Okaloosa County BOCC — November 5, 2013 — Response to October 17 2013 AG Report - 10 29 13 (3) — reading text

officio clerk of the board of county commissioners, auditor, recorder and custodian of all county funds,” the operation of his office is not subject to the direction of the BCC. In those roles, the Clerk is the custodian of all County funds and the manner in which those funds are accounted for are solely within his determination. The Clerk’s constitutional grant of authority vests him with the independent authority within that area of responsibility. Therefore, the specific issue raised in regards to the functioning of the Clerk’s office either has been addressed or will be the subject of future coordination between the respective constitutional bodies. Finding No. 7: The BCC did not obtain adequate support for certain disbursements from the law enforcement trust fund, or document its decision as to how certain disbursements represented allowable uses of law enforcement trust fund moneys in accordance with the provisions of law. Recommendation: The BCC should continue its efforts to obtain adequate support for all disbursements from the LETF, document its decision as to how the disbursements represent allowable uses of LETF moneys in accordance with the provisions of law, and provide such documentation to the CCC. In addition, the BCC should ensure that organizations receiving LETF moneys provide the CCC with the required accounting of the use of LETF moneys. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. As noted in the Finding, in September 2012, the County adopted procedures relating to the application, approval and accounting of the Law Enforcement Trust Fund moneys. The County will continue to review this process and the procedures to make certain that all necessary documentation as to the application, approval and use of these funds are in accordance with these procedures. 5  PROCUREMENT Finding No. 8: The BCC did not document that certain professional services could not be competitively procured because the services could only be obtained from one company. Recommendation: The BCC should ensure that professional services are competitively procured or document the reason competitive procurement is not possible in accordance with its policies and procedures. COUNTY RESPONSE: The County agrees with the audit finding and recommendations. This Finding is based on a review of two professional service contracts entered into during the period October 2011 through February 2013. As part of the corrective action plan implemented by the County in response to Auditor General Report No. 2013-085, issued January 2013, the County prepared 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 Tourist Development Department to all other departments of the County. In particular, the County amended Section L of the Purchasing Manual relating to request for proposals for professional services and Section G.b.4. relating to sole source items. These amendments strengthen the controls related to the issues raised by this Finding. The County will continue to review and strengthen those policies as circumstances dictate. Finding No. 9: The BCC needed to strengthen its procedures regarding the procurement of contractual services. Recommendation: The BCC should strengthen its procedures to ensure that all contracts include adequate provisions to effectively protect the interests of the BCC; contract payments are properly supported at the time the payments are approved and paid; required approvals are obtained for all contract payments in accordance with BCC policies and procedures; contract payments are properly monitored and do not exceed maximum amounts stipulated in the contracts; and contract renewals are properly executed in accordance with contract provisions and BCC policies and procedures. COUNTY RESPONSE: The County agrees with the audit finding and recommendations. As noted in the Findings, a review of contracts in effect during the period of October 2011 through February 2013 disclosed deficiencies in internal controls over contractual services. As part of the corrective action plan implemented by the County in response to Auditor 6 General Report No. 2013-085, issued January 2013, the County prepared 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 Tourist Development Department to all other departments of the County. In particular, the County amended Section Q.VII. relating to support, approval and monitoring of contract payments. Further, the County amended Section Q.XVII. relating to contract/lease renewals. These amendments strengthen the controls related to the issues raised by this Finding. The County will continue to review and strengthen its control of contractual services and incorporate necessary protections, support requirements for contractual payments and renewals. Finding No. 10: BCC records did not adequately document the authorized public purpose served by certain promotional and training-related expenditures. Also, the BCC did not establish written procedures over the use of promotional gift cards. Recommendation: The BCC should strengthen its procedures to ensure that the authorized public purpose of expenditures is adequately documented in BCC records and establish written procedures over the distribution and use of promotional gift cards. The BCC should also document the necessity of providing food and beverages to employees attending training and paying for facility and equipment rentals when its own facilities are available. COUNTY RESPONSE: The County agrees with the audit finding and recommendations. The Finding identifies various expenditures and questions the documentation supporting the public purpose for these expenditures. Though the County believes these expenditures do serve a public purpose, the County agrees that it will work toward providing documentation and will continue to do so. As noted in the Findings, a review of expenditures during the period of October 2011 through February 2013 disclosed that BCC records did not adequately document the authorized public purpose served. As part of the corrective action plan implemented by the County in response to Auditor General Report No. 2013-085, issued January 2013, the County prepared 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 Tourist Development Department to all other departments of the County. In particular, the County amended the following sections of the Purchasing Manual relating to the review of whether a particular expenditure serves a public purpose: Section G.2.e. provides: Prior to authorizing any expenditure listed above, the Department Director shall review the purchase and determine that the 7  expenditure serves a public purpose and that the necessary approval and procedures for the expenditure has been complied with. Section G.9.b.(1) provides: The Finance Department shall review the purchase order and determine that the expenditure serves a public purpose, that the necessary approval and procedures for the expenditure have been complied with and certify that funds are available for the purchase. The funds are encumbered and obligated at this point in the purchasing process. The Finance Department shall forward the certified purchase order to the Purchasing Department. The Finance Department referred to in Section G.9.b.(1) above is under the authority and supervision of the CCC. These amendments strengthen the controls related to the issues raised by this Finding. Finding No. 11: The BCC needed to enhance its procedures relating to the use of purchasing cards. Recommendation: The BCC should strengthen its p-card policies and procedures to ensure that an independent review and approval is documented for all purchases; p-card expenditure reports include the required statement that employees and reviewers have certified they reviewed the applicable p-card expenditure report, the report is supported by receipts, all purchases made were for official County business, and the purchases were in accordance with applicable rules and directives; single transaction limits have not been exceeded; prior to payment, employees have acknowledged the receipt of goods and services purchased; BCC records evidence the authorized public purpose served by the expenditures; and p-cards for terminated employees are timely canceled. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. As noted in the Findings, a review of P-card expenditures during the period of October 2011 through February 2013 disclosed deficiencies in the controls and monitoring of P-card expenditures. As part of the corrective action plan implemented by the County in response to Auditor General Report No. 2013-085, issued January 2013, the County prepared 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 Tourist Development Department to all other departments of the County. In particular, the County amended Section N of the Purchasing Policy relating to Purchasing Card Policy and Procedures. These amendments strengthen the controls related to 8 the issues raised by this Finding. The following is a list of revisions made to the Purchasing Manual: • Section N.C.10.(c) requires P-card expenditure reports of Department Directors to be reviewed by the County Administrator. Reports of the County Administrator are reviewed by the Chairman of the BCC. Reports of the BCC members are reviewed by the Clerk’s Finance Department. • Section N.A.3. relating to the cancellation of P-cards for cardholders that are no longer employed by the County. • Section N.C.2 and 3 requiring that goods or services are received prior to payment. • The revised P-card Expenditure Report (page 63 of Purchasing Manual) requires employees and reviewers to certify they reviewed the report, the report is supported by receipts, all purchases were made for official County business, the purchases were in accordance with applicable rules and directives, documents the public purpose of the purchases, and the date on which the goods/services were received. The County recognizes the importance of P-cards in the elimination of petty cash for small purchases as well as the intangible benefit of rebates from the issuer. In that regard, the County will also review and consider the amendment of the policies and procedures to address controls related to the use of P-cards, as determined to be needed by the County. Finding No. 12: The BCC did not document the necessity of paying for certain goods and services in advance of their receipt, contrary to law. Recommendation: The BCC should strengthen policies and 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