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I I I I I I I I I I I I I I I I I I I --" SECTION 11- FINANCIAL STATEMENT FINDINGS AND RECOMMENDATIONS B. STATUS OF PRIOR YEAR FINDINGS Reportable Conditions No. 2005-1 - Violations of City's Purchasing Policies and Procedures CONDITION: 1) During our testing of the golf course operations, we were informed of several instances of noncompliance with the City's purchasing policy. The policy requires a competitive bidding process on contractual services, which exceed $10,000; three written quotes on purchases ranging from $5,001 to $9,999 and three verbal quotes on purchases ranging from $1,001 to $5,000. On both instances, no competitive bidding or written quotes were obtained. 2) The City's purchasing policy also requires a purchase order to be prepared and approved before the goods are ordered. We were informed of several instances in which management of the golf course operations initiated the purchasing process after the goods were received, 3) During our testing of the golf course operations, we were informed that there was an agreement with a Canadian company to bring Canadian golfers to play at the City's golf course for $24 per round. The City's management is not aware of this agreement being presented to them by the golf course's management company and it was never presented to the Council for approval. (Also see finding 2005-2) CAUSE: 1) Payment was processed without Council approval. 2) The private management company in charge of golf course operations is not complying with the City's purchasing policies. 3) The private management company in charge of golf course operations is not adhering to City policies and procedures over the establishment of golf course fees. EFFECT: The City's Purchasing Policies and Procedures and City Code of Ordinance are not being complied with. RECOMMENDATION: We recommend that the City implement procedures to ensure compliance with its purchasing policies. We also recommend that the City implement controls over the operations of the golf course management company as well as overall golf course operations, CURRENT YEAR STATUS/MANAGEMENT RESPONSE: The management company was terminated on February 28, 2006. The golf course operation became a City department and a new department head was hired to oversee the operations. All financial activities are controlled by the City's finance department using the same policies, procedures, and controls in place for all City operations, This comment will not be repeated.