Agenda 04/24/2018 Item #16J104/24/2018
EXECUTIVE SUMMARY
To provide the Board of County Commissioners the Clerk of the Circuit Court’s Internal Audit
Report 2018-3 Job Creation Investment Program: Arthrex and Arthrex Manufacturing, issued on,
April 24, 2018.
OBJECTIVE: To provide the Board of County Commissioners (Board) the issued Audit Report 2018-3
Job Creation Investment Program: Arthrex and Arthrex Manufacturing.
Internal Audit delivered the Audit Report to the Board on Tuesday, April 24, 2018. It is available
electronically on the Clerk of Courts website.
The Clerk’s website for published Internal Audit Reports, once they are no longer confidential:
https://www.collierclerk.com/finance/internal-audit/published-reports/
Internal Audits do not become public record until the Clerk’s office issues them to the Board.
GROWTH MANAGEMENT IMPACT: None
FISCAL IMPACT: None
RECOMMENDATION: That the Clerk’s Audit Report 2018-3 Job Creation Investment Program:
Arthrex and Arthrex Manufacturing be entered into the record.
Prepared by: Timothy Lo, Internal Auditor
Office of the Clerk of the Circuit Court
ATTACHMENT(S)
1. 2018-3 Job Creation Investment Program - Arthrex and Arthrex Manufacturing (PDF)
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04/24/2018
COLLIER COUNTY
Board of County Commissioners
Item Number: 16.J.1
Doc ID: 5402
Item Summary: To provide the Board of County Commissioners the Clerk of the Circuit Court’s
Internal Audit Report 2018-3 Job Creation Investment Program: Arthrex and Arthrex Manufacturing,
issued on, April 24, 2018.
Meeting Date: 04/24/2018
Prepared by:
Title: – Clerk of the Circuit Court
Name: Timothy Lo
04/18/2018 10:13 AM
Submitted by:
Title: Senior Staff Assistant – Clerk of the Circuit Court
Name: Jennifer Milum
04/18/2018 10:13 AM
Approved By:
Review:
Clerk of the Circuit Court Derek Johnssen Additional Reviewer Completed 04/18/2018 10:31 AM
Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 04/18/2018 10:34 AM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 04/18/2018 10:46 AM
Budget and Management Office Mark Isackson Additional Reviewer Completed 04/18/2018 10:49 AM
County Manager's Office Leo E. Ochs Level 4 County Manager Review Completed 04/18/2018 8:14 PM
Board of County Commissioners MaryJo Brock Meeting Pending 04/24/2018 9:00 AM
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Internal Audit Department
Audit Report 2018-3
Job Creation Investment Program:
Arthrex, Inc., and Arthrex
Manufacturing, Inc.
Dwight E. Brock
Clerk of the Circuit Court
and Comptroller
3299 Tamiami Trail East
Suite #402
Naples, FL 34112-5746
www.collierclerk.com
Issued: April 24, 2018
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Prepared by: Timothy Lo, Internal Auditor
Mike Harder, 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
OBJECTIVE .................................................................................................................................2
SCOPE ..........................................................................................................................................2
BACKGROUND ..........................................................................................................................2
OBSERVATION ..........................................................................................................................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, 5th 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 April 2, 2018. County management provided that response on April 16, 2018.
Summary
This examination generated the following observation regarding the Job Creation Investment Program:
Arthrex maintained 600 eligible jobs for Phase 1, Phase 2, and Phase 3.
Objective
The objective of the audit engagement was to validate the number and wages of eligible ongoing jobs that qualified
for the Job Creation Investment Program incentive payment during the period from July 1, 2016, through June 30,
2017.
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.
Background
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.
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
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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 that Arthrex maintained the previously created 600 new jobs in Collier County for the period
ending June 30, 2017. By meeting the terms of its Job Creation Investment Program Agreement, Arthrex has earned
an economic incentive payment of $133,332.33.
Observation
1) Arthrex maintained 600 eligible jobs for Phase 1, Phase 2, and Phase 3.
Business and Economic Development and Internal Audit examined Arthrex personnel and payroll records for Phase
1, Phase 2, and Phase 3 job creation support. This process established that Arthrex maintained 600 jobs as of June 30,
2017, and continued to qualify for a Job Creation incentive payment. According to Collier County’s Job Creation
Investment Program Agreement with Arthrex, the final incentive payment due for 100 Phase 2 jobs is $66,665.66,
and the second of three payments due for 100 Phase 3 jobs is $66,666.67.
Management Response
“I have reviewed the submitted Audit Report 2018-3 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, 2017.
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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