City of Long Beach – Financial Condition and Cash Receipts from Recreational Activities (2013M-48)

Issued Date
July 11, 2013

Purpose of Audit

The purpose of our audit was to evaluate the City’s financial condition and to examine internal controls over cash receipts from recreational activities for the period July 1, 2010, to April 30, 2012.

Background

The City of Long Beach, located in Nassau County, has a population of approximately 35,000. The City is governed by its Charter and State laws. The City Council, which consists of five members, has overall responsibility for the City’s operations. The City’s operating expenditures for the 2010-11 and 2011-12 fiscal years totaled approximately $73 million and $79 million, respectively.

Key Findings

  • The City’s financial condition has deteriorated as a result of the Council’s decisions when developing and adopting annual operating budgets and its failure to appropriately monitor financial operations. At June 30, 2009, the City’s total unexpended surplus for its major operating funds (general, water and sewer) was slightly over $6 million. By June 30, 2012, the City’s total unexpended deficit for these major operating funds was more than $15 million. From the 2008-09 through the 2011-12 fiscal years, these operating funds experienced total combined operating deficits of almost $18 million primarily because the Council adopted budgets that over-estimated revenues and under-estimated expenditures. As a result, City officials relied on interfund advances, budget notes and long-term financing to fund operations.
  • City officials have not formalized policies and procedures over Department of Parks and Recreation cash collections.

Key Recommendations

  • Develop and monitor a formal plan to reduce and eliminate fund deficits and restore fund balance to an appropriate level. Monitor actual revenues and expenditures to ensure that operations do not deviate significantly from the budget. Adopt realistic budgets based on sound estimates and historical trends. Ensure that the interfund advances are repaid by the close of the year in which the loans were made.
  • Establish formal, written policies and procedures for the collection of cash receipts.