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

use of the restricted resource. B – Supporting documentation did not indicate the names of the people attending the event. Consequently, it was not evident that this expenditure served an authorized purpose or was an allowable use of the restricted resource. 32 JANUARY 2013 REPORT NO. 2013-085 EXHIBIT C MANAGEMENT’S RESPONSE 33 JANUARY 2013 REPORT NO. 2013-085 OKALOOSA COUNTY’S RESPONSE TO THE PRELIMINARY AND TENTATIVE AUDIT FINDINGS AND RECOMMENDATIONS ON THE OVERSIGHT OF THE TOURIST DEVELOPMENT COUNCIL AND USE OF TOURIST DEVELOPMENT TAXES AND FUNDS RECEIVED FROM BRITISH PETROLEUM The Board of County Commissioners is in receipt of the Preliminary and Tentative Audit Findings and Recommendations which may be included in the operational audit of the Auditor General on the Oversight of the Tourist Development Council (TDC) and use of Tourist Development Taxes and funds received from British Petroleum. Please find the Response of the Board of County Commissioners (BCC) to the Preliminary and Tentative Findings and Recommendation. As several of the Preliminary and Tentative Findings relate to the operations of the office of the Clerk of the Court, that office has separately responded to some of these Findings. 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 campaign, to ensure that available resources were not overspent. Recommendation: The BCC should adopt budgets to control expenditures from restricted resources at the level of their restriction and by each specific project funded by these restricted resources. Corresponding budgets should be incorporated into the accounting records to provide for the effective control of expenditures, and the BCC and TDC should perform periodic budget-to-actual comparisons. The CCC should reject invoices presented for payment when sufficient authorized funds are not available to pay for them. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. Initially, under the Constitution of the State of Florida, the Clerk of the Court and the BCC are independent constitutional offices. Though the Clerk, under Article V, section 16 of the Florida Constitution is empowered to serve as the “ex 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. The Clerk’s constitutional grant of authority vests him with the independent authority within these areas of responsibility. Therefore, specific issues raised in regards to the functioning of the Clerk’s office either have been addressed or will be the subject of future coordination between the respective constitutional bodies. Further, as part of the corrective action already taken by the County4, on September 18, 2012, the BCC has adopted Ordinance No. 12-21 which amended the Tourist Development Plan of Okaloosa County and it has substantially revised the Operations and Procedures Manual governing the operation 4Prior to the formal amendment of the Operations and Procedures Manual and Ordinance in September of 2012, the County implemented various policy changes as an interim measure at its May 15, 2012 meeting. 34 JANUARY 2013 REPORT NO. 2013-085 of the TDC and the Tourist Development Department (a copy of Ordinance No. 12-21 and the amended Operations and Procedures Manual are attached as Attachment “A” and “B”, respectively). The intent of these amendments was to provide clear delineation as to the respective uses of the various pennies absent subsequent action by the BCC. Additionally, as part of the amendments to the Operations and Procedures Manual, the BCC has specifically mandated that project level budgets be prepared and submitted to the BCC to control expenditures and ensure that available resources are spent in accordance with the BCC’s intent and within the applicable restrictions. (See D.200). The County will also review the viability of establishing budget control expenditures from the various restricted revenues provided that it would be consistent with the provisions of Chapter 129, Florida Statutes. The County will continue to periodically review the Tourist Development Plan and Operations and Procedures Manual to provide assurance that the various restricted revenues are being expended in conformity with the requirements of Florida Law and the County’s ordinances. CLERK’S RESPONSE: In accordance with the corrective action already taken by the County in changing the TDC Ordinance, Tourist Development Plan and Operations and Procedures Manual, the Clerk will account for the Tourist Development Restricted balances at the levels of restriction as identified by the recommended budgetary process. The Clerk, in accordance with these corrective actions and the increased level of delineation, will reject invoices without sufficient authorized funds available. Finding No. 2: The Tourist Development Council (TDC) and TDC subcommittees performed duties that were not of an advisory nature, contrary to law. Recommendation: The BCC should implement policies and procedures to ensure that the TDC performs only those duties authorized by Section 125.0104(4)(e), Florida Statutes, and County ordinances. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. As part of the corrective action already taken by the County, on September 18, 2012, the BCC has adopted Ordinance No. 12-21 which amended the Tourist Development Plan of Okaloosa County and it has substantially revised the Operations and Procedures Manual governing the operation of the TDC and the Tourist Development Department. These amendments, among other things, reestablished the advisory nature of the TDC and its subcommittees and limited their functions to those mandated under Section 125.0104, Florida Statutes. (See A.400). The amendments established new controls on the exercise of the responsibilities of the TDC and eliminated any authority for it to perform functions outside of the advisory role contemplated by the Statute. Additionally, as to the prior practice of the TDC to approve expenditures, the amendments to the Operations and Procedures Manual also set forth a procedure for the approval of expenditures. Those amendments require that all expenditures be in conformity with established policies and utilizing the procedures of the County’s Purchasing Policy (See D.400). Such approvals for the expenditure of funds may not be given by either the TDC or the subcommittees. 35 JANUARY 2013 REPORT NO. 2013-085 The County will continue to periodically review the Tourist Development Plan and Operations and Procedures Manual to provide assurance that adequate controls are provided and that the operation of the TDC is consistent with the mandates of County policies and Florida Statutes. Finding No. 3: The TDC did not continuously review all expenditures of tourist development taxes, contrary to law. Recommendation: The TDC should continue to strengthen its monitoring controls by ensuring that it timely receives and reviews detailed reports of expenditures of tourist development taxes as required by Section 125.0104(4)(e), Florida Statutes. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. As part of the corrective action already taken by the County, on September 18, 2012, the BCC has adopted Ordinance No. 12-21 which amended the Tourist Development Plan of Okaloosa County and it has substantially revised the Operations and Procedures Manual governing the operation of the TDC and the Tourist Development Department. To facilitate the statutory responsibilities of the TDC to review and oversee expenditures, various amendments were included to provide more safeguards. Among these was that the TDC would initially participate in the establishment of proposed expenditures in the review of the budget and the marketing plan. (See D.200). Further, the amendments provide a post expenditure monitoring process whereby both the TDC and the BCC would be provided quarterly summaries of the actual expenditures. (See A.400). The County will continue to periodically review the Tourist Development Plan and Operations and Procedures Manual to provide assurance that adequate controls are provided and that the operation of the TDC is consistent with the mandates of County policy and Florida Statutes. Finding No. 4: The County purchased goods and services from companies or organizations that were affiliated with members of the BCC, TDC, or a TDC subcommittee, contrary to law. Recommendation: The BCC should implement policies and procedures to ensure that future purchases of goods and services are not made from vendors in which a potential conflict of interest exists or that waivers of the requirements of Sections 112.313(3) and 112.313(7), Florida Statutes, as they relate to TDC and TDC subcommittee members, are granted and documented in accordance with Section 112.313(12), Florida Statutes. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. Without concluding that each of the examples provided by the Auditor General in its Preliminary and Tentative Findings actually constituted violations of Section 112.313, Florida Statutes, the County agrees that inadequate controls existed which would address potential conflicts of interests. As part of the corrective action already taken by the County, on September 18, 2012, the BCC has adopted Ordinance No. 12-21 which amended the Tourist Development Plan of Okaloosa County and it has substantially revised the Operations and Procedures Manual governing the operation of the TDC and the Tourist Development Department. Several of the amendments to the plan directly relate to the issue of potential conflicts of interests. Initially, the revisions to the Manual specifically set forth 36 JANUARY 2013 REPORT NO. 2013-085 guidelines for the approval of special events and sponsorships. (See G.000 - G.600). The revisions also required that committee members with conflicts of interest comply with the provisions of Section 286.012 and Chapter 112, Florida Statutes. Further, the County’s Purchasing Manual, which is incorporated into the Operations and Procedures Manual, requires the submittal of conflict of interest disclosures as part of the process. The County will continue to periodically review the Tourist Development Plan and Operations and Procedures Manual to provide assurance that adequate controls are provided to avoid conflicts of interests and that the operation of the TDC is consistent with the mandates of County policy and Florida Statutes. FRAUD CONTROLS AND CONTROL RISK ASSESSMENTS Finding No. 5: The BCC had not adopted a fraud response plan, and the County did not perform periodic fraud risk assessments or establish action plans to implement and monitor fraud controls. Recommendation: The BCC