Office of Paula S. O Neil

Transcription

1

2

3

4 Office f Paula S. O Neil Clerk & Cmptrller Pasc Cunty, Flrida Pasc Cunty Bard f Cunty Cmmissiner Audit f Purchases Over $50,000 & Authrity t Pay Transactins (ATP s) June 5, 2018 Department f Inspectr General Patrice Mnac-McBride, CIG, CIGA, CGFO Inspectr General Erika Hendricks Auditr III Sarah Denney Auditr I Reprt N Department f Inspectr General P.O. Bx 724 Dade City, FL

5 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Table f Cntents Executive Summary... 2 Backgrund Infrmatin... 2 Audit Challenges... 5 Objective... 6 Scpe and Methdlgy... 6 Statutry Authrity and Cunty Guidelines... 8 Cnclusin... 9 Audit Cmments & Recmmendatins...11 Cmpliance...11 Cntrl Activities...15 Appendix...31 Observatins...31 Pasc Cunty Clerk & Cmptrller Page 1 f 32

6 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Backgrund Infrmatin Executive Summary As a result f an inquiry, the Department f Inspectr General (IG) cnducted an audit f purchases greater than $50,000 t verify purchases were slicited thrugh a cmpetitive prcurement prcess. The audit perid was Octber 1, 2015 thrugh December 31, The audit scpe als included all purchases prcessed during the audit perid with an Authrity t Pay (ATP) frm because these did nt cmply with the Purchasing Ordinance r Purchasing Handbk. The Purchasing Department was the Cunty s centralized buying and supply management agency respnsible fr prcuring gds and services at the best value, and t ensure that all prcurement activity was cnducted in cmpliance with Cunty rdinance, applicable laws, and internal plicies and prcedures. The Purchasing Directr was respnsible t direct and supervise all purchasing fr the Cunty. This psitin reprted t the Assistant Cunty Administratr fr the Internal Services Branch. During the audit prcess, there were fur different Directrs, tw f which were interim psitins, while a full-time Directr was recruited fr the Purchasing Department. The Purchasing Ordinance f Pasc Cunty gverned the purchase f all gds, supplies, equipment, materials, cnstructin, and services fr the Bard f Cunty Cmmissiners (BCC), including the branches, departments, divisins, sectins, and agencies under their cntrl, regardless f the funding surce, except as therwise prvided by law. Pursuant t Sectin 2-93 f the Purchasing Ordinance, the purpse f the rdinance was t: Prescribe the manner in which the cunty was required t cntrl the purchase f materials, supplies, equipment and certain cntractual services f the cunty. Prvide fr the fair and equitable treatment f all persns invlved in public purchasing by the cunty. Maximize the purchasing value f public funds in such prcurement. Prvide safeguards fr maintaining a purchasing system f quality and integrity. Maintain a high ethical standard fr all fficers and emplyees f the cunty in cnnectin therewith. A Vendr s Guide t Ding Business with Pasc Cunty was a dcument available n Pasc Cunty s website. It was a guide published t prvide general infrmatin t vendrs that described authrized purchases, purchasing rdinance, bid pprtunities and vendr registratin, prcurement methds, purchasing threshlds, and ther infrmatin. The chart belw demnstrated that Pasc Cunty s ttal adpted budget exceeded $1 billin fr the past five years. Pasc Cunty Clerk & Cmptrller Page 2 f 32

7 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # $1,700,000,000 Ttal Adpted Budget $1,600,000,000 $1,500,000,000 $1,400,000,000 $1,300,000,000 $1,200,000,000 $1,100,000,000 $1,000,000,000 FYE14 FYE15 FYE16 FYE17 FYE18 Surce: Pasc Cunty Adpted Annual Budget fr fiscal years The Cunty s purchasing Ordinance and internal plicies and prcedures in effect during the audit required all purchases t be made using established prcedures including an apprval prcess fr requisitins and purchase rders. The cunty utilized a Purchase Order based system f prcurement, and gds and services were nt t be rdered withut a duly issued purchase rder. On December 12, 2015, the BCC apprved an amendment t the Purchasing Ordinance (15-26) that increased the threshld amunt fr the cmpetitive slicitatin requirement frm $25,000 t $50,000. The Purchasing Department was respnsible fr reviewing and verseeing the purchasing prcedures utlined in the table belw: Dllar Threshld Cmpetitin Methd f Apprval Required Requirement Purchase $50, r mre Cmpetitive slicitatin BCC Purchase rder and/r cntract $15, t Infrmal written qutes Cunty Administratr Purchase rder $50, $ 5, t $15, Infrmal written qutes Purchasing Directr Purchase rder $ 5, r less Purchase was required t be made in the Cunty s Purchasing Directr Purchase rder best interest Cardhlder Purchasing card In additin t the abve purchase methds, the Cunty had an Authrity t Pay (ATP) prcedure t prcess payments that did nt strictly cmply with either the Purchasing Ordinance Pasc Cunty Clerk & Cmptrller Page 3 f 32

8 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # r Purchasing Handbk. Authrity t Pay (ATP) frms were necessary fr Financial Services t prcess and apprve payments fr purchases that were in vilatin f the Cunty s Purchasing Ordinance. The ATP frm reviewed during the audit time perid f Octber 1, 2015 thrugh December 31, 2016 required apprval signatures frm the Department Head, Assistant Cunty Administratr, and the Purchasing Directr. Reprts f each methd f purchase were btained frm the Purchasing Department and the Clerk & Cmptrller s Department f Financial Services fr the audit perid. These reprts were reviewed, analyzed, and used t determine the audit ppulatin fr testing. Based n the purchasing reprts, the charts belw illustrated the ttal number and ttal dllar value f transactins during the audit perid. Chart 1 reflects 32,939 transactins during the audit perid. The chart depicts with blue bars the number f transactins by purchase methd. The number f purchases within each methd that were individually ver $50,000 is reflected with red bars. 30,000 Number f Transactins by Purchase Methd 10/1/ /31/ ,056 25,000 20,000 15,000 10,000 Transactins Over $50,000 5,000-3, Purchase Orders Encumbered Cntracts Purchasing Cards ATP's Chart 1 Chart 2 reflects the ttal value f the purchases in Chart 1. The ttal $465,372,357 transactins by purchasing methd are depicted with blue bars. The transactin value fr each methd that was individually ver $50,000 are reflected with red bars. Pasc Cunty Clerk & Cmptrller Page 4 f 32

9 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # $250,000,000 Transactin Value by Purchase Methd 10/1/ /31/2016 $200,000,000 $150,000,000 $100,000,000 Ttal Transactins Over $50,000 $50,000,000 $- Purchase Orders Encumbered Cntracts Purchasing Cards ATP's Chart 2 Nte: Prir t the implementatin f the new financial system (August 2016), encumbered cntracts were entered as purchase rders. Effective July 14, 2009, the Cunty jined BidNet Direct t prvide n-line bidding services thrugh a web-based applicatin as part f its nging effrts t encurage increased vendr participatin and the number f respnses t Cunty slicitatins. The n-line bidding service replaced prir paper-based prcesses by electrnically distributing slicitatins, assciated dcuments and ntices t vendrs. Interested vendrs were required t register nline with BidNet Direct t view and respnd t slicitatins. In August 2016, the Cunty implemented a new financial management system (Munis) that was a web-based applicatin with enhanced user functinality. The new system cntained a Purchasing mdule fr purchase rders, encumbered cntracts, and t maintain vendr infrmatin. This cnversin ccurred during the scpe f the audit, and the cut-ff date fr the ld financial system (FASBE) was July 31, Audit Challenges Overall, there was a lack f readily available infrmatin and turnver in the Purchasing Department that negatively affected the audit prcess and caused significant delays. The fllwing was nted: Purchasing staff did nt knw hw t generate varius reprts r research infrmatin in systems (FASBE and Munis). As a result, there were difficulties in btaining reprts Pasc Cunty Clerk & Cmptrller Page 5 f 32

10 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # relevant t the audit fr fieldwrk testing, and sme infrmatin received was cnflicting and/r incmplete. During the audit prcess, there were fur different Directrs f the Purchasing Department, tw f which were interim, while a full-time Directr was recruited. Data, dcumentatin, and respnses t IG questins and cmments that were previusly prvided by the frmer Purchasing Directrs had t be reviewed and/r revised by the current Purchasing Directr and the audit team. There was a five mnth delay in receiving supprting dcumentatin that related t sme audit cmments. Objectives The audit bjectives were t: 1. Determine if gds, services, and cnstructin purchases greater than $50,000 were slicited thrugh cmpetitive slicitatin prcess, purchased frm a vendr nt included n the disqualified vendr list, and apprved by the Bard f Cunty Cmmissiners. 2. Determine if purchases were separated int smaller transactins t avid cmpetitive slicitatin requirements. 3. Determine the number and amunt f Authrity t Pay (ATP) frms issued, and the apprpriateness f the ATP s. Scpe and Methdlgy The audit perid was frm Octber 1, 2015 thrugh December 31, The nature and scpe f the audit was intended t prvide bjective and relevant assurance, and t cntribute t the effectiveness and efficiency f gvernance, risk management, and cntrl prcesses f purchases greater than $50,000. The audit was limited in scpe, and did nt include a review f prcurement methds fr purchases less than $50,000, except fr ATP s. Since ATP s were required t authrize payment fr a purchase that did nt strictly cmply with either the Purchasing Ordinance r Purchasing Handbk, and were frequently used, the scpe included all ATP s issued during the audit perid. Since accunting recrds and system reprts were maintained by unique vendr infrmatin, the audit prcedures were perfrm by tracing and analyzing vendr activity, and included Purchase Orders, encumbered cntracts, Authrity t Pay, and purchasing card transactins. Althugh the audit team exercised due prfessinal care in the perfrmance f this audit, this did nt mean that unreprted nncmpliance r irregularities did nt exist. The deterrence f fraud, and/r emplyee abuse was the respnsibility f management. Audit prcedures alne, even when carried ut with prfessinal care, did nt guarantee that fraud r abuse was detected. The audit was neither designed nr intended, t be a detailed study f every relevant system, prcedure, r transactin. The purpse f this reprt was t prvide an independent, bjective Pasc Cunty Clerk & Cmptrller Page 6 f 32

11 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # analysis, recmmendatins, and infrmatin cncerning the activities reviewed. It was nt an appraisal r rating f management. T achieve the bjectives, the prcedures perfrmed included, but were nt limited t, the fllwing: Develped an understanding f prcedures and cntrls fr purchasing transactins prcessed by the Purchasing Department. Infrmatin btained and reviewed included internal plicies and prcedures, the Pasc Cunty Purchasing Ordinance, and Flrida State Statutes. Obtained, reviewed, and cmbined reprts relevant t Purchasing fr the audit perid. These reprts included a listing f purchase rders, encumbered cntracts, purchasing card transactins, disbursements, and ATP s issued. Verified a randm sample f purchase rders and encumbered cntracts greater than $50,000 were slicited fr cmpetitive bids, and apprved by the BCC. Of the 738 purchase rders and encumbered cntracts, a ttal f 74 (apprximately 10%) were selected fr testing (55 PO s and 19 encumbered cntracts). The BidNet system and Bard Minutes Inquiry was accessed t verify and btain supprting dcumentatin. Verified vendrs assciated with purchase rders r encumbered cntracts were nt included n the Disqualified Vendr Lists maintained by the Cunty and the Flrida Department f Management Services. Verified the accuracy f the infrmatin recrded in Munis. Analyzed data frm the purchase rder reprt, encumbered cntract reprt, purchasing card reprt, and disbursement reprt t determine if there were vendrs with cmbined encumbrances and/r disbursements greater than $50,000 during the audit perid. Verified a sample f vendrs with cmbined encumbrances and/r disbursements greater than $50,000 was slicited fr cmpetitive bids. Of the 531 vendrs, a ttal f 70 (apprximately 13%) vendrs were selected fr testing. 53 (10%) randm and 17 selected judgmentally based n invice amunts and number f transactins The cmbined data fr each vendr selected fr testing was submitted t the Purchasing Department fr review and t prvide slicitatin infrmatin. The respnses prvided by the Purchasing Department were reviewed and verified. Verified that 36 purchases frm the abve test samples that were exempt frm cmpetitive slicitatin were prperly justified in accrdance with internal plicies and prcedures. Verified a sample f ATP frms cntained the prper apprval signatures, reasn dcumented was cnsidered an acceptable exceptin (i.e. emergency, cnversin Pasc Cunty Clerk & Cmptrller Page 7 f 32

12 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # related issues, islated instance), and were prcessed in a timely manner. Of the 573 ATP frms, 80 (apprximately 14%) ATP frms were selected fr testing. 57 (10%) randm and 23 selected judgmentally based n ATP reasn and/r amunt. Identified and dcumented discrepancies. Statutry Authrity and Cunty Guidelines T cnduct this audit, the Department f Inspectr General relied n the fllwing authritative guidelines t serve as criteria: 2017 Flrida Statutes, Chapter 112, Sectin Standards f Cnduct fr Public Officers, Emplyees f Agencies, and Lcal Gvernment Attrneys 2017 Flrida Statutes, Chapter 218, Sectin Timely Payment fr Nncnstructin Services 2017 Flrida Statutes, Chapter 218, Sectin Timely Payment fr Purchases f Cnstructin Services 2017 Flrida Statutes, Chapter 255, Sectin Advertising fr Cmpetitive Bids r Prpsals 2017 Flrida Statutes, Chapter 286, Sectin Public Meetings and Recrds; Public Inspectin; Criminal and Civil Penalties 2017 Flrida Statutes, Chapter 287- Prcurement f Persnal Prperty and Services: Sectin Definitins Sectin Cnsultants Cmpetitive Negtiatin Act Sectin Purchases frm Purchasing Agreements and State Term Cntracts Sectin Discriminatin Pasc Cunty Ordinance N , revised 12/15/15- Purchasing Pasc Cunty Plicy N : Administrative Plicies and Prcedures Manual, dated 12/30/15- Purchasing Pasc Cunty Purchasing Handbk, dated 1/25/05 PR381- Purchase Requisitins PR382- Specificatins PR389- Authrity t Pay (ATP) PR390- Emergency Purchases Pasc Cunty Purchasing Card Manual, revised Nvember 2016 Pasc Cunty Clerk & Cmptrller Page 8 f 32

13 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Pasc Cunty Authrity t Pay Frm Pasc Cunty Justificatin Frm (Sle Surce Frm) fr Purchases Exempted frm Cmpetitin A Vendr s Guide t Ding Business with Pasc Cunty Cnclusin The Department f Inspectr General (IG) cncluded that the internal cntrls ver purchasing required imprvement t ensure purchases are in cmpliance with the Purchasing Ordinance, internal plicies and prcedures, and t reduce the risk f public funds being misused, misapprpriated, r purchases nt being prcured at the best value. The recmmendatins made in this reprt were ffered t strengthen the cntrl envirnment. All audit cmments and recmmendatins were discussed with management, and their respnses were included in this reprt. There were als bservatins nted during the audit prcess that were utside the scpe f the audit, but were imprtant enugh t bring t management s attentin (see Appendix). Management respnses, including crrective actin and estimated cmpletin dates, were received frm frmer management fr the bservatins. Hwever, current management retracted the respnses, and stated that they d nt want t address the bservatins in this reprt. The IG thanks the Purchasing Department fr their prfessinalism and cperatin during this audit. Management is cmmended fr their respnsiveness in taking crrective actin fr sme f the cmments that were brught t their attentin during the audit. The current Purchasing Directr recgnizes the imprtance f internal cntrls, the need fr imprvement, and has begun the prcess f making changes and updates t plicies and prcedures t imprve versight and internal cntrl ver the purchasing functin cunty-wide. The fllwing crrective actin has already been taken: Utilizatin f nt-t-exceed amunts in lieu f at least r estimated amunts in agenda memrandums submitted fr BCC apprval was addressed with all Departments. The ATP frm was revised and distributed t all Cunty staff. Additinal apprvals and signatures were required n the revised ATP frm. The frm was als retitled as Unauthrized Purchase Request. A Vendr s Guide t Ding Business with Pasc Cunty was updated t include a recmmendatin t vendrs t submit invices within a reasnable time frame. Revisins were made t the Purchasing Ordinance, and were in the public hearing prcess. The Purchasing Manual was in the prcess f being updated t address sme f the cncerns nted in this audit reprt. Pasc Cunty Clerk & Cmptrller Page 9 f 32

14 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Based n the dcumentatin reviewed and audit prcedures perfrmed, the IG identified 16 pprtunities fr imprvement: N. Descriptin Cmments (Cmpliance): The Purchasing Handbk had nt been updated since 2005, and 1. did nt reflect all the current plicies and prcedures fr prcuring gds and services. Purchase rders and cntracts with change rders r amendments t the riginal amunt apprved by the BCC, ttaling 2. $17,620,291.35, were nt always apprved in accrdance with the Purchasing Ordinance requirements. Supprting dcumentatin was nt prvided fr sme f these purchases. The Justificatin Exemptin Frm was nt being used cnsistently r 3. utilized t dcument sle surce and nncmpetitive purchases in accrdance with the Cunty s purchasing prcedures. Cmments (Cntrl): Bard agenda mems prepared by departments included language, such as at least r estimated amunts, that allwed staff t increase their expenditures t unlimited amunts withut btaining 4. additinal apprval pursuant t Sectin (a) and (d) f the Purchasing Ordinance. The increases t purchase rders and cntracts in testing ranged frm $2,815 t $2,722, There were 19 vendrs with purchases that exceeded $50,000, and there was n dcumentatin that the vendr was awarded thrugh 5. the cmpetitive bid prcess and/r apprval was btained frm the BCC. The purchasing recrds did nt always accurately reflect purchase 6. rder and bid infrmatin in Munis. Written plicies and prcedures regarding bids that were awarded t 7. multiple vendrs did nt exist. Purchase Order Reprts frm FASBE and Munis were incmplete. 8. Of the 3,753 purchase rders, a ttal f 34 were identified as missing. The Encumbered Cntract Reprt frm Munis was incmplete, and missing cntract numbers were identified. The Purchasing Department did nt review task rders and change 10. rders related t cntracts prir t BCC apprval. Cmmunity Develpment s internal purchase rders were nt 11. required t fllw the Purchasing Ordinance, and were nt submitted t Purchasing fr review and apprval. There was a significant number f ATP s, ttaling $6,352,660, 12. issued during the audit perid. ATP frms were nt always filled ut cmpletely, accurately, r issues were identified regarding the PO numbers referenced n the frms. Cnsequently, purchases in vilatin f the Cunty s 13. purchasing prcedures were nt always prperly apprved and infrmatin reflected n the ATP frms did nt always agree with the supprting dcumentatin. Page Reference Pasc Cunty Clerk & Cmptrller Page 10 f 32

15 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # N Descriptin The ATP Frm did nt require additinal apprvals frm the Cunty Administratr r BCC fr purchases ver the threshld limits nted in the Purchasing Ordinance. As a result, the Purchasing Directr may have apprved ATP s ver the established apprval limit f $15,000. ATP frms were nt always prcessed timely, and the time delay ranged frm 6 t 241 days. Cnsequently, sme payments may nt have been in cmpliance with the Lcal Gvernment Prmpt Payment Act. The annual summary f ATP transactins was nt submitted t the Cunty Administratr within the timeframe as utlined in the Purchasing Handbk. Page Reference Audit Cmments & Recmmendatins Cmpliance: Since cmpliance with agreements, cntracts, laws, rules, regulatin, plicies and prcedures is expected, recmmendatins were nt prvided. Purchasing Handbk 1. The Purchasing Handbk had nt been updated since 2005, and did nt reflect all the current plicies and prcedures fr prcuring gds and services. The Purchasing Handbk was nt amended in accrdance with sectin 2-95 f the Purchasing Ordinance. The purchasing directr was required t: Prmulgate and amend, when necessary, plicies and prcedures gverning the prcurement f gds and services. Prescribe and maintain a purchasing manual fr all using agencies. The purchasing manual was required t include all apprved plicies and prcedures prmulgated by the purchasing directr. A cmprehensive prcurement plicy manual that utlined plicies and applicable laws was critical t ensuring that staff and all stakehlders fllwed the prper prcedures and rules fr prcurement. A cmprehensive plicy manual wuld prmte a clear and cnsistent understanding f the required regulatins related t the prcurement f gds and services. Recmmendatin: Since cmpliance with agreements, cntracts, laws, rules, regulatin, plicies and prcedures is expected, a recmmendatin was nt prvided. Management Respnse: The Purchasing Ordinance has undergne a majr rewrite since 2005 and anther Ordinance mdificatin is pending. The Purchasing Manual is in the prcess f being Pasc Cunty Clerk & Cmptrller Page 11 f 32

16 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # updated t cmply with the revised Ordinance. During the perid since 2005 there were numerus departmental trainings that the Purchasing Department hsted fr user departments and vendrs t familiarize them with the Cunty s purchasing prcess. Als, mre frmal trainings, (Purchasing 101 and Specificatins Writing trainings, fr example) were implemented in 2016 t prvide an extended fundatin t staff and stakehlders n the purpse and requirements f the Purchasing prcess. Internal Purchasing Bulletins were als issued t prvide directin t user departments. Crrective Actin Plan: Once the pending mdificatin t the Purchasing Ordinance is apprved and Manual is in place, the Purchasing staff will prvide, training n the plicies and prcedures utlined therein t all stakehlders. Estimated Cmpletin Date: Full rllut n r befre September 30, PO and Encumbered Cntracts Testing 2. Purchase rders and cntracts with change rders r amendments t the riginal amunt apprved by the BCC, ttaling $17,620,291.35, were nt always apprved in accrdance with the Purchasing Ordinance requirements. Supprting dcumentatin was nt prvided fr sme f these purchases. Accrding t Sectin (a) and (d) f the Purchasing Ordinance, the BCC was required t apprve purchases that exceeded $50,000, unless therwise exempted. All written alternatins r change rders issued against a frmal written agreement r cntact, was required t be submitted t the BCC fr apprval prir t executin f such alternatins r changes. All written alternatins r change rders issued against purchase rders, nt invlving a frmal written agreement r cntract, was required t be submitted t the apprving authrity in accrdance with sectin 2-110, taking int accunt the prpsed change. There were 43 vendrs with purchase rders and cntracts with change rders r amendments t the riginal amunt that were nt apprved in accrdance with the Purchasing Ordinance requirements. The fllwing was identified: Fr ne vendr (PO #9308), the agenda mem apprved by the BCC stated there was n funding required because funding was undetermined, and wuld be cntained in varius department budgets. Change rders were issued t increase the amunt frm $111,000 t $334,000. The increase ttaled $223,000, and was apprved by the Purchasing Directr. Hwever, there was n dcumentatin the BCC apprved the additinal funds. Fr ne vendr (PO # ), the BCC apprved additinal funds t increase the amunt frm $200,000 t $559,975. The increase ttaled $359,975. Hwever, the purchase rder was effective 10/26/16, which was prir t the BCC apprval (12/13/16). Fr ne vendr (PO # ), the bid award was apprved by the frmer Cunty Administratr fr at least $22,000 (n 7/26/16). Hwever, the purchase rder amunt reflected in Munis was $116, The IG team culd nt verify that the increase in the purchase rder amunt f $94,400 was apprved by the BCC. The frmer Purchasing Pasc Cunty Clerk & Cmptrller Page 12 f 32

17 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Directr cnfirmed that the increase was nt presented t the BCC. After the IG team ntified management f the discrepancy, apprval was btained frm the BCC n 08/15/2017. Fr ne vendr (PO # ), a change rder was issued t increase the amunt frm $6, t $76, The increase in the amunt ttaled $69,900, and was apprved by the frmer Purchasing Directr. Hwever, there was n dcumentatin the BCC apprved the additinal funds. Fr ne vendr (cntract #744), the riginal amunt was increased frm $190,417 t $931,092. Hwever, the BCC apprved $404,000 in additinal funds. Accrding t the frmer Purchasing Directr, changes were made in errr. Crrectins were made t the cntract amunt after the IG team identified the discrepancy, and the amunt was decreased by $354, There were 38 vendrs with purchases that exceeded the amunt reflected in the riginal frmal agreement that was apprved by the BCC. Vendrs awarded cntracts with at least, estimated, r likely t exceed language: The majrity f the vendrs with bids (27) were apprved by the BCC fr at least, estimated, r likely t exceed amunts. This allwed departments t increase their expenditure amunts with getting additinal apprval frm the BCC. The increases ranged frm $33, t $2,722, Fr ne f the at least cntracts (#437), the fllwing was als nted: The riginal amunt reflected in Munis was $200,000. Hwever, the BCC apprved an estimated cst f $119,160 annually. There were n change rders reflected in the financial system that increased the cntract amunt frm $119,160 t $200,000. This represented a 68% increase ver the additinal amunt apprved by the BCC. There were tw changes made t increase the amunt frm $200,000 t $999,999. Hwever, the additinal funds were nt apprved by the BCC. The revised amunt was als added t FY18 thrugh FY21. Accrding t the frmer Purchasing Directr, the amunt presented t the BCC was apprved based n estimated quantities, and was apprved fr an at least amunt, and did nt include a nt t exceed amunt. Vendrs awarded cntracts with ttal cst r in the amunt f language: There were 11 vendrs with bids that had expenditures and/r encumbrances that exceeded the amunt apprved by the BCC. The Pasc Cunty Clerk & Cmptrller Page 13 f 32

18 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # difference between the BCC apprved amunt and amunt disbursed ranged between $108, and $3,468, The agenda mem apprved by the BCC referenced ttal cst r in the amunt f. N additinal infrmatin was prvided t verify BCC apprval f changes. Recmmendatin: Since cmpliance with agreements, cntracts, laws, rules, regulatins, plicies and prcedures is expected, a recmmendatin was nt prvided. Management Respnse: The previus practice was t allw the at least r estimated amunt language in agreements taken t the Bard. The Cunty has previusly nt included a Nt t Exceed amunt in the estimated expenditure language but will in the future t cap the planned expenditures. Crrective Actin Plan: The plicy f nt allwing new at least r estimated cntracts is already in place. Any preexisting cntracts that are in place will be allwed t expire if they stay belw the threshld already apprved by the BCC. Any future mdificatins t increase funding fr pre-existing cntracts that are in place will be taken t the BCC fr apprval. Additinally it shuld be nted that a Purchasing Bulletin n this tpic that was distributed t all Cunty departments n 10/23/17. Estimated Cmpletin Date: Already cmpleted actinable items, and nging versight exists. 3. The Justificatin Exemptin Frm was nt being used cnsistently r utilized t dcument sle surce and nncmpetitive purchases in accrdance with the Cunty s purchasing prcedures. Pursuant t Sectin (a) and (b) f the Purchasing Ordinance, all sle surce and nncmpetitive purchases were required t be in the public s best interest and justified. The requesting agency was required t prvide the Purchasing Directr with written justificatin that clearly described and dcumented the advantages f declaring the purchase nncmpetitive n the basis that nly ne ptential r reasnable prvider fr an item. The Justificatin Exemptin frm was required by plicy t be cmpleted by Departments t cnfirm cmpliance with the Purchasing Ordinance fr sle surce/ sle brand r exempted frm cmpetitin. The fllwing was nted during testing: 18 f 19 purchases (18 purchase rders and 1 cntract) in the test samples that were nt slicited fr cmpetitive bids did nt have a Justificatin Exemptin Frm cmpleted t justify the purchase r the Justificatin Exemptin Frm was nt cmpleted prperly. Fr 2 purchases (PO #9702 and #9872), the Justificatin Exemptin did nt reflect the Purchasing Directr s signature fr apprval. There was n Pasc Cunty Clerk & Cmptrller Page 14 f 32

19 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # dcumentatin that reflected Purchasing reviewed the purchase prir t being presented and apprved by the BCC. Fr 1 purchase (PO #10135), the Justificatin Exemptin Frm was apprved by the Purchasing Directr after apprval was btained frm the BCC. Fr 15 purchases, there was nt a Justificatin Exemptin Frm n file in the Purchasing Department. Of the15, a ttal f 8 did nt have any ther dcumentatin n file that justified the exemptin r dcumentatin f apprval frm the Department Head r Purchasing Directr. Recmmendatin: Since cmpliance with agreements, cntracts, laws, rules, regulatins, plicies and prcedures is expected, a recmmendatin was nt prvided. Management Respnse: The Purchasing Directr is wrking with the Purchasing team and Departments requesting the exemptin t ensure that the prper dcumentatin is included n all sle surce and nncmpetitive purchases. Crrective Actin Plan: The Purchasing Manual is currently being revised and will reflect the prper prcedures and justificatin required fr a sle surce and nncmpetitive purchases exemptin t be apprved. Back up dcumentatin is currently being required with all sle surce and nncmpetitive purchase frms. Estimated Cmpletin Date: Onging. Cntrl Activities: Listed belw are cmments that represent pprtunities t strengthen the internal cntrls. Fr each cmment, a recmmendatin has been included. PO and Encumbered Cntracts Testing 4. Bard agenda mems prepared by departments included language, such as at least r estimated amunts, that allwed staff t increase their expenditures t unlimited amunts withut btaining additinal apprval pursuant t Sectin (a) and (d) f the Purchasing Ordinance. The increases t purchase rders and cntracts in testing ranged frm $2,815 t $2,722, There were numerus department agenda mems in the audit test samples fr cntracts r agreements that referenced at least amunts fr the estimated csts, and were apprved by the BCC. This allwed the departments t increase their expenditures t an unlimited amunt withut btaining additinal apprval. The increases t the purchase rder and cntract amunts included in testing ranged frm $2,815 t $2,722, Recmmendatin: When csts f cntracts r agreements are estimated, require that maximum, r nt t exceed amunts be reflected n the agenda mems and cntracts Pasc Cunty Clerk & Cmptrller Page 15 f 32

20 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # presented t the BCC. This will help ensure purchases are made in the mst efficient and ecnmical way, and changes t the riginal amunts are in cmpliance with the Purchasing Ordinance requirements. Management Respnse: The Purchasing Department is currently wrking with all Departments t ensure ging frward all cntracts apprved by the BCC has a nt t exceed amunt instead f an at least amunt. Crrective Actin Plan: The plicy f nt allwing new at least r estimated cntracts is already in place. Any pre-existing cntracts that are in place will be allwed t expire if they stay belw the threshld already apprved by the BCC. Any future mdificatins t increase funding fr pre-existing cntracts that are in place will be taken t the BCC fr apprval. Estimated Cmpletin Date: Purchasing is currently addressing n a case by case basis. 5. There were 19 vendrs with purchases that exceeded $50,000, and there was n dcumentatin that the vendr was awarded thrugh the cmpetitive bid prcess and/r apprval was btained frm the BCC. Pursuant t sectin f the Purchasing Ordinance, any purchase f a gd r service, individually r cllectively fr a prject r nging need, in which the ttal expenditure was reasnably estimated t be greater than $50,000 in a fiscal year r calendar year required cmpetitive seal bids. Accrding t sectin f the Purchasing Ordinance, the BCC was required t apprve purchases that exceeded $50,000. During the audit, the fllwing was nted: There were14 purchases fr which management did nt prvide verificatin that the purchases were cmpetitively slicited as required by the Purchasing Ordinance, and were nt presented t the BCC fr apprval. Fr 13 vendrs, the purchases ttaled mre than $50,000, ranging frm $51,463 t $264, Purchasing did nt prvide supprting r sufficient dcumentatin t verify that the vendrs were awarded thrugh the cmpetitive bid prcess r were exempted frm the bid prcess. There was ne vendr that had expenditures and/r encumbrances that exceeded $50,000, and was nt apprved by the BCC. Expenditures ttaled $178, fr the audit perid. Accrding t purchasing staff, these were Request fr Qualificatins (RFQ) apprved by Administratin and Purchasing. There were five exempt vendrs that had expenditures and/r encumbrances that exceeded $50,000. Dcumentatin that the sle surces r cperative agreements were apprved by the BCC was nt prvided. The purchases ranged between $128, and $759, Pasc Cunty Clerk & Cmptrller Page 16 f 32

21 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Recmmendatin: Plicies and prcedures shuld be established that define the requirements f sectin f the Purchasing Ordinance. Ttal expenditures and encumbrances, by vendr r cmmdity, in a fiscal year and calendar year shuld be mnitred by the Purchasing Directr n a regular basis t ensure the cmpetitive bid prcess and BCC apprval is nt circumvented. Management Respnse: Management recgnizes that the need fr better standardizatin and versight f the Purchasing prcess is required in rder t ensure fiscal respnsibility amng all Departments. Crrective Actin Plan: The Cunty hired a new Purchasing Directr in February 2018 t address these issues and standardize the prcess. Likewise, the Purchasing Ordinance N is currently being revised and updated fr Bard apprval. Additinal revisins t the Ordinance are scheduled t be adpted by the Bard in June The Purchasing Plies & Prcedures Manual will als be updated t reflect all Bard apprved changes utlined in the Ordinance. Estimated Cmpletin Date: September 30, The purchasing recrds did nt always accurately reflect purchase rder and bid infrmatin in Munis Infrmatin entered int Munis was nt always accurate. The fllwing was nted: Fr tw cntracts (#481 and #482), the bid was a multiple vendr award. There were tw vendrs, and the estimated award amunt was $125,000 each. The ttal amunt apprved by the BCC fr bth vendrs cmbined was $250,000. Hwever, the annual cntract amunt reflected in Munis fr each cntract was $250,000. The amunt entered fr bth vendrs ttaled $500,000. Fr cntract #559, the riginal amunt reflected in Munis was $225,000. Hwever, the BCC apprved an amunt f $223,262. The Purchasing Department culd nt prvide an explanatin fr the difference between the tw amunts. Fr cntract #710, the riginal amunt reflected in Munis was $2,559, Hwever, the BCC apprved at least amunt f $856,280 annually. Accrding t the frmer Purchasing Directr, it appeared the amunt entered was fr the full lump sum f the cntract, and the amunt was nt brken dwn. Fr purchase rder #9442, the bid number referenced in Munis (#IFB-RT ) was incrrect. Accrding t the frmer Purchasing Directr, the bid number was shuld have been #IFB-KB Fr fur cntracts (#415, #522, #858, #744), the initial expiratin date reflected in Munis was 9/xx/9999 r blank. The frmer Purchasing Directr stated there were issues when Pasc Cunty Clerk & Cmptrller Page 17 f 32

22 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # the new system went live, and sme Departments entered the expiratin date f 9/30/9999 t avid having invice payment delays. Recmmendatin: Purchase rder and cntract infrmatin entered in t the system shuld be reviewed fr accuracy t ensure the purchasing recrds are accurate and amunts agree t the amunts apprved by the BCC. Determine the number f cntracts in Munis with an expiratin date f 9/xx/9999 r are blank. Crrectins shuld be made t update the expiratin dates, and crrect the infrmatin identified abve. Management Respnse: Amunts entered by Departments int Munis which exceed the apprved amunt will be rejected by the Purchasing Department. All backup dcumentatin related t the prject and apprval amunts will be attached t the requisitin/cntract befre apprved by the Purchasing Department staff and Directr at their levels in Munis. As with any new majr finance system being implemented, when the Cunty went live with the Munis system, there were still prductins and deliveries that needed time t be reslved. The Purchasing Department has been wrking with the Fiscal and Finance Department t wrk thrugh these issues and t implement crrective changes t ensure cmpliance and accuracy with the purchasing recrds. Crrective Actin Plan: The Purchasing Department will cntinue t wrk with the Fiscal and Finance Departments and will review all dcuments upladed int Munis t ensure that the 9/30/9999 expiratin date is remved and the prper cmpletin date is included. The Purchasing Department will duble check the slicitatin infrmatin against the requisitin/cntracts t ensure crrect infrmatin in included. Estimated Cmpletin Date: Onging. 7. Written plicies and prcedures regarding bids that were awarded t multiple vendrs did nt exist. Fr numerus purchase rders (8 ut f 33) and cntracts (6 ut f 23) included in testing that were cmpetitively slicited, the bid was awarded t multiple vendrs. Sme f the multiple awards were issued t prvide flexibility when the lwest bidder was nt available and t ffer the best pprtunities fr reducing cst. Hwever, there were n written plicies and prcedures that guided department users n the prcess when the lwest bidder was nt available. Recmmendatin: Develp plicies and prcedures that define: a. When t award t multiple vendrs. b. The prcess f purchasing frm the multiple vendrs awarded. c. Detailed dcumentatin that must be maintained when ne f the vendrs awarded was unable t fulfill a purchase rder. Pasc Cunty Clerk & Cmptrller Page 18 f 32

23 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Management Respnse: In the slicitatin dcuments the Cunty identifies that multiple awards may result. There is n legal prhibitin in Flrida Statutes r Cunty Ordinance that wuld preclude awarding cntracts t multiple vendrs under a single slicitatin. Crrective Actin Plan: The circumstance f when t award multiple vendrs will cntinue t be cvered in the slicitatin dcumentatin. The prcess f purchasing frm multiple vendrs awarded and a detailed dcumentatin that must be maintained when ne f the vendrs awarded was unable t fulfill a purchase rder will be included in the updated Purchasing Manual. Estimated Cmpletin Date: On r befre September 30, Purchase Order Reprts frm FASBE and Munis were incmplete. Of the 3,753 purchase rders, a ttal f 34 were identified as missing. Reprts were requested frm FASBE and Munis that included all purchase rders (i.e. pen, clsed, deleted, etc.) fr the audit perid. The fllwing was nted: FASBE Purchase Order Reprt: Of the 2,141 unique purchase rder numbers included n the FASBE reprt fr the perid 10/1/15 thrugh 7/31/16, a ttal f 29 were identified as missing. The fllwing was nted: A ttal f 12 purchase rders did nt exist in FASBE (#163060, #163263, #163477, #163904, #164113, #164389, #164653, #164661, #164967, #165002, #165024, and #165032). A ttal f 11 purchase rders had a deleted status reflected in FASBE (#163066, #163510, #163704, #163840, #163901, #163992, #164065, #164096, #164504, #164986, and #164987). A ttal f six purchase rders had an active status reflected in FASBE (#163423, #163443, #163648, #164010, #164423, and #165097). Munis Purchase Order Reprt: Of the 763 purchase rders included n the Munis reprt fr the perid 8/1/16 thrugh 9/30/16, excluding cnverted purchase rders, a ttal f five were identified as missing (# , # , # , # , and # ). In additin t the abve, the first purchase rder number reflected n the Munis Purchase Order Reprts fr bth fiscal year 2016 and 2017 did nt agree t the first purchase rder number included in the sequence prvided by Finance. The fllwing was nted: Accrding t Finance, the first purchase rder number issued in Munis fr FY16 after the system went live was The first purchase rder number reflected n the Munis Reprt was Pasc Cunty Clerk & Cmptrller Page 19 f 32

24 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Accrding t Finance, the first purchase rder number issued in Munis fr FY17 was The first purchase rder number reflected n the Munis Reprt was Recmmendatin: The purchase rder numbers identified abve shuld be reviewed t determine why there were excluded frm the FASBE r Munis reprt. System errrs shuld be researched and crrected. Implement a plicy and prcedure t require a peridic recnciliatin t ensure all purchase rders (numbers) are accunted fr. Management Respnse: Any Purchase Orders that were in the Munis system that had been cnverted but were never psted had t be deleted t clse ut the 2016 Year End. Purchasing was nt invlved in the year end clse. It was the Clerk s Office and Cnsultant that did that year end clse. The P.O.s referenced abve were likely deleted by Clerk s ffice because they were hlding up the year -end clse. That means they were either in a created, rejected, r pending status. All P.O.s must be in an apprved, hsted, and printed status prir t yearend prcessing. Munis des nt track the deleted Purchase Orders and Purchase Order numbers are assigned when the requisitin is cnverted. If that P.O. is cnverted it receives a number; hwever if it is never psted then that wuld create a gap in the numbering f the Purchase Order. Crrective Actin Plan: Purchasing staff desn t have the authrity t delete Purchase Orders, nly the Purchasing Directr des. The previus Purchasing Directr may have inadvertently deleted P.O. s while trying t apprve an item in Munis as it was a new system during the time f this audit. Currently ur practices d nt include deleting any P.O. s. A slutin ging frward will be that Instead f rejecting a Purchase Order, we can apprve the PO, pst and print it, then cancel the PO t keep the histry and t prevent future gaps in Purchase Orders. Als ensure prir t year-end clse, that all Purchase Orders are being mved thrugh the wrkflw and printed prir t year-end clse. Estimated Cmpletin Date: September 30, The Encumbered Cntract Reprt frm Munis was incmplete, and 374 missing cntract numbers were identified. Of the 557 encumbered cntracts included n the reprt fr the perid 10/1/15 thrugh 12/31/16, a ttal f 374 cntracts were identified as missing. The IG team was unable t verify that Encumbered Cntracts Reprt included all cntracts fr the audit perid. The cutff infrmatin first and last cntract numbers fr the audit perid culd nt be prvided. In additin, there was n histry f cntracts that were deleted r cancelled. Recmmendatin: Cut-ff infrmatin fr cntracts issued during the fiscal year shuld be dcumented t ensure that all transactins are recrded in the crrect accunting perid. Since there is n histry f cntracts deleted r cancelled in the system, cmpensating cntrls shuld be in place t track these cntracts. The reasn shuld be als nted. Pasc Cunty Clerk & Cmptrller Page 20 f 32

25 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Management Respnse: Cntracts that were clsed r deleted are nt tracked in the Munis system. Munis des nt prvide a histry f cntracts that were deleted r cancelled. During the startup f the new Munis system it was cmmn fr errrs t be made by staff when entering a cntract. Smetimes cntracts were entered as Encumbered when they needed t be entered as Item Quantity Cst Cntract. If a cntract was in the created r rejected status and then deleted it wuld have received a number but culd nt be fund in Munis. Only cntracts in the created r rejected status can be deleted. Deletin f the cntracts in the created r rejected status must be dne in rder t cmplete the Year End Clse Out. Crrective Actin Plan: The Munis system des nt prvide fr tracking f the deleted cntracts and the numbers assigned t deleted r cancelled cntracts are nt reused. The end users nly have the ability t delete cntracts in the created and rejected status. They d nt have the ability t delete any cntracts that have gne thrugh the prper wrkflw prcess. Estimated Cmpletin Date: N additinal actin necessary at this time. 10. The Purchasing Department did nt review task rders and change rders related t cntracts prir t BCC apprval. Accrding t sectin 2-94 f the Purchasing Ordinance, the Purchasing Directr was required t direct and supervise all purchasing fr the Cunty. Hwever, there was nt a frmal plicy and prcedure in place that required task rders and change rders related t cntracts t be submitted t the Purchasing Department fr review prir t being included n the Bard agenda. One cntract (#349) included in testing was based n a task rder related t prfessinal services, and additinal funds were apprved by the BCC t increase the ttal amunt t $236,877. Accrding t the frmer Purchasing Directr, this was cnsidered a cntinuing cntract, and shuld nt have exceeded $200,000. Recmmendatin: Establish plicies and prcedures that require all change and task rders related t cntracts and purchases t be reviewed by purchasing prir t being included n the Bard agenda fr apprval. Additinally, this internal cntrl may serve as a quality cntrl step t reduce the number f errrs, versights, and edits required after the BCC agenda is published. Management Respnse: Sec (d) addresses Change Orders and states: All written alteratins r change rders issued against a frmal written agreement r cntract, shall be submitted t the Bard f Cunty Cmmissiners fr apprval prir t executin f such alteratins r changes. All written alteratins r change rders issued against purchase rders, nt invlving a frmal written agreement r cntract, shall be submitted t the apprving authrity in accrdance with Sectin 2-110, taking int accunt the prpsed change. Althugh all change rders t Purchase Orders (nt tied t a cntract) are reviewed and apprved by the Purchasing Directr, change rders and/r task rders related t Bard apprved cntracts are specifically designated t the Bard, nt the Purchasing Directr fr apprval per Sectin f the Purchasing Ordinance. Bard apprved cntracts fr the purchase f materials and/r services may have language which prvides the Prject Pasc Cunty Clerk & Cmptrller Page 21 f 32

26 Pasc Cunty Bard f Cunty Cmmissiners Audit Prject # Manager the authrity t review and authrize Change Orders and/r Task Orders, which is then submitted by the Department Directr t the Bard r Cunty Administratr fr apprval, depending n the level f apprval and language in each individually Bard apprved cntract. Likewise all cntract related change rders and task rders are reviewed by the Cunty Attrney s ffice fr statutry cmpliance befre ging t the Bard fr apprval as they are in charge f all cntracts. While we agree that the Purchasing Department shuld be made aware f all change rders and task rders t ensure cmpliance with Purchasing prcedures, the Purchasing Directr shuld nt act as the subject matter expert t determine whether change rders and task rders tied t a cntract shuld be apprved prir t legal and BCC apprval. Crrective Actin Plan: The Purchasing Manual will be updated t address the issue f change rders and task rders tied t a cntract fr BCC apprval and a plicy will be created with the assistance f legal that is cnsistent with the Purchasing Ordinance ging frward. Estimated Cmpletin Date: September 30, Cmmunity Develpment s internal purchase rders were nt required t fllw the Purchasing Ordinance, and were nt submitted t Purchasing fr review and apprval. Cmmunity Develpment issued internal purchase rders (IPO s) fr rehabilitatin prjects facilitated thrugh the Pasc Opprtunity Prgram. IPO s were nt required t fllw the Cunty s Purchasing Ordinance. The POP agencies selected their cntractrs t cnduct the wrk, and were later reimbursed fr csts by the Cunty. The invices were apprved by the Cmmunity Develpment Manager, and then submitted t Accunts Payable. There was nt a requirement t send any dcumentatin t the Purchasing Department fr review and apprval. Fr 2 f the 70 vendrs included in the test sample, a ttal f $2,918, (Cvenant Hmes) and $135, (Keystne Challenge) was disbursed, and apprved by Cmmunity Develpment, withut any secndary reviews r apprvals in the Cunty. Recmmendatin: Internal purchase rders related t Cmmunity Develpment shuld be ruted thrugh the Purchasing Department fr review prir t being prcessed fr payment. Purchasing shuld cnsider btaining BCC apprval t rescind the separate prcurement authrity granted t Cmmunity Develpment. If nt feasible, the Purchasing Ordinance shuld be updated t specifically cite Cmmunity Develpment internal purchase rders as an exclusin frm the rdinance. Management Respnse: Cmmunity Develpment is subject t the Purchasing Ordinance. The Bard exercised their authrity t apprve an alternative purchasing prcess specifically fr the POP prgram (CD97-127) and Affrdable Builder Certificatin Prgram (CD97-126). These prgrams are als subject t fllw state and federal requirements (as it relates t HUD, Flrida Husing Pasc Cunty Clerk & Cmptrller Page 22 f 32