CLERK OF THE CIRCUIT COURT AND COMPTROLLER

David R Ellspermann

MEMORANDUM

To The Honorable Board of County Commissioners individually

FROM David R Ellspermann Clerk of the Circuit Court 11l

DATE March 202014

RE EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

Enclosed is the Internal Audit Division report OJo 2014-03) regarding Internal Audits follow-up review of the Employee Morale and Recognition Fund (EMRF) Expenditures

Internal Audit has concluded that the EMRF continues to operate as expected and that the previous suggestions with which management concurred were immediately implemented Additional enhancement recommendations are identified in the report

Please let me know if you have any questions or require more information This report will be presented on the consent agenda at the next meeting of the Board of County Commissioners

c Lee A Niblock County Administrator

Marion County Clerk ofthe Circuit Court and Comptroller Board of County Commissioners - Internal Audit Division - Wallace K Watford Internal Auditor

Post Office Box 1030 Ocala Florida 34478-1030 bull Telephone (352) 671-5604 bull Facsimile (352) 671-5625 bull wwwmarioncountyclerkorg

CLERK OF THE CIRCUIT COURT AND COMPTROLLER David R Ellspermann

MEMORANDUM

To Lee A Niblock County Administrator

FROM David R Ellspermann Marion County Clerk and Comptroller ~

DATE March 7 2014

RE AUDIT REpORT 2014-03 EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES

FOLLOW-UP REVIEW

Internal Audit previously reviewed expenditures from use ofthe separate Procurement Card (pCard) assigned to the Employee Morale amp Recognition Fund (EMRF) The results were presented in a memorandum report dated June 3 2013 to Bill Kauffman Assistant County Administrator (see Attachment C)

The previous report presented the results ofour review ofexpenditure transactions through November 2012 The initial review was based on a selected sample ofPCard transactions and was done in conjunction with an ongoing county-wide PCard transactions review This report updates our initial review and includes examination ofEMRF expenditure transactions from December 2012 to September 2013 In addition we reviewed to determine the current status of the conclusions we made in the previous memorandum

Backeround The EMRF provides funding of the Employee Recognition program and is under the responsibility of the Assistant County Administrator-Public and Administrative Services who has delegated the management and routine oversight to the Fiscal Manager The EMRF PCard is assigned to the Fiscal Manager who effectively controls the issuance and usage of the PCard by the requesting departments

The EMRF was created pursuant to originating Ordinance 06-04 as incorporated in County Code 2-24 and is funded from revenue generated from vending machines located on county property special events conducted by employees or similar sources ofrevenue A specific County Administrative Policy (presently 12-02) was devised to implement that portion of the Ordinance related to awards presentation In addition the County Administrator approved detailed internal procedures (Employee Morale amp Recognition Funding Procedures dated August 26 2008) to guide the implementation of the EMRF

Our previous report concluded that the EMRF PCard expenditures were appropriately documented approved and monitored and in furtherance ofthe Employee Recognition program as understood by County managers and staff for several years We did further conclude that certain identified EMRF control and accountability features must be enhanced or established County management implemented the suggestions to which they agreed

Marion County Clerk ofthe Circuit Court and Comptroller Board of County Commissioners - Internal Audit Division - Wallace K Watford Internal Auditor

Post Office Box 1030 bull Ocala Florida 34478-1030 bull Telephone (352) 671-5604 bull Facsimile (352) 671-5625 bull wwwmarioncountyclerkorg

Report 2014-03 Page 2

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

Findings and CommentsThe issue of gift cards awarded to employees was identified in our initial report We found during this reviewthat gift cards awarded were substantially reduced and that these were properly reported as taxable incometo the employees through the payroll process

While we were in process of completing this review and discussing preliminary results with appropriateCounty personnel the BCC was presented with a proposal to amend the EMRF original ordinance Eventhough our review was not completed at that time nor were our recommendations finalized or discussed withManagement Internal Audit did propose revisions to existing ordinance language that would implement ourthen proposed recommendations The proposed revisions were submitted to and accepted and approved bythe County Administrator County Code 2-24 was amended by Ordinance 13-31 that was the subject of apublic hearing and was approved by the BCC on November 5 2013 (see Attachment D)

Ordinance 13-31 states that EMRF appropriate funding sources are now ldquo revenues generated fromconcessions and vending machines located on county property special events conducted by employeessimilar sources of revenue voluntary donations and contributions from individuals and businesses to benefitor implement the stated purposes or other sources of revenues subsequently designated by the Boardrdquo Pastpractice has been to share concessions and vending machine revenues with the Sheriff and Clerk (at 10each) This sharing arrangement has not been formalized All other funding sources have not been sharedThe other significant revenues that have not been shared are sponsorship fees from the Coca-Cola beveragevendor (per separate agreement dated March 5 2013) and the SunTrust purchasing card rebate that wasapproved on January 15 2013

The EMRF expenditures have been made for many types of purposes (see Attachment B) The mostsignificant have been for departmental recognition events often during holiday periods and usually consistof food and beverages but have also included ancillary items (such as supplies decorations and prizes) Inaddition there were expenditures for Business Plan awards (County-wide) and safety luncheons and awards(Public Works departments) Further we noted certain other expenditures for flowers purchased toacknowledge employee personal events (bereavement illness child birth etc) but we became aware of atleast one instance that not all eligible employees were identified to receive this benefit

We also noted other expenditures that were more general in nature and affected or benefitted other individualsthat were not employees These included food beverages and related supplies pertaining to the CitizensAcademy which is a County sponsored program that encourages volunteerism Further there were a numberof events that recognized volunteers within certain departments

In addition there was a County sponsored event during March 2013 in Tallahassee for the Countyrsquoslegislative delegation This event provided general benefit to the County although not for the specific benefitof County employees or volunteers but likely at a minimum promoted goodwill toward the County Therelated expenditures for this particular event were subsequently reimbursed by sponsorships from two localbusinesses These sponsorships were not recorded as revenues but instead were used to offset the expenseWe suggest that BCC specifically approve this type of expenditure from the EMRF for future similar eventsThis was alluded to in the approved amended ordinance but also could be included in the revisedAdministrative Policy andor Funding Procedures document

The amended County Code now allows voluntary donations from individuals and outside entities Weunderstand that it may be BCC intent that such donated funds do not benefit only a particular department orspecific individuals To ensure transparency we suggest that such intent be identified in the revisedAdministrative Policy andor Funding Procedures document

Report 2014-03 Page 3

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ConclusionWe concluded that the EMRF continues to operate as expected and that our previous suggestions with whichmanagement concurred were immediately implemented We further concluded that additional enhancementscould be made to the EMRF and these are identified in following section and attachment

Recommendations

We recommend that the following documents be amended to incorporate BCC approval of EMRFexpenditures as presently administered as well as additional approved revenue sources

bull Ordinance 06-04bull Administrative Policy 12-02bull Employee Morale amp Recognition Funding Procedures

We recommend that specific revisions be made to the Employee Morale amp Recognition Funding Proceduresdocument as identified in Attachment A (Update BCC approved the Ordinance on November 5 2013which amended County Code 2-24 County Administration has revised both the Administrative Policy andthe Funding Procedures and combined both into a new Administrative Policy Internal Audit had beenrequested to provide suggestions for such revisions these were incorporated into the approved language)

We recommend that use of EMRF funds for future legislative events be specifically approved by BCC Inlieu of approving each event general BCC authorization of such events could be incorporated into the revisedAdministrative Policy andor Funding Procedures document that will be presented to BCC for approval(Update The County Administrator has determined that EMRF funds will not be used for this purpose andhas revised the Funding Procedures document to state ldquoEmployee morale funds shall not be used forlegislative or political events or purposesrdquo County Administration requests that separate accounts for revenueand expenditures for legislative events be established in the uniform chart of accounts of the General Fund)

We recommend that BCC intent concerning restrictions on uses of voluntary donations from individualsor businesses be incorporated into the revised Administrative Policy andor Funding Procedures documentthat will be presented to BCC for approval (Update This has been incorporated into the revised FundingProcedures document)

We recommend that any revenue sharing arrangements with particular government entities be specificallyidentified in formal documentation This could be included in the revised Employee Morale amp RecognitionFunding Procedures document (Update This has been incorporated into the revised Funding Proceduresdocument)

This review was performed by Wallace Watford Heather May and Sachiko Leoacuten We appreciate theassistance and cooperation of County Administration and staff in completing this review

Attachments (4)

c Bill Kauffman Assistant County Administrator-PublicAdministrative ServicesJohn Schaefer Fiscal ManagerJohn Garri Finance Director

Report 2014-03 Page 4

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ATTACHMENT A

Internal Audit proposes the following revisions to the Administrative PolicyFunding Procedures

1 State that Gift Cards are allowed as prizes and awards but that these are cash equivalenttransactions that are taxable to employee so gifted and must be reported through the payrollprocess

2 State that prizes and awards of personal property with purchase price in excess of an establishedamount (determined to be ldquode minimisrdquo) will be considered to be taxable to the employee sogifted and must be reported through the payroll process

3 Specifically identify that Citizen Academy expenditures are allowed and identify particularexpenditures such as only beverage and refreshments

4 Specifically identify that safety awards are allowed

5 Clarify that flower purchases are allowable expenditures if to acknowledge an employeersquospersonal event (bereavement illness child birth etc) Existing procedures to identify eligibleemployee should be enhanced to further ensure that all individuals are included

6 Provide examples of other types of revenues that are approved pursuant to the revisedordinance such as donations contributions and sponsorships

Report 2014-03 Page 5

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ATTACHMENT B

Expenditures During FY 2013

General Categories

Department Employee Appreciation Events $11842

Volunteer Appreciation Events $ 2683

Department Safety RecognitionRewards Events $ 4266

County-wide Employee Recognition Event (ERC) $ 2542

STARS Program $ 1220

Flowers for Employees (to recognize individualbereavement birth illness) $ 742

Citizens Academy $ 398

Business Plan Awards $ 770

Legislative Event-Tallahassee (subsequentlyreimbursed by corporate sponsor) $ 667

Revenues During FY 2013

Vending Machines Proceeds (a) $12325

Courthouse Concessions (b) $ -0-

Coca-Cola Sponsorship (c) $ 4000

SunTrust PCard Rebate (d) $ 7370

Notes(a) Proceeds from beverage and snack vending machine vendors this amount is net of amounts

shared withseparately allocated to Sheriff (10) and Clerk (10)(b) Courthouse was without a concessionaire during fiscal year 2013(c) Annual beverage sponsorship fee pursuant to renegotiated agreement approved by BCC on

March 5 2013 In previous years annual amount was $6000(d) BCC approved portion of PCard Rebate as one time addition to EMRF per agenda item of

January 15 2013

Clerk of the Circuit Court Board of County Commissioners

Marion County (+

Internal Audit Division David R Ellspermann

Clerk ofthe Circuit Court Post Office Box 1030 Ocala Florida 34478-1030 Telephone (352) 671-5628 Wallace K Watford 110 NW First Avenue Ocala Florida 34475 Facsimile (352) 671-5600

Internal Auditor

MEMORANDUM

To Bill Kauffman Assistant~Adount inistrator lNf9amiddot

FROM Wallace Watford Internal Audi r ~

DATE June 32013

RE REVIEW OF EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES

Internal Audit reviewed expenditures from use of the separate Procurement Card (PCard) assigned to the Employee Morale and Recognition Fund (EMRF) The EMRF provides funding of the Employee Recognition program and is under the responsibility of the Assistant County Administrator-Public and Administrative Services who has delegated the management and routine oversight to the Fiscal Manager The EMRF PCard is assigned to the Fiscal Manager who effectively controls the issuance and usage of the PCard by the requesting departments

The EMRF was created pursuant to Ordinance 06-04 as incorporated in County Code 224 (see Attachment) and is funded from vending machine revenues A specific County Administrator Policy (presently 12-02) was devised to implement that portion of the Ordinance related to awards presentation

The principal purpose of our review was to confirm that there were appropriate controls over the usage of the assigned EMRF PCard and that expenditures were made pursuant to the Employee Recognition program and were being appropriately monitored and documented

We concluded that the EMRF PCard expenditures were appropriately documented approved and monitored and in furtherance of the Employee Recognition program as understood by County managers and staff for several years

During our review we became aware of certain issues that warrant Managements attention to enhance EMRF expenditure controls accountability and reporting practices We enhanced our review of the types of items acquired through the EMRF The EMRF PCard had been used to purchase trophies plaques and holiday luncheons among others This included gift cards awarded to employees by various departments We also found that the EMRF PCard was used for Safety Program training and events within the Office of County Engineer (OCE) and other Public Works departments Many gift cards were purchased to provide safety awards to OCE employees on monthly quarterly and annual basis

Report 2014-03 Page 3

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ConclusionWe concluded that the EMRF continues to operate as expected and that our previous suggestions with whichmanagement concurred were immediately implemented We further concluded that additional enhancementscould be made to the EMRF and these are identified in following section and attachment

Recommendations

We recommend that the following documents be amended to incorporate BCC approval of EMRFexpenditures as presently administered as well as additional approved revenue sources

bull Ordinance 06-04bull Administrative Policy 12-02bull Employee Morale amp Recognition Funding Procedures

We recommend that specific revisions be made to the Employee Morale amp Recognition Funding Proceduresdocument as identified in Attachment A (Update BCC approved the Ordinance on November 5 2013which amended County Code 2-24 County Administration has revised both the Administrative Policy andthe Funding Procedures and combined both into a new Administrative Policy Internal Audit had beenrequested to provide suggestions for such revisions these were incorporated into the approved language)

We recommend that use of EMRF funds for future legislative events be specifically approved by BCC Inlieu of approving each event general BCC authorization of such events could be incorporated into the revisedAdministrative Policy andor Funding Procedures document that will be presented to BCC for approval(Update The County Administrator has determined that EMRF funds will not be used for this purpose andhas revised the Funding Procedures document to state ldquoEmployee morale funds shall not be used forlegislative or political events or purposesrdquo County Administration requests that separate accounts for revenueand expenditures for legislative events be established in the uniform chart of accounts of the General Fund)

We recommend that BCC intent concerning restrictions on uses of voluntary donations from individualsor businesses be incorporated into the revised Administrative Policy andor Funding Procedures documentthat will be presented to BCC for approval (Update This has been incorporated into the revised FundingProcedures document)

We recommend that any revenue sharing arrangements with particular government entities be specificallyidentified in formal documentation This could be included in the revised Employee Morale amp RecognitionFunding Procedures document (Update This has been incorporated into the revised Funding Proceduresdocument)

This review was performed by Wallace Watford Heather May and Sachiko Leoacuten We appreciate theassistance and cooperation of County Administration and staff in completing this review

Attachments (4)

c Bill Kauffman Assistant County Administrator-PublicAdministrative ServicesJohn Schaefer Fiscal ManagerJohn Garri Finance Director

Report 2014-03 Page 4

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ATTACHMENT A

Internal Audit proposes the following revisions to the Administrative PolicyFunding Procedures

1 State that Gift Cards are allowed as prizes and awards but that these are cash equivalenttransactions that are taxable to employee so gifted and must be reported through the payrollprocess

2 State that prizes and awards of personal property with purchase price in excess of an establishedamount (determined to be ldquode minimisrdquo) will be considered to be taxable to the employee sogifted and must be reported through the payroll process

3 Specifically identify that Citizen Academy expenditures are allowed and identify particularexpenditures such as only beverage and refreshments

4 Specifically identify that safety awards are allowed

5 Clarify that flower purchases are allowable expenditures if to acknowledge an employeersquospersonal event (bereavement illness child birth etc) Existing procedures to identify eligibleemployee should be enhanced to further ensure that all individuals are included

6 Provide examples of other types of revenues that are approved pursuant to the revisedordinance such as donations contributions and sponsorships

Report 2014-03 Page 5

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ATTACHMENT B

Expenditures During FY 2013

General Categories

Department Employee Appreciation Events $11842

Volunteer Appreciation Events $ 2683

Department Safety RecognitionRewards Events $ 4266

County-wide Employee Recognition Event (ERC) $ 2542

STARS Program $ 1220

Flowers for Employees (to recognize individualbereavement birth illness) $ 742

Citizens Academy $ 398

Business Plan Awards $ 770

Legislative Event-Tallahassee (subsequentlyreimbursed by corporate sponsor) $ 667

Revenues During FY 2013

Vending Machines Proceeds (a) $12325

Courthouse Concessions (b) $ -0-

Coca-Cola Sponsorship (c) $ 4000

SunTrust PCard Rebate (d) $ 7370

Notes(a) Proceeds from beverage and snack vending machine vendors this amount is net of amounts

shared withseparately allocated to Sheriff (10) and Clerk (10)(b) Courthouse was without a concessionaire during fiscal year 2013(c) Annual beverage sponsorship fee pursuant to renegotiated agreement approved by BCC on

March 5 2013 In previous years annual amount was $6000(d) BCC approved portion of PCard Rebate as one time addition to EMRF per agenda item of

January 15 2013

Clerk of the Circuit Court Board of County Commissioners

Marion County (+

Internal Audit Division David R Ellspermann

Clerk ofthe Circuit Court Post Office Box 1030 Ocala Florida 34478-1030 Telephone (352) 671-5628 Wallace K Watford 110 NW First Avenue Ocala Florida 34475 Facsimile (352) 671-5600

Internal Auditor

MEMORANDUM

To Bill Kauffman Assistant~Adount inistrator lNf9amiddot

FROM Wallace Watford Internal Audi r ~

DATE June 32013

RE REVIEW OF EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES

Internal Audit reviewed expenditures from use of the separate Procurement Card (PCard) assigned to the Employee Morale and Recognition Fund (EMRF) The EMRF provides funding of the Employee Recognition program and is under the responsibility of the Assistant County Administrator-Public and Administrative Services who has delegated the management and routine oversight to the Fiscal Manager The EMRF PCard is assigned to the Fiscal Manager who effectively controls the issuance and usage of the PCard by the requesting departments

The EMRF was created pursuant to Ordinance 06-04 as incorporated in County Code 224 (see Attachment) and is funded from vending machine revenues A specific County Administrator Policy (presently 12-02) was devised to implement that portion of the Ordinance related to awards presentation

The principal purpose of our review was to confirm that there were appropriate controls over the usage of the assigned EMRF PCard and that expenditures were made pursuant to the Employee Recognition program and were being appropriately monitored and documented

We concluded that the EMRF PCard expenditures were appropriately documented approved and monitored and in furtherance of the Employee Recognition program as understood by County managers and staff for several years

During our review we became aware of certain issues that warrant Managements attention to enhance EMRF expenditure controls accountability and reporting practices We enhanced our review of the types of items acquired through the EMRF The EMRF PCard had been used to purchase trophies plaques and holiday luncheons among others This included gift cards awarded to employees by various departments We also found that the EMRF PCard was used for Safety Program training and events within the Office of County Engineer (OCE) and other Public Works departments Many gift cards were purchased to provide safety awards to OCE employees on monthly quarterly and annual basis

Report 2014-03 Page 4

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ATTACHMENT A

Internal Audit proposes the following revisions to the Administrative PolicyFunding Procedures

1 State that Gift Cards are allowed as prizes and awards but that these are cash equivalenttransactions that are taxable to employee so gifted and must be reported through the payrollprocess

2 State that prizes and awards of personal property with purchase price in excess of an establishedamount (determined to be ldquode minimisrdquo) will be considered to be taxable to the employee sogifted and must be reported through the payroll process

3 Specifically identify that Citizen Academy expenditures are allowed and identify particularexpenditures such as only beverage and refreshments

4 Specifically identify that safety awards are allowed

5 Clarify that flower purchases are allowable expenditures if to acknowledge an employeersquospersonal event (bereavement illness child birth etc) Existing procedures to identify eligibleemployee should be enhanced to further ensure that all individuals are included

6 Provide examples of other types of revenues that are approved pursuant to the revisedordinance such as donations contributions and sponsorships

Report 2014-03 Page 5

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ATTACHMENT B

Expenditures During FY 2013

General Categories

Department Employee Appreciation Events $11842

Volunteer Appreciation Events $ 2683

Department Safety RecognitionRewards Events $ 4266

County-wide Employee Recognition Event (ERC) $ 2542

STARS Program $ 1220

Flowers for Employees (to recognize individualbereavement birth illness) $ 742

Citizens Academy $ 398

Business Plan Awards $ 770

Legislative Event-Tallahassee (subsequentlyreimbursed by corporate sponsor) $ 667

Revenues During FY 2013

Vending Machines Proceeds (a) $12325

Courthouse Concessions (b) $ -0-

Coca-Cola Sponsorship (c) $ 4000

SunTrust PCard Rebate (d) $ 7370

Notes(a) Proceeds from beverage and snack vending machine vendors this amount is net of amounts

shared withseparately allocated to Sheriff (10) and Clerk (10)(b) Courthouse was without a concessionaire during fiscal year 2013(c) Annual beverage sponsorship fee pursuant to renegotiated agreement approved by BCC on

March 5 2013 In previous years annual amount was $6000(d) BCC approved portion of PCard Rebate as one time addition to EMRF per agenda item of

January 15 2013

Clerk of the Circuit Court Board of County Commissioners

Marion County (+

Internal Audit Division David R Ellspermann

Clerk ofthe Circuit Court Post Office Box 1030 Ocala Florida 34478-1030 Telephone (352) 671-5628 Wallace K Watford 110 NW First Avenue Ocala Florida 34475 Facsimile (352) 671-5600

Internal Auditor

MEMORANDUM

To Bill Kauffman Assistant~Adount inistrator lNf9amiddot

FROM Wallace Watford Internal Audi r ~

DATE June 32013

RE REVIEW OF EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES

Internal Audit reviewed expenditures from use of the separate Procurement Card (PCard) assigned to the Employee Morale and Recognition Fund (EMRF) The EMRF provides funding of the Employee Recognition program and is under the responsibility of the Assistant County Administrator-Public and Administrative Services who has delegated the management and routine oversight to the Fiscal Manager The EMRF PCard is assigned to the Fiscal Manager who effectively controls the issuance and usage of the PCard by the requesting departments

The EMRF was created pursuant to Ordinance 06-04 as incorporated in County Code 224 (see Attachment) and is funded from vending machine revenues A specific County Administrator Policy (presently 12-02) was devised to implement that portion of the Ordinance related to awards presentation

The principal purpose of our review was to confirm that there were appropriate controls over the usage of the assigned EMRF PCard and that expenditures were made pursuant to the Employee Recognition program and were being appropriately monitored and documented

We concluded that the EMRF PCard expenditures were appropriately documented approved and monitored and in furtherance of the Employee Recognition program as understood by County managers and staff for several years

During our review we became aware of certain issues that warrant Managements attention to enhance EMRF expenditure controls accountability and reporting practices We enhanced our review of the types of items acquired through the EMRF The EMRF PCard had been used to purchase trophies plaques and holiday luncheons among others This included gift cards awarded to employees by various departments We also found that the EMRF PCard was used for Safety Program training and events within the Office of County Engineer (OCE) and other Public Works departments Many gift cards were purchased to provide safety awards to OCE employees on monthly quarterly and annual basis

Report 2014-03 Page 5

EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES FOLLOW-UP REVIEW

ATTACHMENT B

Expenditures During FY 2013

General Categories

Department Employee Appreciation Events $11842

Volunteer Appreciation Events $ 2683

Department Safety RecognitionRewards Events $ 4266

County-wide Employee Recognition Event (ERC) $ 2542

STARS Program $ 1220

Flowers for Employees (to recognize individualbereavement birth illness) $ 742

Citizens Academy $ 398

Business Plan Awards $ 770

Legislative Event-Tallahassee (subsequentlyreimbursed by corporate sponsor) $ 667

Revenues During FY 2013

Vending Machines Proceeds (a) $12325

Courthouse Concessions (b) $ -0-

Coca-Cola Sponsorship (c) $ 4000

SunTrust PCard Rebate (d) $ 7370

Notes(a) Proceeds from beverage and snack vending machine vendors this amount is net of amounts

shared withseparately allocated to Sheriff (10) and Clerk (10)(b) Courthouse was without a concessionaire during fiscal year 2013(c) Annual beverage sponsorship fee pursuant to renegotiated agreement approved by BCC on

March 5 2013 In previous years annual amount was $6000(d) BCC approved portion of PCard Rebate as one time addition to EMRF per agenda item of

January 15 2013

Clerk of the Circuit Court Board of County Commissioners

Marion County (+

Internal Audit Division David R Ellspermann

Clerk ofthe Circuit Court Post Office Box 1030 Ocala Florida 34478-1030 Telephone (352) 671-5628 Wallace K Watford 110 NW First Avenue Ocala Florida 34475 Facsimile (352) 671-5600

Internal Auditor

MEMORANDUM

To Bill Kauffman Assistant~Adount inistrator lNf9amiddot

FROM Wallace Watford Internal Audi r ~

DATE June 32013

RE REVIEW OF EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES

Internal Audit reviewed expenditures from use of the separate Procurement Card (PCard) assigned to the Employee Morale and Recognition Fund (EMRF) The EMRF provides funding of the Employee Recognition program and is under the responsibility of the Assistant County Administrator-Public and Administrative Services who has delegated the management and routine oversight to the Fiscal Manager The EMRF PCard is assigned to the Fiscal Manager who effectively controls the issuance and usage of the PCard by the requesting departments

The EMRF was created pursuant to Ordinance 06-04 as incorporated in County Code 224 (see Attachment) and is funded from vending machine revenues A specific County Administrator Policy (presently 12-02) was devised to implement that portion of the Ordinance related to awards presentation

The principal purpose of our review was to confirm that there were appropriate controls over the usage of the assigned EMRF PCard and that expenditures were made pursuant to the Employee Recognition program and were being appropriately monitored and documented

We concluded that the EMRF PCard expenditures were appropriately documented approved and monitored and in furtherance of the Employee Recognition program as understood by County managers and staff for several years

During our review we became aware of certain issues that warrant Managements attention to enhance EMRF expenditure controls accountability and reporting practices We enhanced our review of the types of items acquired through the EMRF The EMRF PCard had been used to purchase trophies plaques and holiday luncheons among others This included gift cards awarded to employees by various departments We also found that the EMRF PCard was used for Safety Program training and events within the Office of County Engineer (OCE) and other Public Works departments Many gift cards were purchased to provide safety awards to OCE employees on monthly quarterly and annual basis

Clerk of the Circuit Court Board of County Commissioners

Marion County (+

Internal Audit Division David R Ellspermann

Clerk ofthe Circuit Court Post Office Box 1030 Ocala Florida 34478-1030 Telephone (352) 671-5628 Wallace K Watford 110 NW First Avenue Ocala Florida 34475 Facsimile (352) 671-5600

Internal Auditor

MEMORANDUM

To Bill Kauffman Assistant~Adount inistrator lNf9amiddot

FROM Wallace Watford Internal Audi r ~

DATE June 32013

RE REVIEW OF EMPLOYEE MORALE AND RECOGNITION FUND EXPENDITURES

Internal Audit reviewed expenditures from use of the separate Procurement Card (PCard) assigned to the Employee Morale and Recognition Fund (EMRF) The EMRF provides funding of the Employee Recognition program and is under the responsibility of the Assistant County Administrator-Public and Administrative Services who has delegated the management and routine oversight to the Fiscal Manager The EMRF PCard is assigned to the Fiscal Manager who effectively controls the issuance and usage of the PCard by the requesting departments

The EMRF was created pursuant to Ordinance 06-04 as incorporated in County Code 224 (see Attachment) and is funded from vending machine revenues A specific County Administrator Policy (presently 12-02) was devised to implement that portion of the Ordinance related to awards presentation

The principal purpose of our review was to confirm that there were appropriate controls over the usage of the assigned EMRF PCard and that expenditures were made pursuant to the Employee Recognition program and were being appropriately monitored and documented

We concluded that the EMRF PCard expenditures were appropriately documented approved and monitored and in furtherance of the Employee Recognition program as understood by County managers and staff for several years

During our review we became aware of certain issues that warrant Managements attention to enhance EMRF expenditure controls accountability and reporting practices We enhanced our review of the types of items acquired through the EMRF The EMRF PCard had been used to purchase trophies plaques and holiday luncheons among others This included gift cards awarded to employees by various departments We also found that the EMRF PCard was used for Safety Program training and events within the Office of County Engineer (OCE) and other Public Works departments Many gift cards were purchased to provide safety awards to OCE employees on monthly quarterly and annual basis

REVIEW OF EMPLOYEE RECOGNITION AND MORALE FUND EXPENDITURES

We concluded that certain EVIRF control and accountability features must be enhanced or established (1) Gift cards are not expressly identified in policy as an authorized use ofEMRF funds This should be specifically included in policy ifsuch use is authorized In fiscal year 2012 of the total expended from the EMRF ($1917854) at least $160500 had been spent on gift cards We consider this type of usage and the amount to be material We recommend that related policy and procedures be established so that Management may meet the BCC-approved Finding of Fact (per Code Sec 2-24 (a)(1) in the Attachment) of finds that the expenditure of public funds in compliance with the requirements of this section serves a valid public purpose and that the requirements set forth herein provide controls to guard against abuse and assure accountability to the taxpayers and the public (2) All gift cards should be further documented to include identification when purchased how distributed and be signed for by each employee awarded a gift card This should be done in a standardized form that is included as part of the PCard or other purchase documentation (3) Public Works safety awards are not specifically identified in the Ordinance or written policy and such awards do not benefit all County employees We questioned whether such awards are an intended EMRF usage pursuant to the Ordinance Management in response stated that safety is actually recognition pursuant to policy We recommend that such usage be specifically identified in appropriate policy and procedure

We performed research of the issue of whether gift cards have tax consequences to the employee Most gift cards were for $2500 but a few exceeded that amount We concluded that gift cards are considered by the IRS to be cash equivalents and therefore are considered to be employee compensation subject to all employment taxes regardless ofthe amount ofthe gift card received We determined that such awards had not been reported through the payroll system and that the issue of gift cards as awards had not been previously discussed with the Payroll Department We note that when this issue was discussed with Management prompt actions were taken to identify the employees awarded gift cards and the related amounts were reported as taxable employee benefits This allowed appropriate payroll taxes to be calculated and deducted from one ofthe two December 2012 payrolls

Please see the attached Management Response to this review

We appreciate the assistance and cooperation of County Management and staff in completing this reVIew

Attachments (2)

c Lee A Niblock County Administrator John Schaefer Fiscal Manager John Garri Finance Director David R Ellspermann Clerk of Circuit Court

Page 2

REvIEW OF EMPLOYEE RECOGNITION AND MORALE FUND EXPENDITURES

ATTACHMENT

Sec 2-24 - Expenditure of public funds to increase employee productivity and promote good will

(a) Findings offact

(I ) The Board of County Corrunissioners of Marion County Florida hereby finds that the expenditure of public funds in compliance with the requirements of this section serves a valid public purpose and that the requirements set forth herein provide controls to guard against abuse and assure accountability to the taxpayers and the public

(2) The board finds that revenue generated from vending machines located on county property special events conducted by employees or similar sources ofrevenue is the most appropriate SOlllce ofrevenue and shall be the only source ofrevenue to carry out the purposes of this section

(b) Purpose It shall be the purpose of this section to

(1) Enhance county employee productivity

(2) Promote and engender goodwill toward the county within the community

(3) Encolllage increased employee responsiveness to the needs and requests ofthe citizens and residents ofMarion County

(4) Encolllage individuals and corrununity service groups to volunteer services which benefit the citizens ofMarion County beautify the county or improve the quality of life in Marion County and

(5) Provide incentives for the attainment of these goals

(c) Expenditure offunds In order to effectuate the plllposes of this section the following expenditures are hereby authorized

(I) Presentation of awards including but not limited to framed plaques or certificates pins trophies mementos or other suitable tokens of recognition

(2) Refreshments such as coffee doughnuts pastries soft drinks or other light snacks served to employees and guests at county business-related functions meetings or training programs

(3) Ceremonies or other events honoring employees or county volunteers including receptions luncheons picnics or banquets

(4) Employee appreciation picnics dinners buffets banquets and luncheons Payments for such approved functions may include the costs ofcatering meeting rooms or facilities meal utensils and associated items food and drink and other normal and reasonable charges and expenses

(5) The membership and attendance costs associated with civic nonprofit community service or professional associations which serve and promote the general welfare of the citizens of Marion County

(6) Employee newsletters annual reports publications reporting general public information and progress regarding county government activities or similar documents whether in written form or any other format

(d) Approval Any expenditllle pursuant to this section shall be preapproved by the county administrator or hisher designee

(e) Alcoholic beverages County funds shall not be expended for alcoholic beverages

(f) Applicability This section shall apply to all county departments divisions and offices established pursuant to Article VIII Section I (d) of the State of Florida Constitution as well as the Marion County Board of County Commissioners

(g) Compliance with state law Nothing in this section shall be construed to relieve any public officer or employee from compliance with the provisions ofFS Ch 112

(Ord No 06-04 sectsect 1-73-21-2006)

Page 3

Marion County Board of County Commissioners

Pub lic and Administrative Services

601 SE 25th Ave Ocala FL 34471 Phone 352-438-2312 Fax 352-438-2309

MEMO

DATE May 29 2013

TO Wallace Watford Internal Audit

FROM Bill Kauffman Assistant County Administrator

SUBJECT EMRF Review - Management Response

Thank you for providing the final EMRF draft memo for our review and for Management Response Following is our Management Response to the EMRF Draft Memo

Administration appreciates the work completed on the Employee Morale and Recognition Fund audit and agrees with the majority of the findings and opinions Since this is the first audit of this fund from its creation in June 2006 we agree the review of the fund was long overdue

Administration does not agree with the opinion of the audit that states In fiscal year 2012 of the total expended from the EMRF ($1917854) at least $160500 (84) had been spent on gift cards We consider this type of usage and amount to be material The disagreement is with the use of the word material Out of the $55300451 total 2012 Budget Regular Salaries amp Wages the EMRF Budget Amendment for the FICA for the gift cards was $22500 This is 00041 of the total salaries and wages We do not consider this material We have made the changes for future gift card awards to be included in the payroll process We also believe we are within compliance with the requirements of the Ordinance 06-04 regarding awarding of gift cards In addition we recommend that you alert the Constitutional Officers of these findings in order to assure that they are also following the proper payroll function regarding awarding staff monetary awards or gifts

If you should have any questions regarding our response I am available for questions

Cc Dr Lee A Niblock County Administrator John Schaefer Fiscal Manager

Meeting Needs by Exceeding Expectations

wwwmarinncountyflorg

Marion County Board of County Commissioners

Pub lic and Administrative Services

601 SE 25th Ave Ocala FL 34471 Phone 352-438-2312 Fax 352-438-2309

MEMO

DATE May 29 2013

TO Wallace Watford Internal Audit

FROM Bill Kauffman Assistant County Administrator

SUBJECT EMRF Review - Management Response

Thank you for providing the final EMRF draft memo for our review and for Management Response Following is our Management Response to the EMRF Draft Memo

Administration appreciates the work completed on the Employee Morale and Recognition Fund audit and agrees with the majority of the findings and opinions Since this is the first audit of this fund from its creation in June 2006 we agree the review of the fund was long overdue

Administration does not agree with the opinion of the audit that states In fiscal year 2012 of the total expended from the EMRF ($1917854) at least $160500 (84) had been spent on gift cards We consider this type of usage and amount to be material The disagreement is with the use of the word material Out of the $55300451 total 2012 Budget Regular Salaries amp Wages the EMRF Budget Amendment for the FICA for the gift cards was $22500 This is 00041 of the total salaries and wages We do not consider this material We have made the changes for future gift card awards to be included in the payroll process We also believe we are within compliance with the requirements of the Ordinance 06-04 regarding awarding of gift cards In addition we recommend that you alert the Constitutional Officers of these findings in order to assure that they are also following the proper payroll function regarding awarding staff monetary awards or gifts

If you should have any questions regarding our response I am available for questions

Cc Dr Lee A Niblock County Administrator John Schaefer Fiscal Manager

Meeting Needs by Exceeding Expectations

wwwmarinncountyflorg

ORDINANCE NO 13-31

AN ORDINANCE OF THE BOARD OF COUNTY COMMISSIONERS

OF MARION COUNTY FLORIDA AMENDING THE MARION

COUNTY CODE OF ORDINANCES CHAPTER 2 ARTICLE II SECTION

2-24 PROVIDING AUTHORIZATION FOR ADDITIONAL OPTIONS

FOR REVENUES AND EXPENDITURES PROVIDING FOR

SEVERABILITY PROVIDING FOR INCLUSION IN THE CODE AND

PROVIDING AN EFFECTIVE DATE

WHEREAS pursuant to the authority granted by Section 12501 FS The board of

County Commissioners has the power to carryon county government to the extent not

inconsistent with general law and to adopt ordinances and resolutions necessary for the

exercise of its powers and

WHEREAS the Board of County Commissioners desires to enhance the productivity

efficiency safety and working environment of County employees and the employees of

constitutional officers and

WHEREAS the Board of County Commissioners desires to enhance the understanding of

County programs and services and engender a spirit of cooperation and goodwill among the

citizens of Marion County and

WHEREAS the adoption of this ordinance amendment will promote the health safety

and welfare of the citizens of Marion county Florida

NOW THEREFORE BE IT ORDAINED BY THE BOARD OF COUNTY COMMISSIONERS OF

MARIOII COUNTY FLORIDA that

SECTION 1 Amendment to Chapter 2 Article II Section 2-24 of the Marion County

Florida Code of Ordinances

A Chapter 2 Article II Section 2-24 (a)(2) of the Code of Ordinances is hereby amended to

read as follows

(2) The board finds that revenue~ generated from concessions and vending machines

located on county property special events conducted by employees Gf-similar sources

of revenue voluntary donations and contributions from individuals and business to

benefit or implement the stated purposes or other sources of revenues subsequently

designated by the Board i-5-are the most appropriate source~of revenue~ and shall be

the only source of revenue to carry out the purposes of this ordinance

B Chapter 2 Article II Section 2-24 (b)(l) and (2) are hereby amended to read as follows

(1) Enhance county employee productivity and safety

(2) Promote and engender goodwill toward the county within the community and the

state

C Chapter 2 Article II Section 2-24 (c)(2) (3) and (4) are hereby amended to read

(2) Refreshments such as coffee doughnuts pastries soft drinks or other light snacks

served to employees volunteers and guests at county sponsored or business-related

functions meetings or training programs

(3) Ceremonies or other events honoring or benefiting county employees or county

volunteers including receptions luncheons picnics or banquets

(4) Employee appreciation picnics dinners buffets banquets and luncheons or events

that promote and engender goodwill toward the county Payments for such approved

functions may include the costs of catering meeting rooms or facilities meal utensils

and associated items food and drink and other normal and reasonable charges and

expenses

SECTION 2 SEVERABILITY It is hereby declared to be the intent of the Board of County

Commissioners of Marion County Florida that if any section subsection sentence clause

phrase or provision of this Ordinance is held invalid or unconstitutional such invalidity or

unconstitutionality shall not be so construed as to render invalid or unconstitutional the

remaining provisions of this Ordinance

SECTION 3 INCLUSION IN CODE It is the intension of the Board of County

Commissioners of Marion County Florida and it is hereby provided that the provisions of this

ordinance shall become and be made a part of the Code of Marion County Florida that the

sections of this ordinance may be renumbered or relettered to accomplish such intention and

that the word ordinance may be changed to section article or other appropriate

designation

SECTION 4 EFFECTIVE DATE This Ordinance shall take effect upon filing with the Office

of the Secretary of State by the Clerk within ten (10) days after enactment by the Board as

provided in Section 12566(2) Florida Statutes

DULY ADOPTED this day of November 2013

BOARD OF COUNTY COMMISSIONERS

ATTEST OF MARION COUNTY FLORIDA

~~ Clerk of the Circuit Court

RECEIVED NOTICE FROM SECRETARY OF STATE ON NOVEMBER 62013 THAT ORDINANCE WAS FILED ON NOVEMBER 6 2013

SECTION 4 EFFECTIVE DATE This Ordinance shall take effect upon filing with the Office

of the Secretary of State by the Clerk within ten (10) days after enactment by the Board as

provided in Section 12566(2) Florida Statutes

DULY ADOPTED this day of November 2013

BOARD OF COUNTY COMMISSIONERS

ATTEST OF MARION COUNTY FLORIDA

~~ Clerk of the Circuit Court

RECEIVED NOTICE FROM SECRETARY OF STATE ON NOVEMBER 62013 THAT ORDINANCE WAS FILED ON NOVEMBER 6 2013