Okaloosa County BOCC — January 20, 2015 — County's Response to Preliminary and Tentative Findings — reading text

OKALOOSA COUNTY’S RESPONSE TO THE PRELIMINARY AND TENTATIVE AUDIT FINDINGS AND RECOMMENDATIONS ON THE RESPONSE OF THE BOARD OF COUNTY COMMISSIONERS, THE CLERK OF THE CIRCUIT COURT AND THE TOURIST DEVELOPMENT COUNCIL TO AUDITOR GENERAL’S REPORT NO. 2013-085 The Board of County Commissioners is in receipt of the Preliminary and Tentative Audit Findings and Recommendations which may be included in the operational audit of the Auditor General on the extent to which the Okaloosa County Board of County Commissioners (BCC), Clerk of the Circuit Court (CCC) and Tourist Development Council (TDC) had taken, or were in the process of taking, corrective actions to address the findings included in the Auditor General’s report No. 2013-085. Please find the Response of the BCC, CCC and TDC to the Preliminary and Tentative Findings and Recommendations. Organizational Oversight Finding No. 1: Budget Preparation and Monitoring Previously Reported The BCC did not establish annual budgets for expenditures from restricted resources at the level the resources were restricted, or project budgets for each advertising project and marketing campaign, to ensure that available resources were not overspent. We recommended that the BCC adopt budgets to control expenditures from restricted resources at the level of their restriction and by each specific project funded by these restricted resources; corresponding budgets be incorporated into the accounting records to provide for the effective control of expenditures; the BCC and TDC perform periodic budget-to-actual comparisons; and the CCC reject invoices presented for payment when sufficient authorized funds are not available. Results of Follow-Up Procedures The BCC’s and CCC’s actions corrected this finding. Our review of adopted budgets and accounting records disclosed that budgets for restricted resources were established that correspond to the level of their restriction and to projects funded by BP moneys and tourist development taxes, and that monitoring controls, including budget to actual comparisons, were established to provide for the effective control of expenditures of BP moneys and tourist development taxes. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC and the CCC have fully and completely addressed and implemented the recommended corrective actions. 1 Finding No. 2: TDC Duties and Responsibilities Previously Reported The TDC and TDC subcommittees performed certain duties that were not of an advisory nature, contrary to law. We recommended that the BCC implement policies and procedures to ensure that the TDC performs only those duties authorized by Section 125.0104(4)(e), Florida Statutes, and County ordinances. Results of Follow-Up Procedures The BCC’s actions corrected this finding. The BCC approved several changes to the Tourist Development Department’s1 (TDD’s) Operations and Procedures Manual designed to ensure that the TDC performed duties only of an advisory nature. Our review of TDC actions taken at TDC meetings, and subsequent actions taken by the BCC, disclosed that the TDC performed only those duties authorized by Section 125.0104(4)(e), Florida Statutes, and County ordinances. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC and the TDC have fully and completely addressed and implemented the recommended corrective actions. Finding No. 3: TDC Monitoring of Expenditures Previously Reported The TDC did not continuously review all expenditures of tourist development taxes, contrary to law. We recommended that the TDC continue to strengthen its monitoring controls by ensuring that it timely receives and reviews detailed reports of expenditures of tourist development taxes as required by Section 125.0104(4)(e), Florida Statutes. Results of Follow-Up Procedures The CCC’s and TDC’s actions corrected this finding. Beginning in March 2014, the TDC began reviewing CCC-provided monthly reports of expenditures of tourist development taxes. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC, the CCC and the TDC have fully and completely addressed and implemented the recommended corrective actions. Further, they have significantly strengthened their monitoring controls both in the receipt and review of detailed expenditure reports and in other areas. Finding No. 4: Conflicts of Interest Previously Reported The BCC purchased goods and services from companies or organizations that were affiliated with members of the BCC, TDC, or a TDC subcommittee, contrary to law. We recommended that the BCC 2 implement policies and procedures to ensure that future purchases of goods and services are not made from vendors in which a potential conflict of interest exists or that waivers of the requirements of Sections 112.313(3) and 112.313(7), Florida Statutes, as they relate to TDC and TDC subcommittee members, are granted and documented in accordance with Section 112.313(12), Florida Statutes. Results of Follow-Up Procedures The BCC’s actions corrected this finding. TDC Bylaws now require TDC members to abstain from voting, and submit a voting conflict form, when potential conflicts of interest exist. The BCC’s Human Resource Policy Manual now requires BCC employees to disclose, at least annually, potential conflicts of interest. In addition, the BCC’s Purchasing Manual now requires all bidders or proposers to disclose potential conflicts of interest to the BCC. We noted no conflicts of interest during our review of transactions for the period January 2014 through July 2014. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC and TDC have fully and completely addressed and implemented the recommended corrective actions. Fraud Controls and Control Risk Assessments Finding No. 5: Fraud Controls Previously Reported The BCC had not adopted a fraud response plan, and the BCC did not perform periodic fraud risk assessments or establish action plans to implement and monitor fraud controls. We recommended that the BCC strengthen its anti-fraud program by adopting a fraud response plan, requiring periodic fraud risk assessments, and developing action plans to implement and monitor fraud controls. Results of Follow-Up Procedures The BCC’s actions partially corrected this finding. The BCC adopted a fraud response plan in April 2014. The BCC also contracted with a certified public accounting (CPA) firm to perform an overall risk assessment, and the CPA firm released its report on risk assessment in August 2013. In its report, the CPA firm made several recommendations to the BCC regarding developing and implementing an ongoing risk assessment process. As of November 2014, the BCC was in the process of developing this ongoing risk assessment process. Recommendation: The BCC should take the steps necessary to complete the development and implementation of the recommended ongoing risk assessment process, including developing action plans to implement and monitor fraud controls. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC has partially implemented the recommended corrective action. The BCC has adopted a fraud response plan and engaged an outside CPA firm to perform an overall 3 risk assessment. The BCC is in the final process of completing that implementation. It is anticipated that these corrective actions will be fully implemented within the next few months. Finding No. 6: Control Risk Assessments Previously Reported The BCC did not perform and document periodic control risk assessments over the activities of collecting, accounting for, and disbursing restricted resources to identify and respond to identified control risks. We recommended that the BCC perform and document periodic control risk assessments over the activities of collecting, accounting for, and disbursing restricted resources, including tourist development taxes and funds received from British Petroleum (BP). Results of Follow-Up Procedures The BCC’s actions partially corrected this finding. As noted in finding No. 5, the BCC contracted with a CPA firm to perform an overall risk assessment, and the CPA firm released its report on risk assessment in August 2013. In its report, the CPA firm made several recommendations to the BCC regarding developing and implementing an ongoing risk assessment process. As of November 2014, the BCC was in the process of developing this ongoing risk assessment process. Recommendation: The BCC should take the necessary steps to develop and implement the recommended ongoing risk assessment process to ensure that adequate internal controls are in place to minimize identified risks. COUNTY RESPONSE: The County concurs with the Results of the Follow-Up Procedures directed to the previous Findings and agrees that the BCC has partially implemented the recommended corrective action. The BCC has engaged a CPA firm to perform an overall risk assessment and it is in the final process of completing that implementation of adequate internal controls to minimize identified risks. It is anticipated that these corrective actions will be fully implemented within the next few months. Procurement of Goods and Services Finding No. 7: Competitive Procurement by the BCC Previously Reported The BCC did not consistently follow prescribed policies and procedures relating to the competitive procurement of goods and services, including the selection of two advertising and marketing firms. We recommended that the BCC ensure that purchases are procured in accordance with BCC policies and procedures, and strengthen its procurement procedures to ensure that the selection process for the acquisition of professional services is documented and services are acquired pursuant to BCC purchasing policies and procedures. We also recommended that these procedures require maintenance of documentation evidencing the basis for decisions made by selection committees and the signing of ranking sheets by each selection committee member. 4 Results of Follow-Up Procedures The BCC’s actions partially corrected this finding. The BCC approved changes to the TDD’s Operations and Procedures Manual that require all purchases to conform to established BCC purchasing policies and procedures, which require at least three written quotes for purchases exceeding $2,500 but less than $50,000. We reviewed contracts and purchases issued during the period January 2014 through July 2014. Our review of two contracts, one for food and beverage services and one for roofing services, disclosed that the contracts were competitively procured and documentation of the selection process was maintained. However, our review of two other purchases requiring competitive procurement disclosed that, contrary to BCC Purchasing Manual requirements, no written quotes were obtained for the purchase of holiday lighting for $3,640 and only two written quotes were obtained for the purchase of repairs to a cooling tower for $28,910. In these instances, BCC records did not evidence why three written quotes were not obtained. Recommendation: The BCC should continue its efforts to comply with its Purchasing