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Audit Report 2013 =8
Parks and Recreation Department
Immokalee Sports Complex
Capital Assets
Issued: September 18, 2013
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Prepared by: Megan Gaillard, Senior Internal Auditor
Report Distribution: Board of County Commissioners
Leo Ochs, Jr., County Manager
Mark Isackson, Director of Corporate, Financial, & Management Services
Jeff Klatzkow, County Attorney
Steve Carnell, Interim Public Services Administrator
Barry Williams, Parks and Recreation Director
Annie Alvarez, Regional Manager
Derrick Dimas, Supervisor — Immokalee Sports Compfex-
Cc: Dwight E. Brock, Clerk of the Circuit Court
Crystal K. Kinzel, Director of Finance & Accounting
Dale Phillips, Internal Audit Manager
TABLE OF CONTENTS
OBJECTIVES................................................................................................. ..............................2
SCOPE............................................................................................................ ..............................2
BACKGROUND............................................................................................ ..............................3
SUMMARY.................................................................................................... ..............................3
OBSERVATIONS, RECOMMENDATIONS, & MANAGEMENT RESPONSES ...................4
CONCLUSION............................................................................................... ..............................8
ADDITIONAL MANAGEMENT COMMENTS .......................................... ..............................8
The files and draft versions of audit reports remain confidential and protected from public records requests
during an active audit under Nicolai v. Baldwin (Aug. 28, 1998 DCA of FL S' District) and Florida
Statute 119.0713. Work - papers supporting the observations noted within this report will become public
record and can be made available upon request once the final audit report has been issued.
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The Draft Audit Report 2013 -8 was initially reviewed with the Department on July 17, 2013 and was released to the
Department for Management Response on July 18, 2013. The Parks and Recreation Director provided all County
Management Responses on August 1, 2013.
The objectives of the review were to: 1) validate the existence of capital assets, 2) determine whether records of
capital assets were in compliance with Florida Statute and Florida Administrative Code, 3) determine whether
capital assets have been properly reported to the Finance Department and properly recorded, and 4) determine if the
Immokalee Sports Complex is in compliance with County policies and procedures as they relate to the audited
process.
The review consisted of, but was not limited to the following tasks:
• Review of Florida Statute Chapter 274 — Tangible Personal Property Owned by Local Governments;
• Review of Florida Administrative Code and Register 69I -73 — Tangible Personal Property Owned by Local
Governments;
• Review of CMA 5809 (Managing personal property and consumable supplies);
• Review of Finance Department's Capital Assets FY 2011 Annual Assets Inventory Report certified by the Parks
and Recreation Department;
• Review Finance Department's process for capital asset annual inventory, capital asset acquisitions, capital asset
transfers, capital asset disposals, and capital asset forms;
• Review of Capital Assets acquisition cost, depreciation, and net book value;
• Review of Parks and Recreation Capital Assets records;
• Observation of the Immokalee Sports Complex capital assets (100% testing);
• Interviews with Parks and Recreation Staff; and
• Interview with Clerk's Finance and Accounting Staff.
The Immokalee Sports Complex staff completed the FY 2011 Annual Assets Inventory and confirmed possession of
87 capital assets. For administrative purposes six of the 87 capital assets are assigned to the Immokalee Sports
Complex, but are related to other small locations (i.e. Tony Rosbough Park, Pinecrest Park, and Ann Olesky Park
capital assets) that do not have their own cost center. These six capital assets were removed from testing because
they are not located at the Immokalee Sports Complex, leaving 81 capital assets for testing.
During the audit, 81 capital assets (100 %) were reviewed for the Immokalee Sports Complex. The total acquisition
cost of the capital assets was $5,237,865.24 with a net book value of $2,058,093.58 on October 1, 2011.
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The Parks and Recreation Director requested Internal Audit perform an audit of the Immokalee Sports Complex
Capital Assets, based on concerns related to the termination of the supervisor and a customer service specialist. Due
to the terminations and high risk associated with the location, 100% testing was implemented.
The Immokalee Sports Complex is located in the center of Immokalee, a rural area in Collier County. The location
has amenities including: a gymnasium with an indoor basketball court, soccer /football fields, fitness center, and
aquatic facility.
A capital asset is property with a value or cost of $1,000 and a projected useful life of one year or more. A capital
asset should be recorded in the local government's financial system as property for inventory and financial reporting
purposes.
As required by CMA 5809, Department Directors are designated as the asset custodian. Florida Administrative
Code and Register 69I -73 indicates each custodian is responsible to ensure an annual inventory is completed for
assets. The following information, at a minimum, should be provided to Clerk's Finance and Accounting
Department in the annual inventory: date of the inventory, asset identification number, existence of the asset (or
not), physical location of the asset, present physical condition of the asset, name and signature of the employee
attesting to the existence of the asset, and in the case of a property group, the number and description of the
component items of the group. Annually, Clerk's Finance and Accounting Department provide departments with
recorded capital asset lists and forms for validating capital assets.
The following observations were generated during this review:
1. Parks and Recreation were unable to locate five capital assets.
2. Four capital assets have been inaccurately assigned to the Immokalee Sports Complex.
3. Two capital assets did not have permanent asset identification tags.
4. 24 capital assets are not properly recorded on the Immokalee Sports Complex's asset inventory list.
5. There has been inadequate management oversight for capital assets.
6. Lack of written policies and procedures for capital assets.
There has been inadequate control and oversight for capital assets and the annual inventory processes. Without
proper asset oversight and monitoring, assets may be lost, stolen, or misappropriated. Care should be taken by the
Parks and Recreation Department to properly safeguard, control, track, and monitor County assets.
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Recreation 1) Parks and i locate five capital assets.
The FY 2011 Annual Assets Inventory Report provided to the Parks and Recreation Department by Clerk's Finance
was returned on September 1, 2011, signed by the Parks and Recreation Director confirming the Immokalee Sports
Complex was in possession and responsible for 81 capital assets.
On May 11, 2012, Internal Audit completed a site visit with Parks and Recreation staff. Five of the 81 capital assets
(approximately 6.2 %) were unable to be located. The capital assets that were unable to be located include: Sentry
Lifeguard Chair, Combination Soccer and Football Goal Post, Analog Terminal Phone System, Sanyo 645 Cash
Register (Reference Audit Report 2012 -8 for additional information), and 1842RP 360 Replacement Kit (Parks and
Recreation staff were unable to identify the asset).
Florida Administrative Code Chapter 69I -73 requires a physical inventory of property requiring a hands -on
inspection of the assets. If an item is not located during the inventory process then it shall be promptly reported. It
appears the Department should have detected and reported the missing assets at the time of the FY 2011 Annual
Assets Inventory. Parks and Recreation staff indicated the assets had been disposed of in prior fiscal years and the
paperwork not properly submitted.
Based upon concerns raised by Internal Audit regarding "missing" assets, Parks and Recreation staff completed
disposal forms for five capital assets between May 2012 and August 2012. Parks and Recreation staff indicated the
reasons for disposal of the missing capital assets were: item not fixable and disposed of years ago at the dump, item
disposed of for safety reasons and brought to the dump, item not found, and unknown item.
Assets should be properly safeguarded, controlled, tracked, and monitored. When assets are not properly recorded
and not in the possession of the location, it may give the appearance of theft or fraud, overstate assets, and cause
financial information to be inaccurate. Missing assets should immediately be reported for investigation to determine
the cause of the missing capital asset and for completion of appropriate documentation.
Recommendations:
The Department should comply with Florida Statute, Florida Administrative Codes, and County policies and
procedures.
Annual inspection should include a hands -on physical inventory.
The Department should properly monitor assets and submit the appropriate forms when changes occur.
County Management Response:
"Management concurs with the observations and recommendations. Current department expectations are that
hands on inventory occur each year; however, staff will be required in the next annual inventory to provide
photographic documentation that a hands on inventory did occur. In addition, the person who attests that the hands
on inventory occurred will be required to sign and date a statement certifying this fact. The department will comply
with ensuring appropriate forms are completed when changes do occur. Supervisors will be trained on new
procedures being developed for asset completion fall 2013. The department will continue to work with the
development of the countywide asset management system and begin participation at the first opportunity. "
Four capital assets were recorded by the Immokalee Sports Complex when they would be more appropriately
recorded by the Immokalee Community Center. The capital assets include: capital improvements for the Immokalee
Community Park (Acquisition Date 1/10/1986; Acquisition Cost $1,800,644.05), inground picnic tables
(Acquisition Date 11/30/2008; Acquisition Cost $13,472.15), and two mobile digital radios (Acquisition Date
7/31/2009; Acquisition Cost $2,399.97 each) located at the Immokalee Community Center. The four capital assets
had an acquisition value of $1,818,916.14 and have a net book value of $157,013.91 as of October 1, 2011.
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Parks and Recreation staff transferred the two mobile digital radios in May 2012, approved in August 2012. Parks
and Recreation staff corrected the cost center for inground picnic tables and capital improvements for the
Immokalee Community Park in conjunction with the FY 2012 asset report confirmation.
Costs should be appropriately classified to ensure the appropriate source of funding is used for expenditures.
Charging expenditures to an inaccurate cost center may cause financial information to be inaccurate. When budgets
are created, they rely on the information from prior years. If the financial information is inaccurate, the budget may
not have the funds necessary to cover the location's expenditures to maintain capital assets.
Recommendation:
• The Department should properly monitor assets and submit the appropriate forms when changes occur.
• Assets should not be transferred without the appropriate approval and documentation.
County Management Response:
"Management concurs with the observations and recommendations. Future hands on inventory sheets will be
segregated by cost center with each sheet signed by the appropriate responsible individual attesting that they have
completed a physical inventory and verifying that it is within the correct cost center. "
3) Two capital assets i not have permanent asset identification tags.
Florida Administration Code Chapter 69I- 73.004 - Marking of Property requires each property item be permanently
marked with the identification number assigned to that item to establish its identity and ownership.
On May 11, 2012, Internal Audit completed a site visit with Parks and Recreation staff. Two capital assets did not
have asset tags.
Assets should be properly marked with asset/identification numbers that have been assigned to the item. Without
properly marking the asset, the asset may not be able to be identified and/or movement of the asset tracked.
Recommendations:
• The Department should comply with Florida Statute, Florida Administrative Codes, and County policies and
procedures.
• The Department should properly mark capital assets with assigned identification numbers.
• The Department should review all department capital assets for asset identification numbers to ensure the asset
is properly marked with the assigned identification number.
County Management Response:
"Management concurs with the observations and recommendations. The asset tags provided do not always remain
adhered to the asset in question for a variety of reasons, e.g., becomes dislodged due to use, doesn't adhere well to
the asset because of the material the asset is made, weather, etc. The department will establish in a standard
operating procedure that includes, where appropriate, the practice of adding a permanent marking of the asset
number on those assets where the tag may become dislodged in conjunction with the adhesive asset tag to ensure
proper documentation. "
Florida Administration Code Chapter 69I- 73.006 — Inventory of Property requires unrecorded property items found
during the conduct of an inventory, which meet the requirement for accounting, shall have an inventory form
created for the item when located. Florida Administration Code Chapter 69I- 73.002 — Recording of Property
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accounting requirements include: property with a value or cost of $1,000 and a projected useful life of one year or
more.
On May 11, 2012, Internal Audit completed a site visit with Parks and Recreation staff. Internal Audit identified
possible unrecorded assets. On August 31, 2012, Parks and Recreation staff finished additional review of the
possible unrecorded capital assets. Parks and Recreation staff determined 24 unrecorded capital assets have a
probable value exceeding $1,000 and a projected useful life exceeding one year.
Assets should be properly recorded and assigned to the appropriate cost center. When assets are not properly
recorded and tracked, it is possible assets are under or over stated in the financials, lost, or assigned to the
inappropriate cost center. Care should be taken to ensure assets are properly recorded and tracked.
Recommendations:
• The Department should comply with Florida Statute, Florida Administrative Codes, and County policies and
procedures.
• The Department should properly monitor assets and submit the appropriate forms when changes occur.
• The Department should properly record the identified capital assets.
County Management Response:
"Management concurs with the observations and recommendations. The department will comply with ensuring
appropriate forms are completed when changes do occur. Supervisors will be trained on new procedures being
developed for asset completion fall 2013. The department will continue to work with the development of the
countywide asset management system and begin participation at the first opportunity. "
5) There has been •q
Florida Statute 274.02(2) requires a periodic review of property for inventory purposes. Florida Administrative
Code Chapter 69I -73 further elaborates and requires a physical inventory of property requiring a hands -on
inspection of the assets. During the inventory process if an item is not located, unrecorded (meeting the capital asset
thresholds), or differences in the location or physical condition of the asset have changed, then it shall be promptly
reported.
The FY 2011 Annual Assets Inventory Report provided to the Parks and Recreation Department by Clerk's Finance
was returned on September 1, 2011, signed by the Parks and Recreation Director confirming the Immokalee Sports
Complex was in possession and responsible for 81 capital assets. Eight capital assets did not have the present
condition of the asset listed. Exceptions were noted for 18 capital assets (reference audit observations 1, 2, 3, and
physical present condition), approximately 22% of the population. Additionally, 24 capital assets at the Immokalee
Sports Complex were identified that were not recorded and assigned to the location.
It does not appear a hands -on physical inventory was completed when the custodian confirmed the FY 2011 Assets
Inventory Report. Assets were unable to be located, unable to be identified, not recorded by the location, and
inaccurately assigned to the cost center. Parks and Recreation staff indicated changes occurred prior to the
FY 2011 annual inventory.
Assets should be properly safeguarded, controlled, tracked, and monitored. Assets should be physically inspected
for the annual inventory to ensure assets are in possession of the assigned cost center and properly recorded.
Without proper inspection, assets may be under or over stated and cause financial information to be inaccurate.
Recommendations:
• The Department should comply with Florida Statute, Florida Administrative Codes, and County policies and
procedures.
• The Department should properly inspect assets annually and submit the appropriate forms when changes are
identified.
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County Management Response:
"Management concurs with the observations and recommendations. Current department expectations are that
hands on inventory occur each year; however, staff will be required to provide photographic documentation each
year that this hand's on inventory did occur. In addition, cost center supervisors will be required to sign and date a
statement certifying that the hands on inventory did occur. The department will comply with ensuring appropriate
forms are completed when changes do occur. Supervisors will be trained on new procedures being developed for
asset completion fall 2013. The department will continue to work with the development of the countywide asset
management system and begin participation at the first opportunity. "
6) Lack of written policies
CMA #5809 for Managing Personal Property and Consumable Supplies indicates "Each department shall establish
internal procedures governing the proper care and use of assets and tangibles. The procedures shall be based on the
size and function of the department and shall include, but not be strictly limited to, who is authorized to use or
consume the inventoried items and how usage or consumption is tracked."
The Parks and Recreation Department does not have a written policy or procedure for tracking and monitoring
capital assets.
All aspects of a department's operation should be clearly documented in an up -to -date procedures manual. Written
procedures are beneficial for operational consistency and training.
Lack of written policies and procedures increases the risk of asset misappropriation, loss of inventory and /or assets,
and disruptions to operations.
Recommendation:
• The Department should comply with CMA's and create written internal policies and procedures to control,
track, and monitor assets.
County Management Response:
"Management concurs with the observations and recommendation. With the review of Immokalee Sports Complex,
the department began drafting a Standard Operating Procedure that outlines responsibilities of Parks staff during
the audit process. A fiscal technician has been identified as the single point of contact or gatekeeper of the forms
associated with transfers, acquisitions, and inventory. The technician has worked closely with the Clerk's
representative over asset management and developed a more systematic approach to tracking assets within the
department. The Standard Operating Procedure for tracking capital assets will be in place by fall 2013 and
supervisory staff responsible for the respective capital assets at each park location will be trained on the new
procedures. "
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Once a year Finance provides each cost center (i.e. Immokalee Sports Complex) an Annual Assets Inventory Report
for the location to confirm and return including changes to the capital assets. The confirmation includes a hands -on
physical inspection of each capital asset. The Immokalee Sports Complex has not properly completed the physical
inspection. As a result, 22% of the assigned capital assets have been unable to be located, identified, transferred to
the appropriate cost center, marked through identification numbers, or inspected for condition. Another 24 capital
assets are at the location and not recorded for the location indicating other Parks and Recreation locations capital
assets are inaccurately recorded. Inadequate oversight and management exposes the County to misappropriation of
assets and inaccurate financial information.
The Parks and Recreation Department has not sufficiently safeguarded, controlled, tracked, or monitored capital
assets. Inadequate oversight continues to be a strong concern for Parks and Recreation. The Parks and Recreation
Department should ensure there are proper controls, policies, and procedures in place to limit risk, error, and
misappropriation.
Audits do not relieve management of their responsibilities. It is the responsibility of County management to
understand and implement the proper procedural controls in order to reduce and limit the risk of fraud, error, and
misappropriation of County assets. Internal Audit may recommend improvements in audit reports, but ultimately it
is the duty and decision of County management to formulate processes and controls that ensure compliance with
Federal regulation, State statute, County ordinance, and County policies.
Recommendation:
• The Department should complete a hands -on physical inspection for all Parks and Recreation locations.
Additional County Management Comments:
"The Department appreciates the review of the Immokalee Sports Complex after the request by the Director. The
internal auditor was thorough and helpful to the current supervisory staff to ensure the proper accounting of county
assets. The Department will take appropriate steps to ensure strengthening of oversight of capital assets at this and
all Park locations. The Department is in the process of photographing each capital asset assigned that will be used
to validate the hands on physical inspection of the FY 13 inventory. The Department will continue to work with the
countywide effort in asset management to establish a more robust system of not only tracking assets, but also
tracking the useful life of assets in order to maximize business efficiency. Special thanks to the Senior Internal
Auditor and Fixed Asset Accountant for their review of the Parks and Recreation capital asset management
system. "
Internal Audit Comments:
The Internal Audit Department gratefully acknowledges the cooperation and assistance provided by the Parks and
Recreation Department. The Parks and Recreation Department's willingness and diligence in providing information
and responses to the recommendations greatly has assisted the Internal Audit Department with this audit.
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