A Performance Audit of the Utah Telecommunication Open ...

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act in its entirety. Also, the agency does not use several financialcontrols commonly used by local government. By more closelyscrutinizing the agency finances, the board should be able to identifyand address costly problems before they become serious.UTOPIA Should Adopt the Financial ControlsRequired by State LawThe Uniform Fiscal Procedures Act for Utah Cities (Utah Code10-6-101 et seq.) describes the budget procedures that each publicagency in the state must use. Even though it is not specificallymentioned, UTOPIA appears to be subject to the act.UTOPIA’s boardshould follow theFiscal Procedures Actand more closelyscrutinize the agency’sfinances.UTOPIA Should Follow the Fiscal Procedures Act. TheUniform Fiscal Procedures Act for Utah Cities (Utah Code 10-6-136)identifies a number of procedures that local governments must use tomanage agency finances. For example, the act requires board orcouncil approval before making expenditures above the authorizedbudget. During fiscal years 2001 and 2009, we noticed thatUTOPIA’s operating expenditures exceeded the budgeted amount. Yetthe board was not asked to authorize a revision to the budget.When we asked UTOPIA staff why they did not comply with thisprovision of the act, they reported that the agency does not believe itis subject to the act. In fact, according to UTOPIA’s board meetingminutes, the board has been advised that the agency is not required tofollow the Uniform Fiscal Procedures Act for Utah Cities. For thisreason, the agency chose to follow certain requirements but notothers. For example, the board has chosen to follow the requirementthat the annual budget be reviewed during a public meeting and that itbe approved by a formal vote by the board. However, the agencybelieves it is not subject to all provisions in the act.In fact, Utah Code does not contain fiscal procedures thatspecifically target interlocal entities. Title 10 Chapter 6 contains theUniform Fiscal Procedures Act for Utah Cities. Title 17B containssimilar fiscal procedures for local and special services districts. Neithersection of statute mentions any applicability to interlocal agencies suchas UTOPIA. However, the Utah Attorney General has issued anopinion stating that Title 10 does apply to interlocal agencies:Cities may not grant powers to an interlocal agencywhich they do not possess themselves individually. It- 48 -A Performance Audit of the Utah Telecommunication Open Infrastructure Agency (August 2012)
necessarily follows that cities have no power or authorityto act in contravention to the requirements of the FiscalProcedures Act and they cannot endow their interlocalprogeny with such power or authority. (Office of theAttorney General State of Utah Informal Opinion No. 87-31,June 17, 1987)In keeping with this opinion, we recommend that UTOPIA beginto follow the Uniform Fiscal Procedures Act for Utah Cities. Theseare practices that local governmental entities commonly use tomaintain control over agency finances. By applying all the principlescontained in the act, we believe the UTOPIA board can maintaingreater accountability over the agency’s finances. A few of thosepractices are listed below:The board should specify a maximum sum over whichall purchases may not be made without the approval ofthe board. (Utah Code 10-6-159)All expenditures must conform with the agency budget.(Utah Code 10-6-121-123)Board approval should be sought before expendituresare made above the amount authorized by the budget.(Utah Code 10-6-127)UTOPIA’s boardshould set maximumexpenditure limits,require conformanceof expenditures tobudget, and authorizeany expenditures overbudgeted amounts.Once we brought this matter to their attention, UTOPIA’s staffmade a commitment to comply with the act. In fact, during their June2012 meeting, the board authorized an increase in the agency’sspending plan, which otherwise would have exceeded the budgetedamount. We believe following all of the provisions of the UniformFiscal Procedures Act for Utah Cities will enable the board of directorsand UTOPIA staff to exercise greater control over the agency’sfinances.UTOPIA Should Adopt Financial Oversight PracticesCommonly Followed by Local GovernmentsTo assist local governments in managing their finances, the UtahState Auditor has published several accounting manuals. One suchdocument is the Little Manual for Local and Special Service Districts. Itidentifies fiscal controls that are commonly used by local governmententities. The state auditor has also issued a Uniform AccountingOffice of the Utah Legislative Auditor General - 49 -
Page 1:
REPORT TO THEUTAH LEGISLATURENumber
Page 5:
DigestA Performance Audit ofUtah Te
Page 9: Table of ContentsDigest ...........
Page 12 and 13: will be funded through UIA financin
Page 14 and 15: the organization’s general manage
Page 16 and 17: UTOPIA Did Not Reach Its Goal to Bu
Page 18 and 19: UTOPIA did notachieve its goal toco
Page 20 and 21: Figure 2.4 Summary of the Agencies
Page 22 and 23: efinancing, the maximum amount pled
Page 24 and 25: One consequence of the slow growth
Page 26 and 27: factors in deciding where to build.
Page 28 and 29: completed in a timely fashion and h
Page 30 and 31: Figure 2.10 Seven Years of Operatin
Page 32 and 33: Figure 2.11 By 2010, UTOPIA Had Spe
Page 34 and 35: plan did not anticipate the difficu
Page 36 and 37: end of 2010, 3,698 former subscribe
Page 38 and 39: Uncollected revenuesfrom retail pro
Page 40 and 41: agreed to provide UTOPIA with a $66
Page 42 and 43: As problems mounted, the board deci
Page 44 and 45: The data in Figure 3.2 shows that,
Page 46 and 47: As stated previously, two possible
Page 48 and 49: This Page Left Blank Intentionally-
Page 50 and 51: UTOPIA Has a New Development PlanAi
Page 52 and 53: Centerville and in its legacy areas
Page 54 and 55: UTOPIA shouldidentify specific area
Page 56 and 57: e applied. Not surprisingly, we fou
Page 60 and 61: Manual, which describes how local a
Page 62 and 63: in public, the executive committee
Page 64 and 65: separate public body that must comp
Page 66 and 67: public entities that are subject to
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Page 78 and 79: Five‐Year Plan Summary 2Agency (U
Page 80 and 81: Five‐Year Plan Summary 4cities’
Page 86 and 87: - 76 - A Performance Audit of the U
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