More than 3,000 of the beach tags Margate offered for sale last year cannot be accounted for, a recent audit said, with the city apparently losing tens of thousands of dollars as a result.
The city received the final version of the audit last week, but some of the findings were released earlier in the spring, Margate Mayor Michael Becker said. He said The Atlantic County Prosecutor’s Office requested a copy of the audit, which the city provided this week.
The city’s auditing firm, Ford, Scott Associates of Ocean City, criticized the city in a management letter for "a severe lack of internal controls over beach tag operations for the year 2011."
Beach badge oversight “was concentrated in [City Clerk] Tom Hiltner” last year, city Business Administrator Richard Deaney said. It is now split between municipal Chief Financial Officer Lisa McLaughlin and Bill Walsh, a city recreation supervisor. Hiltner declined to comment without talking to the attorney he hired for an ongoing lawsuit against Margate.
Earlier this year Hiltner sued Margate because he said that he was stripped of his $5,000 per-year position as beach tag supervisor in retaliation. He said he lost his post shortly after he told authorities he believed the city commissioners awarded the auditing contract to Ford, Scott in exchange for campaign help.
Among the problems:
- Some 3,423 beach tags, or almost 7 percent of the city's 49,100 beach tags it purchased for sale in the 2011 season, can not be accounted for. These missing tags included 3,388 seasonal tags, 34 senior tags and one weekly tag. The auditors determined that had they been sold, depending on pre-season and in-season prices, they would be worth between $23,845 and $50,830.
By comparison, the city sold 39,756 badges worth $294,724 in 2011.
It was unclear if they were stolen, misplaced or given away. “I don’t know where they went,” Becker said. “I really don’t and I was hoping that would come out when they did the audit.”
- a $2,860 cash deposit for tags sold on June 25, 2011 was not deposited until Aug. 16, 2011. The auditors wrote, "Aside from being in direct violation of [state law] which requires deposit of municipal funds within 48 hours, the cash not being deposited in a timely manner poses a risk of loss of funds to the city;"
- a parent of a city beach badge checker found a baggie with $20 and 18 seasonal beach tags in their home and returned it to the city in March. But the city's files said none of the badge checker's badges were missing, suggesting the records are inaccurate;
Beach tag revenue as of April 30, 2012 was $44,205 greater than it was on April 30, 2011, the audit said. The audit attributed the increase to new “internal controls” established for 2012.
Partial audits were discussed in committee meetings during the spring. The full findings were initially reported to Deaney, McLaughlin and Hiltner in early June, Deaney said, and formally presented to the commissioners last week.
Auditors also found an array of smaller regulatory issues:
- two beachfront maintenance supervisors had to wait more than half a year for their final paycheck, even though the city had more than $300,000 on hand by the end of 2011.
Auditors said Hiltner told the supervisors they would not be paid because of budget constraints. After speaking to Hiltner for months, the pair then tried McLaughlin. Shortly afterward the city determined it owed the supervisors $3,047, which it paid in May.
But since this was a 2011 expense, it resulted in a $2,899 over-expenditure in the current budget that will be made up in the 2013 budget.
- Two people were paid from the electrical inspectors salary budget line, even though they were not in the department. In one instance, a lifeguard captain’s salary reclassification resulted in a $20,770 overexpenditure in the Lifeguards Salaries and Wages portion of the budget that must be made up in 2013.
In another instance, a public works employee was paid a stipend for another public works position, “even though the duties were never actually performed by the by the employee,” according to the city’s management letter.
Furthermore neither the construction code official nor director of public works were aware of this until confronted by auditors, the management letter said. The letter said Hiltner made both decisions.
- the city owns 481 shares of Prudential Financial, Inc. common stock. New Jersey municipalities are forbidden to own common stock, and while Becker said the city became aware it owned them “three or four years ago,” it is unclear how the city came to possess them. The auditors recommended the city immediately sell, and noted the value fell 14 percent in 2011, resulting in a $3,949 loss.
- city commissioners never established set fees for recreation events. In another instance, auditors found a large deposit in July 2011 that they traced to a basketball camp operated by a city employee on city property.
The auditors said city officials told them the payment was the employee’s agreed-upon payment for the used of city property for the camp. But auditors couldn’t find any written agreement or resolution to support this, and recommended the city seek bids.
- the commissioners and Hiltner left many commission meeting minutes unsigned, and Hiltner did not sign any of 2011’s resolutions and ordinances, exposing them to the risk of being tampered with.
- the city offers health insurance, as well as additional payments to those who “opt-out” of coverage or “buy-down” to a lower coverage than they are entitled to. The audit found a person who got payments they were not entitled to and recommended more stringent documentation requirements.
The 2011 audit was performed by Ford, Scott Associates of Ocean City, which replaced Suplee, Clooney & Co. of Westfield, Union County. Suplee, Clooney had been the city’s auditor for years, although the city hired Ford, Scott for part of 2005.
Hiltner, on medical leave, also said in his suit Margate officials also tried to retaliate by alleging violations of vacation, sick time and Family Medical Leave Act policy.
