Backup Documents 05/09/2017 Item #16J3 'Y
GO�.,ER COLT
Internal Audit Department
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Audit Report 2017-7
Job Creation Investment Program:
Arthrex, Inc., and Arthrex
Manufacturing, Inc.
Dwight E. Brock
Clerk of the Circuit Court
and Comptroller-
2 ,,,,i rail Last Issued: May 2, 2017
Suite r402
aples, FL ')-4 I 2-5746
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Prepared by: Mike Harder, Senior Internal Auditor
Pat Blaney, Senior Internal Auditor
Report Distribution: Board of County Commissioners
Leo Ochs, Jr., County Manager
Jeff Klatzkow, County Attorney
Nick Casalanguida, Deputy County Manager
Mark Isackson, Corporate Financial &Management Services Director
Jace Kentner,Business and Economic Development Director
Cc: Dwight E. Brock, Clerk of the Circuit Court and Comptroller
Crystal K. Kinzel, Chief Deputy Clerk
James D. Molenaar, Internal Audit Manager
TABLE OF CONTENTS
SUMMARY 2
OBJECTIVES 2
SCOPE 2
BACKGROUND 2
OBSERVATIONS 3
MANAGEMENT RESPONSE 3
The files and draft versions of audit reports are confidential and exempt from public records requests during
an active audit under Nicolai v. Baldwin (Aug. 28, 1998 DCA of FL, St District) and §119.0713, Florida
Statutes. Workpapers supporting the observations noted within this report become public record and will be
made available upon request once the final audit report has been issued.
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Internal Audit provided a draft of this report to the Office of Business and Economic Development for management
response on March 31,2017.County management provided that response on May 2,2017.
SummarV'
This examination generated the following observation regarding the Job Creation Investment Program:
• Arthrex maintained 400 eligible jobs(Phase 1)initially validated at June 30,2014.
• Arthrex maintained 100 eligible jobs(Phase 2)initially validated at June 30,2015.
• Arthrex created an additional 100 eligible jobs(Phase 3)during 2016.
Objectives
The objective of the audit engagement was to validate the number and wages of eligible ongoing and new jobs that
qualified for the Job Creation Investment Program incentive payment during the period from July 1, 2015,through
June 30,2016.
Scope
The audit engagement consisted of,but was not limited to,the following tasks:
• Reviewing applicable Florida Statutes;
• Reviewing applicable Collier County Ordinances;
• Reviewing applicable Board of County Commissioners(BCC)Agenda Items and Meeting Minutes;
• Reviewing the BCC's Job Creation Investment Program Agreement with Arthrex;
• Examining payroll and personnel records from Arthrex; and
• Tracing payroll data,such as employee numbers, names,job titles,hire and/or promotion dates,wages, work
locations,and lawful United States residency,to the personnel records.
The Office of Business and Economic Development and the Clerk's Internal Audit Department verified 100% of
applicable payroll,personnel,and I-9 documents for Arthrex' created positions.
n3ackground
The Clerk's Internal Audit Department assisted the Office of Business and Economic Development in validating jobs
created by Arthrex in accordance with the Job Creation Investment Program.This program was a performance-based
initiative authorized in Collier County Ordinance 2003-60, as amended. The program provided general revenue
funding to businesses for the creation of jobs that met the criteria specified in the Ordinance. Those criteria, which
varied by geographic location within Collier County,included minimum numbers of new jobs at or exceeding specific
wage levels.
Collier County Ordinance 2003-60 stated that the program's purpose was "to promote and foster economic
diversification through the retention and creation of high wage jobs in targeted industry clusters."Ordinance 2006-
36 defined jobs as "limited to individual permanent legal residents of the United States who are employed in each
new created position of employment at a primary location in Collier County,and as applicable maintained,as a result
of the program." Ordinance 2003-60 originally terminated this program on October 1, 2008,but on September 9,
2008,the BCC enacted Ordinance 2008-46, which extended the Job Creation Investment Program through October
1,2013.
The BCC approved a Job Creation Investment Program agreement with Arthrex on January 24,2012,that would pay
Arthrex$2,000 over a three-year period for each job created.
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In its 2011 application to participate in Collier County's economic incentives, Arthrex proposed creating new jobs
with annualized wages averaging$59,580.The average private sector wage in effect at that time was$38,719.Based
on its expansion locations,the Program required Arthrex to create at least 30 new, eligible jobs. Arthrex intended to
create 400 net new jobs by June 30,2014(Phase 1), 100 more new jobs by June 30,2015 (Phase 2),and another 100
new jobs by June 30,2016(Phase 3),for a total of 600 net new jobs.
This review validated Arthrex' creation of 600 new jobs in Collier County in the period ending June 30, 2016. By
meeting the terms of its Job Creation Investment Program Agreement, Arthrex has earned an economic incentive
payment of$400,000.00.
Observations
I) Arthrex maintained 400 eli"ible 'ohs (Phase 1) initially N alidated at June 30, 2014.
The Office of Business and Economic Development and the Clerk's Internal Audit Department reviewed Arthrex
personnel and payroll records for Phase 1 job creation support.This process established that Arthrex maintained 400
Phase 1 jobs initially validated for 2014.Those jobs paid an average wage of$72,695 as of this review,and continued
to qualify for a Job Creation incentive payment. According to Collier County's Job Creation Investment Program
Agreement with Arthrex,this final incentive payment for 400 Phase 1 jobs is$266,666.66.
2) Arthrex maintained 100 eli«ible 'obs (Phase 2) initially Validated at June 30, 2015.
Business and Economic Development and Internal Audit also examined Arthrex personnel and payroll records for
Phase 2 job creation support.This process established that Arthrex maintained 100 Phase 2 jobs initially validated for
2015. Those jobs paid an average wage of$77,972 as of this review, and continued to qualify for a Job Creation
incentive payment. According to Collier County's Job Creation Investment Program Agreement with Arthrex, this
second incentive payment for 100 Phase 2 jobs is$66,666.67.
3) :krthrex created an additional 100 eli«ible 'ohs (Phase 3) durino 2016.
Business and Economic Development and Internal Audit also reviewed Arthrex personnel and payroll records of
employees filling positions created between July 1,2015,and June 30,2016(Phase 3 in the Job Creation Agreement).
This process established that Arthrex had created 100 additional jobs during that period.Those jobs paid an average
wage of$89,882, and qualified for a Job Creation incentive payment. According to Collier County's Job Creation
Investment Program Agreement with Arthrex,this first incentive payment for 100 Phase 3 jobs is$66,666.67.
Management Res )0nse
"I have reviewed the submitted Audit Report 2017-7 regarding the compliance of Arthrex Inc. and Arthrex
Manufacturing Inc. with incentive criteria established by the Job Creation Investment Program Agreement with
Collier County, approved January 24, 2012. I concur with the audit findings and consider Arthrex Manufacturing
currently in compliance with the obligations within the Job Creation Agreement up to June 30, 2016, as specified for
Phase Three.
Staff appreciates the professional and pragmatic approach exhibited by the Internal Audit Department for this
performance validation process."
Internal Audit Comments:
Internal Audit gratefully acknowledges the cooperation of both Arthrex and Collier County management and staff for
their support in the audit process.
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