The City’s Office of Special Events filed misleading documentation and improperly used its petty cash fund during fiscal 2009-10 and other periods, according to a City Council Auditor report released Thursday.
The report said the misleading documentation resulted in $1.96 million “not being properly reflected on the City’s Annual Financial Report” between Oct. 1, 2006, and April 6, 2011.
The report analyzed “imprest” checking accounts of the City’s Recreation and Community Services division, which consisted of the Office of Special Events; Military Affairs, Veterans and Disabled Services Division; Behavioral and Human Services Division; and Adult Services Division.
All were separate departments until December. Mayor Alvin Brown reorganized City government after taking office July 1.
The report defines “imprest” accounts as those “utilized to assist with purchases of low priced items that are needed immediately and when it is not cost effective (and/or feasible) to issue a check in a normal manner.”
Theresa O’Donnell Price was the City director of special events, but left City employment in September after Brown took office.
She joined the University of North Florida as the director of major events Jan. 9. She did not respond to requests for comment.
The Council Auditor’s Office summarized seven “significant audit findings” in the report:
• Misleading documentation and did not operate the imprest account as an imprest account. The misleading documentation resulted in $1,958,676 in expenditures and revenue not being properly reflected on the City’s Annual Financial Report between Oct.1, 2006-April 6, 2011.
• Payments made to family members of employees.
• Failure to comply with event financial reporting deadlines as required by the City’s municipal code.
• Inconsistency in following the City’s Procurement Code.
• The amount authorized for the account appearing to be in excess of the amount needed.
• Lack of approval from the Office of General Counsel and the City’s chief financial officer prior to entering into contracts, also required under the municipal code.
• Creating invoices to support replenishment requests in multiple instances.
The special events office review was expanded beyond 2009-10 after auditors found an issue with a replenishment request.
Replenishment requests are reimbursed on an as-needed basis but must be reconciled and reimbursed by the end of each month, according to the report, citing City policy.
The report said the request that led to the expanded scope was for two checks that had been voided when they actually had cleared the bank for an amount of $74,168.
The additional scope of the office included payments of $2,500 or more from the office to vendors from Oct. 1, 2009- April 6, 2011 and payment to select vendors from Oct. 1, 2006- April 6, 2011.
Those select vendors included payments to employees — and family members — and vendors with questionable payment, such as checks marked as void and same-amount payments in a defined period.
In its detailed findings, the auditor stated that special events was depositing funds, such as those collected at events, directly into the account, leading to a lack of oversight and overages beyond the authorized $100,010 for the account.
The report also said the office falsified its checkbook balance on account replenishment requests and cited a June 2010 example when the office said the balance was $14,731, when it actually was $68,279, for a replenishment request.
The accounting division also was unable to act as the oversight agency due to a lack of timely replenishment requests, it said.
For fiscal 2009-10, the office wrote checks totaling $879,065 from the account, but only requested replenishments for $374,956 for the year and $27,927 for years before.
In the expanded scope from Oct. 1, 2006- April 6, 2011, the office wrote checks from the account totaling $3.66 million, of which $1.96 million were marked as not reimbursable, void or stop payment on the replenishment or left off entirely.
“This means that over 50 percent of the checks written during this time period did not have any oversight by the City’s Accounting Division,” the report states.
Among the auditor’s recommendations:
• The Office of Special Events must make nightly deposits into the Tax Collector’s bank account and submit a cash receipt with the Tax Collector’s Office that will request the funds be recorded in the Special Events Trust Fund.
• The Office of Special Events must work with the City’s Accounting and Treasury Divisions to establish a plan to bring the imprest account back into the properly authorized amount.
• The City’s administration must take the appropriate disciplinary action against the employees who falsified documents for several years to circumvent the City’s internal controls.
Belton said this morning that many of the auditor’s recommendations have already been implemented and that he would continue to work with Council Auditor Kirk Sherman to address further issues.
He also said he has known the office was one that “needed to be addressed” since Brown took office and that he has worked with Sherman and Tonisha Landry-Gaines, who succeeded O’Donnell Price, to ensure proper monitoring and practices.
“It wasn’t a surprise to me,” Belton said of the audit.
Asked if fraud or theft of the funds in question was a possibility, Belton said he “didn’t know that” and that he would not be involved in any disciplinary action against special events employees present during the audit’s scope.
356-2466