Audit finds $7 million in questioned costs at Lake Worth Water Utility

Updated Jan 04, 2018
County find $7.1 million in questioned costs at Lake Worth’s Water Utility Services department.

Ever wonder how your tax dollars are being spent in Lake Worth?

County Inspector General John Carey does.

After a year-long audit last month, his workers found more than $7.1 million in questioned costs at the Lake Worth Water Utility Services department.

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“They should develop and implement policies and procedures or train their staff more,” Carey told The Palm Beach Post.

In the 21-page report, auditors found significant control weaknesses and operational areas that needed improvement for both the city and the department. The report contained eight findings and 21 recommendations that will help the city save more than $1.5 million in avoidable costs.

The biggest problem was the $6 million loan the city borrowed from Water Utility and investment accounts to pay for the redevelopment of the Lake Worth Beach Casino building.

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“When a city resident gets his water bill, he’s expecting that payment to go to the costs of getting water into his home,” Carey said. “You’re not expecting it to pay for other city services… which should be coming out of general taxpayers dollars.”

Carey added the $6 million loan would have been proper if the city had an ordinance in place for it.

Ben Kerr, a Lake Worth City spokesman, did not respond to several requests for comment.

The report also had issues with Lake Worth’s credit card convenience fee system, under which all credit card payments for utilities made over the phone or on the city’s web page be charged 1.2 percent fee.

The city did not collect the fee, resulting in questioned costs of $306.016 for fiscal year 2016, the report said.

Megan Gaillard, director of audit, said the city told her that the system and credit card companies didn’t work well together.

“Their system wasn’t able to handle the payments the way they were trying to do them, so the city was conducting additional research on how they were going to proceed in the future,” Gaillard said. “If they collect those fees, it would be $918,000 over the next three years.”

The report said the city’s warehouse lacks writing polices and procedures that addresses staff activities, issuance of inventory and the maintenance and tracking of inventory.

Carey said there was more than $41,000 in inventory issued by staff who are no longer working in the city. “That’s not a high dollar, but it’s a high impact,” he said. “We recommended the city uses better controls of keeping account of inventory parts.”

He added that Lake Worth has been very cooperative.

“Even though there were significant control weaknesses, overall, Lake Worth is a very positive city,” Carey said. “They were very open and very receptive to anything we found.”