Audit 360783

FY End

2023-09-30

Total Expended

$3.19M

Findings

2

Programs

1

Organization: City of Neptune Beach (FL)

Year: 2023 Accepted: 2025-06-30

Auditor: Purvis Gray & CO

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
569184	2023-003	Material Weakness	Yes	B
1145626	2023-003	Material Weakness	Yes	B

ALN	Program	Spent	Major	Findings
21.027	Coronavirus State and Local Fiscal Recovery Funds	$3.19M	Yes	1

Contacts

Name	Title	Type
E83BFCS28E34	Jaime Hernandez	Auditee
9042702400	Andrew Miller	Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The City did not have indirect costs. The accompanying Schedule of Expenditures of Federal Awards (the Schedule) is presented on the modified accrual basis of accounting.

Title: Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The City did not have indirect costs. Expenditures are reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The City of Neptune Beach, Florida did not elect to use the 10% de minimis indirect cost rate in section 200.414, Indirect (F&A) Costs, of the Uniform Guidance.

Finding Details

Finding 2023-003

Condition- One of the City's key controls over payroll is for the Chief Financial Officer (CFO) to review the payroll bank transfer against the payroll register to ensure what was drawn from the bank matches the payroll reports for each pay period and to sign the reports to document this review and approval. During our testing of payroll controls we noted 18 out of 26 pay periods for which there was no signature on the payroll reports documenting this review took place. Additionally, for 30 out of 40 paychecks tested, documentation of proper approval of pay rates could not be located. Finally, for 3 out of 40 paychecks tested, documentation of proper approval of timesheets could not be located. Effect- Although we did not note any actual discrepancies in payroll batch totals, pay rates or timecard hours, a lack of a review of payroll documentation could result in erroneous or fraudulent payments that are not prevented or detected and corrected on a timely basis. Since this process is also signficant to the single audit major program, this finding is applied to internal control over compliance for the major program, under the Uniform Guidance, as well as internal control over financial reporting in accordance with Government Auditing Standards. Recommendation- We recommend that the payroll approval process be followed for all pay periods and that contingencies be established to determine a backup reviewer for each payroll control in the event that the primary reviewer is unavailable to review a particular pay period.

Finding 2023-003

Condition- One of the City's key controls over payroll is for the Chief Financial Officer (CFO) to review the payroll bank transfer against the payroll register to ensure what was drawn from the bank matches the payroll reports for each pay period and to sign the reports to document this review and approval. During our testing of payroll controls we noted 18 out of 26 pay periods for which there was no signature on the payroll reports documenting this review took place. Additionally, for 30 out of 40 paychecks tested, documentation of proper approval of pay rates could not be located. Finally, for 3 out of 40 paychecks tested, documentation of proper approval of timesheets could not be located. Effect- Although we did not note any actual discrepancies in payroll batch totals, pay rates or timecard hours, a lack of a review of payroll documentation could result in erroneous or fraudulent payments that are not prevented or detected and corrected on a timely basis. Since this process is also signficant to the single audit major program, this finding is applied to internal control over compliance for the major program, under the Uniform Guidance, as well as internal control over financial reporting in accordance with Government Auditing Standards. Recommendation- We recommend that the payroll approval process be followed for all pay periods and that contingencies be established to determine a backup reviewer for each payroll control in the event that the primary reviewer is unavailable to review a particular pay period.