COUNTY FLORIDA COUNTY AUDITOR 115 S. Andrews Avenue, Room 520 Fort Lauderdale, Florida FAX

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1 B~:9WARD COUNTY FLORIDA COUNTY AUDITOR 115 S. Andrews Avenue, Room 520 Fort Lauderdale, Florida FAX Exhibit 1 May 12, 2017 TO: The Mayor and Members, Board of County Commissioners FROM: Kathie-Ann Ulett, Interim County Auditor ~ SUBJECT: County Auditor's Review - County Commissioner Salary and Travel Allowance Payment Processing My office initiated a review of the payroll processes for County Commissioners' base salaries and travel allowances from February 2015 to January The objectives of the review were to:! Evaluate whether payments to County Commissioners were in accordance with applicable Florida Statutes 1 and Broward County Code of Ordinances 2 (Ordinance), and! Follow-up on the status of the implementation of recommendations in County Commissioners' Salary and Travel Allowance Payment Processing memorandum presented to the Broward County Board of County Commissioners (Board) on October 6, 2015 (Attachment 1 ). Our review disclosed no exceptions: 1. Salary and travel allowance payments made to Commissioners during the review period were accurate and in accordance with Florida Statutes and the Ordinance. 2. Management has made recommended corrections and implemented appropriate procedures to address the recommendations outlined in the previous memorandum (Appendix A). 1 Chapter 145, Sections , (1 )(a), (b) and (c), Florida Statues 2 Broward County Code of Ordinances, Chapter 1 Article II, Section 1-18(a) Broward County Board of County Commissioners Mark D. Bogen Beam Furr Steve Geller Dale V.C. Holness Chip LaMarca Nan H. Rich Tim. Ryan Barbara Sharief Michael Udine

2 County Auditor's Review - County Commissioner Salary and Travel Allowance Payment Processing May 12, 2017 Page 2 Background The Broward County Charter 3 states that Commissioners' salaries are determined in accordance with Florida State law. Annually, the Florida Legislature's Office of Economic and Demographic Research calculates authorized salaries for Elected County Officers in accordance with Florida Statutes Chapter 145. The authorized salaries are as follows: $95,782 $95,888 $96,031 In addition to base salary, the Broward County Code of Ordinances authorizes a $200 monthly travel expense allowance for Commissioners' travel within Broward County. Procedures for paying Commissioners At the beginning of each fiscal year. the County Auditor's office provides County Administration and Payroll with a memo indicating the updated salary for Commissioners. The Payroll Section performs the following:! calculates the daily rate of pay, based on days,! initiates biweekly payments based on 8 hour days and14 day pay periods,! pays the $200 travel allowance monthly on the second payroll,! pro-rates salary and travel allowance to incoming Commissioners effective with the day sworn into office, and! pro-rates salary and travel allowance to outgoing Commissioners based on the last day in office. Prior to payment. Accounting Division management performs independent reviews of:! daily rate computations, and! initial and final payments to Commissioners. 3 Section 2.01 D of the Broward County Charter. 1 The daily rate is calculated based on 366 days during leap years.

3 Appendix A Status of Prior Audit Recommendations The following table summarizes the findings and recommendations contained within the County Commissioners Salary and Travel Allowance Payment Processing Review memorandum, presented to the Broward County Board of County Commissioners (Board) on October 6, 2015 and the remediation status of each recommendation as of May Finding Recommendation Status as of May Payments to Commissioners contained errors and were not consistently calculated. 2. Accounting and Human Resources have no documented policies and procedures for processing payments to Commissioners. 3. Independent reviews of Commissioner salary and travel allowances payment processing were not performed. 1. Implement written procedures for processing payments to Commissioners by September 30, 2015 to include: a. Adoption of a single method of allocating the State authorized annual salary based on a calendar day method (Dividing the annual salary by 365 days to arrive at a daily rate of pay and applying the daily rate to the actual number of calendar days of service). b. Payment of Commissioners' salaries on a biweekly basis consistent with other County employees, and c. A requirement for an independent review of the daily rate computation in 1.a above and of all initial and final payments to Commissioners. 2. Require review of payments previously made to Commissioners and correct the payments as necessary to ensure consistent and accurate payments to Commissioners by September 30, Resolved: The Division has developed written procedures and implemented the following processes: a. Adopted a single method of allocating the authorized annual salary based on a calendar day method. b. Implemented biweekly payment of commissioners' salaries. c. Implemented independent review of the daily rate computations and initial and final payments to Commissioners. Resolved: The Accounting Division processed corrections by December 2015.

4 ATTACHMENT 1 Review of County Commissioners Salary and Travel Allowance Payment Processing B" 'OYVARD '' COUNTY F L ORIDA Office of the County Auditor 115 S. Andrews Avenue. Room 520 Fon Lauderdale. Flonda FAX August 12, 2015 TO: FROM: SUBJECT: The Mayor and Members. Board of County Commissioners Evan A. Lukic, Cou~i t6r Review of County Commissioners Salary and Travel Allowance Payment Processing This report presents the results of our review of the process for paying County Commissioners' base salaries and travel allowances. The purpose of our review was to determine whether Commissioners were paid in accordance with applicable Florida Statutes 1 and Broward County Code of Ordinances. 2 Our review included payments to Commissioners from January 2010 to January Our review disclosed: Payments to Commissioners contained errors and were not consistently calculated, A lack of written policies and procedures for processing payments to Commissioners, and A lack of adequate independent review of the payments to Commissioners. Background In accordance with Section 2.01 D of the County Charter, Commissioners' salaries are determined in accordance with State law. Annually, the Florida Legislature's Office of Economic and Demographic Research calculates authorized salaries for Elected County Officers in accordance with Florida Statutes Chapter 145. The authorized salary for fiscal year 2015 for Broward County commissioners is $95,782. In addition to base salary, the Broward County Code of Ordinances authorizes a $200 monthly travel expense allowance for Commissioners' travel within Broward County. 1 Chapter 145, Sections , (1)(a). (b) and {c). Flori<la Statutes 7 Broward County Code of Ordinances, Chapter 1 Article II, Section 1-18 (a) Broward County Board or County Commissioners Mazk o. Bogen Beam Furr Dille V.C Holness Maron Oav1d K1ar Chip LaMarea Stacy Ritter Tim Ryon Barbara Shanel Leu Wlll'let Broward org

5 Review of County Commissioner Salary and Travel Allowance Payment Processing August 12, 2015 Page2 Florida Statutes does not prescribe the method by which Commissioner annual salaries are paid (e.g. weekly, monthly). While most County employees are paid every two weeks, Commissioners are paid their base salary and travel allowance monthly on the last pay period of each month. Findings 1. Payments to Commissioners contained errors and were not consistently calculated. We reviewed payments for salary and travel allowances to Commissioners from January 2010 to January 2015 and noted the following: Except in months of partial service, routine monthly payments were consistently computed based on one twelfth of the authorized annual salary. In months of partial service, inconsistent methods were used to determine the actual number of days of service. Some Commissioners were paid for business days (Monday through Friday), others were paid for calendar days (Monday through Sunday) and others were paid for fifteen days regardless of their actual start dates (e.g., an outgoing Commissioner left office on November 19 and an incoming Commissioner entered office on November 20 yet they both received equal pay of 15 days for that month). The payment of fifteen days regardless of days served resulted in payments for days not served by the incoming commissioner and nonpayment for days served by the outgoing Commissioner. Errors were made in counting days of service. Payments for calendar days of service were made based on a business day rate resulting In overpayments. 2. Accounting and Human Resources have no written policies and procedures for processing payments to Commissioners. Through conversations with Accounting and Human Resources staff, we determined that neither Division maintains written policies and procedures for processing payments to Commissioners. Documented policies and procedures are essential to ensure consistent, accurate and compliant processing of transactions.

6 Review of County Commissioner Salary and Travel Allowance Payment Processing August12,2015 Page3 3. Independent reviews of Commissioner Salary and Travel Allowance payment proceaslng were not perfonned. Currently, the Payroll Section of the Accounting Division is solely responsible for calculating and reviewing compensation payments. Our review disclosed that the payment processing of commissioners salary and travel allowance is not independently reviewed. Independent reviews of the compensation methodology used and related calculations could reduce errors and ensure consistent application of procedures. Recommendations We recommend the Board of County Commissioners direct the County Administrator to: 1. Implement written procedures for processing payments to Commissioners by September 30, 2015 to include: a. Adoption of a single method of allocating the State authorized annual salary based on a calendar day method (dividing the annual salary by 365 days 3 to arrive at a daily rate of pay and applying the daily rate to the actual number of calendar days of service), b. Payment of Commissioners' salaries on a biweekly basis consistent with other County employees, and c. A requirement for an independent review of the daily rate computation in 1.a above and of all initial and final payments to Commissioners. 2. Require review of payments previously made to Commissioners and correct the payments as necessary to ensure consistent and accurate payments to Commissioners by September 30, Use extra vlgllance In calculating dally rate In leap years and calendar years containing 27 pay periods, as applicable

7 B~'9WARD COUNTY Management's Response FLORIDA BERTHA W. HENRY, County Administrator 115 S. Andrews Avenue. Room 409 Fort Lauderdale, Florida FAX MEMORANDUM TO: FROM: DATE: SUBJECT: Mayor and Board of County Commissioners Bertha W. Henry, County Administrator ~cj~ /44 September 28, 2015 Response to County Auditor's Review of County Commissioner Salary and Travel Allowance Payment Processing We have reviewed the above referenced County Auditor's Report and the following is Management's response to its findings and recommendations. Finding 1: "Payments to Commissioners contained errors and were not consistently calculated. " Recommendation: See recommendations below Response: Agree. It is important to note that no formal legislation or policy exists that governs the method or frequency of paying county commissioners' salary. The Florida Constitution states the "compensation and method of payment for state and county officials shall be fixed by law." Florida Statutes. however, only address the amount of compensation and expense allowance that county commissioners may receive. Broward County's Charter. Code of Ordinances and Administrative Code are also silent except for a brief statement appearing in Section 1-18 of the Code of Ordinances which states that commissioners' monthly travel expense allowance shall be processed "in accordance with existing rules of Broward County government." The County Auditor's report focused in part on payments made to individuals during partial months of service. This review revealed that payments to county commissioners were calculated according to historical practice rather than formal policy or documented procedures - a practice not unique to Broward County. In fact. our review of commission payment practices in ten other Florida counties found no official policy or documented procedures in those counties. We found that in all of our surveyed counties, commissioners are paid biweekly and based on "business days" (Monday through Friday). In contrast. our practice has been to pay commissioners monthly based on a 30-day month or a 360-day calendar year. 1 In addition, following an election and change in officeholder, our long-standing practice compensated the incoming and outgoing commissioners based on 15 days of service during the transition month, regardless of the number of days of actual service. The County's Attorney's Office recently advised that payments must coincide with commissioners' actual term of office. Based in part on the County Attorney's Office advice. we acknowledge that overpayments and underpayments occurred during recent officeholder transitions. Although the County Auditor's Report spans a five-year period from January 2010 through January 2015, both the federal Fair Labor Standards Act 2 and Florida Statutes 3 establish a two-year statute of limitations for the recovery of wages by employers or employees. Therefore. the 1 1\ 360-day da>' year con~1st i ng of I:? months lasung 30 d01ys each os knov.n as a ~ommcr.: 1111 year,\ commm:1al )'ear is often used for linanc1al and reporting purposes to adjust for differences in the numhcr of days m each calendar month. z 255 (a). Fair Labor Standards /\ct of 1938, as amended J (4)(c). Florida Statutes Broward County Board of County Commissioners Maril. 0. Bogen Beam Furr Dale V.C. Holness Martin Dallid Kiar Chip LaMarca Stacy Ritter Tim Ryan Barbara Shalief Lois Welder

8 Response to Review of Commissioner Salary and Travel Allowance Payment Processing. September 28, 2015 Page2 Accounting Division will address payment discrepancies with fonner and current commissioners involved in officeholder transitions between January 2013 and January Finding 2: "Accounting and Human Resources have no written policies and procedures for processing payments to Commissioners. n Recommendation: Direct the County Administrator to implement written procedures for processing payments to Commissioners by September 30, 2015 to include: Adoption of a single method of allocating the State authorized annual salary based on a calendar day method (dividing the annual salary by 365 days 4 to arrive at a daily rate of pay and applying the daily rate to the actual number of calendar days of service), Payment of Commissioners' salaries on a biweekly basis consistent with other County employees, and A requirement for an independent review of the daily rate computation in 1.a above and of all initial and final payments to Commissioners by the Human Resources Division. Response: Agree. We agree policies and procedures are necessary to ensure consistency in processing payments to commissioners, especially during partial months of service. We also support a standard payment methodology and a biweekly payment schedule consistent with County employees. Effective October 1, 2015 and to coincide with the start of FY16 and the State's latest compensation schedule for county commissioners, the Finance and Administrative Services Department will institute the following procedures: 1) Each member of the Board of County Commissioners shall receive as salary the amount of compensation established pursuant to Section , Florida Statutes. 2) Each member of the Board of County Commissioners may reduce his or her salary on a voluntary basis as provided for by Section (3), Florida Statutes. 3) Payment of County Commissioners' salary and pay periods shall be consistent with the rules and procedures for County employees. 4) County Commissioners' salary shall be calculated by dividing the annual salary by 365 days to arrive at a daily rate of pay, and applying a daily rate to the actual number of calendar days of service within a pay period. Also, as part of "Rollout Two" of the County's ERP project (beginning summer 2016), we will be reviewing our overall payroll processes to include data entry, payroll approval, and random reviews to ensure we are following best business practices and implementing the appropriate management controls. Finding 3: "Independent reviews of Commissioner Salary and Travel Allowance payment processing were not performed. n Recommendation: Require review of payments previously made to Commissioners and correct the payments as necessary to ensure consistent and accurate payments to Commissioners by September 30, Response: Agree. The Accounting and Human Resources divisions have reviewed these payroll calculations and have taken appropriate action consistent with our standard practice addressing payroll adjustments. Please do not hesitate to contact my office if you have any questions or require additional infonnation. cc: Evan Lukic, County Auditor Joni Annstrong Coffey, County Attomey Rob Hemandez. Deputy County Administrator Robert R. Mlrade, CFO/Director, Finance and Administrative Services Department 4 Use extra vigilance in calculating daily rate in leap years and calendar years containing 27 pay periods. as applicable