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

functioning of the Clerk’s office either have been addressed or will be the subject of future coordination between the respective constitutional bodies. The County acknowledges that sufficient controls were not in place to assure adequate contract monitoring and pre-auditing of invoices. As part of the corrective action already taken by the County, on September 18, 2012, the BCC substantially amended the Operations and Procedures Manual governing the operation of the TDC and the Tourist Development Department. 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). This includes the specific requirement that all expenditure approvals are consistent with the authority levels of the various positions. 40 JANUARY 2013 REPORT NO. 2013-085 Additionally, to assist the preaudit review of expenditures, the amended Manual also requires that no invoice will be processed through the Clerk’s Office without the executed task order and/or purchase order approved by the respective County officials. Further that no invoice will be approved unless the actual invoice from the vendor accompanies the invoice reflecting the acquisition of the goods or services. (See E.600). As to questionable billings or expenditures, the County has been reviewing numerous expenditures which were inappropriate or which were made with limited documentation. Efforts have been instituted by the County to seek reimbursement for several of these expenditures and this effort is anticipated to continue once law enforcement finalizes its investigations. 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. CLERK’S RESPONSE: In accordance with the corrective action already taken by the County in regard to the County procurement and contract process and the amended Operations and Procedures Manual of the TDC, the Clerk will perform its invoice preaudit function in such a way that will ensure full compliance with contractual provisions and appropriate documentation. In connection with these corrective actions, especially regarding the advertising contract, the increased level of invoicing of these services provided will more clearly identify the goods and services acquired. Finding No. 10: The County did not ensure that goods or services acquired through two advertising and marketing firms were competitively procured. Recommendation: The County should ensure that goods and services purchased through contractors are competitively procured in accordance with County purchasing policies and procedures. 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 substantially amended the Operations and Procedures Manual governing the operation of the TDC and the Tourist Development Department. Those amendments require that all expenditures be in conformity with established policies and utilize the procedures of the County Purchasing Policy (See D.400). Additionally, all functions determined by the Director and Council to be handled by contract with third parties are required to be entered into in accordance with the County’s standard procedures, including the issuance of Requests for Qualifications (RFQ’s) and/or Requests for Proposals (RFP’s) required under County procedures (See E.100). Additionally, the County has recently entered into an Agreement with a new entity to provide marketing and advertising services to the Tourist Development Department. That Agreement incorporates significant new controls over the provision of these services and requires competitive pricing where appropriate. (See Response to Finding No. 8). The County will continue to periodically review the Tourist Development Plan and Operations and Procedures Manual to provide assurances that adequate controls are provided and that the operation of the TDC is consistent with the mandates of County policy and Florida Statutes. 41 JANUARY 2013 REPORT NO. 2013-085 Finding No. 11: The County 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 County paid in advance were not subsequently provided. Recommendation: The County should continue to strengthen their 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 County’s operations and the goods or services being paid for are available only if advance payment is made. Additionally, the County should establish procedures to ensure that goods or services paid for in advance are either subsequently received by the County or a refund of the overpayment is pursued. Further, the County should continue its efforts to recover the questioned payments noted above. 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 substantially amended the Operations and Procedures Manual governing the operation of the TDC and the Tourist Development Department. Those amendments and the Agreement recently entered into with the new entity to provide advertising and marketing services to the Tourist Development Department, specifically prohibit the advancement of funds unless approved by the BCC. (See E.700). Further as to those cited payments where advance payments were made but the services were apparently not provided, the County has been reviewing these and numerous other expenditures which reflect the possibility of inappropriate payments. Efforts have been instituted by the County to seek reimbursement for several of these expenditures, including those cited in this Finding. This effort is anticipated to continue once law enforcement finalizes its investigations. The County will continue to periodically review the Tourist Development Plan and Operations and Procedures Manual to provide assurances that adequate controls are provided and that the operation of the TDC is consistent with the mandates of County policy and Florida Statutes. CLERK’S RESPONSE: In accordance with the corrective action already taken by the County, the Clerk will be able to determine in its preaudit function whether payments made in advance are properly authorized. Finding No. 12: The County did not consistently follow prescribed policies and procedures relating to the approval of purchases, including purchases made through two advertising and marketing firms. Recommendation: The County should ensure that required approvals are obtained for all purchases in accordance with County purchasing policies and procedures. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. The County acknowledges that insufficient controls were in place to assure adequate review of expenditures. As part of the corrective action already taken by the County, on September 18, 2012, the BCC has substantially amended the Operations and Procedures Manual governing the operation of the 42 JANUARY 2013 REPORT NO. 2013-085 TDC and the Tourist Development Department. Those amendments require that all expenditures be in conformity with established policies and utilize the procedures of the County’s Purchasing Policy (See D.400). These amendments mandate that purchases up to $25,000 require approval of the Director and Purchasing Director; purchases above $25,000 and up to $50,000 require the approval of the Director, the Purchasing Director and the County Administrator; and purchases over $50,000 require the approval of the BCC (See D.400 2). Further, the new Agreement with the entity to provide marketing and advertising services to the Tourist Development Department requires that all purchases made by the Agency on behalf of the County be made in accordance with the County’s Purchasing Manual. Section 5.1 of the new Agreement provides as follows: 5.1 All purchases made by the CONTRACTOR on behalf of the COUNTY shall be made in accordance with the COUNTY’s Purchasing Manual. A copy of the Purchasing Manual has been provided to the CONTRACTOR and its terms are incorporated herein by reference as an essential part of this Agreement. The County will continue to periodically review the Tourist Development Plan and Operations and Procedures Manual to provide assurances 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. 13: The County did not consistently follow prescribed policies and procedures relating to the use of purchasing cards (P-cards), 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. Recommendation: The County should strengthen its P-card policies and procedures to ensure that an independent review and approval is documented for all purchases; that 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 County business and in accordance with applicable rules and directives; that P-card certification and receipt forms are timely signed by employees; that employees acknowledge the receipt of goods and services; and that County records evidence the authorized public purpose served by the expenditures. COUNTY RESPONSE: The County agrees with the audit finding and recommendation. The County has previously taken action to reestablish the reporting authority of the Director of the Tourist Development Department to the County Administrator. As such, the County Administrator would provide independent reviewing authority of P-card expenditure reports and authorizations. The County will also review and consider the amendment of the policies and procedures to address controls related to the use of P-cards, including strengthening the reporting requirements of these expenditures, placing caps on the extent of the expenditures, and providing assurances that purchases made through the use of P-cards are actually received by the County. TRAVEL Finding No. 14: The County needed to enhance its policies and procedures to ensure that travel expenditures are preapproved and adequately documented. 43 JANUARY 2013 REPORT NO. 2013-085 Recommendation: The County should strengthen its procedures to ensure the preapproval of travel expenditures for all authorized persons and the use of properly completed and signed travel vouchers to support all travel expenditures and entertainment-related expenditures pursuant to law. COUNTY