Madeira Beach Corrects Marina “Audit” Media Release

Posted on November 4, 2020

On January 23, 2019, the City of Madeira Beach issued a media release entitled “Madeira Beach Officials Receive Report of Marina Audit.”  The Release stated, among other things, that the “report shows estimated marina losses totaling more than $550,000.”  It also stated the “audit was performed after the City’s internal auditor, Johns Houser of Wells, Houser & Schatzel expressed concerns following their annual review” which led to the city’s Director of Finance, Walter Pierce, to oversee an evaluation which revealed “gaps in inventory, record keeping, and more.”

After an exhaustive review by the current Board of Commissioners of Madeira Beach, including a Townhall meeting, a majority of the current Board now clarify the alleged lost revenue and conclusions reported in the medial release.

First, there was no audit performed at the Marina.  The CPA firm of Carr, Riggs & Ingram LLC (CPI) made this very clear on the first page of their report when they wrote “Our firm was engaged to perform an inquiry . . .” and “. . . our engagement did not constitute an audit in accordance with generally accepted auditing standards.”  As such, the use of term “audit” in the Media Release was misleading and inferred a neutral, verifiable process.

Second, $351,558 of the $550,000 of the alleged lost revenue was based upon 3 ½ years of fuel discounts given to marina customers.  These discounts have always been allowed—and publicly advertised—to Madeira Beach residents, fishermen, and commercial enterprises for over 15 years.  The current Commission feels CPI’s conclusion that fuel discounts resulted in over $350K of “lost revenue” unfairly and improperly inflated the amount of alleged losses.  Indeed, in 2019, the Board of Commissioners quickly learned that fuel discounts actually increase revenue in other areas, which is why the discounts were immediately reinstated, and fuel discounts are still in effect today.

Third, the City’s internal auditor categorically denied he raised any alleged red flags, rather, Mr. Houser only stated (years earlier) that the communication between the City’s Finance Department and the Marina needed to improve.  Just prior to the 2018 Board of Commissioners approving $50,000 for the Marina examination, longtime Marina and Public Works Director David Marsicano participated in an investigation by the Florida Commission on Ethics into the unlawful actions of then Commissioner Nancy Oakley.  Interestingly, former Commissioner Oakley was paramount in advocating for a Marina examination.

The examination report provided to the City did not reveal any “gaps in inventory” or criminal activity.

Finally, the City initially paid $15,000 for what was presented to the public an “audit,” yet the initial report was entitled “Fraud Examination Report and Supplementary Information.”  This Report found no fraud and was never released to the public.  However, Board of Commissioners voted to pay an additional $35,000 to CPI to “complete the review after the initial examination revealed more work was needed.”  At that time, Commissioner Nancy Hodges questioned the need for any additional examination, but was out voted.  The final report presented to the citizens of Madeira Beach in January 2019 was entitled “Forensic Examination Report and Supplementary Information.”  Nine days later, Madeira Beach issued the media release discussed above.

The majority of the current Board of Commissioners and several citizens who participated in the Townhall meeting believe the “audit” process was flawed.  An injustice has been done and through this corrected media release, the current Commission desires to remedy the sensationalized 2019 claims made in the first media release.  Going forward, this is not the way the City of Madeira Beach will be governed.

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