The Idyllwild Fire Protection District has scheduled a discussion of its 2009-2010 audit at its Tuesday, Aug. 16 meeting. In advance of the meeting, IFPD has posted the audit and the accompanying correspondence from the auditors on its website.

Commission President Pete Capparelli described the results as good. He was pleased with the report from the district’s new auditors, Rogers, Anderson, Malody and Scott, LLP (RAMS) of San Bernardino.

In its continuing quest to identify its financial condition, the new audit revised the net asset total, which Smith Marion reported for June 30, 2009. In October 2009, Smith Marion reported IFPD’s net assets were $798,160 on June 30, 2009; but RAMS raised that figure to $954,000, more than $150,000, for July 1, 2009. By the end of that fiscal year 09-10, IFPD net assets declined almost $300,000 to $644,000.

“I’m never surprised at anything. There is no question past audits were not accurate.” Capparelli stressed.

He and Treasurer and Commissioner Ben Killingsworth believe the commission will follow through on the auditors’ recommendations. Such as ensuring different individuals perform certain financial functions.

The auditors said they conducted a limited review of IFPD’s internal controls. Nevertheless they identified nine material weaknesses. A material weakness is a deficiency such that there is a reasonable possibility that a material misstatement of the organization’s financial statement will not be prevented or detected and corrected on a timely basis.

Several of the specific observations noted improvements this year over past years. For example, the former financial teams did not make prior year adjustments to financial statements. “The unrecorded amounts were, in our judgment, material to the financial statements.” But RAMS noted improvement in this year work.

They also identified seven significant weaknesses, which are less severe than a material weakness, but important enough for the commission to address.

Nine material weaknesses reported in the IFPD 2009-10 audit

1. Prevent or detect material misstatements as part of the District’s internal control process.

2. Accounting process— RAMS has informed IFPD management who are searching for new accounting software.

3. Account reconciliations — as previously reported the lack of adequate reconciliations led to the discovery of unpaid or missing retirement payments

4. Capital asset record keeping — records are not being maintained a detailed inventory is recommended.

5. Accounting policies and procedures manual — RAMS recommends the preparation and adoption of formal written policies and procedures for accounting practices, i.e., a manual.

6. Modified accrual accounting/ambulance revenues — RAMS recommended that IFPD recognize bills and revenue when the event or action occurs rather than when paid or received. For example, an ambulance transport generates revenue. When the bill is issued, an accounts recievable should be identified rather than waiting months or years for actual payment.

7. Long-term debt accounting — IFPD was making debt payments without reducing the principal or interest. A capital lease was not recorded as an obligation.

8. Segregation of duties — The auditors strongly recommend that one individual does not handle a transaction from its inception to its completion. However they recognize that IFPD’s small size limits the number of office staff that can be hired.

9. Accounts payable integrity — The auditors found some inconsistencies between the accounts payable and the check written. “If this is allowed to continue, it is opening the door for possible defalcation of District assets,” warned the auditors.