW/cl, 40 41- 26)
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