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Audit Report 2014-9 Business and Economic Development - Job Creation and Job Retention Agreements - Haynes Corporation Internal Audit Department Audit Report 201 4 -9 Business and Economic Development Job Creation and Job Retention Agreements: Hay ne s C o r p ora tion Dwight E. Brock Clerk of the Circuit Court 3299 Tamiami Trail East Suite #402 Naples, FL 34112 -5746 www.collierclerk.com Issued: June 18 , 201 4 1 Prepared by: James D. Molenaar, Internal Audit Manager Pat rick Blaney, Senior Internal Auditor Report Distribution: Board of County Commissioners Leo Ochs, Jr., County Manager Bruce Register, Director, Busin e ss & Economic Development Amy Patterson, Manager, Impact Fee s & Economic Development Cc: Dwight E. Brock, Clerk of the Circuit Court Crystal K. Kinzel, Director of Finance & I nt er n al Audit Table of Contents Summary ……………………………………………………………………...………………..………2 Objective……………………………………………………………………...………………..………2 Scope ……………………………………………………………………………………...……………2 Background …………………………………………………………...………………………………..3 Ma n agement Re s p on se.………………………………………………………………………….……..3 Conclusion ……………………………………………………………………………………….……..3 Workpapers supporting the observations noted within this report are public record and can be made av ailable upon request once the final audit report has been issued. T he files and draft versions of audit reports remain confidential and protected from public records requests during an active audit under Nicolai v. Baldw in (Aug. 28, 1998 DCA of FL, 5 th District) and Section 119.0713 , Florida Statutes . 2 Internal Audit provided draft Audit Report 2014 -9 to the Business and Economic Development Director and the Impact Fee Manager for management response on May 27 , 2014 . The Business and Economic Development Director provided the management response on June 4 , 2014 . Summary Th is rev i ew generated the following observations for Collier County’s Job Creation and Job Retention Incentive A gr ee m ents with Haynes Corporation :  Haynes Corporation was visited to examine employee records.  Payroll and personnel records were reviewed for Job Cr e ation eligibility . N ames, hire dates, job titles, and w a g es were n o t ed f or all employees in created jobs . W a g es were averaged for all jobs created, and compared to the requirements of the Job Creation Incentive A greement .  The original 37 retained employee s who were validated in 2011 were compared to Haynes’ employee census as of July 31 , 20 13. Twenty -six original employees remained, and eleven replacements were selected. For those eleven, p ersonnel records were reviewed for Job Retention eligibility. Per the terms of the agreement, n ames, hire dates, and employment a s of July 31, 2013, were n o t ed.  B ecause both A greements contained residency restrictions, th e add res s e s of all employees filling eligible jobs , both original a nd replacement , were confirmed to be i n Col l i e r C o u nt y .  Although not required under these In centive A greements, the I -9 status of every replacement employee was verified. The original employees’ I -9 status had been verified in 2011.  These tests validated that Haynes exce ed ed its Job Creation residency and average wage requirement s for 17 jobs, and that Haynes had retained 37 jobs filled by Collier County residents . Objective The objective of the engagement was to vali d a te the numbe r o f eligible j o bs c r ea t ed and retained in accordance with Hayn e s’ In c e n t iv e A greeme nt s with C o llie r County . Scope Th is examination consisted of validating jobs , residency, and wages , including, but not limited to , the following:  Re ad ing Collier County’s Job Creation and Job Retention Incentive Agreements with Haynes Corporation ;  Reviewing sections 125.045, 288.075, and 688.02, Florida Statutes ;  Examining payroll and personnel records at Haynes Corporation ;  Visiting Haynes Corporation and i nterviewing applicable management;  Substituting replacement employees, as needed, for original employees who had since terminated;  Scheduling payroll and person nel data for all employees h olding jobs claimed as created;  Averaging annual wages for created jobs by reporting year; and  Listing personnel data for replacement employees holding jobs claimed as retained . 3 Background Haynes Corp oration applied to the County Manager for economic incentives, including Job Creation and Job Retention , in 2010 . The ordinances providing for economic incentives expired on October 1 , 20 13 , before the Board of County Commissioners (BCC ) had approved Haynes’ participation in the economic incentive programs . In June 2013 the BCC directed County management to prepare economic incentive agreements with Haynes . At its December 10, 2013, regular meeting, t he BCC approved J o b Cr e a ti on and Job Retention Incentive Agreement s with Haynes. Under the terms of the Job Creation Incentive, t he County will pay Haynes $2,000 per job, spread over three years, for up to 17 new job s created . The jobs must average at least $34,320 in annual wages , and be held by Collier County residents . The J ob Retention Incentive provides $1,000 per job to Haynes for up to 37 j o bs re taine d fro m the time it appli ed through September 30, 2013, and held by a Collier County resident. The $1,000 incentive is to be paid over three years, pending verification of the jobs retained. With the Impa ct Fee & Economic Development Manag e r, Internal Audit validat ed jobs created in accordance with the Job Creation and Job Retention In c ent ive A gr ee m ents . This r ep or t de s cribes th e res u l t s of th at v a l id ation . Management Re sponse “I have reviewed the submitted Audit Report #2014 -9 regarding Haynes Corporation’s compliance with incentive criteria established by Job Creation and Job Retention Agreements in place with Collier County. I concur with the audit findings and consider th e Haynes Corporation currently in compliance with the obligations within the Job Creation and Job Retention Agreements up to September 30, 2013. Staff appreciates the professional and pragmatic approach exhibited by the Internal Audit Department for this p erformance validation process .” Conclusion Due to Haynes Corp oration ’s compliance with the requirements of its J o b Cr e a ti on and Job Retention Incentive Agreement s with Collier County , th ere ar e n o adverse o b ser va tion s to report .