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02/18/2000 Audit r- 1 ( _I � I r. AUDIT REPORT OF MONROE COUNTY PURCHASING FUNCTION • • February 18, 2000 C ... x: J� r' to 4, 4• C 6.COUNTT r=- Prepared by: . Internal Audit Department Clerk of the Circuit Court Danny L. Kolhage, Clerk Monroe County, Florida ! l� cu c?:ii);M �p`��G9w yes r s IZ go,COUNTV.f�P 3Dannp IL. 1aoUjage BRANCH OFFICE CLERK OF THE CIRCUIT COURT BRANCH OFFICE 3117 OVERSEAS HIGHWAY MONROE COUNTY 88820 OVERSEAS HIGHWAY MARATHON, FLORIDA 33050 500 WHITEHEAD STREET PLANTATION KEY, FLORIDA 33070 TEL. (305) 289-6027 KEY WEST, FLORIDA 33040 TEL. (305) 852-7145 TEL. (305) 292-3550 February 18, 2000 The Honorable Danny L. Kolhage Clerk of the Circuit Court Re: Audit of the Monroe County Purchasing Function Dear Mr. Kolhage: The Clerk's Internal Audit Department has completed an audit of the Purchasing Section of the Office of Management and Budget. The purposes of the audit were to determine 'compliance with state and local laws, ordinances, and contracts, that policies and procedures properly document the system, whether internal controls have been established and are being followed, and whether the results accomplish the goal of securing economy in expenditure of county funds. We would like to thank the Purchasing Section and Office of Management and Budget for their cooperation and time while conducting the audit. Procurement is the process organizations use to obtain the supplies and materials needed to support operational activities. It is a universal high risk function and cuts across departments, programs, and agencies. Procurement is obtaining the right product, at the right time, from the right source, and at the right price. There are a host of processes in the function in which fraud, waste, and abuse might occur. In fiscal year 1999, purchasing conducted 82 sealed bid openings, issued 8,375 purchase orders (PO's), reviewed 277 contracts, and filled 1,125 stock orders worth $57,525. The audit report and audit were completed with the assistance of Patrick Blaney, CPA. D. II • • The accompanying audit report is provided for your information. Additional copies of the report will be provided upon your request. • Sincerely, )41),„,A,. d fixikama. Sandra L. Mathena, CPA Director of Internal Audit cc: Board of County Administrators (5) James Roberts, County Administrator James Hendrick, County Attorney John Carter, Senior Director of the Office of Management and Budget Sandee Carlile, Clerk's Finance Director Marva Green, External Auditor ii AUDIT REPORT OF MONROE COUNTY PURCHASING FUNCTION TABLE OF CONTENTS Page I. SCOPE AND OBJECTIVES 1 II. METHODOLOGY 1 III. BACKGROUND 3 IV. CONCLUSIONS 5 V. AUDIT FINDINGS A.Review of Purchase Orders 1. Purchase Order #190739 overstated by $10,400 8 2. Incorrect amounts paid on Blanket Purchase Orders 10 3. PO number placement on the new Purchase Order form 11 4. Paid Purchase Orders still encumbered 12 B. Review of Check Payments 1. Purchases made without Purchase Orders 13 2. Contracts and Construction Projects not encumbered 15 C.Financial Disclosure requirements for employees with purchasing authority greater than $1,000 1. Financial disclosure noncompliance 16 2. Notice to affected employees required 17 D. Purchase Orders for low cost items 1. Numerous low cost purchase orders issued 18 2. Fleet Management responsible for many purchase orders 20 3. Stockroom to be eliminated 21 E. Requisition and Purchase Order approval 1. Requisitions transmitted by computer not approved 22 2. Authorized signature list 23 3. Authorized signature purchasing limits 24 AUDIT REPORT OF MONROE COUNTY PURCHASING FUNCTION TABLE OF CONTENTS Page 4. Purchase Order increases 25 F. Negative cost centers 26 G.Purchasing Section not using all of The Purchasing Agent module's available controls 1. Accounts charged not checked before Purchase Order approval 27 2. Requisitions not combined 28 H.Receiving reports not required 29 I. Filling orders for stockroom supplies 30 VI. EXHIBITS A. Monroe County Purchasing Policy - Purchase Orders Chapter 7, D, 1 & 2 A B. Requisitions Outstanding B C. Statement of Financial Interests - Form 1 C D. Distribution of Work Hours D E. Aged Purchase Order Listing E F. Purchasing's Customized Menu F G. The Purchasing Agent Standard Menu G VII. AUDITEE RESPONSE AUDIT REPORT OF MONROE COUNTY PURCHASING FUNCTION I. SCOPE AND OBJECTIVES A. At the request of the Monroe County Clerk of the Circuit Court, the Internal Audit Department has completed an audit of the Purchasing Section of the Office of Management and Budget. B. The audit objectives were to determine compliance with state and local laws, ordinances, and contracts, that policies and procedures properly document the system, whether internal controls have been established and are being followed, and whether the results accomplish the goal of securing economy in expenditure of county funds. II. METHODOLOGY A. We interviewed the following personnel during the audit to obtain information about the Purchasing Section: 1. The County Administrator 2. The County Administrator's Aide 3. The Purchasing Section Staff 4. The Senior Director of the Office of Management and Budget/Purchasing Director 5. The Budget Administrator 6. The Clerk's Finance Director 7. The Clerk's Chief Accountant B. The Internal Audit Department examined the following documents: 1. Florida Statutes related to procurement 2. Florida Statutes related to financial disclosure 3. Florida Administrative Code related to full and public disclosure 4. Florida Administrative Code related to forms and instruction 5. Monroe County Procurement Policies 6. Monroe County Administrative Instruction 7. Stuart Newman Associates Advertising Contract 8. Purchasing Audit Reports from other counties 9. Purchasing Policies from other counties 10. Florida Commission on Ethics Guide to the Sunshine Amendment and Code of Ethics for Public Officers and Employees C. The Internal Audit Department reviewed a random sample of purchase orders/requisitions to assure that each has received appropriate supervisory or Board of County Commission approval. We also verified that quotes, requests for proposals, bids, sole source, and emergency justifications were on file where applicable. For purchases made by means of contracts, we verified that the awards were subject to competition. D. Internal Auditors vouched payments of vendor invoices to related originating purchase orders or audit slip to ensure description, price, and quantity of goods were the same. Changes to invoice price, quantity, or items were discussed with purchasing staff. E. The Internal Audit Department examined purchase orders for evidence of splitting orders to circumvent the bidding process. F. Reviewed a sample of nonstandard material purchased. Discussed with Purchasing staff why the non standard supplies were needed. G. Purchasing staff completed schedules indicating how their time was spent for two weeks. Internal Audit staff charted their time. 2 r-i III. BACKGROUND A. Purchasing Section of the Office of Management and Budget Monroe County has a Procurement Policy Office, consisting of the Board of County Commissioners, which decides all matters of policy. The County Administrator is the Chief Procurement Officer. The Monroe County Purchasing Policy adopted by the Board in March, 1998 changed Purchasing from a Department under the Office of Management and Budget (OMB) to a Section within OMB. The Director of OMB is the head of the Purchasing Section, and is also referred to as the Purchasing Director. The Purchasing Section has four employees. In fiscal year 1997, Purchasing conducted 78 sealed bid openings, issued 9,135 purchase.orders (PO's), reviewed 235 contracts, and filled 1,221 stock orders worth $65,662. For fiscal year 1998, they opened 67 bids, issued 9,964 purchase orders, reviewed 200 contracts, and filled 1,205 stock orders worth $63,333. B. The Procurement Process Procurement is the process organizations use to obtain the supplies and materials needed to support operational activities. It is a universal high risk function and cuts across departments, programs, and agencies. Procurement is obtaining the right product, at the right time, from the right source, and at the right price. There are a host of processes in the function in which fraud, waste, and abuse might occur. The effectiveness of a procurement program depends partly on the organization's ability to centralize authority and responsibility. C. The Purchasing Agent software module The Purchasing Section began using a software module called The Purchasing Agent in May, 1998. This module allows user departments to input purchase requisitions by computer directly to the Purchasing Section. This software offers up to five levels of departmental approval before a requisition is transmitted to Purchasing, but this control is not presently being used. The Purchasing staff checks each requisition for authorized buyer name, appropriate dollar amount, whether the requisition is for a stock item, and additional approval if for out of county travel. Then they direct the Purchasing Agent module to approve the requisitions for conversion to PO's. This software renders the approval process an all or nothing decision. Problem requisitions must be either approved or deleted. There is no provision to hold such requisitions in suspense. Purchasing converts requisitions to PO's five times each workday. After conversion, they direct The Purchasing Agent to interface with the Finance Department's Fund Accountant module. This interface encumbers the new PO's against their respective line item budget balances. 3 1 ' D. The Purchasing Section's stockroom In Chapter 15 - CENTRAL STORES, the Monroe County Purchasing Policy directs the Office of Management and Budget (OMB) to maintain a complete inventory of consumable materials and supplies. To this end, the Purchasing Section of OMB operates a stockroom at the Stock Island location. When it is economically feasible, Purchasing orders paper goods and office supplies in bulk for the stockroom. County departments order stockroom items from Purchasing, which fills the orders and arranges for their delivery. The Purchasing Policy intends for Purchasing's stockroom to provide more effective control and consolidation of purchases. The stockroom also permits buying frequently purchased items in advance, thus making them readily available for use. E. Encumbrance accounting Encumbrances are amounts set aside to account for unfulfilled commitments, such as purchase orders. When a PO is issued, no expenditure is recognized until the goods or services ordered are received. By setting aside, or "encumbering", the amount of the PO, the commitment to expend that amount is recognized. When the goods or services are received, the expenditure is recognized and the encumbrance is reversed, to avoid double charging the relevant line item account. Encumbrances are used in the general fund, special revenue, and capital projects funds. Encumbrances are not used for routine expenditures, such as salaries, which are ascertainable in advance due to other controls. 4 IV. CONCLUSIONS A. A purchase order (PO) was issued which was based on a contract approved by the Board of County Commissioners. This PO's amount was over $10,000 higher than the contract amount. Such purchase orders should be compared with their underlying contracts' terms prior to the PO's issue. B. Four libraries have blanket PO's for cleaning services performed by the same vendor. For each PO's first payment, the invoices submitted referenced the wrong PO. Had this not been caught and corrected, PO balances and line item expenditures would have been misstated. Invoices submitted for payment should refer to their corresponding PO's. C. Placement of the PO number on the PO form changed in 1998. The PO number is now too close to the top of the form. As a result, printing the new forms sometimes renders the PO numbers either illegible or missing altogether from the forms. PO numbers must be legible in order to be useful. D. When Purchasing issues a PO, the PO's amount is encumbered in the budget. Some departments later submit audit slips for these purchases, without regard for the encumbered amounts. Payments of audit slips do not reverse encumbrances. Line item accounts get double charged thereby, once by the encumbrance, and again by the audit slip expenditure. Such outstanding PO's should be identified, and their encumbrances reversed. E. The Purchasing Policy mandates the use of purchase orders for five categories of goods and services, and specifically exempts two other categories from any purchase order requirements. Departments may avoid the purchase order system and its inherent controls in all other cases. Management should strengthen the policy requiring purchase order use. F. Purchasing Policy does not require purchase orders for Contracts and Construction Projects. Consequently, these often large commitments of funds are not set aside, or "encumbered," in the budget. Putting Contracts and Construction Projects on PO's would automatically encumber these commitments. Encumbering such committed funds would help OMB & user departments to determine the uncommitted balances of appropriations. G. Some Monroe County employees meet the statutory definition of "local officers," because they have purchasing authority greater than $1,000. Section 112.3145, Florida Statutes (F.S.), imposes a financial disclosure requirement on "local officers" having such purchasing authority. These employees are not filing the required Statement of 5 Financial Interests. Employees falling under this statute should be filing the applicable financial disclosure documents annually. H. Monroe County does not notify employees affected by financial disclosure of their reporting obligation under Section 112.3145, F.S. The statute requires such notice to newly appointed employees qualifying as "local officers." Management should establish procedures to inform these employees of their financial disclosure reporting duties. I. Because of some departments' piecemeal approach to procurement, many PO's cost more to process than the purchased items themselves. More efficient methods for making low value purchases should be explored. Reducing the number of PO's and their attendant clerical work would allow Purchasing's buyers to do more true buying, including vendor contact. J. The Fleet Management Department initiated one-third of all purchase orders issued in June, 1998. Costs associated with PO issuance would be better controlled if this volume of PO's were reduced. K. Monroe County Purchasing Policy mandates a central store of consumable materials and supplies. The Policy proposes making certain frequently purchased items readily available. According to Purchasing staff, this stockroom of paper goods and office supplies will be eliminated upon the Purchasing Section's move to the Gato Building. Management should weigh the cost of keeping the stockroom against its benefits as enumerated in the Policy. L. The Purchasing Agent software allows user departments up to five levels of approval over their requisitions. However, Purchasing has not set up the approval definitions table necessary to implement this control. Purchasing presently checks buyer name, an unsecured, optional field, for a requisition's authorization. Good internal control of paperless transactions requires better security over approval authority. M.The Purchasing Section keeps a list of signatures authorized to approve purchases. This list becomes outdated due to changes of personnel or delegated authority. To keep the list current would require a procedure to notify Purchasing whenever changes occur which affect purchasing authority. N. Monroe County's present Purchasing Policy does not require price quotes for items up to $5,000, and bypasses the training and knowledge of Purchasing staff in such areas as state contracts, discounts, freight costs, and warranties. Consequently, the County making many purchases without the benefit of the Purchasing Section's expertise. O. Some purchase order amounts are being increased and paid without receiving any additional approval. Monroe County has no policy regarding purchase order increases. 6 Good internal control requires justification for and approval of PO increases above certain ceilings. P. Some cost centers had negative balances as of April, 1999. This is because the system for checking available balances warns of, but does not stop, entries which will over expend their cost centers' balances. The Clerk's Finance Department, Purchasing, and the Office of Management and Budget are changing the system from warning of over budget transactions to preventing them. Q. The Purchasing Section does not check whether expenditure line item accounts are correct before approving purchase orders. In the interest of timely PO processing, Purchasing requested the vendor to customize The Purchasing Agent module to display only a requisition's cost center, not the line item account. Now that the software is operative, its additional features should be explored to achieve its full benefits. R. Purchasing does not combine multiple requisitions to the same vendor into a single PO. The Purchasing Agent module's "uncustomized" menu has options available that are not currently being used. Some requisitions to a single vendor may be combined into a single PO. S. Receiving reports are not required to document that goods ordered are received. Receiving reports provide additional control over the payments for purchases. T. Some departments phone their supplies orders in to Purchasing, eliminating signatures from the supplies requisitioning process. Buyers of stockroom supplies occasionally also fill departments' orders for supplies. Authorized signatures should support stock orders, and procedures should prohibit buyers of supplies from issuing supplies. 7 V. AUDIT FINDINGS A. Review of Purchase Orders We reviewed a random sample of 50 purchase orders (PO's) issued between October 1, 1997 and July 31, 1998. Our review revealed the following: 1. Purchase Order #190739 overstated by $10,400 Findings: Sampled PO #190739 to Stuart Newman Associates was $10,400.39 higher than the contract amount approved by the Monroe County Board of County Commissioners for fiscal year 1998. The contract states that the contract amount shall be adjusted annually in accordance with the Consumer Price Index (CPI) for wage earners and clerical-workers in the Miami, Florida area indexes, based on the annual average CPI compilation of the previous calendar year. The purchase order was for $272,685, which was a 7.4% change from the previous calendar year. The corresponding change in the CPI was only 3.3%. Stuart Newman Associates billed Monroe County $22,723.75 per month. The Clerk's Finance Department reduced the last payment by $10,400.39 to recover the overpayment. The amount of a PO should not exceed the amount of the contract that the PO represents. Recommendations: 1. The Purchasing Section should verify that its PO's do not exceed the contractual amounts approved by the Monroe County Board of County Commissioners. County Administrator's Response: 1. The sampled PO #190739 was reviewed by Purchasing staff. Purchasing staff contacted the TDC, who originated this purchase order, and requested explanation as to why the PO amount would exceed the contract. TDC informed Purchasing that they intended to encumber the entire amount budgeted. Purchasing staff contacted Finance about this issue and was advised to issue this purchase order for the total budget amount. Purchasing routinely compares purchase order amounts against BOCC minutes or contacts the originating department to verify that the PO amounts are not exceeded. Clerk's Response: 1. There has been a change in personnel responsible for monitoring TDC expenditures. The new TDC accounts payable clerk has received additional training concerning 8 1- contractual payments. Further, we have provided enhanced supervisory oversight for this phase of the TDC accounts payable function. The Finance Department of the Clerk's Office has no review or management responsibilities concerning the purchase order process other than those which fall within our constitutional preaudit function. An example of this would be the rejection of a purchase order issued for an expenditure considered to be unlawful. • 2. Incorrect amounts paid on Blanket Purchase Orders Findings: L & N Dependable Janitorial had four blanket purchase orders during fiscal year 1998 for cleaning the Key Largo, Big Pine, Islamorada and Marathon Libraries. The first payment on each PO was misapplied as follows: Date PO# Location/Cost Center First Payment Amt per PO 11/06/97 191302 Big Pine 62012 $ 557.60 $ 285.60 11/06/97 191326 Islamorada 62008 484.60 435.60 11/06/97 191327 Marathon 62006 285.60 484.60 11/06/97 191328 Key Largo 62010 435.60 557.60 The Clerk's Finance Department corrected the financial records during this audit. The user department should match invoices to the correct PO's for payment. The PO balances and line item expenditures would be misstated if the items had not been identified and corrected. Recommendations: 1. County Departments should ensure that invoices match the PO's submitted. County Administrator's Response: 1. The Purchasing Department will remind the departments of this procedural requirement, which is clearly stated in the Vendor Letters. 10 3. PO number placement on the new Purchase Order form Findings: In 1998 the Purchasing Section changed the format of its purchase orders. The new format puts the PO number too close to the top of the form. Sometimes printing the forms renders the PO numbers either illegible or missing altogether. Also, PO's are filed in Finance using a two-hole punch at the top of the form. This can obscure even a legible PO number, due to the number's placement on the form. To be useful, the PO number must be legible. With the present PO number placement, sometimes the PO number cannot be read. Recommendations: 1. The Purchasing Section should consider using a top margin, or other technique to ensure PO numbers' legibility, when printing purchase orders. County Administrator's Response: 1. When Purchasing Department was first shown the new Purchasing system and new forms, this was one of the problems directed to the software vendor. It is not possible for Purchasing to unilaterally modify the Purchasing system. The software vendor only allowed a few minor changes to be made that were not to the satisfaction of the Purchasing Department. Purchasing will request, through Finance, that this modification be made. Clerk's Response: County Administration should communicate directly with the software vendor concerning issues of functionality and training on the purchasing module. The Clerk's Finance Department is concerned only with matters involving the interface between the purchasing module and the financial management application. 11 4. Paid Purchase Orders still encumbered Findings: When a purchase order is issued, the amount of that PO is encumbered, that is, charged against the budget. Sometimes a department submits an audit slip for payment of this purchase, without reference to the outstanding and encumbered PO. Payment of an audit slip creates a charge to expenditures, but does not reduce the budgetary encumbrance created by the PO's issuance. This results in double charging the budget for the purchase, both as an expenditure and as an encumbrance. Purchases should not charge the budget more than their costs. Recommendations: 1. The Purchasing Section should periodically run aging reports to select PO's without any payment activity for an unreasonable length of time. These PO's should be researched to determine if they may be closed. County Administrator's Response: 1. Purchasing Department was not authorized by Finance to run the reports (part of fund accounting), which are necessary to review open purchase orders. However, in August, 1999, Purchasing staff was given authorization and brief training by Finance over the phone to run this type of report. Purchasing Department now runs this report, marks the status of each purchase order and forwards the report to Finance for necessary actions. Clerk's Response: The County's Office of Management and Budget has the capability of printing all of the necessary reports available from the system, for all departments, at their location. 12 B. Review of Check Payments We reviewed a random sample of 50 checks issued between October 1, 1997 and July 31, 1998. Our review revealed the following: 1. Purchases made without Purchase Orders Findings: Monroe County Purchasing Policy partially describes what purchases of goods or services must use the purchase order process. In Chapter 7, D. 2, the Policy states that: "The Purchase of the following goods and or services require (sic) a purchase order and shall be regulated by the appropriate Administrative Instruction. a) All radio communications service and equipment... b) All telephone systems... c) All computers and or data communications... d) Business cards... e) All travel..." In our sample, ten checks paid for goods and services acquired through purchase orders. Another 18 payments were for goods and services that could have been bought using purchase orders, but were not. Seven of the 18 were for items named in 7, D. 2 as requiring purchase orders. See Exhibit A - Monroe County Purchasing Policy Chapter 7, D, 1 & 2. Purchasing Policy also specifies employee expenses and interdepartmental billings as the only two exceptions to purchase order use. This leaves the use of purchase orders up to departmental discretion for a wide range of goods and services, such as construction projects. The PO system presently is the only way to encumber budgeted funds for planned expenditures. Allowing departments to avoid the purchasing system when acquiring goods and services weakens control over those expenditures. Recommendations: 1. To better control expenditures for purchases, Monroe County management should clarify the Purchasing Policy regarding using purchase orders. County Administrator's Response: 1. The items regulated by Administrative Instruction are for special purchases that require other department approvals prior to ordering (e.g., Computers require Information Systems approval). It clearly describes in the Purchasing Policy, Chapter 7, D, 1, items that are to be processed without a purchase order. In nearly all such cases, departments send audit slips directly to Finance for payment. The Purchasing Department will remind the departments of these requirements. 13 2. When the new system was installed, the departments sent payments to Finance with purchase orders. However, Finance staff occasionally bypasses the purchase order and pays the invoice by audit slip. This may be due to the problem of duplicate vendor number. Clerk's Response: The only time that the Clerk's Finance Department would void a purchase order and proceed with the processing of an invoice is when the vendor or certain vendor information, such as the address, is incorrect. This is done to expedite invoice processing, and to prevent misdirected payments. 14 2. Contracts and Construction Projects not encumbered Findings: Monroe County Purchasing Policy does not require PO's for contracts and construction projects. Since these expenditures avoid the PO system, they are not encumbered against the budget, even though they represent large budgetary commitments. Encumbering unperformed contracts gives early warning of potentially over expending appropriations. If these potential commitments were entered as requisitions in the Purchasing Agent module, it would record them, in"this module only, as Requisitions Outstanding against the budget (See Exhibit B - Requisitions Outstanding). User departments and OMB would have a better idea sooner of how much they are in the process of committing. These requisitions would not be converted to PO's until after Board approval and contract signing. In bypassing the PO system, contracts and construction projects also avoid the encumbering process, thus losing the budgetary control benefits which it features. Section 129.07, F.S., indicates that intentionally over expending budgeted funds may, in some instances, subject certain individuals to personal liability. Recommendations: 1. In order to better control expenditures for purchases, management should require the use of purchase orders for contracts and construction projects. County Administrator's Response: 1. Most contracts and construction projects have never been handled by purchase order. This recommendation has been made before and discussed with the departments. The departments raised several questions about the extra paper work and delays this requirement would create. Purchasing will address this recommendation to the departments again to determine how it might be implemented and how their objections might be answered. 15 C. Financial Disclosure requirements for employees with purchasing authority greater than $1,000 1. Financial disclosure noncompliance Findings: Some Monroe County employees meeting the local officer definition are not filing the Statement of Financial Interests. Section 112.3145, F.S., defines a "local officer" to include any person having purchasing authority over $1,000 for a political subdivision. This law and good internal control policy require local officers to file a Statement of Financial Interests (See Exhibit C - Form 1) annually with the Supervisor of Elections. We confirmed this requirement's applicability to employees of the Board of County Commissioners and employees of Constitutional Officers with the Commission on Ethics. Section 112.317, F.S., provides penalties for failure to make the required disclosures. According to the Florida Commission on Ethics Guide to the Sunshine Amendment and Code of Ethics for Public Officers and Employees, conflicts of interest may occur when public officials are in a position to make decisions which affect their personal financial interests. This is why public officers and employees, as well as candidates who run for public office, are required to publicly disclose their financial interests. It also helps citizens monitor the considerations of those who spend their tax dollars and participate in public policy decisions or administration. Form 1 includes the reporting person's sources and types of financial interests, such as the names of employers, and addresses of real property holdings. Recommendations: 1.County management should seek the County Attorney's opinion about which employees must file the Statement of Financial Interest. The employees identified should be immediately notified of the filing requirements, and be given technical assistance in the completion of the forms, if necessary. County Administrator's Response: 1. Administration has requested a legal opinion from the County Attorney's Office. 16 2. Notice to affected employees required Findings: Monroe County has no procedure for notifying its local officers, as defined in Section 112.3145 (1) (a) 3., F.S., of their duty to comply with financial disclosure. Subsection (7) of this statute directs the appointing official or body, or a designee, to notify each newly employed local officer of these disclosure requirements. Notice aids employees in complying with the statute, and invalidates ignorance as an excuse for noncompliance. Recommendations: 1.Management should establish a procedure to notify those employees with purchasing authority greater than $1,000 of their financial disclosure reporting obligations. County Administrator's Response: 1. See answer to V.C.1. 17 D. Purchase Orders for low cost items We reviewed all 910 purchase orders issued in June, 1998. Our review revealed the following: 1. Numerous low cost purchase orders issued Findings: The Purchasing Section is limited in efficient alternatives to regular purchase orders for buying low cost items. As a result of some departments' piecemeal approach to procurement, Purchasing issues many PO's that cost more to process than the cost of the items themselves. We obtained estimates of local Florida governments' costs to issue a single PO which ranged from $18 to $100, with a median estimate of $50/PO. More efficient methods for making low value purchases should be explored. Of the 910 PO's reviewed, we found 331 (36.4%) PO's were for $50 or less. All Purchase Order Dollar Values 6.4% 17.3% • <$ 10 47.7% <$ 30 • <$ 50 11.6% <$100 17.0% U $100+ June, 1998 Alternative ways of making small purchases include having more annual contracts. At present there is no blanket purchase order for office supplies. Another method would be to have departments order supplies once a week, combining orders until they exceed a designated amount, such as $30. Purchasing could consolidate orders of supplies where appropriate. Another method used by some counties is to require additional approval for purchases of irregular or nonstock items, to protect against inadvertent purchases of items not related to agency functions, or to begin stocking recurringly purchased items. A reduction in the number of purchase orders would result in the individual buyers tending to less clerical and data entry work and doing more true buying work, including vendor contacts. At the present time, Purchasing employees spend about 9.8% of their time contacting vendors. See Exhibit D - Distribution of Work Hours. 18 Recommendations: 1. County Management should evaluate the different methods to reduce the number of purchase orders, and implement those methods determined to be most useful. County Administrator's Response: 1. The audit pointed out that their survey indicated that elsewhere in the state, the cost per purchase order varied from $18 to $100, and the median was $50. It should be noted that our cost, at $25 per purchase order, is well below the median and indeed near the bottom of the survey range. 2. A purchasing workshop was held to review the Purchasing Policies with the departments and Purchasing staff emphasized the use of Blanket Purchase Orders to further reduce the cost per purchase order. 3. Even though our cost per purchase order is already quite low compared to other local Florida governments according to the survey, purchasing will continue to research means to lower the costs further. • 19 2. Fleet Management responsible for many purchase orders Findings: Our review showed that Fleet Management initiated 303 (33.3%) of the 910 PO's issued in June, 1998. Fleet's percentages of PO's under $10, $30, $50, and $100 exceeded those percentages for all PO's. Of Fleet's 303 PO's, 140 (46.2%) were for less than $50. Fleet Management should seek more efficient ways to make low cost purchases. We repeat by reference the alternatives for making small purchases discussed in Finding D. 1. Fleet Mgt PO's Dollar Values 8.6°%° 35.6% 23.4% li <$ 10 ▪ <$ 30 . <$ 50 <$100 18.2% 14.2% $100+ June, 1998 Recommendations: 1. County Management should evaluate different methods to reduce the number of small purchase orders, and implement those methods determined to be most beneficial. County Administrator's Response: 1. Last year Fleet Management solicited bids for an auto parts contract and entered into a contract with Napa Auto Parts in July of 1998. Fleet Management routinely uses Blanket Purchase Orders. However, the number of purchase orders issued to Fleet Management has drastically decreased since the time period covered by this audit finding. 20 3. Stockroom to be eliminated Findings: The Senior Director of the Office of Management and Budget stated during interviews that Purchasing would no longer have a stockroom when they move to the Gato building. Therefore, Purchasing would no longer be ordering office and paper supplies in bulk. After the move, county departments will order these supplies directly. The numbers of purchase orders and of invoices will increase, and quantity discounts will be lost. After moving to the Gato building, departments will also have to use personnel time to order routine office supplies from vendors. According to the Monroe County Purchasing Policy, the purposes of the "complete inventory of stockpiled, consumable materials and supplies" are to "permit more effective control and consolidation of purchases," and to "permit advance procurement of certain items, frequently purchased in small quantities for immediate consumption, thus making these items readily available as issue." Studies have shown that departments purchasing independently can increase costs when departments fail to make use of available statewide contract prices. Recommendations: 1. County Management should evaluate the effects of eliminating the benefits of the Purchasing stockroom. County Administrator's Response: 1. Elimination of the stockroom will not result in loss of quantity discounts. Our supplier offers the same discount directly to the departments that they offer through purchasing. 2. When the stockroom is eliminated, there will be no increase in the amount of time required for the department to order routine supplies. In fact, we expect that the time required to place, fill, and receive office supply orders to actually decrease. The department will simply fill a different form, similar to the stock form they fill now. 3. County management has evaluated the effects of elimination of the stockroom and found that the Purchasing Department will still be ordering office and paper supplies when the stockroom is eliminated. Purchasing Department currently purchases 90% of the supplies stocked by Office Depot through the National Associations of County (NACO) agreement and receives the nationally negotiated price no matter the quantity. The supplies will be delivered the next day, directly to the department. 4. There is no space available at the Gato Building for a stockroom, and to add space for a stockroom, which handles less than $50,000 per year in gross orders, and at no savings to the County, would be cost prohibitive. 21 E. Requisition and Purchase Order approval 1. Requisitions transmitted by computer not approved Findings: The requisitions transmitted by computer to Purchasing are not approved within the originating department. The Purchasing Section has not set up the Requisitions Approval Definitions Table, which establishes approval privileges by cost center using security ID's. The requisition process permits user departments to enter and maintain requisitions for supplies and services. At present, Purchasing uses the buyer name as the authority for a requisition up to $5,000. There is no security over this data field. Anyone can type any name in this field. The old AS 400 system transmitted the requisition to Purchasing along with the full name of the employee logged on. Then Purchasing would check the name to ensure the employee was authorized at this dollar level. The approval status section of the Aged Purchase Order Listing confirms that system approval is not being utilized. See Exhibit E - Aged Purchase Order Listing. At present, the only safeguards against dummy vendors being created in the system are the Clerk's Finance Department request for a Federal taxpayer ID number, and the segregation between new vendor selection and new vendor recording duties. Paperless transactions require the use of internal security features of the automated purchasing system. Good internal control requires approval at the requisition level. Recommendations: 1. The Purchasing Section should use the security capabilities built into the Purchasing Agent software. County Administrator's Response: 1. Purchasing will investigate and test the features of the Requisitions Approval Definitions Table to improve control over purchasing. See general comments above. 22 1 I • 2. Authorized signature list Findings: The Purchasing Section keeps a list of signatures authorized to approve purchases. There is no system to notify Purchasing of changes in this authority, such as additional delegated personnel, new hires, or terminations. Instead, Purchasing annually requests county departments to update this list. Human Resources could notify Purchasing of terminations as they occur, and Purchasing could inform the Clerk's Finance Department. The list in use on May 1, 1999 still included two former County Commissioners, two former division directors, and other former employees. Without any procedure to notify Purchasing of such changes of authorization, the signature list can quickly become outdated before its next update. This can result in unauthorized purchases mistakenly being approved. Recommendations: 1. Management should establish a procedure to notify the Purchasing Section of changes in purchasing authorization in order to keep the signature list up to date. County Administrator's Response: 1. Purchasing Department keeps on file a signed, detailed Purchasing Authorization Form for each user, by Department and by Division. This form has to be approved • and signed by the respective Department and Division managers. 2. In addition to the Purchasing Authorization Form, Purchasing requests a signature list on behalf of the Finance Department for their use in accounts payable. 3. Purchasing will be included in the routing for Personnel Action Forms to ensure that transfers and resignations will be promptly handled in the Purchasing system. 23 3. Authorized signature purchasing limits Findings: Purchasing's authorized signature list shows 97 employees with purchasing authority of at least $5,000. The $5,000 limit only requires a "request to purchase" form. Price quotes are not required. This means that $5,000 of uncontrolled purchasing authority has been delegated to a significant part of the work force. Good internal control indicates that price quotations help to assure that Monroe County is getting the lowest and best prices in its purchasing function. The State and Local Government Program Control and Audit: Handbook for Managers and Auditors states that the number of bids required increases as the value of the purchase increases. Purchases of between $500 and $1,500 often require three written bids, while purchases exceeding $1,500 should not be made until at least five written bids have been obtained. Pinellas County, for example, requires no less than three price quotes for purchases over $2,000. Monroe County's present Purchasing Policy does not require price quotes for items up to $5,000, and bypasses the training and knowledge of Purchasing staff in such areas as state contracts, discounts, freight costs, and warranties. At a minimum, this results in the County making many purchases without the benefit of the Purchasing Section's expertise. Recommendations: 1. Management should consider the benefits of having the Purchasing Section obtain price quotes and place orders. County Administrator's Response: 1. In 1994 the Purchasing Policies were revised and the dollar limit was changed from $1,000.00 to $5,000.00. This policy was developed by the Administration and approved by the Board of County Commissioners. 24 4. Purchase Order increases Findings: The Purchasing Section issues PO's for specific dollar amounts. The Purchasing Policy stipulates precise levels of spending authority. Some employees increase PO's after issuance without any additional approval. Purchasing and accounts payable employees suggested that there had once been a policy limiting PO increases to a percentage of the PO total, but that it no longer was in effect. We did not find any policy addressing PO increases. Good internal control requires justification for and approval of PO increases above certain ceilings. Recommendations: 1. Management should establish a policy to control PO increases beyond given limits. County Administrator's Response: 1. Purchasing will recommend that the Purchasing Policy be amended to restrict the amount by which a purchase order can be exceeded to 20%. This would be in keeping with previous policy limit of 20% without requiring a new purchase order and requisite approvals. 25 I ! F. Negative cost centers Findings: Interviews with OMB staff revealed that some cost centers had negative balances as of April, 1999. For example, Jolly Roger Estates MSD had a negative balance of $14.63. This amount is immaterial, however, it brought to our attention potential problems with the new program as it is now defined in the system parameters. A capital outlay purchase order was approved for $74,750. This left $466.52 available in the line item Capital Outlay - Infrastructure, after posting the PO. However, other entries, charged to salaries, caused the whole fund to become negative. The system warned at the time the entries were posted that salaries were negative. The Office of Management and Budget requested the Clerk's Finance Department to change the flag when the system checks the budget for sufficient available funds from warning to fatal. This means that a requisition, purchase order, expenditure or journal entry will not be processed if the line item's available funds are insufficient. This automatic flag should relieve OMB and the Clerk's Finance Department of research to ascertain why a line item or cost center is negative, and of requests for budget transfers or returns of invoices. The requisitioning department would be responsible to request budget transfers if funds are insufficient in their line items before the item is purchased or posted. The Clerk's Finance Department, Purchasing, and the Office of Management and Budget should coordinate the change in system parameters from warning to fatal. Recommendations: 1. Monroe County Management should notify the departments of the change in policy so that the planning time for ordering supplies, equipment and services is appropriate. County Administrator's Response: 1. Purchasing will work with Finance to change the system parameters from "warning" to "fatal" when purchase requests attempt to exceed budget and notify departments of this procedural restriction. See general comments. 26 1 • G. Purchasing Section not using all of The Purchasing Agent module's available controls 1. Accounts charged not checked before Purchase Order approval Findings: - The Purchasing Section does not check whether items are charged to the correct expenditure accounts before mass approving requisitions for conversion to PO's. Tresun customized The Purchasing Agent software at Purchasing's request to limit their menu to eight lines. See Exhibit F - Purchasing's Customized Menu. One such limitation is to display only a requisition's cost center, and not the line item account charged. The software has controls available that are not currently being used. When this software module was installed, timely processing of PO's and invoices was the most important issue. This module's capabilities should now be explored to achieve its full benefits. Recommendations: 1. The Purchasing Section should receive additional training, and explore all aspects of The Purchasing Agent software module. County Administrator's Response: - 1. Purchasing did not request modifications to the Purchasing software system that would prevent the full account number from being printed on the requisition report. The software vendor advised the Purchasing Department that requisition reports could only show the cost center and not the entire account. This is a restriction in the new system over which Purchasing has no control. 2. Purchasing is required to coordinate software training through Finance and has had difficulty in getting the software vendor to provide training in keeping with the original software contract. When the vendor was supposed to be training, they spent much of their time fixing software problems. Purchasing should be given the authority to deal more directly with the software vendor. See general comments. 27 2. Requisitions not combined Findings: The Purchasing Section does not combine multiple requisitions to the same vendor into a single PO. The Purchasing Agent module's customized mass approval function does not offer combining requisitions into a single P0. The module's "uncustomized" menu has options available that are not currently being used. The Purchasing Agent instructions state "The Convert Requisitions combine by vendor option combines line items on multiple requisitions to a single purchase order for each vendor with the same vendor number and address. When these requisitions are selected, the line items are combined on one purchase order for the appropriate vendor." See Exhibit G - Purchasing Agent Standard Menu #D. Some requisitions to a single vendor should be combined into a single PO. Recommendations: 1. The Purchasing Section should receive additional training, and explore all aspects of The Purchasing Agent software module. County Administrator's Response: 1. Although there is an option to combine PO's in the system, the new system issues an error message when this option is invoked. This problem has been brought to the software vendor's attention several times without appropriate action. Purchasing will attempt again to have the vendor fix the software problem to allow this function. Purchasing should be given the authority to deal more directly with the software vendor to correct problems. Clerk's Response: The Clerk's Office decided to acquire the existing Tresun Financial Management Information System after an extensive procurement process. This decision was based on the software's accounting and financial management capabilities, and also on the fact that it was available through a very advantageous statewide contract. However, while the Clerk as accountant/auditor to the Board of County Commissioners is responsible for the accounting records of the County, the decision to acquire the Tresun purchasing module was made solely by County Administration. The Clerk's Finance Department is only concerned with the interface of the purchasing application with the accounting application. Therefore, County Administration and the Purchasing Section should communicate directly with the software vendor concerning issues of functionality and training on the purchasing module. Comprehensive and detailed procedures manuals have been provided for all of the financial management and related applications, including purchasing. 28 H. Receiving reports not required Findings: Receiving reports generated by vendors indicate the quantity and description of the goods shipped, and whether any items are back ordered. Receiving reports provide additional independent documentation of purchases. Accounts payable does not require receiving reports to document what goods have been received. Vendors do not always provide receiving reports, making it difficult to insist on them before paying invoices. However, receiving departments can generate receiving reports 'with the new Tresun software. Receiving reports help to prevent making full payments for partial shipments. Recommendations: 1. Management should consider the benefits of requiring either vendor generated or system generated receiving reports before paying invoices. County Administrator's Response: 1. Most vendors do not supply a receiving ticket but usually include a packing list with the delivered goods. In many cases, the vendor does not provide a separate packing list or receiving ticket, especially for purchase of services. Finance has allowed the payment of invoices for goods based on an authorized signature, which indicates that the goods were received. In those cases where the packing list is available, it is our procedure to send it along with the invoice when making payments. 2. Vendors are advised of the requirement to include a delivery receipt and/or packing slip or receiving ticket in our Vendor Letters. See general comments. 29 I. Filling orders for stockroom supplies Findings: Some departments telephone their stock orders to the Purchasing Section. Purchasing personnel fill in the forms which support these orders, including signing the authorized signature line intended for the requesting department's staff. Buyers of stockroom supplies also fill stock orders when Purchasing is shorthanded. These procedures substantially weaken control over stockroom supplies, especially when coupled with the fact that no one signs for receipt of stockroom supplies delivered by courier. The telephone stock order process could be used to obtain goods from the stockroom that were never ordered or received by any department. • Recommendations: 1. Purchasing personnel should obtain authorized signatures for all stock orders before filling them. 2. Purchasing Section buyers should not fill orders for stockroom supplies. 3. Purchasing personnel should discontinue the practice of accepting stock order requests by telephone. County Administrator's Response: 1. All the recommendations from the auditors on this item have already been instituted. A buyer will only fill stock orders if there is no other staff members in the office. 30 VI. Exhibits Exhibit A Monroe County Purchasing Policy - Purchase Orders Chapter 7, D 1 & 2 Munroe County Purchasing Policy included in the contract. "Monroe County's performance and obligation to pay under this contract. is contingent upon an annual appropriation by the • 13O('(, - • �. Public Entity Crime Statement. All invitations to hid. request for proposals and any contract document shall contain a statement which reads as follows (Section 287.133 FS): "A person or affiliate who has been placed on the convicted vendor list following a conviction liar public entity crime may not submit a bid on a.contract to provide any goods or services to a public entity. may not submit a bid on a contract with a public entity for the construction or repair ol'a public building or public work, may not submit bids on leases ()I'real property to public entity. may not be awarded or perform work as a contractor, supplier. subcontractor, or consultant under a contract with any public entity. and may not transact business with any public entity in excess ol'the threshold amount provided in Section 287.017. for CATEGORY TWO for a period of 6 months from the date I'being placed on the convicted vendor list.'' 3. Ethics Clause." Mach contract/agreement entered into by the County shall contain in accordance with Section 5 (b) Monroe County Ordinance No. OI O-I')9O the following ethics clause., "(Person or business entity) warrants that he/it had not employed, retained or otherwise had act on • his/its hehall'any former County officer or employee subject to the prohibition of Section 2 of Ordinance No. OI0-I990 or any County officer or employee in violation of Section 3 ol'Ordinance No. 020-I )9)t). For • breach or violation Of this provision the County may. in its discretion. terminate this contract without liability and may also, in its discretion, deduct from the contract or purchase price, or otherwise recover the lull amount olany lee. commission. percentage. gilt. or consideration paid to the former County officer or employee." C. CPI Computation •the contact/agreement (lease) amount agreed to herein n uv he adjusted annually in accordance with the percentage change in the Consumer Price Index (CPI), National Index for Wage Earners and Clerical \Yorkers, and shall be based upon the annual average CPI computation from January I through December 31 of'the previous year. D. Exceptions l. 'There are certain expenditures for which the processing of a purchase order is unnecessary. The Wowing should be made without purchase orders, but audit slips must be attached to invoices before being sent to Clerk's Finance l)epartment for payment: Page 16 mill Revised 2/25/98 Monroe County Purchasing Policy a) Employee expenses such as conference expenses, hotel expenses, mileage and other reimbursable expenses in performance of day-to- - • day duties. b) Interdepartmental charges - billings for specific office repairs, fuels from bulk storage, County vehicle maintenance or repairs. etc. 2. The Purchase of the following goods and or services require a purchase order and shall be regulated by the appropriate Administrative Instruction. a) All radio communications service and equipment - including but not limited to cellular telephones two-way personnel and vehicle radios, beepers and etc. Monroe County Administrative Instruction #1011; Monroe County Administrative Instruction I#5800.2. h) All telephone systems, lines, services. equipment and audit costs. Illy same. Monroe County Administrative Instruction #440I.()I. c) All computers and or data communications hardware, software, product and services. Monroe County Administrative Instruction #4401.01. d) Business cards are subject to Monroe County Administrative Instruction ##4800.2. e) All travel shall be approved and/or regulated by the Monroe County Administrative Instruction #1003.3. Chapter 8 - EXCLUSIONS A. Sole Source 'Purchase of commodities and services from a single source may be exempted from Formal Competition by written justification from the requesting department ol the Following conditions: 1. The vendor is the only one available that can properly perform the intended function or supply the items needed. 2. The public emergency For the requirements will not permit a delay resulting from competitive solicitation. 3. (If Applicable) The proposed subcontractor is a qualified small minority business enterprise or a Section 8 (a) contractor under a set-aside subcontract award. . Page 17 UA7n Revised 2/25/9X Exhibit B Requisitions Outstanding 2/26/99 MONROE COUNTY BOCC PAGE 1 ACCOUNTING PERIOD: 5/99 FND/COST CTR EXPENDITURE BUDGET STATUS ELECTION CRITERIA: expledgr.key_orgn='23503' FUND - 504 - FLEET MANAGEMENT FUND OFCL/DIV • 1013 - PUBLIC WORKS FUNCTION - 5100 - GENERAL GOVERNMENT FND/COST CTR - 23503 - FLEET MGT SVC OPERATIONS iCTIVITY - 5190 - OTHER GENERAL GOV SVC REQUISITIONS ENCUMBRANCES YEAR TO DATE AVAILABLE YTD/ ACCOUNT TITLE BUDGET OUTSTANDING OUTSTANDING EXPENSES BALANCE BUD J30340 OTHER CONTRACTUAL SERVICE .00 .00 .00 .00 ' .00 .00 530430 UTILITY SERVICES .00 .00 .00 .00 .00 .00 130451 RISK MANAGEMENT CHARGES 99,195.00 .00 .00 .00 99,195.00 .00 130460 REPAIR AND MAINTENANCE 380,703.00 50.00 29.274.16 142,826.10 208,552.74 .45 J30520 OPERATING SUPPLIES 14,000.00 .00 1,698.08 5.390.60 6,911.32 .51 TOTAL OPERATING EXPEND/EXP 493,898.00 50.00 30,972.24 148,216.70 314,659.06 .36 i60640 CAPITAL OUTLAY-EQUIPMENT 15,000.00 .00 .00 4,850.00 10.150.00 .32 DOTAL CAPITAL OUTLAY 15.000.00 .00 .00 4.850.00 10.150.00 .32 -OTAL FLEET MGT SVC OPERATIONS 508,898.00 50.00 30,972.24 153,066.70 324,809.06 .36 TOTAL PUBLIC WORKS 508,898.00 50.00 30,972.24 153,066.70 324.809.06 .36 'UAL OTHER GENERAL GOV SVC 508,898.00 50.00 30,972.24 153,066.70 324.809.06 .36 TOTAL GENERAL GOVERNMENT 508,898.00 50.00 30,972.24 153,066.70 324,809.06 .36 'OTAL FLEET MANAGEMENT FUND 508.898.00 50.00 30,972.24 153,066.70 324,809.06 .36 TOTAL REPORT 508,898.00 50.00 30.972.24 153,066.70 324.809.06 .36 RUN DATE 05/04/99 TIME 16:56:46 Tresun/PEI - FUND ACCOUNTING V5.4 Exhibit C Statement of Financial Interests Form 1 FORM 1 STATEMENT OF FINANCIAL INTERESTS 1998 THIS STATEMENT REFLECTS MY FINANCIAL INTERESTS FOR THE NAME OF YOUR AGENCY: PRECEDING TAX YEAR ENDING: CHECK EITHER OR SPECIFY TAX YEAR IF OTHER DECEMBER 31, 1998 THAN THE CALENDAR YEAR: _AST NAME-FIRST NAME-MIDDLE NAME: CHECK ONE OF THE FOLLOWING CATEGORIES: MAILING ADDRESS: ❑ LOCAL OFFICER ❑ STATE OFFICER ❑ CANDIDATE ❑ SPECIFIED STATE EMPLOYEE • LIST OFFICE OR POSITION HELD OR SOUGHT: ITY: ZIP: COUNTY: NOTICE: Under provisions of Sec. 112.317, Florida Statutes, a failure to make any required dis- closure constitutes grounds for and may be punished by one or more of the following: disquali- fication from being on the ballot, impeachment, removal or suspension from office or employ- ment, demotion, reduction in salary, reprimand, or a civil penalty not exceeding $10,000. PART A—PRIMARY SOURCES OF INCOME [Sources exceeding 5%of gross income] NAME OF SOURCE SOURCE'S DESCRIPTION OF THE SOURCE'S OF INCOME ADDRESS PRINCIPAL BUSINESS ACTIVITY PART B—SOURCES OF INCOME TO BUSINESSES.OWNED BY THE REPORTING PERSON [Major customers,clients,etc.] • NAME OF SOURCE OF SOURCE'S DESCRIPTION OF THE SOURCE'S BUSINESS ENTITY'S INCOME ADDRESS PRINCIPAL BUSINESS ACTIVITY ' ,PART C—REAL PROPERTY [Land,buildings] FILING INSTRUCTIONS for when and where to file this form are located at the bot- tom of page 2. INSTRUCTIONS on who must file this form and how to fill it out begin on page 3 of this packet. OTHER FORMS you may need to file are described on page 6. (Continued on p.2) CE FORM 1 -REV. 1/99 PAGE 1 PART D —INTANGIBLE PERSONAL PROPERTY[Stocks,bonds,certificates of deposit,etc.] TYPE OF INTANGIBLE BUSINESS ENTITY TO WHICH THE PROPERTY RELATES I � PART E—LIABILITIES IN EXCESS OF NET WORTH [Major debts] NAME OF CREDITOR ADDRESS OF CREDITOR PART F—INTERESTS IN SPECIFIED BUSINESSES [Ownership or positions in certain types of businesses] -- BUSINESS ENTITY#1 BUSINESS ENTITY#2 BUSINESS ENTITY#3 I NAME OF BUSINESS ENTITY - ADDRESS OF BUSINESS ENTITY PRINCIPAL BUSINESS ACTIVITY POSITION HELD I " WITH ENTITY I OWN MORE THAN A 5% INTEREST IN THE BUSINESS NATURE OF MY OWNERSHIP INTEREST IF ANY PARTS OF A THROUGH F ARE CONTINUED ON A SEPARATE SHEET,PLEASE CHECK HERE ❑ SIGNATURE: DATE SIGNED: • FILING INSTRUCTIONS FOR FORM 1 WHAT TO FILE: After completing WHERE TO FILE: Local offi- WHEN TO FILE: Initially, each all parts of this form, including signing and cers file with the Supervisor of Elections local officer, state officer, and specified dating it, send back only the first sheet of the county in which you permanently state employee must file within 30 days of (pages 1 and 2) for filing. Note: You also reside. (If you do not permanently reside the date of his or her appointment or of the Imay be required to file Form 10, which is in Florida,file with the Supervisor of the beginning of employment. the last page of this packet. Please see that county where your agency has its head- _ _ form for detailed instructions. quarters.) State officers or specified Appointees who must be confirmed by the I state employees file with the Department Senate must file prior to confirmation, even NOTE: MULTIPLE FILING of State, Room 1802, The Capitol, if that is less than 30 days from the date of ' UNNECESSARY: Generally, a per- Tallahassee, Florida 32399-0250. their appointment. son who has filed Form 1 for a calendar or Candidates file this form together with Thereafter, local officers, state fiscal year is not required to file a second your qualifying papers. To determineofficers, Form 1 for the sameyear. However, a can- and specified state employees are what category your position falls under, didate who previously filed Form 1 because see the "Who Must File" Instructions on required to file by July 1st following each I of another public position must at least file page 3. If you were mailed the form by calendar year they hold their positions. a copy of his or her original Form 1 when the Secretary of State or a County Candidates for publicly-elected state or , qualifying. Supervisor of Elections for your annual local office must file at the same time they disclosure filing, return the form to that file their qualifying papers. location. (Continued on p.3)10" i CE FORM 1 -REV.1/99 PAGE 2 , I WHO MUST FILE FORM 1, STATEMENT OF FINANCIAL INTERESTS All persons who fall within the categories of "state officers," "local officers," "specified state employees," as well as candidates for elective state or local office, are required to file Form 1. Positions within these categories are listed below. Persons required to file full financial dis- closure(Form 6)and officers of the judicial branch do not file Form 1 (see Form 6 for a list of persons who must file that form). for the local overnmental unit. STATE OFFICERS include the following positions for SPECIFIED STATE EMPLOYEES include the foi- lstate officials: lowing positions for state employees: 1) Elected public officials not serving in a political subdivision 1) Employees in the office of the Governor or of a Cabinet of the state and any person appointed to fill a vacancy in such member who are exempt from the Career Service System, exclud- office, unless required to file full disclosure on Form 6. ing secretarial, clerical, and similar positions. 2) Appointed members of each board, commission, authority, 2) The following positions in each state department, commis- or council having statewide jurisdiction, excluding members of sole- sion, board, or council: Secretary, Assistant or Deputy Secretary, ly advisory bodies. Executive Director, Assistant or Deputy Executive Director, and 3) Members of the Board of Regents, the Chancellor and Vice anyone having the power normally conferred upon such persons, Chancellors of the state university system, and Presidents of state regardless of title. universities. 3) The following positions in each state department or division: LOCAL OFFICERS include the following positions for Director, Assistant or Deputy Director, Bureau Chief, Assistant officers and employees of local government: Bureau Chief, and any person having the power normally conferred 1) Persons elected to office in any political subdivision (such upon such persons, regardless of title. as municipalities, counties, and special districts) and any person 4) Assistant State Attorneys, Assistant Public Defenders, appointed to fill a vacancy in such office, unless required to file full Public Counsel, full-time state employees serving as counsel or disclosure on Form 6. assistant counsel to a state agency, administrative law judges, and 2) Appointed members of each board, commission, authority, hearing officers. or council of any political subdivision, excluding members of solely 5) The Superintendent or Director of: a state mental health advisory bodies (a governmental body with land-planning, zoning, institute established for training and research in the mental health or natural resources responsibilities is not considered an advisory field, or any major state institution or facility established for correc- body even if its work-product is solely advisory); expressway tions,training, treatment, or rehabilitation. authorities and transportation authorities established by•general 6) State agency: Business Managers, Finance and Accounting law;community college district boards of trustees. Directors, Personnel Officers, Grant Coordinators, and purchasing 3) Persons holding any of these positions in local government: agents (regardless of title) with power to make a purchase exceed- Mayor; county or city manager; chief administrative employee of a ing$1,000. county, municipality, or other political subdivision; county or munici- 7) The following positions in legislative branch agencies: each pal attorney; chief county or municipal building inspector; county or employee (other than those employed in maintenance, clerical, sec- municipal water resources coordinator; county or municipal pollu- retarial, or similar positions and legislative assistants exempted by tion control director; county or municipal environmental control the presiding officer of their house); and each employee of the -- director; county or municipal administrator with power to grant or Commission on Ethics. deny a land development permit; chief of police; fire chief; munici- pal clerk; district school superintendent; community college presi- dent; district medical examiner; purchasing agent (regardless of title) having the authority to make any purchase exceeding $1,000 FILING INSTRUCTIONS : "Leon County," or "Department of ADDRESS OF REPORTING INDIVIDU- INTRODUCTORY INFORMATION Transportation." ALS: If your home address appears on the form but you prefer another address be TAX YEAR: The tax year for most individ- LOCAL OFFICER, STATE OFFICER, shown, mark through the address provided uals is the calendar year (January 1 SPECIFIED STATE EMPLOYEE, AND and insert your office or other current through December 31). If that is the case CANDIDATE DESIGNATIONS: The posi- address. The following persons should not for you, then your financial interests should tions for each of these categories are listed use their home addresses: active or former be reported for the most recently complet- on page 3, under "Who Must File." Please law enforcement personnel, including cor- ed calendar year (1998) and you do not check the box for the position you hold, rectional and correctional probation offi- need to add any information in this part of held during the disclosure period, or are cers; current or former state attorneys, the form. However, if you file your IRS tax seeking. assistant state attorneys, statewide prose- return based on a tax year that is not the cutors, and assistant statewide prosecu- -- calendar year, you should specify the OFFICE OR POSITION HELD OR tors; firefighters; personnel of D.H.R.S. dates of your tax year in the upper left- SOUGHT: Use the title of the office or whose duties include the investigation of hand portion of the form. This is the time position you hold, are seeking, or held dur- abuse, neglect, exploitation, fraud, theft, or frame or"disclosure period" for which your ing the disclosure period (in some cases other criminal activities; spouses of the interests should be reported. you may not hold that position now, but above; and county and municipal code you still would be required to file to dis- inspectors and code enforcement officers; NAME OF AGENCY: This should be the close your interests during the last year and personnel of the Department of ' name of the governmental unit which you you held that position). For example, "City Revenue or local governments responsible serve or served, by which you are or were Council Member," "County Administrator," for revenue collection and enforcement or employed, or for which you are a candi- "Purchasing Agent," or"Bureau Chief." child support enforcement. - date. For example, "City of Tallahassee," (Continued on p.4) cr CE FORM 1 -REV.1/99 PAGE 3 r 1 1 I i PART A - PRIMARY SOURCES OF INCOME stock of a business entity (a corporation, partnership, limit- [Required by Sec. 112.3145(3)(a), Fla. Stat.] ed partnership, proprietorship,joint venture, trust, firm, etc., `-I Part A of Form 1 is intended to require the disclosure of your doing business in Florida); and principal sources of income during the disclosure period. You do (2)You received more than ten percent (10%) of your gross ; not have to disclose the amount of income received. Please list in income during the disclosure period from that business this part of the form the name, address, and principal business entity; and _ activity of each source of your income which exceeded five percent (3)You received more than $1,500 in gross income from that (5%) of the gross income received by you in your own name or by_ business entity during the period. any other person for your benefit or use during the disclosure peri- If your interests and gross income exceeded the three thresholds 1 od. The sources should be listed in descending order, with the listed above, then for that business entity you must list every largest source first. source of income to the business entity which exceeded ten per- I You need not list your public salary resulting from public cent (10%) of the business entity's gross income (computed on the employment, but this amount should be included when calculating basis of the business entity's most recently completed fiscal year), your gross income for the disclosure period. The income of your the source's address, and the source's principal business activity. ' spouse need not be disclosed; however, if there is joint income to Examples: you and your spouse from property held by the entireties (such as — You are the sole proprietor of a dry cleaning business, from interest or dividends from a bank account or stocks held by the which you received more than 10% of your gross income (an entireties), you should include all of that income when calculating amount that was more than $1,500). If only one customer, a your gross income and disclose the source of that income if it uniform rental company, provided more than 10% of your dry exceeded the 5%threshold. cleaning business, you must list the name of the uniform rental "Gross income" means the same as it does for income tax pur- company, its address, and its principal business activity (uni- poses, including all income from whatever source derived, such as form rentals). compensation for services, gross income from business, gains — You are a 20% partner in a partnership that owns a shop- from property dealings, interest, rents, dividends, pensions, distrib- ping mall and your partnership income exceeded the thresh- utive share of partnership gross income, and alimony, but not child olds listed above. You should list each tenant of the mall that ,- -, support. provided more than 10% of the partnership's gross income, Examples: the tenant's address and principal business activity. 1._ — — If you were employed by a company that manufactures — You own an orange grove and sell all your oranges to one computers and received more than 5% of your gross,income marketing cooperative. You should list the cooperative, its (salary, commissions, etc.) from the company, then you address, and its principal business activity if your income met should list the name of the company, its address, and its prin- the thresholds. cipal business activity(computer manufacturing). PART C - REAL PROPERTY [Required by Sec. — If you were a partner in a law firm and your distributive share of partnership gross income exceeded 5% of your gross 112.3145(3)(c), Fla. Stat.] income, then you should list the name of the firm, its address, In this part, please list the location or description of all real and its principal business activity(practice of law). property(land and buildings) in Florida in which you owned directly — If you were the sole proprietor of a retail gift business and or indirectly at any time during the previous tax year in excess of your gross income from the business exceeded 5% of your five percent (5%) of the property's value. You are not required to total gross income, then you should list the name of the busi list your residences and vacation homes; nor are you required to ness, its address, and its principal business activity (retail gift state the value of the property on the form. sales). Indirect ownership includes situations where you are a benefi- I — If you received income from investments in stocks and ciary of a trust that owns the property, as well as situations where bonds, you are required to list only each individual company you are more than a 5%partner in a partnership or stockholder in a from which you derived more than 5% of your gross income, corporation that owns the property. The value of the property may rather than aggregating all of your investment income. be determined by the most recently assessed value for tax purpos- I — If more than 5% of your gross income was gain from the es, in the absence of a more current appraisal. sale of property(not just the selling price), then you should list The location or description of the property should be sufficient to , as a source of income the name of the purchaser, the pur- enable anyone who looks at the form to identify the property. chaser's address, and the purchaser's principal business Although a legal description of the property will do, such a lengthy activity. If the purchaser's identity is unknown, such as where description is not required. Using simpler descriptions, such as securities listed on an exchange are sold through a brokerage `duplex, 115 Terrace Avenue, Tallahassee" or 40 acres located at firm, the source of income should be listed simply as "sale of the intersection of Hwy. 60 and 1-95, Lake County" is sufficient. In (name of company) stock,"for example. some cases, the property tax identification number of the property I, — If more than 5% of your gross income was in the form of will help in identifying it: "120 acre ranch on Hwy. 902, Hendry interest from one particular financial institution (aggregating County,Tax ID#131 45863." interest from all CD's, accounts, etc., at that institution), list the Examples: name of the institution, its address, and its principal business — You own 1/3 of a partnership or small corporation that .__1 activity. owns both a vacant lot and a 12%interest in an office building. PART B - SOURCES OF INCOME TO BUSI- You should disclose the lot, but are not required to disclose the office building (because your 1/3 of the 12% interest— NESSES OWNED BY THE REPORTING PER- which equals 4%—does not exceed the 5%threshold). SON [Sec. 112.3145(3)(b), Fla. Stat.] — If you are a beneficiary of a trust that owns real property I This part is intended to require the disclosure of major cus and your interest depends on the duration of an individual's tomers, clients, and other sources of income to businesses in life, the value of your interest should be determined by apply which you own an interest. You will not have anything to report ing the appropriate actuarial table to the value of the property I I unless: itself, regardless of the actual yield of the property. (1)You owned (either directly or indirectly in the form of an (Continued on p.5)� equitable or beneficial interest)during the disclosure period 1 more than five percent (5%) of the total assets or capital 1 I_, CE FORM 1 -REV.1/99 PAGE 4 • .PART D -:INTANGIBLE PERSONAL PROPERTY Calculations: In orders to decide whether-the debt exceeds your [Required by Fla. net worth,you will need to total all of your liabilities(including promis- Provide a Sec.ge 112.3145(3)(c),description of any. Stat.]itangible personal proper- sory notes, mortgages, credit card debts, lines of credit, judgments ty that was worth more than ten percent(10%) of your total assets at against you, etc.). Subtracto this amount from the value of-all.your- the end of the-disclosure period, and state the business entity to musassets as calculated above for Part D. This is your"net worth." You which the property related. Intangible personal property includes amount list on the form each creditor to whom your debtexceeded this such things as money, stocks, bonds, certificates of deposit, inter- p ag unless it isone of the types of indebtedness listed in the ). ests in partnerships, beneficial interests in a trust, promissory notes paragraph above with one cardrand otherl installment accounts,ichyoueta.e owed to you, accounts receivable by you, IRA's, and bank accounts. Joint liabilities one or more persons for which are Such things as automobiles, houses, jewelry, and paintings are not Jointly and severally liable,"which means that you may be liable for intangible property. Intangibles relating to the s either your part or the whole of the obligation, should be included in ame business entity be aggregated; for example, two certificates of deposit and a your calculations based upon your percentage of liability,with the fol- shouldsavings account with the same bank. lowing exception: Joint and several liability with your spouse for a debt which relates to property owned by both of you as "tenants by Calculations: In order to decide whether the intangible property exceeds 10%of your total assets,you will need to total the value of the entirety"val (usuallythe theasset c at 1 0% ofd be included in your i bilitycalcu at all ofyour assets (includingrealproperty, intan ibleproperty, and 100s of valuing amount at 100% its value and the liability at g 100/°of the owed. tangible personal property such as automobiles, jewelry, furniture, etc.). When making this calculation, do not subtract any liabilities Examples: I (debts) that may relate to the property—add only the fair market — You owe $15,000to a bank for student loans, $5,000 for value of the property. Multiply the total figure by 10% to arrive at credit card debts, and$60,000 (with your spouse) to a savings the disclosure threshold. List only the intangibles that exceed this and loan for a home mortgage. Your home (owned by you and threshold amount.Jointly owned property should be valued accord- your spouse) is worth$80,000 and your other property is worth ing to the percentage of your joint ownership, with one exception: $20,000. Since your net worth is $20,000 ($100,000 minus where the property is owned by husband and wife as tenants by $80,000), you must report only the name and address of the the entirety(which usually will be the case), the property should be savings and loan. valued at 100%. None of your calculations or the value of the prop- — You and your 50% business partner have a business loan I erty have to be disclosed on the form. from a bank of $100,000, for which you both are jointly and Examples: severally liable. The value of the business, taking into account — You own 50% of the stock of a small corporation that is the loan as a liability of the business, is $50,000. Your other worth $100,000, according to generally accepted methods of assets are worth $25,000, and you owe $5,000 on a credit valuing small businesses. The estimated fair market value of your home and other property(bank accounts, automobile,fur- card. Your total assets will be $50,000 (half of a businessworth $50,000 plus $25,000 of other assets). Your liabilities, niture, etc.) is $200,000. As your total assets are worth for purposes of calculating your net worth, will be only$5,000, $250,000, you must disclose intangibles worth over $25,000. because the full amount of the business loan already was Since the value of the stock exceeds this threshold, you included in valuing the business. Therefore, your net worth is should list "stock" and the name of the corporation. If your $45,000. Since your 50%share of the$100,000 business loan accounts with a particular bank exceed $25,000, you should exceeds this net worth figure,you must list the bank. list"bank accounts"and bank's name. PART F- INTERESTS IN SPECIFIED BUSINESSES - When you retired, your professional firm bought out your [Required by Sec. 112.3145(5), Fla. Stat.] partnership interest by giving you a promissory note,the present You are required to disclose in this part of the form the fact value of which is $100,000. You also have a certificate of that you owned during the disclosure period an interest in, or held deposit from a bank worth $75,000 and an investment portfolio any of certain positions with, particular types of businesses. You worth $300,000, consisting of $100,000 of IBM bonds and a are required to make this disclosure if you own or owned (either variety of other investments worth between$5,000 and$50,000 directly or indirectly in the form of an equitable or beneficial inter- each. The fair market value of your.remaining assets (condo- est) at any time during the disclosure period more than five percent minium, automobile, and other personal property) is $225,000. (5%) of the total assets or capital stock of one of the types of busi- Since your total assets are worth $700,000, you must list each ness entities granted a privilege to operate in Florida that are listed intangible worth more than $70,000. Therefore, you would list below. You also must complete this part of the form for each of "promissory note" and the name of your former partnership, these types of businesses for which you are, or were at any time "certificate of deposit" and the name of the bank, "bonds" and during the disclosure period, an officer, director, partner, proprietor, "IBM,"but none of the rest of your investments. — • or agent(other than a resident agent solely for service of process). PART E - LIABILITIES IN EXCESS OF NET The types of businesses covered in this disclosure are only: WORTH [Required by Sec. 112.3145(3)(d), Fla. Stat.] state-and federally chartered banks; state and federal savings and In this part of the form, list the name and address of each pri loan associations; cemetery companies; insurance companies vate or governmental creditor to whom you were indebted at any (including insurance agencies); mortgage companies; credit Itime during the disclosure period in an amount which exceeded unions; small loan companies; alcoholic beverage licensees; pari- your net worth. You are not required to list the amount of any mutuel wagering companies; utility companies; entities controlled indebtedness or your net worth. You do not have to disclose any of by the Public Service Commission; and entities granted a franchise the following: credit card and retail installment accounts, taxes to operate by either a city or a county government. Iowed, indebtedness on a life insurance policy owed to the compa If you have or held such a position or ownership interest in one ny of issuance, contingent liabilities, and accrued income taxes on of these types of businesses, list (vertically for each business): the net unrealized appreciation (an accounting concept). A "contingent name of the business, its address and principal business activity, liability" is one that will become an actual liability only when one or and the position held with the business (if any). Also, if you more future events occur or fail to occur, such as where you are own(ed) more than a 5% interest in the business, as described Iliable only as a guarantor, surety, or endorser on a promissory above, you must indicate that fact and describe the nature of your note; if you are a"co-maker"and have signed as being jointly liable interest. (Continued on p.$)`°- or jointly and severally liable,then this is not a contingent liability. CE FORM 1 -REV.1/99 PAGE 5 NOTICE: OTHER FORMS YOU MAY NEED:TO FILE IN ORDER TO COMPLY WITH THE ETHICS LAWS In addition to filing Form 1 and Form 10(see next page), you maybe required to file one or more of the special purpose forms listed below, depending on your particular position, business activities, or interests. As it is your duty to obtain and file any of the special pur- pose forms.which may be applicable to you, you should carefully read the brief description of each form to determine whether it applies. I - Form 2 — Quarterly Client Disclosure: Required of local offi- Form 8B — Memorandum of Voting Conflict for County, cers, state officers, and specified state employees by Municipal, and Other Local Public Officers:Required to be ' January 15, April 15, July 15, and October 15 following any filed (within 15 days of abstention) by each local officer who calendar quarter during which a reportable representation was must abstain from voting on a measure which would inure to made. This form is used to disclose the names of clients rep- his or her special private gain (or loss) or the special gain (or resented for compensation by you or a partner or associate loss) of a relative, business associate, or one by whom he or before agencies at the same level of government as you she is retained or employed. Each appointed local official who serve. [Sec. 112.3145(4), Fla.Stat.] seeks to influence the decision on such a measure prior to the meeting must file the form before undertaking that action. Form 3A—Statement of Interest in Competitive Bid for Public [Sec. 112.3143, Fla. Stat.] Business: Required of public officers and public employees prior to or at the time of submission of a bid for public busi- Form 9— Quarterly Gift Disclosure: Required of local officers, ness which otherwise would violate Sec. 112.313(3) or state officers, specified state employees, and state pro- 112.313(7), Fla. Stat. [Sec. 112.313(12)(b), Fla.Stat.] curement employees to report gifts over$100 in value. The I form should be filed by the end of the calendar quarter(March Form 4A—Disclosure of Business Transaction, Relationship, 31, June 30, September 30, or December 31) following a cal or Interest: Required of public officers and employees to dis endar quarter in which the gift was received. [Sec. 112.3148, close certain business transactions, relationships, or interests Fla. Stat.] which otherwise would violate Sec. 112.313(3) or 112.313(7), Fla.Stat. [Sec. 112.313(12)and (12)(e), Fla. Stat.] Form 8A—Memorandum of Voting Conflict for State Officers: Required to be filed by a state officer within 15 days after hav- ing voted on a measure which inured to his or her special pri- vate gain (or loss) or to the special gain (or loss) of a relative, _ business associate, or one by whom he or she is retained or employed. Each appointed state officer who seeks to influ- ence the decision on such a measure prior to the meeting must file the form before undertaking that action. [Sec. ' 112.3143, Fla. Stat.] AVAILABILITY OF FORMS; FOR MORE INFORMATION Copies of these forms are available from the Supervisor of Elections in your county; from the Department of State, Room 1802,The Capitol,Tallahassee, Florida 32399-0250; and from the Commission on Ethics, Post Office Drawer 15709,Tallahassee, Florida 32317-5709. Questions about any of these forms or the ethics laws may be addressed to the Commission on Ethics, Post Office Drawer 15709, Tallahassee, Florida 32317-5709; telephone (850) 488-7864 (Suncom 278-7864). Please follow the filing instructions on page 2 and do not file this form with the Commission on Ethics. CE FORM 1--REV.1/99 - PAGE 6 ANNUAL DISCLOSURE OF GIFTS FROM GOVERNMENTAL FORM 10 ENTITIES AND DIRECT SUPPORT-ORGANIZATIONS AND- HONORARIUM EVENT RELATED EXPENSES LAST NAME—FIRST NAME—MIDDLE NAME: THIS.STATEMENT REFLECTS GIFTS AND HONORARIUM EVENT RELATED EXPENSES RECEIVED DURING 1998: YOU NEED NOT FILE THIS FORM IF YOU HAVE . NOTHING TO REPORT ON IT. -IMAILING ADDRESS: - - . NAME OF AGENCY: I CITY: ZIP: • COUNTY: OFFICE OR POSITION HELD: I NOTICE: Under provisions of Sec. 112.317, Fla. Stat., a failure to make any required ' disclosure constitutes grounds for and may be punished by one of more of the following: impeachment, removal or suspension from office or employment, demotion, reduction-in - salary, reprimand, or a fine up to $10,000. • -I PART A—GIFTS(HAVING A PUBLIC PURPOSE)FROM GOVERNMENTAL ENTITIES NAME OF PERSON TOTAL VALUE OF GIFTS ,DESCRIPTION OF DATE EACH j PROVIDING GIFT(S)IN 1998 . FROM THAT PERSON INDIVIDUAL GIFTS GIFT RECEIVED I PART B—GIFTS FROM DIRECT SUPPORT ORGANIZATIONS- ; INAME OF PERSON • TOTAL VALUE OF GIFTS DESCRIPTION OF DATE EACH PROVIDING GIFT(S)IN 1998 FROM THAT PERSON INDIVIDUAL GIFTS GIFT RECEIVED • - 1, PART C—HONORARIUM EVENT RELATED EXPENSES EVENT#1 EVENT#2 INSTRUCTIONS on who • _NAME OF PERSON must file this form and how to fill PAYING EXPENSES !ADDRESS OF it out are on the reverse side. ' --'PERSON IAFFILIATION ,OF PERSON FILING INSTRUCTIONS iAMOUNT OF HONORARIUM for when and where to file this EXPENSES form are located on the reverse IDATES)OF THE EVENT side. DESCRIPTION OF EXPENSES ;PAID ON EACH DAY TOTAL R THEEVE VALUE OFNT EXPENSES FO • (Continued on reverse side) CE FORM 10-REV.1/99 PAGE 1 I I I I I IF ANY OF PARTS A THROUGH C ARE CONTINUED ON A SEPARATE SHEET,PLEASE CHECK HERE ❑ REMEMBER TO ATTACH COPIES OF ALL STATEMENTS PROVIDED TO YOU BY PERSONS AND ENTITIES PROVIDING OR PAYING FOR THE GIFTS AND HONORARIUM EVENT RELATED EXPENSES DISCLOSED ON THIS FORM. YOU MUST DISCLOSE ALL OF THESE KINDS OF GIFTS 'i- AND EXPENSES EVEN THOUGH YOU DID NOT RECEIVE A STATEMENT OR REPORT FROM THE PERSON OR ENTITY PROVIDING THEM. YOU MAY EXPLAIN ANY DIFFERENCES BETWEEN THE ATTACHED REPORTS AND STATEMENTS AND THE INFORMATION PROVIDED ON THIS FORM BY ATTACHING AN EXPLANATION TO THE FORM. ' SIGNATURE: DATE SIGNED: INSTRUCTIONS FOR COMPLETING during 1998 (in some cases you may not entity may give a gift worth over$100 to a person AND FILING FORM 10: hold that position now,but you still would be who files Form 1 or Form 6 or to a state required to file to disclose your interests procurement employee if the person or employee ' WHEN AND WHERE TO FILE: By during the last year you held that position). is an officer or employee of that governmental - July 1,1999.Persons who file Form 1 or Form For example, "City Council Member," entity. Part B should be used to list such gifts. 6 should file this form with their Form 1 or "Member," "Purchasing Agent," or "Bureau Under the law,these direct support organizations Form 6. State procurement employees (see Chief." are required to provide you with a statement definition below) file this form with the ADDRESS OF REPORTING concerning these gifts by March 1; attach this Department of State, Room 1802,The Capitol, INDIVIDUALS: The following persons statement to Form 10. Tallahassee, Florida 32399 0250. This form should not use their home addresses:active need not be filed unless a reportable gift or or former law enforcement personnel, PART C-HONORARIUM EVENT RELATED expense was received during the time you including correctional and correctional, EXPENSES [Required by Sec. 112.3149, Fla. held public office or employment. probation officers; current or former state Stat.] I_- attorneys, assistant state attorneys, Reporting individuals who file Form 1 and statewide prosecutors, assistant statewide Form 6 and state procurement employees are - WHO MUST FILE FORM 10: All prosecutors; firefighters; personnel of prohibited from accepting an honorarium (aI D.H.R.S. whose duties include the in exchange for persons who are required to file Form 1, payment 9 speech, oral investigation of abuse, neglect, exploitation, presentation, writing, political Statement of Financial Interests, and all persons fraud, theft, or other criminal activities; and the like)from a who file Form 6, Full and Public Disclosure of committee or committee of continuous existence, Financial Interests, except judges spouses of the above;county and municipal from a lobbyist who lobbies them or their public I code inspectors and code enforcement agency or has done so within'the revious 12 (comprehensive lists are part of each of those officers; and Department of Revenue or g y ( p forms). In addition, state "procurement months), and from the employer, principal, local government personnel responsible for partner, or firm of such a lobbyist. However, employees"are required to file Form 10. You are Y revenue collection and enforcment or child- these persons and entities maya orprovide a a"procurement employee"if you: support enforcement. P Y P (1) Are an employee of an office, reporting individual or procurement employee department, board, commission, or council of the and his or her spouse for actual and reasonable PART A- GIFTS FROM GOVERNMENTAL transportation, lodging, event or meeting I executive or judicial branches of state government; ENTITIES [Required by Sec. 112.3148, Fla. registration fee, and food and beverage (2) Participate in the procurement of Stat.] expenses related to an event at which a speech, contractual services or commodities costing more Entities of the legislative or judicial presentation,or writing will be made by the public than$1,000 in any year; branches, departments and commissions of the officer or employee. Part C should be used to (3) Through decision, approval, executive branch, counties, municipalities,airport describe these honorarium event related disapproval, recommendation, preparation of any authorities, school boards, water management expenses. Under the law, the persons or entities part of a purchase request, influence the content districts created by 373.069, F.S., and the Tri paying for or providing such expenses are i of any specification or procurement standard, County Commuter Rail Authority may give, either required to provide you with a statement rendering of advice, investigation, auditing, or in directly or indirectly, a gift worth over $100 to concerning them within 60 days of the any other advisory capacity. persons who file Form 1 or Form 6 or to state honorarium event; attach this statement to Form procurement employees if a public purpose can 10' INTRODUCTORY INFORMATION (At be shown for the gift. Part A should be used to FOR MORE INFORMATION list such gifts. Under the law,these governmental Questions about this form or the ethics laws ma the Top of the Form): entities are required to provide you with a . y NAME OF AGENCY: This should be the be addressed to the Commission on Ethics, Post statement concerning these gifts by March 1; Office Drawer 15709, Tallahassee, Florida name of the governmental unit which you attach this statement to Form 10. serve or served,or by which you are or were 32317-5709;telephone (850)488 7864 (Suncom employed. For example, "City of PART B-GIFTS FROM DIRECT SUPPORT 278-7864). Please follow the filing Tallahassee," "Florida Senate," or ORGANIZATIONS[Sec.112.3148,Fla.Stat.] instructions above and do not file this form "Department of Transportation." with the Commission on Ethics. OFFICE OR POSITION HELD: Use the title Direct support organizations specifically of the office or position you hold or held authorized by law to support a governmental I- CE FORM 10-REV.1/99 PAGE 2 Exhibit D Distribution Of Work Hours Distribution of Work Hours Total LEC YES GM PO Processing 27.25 15.0% 8.5 9.25 9.5 Vendor Contacts/Pricing 17.92 9.8% 6 7.92 4 Telephone 24.42 13.4% 9 6.42 9 Data Entry 24.83 13.6% 6 8.83 10 Info Requests 16.67 9.2% 6.5 5.17 5 Clerical 21.33 11.7% 10.5 2.83 8 Bid Openings 2.25 1.2% 1 0.75 0.5 RFP's, RFQ's, Bids 12 6.6% 5 7 0 Miscellaneous 35.33 19.4% 5.5 7.83 22 182 100.0% 58 56 68 182 58 56 68 Distribution of Work Hours Purchasing Section From Timesheets ❑ PO Processing 19.4% 15.0% ❑ Vendor Contacts/Pricing ■ Telephone s.a% Data Entry 6.6°i° Info Requests 1.2% - Clerical 11.7% 13.4% � Bid Openings ® RFP's, RFQ's, Bids 9.2% 13.6% ■ Miscellaneous Exhibit E Aged Purchase Order Listing ' 1 05/15/99 MONROE COUNTY BOCC PAGE 118 ACCOUNTING PERIOD: 8/99 AGED PURCHASE ORDER LISTING DA ENTERED - 10/08/97 AGE IN DAYS - 574 1 PO # OF APPROVAL STATUS---- KEY DATES Nt :R CHGS FND/COST VENDOR PO.TYPE- AMOUNT DATES DATE CODE DAYS 11 36 000 67501 001630 - VIKING OFFICE PRODUCT BLANKET- N REJECTED: NOT REQUIRED 10/08/97 ENTERED 574 BUYER- CAY-PENNY CONFIRM- N APPROVED: NOT REQUIRED REQUIRE TERMS- NET 30 DAYS *-FINAL-* ACCOUNT DATES EXPIRES SHIP CD- 165 REJECTED: NOT REQUIRED FREIGHT- APPROVED: NOT REQUIRED COMMODITY REQ # STOCK # CURRENT UNIT $ QTY ORDERED . L1.._ REQ LINE VEND PROD # MEASURE QTY RECEIVED EXTENDED $ FREIGHT TAX TOTAL COMMODITY 59.5800 4.00 238.32 0.00 0.00 238.32 II EA 0.00 CANON TONER NP6030 SEARCH: II PURCHASE ORDER TOTAL 238.32 DlIl ENTERED - 10/09/97 AGE IN DAYS - 573 PO # OF APPROVAL STATUS- KEY DATES NUMBER CHGS FND/COST VENDOR PO.TYPE- AMOUNT DATES DATE CODE DAYS 1S B8 000 23503 000018 - MARATHON ACE HARDWARE BLANKET- N REJECTED: NOT REQUIRED 10/09/97 ENTERED 573 BUYER- FMS-NOREENE CONFIRM- N APPROVED: NOT REQUIRED REQUIRE TERMS- NET 30 DAYS *-FINAL-* ACCOUNT DATES EXPIRES SHIP CD- 165 REJECTED: NOT REQUIRED FREIGHT- APPROVED: NOT REQUIRED COMMODITY REQ # STOCK # CURRENT UNIT $ QTY ORDERED L] REQ LINE VEND PROD # MEASURE QTY RECEIVED EXTENDED $ FREIGHT TAX TOTAL COMMODITY 1 62.0900 1.00 62.09 0.00 0.00 62.09 EA 0.00 0940.171 MAR HOSE _SEARCH: PURCHASE ORDER TOTAL 62.09 II II I R DATE 05/05/99 TIME 12:11:46 Tresun/PEI - PURCHASING AGENT Exhibit F Purchasing's Customized Menu SECURE: © 2 3 4 5 6 7 8 9 EXIT Monroe County PURCHJIENU TRESUN CORPORATION scarlile 05/05/1999 1. Purchase Agent 2. Requisition Status Report 3. Requisitions By Department Report 4. Requisition Allocation Report S. Convert Requisitions to Purchase Orders 6. Post Purchase Orders 7. Print Purchase Orders 8. Query/Print Uendor List E. EXIT Exhibit G The Purchasing Agent Standard Menu 1 1 PURCHASING: © 2 3 4 5 6 7 8 9 A B C D F G H I J K UPDATE/QUERY/PRINT COMMODITY TABLE ? F a.E..F `t rty -r-z rz i r r sr aln m ?T'hr .. F.,.o-'_"M..SE z Ve .e".-t',57*raPr4s..7 :+>rr 9,e":-z^7, r3 r—a. r x , a a,; C .fix a,,...,..z e, cJ,1., &,.Ja+e-x,ry.4.,n,rr. ,. .,_ ,,,. a , r. r.r...A5"i., z.1%;r J- pt,,..;.-B r..T.':r.+ Pt-.n m.... ',<. .g.<.. r,x. W a,.F. MONROE COUNTY BOCC /PEI i `�0 PURCHASING AGENT U5 4 05/05/99 PERIOD���8/99 , -sue �x < r a , T+ ri. 4•, •s f _� c ,c,, p ,,,, t- .."2,,,W.4 4Yr ."sR55t?3"flA S4 Y I N r er aft i,/, .9 ,x 4 s lC 7 :u. M*Y* _�,x€"'K'M{7j 5 v t4 5?Wrnt xaaa ,z' ^,v 'sr x�C.- rri7,I 9+ .isr�ar..cMT ASP* «* re cp z m t -�.me . � ds „�., c�. � ...'��e sk �,.._. ,r w��c.,� �. a:�� eS sr,<.� L_.,..,..'. eNt..,,, ET.A;r: „,. Ti"2G$.....r! ..,,.,. "T b,X2A.....c.e."..r...ta a 321M,1°L.,'s1..:x.a`ft-..xE.°fr .111 kiZ',.�a l r., =?..,T5 ;ifA5 `k.Cx,a lca�,'^Xw T TABLE MAINTENANCE PURCHASING PROCESS x' 1 COMMODITY TABLE '" F UPDATE/QUERY PURCHASE ORDERS Y 2 UENDOR LIST G APPROVE PURCHASE ORDERS c ; 3 SHIPPING TABLE H POST PURCHASE ORDERS "s 4 UENDOR BID INFORMATION I PRINT PURCHASE ORDERS tl 5 TAX RATE TABLE J UPDATE/QUERY CHANGE ORDERS ; 6 DISTRIBUTION DEFINITIONS H PRINT CHANGE ORDERS11 7 APPROVAL DEFINITIONS L PRINT PURCHASE ORDER REPORTS REQUISITION PROCESS M DISPLAYS AND QUERIES 8 UPDATE/QUERY REQUISITIONS N RECEIVE ORDERED MATERIALS l, 9 APPROVE REQUISITIONS MAINTENANCE FUNCTIONS ;1. A PRINT REQUISITIONS P PURGE CLOSED REQS/P.O.S '" N B PRINT REQUISITION REPORTS Q SETUP 1099 TYPES ;', C PRINT BID LIST/MAILING LABELS R PURCHASE ORDER TYPE TABLE 4 D CONVERT REQUISITIONS TO P.0 S r,,r,,s=,+ ..+x4,ar,vr..;..,..vs ,Wnorterfwu�„a%,.4. ..�q,,,,,,,...,,,,i40,,,,, a ; -. . ir.Ncl^4C5;..»e v 1. dx, .. i c. tiF� # Estx �4 • i VII. Auditee Responses 1 . 1 a , e if BOARD OF COUNTY COMMISSIONERS • �_�" �. j ..-r•�, MAYOR Wilhelmina Harvey,District 1 CH UNTY oONROE -�.r�` Irt� Mayor Pro tem Shirley Freeman,District 3 KEY WEST FLORIDAF 33040 .,_ is;�:+; George Neugent,District 2 (305)294-464l ' ,: �r..1. Nora Williams,District 4 !IL;;kJ . ,,1, ,�,� .s Mary Kay Reich,District 5 Monroe County f,,,� � _:t. ��. �;�; Office of Management & Budget •.. 4" •. , >'A�.,;iii.4. 100 College Road ' ` an~ y Key West, FL 33040 Awl" '"%` ' ac�P:• y rn voice: (305) 292-4470 . ` , ` I1,'( ni-1;- .�� Q fdx: (305) 295-4320 i..� w ' " • - CD '� c' -o • MEMORANDUM ;<<'= 3 • Fri -i r ti -�1^;J b (") Date:. August 31, 1999 • ' a XI cp cD ( To: ' Danny L. Kolhage, Clerk of the Circuit Court From: t`,:, James Roberts, County Administrator 1 Subject: Preliminary Audit Report-Preliminary Draft Audit of Purchasing Function Per,Sandra Mathena's letter dated July 20, 1999; responses to the audit findings are as follows: Some general background is pertinent to this audit. The Purchase Order system was included as one component of a new accounting system that was installed recently. The new accounting system includes capabilities (and limitations) which were not present in the old system and will make necessary some policy and procedural changes to fully exploit its features. Some of those policy and procedural changes are recommended in the audit. Accounting policy and procedural changes have to be worked out between the three key users of the system; Finance, OMB, and the operating departments. These changes are transmitted verbally or by memorandum to the pertinent parties. Other than the Purchasing Policy,there is no formal accounting policy or procedure manual. We believe that a formal accounting procedure manual would clarify who is responsible for each step in the accounting process, including purchasing.. It would also be a reference for the • I departments to answer common accounting questions and promote consistent accounting procedures. An accounting procedure manual would be the vehicle to promulgate changes in accounting procedures and improve communications. , IFinding(s): Section V.A.1. Purchase Order#190739 overstated by $10,400. Answer: 1. The sampled PO #190739 was reviewed by Purchasing staff. Purchasing staff contacted the TDC, who originated this purchase order, and requested explanation as to why the PO 1 amount would exceed the contract. TDC informed Purchasing that they intended to encumber the entire amount budgeted. Purchasing staff contacted Finance about this issue and was • advised to issue this purchase order for the total budget amount. Purchasing routinely compares purchase order amounts against BOCC minutes or contacts the originating department to verify that the PO amounts are not exceeded. Finding(s): Section V.A.2. Incorrect amounts paid on Blanket Purchase Orders. Answer: 1. The Purchasing Department will remind the departments of this procedural requirement, which is clearly stated in the Vendor Letters. Finding(s): Section V.A.3. PO number placement on the new Purchase Order form. Answer: 1. When Purchasing Department was first shown the new Purchasing system and new forms, this was one of the problems directed to the software vendor. It is not possible for Purchasing to unilaterally modify the Purchasing system. The software vendor only allowed a few minor changes to be made that were not to the satisfaction of the Purchasing Department. Purchasing will request,through Finance, that this modification be made. Finding(s): Section V.A.4. Paid Purchase Orders still encumbered. Answer: 1. Purchasing Department was not authorized by Finance to run the reports (part of fund accounting), which are necessary to review open purchase orders. However, in August, 1999, Purchasing staff was given authorization and brief training by Finance over the phone to run this type of report. Purchasing Department now runs this report, marks the status of each purchase order and forwards the report to Finance for necessary actions. Finding(s): Section V.B.1. Purchases made without Purchase Orders. Answer: 1. The items regulated by Administrative Instruction are for special purchases that require other department approvals prior to ordering (e.g., Computers require Information Systems approval). It clearly describes in the Purchasing Policy, Chapter 7, D, 1, items that are to be processed without a purchase order. In nearly all such cases, departments send audit slips directly to Finance for payment. The Purchasing Department will remind the departments of these requirements. 2. When the new system was installed, the departments sent payments to Finance with purchase orders. However, Finance staff occasionally bypasses the purchase order and pays the invoice by audit slip. This may be due to the problem of duplicate vendor number. Finding(s): Section V.B.2. Contracts and Construction Projects not encumbered. 2 Answer: 1. Most contracts and construction projects have never been handled by purchase order. This recommendation has been made before and discussed with the departments. The departments raised several questions about the extra paper work and delays this requirement would create. . Purchasing will address this recommendation to the departments again to determine how it might be implemented and how their objections might be answered. Finding(s): Section V.C.1. Financial disclosure noncompliance. Answer: 1. Administration has requested a legal opinion from the County Attorney's Office. Finding(s): Section V.C.2. Notice to affected employees required. Answer: 1. See answer to V.C,1. Finding(s): Section V.D.1. Numerous low cost purchase orders issued. Answer: 1. The audit pointed out that their survey indicated that elsewhere in the state, the cost per purchase order varied from $18 to $100, and the median was $50. It should be noted that our cost, at$25 per purchase order, is well below the median and indeed near the bottom of the survey range. 2. A purchasing workshop was held to review the Purchasing Policies with the departments and Purchasing Staff emphasized the use of Blanket Purchase Orders to further reduce the cost per purchase order. 3. Even though our cost per purchase order is already quite low compared to other local Florida governments according to the survey, Purchasing will continue to research means to lower the costs further. Finding(s): Section V.D.2. Fleet Management responsible for many purchase orders. Answer: 1. Last year Fleet Management solicited bids for an auto parts contract and entered into a contract with Napa Auto Parts in July of 1998. Fleet Management routinely uses Blanket Purchase Orders. However,the number of purchase orders issued to Fleet Management has drastically decreased since the time period covered by this audit finding. Finding(s): Section V.D.3. Stockroom to be eliminated. _Answer: 1. Elimination of the stockroom will not result in loss of quantity discounts. Our supplier offers the same discount directly to the departments that they offer through purchasing. 3 2. When the stockroom is eliminated, there will be no increase in the amount of time required for the department to order routine supplies. In fact, we expect that the time required to place, fill, and receive office supply orders to actually decrease. The department will simply fill a different form, similar to the stock form they fill now. 3. County management has evaluated the effects of elimination of the stockroom and found that the Purchasing Department will still be ordering office and paper supplies when the stockroom is eliminated. Purchasing Department currently purchases 90% of the supplies stocked by Office Depot through the National Associations of County (NACO) agreement and receives the nationally negotiated price no matter the quantity. The supplies will be delivered the next day, directly to the department. 4. There is no space available at the Gato Building for a stockroom, and to add space for a stockroom, which handles less than$50,000 per year in gross orders, and at no savings to the County, would be cost prohibitive. Finding(s): Section V.E.1. Requisitions transmitted by computer not approved. Answer: 1. Purchasing will investigate and test the features of the Requisitions Approval Definition Table to improve control over purchasing. See general comments above. Finding(s): Section V.E.2. Authorized signature list. Answer: 1. Purchasing Department keeps on file a signed, detailed Purchasing Authorization Form for each user, by Department and by Division. This form has to be approved and signed by the respective Department and Division managers. 2. In addition to the Purchasing Authorization Form, Purchasing requests a signature list on behalf of the Finance Department for their use in accounts payable. 3. Purchasing will be included in the routing for Personnel Action Forms to ensure that transfers and resignations will be promptly handled in the Purchasing system. Finding(s): Section V.E.3. Authorized signature-purchasing limits. Answer: 1. In 1994 the Purchasing Policies were revised and the dollar limit was changed from $1,000.00 to $5,000.00. This policy was developed by the Administration and approved by the Board of County Commissioners. Finding(s): Section V.E.4. Purchase Order increases. Answer: 1. Purchasing will recommend that the Purchasing Policy be amended to restrict the amount by which a purchase order can be exceeded to 20%. This would be in keeping with previous policy limit of 20%without requiring a new purchase order and requisite approvals. Finding(s): Section V.F.Negative cost centers. 4 Answer: 1. Purchasing will work with Finance to change the system parameters from"warning"to "fatal"when purchase requests attempt to exceed budget and notify departments of this procedural restriction. See general comments. Finding(s): Section V.G.1 Accounts charged not checked before Purchase Order approval. Answer: 1. Purchasing did not request modifications to the Purchasing software system that would prevent the full account number from being printed on the requisition report. The software vendor advised the Purchasing Department that requisition reports could only show the cost center and not the entire account. This is a restriction in the new system over which Purchasing has no control. 2. Purchasing is required to coordinate software training through Finance and has had difficulty in getting the software vendor to provide training in keeping with the original software contract. When the vendor was supposed to be training, they spent much of their time fixing software problems. Purchasing should be given the authority to deal more directly with the software vendor. See general comments. Finding(s): Section V.G.2. Requisitions not combined. Answer: 1. Although there is an option to combine PO's in the system, the new system issues an error message when this option is invoked. This problem has been brought to the software vendor's attention several times without appropriate action. Purchasing will attempt again to have the vendor fix the software problem to allow this function. Purchasing should be given the authority to deal more directly with the software vendor to correct problems. Finding(s): Section V.H. Receiving reports not required. Answer: 1. Most vendors do not supply a receiving ticket but usually include a packing list with the delivered goods. In many cases, the vendor does not provide a separate packing list or receiving ticket, especially for purchase of services. Finance has allowed the payment of invoices for goods based on an authorized signature, which indicates that the goods were received. In those cases where the packing list is available, it is our procedure to send it along with the invoice when making payments. 2. Vendors are advised of the requirement to include a delivery receipt and/or packing slip or receiving ticket in our Vendor Letters. See general comments. Finding(s): Section V.I. Filling orders for stockroom supplies Answer: i .ram 5 • • l. All the recommendations from the auditors on this item have already been instituted. A buyer will only fill stock orders if there is no other staff members in the office.