04-012 GESE Audit Report

Vigwe

Informations

• Publié par: Anyae
• Nombre de lectures: 56
• Langue: English

Extrait

C: The Honorable Mayor Manuel A. Diaz
Joe Arriola, Chief Administrator/City Manager
Members of the Audit Advisory Committee
Members of the General Employees and Sanitation Employees’ Retirement Trust
(GESE) Board
Linda M. Haskins, CPA, Chief Financial Officer/Deputy Chief Administrator
Alicia Cuervo-Schreiber, Chief Operating Officer
Larry Spring, Chief of Strategic Planning, Budgeting and Performance
Peter W. Korinis, Chief Information Officer
Alejandro Vilarello, City Attorney
Priscilla A. Thompson, City Clerk
Donald Riedel, Director, Office of Citistat
J. Scott Simpson, CPA, Director, Finance department
Rosalie Mark, Director, Employee Relations department
Dania F. Carrillo, Risk Management Administrator
Sandra Elenberg, Administrator, General Employees’ & Sanitation Employees’
Retirement Trust (GESE)
Robert H. Nagle, Administrator, Firefighters and Police Officers’ Retirement
Trust (FIPO)
Audit Documentation File




AUDIT OF GENERAL EMPLOYEES’ AND SANITATION EMPLOYEES’
RETIREMENT TRUST’S (GESE) NON-INVESTMENT EXPENDITURES AND
OTHER SELECTED FINANCIAL TRANSACTIONS
FOR THE PERIOD OF OCTOBER 1, 2002 THROUGH SEPTEMBER 30, 2003

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................... 1
SCOPE AND OBJECTIVES ......................................................................................................................... 2
METHODOLOGY......................................................................................................................................... 3
SUMMARY OF AUDIT FINDINGS ............................................................................................................ 4
STRATEGIC PLANNING, BUDGETING & PERFORMANCE DEPARTMENT (BUDGET
DEPARTMENT) AND GENERAL EMPLOYEES’ AND SANITATION EMPLOYEES’
RETIREMENT TRUST (GESE) ............................................................................................................... 4
INADEQUATE BUDGETARY CONTROLS FOR GESE................................................................... 4
GENERAL EMPLOYEES’ AND SANITATION EMPLOYEES’ RETIREMENT TRUST (GESE)...... 5
APPARENT NONCOMPLIANCE WITH CITY CODE FOR AWARDS OF DISABILITY
RETIREMENT....................................................................................................................................... 5
FAILURE TO OBTAIN AD VALOREM TAX EXEMPTION. ........................................................... 6
GESE AND FIPO SHOULD ENDEAVOR TO SHARE PERSONNEL AND FACILITIES AS
PROVIDED IN GATES V. CITY OF MIAMI...................................................................................... 6
CONTROLS OVER TANGIBLE PERSONAL PROPERTY. .............................................................. 7
EXPENDITURES FOR STATE SALES TAX AND FOOD/BEVERAGES........................................ 8
AUDIT FINDINGS AND RECOMMENDATIONS 9
STRATEGIC PLANNING, BUDGETING & PERFORMANCE DEPARTMENT (BUDGET
DEPARTMENT) AND GENERAL EMPLOYEES’ AND SANITATION EMPLOYEES’
RETIREMENT TRUST (GESE) ............................................................................................................... 9
INADEQUATE BUDGETARY CONTROLS FOR GESE................................................................... 9
GENERAL EMPLOYEES’ AND SANITATION EMPLOYEES’ RETIREMENT TRUST (GESE).... 12
APPARENT NONCOMPLIANCE WITH CITY CODE FOR AWARDS OF DISABILITY
RETIREMENT..................................................................................................................................... 12
FAILURE TO OBTAIN AD VALOREM TAX EXEMPTION. ......................................................... 15
GESE AND FIPO SHOULD ENDEAVOR TO SHARE PERSONNEL AND FACILITIES AS
PROVIDED IN GATES V. CITY OF MIAMI.................................................................................... 17
CONTROLS OVER TANGIBLE PERSONAL PROPERTY. ............................................................ 19
EXPENDITURES FOR STATE SALES TAX AND FOOD/BEVERAGES...................................... 21


INTRODUCTION

Pursuant to Article IV, Sections 40-241 through 40-295 of the City Code and the verdict
thresulting from Court Case number 77-9491 CA 04 (Gates Case) of the 11 Judicial
Circuit of Miami-Dade County, the City provides the funding for the
administration/operations of the General Employees’ and Sanitation Employees’
Retirement Trust (GESE). GESE, which manages the pension contributions made by
City General and Sanitation Employees, has a total of 10 employees and its Net Assets at
September 30, 2003, were $516,813,945. At the beginning of Fiscal Year 2003, GESE
served 3,470 current and retired employees. The Administrator of GESE reports to a
Board of Trustees, which is comprised of nine members selected as follows:

o One trustee selected by the City Manager.
o Two trustees selected by the Florida Public Employees Council 79, AFSCME,
AFL-CIO, Local 871.

o Two trustees selected by the Miami General Employees American Federation of
State, County, and Municipal Employees Local 1907, AFL-CIO.

o Four independent trustees, who shall not be city employees, selected by the
AFSCME, AFL-CIO, Local 871 and AFL-CIO, Local 1907 and confirmed by the
City Commission.

1
SCOPE AND OBJECTIVES

This audit was performed pursuant to the authority set forth in Section 48 of the City
Charter entitled: “Office of the Independent Auditor General” (OAG), and was conducted
in accordance with the OAG’s Fiscal Year 2004 Audit Plan. The audit covered the
period of October 1, 2002, through September 30, 2003, and selected transactions prior
and subsequent to this period. In general, the audit focused on the following objectives:

• Determined compliance with Chapter 40, Article IV, Division 3, of the City Code
entitled: “General Employees’ and Sanitation Employees’ Retirement Trust”
(GESE).

• Assessed the adequacy of budgetary controls for GESE expenditures.
• Determined the propriety of GESE’s operating expenditures and other payments.

• Evaluated the efficiency and cost effectiveness of GESE’s non-investment
operations.

• Ascertained whether GESE is employing best practices in its non-investment
activities.
2
METHODOLOGY

We conducted the audit in accordance with Generally Accepted Government Auditing
Standards, issued by the Comptroller General of the United States. The audit
methodology included the following:
• Interviewed and inquired of appropriate City and GESE personnel; reviewed and
observed applicable laws, ordinances, procedures, and records in order to gain an
understanding of the internal controls; assessed control risk; and planned
substantive testing,

• Employed analytical review procedures,
• Performed substantive testing consistent with the audit objectives,
• Examined, on a test basis, applicable transactions and records,
• Drew conclusions based on the testing and made corresponding
recommendations.


3
SUMMARY OF AUDIT FINDINGS
STRATEGIC PLANNING, BUDGETING & PERFORMANCE DEPARTMENT
(BUDGET DEPARTMENT) AND GENERAL EMPLOYEES’ AND SANITATION
EMPLOYEES’ RETIREMENT TRUST (GESE)

INADEQUATE BUDGETARY CONTROLS FOR GESE.

Our review of City/GESE budgetary records, disclosed that GESE never submitted its
Board’s approved fiscal year 2003 non-investment budgeted expenses of $2,498,552 to
the City Commission for approval as required in Sections, 40-246(b) and 14-59(a) of the
City Code, and Section 23 (h), of the City Charter. However, we noted that the City’s
fiscal year 2003 Budget Document, which was approved by the Commission, included a
total non-investment appropriation of $1,729,680 for GESE. It appears that the decision
to appropriate $1,729,680 was made by the City’s Budget staff without any input from
GESE management. Our review of the City’s/GESE’s accounting records disclosed that
the actual total non-investment expenditures incurred during the fiscal year 2003 was
$1,884,961. The actual total expenditures incurred resulted in $155,281 (or 9%) in
excess of the appropriation approved by the City Commission.

During each budget cycle, the City Commission, after reviewing all proposed
expenditures, sets the millage rate accordingly. Therefore, it is important that the actual
proposed expenditures for all departments/agencies be provided to the City Commission
for consideration and approval. Absent submission of the GESE Board’s approved
budget to the City Commission for consideration, as required in the City Code and City
Charter, and integration of accurate budgetary data into the City’s/GESE’s accounting
system, the effectiveness of the budget as a planning tool to control and monitor
expenditures becomes greatly impaired. The net effect of this noncompliance is that
GESE management exceeded the City Commission’s approved spending authority for
non-investment expenditures by $155,281 (9%) for fiscal year 2003.
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