Accounting issues plague budget

Finance Director Sue Smith took over as chief accountant for a few months in 2013 while the town sought to fill the open position. The extra work enabled the former auditor to uncover and correct some strange accounting practices that have affected the town’s balance sheet for years.

For instance, the town hasn’t addressed office supplies inventory since the 1990s and was just expensing the supplies to the department budgets when they needed supplies. Tennis Center supplies, Smith said, also weren’t being accounted for correctly.

Smith also said the town will discontinue a policy of carrying purchase orders over prior years, which affected the operating budget and increased department budgets.

And, a $42,980.75 fund consisting of fees for replacement trees that can’t be saved when new projects are built wasn’t being accounted for correctly and wasn’t singled out as a special revenue fund.

The town has filled the accountant position, but Smith told the Longboat Key Town Commission at its meeting Monday night that she will continue to review accounting practices that are outdated.

“I’m not done with my investigation yet,” Smith said.

Smith and Town Manager Dave Bullock also informed commissioners they are reviewing new accounting software because the town’s system is old and outdated. A new system could cost taxpayers more than $100,000.

Although commissioners were happy to hear that Smith corrected some accounting practices, they were upset that auditors hired to review the town’s finances each year never caught the irregularities.

“I’m concerned the auditors weren’t all over this,” said Commissioner Jack Duncan.

When staff informed commissioners that a three-year auditing contract with Clearwater-based Carr, Riggs & Ingram expires this year, Commissioner Phill Younger said, “It’s time to find a new auditor.”

Further frustrating commissioners was the announcement that the town already has a $1.4 million deficit to address because revenues aren’t coming in as expected for the fiscal year budget that ended Sept. 30, 2013.

Franchise fees have been declining for years, and town staff said it has to start doing a better job of estimating more realistic revenue numbers in the future. The decrease in utility revenues, staff said, might be attributed to seasonal residents coming to the island for shorter periods of time.

The town’s Investment Advisory Committee, Bullock said, will work with staff to come up with more realistic revenue projections. Smith will also provide the commission with quarterly revenue and budget updates.

“The expectation for the coming year is to hone projections better and consult with neighboring communities that are also projecting revenues,” Bullock said.

To counteract the deficit, the town has used more of its fund balance and Bullock’s preferred operating budget, which shoots for a 90-day minimum operating fund balance in case of an emergency, has now dropped by 15 days to 75 days.

Bullock told committee members that staff will present a two-year plan this summer to return the budget to the 90-day operating budget he prefers. The town is already making cuts, which include cutting the fire marshal’s hours from full time to three days a week.

Bullock said the town expects property values to continue to increase as the economy recovers to help offset the problem.

Click here for a summary of results of fiscal year 2013

Contact Kurt Schultheis at [email protected]