MARGATE — The city says it has corrected all the faults cited in a critical audit from earlier this year — though an explanation for more than 3,000 missing beach badges in 2011 is still being investigated, as new sales numbers show a $26,000 increase in this year’s sales over last year.

The audit, prepared by Ford, Scott Associates of Ocean City and the final report of which was delivered in June, state that the city showed “a severe lack of internal controls over beach tag operations for the year 2011.”

That included 3,423 of 49,100 tags not being accounted for, a $2,860 cash deposit for tags sold in June not being deposited until August when it should have been done within 48 hours, and faulty record-keeping.

The numbers for the 2012 beach season have been released, and a city analysis shows a 9 percent increase over 2011, with more than 4,100 additional badges being sold. In addition, the city brought in more than $320,000 in total revenue compared with about $294,000 the previous year, the largest single yearly increase in the last five years.

As to what role the missing badges may have played in 2011’s numbers being so much lower than 2012’s, the audit estimated that those badges would have been worth an additional $23,000 to $50,000 — which would have made 2011’s totals either slightly lower or much higher than this year’s.

In addition, expenses and salaries for the beach tag program are also down by more than $1,100.

Margate CFO Lisa McLaughlin said that new internal controls were established to run the program, with Bill Walsh of the Recreation Department reporting directly to McLaughlin.

“I communicate on a daily basis with him,” she said. “They report to me daily, make deposits daily, and give me all deposit slips and sales sheets on a daily basis. If there’s any discrepancy or issue, they come to me.”

The audit actually had a count of 19 badges more than what the city counted, which McLaughlin said may have been due to holiday tags and gift certificates sold during the off-season. In any event, the disparity in the numbers is within reason, she said.

But City Clerk Tom Hiltner, who was in charge of beach badge sales last year, pointed to numbers he said were from the previous auditor, Suplee, Clooney & Co, which had different numbers for the years 2008 and 2009.

While the city’s numbers had sales of about $264,000 and $269,000, for increases each year of 2 percent, Hiltner’s numbers showed revenues of $252,000 and $282,000 — a drop of 3 percent in 2008 and an increase of 12 percent, higher than even this year, in 2009.

Regarding the missing badges, Hiltner said that he had been told the auditors were coming that October, and so had the badges removed from their safe and brought to another location to be examined, but found out later the auditors didn’t come until December.

“So two months later, the audit (of the badges) was not done, and they’ve been sitting in an unsecure location?” Hiltner said. “I don’t know who answers for that. I can’t answer for that.”

Hiltner is personally involved in a lawsuit with the city, claiming that he was stripped of his $5,000-per-year position as beach tag supervisor in retaliation for telling authorities he believed commissioners awarded Ford, Scott the auditing contract in exchange for campaign advice.

“I filed a lawsuit, and several weeks later they publish an audit that is critical of me,” Hiltner said. “To me, the timing says it all. I’m blamed for audit issues by the very firm that is the predicate of the complaint. To me, the audit is written proof of the complaint’s validity.”

As to the remainder of the audit’s findings, McLaughlin said that two maintenance supervisors who had to wait more than six months for their final paycheck were paid, and overexpenditures in other departments will be made up in the 2013 budget.

The 481 shares of Prudential Financial Inc. common stock owned by the city — which is barred by state law, and which no one could recall buying — have been sold, McLaughlin said, and Hiltner and the commissioners have also been asked to look over and sign meeting minutes, as the audit cited several minutes and resolutions that went unsigned in 2011.

‘We have better documentation and communication with department heads,” McLaughlin said, adding that the city also hired a part-time business administrator, Rich Deaney, to oversee operations.

As for an audit finding that commissioners never established standard fees for recreation events, the commission is set to vote today on an ordinance that would do so. The existence of a basketball camp formerly run by Hiltner’s brother and Recreation Department employee Yogi Hiltner also led to the city deciding to go out to bid on such camps.

Contact Steven Lemongello:

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