Century Audit Finds Millions In Deficits, Signs Of Financial Emergency

February 17, 2020

A draft audit shows signs of a financial emergency in Century and multi-million dollar deficits.

The audit found the financial emergency conditions exist due to missed debt service payments, not transferring payroll taxes in a timely manner and issuing payroll checks without sufficient funds in the payroll account.

“The Town has experienced significant financial difficulties over the last few years and subsequent to year-end,” according to the audit for the fiscal year ending September 30, 2019.

The audit found of the town finished the year with a $3 million general fund deficit for governmental operations. Assets exceed liabilities at the close of the year by $5.8 million. But of that amount, $4.9 million was in capital assets (property, roads, drainage systems, etc.) and $3.9 million was restricted by debt service payments and other uses.

The business activities of the town — such as water, sewer and gas — had a balance of $540,000 in unrestricted net funds. The natural gas fund lost $263,000.

Across the board, the town had an unrestricted net position of a $2.4 million deficit.

The town failed to make debt service payments due in March 2017, 2018 and 2019 on gas system revenue bonds.

As of September 30, 2019, there was a deficit balance in the general fund of $3 million and in the natural gas fund of $1.7 million. Both of these funds have borrowed significant amounts from other funds of the town.

Audit findings included:

Financial Condition

The town’s overall financial condition demonstrates signs of a state of financial emergency as described in Florida statutes. Overall factors contributing to this condition include lack of short and long-term financial planning, improper cash management activities and lack of analysis of existing tax rates and fee structures for proprietary operations.

The natural gas fund borrowed $222,000 during the fiscal year from the general and water and sewer funds to cover general operations. In June 2018, the town council approved a repayment plan of $300 per month for $2.9 million borrowed inappropriately from the restricted special revenue fund. The audit noted the town should evaluate costs incurred in prior years for possible reclassification, if such costs met the nature allowed for infrastructure improvements.

This condition has existed for the past three audited periods.

The auditors recommended that the town develop long and short-term financial plans to improve its financial condition.

Cash Management

  • The Town experienced the following cash management issues during the fiscal year:
  • Payroll cash account was overdrawn numerous times during the year.
  • Payroll taxes were not remitted timely to IRS.
  • Payroll checks were provided to and cashed by employees prior to the issue date on the check, causing the Town’s payroll bank account to be overdrawn.
  • Excessive late fees and interest charges incurred on credit cards.
  • Late and missed debt service payments by the water and sewer fund and natural gas fund.
  • Inadequate funds held for customer deposits in the natural gas fund.

This was a recurring finding not corrected from the previous fiscal year’s audit.

The problems are caused by the town council not receiving timely information about the cash position and cash needs of the town which has prevented timely transfers of cash between bank accounts. Turnovers in the town clerk and department leadership over the past few years was also cited, along with operating deficits in the natural gas fund.

The town council “should receive timely information about the cash position and cash needs of the town to ensure adequate funds available for weekly paychecks, payroll taxes, and debt service payments,” the audit states. It was also noted that credit card payments should be made on time to avoid late fees and interest charges.

Credit Card Usage Policy and Receipts

The audit noted that multiple receipts and supporting documentation for credit card charges was not maintained. The business purpose of several credit card transactions was not documented, particularly on purchases of food, fuel and various supplies. The town does not have a policy requiring employees to provide receipts for transactions nor document purpose of purchases.

The previous audit found the same problem.

Reconciliation of Accounts

Interfund general ledger accounts were not reconciled. Audit adjustments were required to adjust for the actual audited amounts and allow for proper balancing of the interfund accounts. The same problem has existed for three consecutive years.

Capital Asset Tracking

There are capital assess that have not been correctly recorded in the town’s records, and the town has not completed an inventory of assets. The condition was also found in the 2018-2019 audit.

Town of Century Response

The Town of Century will submit a corrective action plan to address the audit findings. The town council is expected to discuss, and perhaps approve, their responses during meetings Monday night. NorthEscambia.com will publish an additional story with the town’s responses.

The draft audit must also be approved before being submitted to the state.

Pictured: The Century Town Council meets on February 3, 2020. NorthEscambia.com photo, click to enlarge.

Comments

17 Responses to “Century Audit Finds Millions In Deficits, Signs Of Financial Emergency”

  1. Judy on February 18th, 2020 8:41 am

    WHY do we keep seeing these same problems, and nothing is ever done to correct them? Why are the crooks in charge not arrested and start out with a clean slate? There are far more problems and debts than there is money being applied to them, so where is the money going? I agree…fire all the “leaders” and shut the town down!

  2. Brenda on February 17th, 2020 7:46 pm

    All of this didn’t start the past few years…do an audit 10-20 years back. You’ll find the real problem starters. The folks getting free gas…don’t act innocent you know who you are or did you think your bill has been getting lost in the mail all these years?!!
    Lastly, I want to know where in Century I can sign up for a $2.9 million loan with $300 payments!!!

  3. David Huie Green on February 17th, 2020 5:09 pm

    REGARDING:
    “It’s also impossible to shut a town down.”

    Towns have been shut down before, will in the future.

    David for reality

  4. chris on February 17th, 2020 4:56 pm

    It seems like every few weeks this same type of bamboozling is uncovered. And then life goes on. Perhaps when the well runs totally dry, and creditors start turning things off, somebody further up the pyramid will take notice and actually do something to correct this.

  5. not the least bit surprised on February 17th, 2020 2:07 pm

    Two words… Century Mayor
    Do a PRR for the credit card statements and the expense reports. Demand travel logs (if they exist) and see when and where the card was used. Seems William could use an investigative reporter. I’ll work for food, Whataburger specifically.

  6. Hmmm on February 17th, 2020 12:45 pm

    How does one go about getting one of these City of Century credit cards that you can spend freely on and not have to document? Asking for a friend….

  7. Alan on February 17th, 2020 12:25 pm

    It is past time to dissolve Century’s charter and just let the county run the area. Postponing it will just increase the amount of money the State and County will have to fork out to correct all the issues.

    165.061 Standards for incorporation, merger, and dissolution.
    (3) The dissolution of a municipality must meet the following conditions:
    (a) The municipality to be dissolved must not be substantially surrounded by other municipalities.
    (b) The county or another municipality must be demonstrably able to provide necessary services to the municipal area proposed for dissolution.
    (c) An equitable arrangement must be made in relation to bonded indebtedness and vested rights of employees of the municipality to be dissolved.

  8. Mel on February 17th, 2020 10:39 am

    It’s impossible to fix everything over night, cause these problems have been going on for years. It’s also impossible to shut a town down. Everyone that lives there needs the city to keep running. I Pray in time these problems will get better.

  9. Tracy on February 17th, 2020 10:23 am

    Sure wish we could get free gas and water, our bill runs around 250.00 a month and don’t pay it and see How quick they will turn it off.

  10. tg on February 17th, 2020 9:21 am

    This will go on forever and ever.

  11. retired on February 17th, 2020 8:58 am

    SO IN SHORT——–NO THING HAS CHANGED

  12. sam on February 17th, 2020 8:31 am

    what does it take to remove the problem. it starts at the top. it is called corruption. no one could run their household finances like this. the law would come lock you up. there is no leadership or competence at the top. either clean house or shut this mess down.

  13. Niknak50 on February 17th, 2020 8:04 am

    I read through the website Citizen listed. Unfortunately, there are no consequences for a municipality that is in a financial emergency. That is, no one has to answer for repeated failures to comply. If you read it and see it, i sure didn’t

  14. catman on February 17th, 2020 7:09 am

    Wow did not have to keep up with the receipts from the credit cards. I had a company credit card and I had to keep all the receipts also had to explain the reason for the transaction every month. This just gives someone free access to the card. Don’t figure.

  15. M in Bratt on February 17th, 2020 6:56 am

    Crank up the clown car, it’s time for another ride. And we still haven’t identified the 50% of utility customers that are getting free gas. I wonder how many of those sitting around the table would be on that list?

  16. Citizen on February 17th, 2020 3:49 am
  17. Bob on February 17th, 2020 2:04 am

    Do we have enough proof of incompetence to shut the city down?





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