Agreed-Upon Procedures Report. Florida Court Clerks & Comptrollers and State of Florida Department of Revenue

Transcription

1 Report and State of Florida Department of Revenue Thomas Howell Ferguson P.A Centennial Blvd., Suite 200 Tallahassee, Florida Law, Redd, Crona & Munroe, P.A Centre Pointe Blvd., Suite 200 Tallahassee, Florida 32308

2 Table of Contents Independent Accountants Report...1 Summary of County Invoices Subject to On-Site Procedures...3 Summary of Results of On-Site Visits...4 Summary of Questioned or Disallowed Costs by County...5 Summary of Off-Site Analytical Procedures...6 Findings, Recommendations, and Responses...7 Appendix A....11

3 Thomas Howell a... Ferguson P.A. CERTIF I ED PUBLIC ACCOUNTANTS Law, Redd, Crona &Munroe, P.A. Independent Accountants' Report September 22, We have performed the procedures enumerated in Appendix A of this report, which were agreed to by the Florida Association of Court Clerks, Inc. d/b/a (the "FCCC") and the State of Florida Department of Revenue (the "FDOR"), solely to assist you with complying with Chapter , Section 4(f), Florida Statutes, relating to the audit and certification of all claims for expenditures submitted by the County depositories for Title IV-D reimbursement for the quarter ended September 30, This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described in Appendix A of this report, either for the purpose for which this report has been requested or for any other purpose. During the quarter ended September 30, 2016, we visited 9 counties and performed the agreed-upon procedures 1 through 10 associated with on-site visits as documented in Appendix A of this report. Page 3 of this report provides a summary, by county, of invoices subject to the on-site agreed-upon procedures for the quarter ended September 30, The results of the visits have been summarized on page 4 of this report, and page 5 summarizes the amount, if any, of questioned or disallowed costs resulting from the onsite agreed-upon procedures. The detailed findings, recommendations, and county responses are included at pages 7 through 10 of this report. For counties that were not visited during the quarter ended September 30, 2016, the steps documented as procedure 11 in Appendix A identify various off-site analytical review procedures to perform; however, as is customary with our September quarterly report, such off-site analytical review procedures have not yet been performed. The results of the off-site analytical review procedures will instead be included in our report for the quarter ending December 31, See page 6 of this report for further discussion. We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on the Clerk of the Circuit Court Child Support Depository Title IV -0 Services Reimbursement Invoices. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the FCCC and the FDOR, and is not intended to be, and should not be, used by anyone other than these specified parties. Thomas Howell Ferguson P.A. Tallahassee, Florida Law, Redd, Crona & Munroe, P.A. Tallahassee, Florida

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5 Summary of County Invoices Subject to On-Site Procedures (Title IV-D Reimbursements) Month Broward Citrus Dade Lake Marion Palm Beach Putnam Sumter Volusia November-14 $ 45, $ - $ 296, $ - $ - $ 77, $ - $ - $ - December-14 45, , , January-15 62, , , February-15 42, , , March-15 44, , , April-15 46, , , , , , , , , May-15 60, , , , , , , , , June-15 52, , , , , , , , , July-15 60, , , , , , , , , August-15 44, , , , , , , , , September-15 61, , , , , , , , , October-15 24, , , , , , , , , November-15 44, , , , , , , , , December-15 65, , , , , , , , , January-16 46, , , , , , , , , February-16 47, , , , , , , , , March-16 37, , , , , , , , , Totals: $ 831, $ 267, $ 4,624, $ 292, $ 358, $ 1,457, $ 297, $ 150, $ 520,

6 Summary of Results of On-Site Visits Detail Finding * Agreed Upon Procedure per Program Step at Appendix A County Visited Reference Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 Step 10 1 Broward n/a x x x x x x x n/a x x 2 Citrus Page 7 x x x x x x B x x x 3 Dade n/a x x x x x x x n/a x x 4 Lake Pages 7-8 x x x x x x B n/a x x 5 Marion n/a x x x x x x x x x x 6 Palm Beach n/a x x x x x x x x x x 7 Putnam Page 8 x x x x x A x n/a x x 8 Sumter Page 9 x x x x x A x n/a x x 9 Volusia Pages 9-10 x x x x x x B n/a x x * We were advised by FDOR that there was no change to the contract (Cooperative Agreement) between FDOR and the Clerks of the Circuit Courts. x No findings or recommendations noted. A. Personnel costs were either based on estimates rather than actual amounts, based on incorrect amounts, incorrectly calculated, did not include appropriate personnel, or lacked sufficient documentation. Findings may result in either disallowed/questioned or understated costs. B. RMS moment responses were incorrectly classified. 4

7 Summary of Questioned or Disallowed Costs by County The following is a summary of the questioned or disallowed costs identified as a result of procedures performed during the on-site visits for the quarter ended September 30, 2016: None With respect to questioned or disallowed costs, it should be noted that the responsible FDOR Project Manager is the sole authority over what, if any, adjustments are made to child support reimbursement invoices. 5

8 Summary of Off-Site Analytical Procedures In accordance with the agreed-upon procedures program at Appendix A, we typically perform certain off-site analytical procedures related to the Title IV-D Services Reimbursement Invoices of counties for which on-site visits were not conducted during the quarter to which our report relates (in this case, the quarter ended September 30, 2016). The analytical procedures are limited to Title IV-D Services Reimbursement Invoices filed with the Florida Department of Revenue for the preceding quarter (in this case, April 1, 2016 through June 30, 2016). For each county not visited, we typically determine quarterly averages for reimbursable costs reported on lines 1, 2a, 2b, 5a, 5b, 10c, and 10f of the invoices. Inquiries are then made if the actual line item amount fluctuates from the average by 15% and a predetermined dollar amount, which is based on the size of the county. As is typical for the September quarterly report, the above-described off-site analytical procedures have not yet been completed. As with prior years, we will report the results of such analytical procedures (for the period April 1, 2016 through June 30, 2016) in our report for the quarter ending December 31,

9 Findings, Recommendations, and Responses For each county visited during the quarter ended September 30, 2016, we provided the Clerk of the Circuit Court with a letter indicating our finding, the authoritative support for our finding, and our recommendation to correct the finding. The detailed finding is listed below along with our recommendation, questioned or disallowed costs, and the county s response. CITRUS Finding During our review of the selected RMS moments and to obtain the explanation for CSE Undetermined type activities, it was noted that an employee had entered Work Activity: Child Support Work, CSE - Undetermined Type with a private case # in the description. Per discussion with the employee s supervisor, the activity type should have been Work Activity: Non-Child Support Work, Non-CSE. Since participant activities have a direct effect on the final RMS ratio and the resulting allocation of Title IV expenses, accurate classification of such activities is required. To ensure compliance with the Florida Department of Revenue RMS Invoice Completion Instructions, we recommend that a review of RMS participant activity codes be conducted to ensure the accuracy of data submitted to the Florida Department of Revenue. Questioned Costs: Not readily determinable. County Response: The office is in receipt of the correspondence dated July 6, 2016 and has reviewed your recommendations. We concur with the suggestion and have taken the appropriate steps for implementation. LAKE Finding During our review of the selected RMS moments and to obtain the explanation for CSE Undetermined type activities, it was noted that an employee had entered Work Activity: Child Support Work, CSE - Undetermined Type with a private case # in the description. Per discussion with the employee s supervisor, the activity type should have been Work Activity: Non-Child Support Work, Non-CSE. Since participant activities have a direct effect on the final RMS ratio and the resulting allocation of Title IV expenses, accurate classification of such activities is required. 7

10 To ensure compliance with the Florida Department of Revenue RMS Invoice Completion Instructions, we recommend that a review of RMS participant activity codes be conducted to ensure the accuracy of data submitted to the Florida Department of Revenue. Questioned Costs: Not readily determinable. County Response: Upon being made aware of the issue outlined in the finding, the RMS Delegate immediately reviewed the identified responses and then submitted corrections to the RMS Administrator with the Florida Department of Revenue, the Department. The Department then provided recalculated RMS percentage rates and amended invoices to our office. The corrected rates indicated our office had received an overpayment for the May 2015, June 2015, and July 2015 invoices for a total of $1, Upon receipt of these corrected rates and amended invoices, we signed and submitted the amended invoices to the Department. To prevent further such occurrences as described in the finding, our RMS Delegate has conducted refresher training with all RMS participants. The Delegate is also conducting more detailed reviews of the participant responses in an effort to spot any future anomalies and provide any remedial training as needed. PUTNAM Finding OMB Circular A-87, Attachment A, Section C, Paragraph 1(j) states To be allowable under federal awards, costs must be adequately documented. During our review of the monthly Title IV-D Services Reimbursement Invoices, it was noted that the costs for personnel expenses on the May 2015 invoice were incorrect. Per review of the supporting documentation, it appears that the expenses were understated based on the support provided. To ensure compliance with Florida Department of Revenue RMS Invoice Completion Instructions and OMB Circular A-87, we recommend that invoices and related support be reviewed and the review/approval documented prior to submission of the invoices to the Florida Department of Revenue. Questioned Costs: Not applicable, costs were understated. County Response: The Clerk s Office will strengthen controls by having management review the invoices and related support before they are submitted to the Florida Department of Revenue. In addition, copies will be retained with management s signature for future records. 8

11 SUMTER Finding OMB Circular A-87, Attachment A, Section C, Paragraph 1(j) states To be allowable under federal awards, costs must be adequately documented. During our review of the monthly Title IV-D Services Reimbursement Invoices, it was noted that the personal service costs on the October 2015 invoice were incorrect. Per review of the supporting documentation, it appears that the personal services costs were understated based on the support provided. To ensure compliance with Florida Department of Revenue RMS Invoice Completion Instructions and OMB Circular A-87, we recommend that invoices and related support be reviewed and the review/approval documented prior to submission of the invoices to the Florida Department of Revenue. Questioned Costs: Not applicable, costs were understated. County Response: During the review of October 2015, one of the figures for personal services was incorrect. Per review of the supporting documentation, it appears that there was a transposition error made in recording the personal services cost. In response to the finding the calculations were correct on the backup documentation as it appears that it was keyed incorrectly on the invoice backup worksheet therefore it was incorrect on the invoice. The correction is being made on the August 2016 invoice to add the $200 on personal services. VOLUSIA Finding During our review of the selected RMS moments and to obtain the explanation for CSE Undetermined type activities, it was noted that an employee had entered Work Activity: Child Support Work, CSE - Undetermined Type with a private case # in the description. Per discussion with the employee s supervisor, the activity type should have been Work Activity: Non-Child Support Work, Non-CSE. Since participant activities have a direct influence on the final RMS ratio and the resulting allocation of Title IV expenses, accurate classification of such activities is required. 9

12 To ensure compliance with the Florida Department of Revenue RMS Invoice Completion Instructions, we recommend that a review of RMS participant activity codes be conducted to ensure the accuracy of data submitted to the Florida Department of Revenue. Questioned Costs: Not readily determinable. County Response: We will begin a systematic monthly review of RMS participant activity codes hence forth to help ensure accuracy of data submitted. 10

13 APPENDIX A ON-SITE AGREED-UPON PROCEDURES 1. Review the contract (cooperative agreement) between FDOR and the Clerks of the Circuit Court. 2. Obtain and review the most current external auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters; Management Letter, Single Audit Report and, if applicable, any internal audit reports. Identify significant deficiencies, material weaknesses, findings and recommendations which could impact child support activities. If any items potentially impact child support, discuss the issue with client personnel and inquire regarding the status of client procedures to implement recommendations and resolve matters. Consult with engagement executive to determine if additional procedures are considered necessary 3. Gain an understanding of the collection and disbursement of child support payments by determining and documenting the following: a. How and by whom are the transactions initiated? b. Describe the source documents that support the transactions. c. Describe the computer media that is used in the processing of the information. d. Describe the documents and reports generated by the system. 4. Document the understanding of the system of collection and disbursement of child support payments using a flowchart with an accompanying narrative. 5. Test a sample of disbursements that support the Title IV-D Reimbursement Invoices. Test the selected disbursements for compliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) by determining that the charges were: a. Supported by adequate documentation. b. Either authorized or at least not prohibited under Federal, State or local laws or regulations. (Note: Payments to ACS and legal expenses incurred in connection with the RMS/back casting refund issue are NOT reimbursable through the federal child support program.) c. Consistent with the cost provisions of the applicable Uniform Guidance or limitations, if any, in the program agreement, program regulations, or program statute. d. Necessary and reasonable for the proper and efficient performance and administration of the program. 11

14 e. Allocable to a particular cost objective, if the goods and services involved were charged or assigned to such cost objective in accordance with relative benefits received. f. In conformity with GAAP, except as otherwise required by Uniform Guidance. g. Net of all applicable credits (discounts, rebates, etc.) and fees received. Specifically, all IV-D program income and interest is appropriately included on the invoice as a deduction to the Eligible IV-D Cost. Further, all non IV-D revenue should be excluded from the reimbursement invoice. h. Appropriately classified as either direct or indirect expenses, as developed in the county specific Uniform Guidance compliance cost study. i. For actual costs; not those based on budgeted, projected or estimated amounts. j. Not included as a cost or used to meet cost sharing or matching requirements of any other Federal award in either the current or prior period, except as specifically provided by Federal law or regulation. k. Consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the county. l. Not relating to legal fees incurred in resolving the federal appeal of the RMS back casting issue. 6. Document the number of employees included in Line 1 of the Reimbursement Invoice and calculate the average rate of pay. Test a sample of payroll transactions for conformance with the criteria in Step 5 above, where applicable, and the following: a. If employees preparing the reimbursement invoices have access to the payroll system, trace employee s rate to personnel record on a test basis. b. The individual's wage was reasonable and comparable for the similar positions in other divisions of the Clerk s office. Judgmentally select salaries of two individuals and compare to salaries for two similar positions in other divisions of the Clerk s Office for reasonableness; or, alternatively, determine that their compensation is within historically determined compensation ranges for similar counties based on size/location. c. For salaries of the Random Moment Sampling (RMS) participants, verify that the names supporting the amount claimed on line 1 of the invoice agree with the RMS participant names stated on the RMS moment tally sheets for the corresponding period for the manual RMS; and on the Participant Information screen for the automated RMS. Verify that allocated supervisor salaries were computed in accordance with RMS Invoice Completion Instructions. d. Charges for leave, employee insurance, pension plans, etc., were reasonable. 12

15 7. For RMS county applications: Manual RMS Procedures Testing: a. Agree RMS % to the DOR approved rate. b. Obtain Delegate Tally Sheet and Transmittal Sheet for Response Forms from FDOR for a recent reporting period during the contract term. c. Test the clerical accuracy of the forms. d. Test a sample of participants per the Delegate Tally Sheet or Micro Office Time Diary, as applicable, to the employee s Random Moment Sampling Form for proper classification of activity and sign off by the participant and supervisor/delegate. For time categorized as CSE-Undetermined type, review activity description and supporting documentation for reasonableness on a test basis e. For a selected number of manual RMS counties observe a dry run Random Moment noting the method of announcement and timely completion and submission of the forms. Selected counties to include Dade County plus additional selections to achieve 90 % coverage for reimbursement invoices submitted in the prior contract year by manual RMS counties. f. Interview an employee for the participant s understanding of the RMS process, proper completion of the form, and the RMS Procedures Guide. Automated RMS Procedures Testing: g. Agree RMS % to the DOR approved rate. h. Obtain the RMS Report for a recent reporting period during the contract term. i. For time categorized as CSE-Undetermined type, obtain explanation of activity description and review supporting documentation for reasonableness on a test basis. j. Interview an employee for the participant s understanding of the RMS process, proper completion of the on-line form, and the Automated RMS Procedures Guide. 8. Test the accuracy of the IV-D Allocation formula included on the Title IV-D Reimbursement Invoice, Section 2. Specifically, select a random sample of 10 child support case files. a. Identify the cases in the sample that are considered "active" in the CLERC system. Active being defined as a case that has received at least one payment in the twelve months preceding the most recent invoice being tested. (Access CSE module, Case Maintenance, Case Info, Inquire, input case number, F3 to back out.) b. Based on the results of step a), determine if the individual active cases are correctly classified on the CLERC system as Title IV-D or non Title IV-D. This will be accomplished by reviewing each of the subject child support case files. 13

16 9. For organizations that had self-insurance, pension, or other fringe benefit programs that require an actuarial study, verify that independent actuarial studies that are appropriate for such activities were performed at least biannually and that current period costs were allocated based on a study, which was not over two years old. 10. Inquire of Clerk personnel if Title IV-D expenses claimed on the invoice are recorded in the same fund as the revenues received. Obtain a trial balance for the fund where the Title IV-D reimbursement revenues are recorded and verify that this is the fund that contains the Title IV- D direct expenses claimed on the invoice. If revenues are allocated to multiple funds due to indirect Title IV-D expenses claimed for reimbursement (e.g., unit costs for recording), obtain those fund trial balances as well and verify that a portion of the reimbursement was credited to that fund. OFF-SITE AGREED-UPON PROCEDURES 11. Perform analytical procedures on the Clerk of the Circuit Court Support Depository Title IV- D Services Reimbursement Invoice. This procedure will be performed on the county depositories not visited during the quarter. a. Compute an average for each reimbursement invoice line item for the audit period. b. Investigate any variance that deviates from the average greater than a predetermined threshold. The threshold will be established when determining materiality. c. Contact the subject county depository to obtain an explanation for variances that exceed the threshold. d. Evaluate the provided explanation for reasonableness e. Document the results for each analytic performed. f. Include the results of this procedure in the quarterly report submitted to the FCCC and the FDOR. 14