Audit: Sewer Commission didn't invest securely

St. Mary Parish Water and Sewer Commission No. 2’s audit report shows the board did not have about $190,000 in investments properly secured by a financial institution, but fixed the problem in November 2014, according to the report released Monday on the state legislative auditor’s website.
Pitts & Matte CPA firm performed the audit report for the fiscal year ended Sept. 30, 2014. The commission is based in Bayou Vista.
The audit had one finding relating to security of cash deposits and investments. “Our auditors noted that at year end a portion of our funds on deposit was not properly secured by the financial institution with which it was deposited as required under Louisiana Revised Statues,” the audit report stated.
Management stated that it will periodically evaluate the amount of collateral pledged in relation to its deposits with financial institutions.
At the end of the year, the commission had investments totaling about $1.45 million on deposit with financial institutions. Of this amount, about $1.26 million was properly collateralized and secured in accordance with Louisiana Revised Statutes, the auditor stated.
The remaining approximately $190,000 was not properly secured by the financial institution with which it was deposited, the report stated.
However, the financial institution detected and corrected this error and all deposits and investments were fully secured as of Nov. 19, 2014, auditors stated. The commission did not suffer any loss due to this item of noncompliance, the report stated.
Failure to have securities pledged for deposits in excess of FDIC insurance coverage exposes the commission’s deposits to an increase in the risk of loss, the audit stated.
While performing audit tests and inquiring about internal control, auditors also discovered that the commission had little segregation of duties in the area of billings and collections, the report said. The cause of the finding is due to the commission’s limited personnel, the auditor stated.
Management stated it will “constantly monitor the activity of the employees, in an effort to minimize any errors or omissions.”
Also in the report, the auditor issued an unmodified, or clean, opinion on the commission’s financial statements.