Okaloosa County BOCC — November 5, 2013 — reading text

contracting a CPA firm, and hiring an employee, the County Administrator has determined the best solution is to create a position for a Compliance Officer assigned under the County Administrator’s Office. Specific to the duties of this position, if approved, several responsibilities will include: - Conducts reviews for compliance of internal policies, procedures and practices, general ledger account balances, grants, contracts, revenue collection, purchasing, disbursements, inventory as well as facilities and equipment management. - Determines whether the BCC Departments are performing their planning, custodial, accounting or control activities in compliance with policies, procedures, standards, laws, and regulations, and in a manner consistent with objectives and standards of administrative practices and applicable federal, state, and local laws and ordinances. - Develops internal control policies, processes, and procedures and makes recommendations. RECOMMENDATION: Staff recommends Board approval to proceed with the creation of the position of Compliance Officer and development of the duties and responsibilities, including those listed above. RECOMMENDED BY: Packet Pg. 688 APPROVED BY: Ernie Padgett, County Administrator Packet Pg. 689  BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: December 17, 2013 TO: Honorable Chairman and Members of the Board FROM: Rick Owen SUBJECT: Update on AGO Report and response DEPARTMENT: County Administrator BCC DISTRICT: All STATEMENT OF ISSUE: Staff requires Board discussion and action on the modified P&T Findings report from the AGO. BACKGROUND: After receipt of the P&T Findings Report from the Auditor General's Office dated October 17, 2013, staff drafted responses to each finding and presented to the Board at the BCC meeting held on November 5, 2013 at 6 p.m. in the Crestview Courthouse. After approval of the responses and authorization for the Chairman to sign a transmittal letter by the Board, these responses were sent to the AGO on November 13, 2013. The formalized, Board-approved response to the AGO is attached. On November 20, 2013, staff was contacted by the AGO with a proposal to modify their report in exchange for several changes to the Board’s response. The proposed modification to the October 17, 2013 report is attached and the summary of recommended changes to the responses are as follows: 1. A minor modification to the introductory paragraph on page one: As reflected in the Preliminary and Tentative Audit Findings, the review parameters consisted of the period from October 2011 through February 2013. This review period overlaps with the period addressed in Report No. 2013-085 relating to the Tourist Development Department which was May 2010 through May 2012. Though the Tourist Development Department was excluded from this review, the Preliminary and Tentative Audit Findings identify several areas that were also the subject of Report No. 2013-085. As part of the Corrective Action Plan Report No. 2013-085, the County has previously addressed several of these through the amendment of its Purchasing Manual on April 2, 2013. The implementation of the corrective action plan resulting from Report No. 2013-085 is ongoing. 2. In finding number 3, the response would be modified to read: COUNTY RESPONSE: The County agrees that all BCC local officers should be advised of the requirement to file a statement of financial interests and in accordance with section 112.3145(7)(a), F.S., and the County complies with Florida law by notifying each newly appointed local officer of their duty to comply with the disclosure requirements of section 112.3145, F.S. The County will take any additional actions deemed necessary to comply with section 112.3145, F.S. RECOMMENDATION: Staff recommends approval of proposed changes to the AGO report and Board responses respectively. Packet Pg. 690 RECOMMENDED BY: APPROVED BY: Ernie Padgett, County Administrator Packet Pg. 691  OKALOOSA COUNTY’S RESPONSE TO THE PRELIMINARY AND TENTATIVE AUDIT FINDINGS AND RECOMMENDATIONS OF THE OKALOOSA COUNTY BOARD OF COUNTY COMMISSIONERS AND OKALOOSA COUNTY CLERK OF THE CIRCUIT COURT The Board of County Commissioners is in receipt of the Preliminary and Tentative Audit Findings and Recommendations, dated October 17, 2013, which may be included in the operational audit of the Auditor General of the Okaloosa County Board of County Commissioners (BCC) and Okaloosa County Clerk of Court (CCC). Please find the Response of the Board of County Commissioners to the Preliminary and Tentative Findings and Recommendation. As reflected in the Preliminary and Tentative Audit Findings, the review parameters consisted of the period from October 2011 through February 2013. This review period overlaps with the period addressed in Report No. 2013-085 relating to the Tourist Development Department which was May 2010 through May 2012. Though the Tourist Development Department was excluded from this review, the Preliminary and Tentative Audit Findings identify several areas that were also the subject of Report No. 2013-085. However the Preliminary and Tentative Audit Findings fails to adequately note that as part of the Corrective Action Plan Report No. 2013-085, the County has previously addressed several of these through the amendment of its Purchasing Manual on April 2, 2013 and that the implementation of the corrective action plan resulting from Report No. 2013-085 is ongoing. FRAUD AND ETHICS CONTROLS/RISK ASSESSMENTS Finding No. 1: The BCC had not performed and documented periodic fraud or control risk assessments of the operations of BCC departments, developed written action plans that implement and monitor needed controls, or included a fraud response plan in its policies and procedures. Recommendation: The BCC should continue its efforts to ensure that periodic fraud and control risk assessments are performed and action plans are prepared to implement and monitor needed controls. In addition, the BCC should enhance its anti-fraud program policies and procedures to include a written fraud response plan. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. As noted in the Finding, these matters were previously addressed in Report No. 2013-085 (See Findings 5 and 6). As with our response at that time, the County indicated it will review and consider the amendment of its current code of conduct and whistleblower policies to include a written fraud response plan that addresses investigation protocols and guidance on reporting known or suspected fraud to the appropriate authorities. 1 Packet Pg. 692  In response to those previous Findings, the County, in April 2013, retained an independent CPA firm to conduct fraud and control risk assessments related to the County’s operations, including accounting activities for the County performed by the CCC. The CPA firm has issued a report dated August 26, 2013 that has identified several fraud risks and control weaknesses and provided recommendations to the BCC. The County is continuing to study this report and its recommendations. It is also considering other areas that may be addressed in the future. The County is also reviewing and considering the implementation of an annual fraud risk assessment and fraud controls monitoring. In furtherance of this monitoring, the County has researched and determined the Association of Certified Fraud Examiners has a Fraud Risk Assessment tool that can be used by Okaloosa County to strengthen its anti-fraud program. The County will consider the implementation of this or similar fraud assessment tools which can be utilized to enhance its fraud controls. Finding No. 2: Several BCC employees did not file a statement of financial interests with the Okaloosa County Supervisor of Elections, contrary to law. Recommendation: The BCC should ensure that all BCC local officers, as defined in Section 112.3145(1), Florida Statutes, are advised of the requirement to file a statement of financial interests and that the names and positions of applicable local officers are communicated to the Commission. COUNTY RESPONSE: Based upon the comments in the audit finding and recommendation, the Auditor General appears to be imposing a requirement on the County which is not supported by Florida law. Specifically, there are aspects of the comments which accompany the Finding that are at odds with the opinion of an attorney with the Florida Commission on Ethics (see attached correspondence). Initially, section 112.3145(7) (a), F.S., sets forth certain responsibilities of the appointing authority as to the filing of a statement of financial interests. The County agrees that all BCC local officers should be advised of the requirement to file a statement of financial interests and in accordance with section 112.3145(7)(a), F.S., and the County complies with Florida law by notifying each newly appointed local officer of their duty to comply with the disclosure requirements of section 112.3145, F.S. However, Florida law assigns the responsibility for the notifying those persons who are required to file statements of financial interests with the Commission on Ethics. Per section 112.3145(6), F.S. The County has fully complied with the obligations assigned to it under the Statute and the comment appears to impose a standard not required by law. 2 Packet Pg. 693  Finally, the comment also identifies four (4) employees that did not file a disclosure of Financial Interests and the Auditor General states that they should have in that they have the authority to purchase goods and services in excess of $20,000. Initially, none of these employees have authority to purchase goods and services in any single transaction in an amount in excess of $20,000, however, it is the position of the Auditor General that a statement of financial interest is required if the cumulative amount of all purchases could exceed $20,000. The attached correspondence from the Florida Commission on Ethics provides an attorney’s opinion that the expenditure limit is not a cumulative amount, but rather must be based upon authority to make individual purchase in excess of $20,000. Finding No. 3: BCC policies and procedures were not adequate to identify and prevent potential conflicts of interest. Recommendation: The BCC should enhance its policies and procedures, as needed, to identify and prevent potential conflicts of interest. Such policies could include, for example, requiring employees to disclose potential conflicts of interest. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. As noted in the Finding, as part of the corrective action plan implemented by the County in response to Auditor General Report No.2013-85, issued in January 2013, the County adopted significant revisions to its Purchasing Manual on April 2, 2013. The purpose of these changes was to apply many of the controls that were implemented for the