Finance Department Reconciliations Annual Results Summary (Period 8-1-18 to 7-31-19) 9-30-19MIAMI BEAC H INTERNAL AUDIT REPORT
City of Miami Beach, 1700 Convention Ce nter Drive , Miomi Beoch , Florida 33139, www.miamibeachfl.gov
Office of Internal Audit
Tel: 305-673-7020
TO : Jimmy L. Morales , City Manager
FROM : Mark D. Coolidge , Interim Internal
DATE : September 30 , 2019
SUBJECT : FINANCE DEPARTMENT RECONCILIATIONS ANNUAL RESULTS SUMMARY
PERIOD(S): August 1, 2018-July 31 , 2019 (Bank Reconciliat ions)
October 1, 2018 -September 30 , 2019 (Daily Debit Transaction Reports and Zero-
Balance Accounts)
Upon the discovery of a $3.6 million fraud involving its Treasury and ACH disbu rsements , the C it y
Administration and Finance Department, among other implemented changes, hired the independent firm
of BOO USA, LLP (BOO) to perform an audit. On May 17, 2017, BOO issued a report containing sixty
(60) findings with recommendations on how to mitigate the City's risk exposure on these disbursements
which also affected other Finance Department funct ions including payroll and accounts payable.
As a result, the Office of Internal Audit (Internal Audit) was subsequently tasked with performing a follow-
up review to verify whether the recommendations made to correct the deficiencies noted had been
implemented or were in the p rocess of being implemented. Although testing found that the specified
corrective actions were being taken, Internal Audit has continued to (1) review the bank reconciliations
performed either monthly or quarterly by designated Finance Department staff to verify that they were
completed timely and promptly reviewed/approved; (2) confirm that all entries on the Daily Debit
Transaction Report were deemed valid by Finance Department staff; and (3) that there is a credit in the
general depository account and a corresponding debit transaction in another City bank account for all
ZBA (zero-balance account) transactions . The resu lts of the testing performed during the specified
periods are summarized below:
1. Monthly Bank Reconciliations Analysis
Although the actual number of bank accounts may vary, the Finance Department typically
completes between 55 and sixty (60) monthly bank reconciliations plus they also reconcile the
Regions Bank MBPD CID-OAF acco unt on a quarterly basis . Per their approved procedures , all
bank reconciliations (excluding the pooled cash) are to be completed within thirty (30) days
following the end of the month in which the transactions occurred . For example, August 2018 's
bank reconcil iations are to be completed by September 30, 2018, September 2018's by October
30, 2018 and so on.
Meanwhile , Finance Department staff have 45 days following the end of the month to complete
the pooled cash bank account's reconciliation due to its complexity and large volume of
transactions . Consequently, the August 2018 pooled cash's bank account reconciliation is to be
completed by October 15, 2018 , September 2018 's by November 14, 2018 and so on .
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INTERNAL AUDIT REPORT
FINANCE DEPARTMENT RECONCILIATIONS ANNUAL RESULTS SUMMARY September 30. 2019
Internal Audit's testing found that all bank accounts were timely reconciled and
reviewed/approved each month except for the following three (3) instances:
• One (1) bank reconciliation was completed seven (7) days late as the Finance Department
received the needed November 2018 documents on December 27, 2018 or three (3) days
prior to the bank reconciliation's due date. As a result, the Finance Department stated via
email that the 5th and Alton Road Garage's bank account reconciliation due date was
extended going forward to 45 days due to frequent delays in receiving the required
documents from Edens (the independent company which owns 54% of the garage and is
responsible for handling the lease rental income, tenant contributions and all related
expenses).
• One (1) bank account's March 2019 reconciliation was completed one (1) day late on May
1, 2019. The Finance Department provided an email showing that the bank statement
was not received from the Police Department until earlier that day to support its late
completion date.
• One (1) bank account's March 2019 reconciliation was originally completed and reviewed
timely; however, a subsequent revision was made and was not completed until May 2,
2019.
Management Response (Finance Department):
The 51h and Alton Road Garage's bank account reconciliation is now completed within 45 days of
the end of the month.
Improved communication with the Police Department and better due diligence has allowed the
Finance Department to complete all subsequent reconciliations for this account within 30 days.
The Health Facilities Authority March 2019 bank reconciliation was originally completed and
reviewed within 30 days. In a subsequent review, it was noticed that the Trial Balance Report
date was inadvertently ran for an extra period (period Oct-Apr). An updated Trial Balance Report
and bank reconciliation were completed in May. Subsequent to this event, a discussion with staff
regarding diligence on reporting periods and special attention by the reviewer to this report has
been in place.
2. Validation of Daily Debit Transaction Report Entries
All Daily Debit Transaction Reports generated from the City's operating accounts between
October 1, 2018 and September 30, 2019 furnished to Internal Audit contained notations
indicating that they were valid transactions according to designated Finance Department staff.
Any transactions that needed to be researched with the bank as to their validity were properly
followed-up with and were typically cleared within the next day or two. Internal Audit relied solely
on Finance Department staff's transactional reviews and corresponding approvals as no
additional testing was performed to determine their legitimacy.
3. Review of Zero-Balance Accounts Transactions
A zero-balance account or ZBA can be defined as a checking account in which a balance of zero
is maintained by automatically transferring funds from a master account in an amount only large
enough to cover the checks presented. A ZBA is used to help eliminate excess balances in
separate accounts and to maintain greater control over disbursements.
As part of the Daily Debit Transaction Report, Finance Department staff includes both the debit
and the corresponding credit of the ZBA transaction. In reviewing these daily transactions for the
twelve (12) month audit period, no exceptions were noted.
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INTERNAL AUDIT REPORT
FINANCE DEPARTMENT RECONCILIATIONS ANNUAL RESULTS SUMMARY September 30, 2019
Reviews Performed by Mark Coolidge, Interim Internal Auditor and Coral Delgado, Auditor
F:\OBPI\$AUD\INTERNAL AUDIT FILES\DOC18-19\REPORTS -FINAL\FINANCE RECONCILIATIONS ANNUAL RESULTS SUMMARY
REPORT FY 2018-19 09-30-19.DOCX
cc: John Woodruff, Chief Financial Officer
Allison Williams, Deputy Finance Department Director
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