Military surplus items should be accounted for

Following last fall’s revelation that the Dewey Beach Police Department had been given hundreds of military surplus items over a period of years, selling some to buy two police-equipped SUVs, the town council asked the police department to take an inventory of equipment held under the Department of Defense Law Enforcement Support Office surplus program.

It also hired TGM Group LLC of Salisbury, Md., to look at the handling of funds from military surplus equipment sales and donations to the Beach Patrol. TGM was to evaluate the town’s financial controls and capital equipment recordkeeping.

The report, dated March 9, became available late in the month. The police department’s inventory has not been turned in to the council.

In essence, TGM said it’s time to clean house financially.

The report concluded that Dewey Beach has no “documented internal control, policies and procedures with regard to the LESO program and/or the handling of lifeguard donations.”

TGM said the town has “opportunities to strengthen your internal controls surrounding financial reporting, in particular related to cash and capital asset management.”

Dewey Beach Police surplus sales

TGM’s report said the police department has “disposed of archived DEMIL Code A LESO property” by selling it at auction or sealed bid, sold without any formal bid process, or given away in a barter transaction.”

None of the DEMIL Code A LESO property has been entered onto the town’s books, and “various off-the-books barter/exchange transactions have occurred” with surplus military property given to the town over the past five years.

Some proceeds were deposited into one of  four accounts managed by the town finance department: the SALLE grant account; the EIDE grant account; the police department account; and the confiscated funds account.

However, other income from property sales was “retained in a safe within the DBPD. Recently these monies were given to the finance department with a cash receipts/disbursement log.”

The beach patrol’s accounts

The lifeguards obtain money through fundraisers and donations “from individuals and businesses. These donations can be cash and/or equipment.”

Funds are deposited into one of three accounts. The General Beach Patrol and Junior Lifeguard / youth recreation accounts are overseen by the town finance department.

The Dewey Beach Patrol Competition Team has an unsupervised account. According to the report, “the lifeguard department was unable to supply Form 1023 IRS acceptance letter of tax exempt status and the IRS has no record of the Dewey Beach Patrol Competition Team account’s tax exempt status.”

TGM recommended that the town administration ask for Dewey Beach Patrol Competition Team account reconciliations and check the record of deposits and expenditures. Further, the “Town Council should ensure that the Dewey Beach Patrol Competition Team account be under the control of the Town as there was no proof given and the IRS has no record of its tax exempt status.”


TGM said the town should hire a financial manager, either in-house or outsourced, and should have a “formal accounting policy and procedures handbook” that describes how cash must be handled and property and capital assets are tracked. Barter should be eliminated.

In addition, the town should verify that the police SALLE and EIDE grant bank accounts are being properly used and find out how the police department’s safe is used for holding cash. That includes going over the log of money flowing into and out of the safe.

It is also time to determine what physical property the town still has, by counting the LESO property in police department hands and property held by the beach patrol. This should be compared to insurance records and to records of the auction house.

Demil Code A property in possession of the police should be assessed for fair market value, along with donations to the lifeguards, the report said.