Response to Disbursements Management Letter and Golf Course Letter to Management
We are providing this letter in response to the audit of the City of Ocean Shores for the period January 1, 2020, through December 31, 2020.
First, we would like to state that we were pleased to receive another “clean” audit. This is the City’s fourth consecutive audit with no audit findings.
Nearly every audit includes recommendations for stronger internal controls and/or processes to ensure compliance with policies and procedures. This audit identified the following areas where improvements can be made.
Disbursements Management Letter:
- Auditor’s Recommendation: Segregate duties between the accounts payable and vendor management functions to ensure only valid vendors receive payments.
City Action Plan: The City Clerk will be creating a contract and agreement policy. This policy will outline the process for required signatures, retention, online postings, process for contract extensions, etc. This will segregate duties between the City Clerk’s Office and Finance Department and ensure all contracts and agreements are current, signed and posted online.
- Auditor’s Recommendation: Ensure professional service contracts are current, vendors meet contract terms, and vendors provide invoices before staff make payments.
City Action Plan: This recommendation was made regarding not having signed contract extensions on file for our janitorial and IT service agreements. The city did have documentation that the contract extensions were sent around for signatures but could not find the final signed copies. We now have an electronic signing process that should help alleviate this in the future and both agreements are now current and posted on the City’s website. The Finance Department will also continue to ensure vendors are meeting contract terms and invoices are attached prior to making payment.
- Auditor’s Recommendation: Comply with state law and established policies and procedures.
City Action Plan: This recommendation was made in reference to the Convention Center purchasing alcohol to serve at a catering event. In the coming months, the City will issue a Request for Proposals (RFP) to determine if we can find an outside vendor to perform alcohol service at Convention Center events. If we can find an outside vendor, the Convention Center will no longer need to purchase alcohol for catering events.
- Auditor’s Recommendation: Obtain and keep adequate documentation supporting public purpose of purchases.
City Action Plan: This recommendation also relates to the alcohol purchase. Please see City Action Plan above.
- Auditor’s Recommendation: Adequately review invoices to ensure the city is not making duplicate payments.
City Action Plan: This recommendation relates to a duplicate payment of a $448 invoice. This was an isolated occurrence, and we received a credit for the duplicate payment. We will be more diligent to ensure this doesn’t happen in the future.
Golf Course Letter to Management:
Typically, the recommendations included in this letter would be reported as “exit items” and not brought forward to the exit conference. However, the auditor stated that the Golf Course is highly political. We were also told that due to the large number of citizen referrals the auditor’s office received in relation to the Golf Course, they would have to report the results this way.
Citizen referrals result in an additional audit cost to the city. We have requested a copy of the citizen referral report from the auditor’s office which they said will be available after the audit reports are issued. Once we receive the report and final audit costs associated with the citizen referrals, we will post all this information on the City’s website along with the audit documents.
With that being said, we are pleased with the results of the audit of the Golf Course lease. We were asked for documentation dating back to 2005 and only received three minor recommendations. Here is our action plan to address the auditor’s recommendations:
- Auditor’s Recommendation: The lease agreement includes requirements that the lessee must submit certain financial reports to the City. However, the city could not demonstrate that the lessee provided the reports timely. We recommend the City maintain documentation indicating when it received these required reports.
City Action Plan: City administration met with the Golf Course lessee on February 15, 2022. We developed a plan to have him send his monthly financial reports to the City Clerk by the 15th of every month. The City Clerk also set calendar reminders to ensure the reports are received timely. Since these reports are received through email, there will be a time/date listed.
- The lessee did not report to the City Council on the status of the leasehold improvements in 2020, as the lease requires. We recommend the city ensure it receives timely notification of the status of leasehold improvements.
City Action Plan: During our meeting with the lessee, we discussed a plan to have him report to Council twice a year per the lease agreement. He will make his first presentation for 2022 at the February 28, 2022, Council Meeting.
- Auditor’s Recommendation: The golf course holes were renumbered, but the lease was not updated to reflect the current terminology. We recommend the city ensure it makes timely updates to the lease agreement.
City Action Plan: The renumbering of the golf course holes dates back to 2007/2008. If the lease agreement would have been audited at that time, the terminology would have been correct. The Golf Course lessee presented a letter to the City Council on January 14, 2008, stating that the holes had been switched. Amendment #3 to the Golf Course lease also referenced that the holes were switched. We do not feel this issue should have been included in the current audit as it was done 12 to 13 years prior. No additional follow-up will be done.