The Town of Fort Myers Beach Audit Committee was asked to review the town’s investment policy and consider changing it. The reason they were being asked to consider the change was because of two audit findings against the town.
According to the committee, and the town’s senior accountant, the findings from the town’s last two audits were the result of Town Manager Roger Hernstadt not taking state required 8 hours per year of continuing education to stay up-to-date on the town’s investment policy. Finance Director Robert Lange could have also taken the 8 hours of training to meet the state requirements. Lange is an independent contractor that works for Hernstadt.
According to the town’s senior accountant Andre Heiting the town had two audit findings as a result of the training not being completed. “We cannot afford a 3rd. The intent of the law is to protect the public funds of each unit of local government. It regulates what type of investments a local government can invest in. If a town has an investment policy it can invest in a broader range of investments, which generally means that you’re allowed to take a little bit more risk. If the town does not have an investment policy the town is more restricted in the type of investments it can make.”
Heiting says he’s worried there could be additional findings against the town. ‘”The last two audit findings are the main reason we’re discussing this right now. The law requires the continuing education. An auditor could potentially say we are not in compliance. They are mainly technical issues, not substantive issues.”
Currently the town has about $2.6 million invested in an intergovernmental investment pool and CD’s. They are low risk investments which do not require the 8 hours of continuing education. So why does the town have the investment policy which caused the audit red flags?
Audit Committee Chairman Dan Hughes said there appears to be a change at the town council level. “Apparently they’ve decided to eliminate the investment policy, provided we agree or recommend to do so.”
It’s unclear who wants to change the policy though.
Hughes said he spoke to Mayor Ray Murphy who has no recollection of discussing this matter. “It’s rather peculiar to me that in 2013 we spent 6 months, hours on this, preparing this, at that time. My question is, if an investment policy is of no significance to the town now, why was it back then and could it possibly be of significance in the future?”
This all boils down to the 8 hours of continuing education and committee members believe it just needs to be done.
Vice Chair Edward Lombard said the committee spent a lot of time on the investment policy. “I think it’s a good one and I think it’s one that any town would be wise to comply with or try to comply with.”
Committee member Richard Cote said, “Understand that you need to do it and if you don’t do it, you’re going to be written up. It’s not a major weakness. Get rid of the whole policy because of the one little provision?”
Committee member John Goggins said 8 hours of continuing education is not a reason to change anything. “It’s 8 hours of continuing education. It’s not a lot. The Town Manager or the Town Finance Manager should do that. I see no reason to change this.”
The committee members were not happy the town’s Finance Director did not participate in their meeting.
The committee unanimously recommended the town keep the investment policy as it exists
Comments are closed.