Agenda 01/24/2012 Item #16C3Proposed Agenda Changes
Board of County Commissioners Meeting
January 24, 2012
Continue Item 8A to the February 14 2012 BCC Meetine• This item continued from the January
10, 2012 BCC Meeting. This item requires that ex parte disclosure be provided by Commission members.
Should a hearing be held on this item, all participants are required to be sworn in. PUDZ- 2003 -AR -3608:
Orangetree PUD -- An Ordinance amending Ordinance Numbers 2005 -42 and 2004 -73, the Orangetree
PUD, to add 1,050 residential units for a total of 3,150 residential units; to add 100,000 square feet of
office use and add 172,000 square feet of retail use to the existing 60,000 square feet of retail for a
total of 332,000 square feet of commercial development; to revise the development standards
including building height and setbacks and to add allowable residential, commercial uses and mixed
uses, and to eliminate the environmental commitments, for property located in parts of Sections 11,
12, 13,14, 22 through 27, Township 48 South, Range 27 East, Collier County, Florida consisting of
2,138.76 acres; and by providing an effective date. (Coordinator: Kay Deselem, AICP, Principal
Planner) (Commissioner Coletta's request)
Withdraw Item 16A5: Recommendation to direct the County Manager or Designee to have the
County's consultant proceed with the design of a pathway connection on the north side of Immokalee
Road, also known as, Alternative 1. (Staff's request to revise back -up material)
Move Item 16A13 to Item 10I: Recommendation to direct the County Manager or his designee to
work with the Finance Committee, the County Attorney, and the Clerk's Office to review and possibly
establish a potential process which would authorize the solicitation for competitive bid proposals
from interested firms willing to both finance and construct production -ready projects.
(Commissioner Coyle's request)
Continue Item 16C3 to the February 14.2012
BCC Meeting: Recommendation to approve
removing uncollectible accounts receivable
and their respective balances from the
financial records of Collier County Public
Utilities Division in the amount of
$423,644.77. (Staff request based on Finance
Department request for additional time to
review all documents)
Move Item 16D8 to Item 10F: Recommendation to approve an agreement and associated forms with
the Florida Department of Economic Opportunity (DEO) to accept funding for the Disaster Recovery
Enhancement Funds (DREF) in the amount of $3,335,131.91 and approve a budget amendment to
allocate the funding. (Commissioner Hiller's request)
Move Item 16D10 to Item 10G: Recommendation to approve reprogramming of Community
Development Block (CDBG) Grant funds in the amount of $810,000, and approve a Subrecipient
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1/24/2012 Item 16.C.3.
EXECUTIVE SUNEVMRY
Recommendation to approve removing uncollectibie accounts receivable and their
respective balances from the financial records of Collier County Public Utilities
Division in the amount of $423,644.77.
OBJECTIVE: In that staff, working collaboratively with the Clerk of Courts Finance,
has exhausted all collection efforts, approve removing uncollectible balances from the
Miscellaneous Accounts Receivable Ledger; the Collier County Water -Sewer District
( "District ") Subsidiary Ledger; and Solid Waste Landfill Accounts Receivable Ledger to
represent the true financial picture of the Board of County Commissioners' General
Ledger.
CONSIDERATION: Accounts receivable management includes the- periodic
recognition of bad debt expense in the financial records for accounts that have been
identified as uncollectiible. Bad debt is recognized for a variety of reasons.
• Exceeding the statute of limitations of collection.
• Commercial accounts where the registered entity has gone out of business.
• Staff errors and omissions.
• Non - Sufficient Fund (NSF). checks that are returned as not collectible.
An internal review of all accounts receivable balances within the Public Utilities Division
n (PUD) was completed in coordination with the Clerk of Courts Finance. Process
improvements for quality assurance/quality control programs have ,been incorporated into
our business practices for all accounts receivable balances within the PUD (Exhibit 1,
Page 1). Collection efforts for receivable balances included in this recommendation have
been exhausted (Exhibit 1, Page 2). Approval of this item will increase PUD bad debt
expense by $137,696.90, and reduce the reserve for bad debt by $285,947.87.
A. Miscellaneous Billing
The accounts receivable balance in the amount of $285,947.87 is- comprised of invoices
issued to contractors for repairs to damaged infrastructure (water and sewer lines, etc.),
including internal costs for staff time, equipment, and materials used to make the
necessary repairs. The lien rights afforded to the District arising from a failure by a
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1/24/2012 Item 16.C.3.
property owner to pay water or sewer services is not available in cases where District
infrastructure is buried in the right of way.
Annually, the Clerk of Courts identifies miscellaneous billing accounts that are one year
or older and recognizes those as bad debt, recording the bad debt expense in the general
ledger. An Ernst and Young audit of the miscellaneous billing system recommended
removal of those account balances (Exhibit 2).
B. Collier County Water -Sewer District
The impact to the District's bad debt expense is $100,974.04. On average, the District
bills over $100,000,000 in annual revenue. The recommended write -off represents .10%
of annual water -sewer revenues. Staff benchmarked this with utilities in neighboring
counties and . municipalities for their recent uncollectible accounts receivable experience
(Exhibit 1, Page 3).
C. Sewer Impact Fees
The amount recommended for removal is $1,575.00, representing two checks returned by
the bank for non - sufficient funds.
D. Solid Waste Disposal
The accounts receivable balance of $17, 354.83 represents amounts in the solid waste
landfill accounts for five companies that have gone out of business. Delinquent balances
related to NSF checks dated April 1, 1990, through August 29, 2011, total $16,235.20.
Total bad debt expense for the Solid Waste Disposal Fund is $33,590.03.
E. Mandatory Collections
The balance recommended for removal is $1,557.83. This amount represents 13 NSF
checks dated January 1994 through January 2008.
GROWTH MANAGEMENT IMPACT: There is no growth management impact
associated with this action.
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney,
is legally sufficient, and requires majority support for approval. -JAK
FISCAL IMPACT: Removal of the accounts receivable balances from the District
subsidiary ledger will increase bad debt expense in FY2012 in Operating Fund (408) by
$100,974.04; Sewer Impact Fee Fund (413) by $1,575.00; Solid Waste MWgement
Fund (470) by $33,590.03; and Mandatory Collections Fund (473) by $1,557.83.
Removal of District miscellaneous accounts receivable balances will reduce the
allowance for doubtful accounts in Operating Fund (408) by $285,947.87.
RE� COMMENDATION; That the Board of County Commissioners, as Ex -officio the
Governing Board of Collier County Water -Sewer District, approves removing
uncollectible accounts receivable and their respective balances from the financial records
of the Public Utilities Division in the amount of $423,644.77.
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1/24/2012 Item 16.C.3.
^ PREPARED BY: Teresa Riesen, Revenue Manager, Utility Billing and Customer
Service
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COLLIER COUNTY
Board of County Commissioners
Item Number: 16.C.3.
1/24/2012 Item 16.C.3.
Item Summary: Recommendation to approve removing uncollectible accounts receivable
and their respective balances from the financial records of Collier County Public Utilities
Division in the amount of $423,644.77.
Meeting Date: 1/24/2012
Prepared By
Name: debbie chinn
Title: Administrative Assistant,Utilities Finance Operations
12/21/20118:10:30 AM
Submitted by
Title: Manager - Revenue,Utilities Finance Operations
Name: RiesenTeresa
12/21/20118:10:31 AM
Approved By
Name: HapkeMargie
Title: VALUE MISSING
Date: 12/21/20119:42:33 AM
Name: RiesenTeresa
Title: Manager - Revenue,Utilities Finance Operations
Date: 12/27/20118:59:36 AM
Name: Joseph Bellone
Title: Manager - Utility Billing & Cust Serv.,Utilities Finance Operations
Date: 1/4/2012 8:08:32 AM
Name: Pam Callis
Title: Supervisor - Revenue,Utilities Finance Operations
Date: 1/4/2012 11:11:48 AM
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^ Name: WidesTom
Title: Director - Operations Support - PUD,Utilities Fina
Date: 1/4/2012 4:33:33 PM
Name: YilmazGeorge
Title: Director - Wastewater,Wastewater
Date: 1/11/2012 11:33:01 AM
Name: KlatzkowJeff
Title: County Attorney,
Date: 1/11/2012 2:55:34 PM
Name: KlatzkowJeff
Title: County Attorney,
Date: 1/11/2012 3:01:58 PM
Name: GreenwaldRandy
Title: Management/Budget Analyst,Office of Management & B
Date: 1/12/2012 9:00:15 AM
Name: UsherSusan
Title: Management/Budget Analyst, Senior,Office of Manage
Date: 1/17/2012 9:00:02 AM
Name: OchsLeo
Title: County Manager
Date: 1/17/2012 9:48:01 AM
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1/24/2012 Item 16.C.3.
1/24/2012 Item 16.C.3.
PUBLIC UTILITIES DIVISION
Accounts Receivable Report
January 24, 2012
EXHIBIT 1
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1/24/2012 Item 16.C.3.
^ PROCESS IMPROVEMENTS
Quality Assurance /Quality Control (QA/QC) Program
Process improvements for protection and preservation of Public Utilities Division (PUD)
accounts receivable assets include:
a. For miscellaneous billing:
i. All invoice requests are reviewed by accounting staff for complete and
proper documentation to support the claim prior to approval of the invoice.
ii. Staff is developing an offset procedure with the Clerk of Courts Finance
Department to recover delinquent receivables from active Collier County
vendors.
b. For water -sewer billing, written procedures for balance transfers due to change in
ownership have been implemented.
c. For impact fee payments, all checks must include the driver's license number
accompanied by a photo ID in accordance with county -wide procedures.
d. For solid waste disposal:
iii. Current landfill operating policy prohibits customers from disposal at the
landfill until bad checks have been replaced. Customers with a bad check
history must pay by cash or credit card within one year of the date of the
returned check.
iv. Billing for services in arrears is limited to only government agencies (City
of Naples, City of Marco Island) and franchise solid waste haulers (Waste
Management Inc., and Choice Environmental).
e. For mandatory solid waste trash collection, liens are recorded with the Clerk of
Courts on properties for delinquent payments, ensuring collection when
ownership is transferred.
From time to time, staff may utilize outside legal and forensic expertise to preserve and protect
PUD accounts receivable assets.
Page 1
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1/24/2012 Item 16.C.3.
COLLECTION PROCESSES
Non - Sufficient Funds (NSF) Check Recovery Process
Currently, Clerk of Courts Finance reviews checks returned by the bank for non - sufficient funds
and identifies those eligible to be turned over to the State's Attorney for collection following
written notification to the customer that returned checks must be paid in full within 30 days.
Delinquent Invoice Collection Process
Utility accounting staff follows a four step process when invoices become delinquent.
1. The first delinquent notice is sent 30 days after the invoice date reminding the entity that
the invoice is overdue.
2. The second delinquent notice is sent 60 days after the invoice date demanding payment.
3. The third and final delinquent notice is sent 90 days after the invoice date, and notifies
the responsible party that the invoice will be sent to a collection agency if payment is not
tendered.
4. All invoices are sent to the collection agency under contract with Collier County. Those
returned as uncollectible are considered for removal from the financial records.
Page 2
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1/24/2012 Item 16.C.3.
^ ACCOUNTS RECEIVABLE BENCHMARKS
Lee County Utilities (similar in size to the District) recognized bad debts of approximately
1.00% of annual billed revenues.
Sarasota County Utilities (slightly larger than the District) experienced a.33% uncollectible rate.
The City of Naples experiences an annual uncollectible rate of .48 %.
Page 3
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1/24/2012 Item 16.C.3.
EXHIBIT 2
Management Response
Public Utilities — Miscellaneous Revenue & Billing
1) Segregation ofDuties
Observation: During the course of our Miscellaneous Billing — Water & Wastewater
walkthrough at UBCS, we noted that the same individual who reviews the draft invoices prior to
issuance to customers (control activity) has access in the SAP module to edit the invoices, and is
also the same individual who mails the invoices.
Recommendation: Management should consider that a different individual perform an
additional review and be responsible for the mailing of the final invoices, or that the Fiscal
Technician's SAP access be restricted to prevent her ability to edit the invoices prior to her
approval of them, in order to achieve adequate segregation of duties. - A fundamental element of
internal control is the segregation of certain key duties. Segregation of incompatible duties, such
as the recording activity and the control activity, ensures that no employee or group should be in
a position both to perpetrate and to conceal errors or fraud in the normal course of their duties.
Management Response: Management agrees and requested Clerk's MIS to restrict the fiscal
technician's access to prevent editing invoices prior to approval. This system permissions
change has been implemented.
2) Accounts Receivable Write-off & Aging
Observation: During our walkthrough of the Miscellaneous Revenue & Billing - Water &
Wastewater process at UBCS, we noted that the aging of receivables includes accounts which are
greater than 1 year old. We note that the Finance office fully allows for any receivables older
than 1 year; however, this process does not include writing off uncollectible accounts.
Recommendation: Management should consider that those accounts which are greater than 1
year old, and have therefore already been provided to the collections agency, should be written
off, as collectability is unlikely. This will reduce the gross -up of the accounts receivable balance
as well as the offsetting allowance for doubtful accounts, resulting in accounts receivable
balances which are more likely to be realized.
Management Response: Management agrees that account balances that are uncollectible
should be written off in a timely manner. Those balances due from vendors who are also service
providers to the county will not be sent to the collection agency. Every attempt will be made to
offset receivables balances against payables to that vendor. All other aged receivable balances
that have been returned by the collection agency as uncollectible will be written off, regardless of
the age of the receivable. Staff is preparing an Executive Summary to recommend existing
balance write -offs for invoices that are considered uncollectible.
Observation: Per policy, accounts which are greater than 90 days overdue are turned over to the
collections agency, based on the review of the aging by the Fiscal Technician. We noted during
our discussions with the Fiscal Technician that, although a procedure is in place for reviewing
the receivables aging on a weekly basis in order to determine the accounts to be sent to the
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1/24/2012 Item 16.C.3.
ON" Ul 0-0
^ collections agency, the procedure is being performed more on an ad hoc basis, as there is no
formalized review process of the procedure. Therefore, the receivables aging may be reviewed
several times within the month or not at all, depending on the availability of the Fiscal
Technician.
Recommendation: Management should consider that the review of the aging be incorporated
more formally into a weekly or monthly receivables closing and a formal list of accounts to be
sent to a collection agency be formally approved by the Department Director. Therefore, the
process will be more formalized and result in standardized opportunities for review, which will
in turn assist with the implementation of the new offset policy, as the review of vendors may be
performed simultaneously. Management may also wish to consider that the vendor numbers in
the UBCS Miscellaneous Billing Module of SAP be adjusted to match those vendor numbers
used universally by the County, allowing employees to run a matching using the SAP program to
identify vendors who fall under the offset policy. Alternatively, a vendor table could be
developed in SAP to allow reconciliation between the UBCS vendors and the County vendors.
Management Response: Management agrees to a formal monthly review of the aging to be
implemented with the November, 2010 A/R balance.
Observation: Per discussions with UBCS management, we noted that a new policy has been
approved by the Board on September 28, 2010 (Agenda Item 160), but is not yet in place. This
policy allows management to offset the amounts owed to vendors by the County with the
vendor's overdue balance owed to the UBCS division (hereafter referred to as the "offset
policy "). We note that this policy will require that UBCS management/staff to review the listing
of vendors on a frequent basis and to crosscheck the vendors against the County's master vendor
listing.
Recommendation: Management should consider that, upon the implementation of the offset
policy, accounts sent to the collections agency should be restricted to those accounts which are
not actionable in any other way. In other words, those accounts which can be collected through
the offset policy should not be provided to collections, in order to reduce the administrative
burden on the employees to follow up with the collections agency, and to ensure more timely
settlement of the account.
Management Response: Discussions are underway with Clerk's Finance and MIS to determine
how best to automate offset of receivables against payables. Once this process has been
implemented, receivable balances sent to the collections agency will be restricted to only those
that cannot be resolved via the offset process.
3) Wastewater Invoice Detail Preparation
Observation: In our testing performed over the process of Miscellaneous Billing & Revenue -
Wastewater, we noted that the County subcontracts out certain work orders. When work is
subcontracted, the County receives an invoice from the subcontractor for the work performed,
and the County uses that invoice received as the basis for the invoice amount to be charged to the
subject of the work order. We noted that when an invoice was received from the subcontractor,
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1/24/2012 Item 1.6.C.3.
EXHIBIT 2
the County noted that the "Service Date" was the date of the subcontractor invoice, not the date ^
that the work was performed.
Recommendation: Management should consider implementing a policy in which all work
orders are processed, listing the "Service Date" as the date the work was actually performed,
regardless of which date the County receives subcontractor invoices or processes the work order.
This will more accurately reflect the details of the work performed and may decrease the volume
of related complaints /disputes regarding the services performed from customers. It also helps to
ensure that revenues are stated correctly, as currently, some revenues may not be properly
accounted for as of the month or year -end based on the actual date of service performed and
additional time is incurred to accrue such revenues prior to the closing of the books.
Management Response: Management agrees to list the `'Service Date" as the date the work was
actually performed. The invoice received. from the subcontractor will show the actual date the
work was performed.
Observation: In our testing performed over the process of Miscellaneous Billing & Revenue -
Wastewater, we noted that the Work Order does not specify the customer /contractor to whom the
work performed should be invoiced. This information is provided verbally to the Wastewater
Supervisor by the preparer of the work order by the Field Supervisor, but is not formally
documented on the work order. Therefore, there is no record of the customer to which the
invoice is to be billed to until the invoice is created by the Wastewater Supervisor.
Recommendation: Management should consider implementing a policy in which all work ^
orders provide the name of the customer. This will reduce the possibility of mistaken or
incorrect billings and ensures that each work order document stands alone and provides sufficient
detail for the preparation of an invoice, without requiring further information from the field
supervisor. This also prevents any delays in processing work orders, as if the Field Supervisor is
unavailable, the Wastewater Supervisor may still prepare the invoice.
Management Response: Water/Wastewater will create work order in wo system and reference
responsible party (property owner, contractor, etc.) at the time of creation. Work will then be
performed either in -house or by hired contractor (hired contractor will need to reference work
order number on invoice for payment to receive payment). Work order will then be reviewed by
supervisor /manager to confirm that the work is clearly billable. Invoice for payment is created to
bill property owner or responsible contractor.
4) General Work Order Review & Iimely Invoice Preparation
Observation: In conjunction with our walkthrough, and as confirmed through our testing
performed over the receivables aging and discussions with management, we note that there is no
formal policy in place relating to the timing of work order processing and billing. As such, a
work order may not be invoiced for several months, depending on the availability of the Fiscal
Technician preparing the related invoice. Therefore, resulting difficulties are untimely revenue
collections, possible incorrect pricing due to pricing changes between the date work was
performed and the date it was invoiced, both of which may also result in disgruntled customers.
Furthermore, County is assuming additional credit risk as the customer may be in strong ^
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1/24/2012 Item 16.C.3.
EXHIBIT 2
financial condition at the time the initial work is completed and may become insolvent during the
many months it takes to bill in some cases. This may result in additional uncollectible amounts.
Recommendation: Management should consider implementing a policy in which all work
orders are processed on a timely basis, such as weekly. This will reduce collection delays, and
may decrease the volume of related complaints. It also helps to ensure that revenues are stated
correctly, as currently, some revenues may not be properly accounted for as of the month or year
end, and additional time is incurred to accrue such revenues prior to the closing of the books.
Management Response: A new procedure has been put into place that requires all invoices be
entered for processing within 10 days of close out of the work order or receipt of a contractor's
invoice, whichever comes last. This requirement has been added into the key results areas for
the data entry clerk. The Administrative Assistant who manages the team member responsible for
performing the data entry will develop a tracking report to allow this to be monitored for
compliance.
Observation: In conjunction with our walkthrough, . and as confirmed during our testing
performed over the process of Miscellaneous Billing & Revenue, we note that there is no formal
policy in place relating to the reconciliation of work order numbers. Work orders are pre -
numbered and sequential, but there is no check to determine that all work orders are submitted
for processing. As such, work orders may be lost or not turned in for processing, resulting in the
County being unaware of a billing opportunity.
Recommendation: Management should consider implementing a policy in which work orders
are reconciled on a regular basis, such as weekly or monthly. This will help to ensure that all
work orders are processed, and that the County appropriately bills for all water distribution and
wastewater repairs. It also helps to ensure that revenues and accounts receivable are stated
correctly, as otherwise, some revenues and accounts receivable may not be properly included in
the financial statements.
Management Response: Currently, work orders are prepared for all daily work assignments,
either prior to the start of the day through InHance or in the field on a manual work order by the
field team members. Work. orders issued to repair damage to utility assets are included within
the batch and cannot be singled out identifying it as necessary to bill to a third party. If a
particular work order must be billed to a third party to recover costs, a Request for Invoice form
is prepared and submitted along with the work. order to the department manager for review and
approval. Since management reviews al] work orders on a daily basis, this process is sufficient
in our current manual work order system to ensure all work orders that should be billed to a third
part are billed. However, a field based electronic work order system is anticipated in the near
future. Management will request functionality in that automated system that tags a billable work
order with a specific identifier. A weekly report can then be produced for management review
that will enable a thorough reconciliation of all. billable work orders with invoices produced each
week.
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EXHIBIT 2
Conclusion
1/24/2012 Item 16.C.3.
We were not engaged to, and did not conduct, an examination, the objective of which would be
the expression of an opinion on management's assertions. Accordingly, we do not express such
an opinion. Had we performed additional procedures, other matters might have come to our
attention that would have been reported to you.
This report is intended solely for the information and use of the Collier County Government
Center and management of Utility Billing & Customer Service, and is not intended to be and
should not be used by anyone other than these specified parties.
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