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

effect during the period May 2010 through May 2012, the BCC concluded that providing beach shuttle services was a proactive step to reduce seasonal tourism traffic congestion and encourage efficient and environmentally friendly transportation choices, established a permanent and dependable connection between the beaches and adjacent tourist destinations, and was necessary to promote the convention center and provide an alternate mode of access thereto. However, transportation services are a general government function owed to the public at large and, as such, do not appear to be an allowable use of tourist development taxes. Beginning with the 2012-13 fiscal year, the BCC funded the beach shuttle services from other revenue sources. Recommendation: The County should seek an opinion from the Attorney General as to the allowability of the $2,476,095.68 of questioned expenditures and, if appropriate based on the Attorney General’s opinion, should restore this amount to the tourist development taxes accounts. Finding No. 18: BP Grant Funds – Grant Compliance As discussed in the Background section of this report, the County received funds from BP after the oil spill to help rebuild and promote area tourism, including a $6,506,013 grant through Florida’s Coastal Northwest Communications Council, Inc. (FCNCC). Pursuant to the grant agreement, these funds were intended to be used for promotion and 21 JANUARY 2013 REPORT NO. 2013-085 awareness building expenditures not already planned or that would not normally be made to promote tourism (i.e., for expenditures to procure goods or services not previously paid with tourist development taxes). County records supporting many payments made to the two advertising and marketing firms were inadequate to determine whether the payments to the firms were already planned or would normally be made to promote tourism. However, based on available supporting documentation, we noted certain goods and services purchased with the BP grant funds noted above that were for goods or services previously paid for by the County with tourist development taxes. For example, we noted expenditures totaling $61,000 in routine monthly fees paid to one firm from BP grant funds that were for services previously paid with tourist development taxes. Likewise, we noted expenditures totaling $56,994 in special events grants paid to one firm from BP grant funds that were previously paid with tourist development taxes. County personnel indicated that the former TDC Executive Director was allowed to use his judgment in determining the funding source for these expenditures. As the above expenditures, totaling $117,994, were for goods or services previously paid with tourist development taxes, these expenditures represent questioned costs subject to disallowance by the grantor. Recommendation: The County should consult with the FCNCC as to the allowability of the $117,994 in questioned costs. Finding No. 19: BP Grant Funds – Grant Compliance and Controls over Debit Card Program Funds received from BP by the County after the oil spill to help rebuild and promote area tourism included a $1,371,939 grant through the FCNCC. The BCC approved the use of $1,000,000 from this grant to conduct the Emerald Coast Money Debit Card Program (Program). The Program provided that 5,000 debit cards, each worth $200, would be given to guests that paid for a minimum two-night stay at preapproved lodging facilities located in Destin, Fort Walton Beach, Okaloosa Island, Mary Esther, or Cinco Bayou. County records related to the Program indicated that the majority of the debit cards appear to have been issued to guests at lodging facilities as intended. However, we noted deficiencies in the controls over the Program as discussed below. The Program provided that guests would obtain debit cards by presenting identification and qualifying paid receipts from lodging facilities to the Emerald Coast Visitor’s Center. County records indicated that 3,651 debit cards, totaling $730,200, were issued for this purpose. However, our test of the issuance of 60 of the 3,651 debit cards disclosed that for 6 debit cards (10 percent), totaling $1,200, including 2 debit cards that were issued to the former TDC Executive Director, supporting documentation did not include a qualifying paid receipt from a lodging facility. For these 6 debit cards, County records did not demonstrate that the debit cards were issued pursuant to the approved Program and, as such, the $1,200 represents questioned costs subject to disallowance by the grantor. The former TDC Executive Director controlled the distribution of the remaining 1,349 debit cards, totaling $269,800, of which 302 debit cards were either not used or County records did not evidence how they were used. However, County records evidenced that 1,047 debit cards were not issued pursuant to the approved Program as follows:  1,000 debit cards totaling $200,000 were issued to an airline company. However, the County did not have a written agreement with the company stating the purpose for which the debit cards were issued.  46 debit cards were partially used by individuals, including the former TDC Executive Director, to purchase a variety of goods and services totaling $6,330.45. These goods and services included such items as furniture and furnishings, lodging, food and drinks, alcoholic beverages, tips, entertainment, gas, sales taxes, and other unspecified items.  One debit card was used as a prize in a local golf tournament. 22 JANUARY 2013 REPORT NO. 2013-085 County records did not evidence that the above purchases and uses were allowable uses of the grant funds. As such, these purchases and uses totaling $207,730.45 represent questioned costs subject to disallowance by the grantor. Recommendation: The County should consult with the FCNCC as to the allowability of the $207,730.45 in questioned costs. Finding No. 20: BP Claims and Reimbursements During the aftermath of the oil spill, BP contracted with the County to provide four land-based medical aid stations for clean-up crews working along the beaches. BP paid the County $634,041 for these services based on a Medical Services Support Agreement that provided hourly rates to be paid for the various services provided at each station. Our tests of invoices submitted to BP by the County disclosed errors in the rates used and calculations made by County personnel. For example, the County invoiced BP for an ambulance at one of the stations at a rate of $100 per hour when the agreement provided for a rate of $50 per hour, resulting in an overcharge of $27,062.50. County personnel indicated that they used the rate of $100 per hour since it was the rate listed in the County’s emergency medical services fee schedule and was the same rate listed in the agreement for the other stations. BP also entered into a Deepwater Horizon Funding Agreement (Agreement) with the Florida Division of Emergency Management through which the County could request reimbursements from BP for costs it incurred in responding to the oil spill. The Agreement required the County to include complete documentation, including invoices, checks, and proof of payment with its requests for reimbursement, and subsequent guidelines indicated that BP would generally reimburse the costs of increased or additional public services, response and removal costs, and lost revenues as a direct result of the oil spill. The County received $1,262,915.71 in reimbursements from BP, of which $981,447.70 (77.7 percent) related to payments the County made to a contractor that assisted County personnel in responding to the oil spill. We reviewed selected documentation supporting the reimbursements the County received from BP for the payments made to the contractor and noted certain costs that were inadequately supported or were for goods and services not clearly related to increased or additional public services, response and removal costs, or lost revenues. For example, we noted the following:  The County received reimbursements, totaling $370,208, for wages paid to the contractor’s employees. However, the County did not require the contractor to provide time cards or work logs to support the number of hours used to calculate wages.  The County received reimbursements for rental fees, totaling $6,122.36, for boats rented by the contractor. However, the County did not require the contractor to provide invoices from the boat owners to support the rental fee amounts.  The County received reimbursements, totaling $3,199.04, for purchases made at restaurants and convenience stores. However, the County did not require the contractor to provide invoices or receipts indicating the items purchased and, in some cases, the person(s) that received or consumed them. As a result, County records did not evidence that the items purchased were necessary and allowable costs related to the response to the oil spill.  The County received reimbursements, totaling $5,655.23, for various goods or services for which County records did not evidence were necessary and allowable costs incurred by the contractor in responding to the oil spill. These goods and services included such items as an alcoholic beverage, personal hygiene products, prescription drugs, over-the-counter medications, out-of-state lodging and car rental, and airfare to and from locations outside the County. County personnel indicated that they obtained the best available supporting documentation for the contractor’s expenses under the circumstances, provided that support to BP, and BP approved the expenditures as reimbursable 23 JANUARY 2013 REPORT NO. 2013-085 costs. Although BP reimbursed the County for these expenditures, the above reimbursements, totaling $385,184.63, were not supported by documentation required by the Agreement. Recommendation: For future reimbursement agreements, the County should ensure that reimbursement requests are made pursuant to terms of the agreements, including submission of required supporting documentation. Motor Vehicles Finding No. 21: Fuel Cards The County issued fuel cards for use in its vehicles, including those vehicles assigned to the Tourist Development Department and the convention center, and the Fleet Operations Department was responsible for compiling the monthly fuel charges invoiced by vendors and allocating the fuel charges to user departments. User departments were then responsible for reconciling the monthly fuel charges to gas receipts submitted by employees. During the period May 2010 through May 2012, the Tourist Development Department and the convention center were charged $24,146.86 for fuel purchased using fuel cards. Our review of these charges and the procedures used by County personnel to ensure the propriety of these charges disclosed the following deficiencies:  The Fleet Operations Department generated exception reports, by vehicle, to identify unusual fuel consumption. However, the parameters for generating exceptions on these reports were default parameters of the tracking software and were not reasonable. For example, the fuel limits for vehicles assigned to the Tourist Development Department and the convention center ranged from 250 to 400 gallons per day and 900 to 1,050 gallons per week. When such high parameters are used for