local government accountability update fgfoa annual conference june 25, 2013
TRANSCRIPT
Local Government Accountability UpdateFGFOA Annual Conference
June 25, 2013
Topics for Discussion
Laws, Rules, and Guidance Update AG Audits of Local Governments Lessons from AG Audits of Local
Governments
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2013 Legislation Chapter 2013-36, Laws of Florida – Ethics
Comprehensive reform bill – includes: Allows Commission on Ethics (COE) to collect unpaid
financial disclosure fines by garnishment of wages and filing a lien on the filer’s real property.
Requires COE to publish certain financial disclosure filings online beginning with the 2012 filings.
Clarifies that only those that have the authority to purchase more than $10,000 in a year are “procurement employees.”
Prohibits financial disclosure filers to accept gifts in excess of $100 from “vendors” and vendor gifts valued between $25 and $100 must be reported.
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2013 Legislation Chapter 2013-36, Laws of Florida – Ethics
Comprehensive reform bill – includes: Permits Commission on Ethics to initiate investigations
based on referral from Governor, Florida Department of Law Enforcement, a law enforcement agency, or a state attorney.
Requires constitutional officers to complete a minimum 4 hours of training for ethics, open meetings, and public records laws.
Prohibits an elected public officer or candidate for elected public office, during period of candidacy, from obtaining new public employment after qualifying for elected public office.
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2013 Legislation SB 1512 – Clerks of Court
Increases revenues to allow clerks to be fully funded from court-related collections.
Clerks must submit proposed budgets to Clerks of Court Operations Corporation (CCOC) by June 1 (beginning 2014).
CCOC to submit clerks’ budgets to Legislative Budget Commission by August 1 (beginning in 2014) for approval, disapproval, or amendment.
Specifies total budgeted expenditures for all clerks for the period July 1, 2013 thru September 30, 2014.
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2013 Legislation SB 328 – Public Accountancy
Amends Section 473.3065, Florida Statutes, increasing annual frequency of scholarships provided by the Board of Accountancy (BOA) to twice per year and increases annual maximum from $100,000 to $200,000.
Creates Section 473.3125, Florida Statutes, requiring CPA firms to be enrolled in a peer review program as a condition of licensure as of January 1, 2015. BOA to adopt rules for the minimum standards for peer review programs.
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2013 Legislation Chapter 2013-39, Laws of Florida – Department of
Economic Opportunity Creates the Gulf Coast Economic Corridor Act in
support of areas affected by the Deepwater Horizon disaster.
Creates Triumph Gulf Coast, Inc. as a nonprofit corporation to administer a Recovery Fund.
Establishes the Recovery Fund for the benefit of disproportionately affected counties (Bay, Escambia, Franklin, Gulf, Okaloosa, Santa Rosa, Walton, and Wakulla).
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2013 Legislation Chapter 2013-39, Laws of Florida – Department of
Economic Opportunity Requires the scope of local government financial
audits to include a review of funds received or expended related to the Deepwater Horizon oil spill to, at a minimum, evaluate compliance with State and Federal laws related to the expenditure of those funds.
Requires Auditor General to adopt rules for the form and conduct of all financial audits performed by CPAs for audits of local governmental entities for oil spill funds received/expended.
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Anticipated AG Chapter 10.550 Rule Changes
Rules for local government and Florida Single Audit Act audits should be available for comment in mid-July (Chapters 10.700, 10.800, and 10.850 have been revised for 2013 audits).
Update for 2013 laws and authoritative literature.
Delete references already addressed within the requirements of OMB Circular A-133 or Government Auditing Standards.
Simplify description of auditor’s report on financial statements and report on internal control and compliance.
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Anticipated AG Chapter 10.550 Rule Changes
Update rules to clarify audit finding reference numbering requirements.
Must have a reference number.
Still required to indicate those findings included in the preceding and second preceding year – including the reference numbers applicable.
Update to implement requirements of Chapter 2013-39, Laws of Florida, for audits of local governments that receive/expend Deepwater Horizon oil spill funds.
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2013 Guidance Changes New example financial indicators
Government-wide Change in Net Assets (Net Position) Capital Asset Condition
General Fund Fund Balance as a % of Expenditures Quick Ratio
Pension and OPEB Funded Ratio
Re-ordering of data elements and financial indicators
Available with the December 2013 updates
(See FGFOA Webinar presentation of May 16, 2013)11
Auditor General
Audits of
Local Governments
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Operational Audit Section 11.45(1)(g), Florida Statutes, defines an operational
audit as an audit whose purpose is to evaluate management’s performance in establishing and maintaining internal controls, including controls designed to prevent and detect fraud, waste, and abuse, and in administering assigned responsibilities in accordance with applicable laws, administrative rules, contracts, grant agreements, and other guidelines. Operational audits must be conducted in accordance with government auditing standards. Such audits examine internal controls that are designed and placed in operation to promote and encourage the achievement of management’s control objectives in the categories of compliance, economic and efficient operations, reliability of financial records and reports, and safeguarding of assets, and identify weaknesses in those internal controls.
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Operational Audit
Why pay attention to AG audits of local governments?
Different scope than financial audits Compliance requirements applicable to operations of
your entity that may not be covered in a financial audit
Controls that apply to those operations
Economic/efficiency ideas
Good business practices
Improve financial management of your entity
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What can be learned from recent local government
operational audits?
Reports available on AG Web site: www.myflorida.com/audgen
Under Auditor General Released Reports, By Entity Type,
Local Government/Nonprofit
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Audit FindingsWhy are contracts important?Provide descriptions of the responsibilities of each partyProvide a basis for making paymentsProtects each party
What should be included in contracts?All key terms should be definedResponsibilities of each party should be clearSpecific deliverables or other necessary information should be stated that provide a basis for payment or billing
Contracts should be updated periodically to incorporate changes in terms
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Audit FindingsSome issues we have noted:
Contracts needed to be updated and consolidated – original contract was in 1977 and had modifications through 2005
• Arduous to determine what contracts require
• Outdated provisions
Contracts did not specify the basis or methodology for calculating some costs to be billed
Contracts did not address some issues
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Audit FindingsWhat happens when contractors, which obtain and pay for services from other organizations on behalf of the government, are not required to provide supporting documentation with reimbursement requests?
No proof that the goods/services were obtainedNo proof that amounts paid were those paid by the contractor to the providerNo proof that a public purpose was served
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Audit FindingsWhat we found or what we know happened:
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Audit FindingsWhat we found/what happened:
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Audit FindingsOther contract issues:
Contract award process was not in accordance with Board policies and procedures
Contracts did not require advertising firms to follow Board procurement policies
Advertising firms were not required to provide cost estimates
Inadequate preaudit of expenditures by Board and Clerk staff
Inadequate monitoring of payments pursuant to the contracts (some payments made for services already included in fixed fee payments to the contractors)
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Audit FindingsOther issues related to this audit:
No anti-fraud program or control risk assessments
Lack of budgetary control established by the Board
• At the level of restriction
• At the project level
Overexpenditures of tourist development taxes
Unauthorized expenditures of tourist development taxes
Insufficient oversight of tourist development tax expenditures by the TDC
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Audit FindingsOther issues related to this audit:
Conflicts of interest were not identified
• Board member also Executive Director of Chamber of Commerce that received funds
• TDC Committee member was owner or director of company receiving promotional money
• TDC Subcommittee member was president of a company paid for aerial advertising
Payments made in advance, some services never received
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Questions?
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Marilyn Rosetti, Audit Manager
Telephone: 850-487-9031
Web site: www.myflorida.com/audgen/
Headquarters: 111 West Madison Street
Room 401 Pepper Building
Tallahassee, FL 32399-1450
Florida Auditor General
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