INTERNAL AUDIT DIVISION CLERK OF THE … AUDIT DIVISION CLERK OF THE CIRCUIT COURT ... FOLLOW-UP...

INTERNAL AUDIT DIVISION

CLERK OF THE CIRCUIT COURT

Internal Audit Division, Clerk of the Circuit Court

FOLLOW-UP REVIEW TO AUDIT OF COUNTY EXTENSION

Ken Burke, CPA* Clerk of the Circuit Court Ex-officio County Auditor

Robert W. Melton, CPA*, CIA, CFE Chief Deputy Director Internal Audit Division

Audit Team David C. Williams, CIA, CFE, CBM, CGFM, Internal Auditor II

Scott K. Stees, CIA, CISA, CFE, CGFO, Internal Audit Manager

JULY 27, 2006

REPORT NO. 2006-13 *Regulated by the State of Florida

July 27, 2006

The Honorable Chairman and Members of the Board of County Commissioners We have conducted a follow-up review of our audit of the Board of County Commissioners County Extension. The purpose of our follow-up review was to determine the status of our previous recommendations for improvement. We COMMEND management for implementation of our recommendations. Of the thirty-eight recommendations contained in the audit report, we determined that thirty-six have been implemented, and two have not been implemented. The status of these recommendations is presented in this follow-up review. We appreciate the cooperation shown by the staff of the County Extension during the course of this review. Respectfully Submitted, Robert W. Melton, CPA*, CIA, CFE Chief Deputy Director Internal Audit Division Approved: Ken Burke, CPA* Clerk of the Circuit Court Ex Officio County Auditor *Regulated by the State of Florida

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Follow-up Audit of County Extension INTRODUCTION_____________________________________________________


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Scope and Methodology We have conducted a follow-up review of our audit of the Board of County Commissioners (BCC) County Extension. The purpose of the follow-up review is to determine the status of our recommendations for improvement. The previous audit covered the administration of the Florida Botanical Gardens and the Pinellas County Extension/4-H Youth Programs partnered with the University of Florida. The County Extension interaction with two active non-profit organizations (Florida Botanical Gardens Foundation and Pinellas County 4-H Club Foundation) was reviewed in our original audit. The use of funding and the internal controls over grants and private sector donation funding processed through the County and the non-profits were also reviewed. Excluded from the scope of the previous audit was the operation of the Florida Botanical Gardens Foundation gift shop located on the County site. The original audit objectives were to: • Determine if proper internal controls are established for revenue collected and

expenditures processed by Extension staff. • Evaluate the County Extension internal controls over the Grant processing and

determine if the grant program purposes are adequately met. • Evaluate the County Extension relationships established with non-profit foundations,

including sponsored events, educational activities, financial/operational responsibilities and utilization of funds.

• Determine if Extension short-term plans are consistent with the Mission Statement, and accomplishment reporting includes sufficient outcome measures to evaluate the success of the plan performance.

To determine the current status of our previous recommendations, we conducted an interview with management to determine the actual actions taken to implement the recommendations for improvement. We performed limited testing to verify the progress of the recommendations for improvement. Our follow-up audit was conducted in accordance with the International Standards for Professional Practice of Internal Auditing and, accordingly, included such test of records and other auditing procedures as we considered necessary in the circumstances. The audit period of our original review was October 1, 2001 through March 31, 2003. However, transactions and processes reviewed were not limited by the audit period. Overall Conclusion We COMMEND management for implementation of our recommendations. Of the thirty-eight recommendations in the report, we determined that thirty-six have been implemented, and two have not been implemented.

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Background The County Extension consists of two main segments, The Florida Botanical Gardens and Pinellas County Extension 4-H Youth Programs. The Extension site is part of the Pinewood Cultural Park that also includes the Gulf Coast Museum of Art and Heritage Village. Extension Services is a teaching branch of the University of Florida that provides research-based information to local citizens. The Botanical Gardens is a showcase of flora, fauna, and natural resources in surroundings that motivate the visitor to practice environmentally sustainable techniques. There are formal gardens including palm, tropical, herb, rose and other plants indigenous to the area covering over 160 acres. The Gardens is supported by the Florida Botanical Gardens Foundation, a non-profit organization through its membership/volunteers and support from County Extension staff for special events, environmental classes/workshops, and fundraising activities. Through the Master Gardener Program, the Foundation supports the planning and maintenance of the on- site gardens. The Pinellas County Extension is part of the nationwide system of Extension centers, with resource sharing from the University Of Florida/Institute of Food and Agricultural Science. Pinellas County citizens can obtain information on plants, insects, wildlife, and other environmental issues as well as information related to health, energy conservation and other matters important to the family. The Extension 4-H Youth Programs help build leadership and citizenship skills among the community’s young people. Interwoven in the Extension services supplied is the Pinellas County 4-H Club Foundation, a non-profit organization that receives direction from the State and National 4-H organizations. The County Extension site offers other services that include: rental of inside conference rooms, rental of the Wedding Garden, and a gift shop run by Florida Botanical Gardens Foundation. The 4-H Foundation utilizes an additional property, the Chester Ochs/4-H Educational Center, donated to the County for an environmental learning center for Pinellas youth. The Pinellas County Extension Service Advisory Council supplies additional oversight of the County Extension’s services. The site is used to benefit the Pinellas County residents and the business community. Some of the many diversified interests included are:

• Public and commercial horticulture education that includes the Florida yard and neighborhoods, “Certified Florida Yard” program.

• Family and Consumer Science education programs that include nutrition and fitness, food safety, child care, environmental safety for household chemicals and financial management and budgeting.

• Access to the Southwest Florida Water Management District programs. • Pinellas County Master Gardener Program.

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• Urban Wildlife ecological issues. • 4-H and other Youth Programs. • Family and Consumer Sciences. • Through the University of Florida Extension, access to a wide range of

research-based information on human and natural resources to improve life in local communities.

Follow-up Audit of County Extension

Follow-up of Previous Recommendations____________________________


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This section reports our follow-up on actions taken by management on the Recommendations for Improvement in our audit of the County Extension. The recommendations contained herein are those of the prior audit, followed by the current status. 1. There Was No Formal Agreement Between The Florida Botanical Gardens

Foundation (FBGF) And The County Defining Roles And Responsibilities.

Extension Management had been developing a draft agreement between the non-profit organization and the County. Our review of the proposed agreement found that the roles and responsibilities of the two parties were not adequately defined. The information provided did not inform the Board of County Commissioners (BCC) of what Extension services are donated or allowed to be used by the non-profit to support their operations. When County resources have been utilized to support the operations of a private non-profit organization, the roles and responsibilities should have been clearly defined so that the Board of County Commissioners can clearly ascertain the public benefit received vs. the resources used. Without a clearly defined agreement, there was no assurance that the use of County resources provided primarily a public benefit rather than primarily a benefit to a private organization. On June 19, 2003, prior to the presentation of the agreement to the BCC, we informed the County Administrator of our concerns related to the draft agreement. On September 23, 2003, the agreement was presented and approved by the BCC with our recommended changes made by management. The approved agreement identified the specific activities the BCC believed were appropriate and served primarily a public purpose. Recommendation: Because an appropriate agreement has now been established, we have no further recommendation. Status: Implemented. There is now a formal agreement between Pinellas County and the Florida Botanical Gardens Foundation, Inc. which appropriately defines roles and responsibilities. This agreement remains in effect.

2. The County Extension Was Commingling Operational Functions With The

FBGF, A Non-Profit Organization.

Some of the services being performed by the Extension were inappropriate for the Extension staff to render, and were not covered by adequate written procedures.




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The processes contained control weaknesses, and adequate supporting documentation was not maintained. Functions Performed By The Extension For FBGF Non-Profit Organization include: • Check Preparation Process • Cash Deposit Process to Bank Account • Bank Reconciliation • Use of Sam’s Club Credit Cards By Extension Staff • Bookkeeping, Quick Books Process • Cash Funds Activities for Events (oversight) • Membership Processing • Board Package Presentation • Mail Processing Function • Donation Box Opening By Extension Staff • Advisory to Public Events On Site • Thank You Letters for Donations • Record Retention for Non-Profit Records • Planning & Advisory for Training/ Educational Seminars/ Classes Sponsored by

FBGF • Incurring/Obligating Expenditure of Non-Profit Funds By Extension Staff County staff should not be used as a resource to perform services of a private non-profit organization that are not considered general support. In addition, the general support functions performed by the Extension staff should be covered by formal written procedures, contain proper internal controls and separation of duties for the functions. With this structure, County Extension staff was performing services for the FBGF without the County receiving reimbursement for the services rendered. The County had undue exposure related to the risk of inadequate internal controls and separation of duties for the functions performed for the non-profit. The FBGF Board had not approved the procedures used by the Extension staff in performing the FBGF functions.

Recommendation:

A. The operational functions being performed by the Extension staff for the FBGF that are not general support should be turned over to the non-profit Board members after adequate training support is provided by the Extension staff.

For functions not turned over to the non-profit organization, management should:

B. Develop written procedures for the process and obtain formal approval from the

FBGF Board.




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C. Develop procedures to properly support the current operations.

D. Eliminate control weaknesses and separation of duties issues from the process.

E. Maintain proper documentation to support the FBGF function performed by the Extension staff.

Status:

A. Implemented. The revised agreement between Pinellas County and the Florida Botanical Gardens Foundation, Inc. prescribes duties and responsibilities for each entity.

B.-E. Implemented. Written Guidelines for Fiscal Procedures have been developed, approved and implemented to provide adequate internal controls to support the FBGF function.

3. FBGF Funds Were Being Received And Disbursed By Extension Staff.

Funds from the nonprofit organization were being paid to Extension staff, who are County employees. During the audit period, we identified $14,240 that was paid to Extension staff. Further, inadequate documentation existed to support a pre-approval process that had FBGF authorizing the expenditure before it is incurred by Extension staff. Therefore, the Extension staff was incurring and/or obligating expenditures on behalf of the FBGF. Extension management stated that some of the expenditures are supported by approved FBGF budget line items. However, budget information was not in sufficient detail to be considered pre-approval by the non-profit. The current process being performed by Extension staff circumvented the County internal controls for the processing of receipts and expenditures. This process also enabled Extension staff to incur expenses for the non-profit organization, creating a separation of duties issue between the County and a private entity. Recommendation: Extension management cease taking primary responsibility for the receipt and expenditure process for the non-profit organization. If, through the general support supplied by the Extension staff, an obligation of an expense is incurred, clear prior approval from the FBGF has to be obtained and documented. If the operational process requires the Extension staff to process receipts and expenditures of the FBGF on a daily basis, the transaction should be conducted through the Clerk’s Finance Department subject to standard County internal controls. In addition, the daily process must be covered by a detailed agreement between the parties.




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Status: Implemented. The Florida Botanical Gardens Foundation Agreement and the Guidelines for Fiscal Procedures now provide adequate controls over FBGF funds.

4. There Was No Formal Agreement Between The Pinellas County 4-H Club Foundation (4-H Foundation) And The County Defining Roles And Responsibilities.

The Extension staff was performing the majority of operational and financial functions for the 4-H Foundation. An agreement defining roles and responsibilities is especially needed because of the overlapping services and operations between the County Extension and the 4-H Foundation functions. A clear understanding between both parties is needed to ensure that the operations have proper internal controls and adequate separation of duties. In addition, the 4-H Foundation Board must formally accept the services being performed by the Extension as meeting their internal control requirements. When County resources are being utilized to support the operations of a private non-profit organization, the roles and responsibilities should be clearly defined so that the Board of County Commissioners can clearly ascertain the public benefit received vs. the resources used. Without a clearly defined agreement there is no assurance that the use of County resources provides primarily a public benefit and not just a benefit to a private organization. Recommendation: Develop an agreement that establishes which specific Extension resources are being donated to the non-profit organizations, and ensure benefits received by the Extension exceed the cost of resources donated to the non-profit. The Agreement should receive both Board of County Commissioners and 4-H Foundation Board approval. The same format used for the FBGF should be utilized to develop the 4-H Foundation agreement. Status: Implemented. The 4-H Foundation Agreement signed June 22, 2004 outlines the responsibilities, fiscal procedures and guidelines of the County and the Foundation.

5. Operational Functions Performed By The Extension Staff On Behalf Of The 4-H Foundation Were Not Covered By Adequate Written Procedures And Internal Control Weaknesses Are Present.

Some of the services being performed by the Extension were not covered by written procedures; the procedures did not contain sufficient detail to adequately dimension the process followed; and the process being followed contained internal control weaknesses or separation of duties issues.




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4-H Foundation Operational Functions were as follows:

• Check Issuance Process • Cash Deposit Process to Bank Account • Bank Reconciliation • Bookkeeping, Quicken Books Process • Petty Cash Funds for 4H • Board Package Preparation • Mail Processing Function • Record Retention for Non-Profit Records • Planning & Advisory for Training/Educational Seminars/ Classes Sponsored by 4-

H • Obligation of Expenditure of Non-Profit Funds By Extension Staff • Depository for Other 4-H Clubs • Administration for 4-H Grants • Administration of 4-H Donations With Use Restrictions • Fund Raising Events • Budget/Investments

The functions being performed by Extension staff for the 4-H Foundation should be covered by written procedures that supply proper internal control and separation of duties for the process. With this structure, the County has undue exposure related to the risk of inadequate internal controls and separation of duties for the functions performed for the non-profit. In addition, the 4-H Foundation Board had not approved the procedures used by the Extension staff in performing the functions.

Recommendation: Management: A. Where possible, utilize 4-H Foundation volunteers to support the operational

functions and reduce workload on Extension staff. B.&D. Develop written procedures for all functions performed by the Extension staff

to include proper internal controls and separation of duties. C. Current written procedures should be expanded to include adequate information

on the process. E. The Extension should continue to use the County retention schedule for the 4-H

Foundation records with the records stored at the County record retention facility.




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Status:

A. Implemented. Operational functions that reduce workload on Extension staff are addressed in the Pinellas County 4-H Foundation Accounts Management Policy dated May, 6 2004.

B.&D. Implemented. Written procedures for all functions performed by the Extension

staff to include proper internal controls and separation of duties are addressed in the Agreement between Pinellas County and The Pinellas County 4-H Foundation, Inc.

C. Implemented. The 4-H Foundation Accounts Management Policy has been expanded to include adequate process information.

E. Implemented. The Extension uses the County retention schedule for the 4-H Foundation records with the records stored at the County record retention facility.

6. Internal Control Weaknesses Were Present In The 4-H Foundation Expenditure

Process Performed By Extension Staff.

The following internal control weaknesses and procedural problems were found in relation to the Extension staff processing the payment of expenses through the 4-H Foundation general ledger: A. Extension staff was incurring and/or obligating an expenditure on behalf of the

non-profit organization without adequate pre-approval documentation for the transaction. In most cases, the budget line item information was not sufficiently detailed to be considered pre-approval by the non-profit. In addition, there was no notation on the Check Request Form that the item was covered by an approved budget line item or received special approval by the 4-H Foundation Board. As noted in Opportunity for Improvement Number 2, we believe it was inappropriate for Extension staff to be performing this function. However, if it was continued, reasonable controls should be in place.

B. There was inadequate dual control in the check request process. This procedure

does not require a second member of the Extension Management, such as the Assistant Extension Director, to review and approve check requests. Checks were prepared by the bookkeeper for the signature of the 4-H Treasurer with only the requester’s approval. During the audit period, $84,218 in checks was processed, with $2,699 issued to Extension staff as the requesting party. As noted in Opportunity for Improvement Number 2, we believe it was inappropriate for Extension staff to be performing this function. However, if it is continued, reasonable controls should be in place.

C. Supporting documentation for the expenditure was not always maintained by the

bookkeeper with the Check Request Form. In some cases the original supporting documentation was returned to the check requester to be maintained




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in a Program File held by the requester. Also, there was no retention schedule for the Program Files. Not maintaining the original documentation with the check request is considered a control weakness in the procedure.

D. Our review of selected expenditure transactions related to Grants and private

sector donations received by the 4-H Foundation found that three travel advances taken by Extension staff and volunteers were not being properly handled by the Extension Office. The three advances totaling $547 were not reimbursed or supported at a later date by expense receipts documenting the use of the funds.

Recommendation: Management: A. Not allow Extension staff to incur and/or obligate an expenditure on behalf of the

non-profit without adequate pre-approval documentation for the transaction. B. Require supervisory review and approval of all Check Request Forms originated

by Extension staff prior to the transaction being processed by the bookkeeper.

C. Maintain the original supporting documentation for checks issued, with the Check Request Form under the control of the bookkeeper.

D. Require immediate reimbursement of all travel advances after the expense

voucher is paid. Travel advances for trip expenditures processed through the County should be requested through the Clerk’s Finance Division, not the 4-H Foundation. The $985.09 should be repaid to the County, as well as recovery of unsupported advances.

Status:

A. Implemented. The 4H Foundation Accounts Management Policy was revised

May 6, 2004 to prevent Extension staff from incurring or obligating expenditures.

B. Implemented. A new check request form was revised and implemented June 9, 2005 which addresses proper review and approval by the 4-H Program Leader and the Foundation President.

C. Implemented. The new check request form provides for all supporting

documentation to be attached and filed.

D. Implemented. Reimbursement requirements are addressed in the 4-H Foundation Accounts Management Policy, Handling of Funds at Pinellas County Extension. Also a repayment of $547 was made to the County for undocumented travel expenses.




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7. The County Extension Oversight Of The Ochs Property Donated To Pinellas County Was Not Being Properly Handled.

The Ochs Estate donated the property to Pinellas County in 1991 to be used as a Park property. The County established the site as an educational park for youth- related projects. The site was named the Chester Ochs/4-H Educational Center and used as an environmental learning center for Pinellas youth. The facility now serves as a teaching and resource center for environmental activities conducted by the 4-H Foundation. Our review of the administration and maintenance by the County for the Ochs Property found the following concerns: A. There was no formal document produced by Real Estate Management that

transferred the oversight responsibility of the property to the County Extension Department. Therefore, no standards for oversight, upkeep and maintenance of the property and buildings were established for the receiving department.

B. In the past there has been a transfer of oversight and maintenance responsibility

from the County Extension to the 4-H Foundation. This transfer took place without formal acceptance from either the Board of County Commissioners or the 4-H Foundation Board. Again, no standards for oversight, upkeep and maintenance of the property and buildings were established.

C. In evaluating the current oversight process, the following deficiencies are

present:

• Oversight of the property has not been formally established with tasks, responsibilities and deliverables.

• There is no yearly budget established for the maintenance of the property and the buildings.

• There is no plan and/or budget for major repairs for the buildings on the property.

• There is no property inspection procedure established that includes documenting the results of the inspections. The inspection process also must include safety issues since the facility is used for youth development.

• There is no document that outlines property use and how it relates to the 4-H programs.

D. The 4-H Foundation was required to pay expenses incurred for the repair and

upkeep of the rental house on the property in Fiscal Year 2000-2001 totaling $6,458. This is a County property and expenditures of this type are the responsibility of the County, not the Foundation.

E. There was a caretaker/rental arrangement for the property, but the rent ($350 per

month) was being paid to the 4-H Foundation instead of the County. There is no basis for a County property rent to be paid to a third party.




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The oversight and maintenance of the Ochs Property should be addressed by the County in a professional manner with adequate budgeted funding and established standards to meet the Covenant Terms of the Gift Resolution. Non-compliance with Covenant Terms is stipulated that the real property “be used exclusively for Pinellas County, Florida public park or parks purpose and subject to certain special conditions and terms and rights of reverter in said Will. In the event that said real property is at any time no longer used as a Pinellas County, Florida public park or parks, then the title to said real property shall automatically revert to and vest in the Pinellas County Community Foundation.”

Without adequate oversight and funding established by the County for the property, the site cannot properly function as an educational park for youth and comply with the Will Covenant special conditions.

Recommendation: Extension Management: A. Confer with Real Estate Management and establish formal standards for the

oversight of the Ochs Property. The County Extension should also obtain any pertinent documentation relevant to the property, i.e., the property plan as referred to in the BCC Resolution #38, 1-15-91, to ensure compliance with the Will Covenant.

B. Ensure oversight and maintenance of the property by the County Extension and

not by the non-profit that is not party to the Gift Covenant stipulations.

C. Establish a formally written oversight plan that includes tasks, responsibilities and deliverables. A formal yearly budget be established for general maintenance of the property and the buildings. The site buildings be inspected and a long range plan and budget be established for major repairs. County Extension establish a formal written property inspection procedure that includes documenting the results of the inspections. The 4-H Foundation be required to present to the County Extension a formally written yearly usage plan for the Chester Ochs/4-H Educational Center. This document will support compliance to the Will Covenant.

D. Under a yearly budget, assume responsibility for maintenance and repairs of the

property and building.

E. Receive rent for the property house.




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Status:

A. Implemented. County Extension has turned over responsibility for the property to the County’s Culture, Education & Leisure Department.

B. Implemented. Property oversight and maintenance is now the responsibility of the County’s Culture, Education & Leisure Department.

C. Implemented. County Extension has turned property oversight planning to the

County’s Culture, Education & Leisure Department.

D. Implemented. The Culture, Education & Leisure Department now budgets for maintenance and repairs of the property and building.

E. Implemented. The rental agreement for the house has ended. 8. The On-site Occupant Agreement For The Ochs/4-H Educational Center

Property Was Not Adequate And Was Not Properly Executed.

The County allowed a County employee, who worked for another department, to rent a home on the Ochs property at a reduced rate in return for caretaking services. Our review of the Agreement between the County and the County employee, found several items of concern relating to the content of the Agreement, execution/approval of the Agreement, and performance-related issues. A. Extension management was not able to locate the signed copy of the Agreement.

In addition, the Agreement was not presented to the Board of County Commissioners for approval. Our review of the Agreement was based on an unsigned copy of the Agreement supplied by Extension Management.

B. The Agreement referred to the on-site person as “Employee.” This designation

makes it appear the Agreement is an Employment Agreement, not a Rental Agreement as indicated by County Extension Management. Section #1 of the Agreement states “The Resident House shall be used and occupied by the renting resident for $350.00 per month as a condition of the Employee’s position with Pinellas County, …” Also, throughout the Agreement the renter is referred to as “Employee.”

C. Section 2.B for Employee’s Responsibilities states, “Thirty hours of work per

month is also required for maintenance of the meeting room and grounds.” The agreement was silent on whether the hours are in addition to the work schedule for the General Services Department.

D. Section 1.A states, “Employee shall ensure the availability of the Property for its

intended use.” This requirement is inappropriate for a person acting as the caretaker/renter of the house on the property. This is the responsibility of the County Extension as County oversight of the property.




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E. Section 2.A, Promotion, “Promote usage of the facility and the 4-H program

through county and 4-H publications, promote usage of the facility by 4-H and county personnel, expand the 4-H program through recruitment and involvement of 4-H's on site.” The On-Site Person has no authority to organize 4-H Foundation volunteers to perform the requirement.

F. Section 2.A required the Employee to perform maintenance on the property, but

is silent on who will supply the equipment and materials required.

G. Section 3 outlines the responsibilities for the 4-H Foundation. The Foundation was not party to the Agreement, and the 4-H Board had not approved the Agreement.

H. There was no documentation to support the justification of the rent amount and

breakdown of the cost of the services supplied by the On-Site Person. If the Agreement pricing is not properly structured, IRS income and wage issues could be present.

I. There was no formal evaluation performed of the On-Site Person deliverables as

stated by the Agreement under Employee Responsibilities. The County Extension does informal inspections and communicates verbally on any issues to the On-Site Person. However, this information is not documented and used as part of the evaluation for renewal of the yearly agreement.

This arrangement did not ensure the County received fair value for the reduced rent, and the County could have assumed unnecessary liability. The Agreement should have been a rental agreement, not an employee agreement. The deliverables stated in the Agreement should have been structured to be attainable as the renter of the property, not an employee of the County.

Recommendation: Management: A. Establish a new agreement for approval of the Board of County Commissioners. B. Clearly identify the contract as a rental contract and eliminate all reference to

County employment. The contents of the agreement should be modified to correct the other deficiencies noted in the Opportunity For Improvement.

C. Address the work requirement considering federal law implications.

D. Eliminate Section 1A from the new agreement. E. Eliminate Section 2A from the new agreement.




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F. Require the agreement to clearly state the equipment and who is responsible for obtaining and maintaining the equipment.

G. Exclude the 4-H Foundation from the agreement.

H. Determine the rent based on market as compared to the required services,

considering tax and labor law implications.

I. A formal inspection and evaluation plan for the deliverables of the agreement should be developed and made part of the agreement. Results should be used to determine the renewal of the agreement.

Status:

A.-I. Implemented. Management stated that the rental agreement has ended so this

is no longer an issue. 9. The Memorandum Of Understanding Between The County And The State Of

Florida Is Not Being Complied With And/Or Not Updated To Cover The Current Process.

County Extension is not reimbursing State salaries and benefits expenses in accordance with the Memorandum Of Understanding (Agreement) dated November 12, 1996. We noted the following concerns: A. Two State employees’ salaries/benefits expenses were not invoiced by the State

and paid by the County at the Agreement rate of 40% of the full year compensation paid monthly. For the current year (October 1, 2002 to September 30, 2003) the overpayment by the County will be $1,055. For the Assistant Director’s compensation, the percentage reimbursed by the County ranged from 35% to 42% over the period. For the Instructional Designer compensation, the reimbursement rate used was 52%. The Extension Management stated that for each budget year the State establishes the reimbursement rate and the County has used that rate for the sharing percentage. This process is not contained in the Agreement. Paragraph V.B assigns Pinellas County Extension a 40% share of the total cost related to non-classified State Extension faculty salaries, fringe benefits and workers compensation. Extension Management further stated that the two positions noted above are not for “State Agent Employees” or “Faculty;” therefore, they are not covered under the current Agreement. Considering all factors, the issue still remains that the County Extension is participating in a compensation procedure that is outside of the Agreement and




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the reimbursement has not been approved by the Board of County Commissioners.

B. The State Extension Services overbilled the County $3,325 for the August 2002 invoice. The error related to annual leave payout for a State employee who was terminated on July 31, 2002. The payout of leave is part of the employee’s fringe benefits that have already been paid for by the County through the sharing process. The Extension review process for the invoicing did not detect the State billing error. We also found that the Senior Office Specialist responsible for the review of the invoices did not have a copy of the Agreement controlling the reimbursement process. The undetected error in the invoice represents a breakdown in the Extension internal control process for invoice review.

C. The Agreement did not sufficiently cover the sharing arrangement related to the County Extension Director. The Agreement provided a minimum percentage of support for the Director’s compensation that would be provided by Pinellas County but does not cover what agency will pay the employee. This process has both the County and the State University paying individual segments of the total compensation. The Agreement was silent on which agency is responsible for administrating the Director’s salary, benefits and tax responsibility. For the Faculty salaries, the Agreement clearly stated these responsibilities.

It appears that the County Extension is participating in compensation procedures that are not expressly authorized by the Agreement, and the reimbursement has not been clearly approved by the Board of County Commissioners. As a result, risk of inappropriate expenditures is increased.

It is Extension Management’s responsibility to comply with the terms of the Agreement for reimbursement of State salaried employees located at the County site.

Recommendation:

Extension Management: A. Comply with the current Agreement on the rate of reimbursement for all non-

classified State Employees. If the situation has changed between the two parties, the Agreement should be amended to reflect the procedures being followed.

B. Recover from the State the overpayment made in the August 2002 invoice.

C. Amend the Agreement to clearly define the arrangement as it relates to the

Director’s compensation.




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Status:

A. Implemented. IFAS is working to provide funding to get all agents to the 40% County/60% State split, at the next budget cycle, July 1 2006 - June 30, 2007. Management has complied with the current agreement on the rate of reimbursement of non-classified State Employees as of July 1, 2004.

B. Implemented. Management stated they are in the final stage of recovering the $3,325 overpayment from the State.

C. Implemented. University of Florida modified the Memorandum of Understanding

as suggested.

10. Two Operational Errors Related To The Administration Of The Youth As Resource Grant (YAR) Were Found. The YAR grants are awarded by the Juvenile Welfare Board in small amounts ranging from $500 to $1,500 for individual projects. The total grant funding received was, Fiscal Year 2001/02 - $45,195 and Fiscal Year 2002/03 - $46,099. Our review for compliance to the Grant Agreement found the following items:

A. The grant reimbursement request omitted one month’s salary expense that

amounted to $1,031.11. The error was caused by a miscalculation by the YAR Coordinator submitting the reimbursement request.

B. The grant reimbursement request for April 2003 included a five-month period.

The grant gives the option for the related expenses to be submitted weekly or once a month. The loss of funding by the County is immaterial based on the amount involved.

Our review of the administration process for this grant found a lack of management oversight. There is no process in place to ensure that reimbursements are processed as required by the grant agreement. In addition, the process does not have a second person reviewing and approving the reimbursement requests for proper presentation. Although the issues found were minor, the lack of oversight represents an internal control weakness requiring attention.

Recommendation: Extension management should install adequate internal controls over the YAR grant process related to the oversight responsibility. The under-requested amount of $1,031.11 should be included in the next reimbursement request.

Status:

Implemented. A process is now in place to ensure that reimbursements are processed as required by the agreement. A new grant detailed reimbursement




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report has been created and is in place that addresses reimbursement number, date and status of approval.

11. The Extension Grant File Did Not Support The Compliance To Two

Requirements For The EPA Educational Module Grant (EPA).

The EPA grant was awarded to the County Extension on July 11, 2001 in the amount of $99,800, covering the period of August 1, 2001 through July 31, 2003. The grant was for the development of education modules on environmental sustainability and stewardship of natural resources for middle school age children.

Our review of the administration process for this grant found a lack of management oversight. There is no process in place to ensure compliance to the grant agreement. Although the issues found were minor, the lack of oversight represents an internal control weakness requiring attention.

Recommendation: The Extension needs to install adequate internal controls over the EPA grant process related to the oversight responsibility.

Status:

Implemented. Management closed the grant in September 2003. The EPA reviewed and approved all required grant reports and closed out the project subject to a final audit.

12. The Extension Did Not Have A Process In Place To Ensure Grant Revenue

Request Is Received And Posted To The Correct General Ledger Account.

Our review of the grant revenues for the audit period totaling approximately $533,000 found three erroneous general ledger postings totaling $45,320. The erroneous postings not being detected by the Extension indicates an internal control weakness in the process. There is no reconciliation performed by the Extension that confirms that all grant revenue requests are received and posted to the correct general ledger account. Although the items found were miss-posts, there is no assurance in the current process that all grant revenue requested by the Extension has been received and posted to the County’s general ledger. During our audit period, we confirmed that all grant revenue requested was received by the County. The erroneous postings were corrected after we brought the situation to management’s attention.




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Recommendation: The Extension needs to install adequate internal controls over the grant revenue process to include a formal reconciliation for grant revenue. The miss-posts to the general ledger were corrected during the audit. Status: Implemented. The County Extension now has a process in place to ensure that grant revenues requested are received and posted to the correct general ledger account. The internal controls include printing the monthly finance report and checking to ensure that grant revenues have been posted to the appropriate account.

13. There Was No Process In Place That Addresses Preparation And Management Of Large Events On The Extension Site. There were no formal requirements and standards established for non-profit organizations to conduct large public events on the Extension site. At the time of the audit, with only three public events being sponsored by the non-profit organizations (with one being overseen by Heritage Village) at the site, the operational risk was limited. In addition, most of the events at the Extension were small and were being handled under the Extension’s “Rental” Policy & Procedure. However, with the increased awareness of the site availability and the possibility of new event requests, consistent handling of these event operations should be ensured.

The Extension should have a formal written policy and procedure covering public event scheduling for non-profit organizations that have on-site presence at this and other County locations. To reduce the County exposure for on-site events and address the risk areas, the procedure should include but not be limited to a) minimum volunteer support to be supplied by the sponsoring non-profit organizations, b) establishment of a committee by the non-profit to interface with the Extension staff for event planning, c) address safety and security needs at the site for the public, d) cost recovery issues relating to the expense incurred by the County having the event run on the site, and e) the use of checklists and other planning documents to ensure the proper conduct of the event administration.

Recommendation: Extension management should obtain a copy of the Event Planning Procedures and related documents from Heritage Village and make any changes to fit the County Extension environment.




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Status:

Implemented. There are now policies and procedures in place that address the preparation and management of large events. The Public Events Policies and Procedures now address the above issues and meet the needs of special events.

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