Okaloosa County BOCC — September 3, 2013 — September 3 Regular Meeting — reading text

Harris about excessive restrictions, Mr. Riggs said the Finance Department pre-audits every invoice and he heard from departments that payments were two or three months behind. When asked by Mr. Harris if this could be a big issue, Mr. Riggs replied it could be a structural problem and could make things overly cumbersome. Mr. Riggs stated the firm did pre-research before beginning the assessment and looked at the facts surrounding why they were engaged. He felt that in the process of healing and moving forward, responsibilities must be clearly defined and departments must do what they are supposed to do for financial reporting. Mr. Riggs said the Board is the policy maker and the Clerk is responsible for financial reporting. He stated at the end of the day if someone is not directly responsible, then no one is responsible. Mr. Harris referred to Mr. Riggs’ report which said Internal Auditor Tim Pozza had not prepared an internal audit for five years. He asked if there is some type of CPA belief that if a document is not prepared, the audit did not take place. Mr. Riggs responded that certain findings are based on some action and he expected typical internal audit work based on Mr. Pozza’s title. He stated Mr. Pozza issued reports but they were not internal audit in nature. Mr. Riggs told how his firm conducts internal audits and makes subsequent reports. Mr. Harris asked Mr. Riggs if he still believes with all the stringent policies put in place as directed by Special Counsel Greg Stewart, there is still a big hole. Mr. Riggs directed attention to the expenditure process, saying there is a lot of stuff to collect and validate. He clarified that he is talking a big picture scenario and spoke about the Airports Department lack of controls. When asked for further explanation, Mr. Riggs said the Airports Department has a single individual in charge of leases. He referred to a problem with a Destin FBO and loss of a half-million dollars. Mr. Parisot interjected those funds were recovered. Mr. Riggs commented that it is easy to see what comes in but asked if you are sure that is what is supposed to come in, September 3, 2013 -6- Minute Book 70, Page 6 Okaloosa County Board of County Commissioners Mr. Windes referred to what happened a year ago and subsequent corrective measures. He asked Mr. Riggs if he can give a percentage as to the county being structurally sound. Mr. Riggs responded by speaking about the process on the expenditure side. Mr. Windes again asked if a percentage can be assigned to soundness, such as 75%, and noted the county has addressed 60% of the AG’s findings. Mr. Riggs said 75% but it depends on how far you have to go. Mr. Windes stated the county has apparently made progress and Mr. Riggs replied, “It’s subjective.” Mr. Don Howard, Clerk of Circuit Court, stated he has a prepared statement he would like to read but first he would like to address some comments made by Mr. Riggs. Mr. Howard said there appears to be a wide gap between Mr. Riggs’ understanding of the law and Constitution and what his (Mr. Howard’s) understanding is having more than 39 years in the Clerk’s Office. He said pursuant to current case law, the Clerk has no responsibility directing the policy of this Board. What occurs in various county departments is under the direction of the Board. And, policy relative to a financial nature, is the responsibility of the Board. Mr. Howard stated some may say he is trying to deflect responsibility but that is not the case. Again, he referenced the Constitution and case law and encouraged the commissioners to ask their attorney. In particular, he directed attention to the Collier County suit. With regard to internal auditing, Mr. Howard stated he cannot go into any county department on his own accord. He reiterated that he cannot direct Mr. Pozza to go to Water & Sewer and perform an audit or go to the Airports to review leases. Ifa request is made by the Board, then the Internal Auditor can conduct an internal audit in any county department. Mr. Howard stressed there is a definite division of responsibilities. He said our responsibility is primarily a pre-audit function, to verify the appropriateness of payments before issuing disbursements, Mr. Howard said the idea that the changes were limited to TDD is totally untrue. He added the financial changes which were established will continue, saying we will continue to be an “equal opportunity agitator,” treating everyone the same. Mr. Howard read his prepared statement. He advised that he was shocked to read the biased August 26, 2013 cover letter and extremely disappointed that a CPA firm would write something that is blatantly in conflict with professional standards September 3, 2013 -7- Minute Book 70, Page 7 Okaloosa County Board of County Commissioners regarding an independent and objective review of the facts. Mr. Howard said he will wholeheartedly agree with strengthening internal controls but adamantly disagrees with the biased, subjective and unsupported rhetoric in the transmittal letter. He stated that he was disturbed not only with the fact the Clerk was blamed for the fraud perpetrated by others but also by some commissioners’ responses to the report. Mr. Howard noted those comments were made without the professional courtesy of a telephone call to him or to Mr. Stanford in an attempt to learn the truth. He pointed out neither he nor Mr. Stanford was given an opportunity to review the draft of the cover letter or the report. Mr. Howard continued with a quote from a December 2012 article in the Florida Bar Journal regarding the system of checks and balances created by the Florida Constitution. He pointed out the significant changes made in the TDD Operations and Procedures Manual (January 2013) and the Purchasing Manual (April 2013) by the Board. Many of these changes were implemented prior to the Auditor General’s Audit. Mr. Howard referenced Mr. Boyles’ remarks at the July 23 budget workshop where he expressed pleasure in knowing the Finance Department is “a pain in the tail” with regard to approvals of invoice payments. Mr. Boyles’ statement was made in response to complaints he had received from department heads. Mr. Howard announced that more than 500 payment requests to various county departments have been returned due to non-compliance with BCC policies. Joint training by the Purchasing Department and the Clerk’s Office for all BCC departments has been scheduled for September 10 to address the newly-adopted policies relative to contract payments. Mr. Howard said the report made specific reference to the Internal Auditor position. He underscored the Clerk’s Office has always conducted its role based on Florida case law. Mr. Howard quoted the Florida Supreme Court “the clerk of the circuit court shall audit all claims against the county that are presented for payment by the county.” With regard to the Collier County case referenced earlier, he said the courts opined the clerk has no authority to perform internal audits of various board departments unless requested to do so. He stated one of the many roles of the Internal Auditor has been over federal and state grant awards and it is because of oversight in the area of grant compliance and subrecipient monitoring, we have been classified as a low risk auditee. September 3, 2013 -8- Minute Book 70, Page 8 Okaloosa County Board of County Commissioners Mr. Howard concluded his statement by listing his continuing plans to address fraud risks at the Clerk’s Office. Mr. Harris noted that he had met with Mr. Howard today. He said he is confused by the whole thing. He felt there is still work to be done. Mr. Boyles stated Board did not have to conduct the risk assessment but did engage the firm to look across the county to apply lessons learned. He said two creditable gentlemen have spoken, saying he met with both Mr. Riggs and Mr. Howard. Mr. Boyles stated it is his understanding the Internal Auditor is getting ready to retire and this may be an opportunity to work with Mr. Howard about retooling that department, saying the Board needs to give him the resources to beef up that department. Mr. Boyles said before his time on the Board and prior to collapsing some of the management positions, the county had a budget officer. He remarked that now may be the time to have someone from the county back in that position, someone who speaks the same language as the Finance Director. He reiterated it would be helpful to have someone from the county’s side of the house in that role. Mr. Boyles felt the Board should take this report, and others, and use them to make the systems more robust. He quickly added that is not to say the system which was in place was a failure. Mr. Boyles said some tweeking is needed and believes the Constitution is less than clear on the Givision of responsibilities. Mr. Parisot stated he is not certain they can create a budget officer position under the Board. He added that he doesn’t think there is a problem with the way the budget is put together and complimented Budget Analyst Dave Skarzynski on doing a good job. Mr. Parisot noted he became involved in county activities in 2007 and it did not have a budget officer during that time. Mr. Howard stated he can answer the question about a county budget officer and advised Okaloosa County has never had a budget officer. He told the Board when it hired Chris Holley as County Manager his contract included provision for a _ budget officer. However, when Mr. Holley requested that position be filled, the Board chose not to fund the position and Mr. Holley summarily took on those responsibilities. Mr. Howard said the system put into place by Mr. Holley, whereby the County Manager September 3, 2013 -9- Minute Book 70, Page 9 Okaloosa County Board of County Commissioners works with the Finance Department to prepare the budget, is still the same one used today. Mr. Boyles responded that he understands the Assistant County Administrator served in the defacto role as the budget officer. He thought preparation of the budget should be a Board function. Mr. Parisot felt there is more to be gained by establishing an internal audit function under the Board to work within the departments and to provide oversight. This person would work with the financial managers and verify the revenue stream. He felt there would be more bang for the buck by improving the audit function rather than in the budget process. Mr. Parisot addressed Mr. Riggs and said he did not see in the report any prioritizing of risk areas. Mr. Amunds stated he would like for Mr. Padgett, Mr. Riggs, and Mr. Howard to work together and have a report in two weeks on what has been accomplished since the AG Report and what is currently being worked on. He said he wants something like a report card. Mr. Windes referred to Mr. Boyles’ stand on a budget officer and noted he has been entertaining that idea since coming on the Board. He pointed out the position would cost money and he is not willing to raise taxes to do that. Mr. Amunds asked Mr. Windes if he wants the working committee (Mr. Padgett, Mr. Riggs, and Mr. Howard) to look at that concept and its impact. Mr. Windes replied he believes it would be beneficial to the county but believes’ an internal auditor is more important. He stressed the importance of the county being financially sound. Mr. Amunds said the working group should address this concept. Mr. Harris said he is an advocate for an internal auditor. He added that he would like to make a PowerPoint presentation at a later date on an Assessment Program. Mr. Amunds asked if the Board would like to put a commissioner on the working group or determine if there is support for a working group. Mr. Boyles said he can support the working committee and feels a sense of urgency with the budget year end coming. He stated he wants this cleared up and behind us. Mr. Windes remarked that he is