By Michael Salerno
For Hometown News
PORT ORANGE -- More revenue losses were uncovered as city leaders await the results of an investigation into water billing errors that caused a loss of more than $1 million.
The broken internal controls that resulted in the lost revenue from wholesale water customers in Daytona Beach Shores also caused losses of $146,000 from its contracted wrecker company, A&A Wrecker, after it recently closed its business, and $57,165 in checks from Clear Channel Communications for billboard rentals in the city.
As citizens and city leaders were outraged by the latest discoveries, city staff said existing procedures in the finance department must be corrected to prevent repeat incidents. Last week city staff received recommendations from an independent auditor on how to do just that.
"We received and we're reviewing the reports," city spokesman Kent Donahue said. "There's lots of issues with lack of oversight (and) lots of issues involving checks and balances. We're taking this very seriously."
Mr. Donahue said A&A Wrecker owes the city for 31 months of service. City Manager Ken Parker said in an e-mail that A&A always brought payment to an employee who no longer works for the city, and that person's replacement "did not realize that they were to track payments and to report non-payment."
"When we requested A&A provide us with copies of previous checks, they could not provide that information," Mr. Donahue said.
Mr. Parker said he plans to look at legal options in recovering the lost $146,000. Mr. Donahue acknowledged the process would be difficult because the company is now out of business.
Mr. Donahue could not say for certain whether or not the city received checks from Clear Channel over the last two years. Stella Gurnee, the city's comptroller and interim finance director, said the city had no record of the checks coming in.
Although the money should have been coming in, Mr. Donahue said the city was not aggressively pursuing the lost revenue.
Mr. Donahue said no billing process was followed in each case because A&A and Clear Channel did not submit a billing action request form to the city's finance department, which identifies who is providing the funds to the city, who's requesting the funds, what account it goes into and what services were provided.
"They (Clear Channel) weren't looking for it and we weren't looking for it either," he said. "(But) we're taking steps to take action on the billing that should have occurred in the first place."
Chris Ashley, Clear Channel's vice president of real estate and public affairs, said he would have all of its checks to the city of Port Orange, which date back to January 2011, reissued and submitted by Dec. 7.
Mr. Ashley discovered Port Orange staff wasn't cashing the checks through an annual review of the company's un-cleared payments at the beginning of the year. When he first notified staff of the outstanding revenue Clear Channel owed the city on Aug. 8, he received no response.
"We notified (city staff) immediately after finding this discrepancy and received no response," Mr. Ashley said in an email to interim finance director Stella Gurnee last week. "Even with the lack of response we went ahead with the ordering of new checks to ensure payment of all funds due prior to year end."
Mr. Ashley did not answer questions regarding the checks. Mr. Parker and Ms. Gurnee could not be reached before press time.
Meanwhile, an auditor's investigation into why the city lost more than $1 million in revenue from under-billing wholesale water customers in Daytona Beach Shores found the finance department does not have formal processes for reviewing customer account profiles, billing registers and changes to rate tables that calculate water billing rates, which the auditor recommended should be checked for accuracy and signed off by city staff. Internal control processes appear to have not been updated since 2008, the auditor found.
The auditor also concluded finance director John Shelley and customer service director Betty Barnhart were responsible for the problems found. After both employees were suspended with pay last month, Mr. Shelley announced his retirement and is currently on leave, while Ms. Barnhart was reassigned to the parks and recreation department.
Citizens are angry over the ongoing revenue loss issues.
Corey Berman recently wrote an email to Gov. Rick Scott asking for the state to take over the city. He believes the state would do a better job of uncovering problems within city departments and how to resolve them.
"We need a forensic audit of all systems policies and operations including cash and credit operations since we are missing so much money," Mr. Berman said.
Mark Schaefer believes the auditor's investigation didn't go far enough and should have looked at how other city departments, not just finance, are operating.
"The CPA auditors, to their credit and even though they missed hundreds of thousands, did note that there were many problems in the record keeping and books of Port Orange," Mr. Schaefer said. "One question the City Council members should be asking is what else is missing. Another ... is why are we limiting our forensic audit Request for Proposal to little more than glorified bookkeeping."
The issues have also unsettled city council members.
Councilman Don Burnette believes it's time for a change in leadership in the finance department.
"(Lax) supervision and a culture of not wanting to bring bad news forward has gone on too long," Mr. Burnette said. "We have to keep up the persistence and work the problems to resolution."
Councilman Dennis Kennedy also said fixing the problem will involve city staff changing the way it does its business.
"I once felt this was a small anomaly in a busy department that had lost some long-term employees due to budget cuts," he said, "but I have come to realize that we have much bigger issues than the water meter problem."