The Loxahatchee Groves Town Council heard Town Manager Bill Underwood’s response Tuesday to an audit report from Palm Beach County’s Office of the Inspector General (OIG) citing about 20 areas for improvement in town government.
Underwood said he planned to write a letter to the inspector general indicating that the council would consider the recommendations, although many of them have already been addressed.
The scope of the audit report was to determine whether controls over contracts, vendors and fixed assets were in place and working effectively to safeguard the assets of the town.
The scope included a review of activities from October 2013 to September 2015, and found about 20 questionable activities, including $229,019 in questioned costs and $1,765 in identified costs, and found that some of the town’s internal controls need improvement.
The report also found that some of the town management company’s practices did not align with the town charter, in providing some reimbursements for mileage and training expenses that the contract did not provide for.
Underwood said part of the $229,019 included $95,171 for land research management.
“The current agreement, contrary to their position that they believe the agreement was terminated, does not have a termination date. The current agreement identified two specific tasks, the comp plan and the Planning & Zoning Board, both of which were going on when we got here and are continuing even to today,” Underwood said, explaining that all invoices were approved by the manager and former manager.
He said that other charges for miscellaneous items were not documented the way that the OIG considers proper, including credit card charges that were not documented consistently, such as the cost of materials during the remodeling of the new town hall and an invoice for about $250 for food and refreshments during the dedication ceremony.
“We admit, sometimes you lose a piece of paper,” he said, although the cost was reflected in the monthly credit card invoice. “That was regarded as insufficient to meet their requirement.”
The report also cited missing signatures on some statements by the manager, although he asserted that his signature is not required.
“It’s a procedure that we have internally, but since they didn’t see my signature on some, they said, ‘OK we’re going to do that,’” he said.
The audit report also identified one over-limit fee, which Underwood said occurred during the move to the new town hall, and 15 late payment fees, although Underwood said the payments were made in compliance with state statute, and some questionable payment requests were withheld by Underwood.
The audit report included travel reimbursement to some staff members, and asserted that travel expenses were not provided in the management contract. Underwood pointed out that travel reimbursement is also not excluded from the contract.
“The OIG report said that the contract didn’t allow it, but the contract didn’t address it, either,” he said. “The contract doesn’t say anything about it one way or the other.”
Underwood also pointed out that the town’s Finance Advisory & Audit Committee reviewed all the expenses as they came through.
“We never got a response until the first time they were trying not to renew our contract, and then it came up,” he said.
Underwood said that the OIG has a problem with the town’s contract management form of government.
“They had a problem with home rule and self-determination that you pick how you want to manage your town,” he said. “The degree of outsourcing, they believe, is uncommon, and they tried to identify the discernable risks. Unfortunately, the amount of discernable risk is the same whether you have an employee or you have us.”
Underwood also pointed out that contractual road management by the Loxahatchee Groves Water Control District, and solid waste monitoring by LGWCD President Frank Schiola, which were on the list of items for review, were omitted in the report.
The report also mentioned that the management contract had no conflict-of-interest clause. Underwood pointed out that several of the town’s contracts did not include that, but he might consider including them in the future.
He added that the report’s statement that the management company’s contract was not in alignment with the town charter had started to be addressed more than a year ago.
“That’s why we changed the contract,” Underwood said. “We need to change a few more things, but I think it’s pretty minor what we have to do at this point.”
The report suggested that the council consider having the town manager and clerk be employees, rather than contractual, and cited the lack of performance reviews of the management company by the council.
In response, Underwood explained that the council has a performance review policy in place, but it was not used for several years because a new management company was expected. “The last two or three times there was no need to do the performance audit because our contract was not going to be renewed, so it wasn’t really necessary,” he said. “If you want to do it next year, that’s fine.”
The report found that the management company did not consistently follow policy, but Underwood pointed out the instances noted were only about 3 percent of the time.
“We found that in their sample, it was about 3 percent, so 96.9 percent of the time, we were on the money with everything,” he said. “We may have missed a few invoices and misplaced a couple of things, but everything was there. I think we can get better, but I disagree that it was consistent.”
After discussion, the council decided that for the time being, it would continue with the current form of government. However, in the near future, the council agreed to look at the evolution of a possible town manager working directly for the town, and consider all the recommendations of the audit report. Some council members pointed out, however, that many of the recommendations had been implemented or were being implemented.
Town Attorney Michael Cirullo said he would prepare a response to the OIG and have it ready for council review in December.