Okaloosa County BOCC — August 18, 2015 — County Response to P&T 2015

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 extent to which the Okaloosa County Board of County Commissioners (BCC and the Clerk of the Circuit Court (CCC) had taken, or were in the process of taking, corrective actions to address the findings included in the Auditor General’s Report No. 2014-068. Please find the Response of the BCC to the Preliminary and Tentative Findings and Recommendations. Finding 1: Fraud Controls and Risk Assessments COUNTY RESPONSE: The County concurs with the results of the Follow-Up Procedures directed to the previous Finding and agrees that the BCC has fully and completely addressed and have implemented the recommended corrective actions. Finding 2: Statements of Financial Interest COUNTY RESPONSE: The County concurs with the results of the Follow-Up Procedures directed to the previous Finding and agrees that the BCC has fully and completely addressed and had implemented the recommended corrective actions. Finding 3: Conflicts of Interest COUNTY RESPONSE: The County concurs with the results of the Follow-Up Procedures directed to the previous Finding and agrees that the BCC has fully and completely addressed and had implemented the recommended corrective actions. Finding 4: BCC Duties and Responsibilities COUNTY RESPONSE: The County concurs with the results of the Follow-Up Procedures directed to the previous Finding and agrees that the BCC has fully and completely addressed and had implemented the recommended corrective actions. 1  Finding 5: Fund Balance – General Fund Results of Follow-Up Procedures The BCC took no corrective action regarding this finding. The Government Finance Officers Association (GFOA) recommends that local governments establish a formal policy that provides for maintaining, at a minimum, an unrestricted fund balance in the General Fund that is no less than 2 months (17 percent) of the General Fund's operating revenues or operating expenditures. The policy should also provide for replenishing unrestricted fund balance when the balance falls below the target level. However, the BCC did not adopt a formal policy addressing an acceptable level of unrestricted fund balance in the General Fund. BCC personnel indicated that flexibility is necessary for establishing appropriate reserves and that they monitor unrestricted fund balances to ensure amounts are maintained for anticipated and unanticipated expenditures. At September 30, 2014, the County reported a General Fund unrestricted fund balance of $7,728,773, which is 10 and 9 percent of 2013-14 fiscal year operating revenues and expenditures, respectively, and less than the 17 percent level recommended by the GFOA. Policies that establish acceptable levels of General Fund unrestricted fund balance would set forth management's intent for such levels, provide public awareness of the levels, and guide BCC personnel to ensure adequate resources are available for emergencies or unforeseen circumstances. Recommendation: The BCC should adopt a formal policy addressing an acceptable level of unrestricted fund balance in the General Fund. Such policy should include a formal plan to replenish the unrestricted fund balance should it fall below the target level. COUNTY RESPONSE: The County acknowledges that Government Finance Officers Association (GFOA) recommends that local governments establish a policy on the level of unrestricted fund balance that should be maintained for the General Fund. The County views this recommendation as a best practices tool and not a requirement of law. Additionally, the extent of unrestricted fund balances that may be held during the course of a given year may vary. The County closely monitors these fund balances throughout the course of the year both as