A special procedures test of contractor "accounting"
The town's golf operator, Indigo Golf, does the bookkeeping and accounting of Oro Valley Municipal Golf. Indigo handles the cash. It pays all bills. It provides a report to the town of financial results. The town relies on this information for making entries into its books; and for decision making.
The town contracted Baker Tilly, the town's external auditor, to perform special procedures to check the reported results. They performed four "tests" on the information provided by the town's golf operator, Indigo Golf. The time period covered was fiscal 2022 and 2023. They did not find any irregularities in reported revenues and expenses, as well as in "round of golf" reported.
Found no irregularities but did not offer an opinion on the accuracy of the numbers
The auditor did not express an opinion on the fairness (accuracy) of Indigo Golf's numbers based on its test of perhaps 100 transactions in total. The auditor did not perform a financial audit of the numbers. The Town Council will rely on the Indigo Golf prepared financial results on February 7 when it assesses the future operations of the Pusch View Golf Course.
The auditor noted in their report that Indigo is not providing proper support for the bank account reconciliations. The town is a joint owner of this account. "We recommend the Town require their TPMC to maintain proper supporting documentation of
review and approval of bank reconciliations with supervisor signature or initial. Additionally...we recommend the Town request and review monthly bank reconciliations."
One would have thought that the town would have been requiring this information. After all, this is "basic stuff". Reconciling a bank account is an important oversight measure (see panel above) to ensure that the revenues received are deposited and that the expenses paid are accurately reflected in the financial records.
The current measures for overseeing the accuracy of information from a third-party business, which is owned by the town, are insufficient
One would have thought that the town would have been requiring this information. After all, this is "basic stuff". Reconciling a bank account is an important oversight measure (see panel above) to ensure that the revenues received are deposited and that the expenses paid are accurately reflected in the financial records.
The current measures for overseeing the accuracy of information from a third-party business, which is owned by the town, are insufficient
According to Oro Valley Finance Director David Gephart, speaking to the town's Budget and Finance Commission last week, Indigo Golf handles all the accounting. The company submits its report to the town, and the town, without conducting an audit or verification, directly incorporates the received information into its financial records, accepting the numbers without further scrutiny.
Three things the town can do now to enhance the assurance of Indigo's financial reporting
Three things the town can do now to enhance the assurance of Indigo's financial reporting
Municipal Golf is a town owned venture. The town should be engaging in oversight activities of the golf operator's bookkeeping and accounting. It is not. There are some things it can and should do. First, mandate that Indigo Golf submit an annual independent audit report to the Town, verifying the numbers provided. The town's annual audit does not encompass a review of these figures. Second, consider performing the bank reconciliations periodically, instead of relying on the operator. This involves the town examining a bank account under its ownership to ensure the accuracy of the information. Third, implement its own periodic review of reported revenues and expenses.
Town can institute these actions now
Council member Tim Bohen brought the town's attention to the necessity of scrutinizing the numbers provided by Indigo Golf. He did not believe that the revenue numbers were accurate. The special review did not confirm his suspicions. Regardless, his instinct that the current system is susceptible to fraud is accurate. Thus, there is a pressing need to establish oversight control.
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