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Home My WebLink About08/14/2025 Audit Monroe County Clerk of Circuit Court & Comptroller Internal Report COUR 0 � w AO fw,�y �i"wawwma'w„� Audit of Monroe County Risk Management 2025-005 b &4�"' 500 Whitehead Street, Key West, FL 33040 1 (305) 295-3130 1 Monroe-Clerk.com Report 2025-005 August 2025 Monroe County Clerk of Circuit Court& Comptroller Kevin Madok, CPA Interim Internal Audit Director Pain Radloff Auditors Noah Browning Kalina Bringle About Monroe County Clerk's Internal Audit Department As part of the Clerk's constitutional responsibilities, the Monroe County Clerk's Internal Audit Department provides independent, accurate, and timely audits of Monroe County government's business activities, operations, financial systems, and internal controls. Internal Audit's audits and consulting services are designed to add value, increase efficiency of operations, advance accountability, and improve stewardship of public resources. Monroe County's Internal Audit Department accepts confidential tips about fraud, waste, and abuse in Monroe County government or programs through its hotline (305) 292-5760 or at hLtps://monroe-clerl<-.com/fraud-waste-abuse. Kevin Madok, CPA Yp6 F �toN..... �..v Clerk of the Circuit Court&Comptroller—Monroe County, Florida August 14, 2025 The Honorable Mayor Jim Scholl Monroe County Board of County Commissioners 530 Whitehead Street Key West, FL 33040 Email: boccdis3(�monroecounty-fl.gov Dear Mayor Scholl: The Monroe County Clerk's Internal Audit Department completed an audit of the Monroe County Risk Management(Risk)program for the period October 1,2022,through September 30,2024.As we conducted our audit fieldwork, the County Attorney's Office began making significant changes to the County's Risk program including hiring an Assistant County Attorney with extensive risk management experience. Other changes made to Risk during 2025 included: (1) improving the methodology for projecting Risk's annual costs to cover risk exposures; (2) working with a consultant to develop a comprehensive internal service billing plan to ensure County departments and offices are paying premiums in proportion to their risk exposure; and(3)instituting a planned increase in the frequency of subrogation of claims. The changes appear to be taking the program in a positive direction for Monroe County. We support and encourage the County Attorney's Office to continue with the planned changes to the County's Risk program.We believe that,once completed, the improvements will result in a more efficient and effective Risk Management Program for Monroe County. We appreciate the courtesy and cooperation extended to the Clerk's Office by County Attorney staff during the audit.We included the County Attorney's response to the audit report as Appendix I. Sincerely, Kevin Madok, CPA Monroe County Clerk of Circuit Court& Comptroller Cc: Board of County Commissioners Bob Shillinger, County Attorney Gaelan Jones, Assistant County Attorney Christine Hurley, County Administrator Internal Audit KEY WEST MARATHON PLANTATION KEY 500 Whitehead Street 3117 Overseas Highway 88770 Overseas Highway Key West, Florida 33040 Marathon, Florida 33050 Plantation Key, Florida 33070 Table of Contents Audit of Audit of Monroe County Risk Management ExecutiveSummary ........................................................................................I Monroe County Risk Management...............................................................2 Purpose and Scope of Internal Audit............................................................3 Reviewof Risk Management..........................................................................4 Appendix I: County Attorney's Response To Audit Report .....................5 Executive Summary The Monroe County Clerk of Circuit Court and Comptroller's Internal Audit Department recently conducted an audit of Monroe County Risk Management (Risk). The audit period was from October 1, 2022, through September 30, 2024. The Monroe County Attorney's Office manages the County's risk management function. Among its duties, Risk is tasked with managing, assessing, and defending liability and tort claims made against Monroe County along with analyzing sources of potential liability and working to eliminate and/or reduce the County's exposure to claims. During the audit period, we noted weaknesses in Risk's operations including reliance on outdated methodologies for completing Risk's annual operating budget and calculating its interdepartmental billings. The County Attorney's Office recognized similar shortcomings before we completed our audit fieldwork and took proactive measures to remedy the issues. Specifically, in January 2025, the County Attorney hired an Assistant County Attorney with extensive experience in risk management to oversee Risk's operations. The Assistant County Attorney is in the process of taking needed steps to strengthen the County's risk management program. We support and encourage the County Attorney's Office to continue with the planned changes to the County's Risk program. We believe that, once completed, the improvements will result in a more efficient and effective Risk Management Program for Monroe County. � 1 � Monroe County Risk Management In 1988, Monroe County (the County) created its Risk Management Program (Risk) whereby the County retains certain risks and manages any resulting claims. To fund this program, the Monroe County Board of County Commissioners (BOCC) created the Risk Management Fund, an internal service fund that is used to pay legitimate claims made against the County. The Risk Management Fund is funded by premiums paid by County departments and offices that rely on coverage by the County's Risk Management Program. At the same time, the County also directed the County Administrator to implement a safety program to identify and implement ways to reduce or eliminate unsafe conditions or practices for which losses may occur. The Monroe County Attorney Office manages the County's risk management function. Risk is tasked with managing, assessing, and defending liability and tort claims made against Monroe County along with analyzing sources of potential liability and working to eliminate and/or reduce the County's exposure to claims. Risk is expected to monitor the insurance carrier counsel's defense of such claims and manage the associated costs. The County's contracts are reviewed by Risk to ensure there is proper insurance coverage in its agreements.Risk also works with members of the public to assist in resolving legitimate accident claims involving County property, operations, or employees. Purpose and Scope of Internal Audit The Monroe County Clerk of Circuit Court and Comptroller requested the Internal Audit Department audit of Monroe County Risk Management. The audit period was from October 1, 2022, through September 30, 2024. The scope of the audit included: • Reviewing management and oversight of the County's Risk Management Fund including annual calculation of fund reserves, calculation and billing of the county premium; • Evaluating the administration and oversight of claims; • Evaluating the internal controls and processes for managing the County's exposure to loss; • Evaluating the effectiveness and efficiency of the current organizational structure of the County's risk management program; and • Evaluating the internal controls and processes over Risk's management of contracts,capital projects, and County property. The original audit scope of risk management included prevention, claims management, fund management, and investigations. As we began our audit fieldwork, we discovered that the prevention function is administered by the BOCC's Employee Services Department. As a result, we determined that an audit focusing on the County's prevention and safety practices would be conducted separately from the Risk Management Audit. � 3 � Review of Risk Management During the audit period, we noted weaknesses in Risk's operations including reliance on outdated methodologies for completing Risk's annual operating budget and calculating its interdepartmental billings. The County Attorney Office recognized similar shortcomings before we completed our audit fieldwork and began taking proactive measures to remedy the issues. Specifically, in January 2025, the County Attorney hired an Assistant County Attorney with extensive experience in risk management to oversee Risk's operations. The Assistant County Attorney identified and took immediate steps to address Risk's noted shortcomings including taking steps to: • Improve the methodology for projecting Risk's annual costs to cover risk exposures. • Work with a consultant to develop a comprehensive internal service billing plan to ensure County departments and offices are paying premiums in proportion to their risk exposure. • Institute a planned increase in the frequency of subrogation of claims. The Assistant County Attorney also found that Risk's prior cautionary approach to budgeting appeared to result in an inflated budget proposal. This was due to the unpredictability of the State of Florida's insurance market in recent years. To address this concern, Risk's fiscal year (FY) 2026 proposal acknowledged the inflation and provided a justification and purpose that may, in due course, reduce Risk's overall cost. We support and encourage the County Attorney's Office to continue with the planned changes to the County's Risk program. In addition, because of the inherent limitations in any internal audit, significant deficiencies may exist and not be detected. We believe the conditions identified in our review constitute reportable conditions, however,we believe that, once completed, the improvements already in progress will result in a more efficient and effective Risk Management Program for Monroe County. � 4 � Appendix I County Attorney s Response To Audit Report — 5 — BOARD OF COUNTY COMMISSIONERS 1tu y of 1 11 1» Mayor Jfam,e,�K.SrHirrEa,IDvrbt[ict The Floi vdrs ? Mayor Pro Tema,Michelle LmcoLm,Di.stnci C7aig,Cate .IDhi77nAn R I Ho,13v McTnIl D r Dace,Lutn r" Rai o t Omab�er t H.�S hhaCounty Attorney Jr., Attorney' "niumri.,,a rla�emm.,Lai�trsrt.5 Pedro J.Mercado,Chbef kss;iita,nt couuinry A rnjEyy'*" Chzii.ntine Lrnabeet-Earr oaw�,3vr.AsEs�w "rrur T AMoray"" Da erek V Howard,Sr. ki i svm c onanty y rtorney " taffire of the Count' Attor " Pener H',.Morris. t Ccnnnry Anmorne w"" 1 a 11 l udo try n.S'mne-4018 Patricia,E�blle ,Assistant f;'ouin),A tnorney Key'rlrs°est.FL 330*:i Joseph Lnimao�vo,.Assistant Counf.y Atnomey"m- (30,5) 4'-1-3470Office K ZeLly Dugm,AmsiiroennfounzyAttorav (305) 42-3.5R61Fax A naelica Harraen-Ivaiic ssLi,Assivant Cotinr Attnruey Due NE.L!_ewni,A�L,ita n couwnny Artonne.v I I &aelam P'.Jone,,Assistant Courant),A ltorney Senn-Lee r IacLari lymvn, u5w,iitamt c bnimty Attorney Ana mm^alner,Asriitaw counnnvy Anorney IDonald L'owa eamd.,Jr..AibrAamt CounnryArnomey a Board cerrifned in city, vmtiy eft Loan]Govi.Law Ally'21,,2025 ovah Browning Senior hvterrmmt Auditor 1"'«+lor oe C.lerlr of C'ouurt 5,00 IVI iteheid Street .ey Nest,FL 33040 RE; if:'omummments oua Du°®uift Risk Management Audit Repo;i°t Demr Mr. Bfcawrairig: Please all v tllii s letter to stn—e as the C'oiamvty's written resporise to the draft audit report dated Rily 77, ,025. We thank you for this oppor-tunity to clanf,certain findings documented in the draft repoi t. Overall,we agree with the tenor of the audit but submit mmit tlir s response to clumriif,the record. The draft report concluudes that a newly-hired Assistwit t'"eRnaty Attonley Gael an Jones,who is assigned to oversee able to improve "mit ated,rimethod lctgies mused,for co mmpletirag F Jsk's amauuaal operating,budget and calculating its interdepartmental billings."The draft report f ullier noted that these iCmlp I overmients were made possible by working with 9.corisuult�arlt to,develop,a eetmpreheris ive itaterna.] service billing Plan. ?L1163itulda:tely7 this is not entirely accuiraate. I lade k P"Ifaria,gelmment 1,,m°aas able to reduce its umrarimual operating Midget with a more detailed projection of expected,mrisuirance prernim n costs for&ter 6. the fechiction was orily made possible by significant stabilization of tile property inrsmur-mrrce market iri recent years. Risk Management requested a large itacrease to the FY23 aramimmml budget for C.o t C`enmter 02 &ie to as dfistrc unexpected increase in the, cast of Propelty insurance expenence ,tluouughouit the stone in 2022. Although time insl.Xance market eventually stabilized,the increased operating budget for f`cust Center tl8-502 wis maintained for the next hvo budget cycles in as pr-rident exercise of caution by the prior Risk l"'«+7 mriager,Brian Bradley. his mna ;iustry experts anticipate ciarrtunuied decreases in the cost of insa.iranice, Mr. ,Jones was gable to more acciirately project'insmurance prernimunis for the upconling fiscal yemr7 a hLxi -y that was not afforded to his predecessor h . Bradley. � 6 � Noah Bfoivning Rily 217 2025 Page 2 The draft report also notes that Risk Mmiagement was able to work with 9.consiftuit to develop a new Compfeliensive internal sen ces billing plan. While Mr.Jones,the current Risk NLmagef, proposed that as corisultmit be retained to develop ara finprmred methodology for FY26 intermlsenrice billings7 billi�ngs �for FY2 5 were calculated in accordance with the meffiodGlogy originally proposed by the C le:rk"s Office working in cooperation with Mr. Bradley as as temporary solution in August 2022. VIle this methodology has preserjed the proportional allocation of aruntal internal senice billings assigned to each costcentef by Mr. Bradley's predecessor,the basis for these allocatioms is poorly imdentoGdmid will be redeveloped for FIf.16 with the Laid of ma actuarial comsultmit. Finally,the draft,report notes 9.gap in staff's risk expeitise- The&aft report"s depiction of the credentials of Brimi Bradley,the inunediate predecessor to the current R ,,sl Mzusager7,is ulaccurate. Mr. Bradley assinned the position of Risk Manager iri.Januzp,of 2022 (FY22,. Prior to assiu-niiag those duties. Mi. Bradley had taken it upon,himself to become as certified As&oci-.qte in Risk:Mmagement (ARXI)and upon taking the posi fion becune active with the F",iblic Risk Maraa geinent Association (P'M,LA:). Mr.Bradley's credentials ive:fe in line with most public risk mmaagenient departments in Florida. We wculd request that the final audit report reflect that distinction. To beclem. Mr. BracUey represented ara up, ade from his pre decessof, who held the title of`, sk Admilpijst?°,ato?•for in-my yem'. Despite finny encouragement arad pa, I or risk Immagement yinei t�f certification classes. Mr. Bradley's predecessor was wiable to pass the tests necei&ary to obtain the credentials expected of as Rdsk Manager. Upora the retirement of Mr. Bradley's predecessor in Ruluary of 2022, 1 upgaded the position frorn F:sk Administratof to Risk Managef along with upgrading the miininial crederatials nec essary to hold the posi6m. Mr.BracUey was selected for the position in Rumary 2022 because he held the desired and neivly requifedcfedentials. I smil,most of the improvenlents noted in the report begmi i�mder Mr. Bracuey's temire once he assiumed the position of Risk Manager in Jimup,of 2022. Those improvements hive contimed under Mr. Jones who has taken the progrm-n to the next level. Tlie C muityAtton;iey's Office,,uiticipates contumed progress i�n niodenuzing the Rl s'k Management pfogmn under its ciurent leadership. Sincerely, Digitally sigime.d by Rcbeirt 8 Robert B. Sfail fingeir, Jr. Shillinger'll, Date:1025,C)7 2 fi 171 2A6 04"00' Robert B. Shillingef,,Jr. Cmulty Attorney CC: G.9jelmi.Jones,,�kssistmt C.oinity Attorney Jaclyn Hatt—Risk Achninistra tof