Binder - LL - Sec

8/13/2019 Binder - LL - Sec

1/23

Sunday, December 22, 2013

Timothy Chaz Stevens

MyActsOfSedition.com (MAOS)

Post Office Box 1123Deerfield Beach, FL 33443

Securities and Exchange Commission

cc: FEMA Inspector General

HUD Inspector General

State of Florida Inspector General

State of Florida Auditor General

State of Florida Legislative Auditing Committee

Broward OIG

Broward County Commission

RE: Investigation/Complaint concerning the City of Lauderdale Lakes

To whom it may concern;

MAOS is filing a formal complaint concerning the City of Lauderdale Lakes and

requests investigation and action against responsible officials in the City in addition to

immediate corrective action. We allege a systematic effort to overstate the financial

condition of the City by suspect and improper actions of responsible officials and

independent auditors who aided this cover-up. This directly led to incorrect financial

information being provided to financial institutions, investors, government agencies to

obtain grants, other local government agencies, and above all to the residents and

taxpayers of the City. As the highest level of government, the City Commission should

be held accountable for continuing this alleged Ponzi scheme by continuing to

approve and endorse these actions.

Due to the lack of action by the City to correct for the deteriorating economic and

financial conditions, as determined by a Broward County Office of Inspector General

Report, the City was in a state of financial emergency in 2011 as filed with the State ofFlorida as required. At the end of fiscal year 2011 the general fund had a negative

$4.8M fund balance and the total overall Governmental Funds had a negative $5.4M

fund balance. The general fund is used to pay for all normal operating expenses of the

City. In addition, the City contracted with the Broward County Sheriffs Office (BSO)

for public safety services and owed BSO $9.2M for public safety operating costs


2/23

Page 2

through the end of fiscal year 2011. These operating expenses were properly

recorded creating the deficits identified above.

Attached are selected pages from the Citys audited financial statements for fiscal year

2012. On the Statement of Revenues, Expenditures and Changes in Fund Balances-

Governmental Funds there is clearly identified a $9.2M revenue identified as

Proceeds from Refinancing. And as noted there is only $51k in public safety

expenses for 2012. MAOS believes that the City Manager Jon Allen improperly used

the accounting treatment afforded under the Governmental Accounting Standards

Board (GASB) for refinancing of long term to his advantage. And this action was

subsequently endorsed by the independent auditor and ultimately approved by the

City Commission.

To highlight this gross misstatement, Florida Statute 166.101 only allows cities to issue

debt for capital projects. Further the City Charter Section 3.17 requires an ordinance

with public hearings to enact any debt within the City. From public records requests

there was not an ordinance adopted or public hearings held as required for the past

BSO operating expenses of $9.2M. This $9.2M for public safety operating expenses

through 2011 was properly recorded as such in 2011. Now as shown in 2012, all public

safety operating expenses are shown as capital expenditures. In direct conflict to this,

other pages in the financial statements clearly show the public safety operating

expenses as such not as capital expenditures. MAOS alleges that this is improper

treatment of past BSO contract operating expenses and certainly does not meet the

criteria allowed by GASB for the refinancing of long-term debt. This is not a debt at all

as outlined by FS 166 and the Citys own Charter Section 3.17. And past due BSO

contract operating costs are not capital expenditures no matter if they city agrees with

BSO to reimburse them over a period of time.

MAOS alleges that this was a ploy to show that 2012 now had positive fund balances

in the general and fire funds in addition to a positive balanced budget for 2012 thus

totally wiping out the negative fund balances from 2011 with this single swipe of thepen. What is hidden you say? The actual operating results from 2012 reflect budget

deficits in the general fund of over $500k and over $600k in the fire fund. This

misinformation was provided through these audited financial statements to investors,

potential investors, granting agencies, companies doing business with the city, and

also to residents and taxpayers of the city. An example of this was a debt due to


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SunTrust Bank for past capital projects. This note was refinanced in August 2012 and

included provisions for a reduced interest rate when there were positive balanced

budget results shown. And Allen with City Commission and independent auditor

approval gave them those results for 2012 no matter how he had to manufacture

them.

In the Long Term Financial Recovery Plan, it was identified as goals to refinance

existing long-term debt and to sell off all city assets and then lease them back. This

new accounting would certainly help make the city look more attractive to investors

but is strictly a cover-up. In addition the City borrowed $2.5M from the Community

Redevelopment Agency (CRA) to pay operating expenses of the city. The city intends

to repay the CRA over the next 15 years. The CRA funds are restricted and any excessis be used in the next budget year or refunded. The City has essentially forced its own

CRA to be in violation of FS 163. This is after the CRA has expended over $8M for city

projects not meeting CRA requirements under FS 163. As shown in the attachments,

they are claiming the City/CRA owns the 20,000 square foot library when in reality

Broward County built and owns the Library. Again misrepresentation.

In the financial statements, the grant fund of the City is indicated as having a deficit

cash balance of $884k and is carrying another $565k in accounts receivable related to

old HUD/CDBG cases. MAOS believes that if investigated it would determine that

these accounts receivables are old and uncollectable at this point in time and should

be written off. Writing these off would certainly further weaken the grant fund used to

support grant applications already applied for and future applications but would give

granting agencies the true picture. That is why Allen and company do not want to do

the right thing. The ongoing mess with HUD/CDBG is worthy of investigation by HUD-

MAOS encourages you to come in. The city received grant awards from FEMA for

firefighters (SAFER) in 2013 and police (COPS) in 2014. Wonder if FEMA would award

knowing the misrepresented financial condition of the city. And the following

highlights even bigger issues with grants.

The attached shows the Schedule of Expenditures of Federal Awards as required to be

shown in the financial statements for grants awards. The following page shows the

Summary Schedule of Findings and Questioned Costs from the auditor. Notice that

this is an Unqualified Opinion with no Material or Significant Weaknesses identified.

But MAOS would certainly challenge that. Following the Summary are six Significant


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Deficiencies identified covering nine pages. And Item 2012-06 is for the grant process

itself. How can this be -- six Significant Deficiencies but none shown on the Auditors

Opinion Summary as Significant or Material? MAOS has pointed out several times the

close personal relationship between Allen, certain Commission members, and External

Auditor Rod Harvey.

This systematic effort to deceive investors, potential investors, granting agencies,

businesses, other local government agencies, the State of Florida, and residents and

taxpayers has gone on long enough. It is time to sanction and hold those responsible

accountable. MAOS believes these misstatements and actions run rampant through

the City Manager, City Attorney, External Auditor, and are ultimately blessed by the

City Commission. It is time to close down this Ponzi scheme.

I stand ready to assist.

Timothy Chaz Stevens

MyActsOfSedition.com (MAOS)


5/23

Statutes Constitution :View Statutes : Online Sunshine

The 2012 Florida StatutesTitle XII

MUNICIP LITIES

Select Year: 2012 -3 [ Go I

Chapter 166MUNICIP LITIES

Page 1 of 1

View Entire Chapter

166.101 Oefinitions. As used in this part, the following words and terms shall have the followingmeanings unless some other meaning is plainly indicated:

(1) The term bond includes bonds, debentures, notes, certificates of indebtedness, mortgagecerti ficates, or other obligations or evidences of indebtedness of any type or character.

(2) The term general obligation bonds means bonds which are secured by, or provide for theirpayment by, the pledge, in addition to those special taxes levied for their discharge and such othersources as may be provided for their payment or pledged as security under the ordinance or resolutionauthorizing their issuance, of the full faith and credit and taxing power of the municipality and forpayment of which recourse may be had against the general fund of the municipality.

(3) The term ad valorem bonds means bonds which are payable from the proceeds of ad valoremtaxes levied on real and tangible personal property.

(4) The term revenue bonds means obligations of the municipality which are payable fromrevenues derived from sources other than ad valorem taxes on real or tangible personal property andwhfch do not pledge the property, credit, or general tax revenue of the municipality.

5) The term improvement bonds means special obligations of the municipalfty which are payablesolely from the proceeds of the special assessments levied for an assessable project.

(6) The term refunding bonds means bonds issued to refinance outstanding bonds of any type andthe interest and redemption premium thereon. Refunding bonds shall be issuable and payable in thesame manner as the refinanced bonds, except that no approval by the electorate shall be requiredunless required by the State Constitution.

(7) The term governing body means the council, commission, or other board or body In which thegeneral legislative powers of the municipali ty shall be vested.

(8) The term project means a governmental undertaking approved by the governing body andincludes all property rights, easements, and franchises relating thereto and deemed necessary orconvenient for the construction, acquisition or operation thereof, and embraces any capital expenditurewhich the governing body of the municipality shall deem to be made for a public purpose including therefunding of any bonded indebtedness which may be outstanding on any existing project which is to beimproved by means of a new project.

Hlstory. - s. 1, ch. 73-129.

Copyright < 1995-2013 The Florida Legislature Privacy Statement Contact Us

http://www.leg.state.fl.us/statutes/index.efm?App_mode=Display_ Statute Search_String=... 4/28/2013


6/23

Statutes Constitution :View Statutes : Online Sunshine

The 2012 Florida StatutesTitle X

MUNICIPALITIES

Select Year: 201 2]3 ( Go J

Chapter 166MUNICIPALITIES

Page 1 of 1

View Entire Chapter

166.111 Authority to borrow. The governing body of every municipality may borrow money,contract loansJ and issue bonds as defined in s. 166.101 from time to time to finance the undertaking ofany capital or other projeCt for the purposes permitted by the State Constitution and may pledge thefunds, credit, property, and taxing power of the municipality for the payment of such debts and bonds.

Htstory. s. 1, ch. 73-129; s. 2, ch. 92-345; s 159, ch. 2003-261.

Copyright 1995 2013 The Florida Legislature Privacy Statement Contact s

http://www.leg .state.fl.us/statutes/index.efm?App_mode=Display_Statute Search_String= 4/28/2013


7/23

CITY OF LAUDERDALE LAKES, FLORIDASTATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCES GOVERNMENTALFUNDSFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Other TotalCommunity lOOSGOBond Governmental GovernmentalGeneral Fire Rescue Grant Redeveloement Construction Funds Funds

REVENUESProperty taxes and tax increments 6,627,874 $ 1,409,887 s $ 1,050,700 9,088,461Sales, usc and mo10r fuel lUes 558 044 558,044Franchise and other tax., 3,197,388 17,430 3,214,818Utility lUes 2,025,466 2,025,466lntergovenunmental 2,8S4,801 2,854,801Special assessment 4,076,941 4,076,941Charges for servlcos, fines and forfeitnrres 1,447,714 312,788 138,537 1,899,039Government gnnts and oh r SUJlllOit 10,586 284,281 290,707 . 210 958 856,532Investment income .tJ ::. 7,322 435 1,470 268roceeds from refinancingcontracts payabl 6,433,597 2,737,532 9,171,1ther revenu 4 4 ~ 5 8 S 4 ~ 59,21Total Revenues 6 4 9 , Q 0 6 7,127,696 I 719 494 0 5 0 33,814Ji8

EXPJtNDITIJRESCunmtGeneral government 4,581,315 4,581,315Public safety 22,122 7,639 114 21,591 51,466Public services 549 ,478 (S22) 548,956Economic development S3,257 32,103 832,812 918,172Culture and recn:_atlon 552,816 119,118 671,934Highway and streots 628,404 366,041 994,445Social services 75,321 366,815 442,136ebt ServicePrincipal 1,054,757 298,494 506,426 S6S,719 2,425,396Interest 238,056 430,355 473,841 1,142,252

Capital Ouday 2 ~ 8 9 , 5 4 4 4 , 2 0 ~ 9 1 66 622 m 14 536 14,172,676Total Eltpenditures 4 ~ , 0 7 Q 5,2QZ,724 2 1-W. 1,72,221 (S22) 1,28,S43 2 5 , ~ 4 8 , 7 4 8Excess (deficiencyof ovenucs overexpenditures 5 Q ~ , m ~ 1 1 2 . m 6 6 ~ 1 9 ~ 2 d 7 Z ) S23 225,507 7 865 781OTHER FINANCING SOURCltS (USES)1nnsfCI1IO 395,000 395,000Transfers Out {75,000) {75,000)

Total other financ na sources and uses ~ 9 5 , 0 0 0 {75,000) 320000Net Chan& in Fund Balance 5,898,936 2,119,972 66,319 (50,477) 523 150,507 8,185,781

Fuod Balanc


8/23

CITY OF LAUDERDALE LAKES FLORIDAREQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULEGENERAL FUND

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Revenues:Ad Valorem TaxesFranchise FeesUtility TaxesIntergovernmentalCharges for ServicesLicenses and PermitsFines and ForfeituresInterestGrants and Other RevenueTotal Revenues

Expenditures:Current:General Government:Mayor and CommissionCity AttorneyCity ClerkCity ManagerFinance and Information TechnologyGeneral AdministrationHuman ResourcesBoardsTotal General Government

Public Sa fety:PoliceEMS Fire Services)Total Public SafetyPublic Works:

MaintenanceTotal Public WorksCulture and Recreation:Social Services ProgramsPhysical Environment:Community DevelopmentTotal Physical Enviroment

Debt Service:PrincipalInterestCapital Outlay:Total Expenditures

Excess Deficiency) of Re venuesOver Expenditures

FUND BALANCE- BEGINNINGFUND BALANCE- ENDING

ORIGINAL FINALBUDGET BUDGET

6,461,457 6,625,0002,602,151 2,665,8911,794,360 1,801,8602,956,101 2,922,248

569 ,120 464,344260,000 150,000292,306 225 ,0005,000 5,000809,108 783,00015,749,603 15,642,343

294,831 343 ,236296,640 225,000224.712 220,339365,010 331,0285 ,317 566,4492,871,117 2,212,0327 ,810 152,15916,500 15,500

4,761,937 4,065,742.99

5,916,168 6 ,076,1682,200,000 2,200,0008,116,168 8,276,168

1,905,043 1,703,6241,905,043 1,703,624677,031 799,03284,574 84,598

204,850 68 ,650204,850 68,650-d

387,394257,134

15,749,603 15,642,343

VARIANCEPOSITIVE

ACTUAL NEGATIVE}6 ,627,873 2,8733,256,018 590,1272,025.466 223,6062,925 ,123 2,8758 ,722 347,378148,236 1,764)316,005 91,0056,420 1,420

6,927,142 6,144,14223,044,006 7,401,663

298 ,372 44,864208,615 16,385205,431 14,909307,680 23,348525,822 40,627

2,077,215 134,818135,156 17,0027,377 8,1233 ,765,668 300,075

6,124,340 48,172)2,300,61 1 {100,611)8 ,424 ,951 148,783)

1,421,438 282,1861,421,438 282,186552,816 246,21675 ,321 9,277

261,624 192,974)6 ,624 192,974)

1,054 ,757 667,363)238 ,056 19,078534 ,792

16,329,422 152,287)

6,714,584 7,553,950

{4,853,500)1,861,084


9/23

CITY OF LAUDERDALE LAKES FLORIDAREQUIRED SUPPLEMENTARY INFORMATIONBUDGET COMPARISON SCHEDULE

FIRE RESCUE FUNFOR THE FISCAL YEAR ENDED SEPTEMBER 30 2012

VARIANCEORIGINAL FINAL POSITIVEBUDGET BUDGET ACTUAL {NEGATIVE}Revenues:

Special Assessments 4,128,181.00 4,128,181.00 4,077,294.57 (50,886.43)Charges for Services 612,781.00 612,781.00 297,982.66 (314,798.34)Investment IncomeMiscellaneous 200.00 200.00 21260,816.31 2,260,616.31Total Revenues 4,741,162.00 4,741,162.00 6,636,093.54 1,894,931.54

Expenditures:CurrentPublic Safety - Fire 4,600,000.00 4,606,094.00 4,514,577.55 91,516.45Debt Service:

Principal 37,532.00 31,438.00 936.00 30,502.00Interest 3,630.00 3,630.00 608.70 3,021.30Total Expenditures 4,641,162.00 4,641,162.00 4,516,122.25 1251039.75Excess (Deficiency) of Revenues

Over Expenditures 100,000.00 1001000.00 21119,971.29 1 769,891.79

Other Financing Sources and (Uses)Administrative Fees 75,000.00 75,000.00 (75,000.00)Contingency 251000.00 25,000.00 25,000.00)100,000.00 100,000.00 (100,000.00)

Excess of Revenues and OtherFinancing sources over Expendituresand Other uses: 2,119,971.29 1,869,891.79

FUND BALANCE - BEGINNING (1, 735,562)FUND BALANCE ENDING 384,409

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1 : . ~ : . : . . _ _


10/23

Capital Lease

CITY OF LAUDERDALE LAKESNOTES TO THE FINANCIAL STATEMENTSSEPTEMBER 30 2012

The City entered into a capital lease agreement to purchase air-conditioningimprovements and pay off the prior lease agreement covering lighting and airconditioning equipment with Key Government Finance, Inc. as lessees for financing theair conditioning improvements. The lease agreement qualify as capital lease foraccounting purposes and, therefore have been recorded at the present value of futurelease payments as of the inception date with monthly payments of 5,767. Finalpayment is due May 28, 2014.The future (minimum) lease obligations and the net present value of capital leasepayments as of September 30, 2012 are as follows:

Fiscal Year EndingSeptember 3 ,201220132014Total minimum future lease payments

Less amount representing interestPresent value of minimum lease payments

Repayment AgreementBroward heriffs Office Police and Fire Services

Amount69,20769,20746,137

184,55120,696

163,855

During fiscal year 2 11 the City renegotiated an agreement with the Broward heriffsOffice (BSO) for police and fire services. The previous contract expired in 2009. TheCity has accepted BSO's claim of 1,523,736 which was derived from the increase ofthe contract billings for cost allocations and OUler Post Employment Benefits (OPEB)charges; these costs were not included in the original contract.The City has entered into a five year repayment agreement for the outstanding obligationue to BSO in the amount of 9,171,129. The total amount due represents repaymentr services rendered and OPEB costs for the period from October 1, 2009 through

eptember 30, 2 11 .BSO will provide the breakdown of principle and applied interest and the resultingoutstanding balance within 3 days of Fiscal Year close and provide a revisedoutstanding balance schedule which shall be deemed an amendment to the repaymentagreement. Bi-Annual payments are made during January and July beginning in 2012and continuing through 2016 based on the agreed upon payment for each fiscal year asadjusted for accrued and paid interest and the principle.

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11/23

CITY OF LAUDERDALE LAKES, FLORIDAMANAGEMENT DISCUSSION AND ANALYSIS

Financial Analysis of the City s FundsThe City uses fund accounting to ensure and demonstrate compliance with the finance relatedlegal requirements.Governmental FundsThe purpose of the City s governmental funds is to provide information on near-term inflows,outflows, and balances of spendable resources relative to the City s funding requirements.Unreserved fund balance serve as the most useful measure of the City s net resources availablefor spending at the end of the fiscal year.As of the end of the current fiscal year, the City s governmental funds reported a combinedending fund balance of 4.5 million, an increase of 8.2 million in comparison with 2011. The Cityproperly reclassified the outstanding obligation , to the Broward Sheriffs Office, (B to long tenndebt in accordance with the executed debt repayment agreement.The Fire Rescu fund revenues exceeded its expenditures by an increase of 2.1. The increasein overall revenues is due to the reclassification of the outstanding Broward Sheriffs Officeobligation to long-term debt.During the fiscal year 2012, the City continued Community Development Block Grant programs.The City will aggressively pursue reimbursements from outside grant agencies for theexpenditures of funds.The Community Redevelopment Agency (CRA) fund expenditures exceeded its revenues by50,477. The CRA fund had a positive fund balance of 3.3 million for the fiscal year ended2012. Note: that the CRA Fund budgets re-appropriated fund balance and anticipates use of fundbalance during the fiscal year.The General FundThe General Fund is the City s primary operating fund and largest source of day-to-day servicedelivery. General tax revenues and other receipts that are not allocated by law or contractualagreement to another fund are accounted for in this fund. General operating expenses, fixedcharges and capital improvement costs not paid through other funds are paid from this fund. Atthe end of this reported fiscal year, the fund balance of the general fund was 1 million, comparedto a fund balance deficit in the prior year. f the 1 million in fund balance in the general fund,125,621 of this amount is non-spendable leaving a 919,816 million in unassigned fund balance.General Fund Budgetary HighlightsSince the City Administration did not recommend any material rev s ons to the originalappropriations in the General Fund budget there is not a significant amount of information tohighlight. The Budget and Actual Comparison schedule is provided in the SupplementaryInformation for the General Fund and Major Special Revenue Funds.The Budget and Actual Comparison Schedules show the original adopted budgets , the finalrevised budget, actual results and variance between the final budget and actual results for theGeneral and Major Special Revenue Funds. After the original budget is approved, it may berevised for a variety of reasons such as foreseen circumstances, loan proceeds, new grantawards or other unanticipated revenues.

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12/23

LONG TERM FINANCIAL PLANAs part of the need to provide financial stability to a weakening local economy, City Managementdeveloped a Five-Year Financial Plan. The financial plan serves as a valuable tool to assist the CityCommission and City Management in making sound fiscal decisions particularly as it relates to thesurmountable debt service. Most important, the City negotiated and executed mutually acceptableagreements with the Broward Sheriffs Office (BSO) fo r the following: (1) approximately 9 Millionoutstanding obligations covering FY201 0 disputed Other Post Employment Benefits {OPEB) balancesand FY2011 police and fire rescue services costs and (2) new 5 Year City/BSO police and fire rescueservices agreement at a reduced cost to accommodate the City's limited revenues. To date, the Citycontinues to meet agreement and other requirements.The City also adopted financial goals and objectives by which to measure the City's overall performanceand financial recovery from poor economic conditions. The City Commission and City Managementcontinued to review and evaluate the budgetary line items and give consideration to the elimination orreduction of expenditures to halt the escalating debt accumulated in 2011. The City Administration mustcontinue to make recommendations to immediately reduce and manage expenses across the board,including personnel costs and contractual services. In fiscal year 2012, the City maintained the increasedlevel for charges for services to meet anticipated reductions in revenue. As noted in the FY 2011 AnnualReport the City took extreme measures to minimize the financial crisis without jeopardizing critical Cityservices. The result of the fiscal constraint implemented in Y 2011 and continued into FY 2012 by CityManagement can be seen in this September 30 year ended report. There was a significant positivechange in City's financial condition although the City continues to have financial challenges .

MAJOR INITIATIVES AND CAPITAL PROJECTSDuring fiscal year 2012, the City effectively dealt with its financial challenge. The achievements are asfollows:

Paid over 1 million to Broward Sheriff Office (BSO) for City/BSO Police and Fire RescueServices Agreement to pay the City's outstanding debt obligations; Paid current BSO obligations in a timely basis; Provided monthly budget reports to keep the Mayor, City Commission, City Management andexternal stakeholders updated on the City's financial condition; Achieved a balance budget as of year ended September 30, 2012; Implemented the City's Five Year Financial Plan; and Implemented an agreement with Broward County for and or other governmental agencies tocomplete the construction phases for the followmg grant funded capital projects: FederallyFunded Emergency Operations Center, CDBG/DRI Funded Alzheimer Care Center ImprovementProject, CDGB/DRI Funded Mast Arm Traffic Signal Project, and Stormwater Canal BankStabilization Project.

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13/23


14/23

CI1Y OF LAUDERDALE LAKES FLORIDASCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

FISCAL YEAR ENDED SEPTEMBER 30 2012

FederalCFDAFederal Grantor/Pass-Through Grantor/Program 1itle Number

U.S. Department of Housing and Urban DevelopmentPass-Through Program from:State of Florida Department of Housing and Urban DevelopmentPassed through - Broward CountyCDBG Service Area Mast Arms and Traffic Signals 14.228

CDBG Service Area 7 AlzheimersCenterHurricane Improvement Project 14.228

Community Development Block Grant 37th Year Senior Quality of Ufe 14.218Community Development Block Grant - 37th Year Senior Transportation 14.218Community Development Block Grant - 37th Year Youth Leadership Program 14.218Community Development Block Grant 37th YearMinor Home Repair 14.218

Subtotal n direct programsTotal U.S. Department of Housing and Urban Development

U.S. Department ofHealth andHuman ServicesPass-Through Program from:State of Florida Passed through -Broward County

Special Programs for the Aging Trtle 111 B Grants for SupportiveServices and Senior Centers 93.044Total U.S. Departmentof Health and Human ServicesU.S. Department ofAgriculture

Pass-Through Program from:Florida Department of Agricuhure

Summer Food Program 10.559Total U.S. Departmentof AgricultureTotal Expenditures of Federal wards

Pass-ThroughEntity Identifying Federal Federal

Number Expenditures Award

08-DB-D3-11-1 Hl1-A06 500 000 500 00008-DB-D3-11-1EH>1-A06 625 000 625 000

B-09-UC-12-001 18 005 18 162B-09-UC-12-001 45 082 49 712B-09-UC-12-001 12 668 12 508B-09-UC-12-001 322 733

75 755 403 1151 200755 1 528 115

JA010-25-2012 52 055 52 05552 055 52 055

04-0176 15 113 12 28815 113 12 288

1 267 924 1 592 458


15/23

CITY OF LAUDERDALE LAKES, FLORIDASummary Schedule ofFindings and Questioned CostsFor the Year Ended September 30,2012

SECTION I - SUMMARY OF AUDITOR'S RESULTS

Financial StatementsType of Auditors' report issued:Internal control over financial reporting:

Material weakness(es) identified? Significant deficiency(ies) identified that areNot considered to be material weakness(es)?

Noncompliance material to financial statements noted?Federal wards

Internal control over ~ o r programs: Material weakness(es) identified? Significant deficiency{ies) identified that are

Not considered to be material weakness(es)?Type of auditors ' report issued on compliance for majorfederal programs and state projects:

ny audit findings disclosed that are required to be reported inaccordance with section 5IO(a) ofOMB Circular A-133?

Identification of major programs:

Federal ProgramFederal ProgramsCommunity Development Block GrantCommunity Development Block Grant

Dollar threshold used to distinguish between Type A and Type BFederal Programs: 300,000

Auditee qualified as low-risk auditee for federal a\\'ard programs?

Unqualified

~ Y e s X NoYes No

_Yes No

_Ye s No_Yes No

Unqualified

Ye s J _ N o

Federal CFDA

14.218.228

_Yes _No


16/23

SECTION II - FINANCIAL STATEMENT FINDINGSSIGNIFIC NTDEFICIENCIES2012-01 Year End Closing EntriesConditionWe noted during the cour se of the audit that balance sheet accounts which include accru ed liabilities, capitalassets and due to/from in all funds reflected on the respective trial balances were not properly reconciled to reflectthe approptiate balances as of year-end.CriteriaPrudent policies include a for mal closing process with supervisory Finance D epartment personnel beingresponsible for the reYiev. and evaluation of transactions and balances recorded.CauseThe cause of the conditions is the lack of a formal cl osing process which i ncorporates a thorough review byfinance personnel.EffectFormal closing procedures includes the following: reve rsing prior years accmals, d eterrnination that alltransactions have been recorded and posted, reconcili ng general ledger acco unts with subsidiary ledgers andmaking necessary adjustments, mnning/print ing year-end reports in order to have a record ofhistoricaltransactions for the year (they will be useful dming the audit), etc. Lack of the implementation of hese proceduresmay result in misstatements in the fmancial statements.RecommendationThe City should consider developing formal y ear end closing procedures. These procedures should includetimetables outlining appropriate due dates and instructi ons for schedules that should be prepared. The closingprocedures should be documented in a formal checklist that indicates the indiYidual responsible for the task, whenit is due to be co mpleted and when it is accomplished. We believe that a review and evaluation of transactionsrecorded at year end should be performed to ensure the validity ofamounts recorded, as well as reduce audit time.The implementation of formal procedures will reduce tl1e need for numerous adjustments to financial recordsduring the audit process, delay in the preparation of financial reports needed by management and the auditors.V eW ofResponsible Officials and Planned Corrective ctionsManagement accepts the finding and reco mmendation. Management will establish procedures in the currentperiod to address the following issues:

... The City will continue to strengthen its fmm al year end closing processes and procedures, whichincorporate a thorough review of all accounts to ensure all transactions have been recorded and reconciledin a proper manner and timeframe.)- The year-end closing process - .ill include timelines and checklists for the Financial Services Depattment.The new process will r equire the timely recording of year-end closing entries into the City s FinancialAccounting System.The City will endeavor to upgrade the City s Financial Accounting System and conduct employee training toensure a more efficient and effective year-end financial reporting process

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SECTION FINANCIAL STATEMENT FINDINGS (CONTINUED)SIGNIFIC NT DEFICIENCIES CONTINUED)2012-02 Bank ReconciliationsConditionDuring the course of the audit \Ve noted the City did not reconcile its pooled cash bank account proper y nor wasit completed in a timely manner. Not reconciling the accounts on a monthly basis means that enors or otherproblems might not be recognized and resolved on a tim ely basis. We also noted an unreconciled difference ofapproximately $125,000. This difference was corrected by the City after the fiscal year end .CriteriaTimely preparation of complete and accurate bank reconc iliations is a key to maintaining adequate control overboth cash receipts and disbursem ents. Bank accounts should be reconciled on am onthly basis which wouldproYidc management a useful tool to monitorthe City' s cash position. The purpose of he bank reconciliation is toprevent and detect errors or misappropriation ofassets.CauseThe monthly bank reconciliations were not prepared timely or properly and reviewed by management.EffectThe City is susceptible to the concealment ofmisappropriation of cash assets and risk ofmisstatement of cash orreconciling items.RecommendationWe recommend that all bank accounts be reconciled and reviev .ed each month prior to preparation of the monthlyfinancial statemen.ts. The review s hould include tests of mechanical accuracy and tracing of item s on thereconciliation to the relevant sour ce documents. The composition of unreconciled differences should bedetermined and followed up on, and any journal entries deemed necessary as a result be recorded.

IView ofResponsible Officials and Planned Corrective ActionsManagement accepts the finding and recommendation. Management ill establish procedures in the currentperiod to address the following issues:' The Financial Services Departmentwill continue to enhance its bank reconciliation procedures to includetimelines and checklists.' The timely completion ofbank reconciliations will be prioritized and incorporated into the FinancialSen ces Director and Financial Services Manager' s regular responsibilities, position descriptions andperformance evaluations.' The Financial Services Director and/or designee ill ensure the timely completion and accuracy of hebank reconciliations on a monthly basis.

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SECTION IT-FINANCIAL STATEMENT FINDINGS (CONTINUED)2012-03 Disas ter Recovery PlanConditionDuring the course ofour audit, we inquired offmance personnel regarding the City' s disaster recovery plan. TheCity should have a plan in place that would protect the financial data and se curity information in the case ofanatural disaster.CriteriaFlorida is especially susceptible to natural disasters i n the form ofhurricanes and t omados. The st ffshould betrained and backups to financial data and securit y systems made on a re gular basis. Back ups should bemaintained offsite.CauseThe personnel knew that there was a plan, but did not know any details related to how it should work. There wereno drills or training to keep employt:t:s aware of he pro cedurt:s. Personnel wt:re not awart: of any details of hedisaster recovery plan and the backups were maintained on site.EffectWithout an appropriate disaster recoYery plan in effect, the City would be extremely hindered in their efforts toget their senices up and running as so on as possible for its residents. The City would have lost the ability toprO\ de funds, purchase orders and other required documents to effectively account for and manage the recoveryprocess.RecommendationA disaster recovery plan should be formally adopted, written and included with the employees ' handbookmaterials to include regular and consistent backups of financial data with a copy of those backups stored offsite.There should also be an e stablishment of all security protocols required for both the backup and the recoveryprocedures. Staff should be trainl d on a regular and consisttmtbasis regarding t:ach of heir responsibilities in thecase of a disaster. The City should consider conducting a drill oftthe disaster recoYery plan at least once a year.View o Responsible Officials and Planned Corrective ctionsManagement accepts the finding and recommendation. Management \\i ll establish procedures in the currentperiod to address the following issues:' The Financial Services Department will update the City' s Disaster Preparedness and Recovery Plan.

- The City will conduct any required employee training. The employee training sessions will be conductedfor the Financial Services Department and Other Departments as needed.-, The City will continue to enhance its security protocols, back up and the recovery procedures.

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SECTION FINANCIAL STATEMENT FINDINGS CONTINUED)SIGNIFIC NT DEFICIENCIES CONTINUED)2012-04 Accounts ReceivableConditionWe noted during the course of the audit that accounts receivable balances were not properly reconciled to reflectthe appropriate balances as of year-end .CriteriaPrudent policies include a for mal closing process with supervisory Finance D epartment personnel beingresponsible for the review and eYaluati on of transactions and balances recorded. The re\iew would include, at aminimum, preparing a detailed aged accounts receivable ledger, revie\\ing balances for consideration for writ eoff, or for an adjustment to the allowance for doubtf ul accounts and following up with collection procedures tomake sure appropriate measures are being taken on overdue accounts.CauseThe cause of the conditions is the lack ofa formal cl osing process which i ncorporates a thorough review byfinance personnel.EffectFormal closing procedures includes the following: determination that all transactions have been recorded andposted, reconciling general kdger accounts with subsidiar y ledgers or schedules and m aking necessaryadjustments, running/printing year-end reports in order to haYe a record of hi storical transactions for they earthey will be useful during the audit), etc. L ack of the i mplementation of these procedures may result inmisstatements in the financial statements preventing proper management consideration for those balances.RecommendationThe City should consider developing formal accounts receiYable interim and year end closing procedures. Theseprocedures should include timetables outlining appropriate due dates and instructions for schedules that should beprepared. The closing procedures should be docu mented in a form al checklist that indicates the individualresponsible for the task, when it is due to be completed and hsr it is accomplished. We believe that a review andevaluation of ransactions recorded at ye r end should be performed to ensure the validity of amounts recorded, asvvell as redu ce audit time. The im plementation of form al procedures will reduce the need for numerousadjustments to financial records during the audit process, delay in the preparation of financial reports needed bymanagement and the auditors.View ofResponsible Officials and Planned Corrective ActionsManagement accepts the fmding and recommendation. Management will establish procedures in the currentperiod to address the following issues:

- . The City will continue to strengthen its accounts receivable year-end closing processes and procedures,which incorporates a thorough review of all accounts to ensure all transactions haYe been properlyrecorded and reconciled in a proper timeframe.

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SECTION FINANCIAL STATEMENT FINDINGS (CONTINUED)SIGNIFIC NT DEFICIENCIES CONTINUED)20U 06 Grant review processesConditionWe noted during the course of the audit that the City as a sub-recipient for two federal grant awards was notproperly reconciling and recording the grant activity to reflect the appropriate balances as of year-end.CriteriaPrudent policies include a formal review process by supe rvisory Finance Department personnel responsible forthe recognition ofgrants, contracts and agreements . The review would include, at a minimum, a determination ofthe reporting and subm ission requirements, expenditure limitations, responsibilities the City is to be heldaccountable for and the preparation of a schedule of expenditures of federal awards.CauseThe cause of the condition is the lack of a formal review process for grants, contracts and agreements which isrequired of finance personnel in order to properly record the effects in the records for the City.EffectThe recognition of federal grant award s includes the folio wing: determination that all transactions have beenrecorded and posted correctly , all transactions meet the limitations expressed in the grant agreem ent, amountsreconcile to the general I edger grant fund accounts with all related schedules for making necessary adjustments,running/printing year-end reports in order to have a record of historical transactions forth e year {they will beuseful during the audit), the preparation of the schedule of expenditures of federal awards, etc. Lack of theimplementation of hese procedures may result in misst atements in the fma ncial statements preventing propermanagement consideration for those balances and any related grant compliance issues.RecommendationThe City should consider developing a formal system of grant, contracts and agreements review procedures.These procedures should include ti m tables outlining appropriate due dates and instructions for sched ules thatshould be prepared and a detail listing of ll compliance requirements. The procedures should be documented in atformal checklist that indicates the individual responsible for the task, when it is due to be completed and when it isaccomplished. Additionally, staff should be assigned the task of preparing the preliminary data required for theschedule of e)l:penditures of federal awards. Web elieve that an additional review and evaluation of grants,contracts and agreements at year end should be performed to ensure the validity ofamounts recorded, as well asreduce the time for completion of the audit. The i mplementation of formal procedures will reduce the need fornumerous adjustments to financial reco rds during the audit process and delay s in the preparation of financialreports needed by management and the auditors.View o Responsible Officials and Planned Corrective ActionsManagement accepts the fmding and recommendation. Management will establish procedures in the currentperiod to address the following issues:

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; The City will develop a grant review process which will incmporate a thorough review ofall grantrequirements that will outline appropriate due dates and instructions for grant required schedules

. The grant review year-end process will include time ines and checklists for the Financial SetvicesDepartment and ensure accuracy of data recorded in the Citys Financial Accounting System.

- The new process will require that staff imely prepare the preliminary data need to comply with grantaudit requirements.., The timely grant review process will be prioritized and incorporated into the Financial Services Directorand Financial Services Analyst s regular responsibilities, position description and performanceevaluation.., The City will endeavor to upgrade the City s Financial Accounting System and conduct employeetraining to ensure a more efficient and effective grant re\.iew year-end financial reporting process.

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Municode Page 1 o 1

Section 3 17 Ordinances and resolutionsOrdinance means an official, legislative action o the city commission which action is a

regulation o general and permanent nature and enforceable as a local law.A resolution is an expression o the city commission on matters o official concern, opinion

or administration, o a temporary character, or a provision or the disposition o a particular item ofthe administrative business o the governing body.

(1) Form. Each ordinance or resolution shall be introduced in writing and shall embracebut one subject and matters properly connected therewith. The subject shall be clearlystated in the title. No ordinance shall be revised or amended by reference to its titleonly. Ordinances to revise or amend shall set out in full the revised or amended act,section, subsection or paragraph o a section or subsection.

(2) Procedure. The proposed ordinance shall be read in full on the first reading, and bytitle or in full on the second reading on at least two (2) separate dates, at eitherregular or special meetings o the city commission; provided, however, upon theaffirmative vote o five (5) members o the city commission, the necessity that theordinance be read in full on the first reading may be waived. At least eight (8) daysprior to the second reading, a proposed ordinance shall be advertised at least once ina newspaper o general circulation in the city. The notice o proposed enactment shallstate the date, time and place or places within the city where such proposedordinance may be inspected by the public. Said notice shall also advise that interestedparties may appear at the meeting and be heard ith respect to the proposedordinance.

(3) Effective date. Each ordinance shall become effective on the date specified therein ;provided that in the absence o such designation in an ordinance, such ordinanceshall become effective on the tenth business day subsequent to its adoption.

(4) Action requiring n ordinance. In addition to other acts required by law or by specificprovision o this Charter to be done by ordinance, those acts o the city commissionshall be by ordinance which:(a) Adopt or amend an administrative code, or establish, al ter or abolish any city

department or agency;(b) Establish a rule or regulation the violation which carries a penalty;(c) Levy taxes authorized by general law;(d) Grant, renew or extend a franchise;(e) Set service or user charges for municipal services o [or] granting

administrative authority for such charges;f) Authorize the borrowing o money not inconsistent with the limitations in theConstitution and general law of the state;

(g) Convey or lease or authorize by administrative action the conveyance or leaseo any lands o the city;

(h) Amend or repeal any ordinance previously adopted.Prop. No. 1 11 -2-1982; Ord. No. 97-23, 1-13-1998)

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