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COU/T
Internal Audit Department
NEcW
Interim Audit Report 2013-6
(formerly Interim Audit Report 2011-2A)
Tourism Department
Limited Scope:
Tourist Development Tax (TDT) Revenue
Grant Applications — Fiscal Year 2011-2012
Dwight E. Brock Issued: July 3, 2013
Clerk of the Circuit Court
3299 Tamiami Trail East
Suite #402
Naples, FL 34112-5746
����w.Loll lei let k.com
138
Prepared by: Megan Gaillard, Senior Internal Auditor
Report Distribution: Board of County Commissioners
Leo Ochs, Jr., County Manager
Jack Wert, Tourism Department Director
Kelly Green, Tourist Development Tax Coordinator
Jeff Klatzkow, County Attorney
Colleen Greene, Assistant County Attorney
Mark Isaacson, Office of Management and Budget (OMB) Director
Cc: Dwight E. Brock, Clerk of the Circuit Court
Crystal K. Kinzel, Director of Finance & Accounting
TABLE OF CONTENTS
OBJECTIVES 2
SCOPE 2
BACKGROUND 3
SUMMARY 4
OBSERVATIONS, RECOMMENDATIONS, & MANAGEMENT RESPONSES 5
CONCLUSION 9
ADDITIONAL MANAGEMENT COMMENTS 9
•
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, 5" 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.
1
13 ,E
The draft interim audit report 2013-6 (formerly interim audit report 2011-2A), dated August 22, 2011, was
responded to by Jack Wert,Tourism Department Director for the management response. An additional management
response, from the department, was provided on January 5, 2012 for updates on progress and a revised management
response on July 2, 2013.
Objectives
The objectives of the audit were to determine 1) grant award compliance to Category B and Category C-2 grant
guidelines, Collier County Ordinance, and Florida Statute, 2) whether grant applications included all required
documentation,and 3)consistency of Collier County Ordinance language to Florida Statute.
Scope
The audit review consisted of reviewing Tourist Development Tax Revenue Grant Applications for FY 2011-2012,
including but not limited to the following tasks:
• Review of Florida Statute Chapter 125.0104;
• Review of Collier County Ordinance 92-60,as amended;
• Review of Category B and C-2 grant guidelines;
• Observe the grant application process;
• Attend Tourism Grant Review Committee meeting;
• Attend Tourist Development Council meetings;
• Interviews with County staff;
• FY 2011-2012 grant applications for Category B and Category C-2 submitted to the Tourism Department for
review (100%testing); and
• Review of Florida Department of State Division of Corporations records.
2
1313
Background
The Tourism Department received four Category B grant applications, five Category C-2 grant applications, and
one request for funding for Fiscal Year (FY) 2011-2012. The purpose of the grant application is to provide
information to County Staff for events and organizations in order to determine if the entity is qualified to receive
Tourist Development Tax Revenues in compliance with Florida Statute 125.0104 and Collier County
Ordinance 92-60, as amended.Ordinance 2005-43 is the most recent amendment to Ordinance 92-60.
Florida Statute 125.0104(5)(a)2 for Authorized Uses of Tourist Development Tax Revenues: "to promote and
advertise tourism in the State of Florida and nationally and internationally; however, if tax revenues are expended
for an activity, service, venue, or event, the activity, service, venue, or event shall have as one of its main purposes
the attraction of tourists as evidenced by the promotion of the activity, service,venue, or events to tourists."
Collier County Ordinance 2005-43 states Category B funds are "to promote and advertise county tourism within the
State of Florida,nationally and internationally,which encourages tourism with an emphasis on off-season visitors to
Collier County and to fund convention bureaus, tourist bureaus, tourist information centers, and news bureaus as
county agencies. If tax revenues are expended for an activity, service, venue or event,the activity, service, venue or
event shall have as one of its main purposes the attraction of tourists as evidenced by promotion of the activity,
service,venue or event to tourists."
Florida Statute 125.0104(5)(a)1 for Authorized Uses of Tourist Development Tax Revenues: "to acquire, construct,
extend, enlarge, remodel, repair, improve, maintain, operate, or promote one or more publicly owned and operated
convention centers, sports stadiums, sports arenas, coliseums, or auditoriums, or museums that are publicly owned
and operated or operated by not-for-profit organizations and open to the public, within the boundaries of the county
or sub-county special taxing district in which the tax is levied...However, these purposes may be implemented
through service contracts and leases with lessees with sufficient expertise or financial capability to operate such
facilities."
Collier County Ordinance 2005-43 states Category C funds are "to acquire, construct, extend, enlarge, remodel,
repair,improve,maintain, operate or promote one or more County owned or operated museums or municipal owned
museums or museums that are owned and operated by not for profit organizations and open to the public."Category
C-2 further specifies "Municipal owned museums and Museums owned and operated by not for profit organizations
open to the public."
While reviewing the Tourist Development Tax Revenue grant application process was in conjunction with the
Tourism Department Audit (Reference Audit Report 2013-5,formerly Audit Report 2011-2), a further review was
completed on FY 2011-2012 grant applications when compliance concerns were discussed in the Tourist
Development Council Advisory Board Meeting on May 27, 2011.
3
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.
ry
1
1 The following observations were generated during this review: 1313
3
1. Florida Statute is more restrictive than the Collier County Ordinance.
2. Some applicants grant applications for Category B and Category C-2 are incomplete.
3. The Friends of Rookery Bay, Inc. does not qualify for Tourist Development Tax Revenue Funding under
Category C-2.
4. The Holocaust Museum & Education Center of Southwest Florida grant application does not use the
not-for-profit organization's legally registered name.
5. Request for Funding submitted by The United Arts Council was not a grant application and lacked the
required documentation.
6. Collier County Ordinance 2005-43 percentage allocation should be verified for compliance when transfers
of funds occur between grant categories.
Grant applications need to include all documentation required by the Tourism Department. Without all required
1 documents, County Staff cannot properly evaluate the qualifications for events and organizations, which can lead to
non-compliance with Florida Statute 125.0104 and/or Collier County Ordinance 92-60, as amended. In addition,
County Staff has approved and recommended funding grant applications that were not qualified to receive Tourist
Development Tax Revenues under the current Florida Statute and/or Collier County Ordinance and/or internal grant
guidelines.
A more comprehensive report of the Tourism Department will be issued for other areas of review (Reference Audit
Report 2013-5 Tourism Assets, Revenues, and Expenditures Review,formerly Audit Report 2011-2). The Interim
Report was provided to the Department and County Attorney's Office to outline concerns. The concerns were
discussed with Tourism Department Staff and the County Attorney Staff as resolution of grant requests was urgent
due to pending agenda items.
4
13B
Observations
1 ) Florida Statute is more restrictive than the Collier County Ordinance.
Florida Statute 125.0104(5)(a)1 states the authorized uses of revenue must be "within the boundaries of the county
or sub-county special taxing district in which the tax is levied." The Collier County Ordinance 2005-43 does not
include this limitation.
Florida Statute 125.0104(5)(a)1 states funding must be to"publicly owned and operated or owned and operated by a
not-for-profit organization and open to the public...However, these purposes may be implemented through service
contracts and leases with lessees with sufficient expertise or financial capability to operate such facilities." Collier
County Ordinance 2005-43 Category C states funding must be to "County owned or operated museums or
municipal owned museums or museums that are owned and operated by not for profit organizations and open to the
public." Category C-1 further states funding is to "County owned or operated Museums." Category C-2 further
states funding is to "Municipal owned museums and Museums owned and operated by not for profit organizations
open to the public."
The Collier County Ordinance uses the word "or" making the Ordinance less restrictive than the Florida Statute
which uses "and". This may cause the approval of grant funding for entities not qualified to receive Tourist
Development Tax Revenues under Florida Statute.
Recommendation:
• The language used in the Collier County Ordinance should mirror the Florida Statutory language.
County Management Response:
"The Ordinance will be revised by the County Attorney to mirror Florida Statutory language when the next
amendment occurs. County staff plans to present these suggested amendments to the Tourist Development Council
(TDC) on September 6, 2011 and depending on the TDC recommendation, to the Board of County Commissioners
(BCC)on September 13 or September 27, 2011."
Internal Audit Response to County Management Response:
The above County Ordinance amendment has not been completed and the County Ordinance remains less restrictive
than Florida Statute.
2) Some applicants grant applications for Category B and Category C-2 are incomplete.
The application for funding packets have a check list for the following items: charter, articles of incorporation,
by-laws, proof of current status, minutes of meetings authorizing officers to apply for tourism tax funds, IRS
determination letter, list of officers and board members with terms of position and salaries, organizational chart,
copy of the most recent fiscal year's financial statement, proof of liability insurance, and letters of commitment for
co-sponsors and matching fund contributions.
Many of the documents required were not included by some applicants.It is important that the applicants include all
of the required documents so the appropriate review can be performed by County Staff for category
recommendation and qualification determinations to ensure compliance to applicable Florida Statute, Collier
County Ordinances, and internal grant guidelines.
Recommendations:
• Future applications should include all required documentation.
• When applications are not complete, the additional information should be requested by County Staff or the
application should be declined.
5
136
County Management Response:
"We obtained the required grant application documents from the applicants and have the original FY 12 grant
applications with the required attachments available in our office for review."
3) The Friends of Rookery Bay, Inc. does not qualify for Tourist Development Tax Revenue
Funding under Categor C-2.
Rookery Bay National Estuarine Research Reserve is a component of the Florida Department of Environmental
Protection,a State Agency; the reserve is state funded and operated. The Friends of Rookery Bay, Inc. operates as a
501(c) (3) not-for-profit organization, but does not own or operate the reserve. Volunteers of The Friends of
Rookery Bay,Inc.provide supporting services and assistance to the reserve.
Florida Statute 125.0104(5)(a)1 states the criteria for funding as follows: "Museums that are publicly owned and
operated or owned and operated by not-for-profit organizations and open to the public, within the boundaries of the
county." Collier County Ordinance 2005-43 Category C states: "County owned or operated museums or municipal
owned museums or museums that are owned and operated by not for profit organizations and open to the public."
Category C-2 further specifies: "Municipal owned museums and museums owned and operated by not for profit
organizations open to the public"are qualified for TDT funding.
The Friends of Rookery Bay, Inc. does not own or operate the reserve or a museum. It does not appear that the
organization is qualified to receive funds under Category C-2.
FY 2010-2011 Grant Funding from Category C-2 provided to The Friends of Rookery Bay, Inc. needs to be
reviewed and any current outstanding funds requested put on hold until the discrepancies are reviewed and
alternative funding method is available.
Recommendation:
• The Friends of Rookery Bay, Inc. appear to be qualified to receive Category B funding with revisions to the
project expense budget and an updated application. The Friends of Rookery Bay, Inc. could make the necessary
updates for information and submit under Category B.
County Management Response:
"The Friends of Rookery Bay, Inc. have submitted the necessary information to the tourism staff in order to prepare
the submittal to the Tourist Development Council(TDC)for their September 6, 2011 meeting and then to the Board
of County Commissioners on September 13, 2011. The TDC and BCC will be asked to change the funding source
for the FY 11 agreement with The Friends of Rookery Bay, Inc. to Category B (Fund 184), approve an amended
project scope in Exhibit F of the agreement and to waive the $25,000 limit, and the 80% multiple year request
guidelines in the Category B grant application.."
Internal Audit Follow-Up:
The source of funding for The Friends of Rookery Bay, Inc. was revised to provide funding from Category B rather
than Category C-2. The observation was resolved and closed.
4) The Holocaust Museum & Educational Center of Southwest Florida grant application
does not use the not-for-profit organization's legally registered name.
The Holocaust Museum & Education Center of Southwest Florida applied for grant funding under a name other
than the legally registered entity name. The Florida Department of State Division of Corporations not-for-profit
corporation name is "Southwest Florida Holocaust Museum, Inc." All of the Florida Department of State Division
of Corporation's information for the address and president of Southwest Florida Holocaust Museum, Inc. match the
information provided in the Category C-2 grant application under the name Holocaust Museum&Education Center
of Southwest Florida. The Holocaust Museum & Education Center of Southwest Florida is not listed as an
organization with the Florida Department of State Division of Corporations.
6
ter• ..rr..�
136
The registered legal name should be used on the grant application exactly as registered with the Florida Department
of State Division of Corporations. If the name of the entity has changed, then the name should be changed with the
Florida Department of State Division of Corporations.
Category C-2 grants require the entity be either a municipal owned museum or a museum owned and operated by a
not-for-profit organization. By not using the legally registered not-for-profit organization's name,the funding could
be awarded to an unqualified entity and be non-compliant to Florida Statute and County Ordinance.
Recommendation:
• Applications should only be accepted in the legally registered name to avoid confusion,ensure proper award of
grant funds,and to ensure proper payment for reimbursement requests.
County Management Response:
"We will caution all grant applicants to complete their applications using the correct legal corporate name as
registered with the State of Florida."
Internal Audit Follow-Up:
The grant agreement was properly entered into with the entity in the entity's legal registered name. The observation
was resolved and closed.
5) Request for Funding submitted by The United Arts Council was not a grant application
and lacked the re( aired documentation.
The United Arts Council submitted a Request for Funding to print a Calendar of Events brochure rather than a grant
application. The Tourist Development Council (in FY 2011) stated in FY 2012 the funding would not qualify for
Category B funding and would need to be funded through the Tourism Department's line item budget because the
program was predominately for local advertising rather than soliciting out of the area tourists.
The United Arts Council appears to meet the requirements of Florida Statute 125.0104(5)(a)2 and Collier County
Ordinance 2005-43 Category B, which state to promote and advertise tourism.
The internal grant guidelines require out of Collier County expenditures and marketing. The requested funding for
the calendar does not appear to meet the internal grant guideline requirements.
The United Arts Council requested funding from the Tourism Department through a Request for Funding as
recommended in FY 2011 by the Tourist Development Council rather than as a Category B grant application. The
Request for Funding was then submitted as a Category B grant application by County Staff without all the required
documentation needed for review and recommendation. Proper documentation is needed to ensure compliance to
Florida Statute and County Ordinance.
Recommendations:
• Future applications should include all required documentation and should follow appropriate funding sources.
• When applications are not complete, the additional information should be requested by County Staff or the
application should be declined.
County Management Response:
"United Arts Council of Collier County, Inc. thought they were applying for marketing funding assistance from
tourist tax marketing funds, not a Category B grant. This understanding was a carryover from a TDC discussion in
2010 about their FY 11 application where staff was directed to fund the United Arts cultural events calendar project
as a tourism department printing project, not as a Category B grant. United Arts assumed the situation with their
FY 12 application would be treated the same as the FY 11 project, so they did not feel they were required to submit
7
138
a Category B grant application. Their written request was in the form of a letter and brief presentation of the
project and the projected budget. Their request was reviewed by the Grant Review Committee along with all the
FY 12 grant applications, but ultimately this request was recommended by the TDC for funding as a tourism
department printing project for FY 12, and is not included in the Category B grants line item in the FY 12 tourism
department budget."
Internal Audit Follow-Up:
The County did not enter into a Category B grant agreement with the United Arts Council and properly entered into
a vendor agreement.The observation was resolved and closed.
6) Collier County Ordinance 2005-43 percentage allocations should be verified for
corn.liance when transfers of funds occur between 'rant categories.
During the Tourist Development Council grants funding meeting for FY 2011-2012 on June 27, 2011, discussions
were held regarding the level of category funds. The recommendation was to increase Category B (event and
promotion) funding and decrease Category C-2 (museum) funding to provide additional funds to organizations that
were not qualified under Category C-2 funding.
Recommendation:
• When the adjustments or line item budget changes are proposed, verification and reconciliation for the
modifications need to occur to ensure compliance to Collier County Ordinance 2005-43 for the percentage
allocations by the grant categories for Tourist Development Tax Revenue funds in order to maintain compliance
with ordinances.
County Management Response:
"Staff fully understands that transfers between tourist tax funds cannot be accomplished without BCC approval,
including a tourist tax ordinance change. The intent of the discussion at the TDC level was to reallocate funds
between line items in Fund 184(Advertising and Promotion) to free up funding for applicants that better qualify for
Category B grants, rather than Category C-2 grants. That was accomplished in the budget process for FY 12 and
will not necessitate any transfers between funds, or ordinance changes."
8
13B
Conclusion
Grant applications submitted need to include all documentation required by the Tourism Department. Without all
required documents, County Staff cannot properly evaluate the qualifications for events and organizations, which
could lead to non-compliance with Florida Statute 125.0104 and/or Collier County Ordinance 92-60,as amended. In
addition,County Staff has approved and recommended funding grant applications that were not qualified to receive
Tourist Development Tax Revenues under the current Florida Statute and/or Collier County Ordinance and/or
internal grant guidelines.
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/revenues. 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,Florida Statute,County Ordinance,and County Policies and Procedures.
Additional County Management Comments:
"We completely concur that only the County Commission can approve funding. We routinely do recommend to the
TDC actions related to expenditures of tourist tax funds, based on the advice and counsel of the County Attorney's
Office regarding any legal interpretations of funding eligibility. We do not feel that any unqualified tourist tax grant
funding was recommended to the TDC or subsequently awarded to applicants as covered under Florida Statute
125.0104. We acknowledge that a conflict exists in language between State Statute 125.0104 and County Ordinance
92-60, as amended, due to a scrivener error. That conflicting language is currently in the ordinance amendment
process and will come before the County Commission for consideration in January and February 2012."
Internal Audit Comments:
The County Ordinance has not been amended and remains less restrictive than Florida Statute.
Internal Audit gratefully acknowledges the cooperation and assistance from the Tourism Department. The Tourism
Department's quick response for providing information and responses to recommendations greatly assisted Internal
Audit in the interim work and resolution of findings.
9
8•
Internal Audit Department
NE C13
Interim Audit Report 2013-6
(formerly Interim Audit Report 2011-2A)
Tourism Department
Limited Scope:
Tourist Development Tax (TDT) Revenue
Grant Applications — Fiscal Year 2011-2012
Dwight E. Brock Issued* July 1 2011
Clerk of the Circuit Court u
3299 Tamiami Trail East
Suite #402
Naples, FL 34112-5746
www.collierclerk.com
13B
Prepared by: Megan Gaillard, Senior Internal Auditor
Report Distribution: Board of County Commissioners
Leo Ochs, Jr., County Manager
Jack Wert, Tourism Department Director
Kelly Green, Tourist Development Tax Coordinator
Jeff Klatzkow, County Attorney
Colleen Greene, Assistant County Attorney
Mark Isaacson, Office of Management and Budget (OMB) Director
Cc: Dwight E. Brock, Clerk of the Circuit Court
Crystal K. Kinzel, Director of Finance & Accounting
TABLE OF CONTENTS
OBJECTIVES 2
SCOPE 2
BACKGROUND 3
SUMMARY 4
OBSERVATIONS, RECOMMENDATIONS, & MANAGEMENT RESPONSES 5
CONCLUSION 9
ADDITIONAL MANAGEMENT COMMENTS 9
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.
1
138
The draft interim audit report 2013-6 (formerly interim audit report 2011-2A), dated August 22, 2011, was
responded to by Jack Wert,Tourism Department Director for the management response. An additional management
response,from the department, was provided on January 5, 2012 for updates on progress and a revised management
response on July 2, 2013.
Objectives
The objectives of the audit were to determine 1) grant award compliance to Category B and Category C-2 grant
guidelines, Collier County Ordinance, and Florida Statute, 2) whether grant applications included all required
documentation,and 3)consistency of Collier County Ordinance language to Florida Statute.
Scope
The audit review consisted of reviewing Tourist Development Tax Revenue Grant Applications for FY 2011-2012,
including but not limited to the following tasks:
• Review of Florida Statute Chapter 125.0104;
• Review of Collier County Ordinance 92-60, as amended;
• Review of Category B and C-2 grant guidelines;
• Observe the grant application process;
• Attend Tourism Grant Review Committee meeting;
• Attend Tourist Development Council meetings;
• Interviews with County staff;
• FY 2011-2012 grant applications for Category B and Category C-2 submitted to the Tourism Department for
review(100%testing); and
• Review of Florida Department of State Division of Corporations records.
2
136
Background
The Tourism Department received four Category B grant applications, five Category C-2 grant applications, and
one request for funding for Fiscal Year (FY) 2011-2012. The purpose of the grant application is to provide
information to County Staff for events and organizations in order to determine if the entity is qualified to receive
Tourist Development Tax Revenues in compliance with Florida Statute 125.0104 and Collier County
Ordinance 92-60,as amended. Ordinance 2005-43 is the most recent amendment to Ordinance 92-60.
Florida Statute 125.0104(5)(a)2 for Authorized Uses of Tourist Development Tax Revenues: "to promote and
advertise tourism in the State of Florida and nationally and internationally; however, if tax revenues are expended
for an activity, service, venue, or event, the activity, service, venue, or event shall have as one of its main purposes
the attraction of tourists as evidenced by the promotion of the activity, service,venue,or events to tourists."
Collier County Ordinance 2005-43 states Category B funds are"to promote and advertise county tourism within the
State of Florida,nationally and internationally,which encourages tourism with an emphasis on off-season visitors to
Collier County and to fund convention bureaus, tourist bureaus, tourist information centers, and news bureaus as
county agencies. If tax revenues are expended for an activity, service, venue or event,the activity, service, venue or
event shall have as one of its main purposes the attraction of tourists as evidenced by promotion of the activity,
service, venue or event to tourists."
Florida Statute 125.0104(5)(a)1 for Authorized Uses of Tourist Development Tax Revenues: "to acquire, construct,
extend, enlarge, remodel, repair, improve, maintain, operate, or promote one or more publicly owned and operated
convention centers, sports stadiums, sports arenas, coliseums, or auditoriums, or museums that are publicly owned
and operated or operated by not-for-profit organizations and open to the public, within the boundaries of the county
or sub-county special taxing district in which the tax is levied...However, these purposes may be implemented
through service contracts and leases with lessees with sufficient expertise or financial capability to operate such
facilities."
Collier County Ordinance 2005-43 states Category C funds are "to acquire, construct, extend, enlarge, remodel,
repair,improve, maintain,operate or promote one or more County owned or operated museums or municipal owned
museums or museums that are owned and operated by not for profit organizations and open to the public."Category
C-2 further specifies "Municipal owned museums and Museums owned and operated by not for profit organizations
open to the public."
While reviewing the Tourist Development Tax Revenue grant application process was in conjunction with the
Tourism Department Audit (Reference Audit Report 2013-5,formerly Audit Report 2011-2), a further review was
completed on FY 2011-2012 grant applications when compliance concerns were discussed in the Tourist
Development Council Advisory Board Meeting on May 27,2011.
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Summary
The following observations were generated during this review:
1. Florida Statute is more restrictive than the Collier County Ordinance.
2. Some applicants grant applications for Category B and Category C-2 are incomplete.
3. The Friends of Rookery Bay, Inc. does not qualify for Tourist Development Tax Revenue Funding under
Category C-2.
4. The Holocaust Museum & Education Center of Southwest Florida grant application does not use the
not-for-profit organization's legally registered name.
5. Request for Funding submitted by The United Arts Council was not a grant application and lacked the
required documentation.
6. Collier County Ordinance 2005-43 percentage allocation should be verified for compliance when transfers
of funds occur between grant categories.
Grant applications need to include all documentation required by the Tourism Department. Without all required
documents, County Staff cannot properly evaluate the qualifications for events and organizations, which can lead to
non-compliance with Florida Statute 125.0104 and/or Collier County Ordinance 92-60, as amended. In addition,
County Staff has approved and recommended funding grant applications that were not qualified to receive Tourist
Development Tax Revenues under the current Florida Statute and/or Collier County Ordinance and/or internal grant
guidelines.
A more comprehensive report of the Tourism Department will be issued for other areas of review (Reference Audit
Report 2013-5 Tourism Assets, Revenues, and Expenditures Review,formerly Audit Report 2011-2). The Interim
Report was provided to the Department and County Attorney's Office to outline concerns. The concerns were
discussed with Tourism Department Staff and the County Attorney Staff as resolution of grant requests was urgent
due to pending agenda items.
4
Observations
1) Florida Statute is more restrictive than the Collier County Ordinance.
Florida Statute 125.0104(5)(a)1 states the authorized uses of revenue must be "within the boundaries of the county
or sub-county special taxing district in which the tax is levied." The Collier County Ordinance 2005-43 does not
3
include this limitation.
Florida Statute 125.0104(5)(a)1 states funding must be to"publicly owned and operated or owned and operated by a
not-for-profit organization and open to the public...However, these purposes may be implemented through service
contracts and leases with lessees with sufficient expertise or financial capability to operate such facilities." Collier
County Ordinance 2005-43 Category C states funding must be to "County owned or operated museums or
municipal owned museums or museums that are owned and operated by not for profit organizations and open to the
public." Category C-1 further states funding is to "County owned or operated Museums." Category C-2 further
states funding is to "Municipal owned museums and Museums owned and operated by not for profit organizations
open to the public."
The Collier County Ordinance uses the word "or" making the Ordinance less restrictive than the Florida Statute
which uses "and". This may cause the approval of grant funding for entities not qualified to receive Tourist
Development Tax Revenues under Florida Statute.
Recommendation:
• The language used in the Collier County Ordinance should mirror the Florida Statutory language.
County Management Response:
"The Ordinance will be revised by the County Attorney to mirror Florida Statutory language when the next
amendment occurs. County staff plans to present these suggested amendments to the Tourist Development Council
(TDC) on September 6, 2011 and depending on the TDC recommendation, to the Board of County Commissioners
(BCC)on September 13 or September 27, 2011."
Internal Audit Response to County Management Response:
The above County Ordinance amendment has not been completed and the County Ordinance remains less restrictive
than Florida Statute.
2) Some applicants grant applications for Category B and Category C-2 are incomplete.
The application for funding packets have a check list for the following items: charter, articles of incorporation,
by-laws, proof of current status, minutes of meetings authorizing officers to apply for tourism tax funds, IRS
determination letter, list of officers and board members with terms of position and salaries, organizational chart,
copy of the most recent fiscal year's financial statement, proof of liability insurance, and letters of commitment for
co-sponsors and matching fund contributions.
Many of the documents required were not included by some applicants. It is important that the applicants include all
of the required documents so the appropriate review can be performed by County Staff for category
recommendation and qualification determinations to ensure compliance to applicable Florida Statute, Collier
County Ordinances,and internal grant guidelines.
Recommendations:
• Future applications should include all required documentation.
• When applications are not complete, the additional information should be requested by County Staff or the
application should be declined.
5
1
13B
County Management Response:
"We obtained the required grant application documents from the applicants and have the original FY 12 grant
applications with the required attachments available in our office for review."
3) The Friends of Rookery Bay, Inc. does not qualify for Tourist Development Tax Revenue
Funding under Cate:.or C-2.
Rookery Bay National Estuarine Research Reserve is a component of the Florida Department of Environmental
Protection, a State Agency;the reserve is state funded and operated.The Friends of Rookery Bay, Inc. operates as a
501(c) (3) not-for-profit organization, but does not own or operate the reserve. Volunteers of The Friends of
Rookery Bay,Inc. provide supporting services and assistance to the reserve.
Florida Statute 125.0104(5)(a)1 states the criteria for funding as follows: "Museums that are publicly owned and
operated or owned and operated by not-for-profit organizations and open to the public, within the boundaries of the
county." Collier County Ordinance 2005-43 Category C states: "County owned or operated museums or municipal
owned museums or museums that are owned and operated by not for profit organizations and open to the public."
Category C-2 further specifies: "Municipal owned museums and museums owned and operated by not for profit
organizations open to the public"are qualified for TDT funding.
The Friends of Rookery Bay, Inc. does not own or operate the reserve or a museum. It does not appear that the
organization is qualified to receive funds under Category C-2.
FY 2010-2011 Grant Funding from Category C-2 provided to The Friends of Rookery Bay, Inc. needs to be
reviewed and any current outstanding funds requested put on hold until the discrepancies are reviewed and
alternative funding method is available.
Recommendation:
• The Friends of Rookery Bay, Inc. appear to be qualified to receive Category B funding with revisions to the
project expense budget and an updated application. The Friends of Rookery Bay, Inc. could make the necessary
updates for information and submit under Category B.
County Management Response:
"The Friends of Rookery Bay, Inc. have submitted the necessary information to the tourism staff in order to prepare
the submittal to the Tourist Development Council(TDC)for their September 6, 2011 meeting and then to the Board
of County Commissioners on September 13, 2011. The TDC and BCC will be asked to change the funding source
for the FY 11 agreement with The Friends of Rookery Bay, Inc. to Category B (Fund 184), approve an amended
project scope in Exhibit F of the agreement and to waive the $25,000 limit, and the 80% multiple year request
guidelines in the Category B grant application.."
Internal Audit Follow-Up:
The source of funding for The Friends of Rookery Bay, Inc. was revised to provide funding from Category B rather
than Category C-2. The observation was resolved and closed.
4) The Holocaust Museum & Educational Center of Southwest Florida grant application
does not use the not-for-profit organization's legally registered name.
The Holocaust Museum & Education Center of Southwest Florida applied for grant funding under a name other
than the legally registered entity name. The Florida Department of State Division of Corporations not-for-profit
corporation name is "Southwest Florida Holocaust Museum, Inc." All of the Florida Department of State Division
of Corporation's information for the address and president of Southwest Florida Holocaust Museum, Inc. match the
information provided in the Category C-2 grant application under the name Holocaust Museum&Education Center
of Southwest Florida. The Holocaust Museum & Education Center of Southwest Florida is not listed as an
organization with the Florida Department of State Division of Corporations.
6
qq
i9
138
The registered legal name should be used on the grant application exactly as registered with the Florida Department
of State Division of Corporations. If the name of the entity has changed, then the name should be changed with the
Florida Department of State Division of Corporations.
Category C-2 grants require the entity be either a municipal owned museum or a museum owned and operated by a
not-for-profit organization. By not using the legally registered not-for-profit organization's name,the funding could
be awarded to an unqualified entity and be non-compliant to Florida Statute and County Ordinance.
Recommendation:
• Applications should only be accepted in the legally registered name to avoid confusion, ensure proper award of
grant funds,and to ensure proper payment for reimbursement requests.
County Management Response:
"We will caution all grant applicants to complete their applications using the correct legal corporate name as
registered with the State of Florida."
Internal Audit Follow-Up:
The grant agreement was properly entered into with the entity in the entity's legal registered name. The observation
was resolved and closed.
5) Request for Funding submitted by The United Arts Council was not a grant application
and lacked the required documentation.
The United Arts Council submitted a Request for Funding to print a Calendar of Events brochure rather than a grant
application. The Tourist Development Council (in FY 2011) stated in FY 2012 the funding would not qualify for
Category B funding and would need to be funded through the Tourism Department's line item budget because the
program was predominately for local advertising rather than soliciting out of the area tourists.
The United Arts Council appears to meet the requirements of Florida Statute 125.01.04(5)(a)2 and Collier County
Ordinance 2005-43 Category B,which state to promote and advertise tourism.
The internal grant guidelines require out of Collier County expenditures and marketing. The requested funding for
the calendar does not appear to meet the internal grant guideline requirements.
The United Arts Council requested funding from the Tourism Department through a Request for Funding as
recommended in FY 2011 by the Tourist Development Council rather than as a Category B grant application. The
Request for Funding was then submitted as a Category B grant application by County Staff without all the required
documentation needed for review and recommendation. Proper documentation is needed to ensure compliance to
Florida Statute and County Ordinance.
Recommendations:
• Future applications should include all required documentation and should follow appropriate funding sources.
• When applications are not complete, the additional information should be requested by County Staff or the
application should be declined.
County Management Response:
"United Arts Council of Collier County, Inc. thought they were applying for marketing funding assistance from
tourist tax marketing funds, not a Category B grant. This understanding was a carryover from a TDC discussion in
2010 about their FY 11 application where staff was directed to fund the United Arts cultural events calendar project
as a tourism department printing project, not as a Category B grant. United Arts assumed the situation with their
FY 12 application would be treated the same as the FY 11 project, so they did not feel they were required to submit
7
138
a Category B grant application. Their written request was in the form of a letter and brief presentation of the
project and the projected budget. Their request was reviewed by the Grant Review Committee along with all the
FY 12 grant applications, but ultimately this request was recommended by the TDC for funding as a tourism
department printing project for FY 12, and is not included in the Category B grants line item in the FY 12 tourism
department budget."
Internal Audit Follow-Up:
The County did not enter into a Category B grant agreement with the United Arts Council and properly entered into
a vendor agreement.The observation was resolved and closed.
6) Collier County Ordinance 2005-43 percentage allocations should be verified for
corn s liance when transfers of funds occur between grant categories.
During the Tourist Development Council grants funding meeting for FY 2011-2012 on June 27, 2011, discussions
were held regarding the level of category funds. The recommendation was to increase Category B (event and
promotion) funding and decrease Category C-2 (museum) funding to provide additional funds to organizations that
were not qualified under Category C-2 funding.
Recommendation:
• When the adjustments or line item budget changes are proposed, verification and reconciliation for the
modifications need to occur to ensure compliance to Collier County Ordinance 2005-43 for the percentage
allocations by the grant categories for Tourist Development Tax Revenue funds in order to maintain compliance
with ordinances.
County Management Response:
"Staff fully understands that transfers between tourist tax funds cannot be accomplished without BCC approval,
including a tourist tax ordinance change. The intent of the discussion at the TDC level was to reallocate funds
between line items in Fund 184(Advertising and Promotion) to free up funding for applicants that better qualify for
Category B grants, rather than Category C-2 grants. That was accomplished in the budget process for FY 12 and
will not necessitate any transfers between funds, or ordinance changes."
8
1313
Conclusion
Grant applications submitted need to include all documentation required by the Tourism Department. Without all
required documents, County Staff cannot properly evaluate the qualifications for events and organizations, which
could lead to non-compliance with Florida Statute 125.0104 and/or Collier County Ordinance 92-60,as amended.In
addition, County Staff has approved and recommended funding grant applications that were not qualified to receive
Tourist Development Tax Revenues under the current Florida Statute and/or Collier County Ordinance and/or
internal grant guidelines.
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/revenues. 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,Florida Statute,County Ordinance,and County Policies and Procedures.
Additional County Management Comments:
"We completely concur that only the County Commission can approve funding. We routinely do recommend to the
TDC actions related to expenditures of tourist tax funds, based on the advice and counsel of the County Attorney's
Office regarding any legal interpretations of funding eligibility. We do not feel that any unqualified tourist tax grant
funding was recommended to the TDC or subsequently awarded to applicants as covered under Florida Statute
125.0104. We acknowledge that a conflict exists in language between State Statute 125.0104 and County Ordinance
92-60, as amended, due to a scrivener error. That conflicting language is currently in the ordinance amendment
process and will come before the County Commission for consideration in January and February 2012."
Internal Audit Comments:
The County Ordinance has not been amended and remains less restrictive than Florida Statute.
Internal Audit gratefully acknowledges the cooperation and assistance from the Tourism Department. The Tourism
Department's quick response for providing information and responses to recommendations greatly assisted Internal
Audit in the interim work and resolution of findings.
9
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