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I APPENDIX III - MANAGEMENT LETTERS DEVELOPED AND ISSUED IN CONNECTION WITH LOCAL GOVERNMENT AUDITS I I I I I I I I I I I I I I I I I I TOWN OF SOUTHWEST RANCHES, FLORIDA SCHEDULE OF FINDINGS AND RECOMMENDATIONS SEPTEMBER 30, 2005 (CONTINUED) SECTION 11- STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS (CONTINUED) 2001-8 Investment of Surplus Funds Condition During our testing of cash, we noted that the Town currently deposits a large amount of excess cash with a local bank, which currently provides the Town with 0.20% to 0.25% return on those deposits. There are other options permitted under Section 218.45 of the Florida Statutes for the investment of the Town's excess cash which could provide a higher return, with the same level of security and liquidity. Recommendation The Town should review its current investment of excess cash and possibly invest in other types of investments permitted under Section 218.45 of the Florida Statutes. Status The Town not has implemented this recommendation during 2005. This comment will be repeated. Management's Response We will monitor this situation in the future for investment considerations. 2001-9 Accounting Software Condition The Town is currently using Quickbooks Pro 2001 to record and report the Town's transactions. This software is not designed for fund accounting. The Town currently has one special revenue fund, one capital projects fund, two account groups and the general fund. As the Town grows and the number of funds increase the current software will be inadequate to maintain all the different funds. The Town segregates the funds in Quickbooks by class; however, we noted that although the trial balance for the Town was in balance, when segregated by individual funds, it did not balance. The trial balances did not balance because the due to/from accounts were not adjusted for the transactions that affected each individual fund. 17