Thursday, November 12, 2026
City Council described outrage with City staff that an audit reveals Marco Island improperly reported nearly $2 million in grants without those findings being revealed to Council.
Chairman Erik Brechnitz called for the ousting of City Manager Mike McNees due to this and other reported failures announced at the Council meeting Monday night.
“This is a very serious matter and one that this Council should be concerned about,” Brechnitz said. “Auditors do not use the term ‘material weakness’ without something very serious being wrong,” he said.
What was of further concern was that McNees knew of the problem discovered by auditors in early June and did not inform Council, Brechnitz said.
McNees said he watched the email exchange between the auditing firm, CliftonLarsonAllen LLP, and City of Marco Island Finance Director Guillermo Polanco, but was not informed that the audit was posted to the City’s website.
Council members and McNees said they didn’t receive the auditors’ letter of concern until Brechnitz discovered the audit posted to the City’s website either. Brechnitz first brought his concerns about it to Council on Monday night, without a request for information from McNees or Polanco privately prior to the public meeting - a fact that upset staff and some Council members.
Councilwoman Deb Henry described Brechnitz’s approach like an ambush.
“We could be in violation of our bond covenants,” Brechnitz warned.
The City’s audit advisory committee hadn’t met for more than a year, and the typical communications with auditors that occur in April, May, and June never occurred, Brechnitz said.
Brechnitz moved to not renew McNees’s contract as city manager for another year, effective immediately.
Councilman Darrin Palumbo seconded that motion to allow for further discussion but later withdrew his second. This would give Council more time to investigate what occurred and hear from auditors at the Council meeting on August 4, if not sooner, before making any major decisions on the matter, they decided.
The City’s financial statements for fiscal year 2024, which ended September 30, were audited by CliftonLarsonAllen LLP, a firm of independent licensed certified public accountants, with the goal to provide reasonable assurance that the financial statements of the City are free of material misstatement, according to the audit report that is posted on the City’s website.
Without communication and thorough review, it is possible for a person to miss that there was a problem with the audit. No one was informed that it was posted online, Council members said. Brechnitz said he searched for it.
The report describes an award for financial reporting from the Government Finance Officers Association of the United States and Canada. “The City has received this prestigious award since 1998,” Polanco wrote in a letter attached to the audit posted to the website.
The letter from Polanco is dated June 30, addressing Council and the citizens of the City - but no one received it, they said. It also describes the award and not the concerns.
Council did not receive the audit or any communications that there were problems or delays with the audit, until Brechnitz looked into it and brought it up Monday night during the meeting, they said.
It was not immediately clear what McNees knew and when he knew it, other than McNees saying he was copied on emails between Guillermo and auditors and saw the exchanges noting some concerns.
“The fact this got put on our website, frankly, I feel like I’ve been set up,” McNees said.
Material Weaknesses in $2 Million of Grant Reporting
Auditors describe the material weaknesses in state and federal grant reporting, including from page 120 through approximately page 136 of their report, which is posted on the City’s website.
Auditors identified deficiencies in internal controls that they considered material weaknesses and then described these as “significant deficiencies.”
Within the document, dated June 26 and signed by Clifton Larson Allen, LLP, the auditors describe their responsibility to communicate any significant deficiencies and material weaknesses in internal control identified during the audit.
Areas of concern include grants from the US Department of Homeland Security, Federal Emergency Management Agency (FEMA), Florida Department of Financial Services, and Florida Department of Environmental Protection, according to the audit report. The total federal awards were almost $1 million and the total state awards were $1.25 million. The projects included water quality restoration, according to the audit.
The City received generators that didn’t work for two years, so the City couldn’t bill for them, Polanco said to Council on Monday.
Polanco could have informed Council in as simple as an email that the auditors had cited a material weakness in internal controls, Brechnitz said.
Also unusual was that the audit was filed the very last day of the deadline, which is June 30, Brechnitz said.
To Fire or Not to Fire City Manager Mike McNees
Firing anyone on the spot was not rational, Council members decided after discussion.
Some material weaknesses are more serious than others and more information from auditors is needed, said Councilman Rene Champagne.
Henry put the blame on Brechnitz for not asking questions sooner.
“This is sneaky,” Henry said of Brechntiz’s unexpected call for firing McNees.
“Unfortunately, it feels backstabbing and wrong, but it’s the Sunshine Law,” Palumbo said of the laws requiring public transparency in government.
A point of contention with Brechnitz’s style was highlighted by Councilwoman Bonita Schwan, who said the document Brechnitz read from that included numerous management failures should have been made available to Council and staff prior to the meeting or at the latest, at the outset of the meeting.
This document from Brechnitz stated several additional concerns including:
Problems with the 2023 financial reports
Increased audit costs
A lack of performance reviews of directors
Forged police department documents
Fictitious fire inspections
The impact fee agreement with Collier County has not been updated since 2002
“I didn’t see this coming,” said Councilman Stephen Gray, a career banker. “This is a 98-mile-per-hour spitball. I’m trying to think of the reasonable way to process this,” Gray said.
“The audit was released to the public and I have not seen it,” Gray said. “I didn’t know the opinion letter from the auditor was released. That’s very unsettling to me,” Gray added.
McNees said he only had a week from when the audit was submitted through to the Council meeting and that it wasn’t enough time to get it on the agenda, nor was there a process for him to do so.
He said he hadn’t seen the auditor’s letter either, but it was included in the audit, which McNees said he also did not receive.
“The fact it was not submitted until the last day is not a subterfuge, it’s a fact,” McNees said.
The City had hired a new audit firm because there were concerns with financial records earlier, McNees said.
Details in the Auditors’ Report
The City did not account for grants expenditures and the related revenues in the correct period and therefore, the financial statements and supporting schedules were not prepared accurately, the auditors state on page 130.
According to the auditors’ report, these financial statements and supporting schedules were inaccurate, and the cause was that the City did not have the proper internal controls to prevent or detect the errors.
The recommendation, according to the report, is to “implement controls to ensure grant revenue and expenditures are recognized when eligibility requirements are met - not when funds are requested or received.”
Also, the recommendation to correct the material weakness in internal control over financial reporting that led to the City’s financial records being misstated included for management to “enhance its review over financial records to ensure information is accurately recorded.”
Further, the auditors stated the City has not established formal policies and procedures for the review and approval process for grant quarterly progress report submissions, resulting in inaccurate and incomplete reimbursement request reports, which may lead to noncompliance with grant requirements and potential financial penalties.
Additional recommendations included training staff on the review process.
In regard to the four of five reports not being submitted in the required 20-day period end, the auditors recommended the City update policies, procedures, and controls, as well as implement a tracking system for each grant’s reporting requirements and deadlines.
Comments
No comments on this item Please log in to comment by clicking here