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Audit reveals ‘material weakness’ in Bradenton Beach budget

By Merab-Michal Favorite, Islander Reporter

A recent Bradenton Beach audit has revealed serious account deficiencies in the city’s 2012-13 budget.

The report was presented during the city commission’s work session March 20.

According to the audit, the city’s reserve balance in the general fund has been depleted nearly $800,000 during the past five years and the city has been spending more than it receives in revenue.

“At this rate, we will be out of cash in a matter of two or three years,” Mayor Bill Shearon said. With regard to the 2012-13 budget, enacted and carried out prior to Shearon’s term in office, he said, “Despite our lack of involvement, me and the city treasurer, Shelia Dalton, are accountable to the auditor general of the state of Florida to resolve the deficiencies.”

The audit found 24 audit adjustments, or journal entries, had caused a material weakness within the system, which amounts to a violation of state statute.

According to the statute, had it gone unnoticed, the mistake could have resulted in a material misstatement, which has the potential to affect the city’s worth.

The city has exceeded revenue by $400,000 in the current budget and the commission already approved taking $100,000 from the reserve fund to help balance the budget.

While the city received $200,000 of unexpected revenue, expenses in 2013 over that amount were $250,000. The audit also revealed $34,000 of “bad debt” due to poor collection methods.

Shearon said he’s expecting to receive a letter from the auditor general at any time warning the city that this sort of budget deficiency cannot happen again.

“It’s a major violation in some respects,” he explained. “We are as close as we can get before the state comes in and audits the books. The good news is no one had their hands in the cookie jar, meaning we can account for all the money and there was no wrongdoing. It’s just a matter of sloppy accounting.”

In order to correct the mistake, Shearon is asking commissioners to approve payroll, accounts payable checks and to review revenue and expense reports on a monthly basis and start the next fiscal year’s budget process six months in advance.

In addition, the city is undergoing an administrative reconstruction, which also was approved following the budget work session at the March 20 commission meeting, to establish a clear authority for department heads.

Department heads will now submit a written monthly report to the commission outlining their projects, timetables and expenses. Previous to the meeting, department heads reported verbally to the mayor.

Commissioners hope the change will signify a more cohesive intergovernmental structure and improve communication between departments.

Shearon said department heads will have more responsibility and be accountable for expenditures.

Shearon said he hopes to have the budget straightened out within six months, just in time for the city to address its fiscal year 2014-15 budget.

“By looking at the budget as a whole, we will be able to evaluate and fine tune our budget, go over line items and get things worked out for the better,” Shearon said.

Commissioners approved the invoice for the audit at their regular meeting March 20. CS&L CPAs, of Bradenton, invoiced the city $1,950 to complete the audit of the city’s financial statements on Sept. 30, 2013, and $1,065 for additional assistance for the mayor and members of the finance department, as well as preparation of cash reports. The total invoice was $3,015.

On the plus side, the city has no debt and about $8.3 million in total assets, although that money is made up of restricted funds that can only be used for certain projects pertaining to the Tingley Memorial Library or city community redevelopment agency.

Commissioner Jack Clarke said he hoped the new changes would help make the process simpler next year.

“The preparation for the audit next year will be a whole lot easier and, in turn, that will make it a whole lot cheaper,” he said.

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