Okaloosa County BOCC — January 18, 2013 — reading text

of ten people at a dinner and silent auction for a charitable organization. According to County personnel, the reasons why the payments were not approved varied. For example, the rigging and production services were not procured through the Purchasing Department but were directly purchased by an employee, contrary to County purchasing policies and procedures. Therefore, the Purchasing Director?s approval was not obtained. We also scanned the payments made to two advertising and marketing firms and noted that the BCC Chairman was permitted to approve certain purchases rather than the County Administrator, contrary to County purchasing policies and procedures. Upon inquiry, the County Administrator indicated that he was unaware of any formal action taken by the BCC specifically authorizing a change in the responsibilities for expenditure approvals, but that there may have been an assumption that the BCC Chairman was authorized to approve the expenditures since the former TDC Executive Director reported directly to the BCC Chairman. When payments are not approved as required by County purchasing policies and procedures, the County is at an increased risk that it will pay for unallowed or inadequately supported expenditures. In February 2012, the County eliminated the practice of allowing the BCC Chairman to approve expenditures rather than the County Administrator. Recommendation: The County should ensure that required approvals are obtained for all purchases in accordance with County purchasing policies and procedures. Finding No. 13: Purchasing Card Controls The County provided purchasing cards (p-cards) to approved employees in an effort to efficiently and effectively process and expedite low dollar purchases of goods and services, and the County established policies and procedures to provide guidelines on the proper use of these cards. Our review disclosed that improvements were needed in the design and monitoring of County p-card policies and procedures, as follows: 17 Packet Pg. 351  9.1.a ****PRELIMINARY AND TENTATIVE FINDINGS**** County p-card policies and procedures required that departments review p-card expenditures to ensure goods and services obtained were necessary and appropriate. However, these policies and procedures did not specify who was required to approve the expenditures. County records did not evidence that the former TDC Executive Director?s p-card expenditures were approved by another employee. County p-card policies and procedures required the p-card user and reviewer to sign a preprinted statement on monthly p-card expenditure reports certifying that they reviewed the expenditure report, that it correctly reflects the supporting receipts, and that all purchases made were for official County business and in accordance with applicable rules and directives. However, we noted that the preprinted statement did not Attachment: Attorney General P&T Audit (1278 : Response to the Auditor General's Report) appear on many of the expenditure reports. County p-card policies and procedures required that employees receiving p-cards sign certification and receipt forms documenting that the employees accepted the terms and conditions for the use of the p-cards. Although requested, we were not provided 2 of 17 p-card certification and receipt forms we selected for testing. Of the 15 forms we were provided, 5 forms were dated subsequent to our request, and 5 forms were not dated (i.e., there was no indication that the employees signed the agreements prior to receiving their p-cards). During the period May 2010 through May 2012, the County paid $600,000 in p-card expenditures from tourist development taxes or BP grant funds. Our tests of 60 such expenditures, totaling $37,000, disclosed the following: 25 of 60 purchases (41.7 percent), totaling $18,324.05, were for goods or services not immediately provided to the purchaser (e.g., internet or phone orders), and County records did not evidence that the purchaser subsequently acknowledged that the goods or services were received. 28 of 60 purchases (46.7 percent), totaling $14,680.37, were not supported by detailed receipts or explanations that clearly documented the public purpose of the expenditures. These purchases are included on Exhibit A. In the absence of an independent review and approval of p-card transactions, certification statements from the p-card user and reviewer, timely completed certification and receipt forms, documentation that goods or services were received, and detailed receipts and explanations as to the purpose of the expenditures, the County is at an increased risk that expenditures may be made that are not in accordance with County p-card policies and procedures or that do not serve an authorized public purpose. Recommendation: The County should strengthen its p-card policies and procedures to ensure that an independent review and approval is documented for all purchases; that employees and reviewers certify they reviewed the applicable p-card expenditure report, that it correctly reflects the supporting receipts, and that all purchases made were for official County business and in accordance with applicable rules and directives; that p-card certification and receipt forms are timely signed by employees; that employees acknowledge the receipt of goods and services; and that County records evidence the authorized public purpose served by the expenditures. Travel Finding No. 14: Travel Expenditures Section 112.061, Florida Statutes, generally provides travel requirements for public officers, employees, and other authorized persons, and requires that all authorized travelers submit travel voucher forms when submitting travel expenditures for approval and payment. The travel voucher form should state the purpose of the travel. It should also include a certification signed by the traveler indicating the truth and correctness of the claim in every material matter, the travel expenses were necessary and incurred by the traveler in the performance of his or her official duties, the per diem claimed was reduced for any meals or lodging included in the convention or conference registration fees 18 Packet Pg. 352  9.1.a ****PRELIMINARY AND TENTATIVE FINDINGS**** claimed by the traveler, and the voucher conforms in every respect with the requirements of Section 112.061, Florida Statutes. Pursuant to Section 125.0104(9), Florida Statutes, the TDC is also authorized and empowered to make expenditures for transportation, lodging, meals, and other reasonable and necessary items and services for such persons, as determined by the head of the TDC, in connection with the performance of promotional and other TDC duties. Complete and detailed justification for all travel and entertainment-related expenditures made pursuant to Section 125.0104(9), Florida Statutes, are also required to be shown on travel vouchers or attachments to the travel vouchers. Attachment: Attorney General P&T Audit (1278 : Response to the Auditor General's Report) The BCC established various policies and procedures governing travel, including a requirement in the TDC operations and procedures manual that TDC employees and members obtain preapproval for travel. However, CCC personnel indicated they did not routinely verify that travel of TDC employees and members was preapproved. County policies and procedures did not require that travel of other authorized persons (e.g., contracted employees, travel writers, and tour brokers performing promotional and other duties) be preapproved. In the absence of the preapproval of travel, the County is at an increased risk that unauthorized or unnecessary travel expenditures may be incurred. County personnel classified and recorded $113,000 in travel expenditures during the period May 2010 through May 2012 paid from tourist development taxes or BP grant funds. As similarly noted in finding No. 22, additional travel expenditures were incorrectly classified and recorded under other object codes. As a result, the total amount of travel expenditures incurred during the period was not readily quantifiable using the County?s accounting records. Our review of selected expenditures recorded as travel noted above, as well as selected misclassified travel expenditures we noted during other testing, indicated that the County paid $41,225.32 in travel-related expenditures that were not supported by travel vouchers. In the absence of properly completed and signed travel vouchers, the County is at an increased risk that unallowed or unjustified travel expenditures may be incurred. For example, we noted that the County paid $1,151.80 in airfare for a candidate interviewing for an open sales position at the convention center. The Director of Human Resources had previously informed the former TDC Executive Director that the County would not pay for these travel costs. However, at the former TDC Executive Director?s direction, the travel costs were subsequently paid by one of the advertising and marketing firms and invoiced back to the County. Recommendation: The County should strengthen its procedures to ensure the preapproval of travel expenditures for all authorized persons and the use of properly completed and signed travel vouchers to support all travel expenditures and entertainment-related expenditures pursuant to law. Special Events Grants and Sponsorships Finding No. 15: Special Events Grants To increase tourism and the use of lodging facilities in the County, the TDC and TDC Marketing Subcommittee awarded $341,361.89 in special events grants paid from tourist development taxes or BP grant funds during the period May 2010 through May 2012. These grants were awarded to groups or organizations that planned, coordinated, or managed special events that were expected to benefit area tourism. Examples of special events grants awarded included $32,000 for the Florida State H.O.G. Rally, $17,740 for the Emerald Coast Poker Run, and $2,400 for the Greater Gulf Coast Beer Festival. 19 Packet Pg. 353  9.1.a ****PRELIMINARY AND TENTATIVE FINDINGS**** The BCC had not developed written policies and procedures addressing the criteria used to award special events grants, the methodology for calculating the amounts of the grants, the persons authorized to approve the grants, or the responsibilities of grant recipients to document that the grants were used for allowable purposes. In practice, the TDC and TDC Marketing Subcommittee awarded the grants in advance of