Okaloosa County BOCC — January 20, 2015 — Okaloosa Follow-Up Letter and PT — reading text

each selection committee member. 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 Manual requirements to ensure that goods and services are acquired pursuant to BCC purchasing policies and procedures. Finding No. 8: Contract Design Previously Reported The BCC negotiated and entered into contracts that did not contain adequate provisions to effectively protect the BCC’s interests. We recommended that the BCC strengthen its procurement procedures to ensure that all contracts include provisions that specify the types and amounts of contractor expenses for which the contractor is to be reimbursed and require the contractor to submit sufficiently detailed invoices to allow for an effective preaudit. We also recommended that the contracts for advertising and marketing firms include provisions to competitively procure goods and services in accordance with BCC purchasing policies and procedures, and require the firms to submit cost estimates, obtain BCC approval prior to starting work on an advertising project or marketing campaign, and state the advertising project or marketing campaign with which invoices are associated. 4  ****PRELIMINARY AND TENTATIVE FINDINGS**** Results of Follow-Up Procedures The BCC’s actions corrected this finding. Our review of two contracts relating to the TDD issued during the period January 2014 through July 2014 disclosed that the contracts contained adequate provisions to protect the BCC’s interests. In addition, our review of the contract with the TDD’s advertising and marketing firm disclosed that the contract included provisions to competitively procure goods and services in accordance with BCC purchasing policies and procedures, require the firm to submit cost estimates, obtain BCC approval prior to starting work on an advertising project or marketing campaign, and require that invoices indicate the advertising project or marketing campaign with which the invoices are associated. Finding No. 9: Contract Monitoring and Contract Payments Previously Reported The BCC did not perform an adequate review or preaudit of invoices submitted by two advertising and marketing firms, including a comparison of payment requests to the provisions of the contracts. As a result, the BCC paid two advertising and marketing firms $12.1 million without obtaining adequate documentation supporting the goods or services received, including payments of several invoices that incorrectly or inadequately described the actual goods or services purchased. We recommended that the BCC continue to strengthen its monitoring and preaudit procedures to ensure that contract provisions are properly monitored and payments are supported by adequate documentation to allow for an effective preaudit. We also recommended that the BCC continue its efforts to obtain supporting documentation for payments made to the two advertising and marketing firms. In addition, we recommended that the BCC, in consultation with its legal counsel, determine whether the BCC is entitled to recover any questioned billings, and take appropriate action to recover such billings. Finally, we recommended that the BCC adopt written policies and procedures that provide guidance on the reasonableness and necessity of TDC expenditures. Results of Follow-Up Procedures The BCC’s actions partially corrected this finding. While the BCC did not adopt policies or procedures that provide guidance on the reasonableness and necessity of tourist development related expenditures, the BCC adopted policies and procedures designed to strengthen controls over contractual payments. These policies and procedures include the adoption of a strategic marketing plan for TDD expenditures and the implementation of a task order system over contractual expenditures. A total of $2,561,315 was paid to the TDD’s advertising and marketing firm during the period January 2014 through July 2014. Our review of eight payments totaling $253,184 disclosed that the payments were properly supported by adequate documentation to allow for an effective preaudit. In August 2014, the BCC, pursuant to court-ordered mediation, negotiated a settlement with one of the advertising and marketing firms referred to in our report No. 2013-085. However, negotiations with the other advertising and marketing firm are still ongoing. Recommendation: The BCC should continue its efforts to negotiate a settlement with the remaining advertising and marketing firm. 5  ****PRELIMINARY AND TENTATIVE FINDINGS**** Finding No. 10: Competitive Procurement by Contractors Previously Reported The BCC did not ensure that goods or services acquired through two advertising and marketing firms were competitively procured. We recommended that the BCC ensure that goods and services purchased through contractors are competitively procured in accordance with BCC purchasing policies and procedures. Results of Follow-Up Procedures The BCC’s actions corrected this finding. The contract with the TDD’s advertising and marketing firm, dated December 4, 2012, requires that all purchases made by the firm on behalf of the BCC be made in accordance with the BCC’s Purchasing Manual. Our review of eight payments totaling $253,184 to the TDD’s advertising and marketing firm during the period January 2014 through July 2014 disclosed that applicable goods and services purchased through contractors were competitively procured. Finding No. 11: Advance Payments Previously Reported The BCC paid for certain goods and services in advance of their receipt, including certain goods and services acquired through two advertising and marketing firms, contrary to law and the State Constitution. Some services for which the BCC paid in advance were not subsequently provided, resulting in overpayments of $50,760. We recommended that the BCC continue to strengthen its purchasing procedures to ensure that advance payments are approved and paid only if the payments result in a savings that is equal to or greater than the amount that would be earned by investing the funds and paying later, or if the payments are essential to the BCC’s operations and the goods or services being paid for are available only if advance payment is made. We also recommended that the BCC establish procedures to ensure that goods or services paid for in advance are either subsequently received by the BCC or a refund of the overpayment is pursued. In addition, we recommended that the BCC continue its efforts to recover the overpayments noted above. Results of Follow-Up Procedures The BCC’s actions corrected this finding. The BCC approved changes to the TDD’s Operations and Procedures Manual that requires the BCC to preapprove all advancement of funds under advertising and promotions contracts. Our test of expenditures included one expenditure representing an advance payment. Our review disclosed that the BCC preapproved the advance payment and that the advance payment was allowed by the State Chief Financial Officer’s Reference Guide for State Expenditures. The BCC also recovered, restored, or received alternative services for the overpayments noted above. For $14,960 of alternative services received, the County’s documentation of the alternative services provided lacked certain relevant information (e.g., time records, specific dates of services, methods of valuating services provided) necessary to demonstrate that the value of the services provided totaled at least $14,960. In response to our inquiry as to the valuation of the services provided, the County’s attorney indicated that based on discussion with numerous County staff as to the work performed and the extent of services provided, it was felt that there was a sufficient showing, 6  ****PRELIMINARY AND TENTATIVE FINDINGS**** confirmed by staff, that the amount of work performed was reasonably related to the $14,960 amount of the overpayments. Finding No. 12: Approval of Purchases Previously Reported The BCC did not consistently follow prescribed policies and procedures relating to the approval of purchases, including purchases made through two advertising and marketing firms. We recommended that the BCC ensure that required approvals are obtained for all purchases in accordance with BCC purchasing policies and procedures. Results of Follow-Up Procedures The BCC’s actions corrected this finding. Our review of 15 purchases totaling $372,692 made during the period January 2014 through July 2014, including 8 purchases made through the TDD’s advertising and marketing firm, disclosed that required approvals were obtained for all purchases in accordance with BCC purchasing policies and procedures. Finding No. 13: Purchasing Card Controls Previously Reported The BCC did not consistently follow prescribed policies and procedures relating to the use of purchasing cards (p-cards), including certifications from the p-card holder accepting the terms and conditions for the use of the p-card, supervisory approval of purchases, and certifications from the p-card user and reviewer that the purchases were for official County business and in accordance with applicable rules and directives. In addition, BCC employees did not document the receipt of goods and services purchased with p-cards that were not immediately provided to the purchaser or document the public purpose served by the p-card expenditures. We recommended that the BCC strengthen its p-card policies and procedures to ensure that an independent review and approval is documented for all purchases; 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 business and in accordance with applicable rules and directives; p-card certification and receipt forms are timely signed by employees; employees acknowledge the receipt of goods and services; and BCC records evidence the authorized public purpose served by the expenditures. Results of Follow-Up Procedures The BCC’s actions partially corrected this finding. Our review of 19 p-card transactions totaling $13,914 made during the period January 2014 through July 2014 disclosed that an independent review and approval was documented for all purchases; employees and reviewers certified they reviewed the applicable p-card expenditure report, that it correctly reflects the supporting receipts, and that all purchases made were for official business and in accordance with applicable rules and directives; p-card certification and receipt forms were timely signed by employees; and employees acknowledged the receipt of goods and services. However, our