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DAPC audit a ‘black eye’ for PTC

By JOHN MUNFORD
jmunford@TheCitizenNews.com

An auditing firm has determined the Development Authority of Peachtree City had deficient internal controls over financial reporting for the fiscal year ending Sept. 30, 2003, which could lead to “undetected misappropriation of funds or delays in finding other potential errors or irregularities.”

The report, issued earlier this year by the Macon accounting firm of Mauldin and Jenkins, included findings that the authority failed to maintain subsidiary ledgers for all statement of net asset accounts, failed to reconcile subsidiary ledgers to the general ledgers and had “incomplete and inconsistent posting of transactions to the general ledger.”

“The failure of the Development Authority to effectively design and operate sound internal controls, as well as the failure to maintain an up-to-date general ledger leads to untimely and inaccurate information provided to the board of directors,” the auditing firm wrote.

“Additionally, failure to design and operate effective internal controls could lead to undetected misappropriation of funds or delays in finding other potential errors or irregularities,” the audit concluded.

The firm suggested that the authority work immediately to eliminate the deficiencies found in the audit.

After a stormy dispute with the Peachtree City Council during 2002 and 2003, the authority no longer operates the city’s Tennis Center nor its Amphitheater, which were its main sources of revenue. That loss creates another concern, the auditing firm pointed out: whether the authority can continue because of its “substantial liabilities without the necessary revenues to service the debt.”

The authority has just begun receiving payments from the city to pay some of its outstanding bills, but nowhere near enough to pay off its estimated $1.5 million in debt. The City Council earmarked roughly $30,000 for the authority in this year’s budget as the authority tackles its only remaining task: economic development.

The findings in the DAPC’s audit caused a black eye on the city’s audit, which is separate, said Peachtree City Finance Director Paul Salvatore. The DAPC is considered a “component unit” of the city, so any errors on the DAPC audit are also listed on the city’s audit, Salvatore noted.

That means this year, for the first time in 16 years, Peachtree City will not receive the prestigious certificate of achievement for excellence in financial reporting from the Government Finance Officers Association, which covers the U.S. and Canada, Salvatore said.

“There was nothing wrong with the city’s financial statements or internal controls ourselves,” Salvatore said. “We had no reportable conditions or material weaknesses,” other than those associated to the DAPC,” he added.

The DAPC’s audit problems, also conducted by Mauldin and Jenkins, basically “tainted” the city’s audit, Salvatore explained.

Ironically, this is the first year the city met the criteria for another accolade offered by GFOA, the distinguished budget presentation award, said Salvatore, who himself is one of three nationally certified public finance officers in the state.

The budget award is for incorporating features such as benchmarks and performance measures into the budget, “not just numbers,” Salvatore noted.

The audit findings on the DAPC, however, “kind of took the reward out if it,” Salvatore said of the new honor.

Salvatore also serves on the city’s tourism association, which now runs the city’s Tennis Center and Amphitheater.

While the association’s reorganization has been criticized by some tennis center users, one of the main goals of the process was to address some of the problems pointed out in the audit, Salvatore said.

“There were all kinds of problems,” including issues with debt, Salvatore said.