Okaloosa County BOCC — January 8, 2013 — Final AG Report and Board Response - January 2013 — reading text

REPORT NO. 2013-085 JANUARY 2013 OKALOOSA COUNTY BOARD OF COUNTY COMMISSIONERS’ OVERSIGHT OF THE TOURIST DEVELOPMENT COUNCIL AND USE OF TOURIST DEVELOPMENT TAXES AND FUNDS RECEIVED FROM BRITISH PETROLEUM Operational Audit  BOARD OF COUNTY COMMISSIONERS, COUNTY ADMINISTRATOR, CLERK OF THE CIRCUIT COURT, TOURIST DEVELOPMENT COUNCIL, AND EXECUTIVE DIRECTOR OF THE TOURIST DEVELOPMENT COUNCIL The Okaloosa County Board of County Commissioners, County Administrator, Clerk of the Circuit Court, Tourist Development Council, and Executive Director of the Tourist Development Council who served during the period May 2010 through May 2012 are listed below: Board of County Commissioners District No. Wayne Harris, Chair to 12-31-2010 1 John Jannazo to 11-15-2010 2 Dave Parisot from 11-16-2010, Vice Chair from 1-1-2012 2 Bill Roberts, Vice Chair from 1-1-2011 to 12-31-2011 3 Don Amunds, Vice Chair to 12-31-2010, Chair from 1-1-2012 4 James Campbell, Chair from 1-1-2011 to 12-31-2011 5 County Administrator James D. Curry Clerk of the Circuit Court Don W. Howard Tourist Development Council Kathy Houchins, Chair from 10-1-2010 Robert "Bobby" Nabors, Vice Chair from 12-15-2010 Dennis "Nick" Nicholson, Chair to 9-30-2010 Warren Gourley, Vice Chair to 12-14-2010 Timothy M. Edwards Patricia Hardiman Larry Hines Lino Maldonado James Campbell, Board Liaison to 11-25-2011 Dave Parisot, Board Liaison from 11-26-2011 Executive Director of the Tourist Development Council Darrel Jones to 5-31-2010 Mark Bellinger from 5-13-2010 to 5-4-2012 (Deceased) Greg Donovan, Interim from 5-5-2012 The audit team leader was Kenneth C. Danley, CPA, and the audit was supervised by James W. Kiedinger, Jr., CPA. Please address inquiries regarding this report to Marilyn D. Rosetti, CPA, Audit Manager, by e-mail at marilynrosetti@aud.state.fl.us or by telephone at (850) 487-9031. This report and other reports prepared by the Auditor General can be obtained on our Web site www.myflorida.com/audgen; by telephone (850) 487-9175; or by mail G74 Claude Pepper Building, 111 West Madison Street, Tallahassee, Florida 32399-1450. JANUARY 2013 REPORT NO. 2013-085 OKALOOSA COUNTY BOARD OF COUNTY COMMISSIONERS’ OVERSIGHT OF THE TOURIST DEVELOPMENT COUNCIL AND USE OF TOURIST DEVELOPMENT TAXES AND FUNDS RECEIVED FROM BRITISH PETROLEUM TABLE OF CONTENTS PAGE NO. SUMMARY .........................................................................................................................................................1 BACKGROUND ................................................................................................................................................ 3 FINDINGS AND RECOMMENDATIONS .................................................................................................... 6 ORGANIZATIONAL OVERSIGHT ...................................................................................................................... 6 Finding No. 1: Budget Preparation and Monitoring ............................................................................... 6 Finding No. 2: TDC Duties and Responsibilities ................................................................................... 7 Finding No. 3: TDC Monitoring of Expenditures .................................................................................. 8 Finding No. 4: Conflicts of Interest ........................................................................................................ 8 FRAUD CONTROLS AND CONTROL RISK ASSESSMENTS ................................................................................. 9 Finding No. 5: Fraud Controls ................................................................................................................ 9 Finding No. 6: Control Risk Assessments.............................................................................................. 10 PROCUREMENT OF GOODS AND SERVICES ................................................................................................... 10 Finding No. 7: Competitive Procurement by the County ...................................................................... 10 Finding No. 8: Contract Design ............................................................................................................. 11 Finding No. 9: Contract Monitoring and Contract Payments ............................................................... 12 Finding No. 10: Competitive Procurement by Contractors.................................................................... 15 Finding No. 11: Advance Payments........................................................................................................ 15 Finding No. 12: Approval of Purchases .................................................................................................. 17 Finding No. 13: Purchasing Card Controls ............................................................................................ 17 TRAVEL .......................................................................................................................................................... 18 Finding No. 14: Travel Expenditures ..................................................................................................... 18 SPECIAL EVENTS GRANTS AND SPONSORSHIPS ............................................................................................ 19 Finding No. 15: Special Events Grants................................................................................................... 19 Finding No. 16: Sponsorships ................................................................................................................20 ALLOWABLE USES OF RESTRICTED RESOURCES ........................................................................................... 21 Finding No. 17: Tourist Development Taxes – Statutory Compliance .................................................. 21 Finding No. 18: BP Grant Funds – Grant Compliance .......................................................................... 21 Finding No. 19: BP Grant Funds – Grant Compliance and Controls over Debit Card Program ...........22 Finding No. 20: BP Claims and Reimbursements .................................................................................23 JANUARY 2013 REPORT NO. 2013-085 OKALOOSA COUNTY BOARD OF COUNTY COMMISSIONERS’ OVERSIGHT OF THE TOURIST DEVELOPMENT COUNCIL AND USE OF TOURIST DEVELOPMENT TAXES AND FUNDS RECEIVED FROM BRITISH PETROLEUM TABLE OF CONTENTS (CONTINUED) PAGE NO. MOTOR VEHICLES .........................................................................................................................................24 Finding No. 21: Fuel Cards ....................................................................................................................24 ACCOUNTING CONTROLS ..............................................................................................................................24 Finding No. 22: Classification and Reporting of Expenditures .............................................................24 ELECTRONIC FUNDS TRANSFERS .................................................................................................................25 Finding No. 23: Controls Over Electronic Funds Transfers ..................................................................25 INFORMATION TECHNOLOGY CONTROLS ....................................................................................................26 Finding No. 24: Access Controls ............................................................................................................26 PUBLIC RECORDS ..........................................................................................................................................27 Finding No. 25: TDC and TDC Subcommittee Meeting Minutes ........................................................27 RELATED INFORMATION ..........................................................................................................................28 OBJECTIVES, SCOPE, AND METHODOLOGY .........................................................................................28 AUTHORITY ...................................................................................................................................................29 EXHIBIT A - AUDIT SCOPE AND METHODOLOGY............................................................................... 30 EXHIBIT B - INADEQUATELY SUPPORTED PURCHASING CARD EXPENDITURES ..................... 32 EXHIBIT C - MANAGEMENT’S RESPONSE ............................................................................................. 33 Management's Response Attachments ..................................................................................................... 52 JANUARY 2013 REPORT NO. 2013-085 OKALOOSA COUNTY BOARD OF COUNTY COMMISSIONERS’ OVERSIGHT OF THE TOURIST DEVELOPMENT COUNCIL AND USE OF TOURIST DEVELOPMENT TAXES AND FUNDS RECEIVED FROM BRITISH PETROLEUM SUMMARY Our operational audit of the Okaloosa County Board of County Commissioners’ oversight of the Tourist Development Council and use of tourist development taxes and funds received from British Petroleum disclosed the following: ORGANIZATIONAL OVERSIGHT Finding No. 1: The Board of County Commissioners (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