INTERNAL AUDIT DIVISION CLERK OF THE CIRCUIT COURT
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1 INTERNAL AUDIT DIVISION CLERK OF THE CIRCUIT COURT AUDIT OF ADMINISTRATIVE OFFICE OF THE COURTS SIXTH JUDICIAL CIRCUIT Karleen F. De Blaker Clerk of the Circuit Court Ex officio County Auditor Robert W. Melton, CPA, CIA, CFE Chief Deputy Director Internal Audit Division Prepared by: Anne D. Lawler, CPA, CIA Internal Auditor Supervised by: Ronald M. Peters, CIA, CISA Senior Internal Auditor JULY 26, 2001 REPORT NO
2 EXECUTIVE SUMMARY We have conducted an audit of the Administrative Office of the Courts. Our audit objectives were to determine compliance with Pinellas County interlocal agreements, contracts, and policies. In our opinion, the Administrative Office of the Courts is complying with interlocal agreements, contracts, and other agreements. However, we noted opportunities for improvement. The Sixth Judicial Circuit is composed of Pinellas County and Pasco County. For the year ended June 30, 2000, governmental funding of the Circuit was approximately $9 million, $10.6 million, and $1.6 million by the State of Florida, Pinellas County, and Pasco County, respectively. In the Sixth Judicial Circuit, the Court Administrator serves as the chief executive officer of the court. During our review, we noted that Pinellas County may be subsidizing Pasco County operations. We noted an agreement whereby Pinellas County personnel provide General Master Services to Pasco County on an as-needed basis. The agreement provided for a cost reimbursement of $150 per day, even though the actual cost of these services to Pinellas County is at least $351 per day. In addition, Pinellas County funds totaling $27,173 were used to move an electronic switch and power hub from the Pasco County Sheriff s Office to Pasco County s government complex in New Port Richey. The Pinellas County funds used were divided equally between the Court Administrator, Public Defender, and State Attorney. To ensure the citizens of Pinellas County are not subsidizing Pasco County, a benefit analysis should be performed and documented. Numerous errors were noted in billings for court reporter services; yet, they were authorized for payment. These errors included overbilled overtime charges and charges for minimum billings for the same court reporter for the same half-day. We also noted two instances of apparent double billing. There is no documentation that these situations were questioned prior to payment. We recommend $1,137 be recovered from the vendor. Our report contained a total of six recommendations for improvement.
3 Scope and Methodology We have conducted an audit of the Administrative Office of the Courts for the Sixth Judicial Circuit. The objectives of our audit were to: 1) review interlocal agreements that pertain to the expenditure of Pinellas County funds and determine compliance with the terms; 2) review all other contracts and agreements in effect during the audit period that pertain to the expenditure of Pinellas County funds and determine compliance with the terms and conditions; and 3) verify that Pinellas County funds were expended in accordance with court order, interlocal agreement, contract, or policy. To meet these objectives, we reviewed the Court Administrator s compliance with applicable laws, Administrative Orders, agreements, policies, and procedures. We tested compliance with requirements of all contracts and agreements. We verified agreements had been executed as required by Administrative Orders of the Court. We examined expenditures of Pinellas County funds during the audit period of October 1, 1999, through January 31, Specific testing was done on expenditures for court appointed attorneys, doctors, psychologists, expert witnesses, interpreters, mediators, hearing officers, court reporters, travel, and payroll. A two-year comparison of line item expenditures was performed to identify any significant changes. Any federal or state grants received by the Administrative Office of the Courts were not included within the scope of this audit; therefore, we have no conclusion regarding compliance with grant requirements. Overall Conclusion In our opinion, the Administrative Office of the Courts is complying with the terms of the interlocal agreements, contracts and other agreements. The expenditure of County funds is substantially in accordance with court orders, interlocal agreements, and policies. However, we noted some Pinellas County expenditures that appear to be subsidizing the Pasco County operations of the Administrative Office of the Courts of the Sixth Judicial Circuit. Our audit disclosed some opportunities for improvement. Those opportunities are presented in this report. Background The Florida Rules of Judicial Administration provide for the appointment of a Circuit Court Administrator. In the Sixth Judicial Circuit, the Court Administrator serves as the chief executive officer of the court. This office was established in the Sixth Judicial Circuit in The Circuit Court Administrator reports to the Chief Judge and is
4 responsible to the court for the effective and efficient administration of all non-legal functions of the courts. The Administrative Office of the Courts oversees many court related programs, including, but not limited to: Guardian Ad Litem Program Juvenile Arbitration Program Alternative Dispute Resolution Program Teen Court Juvenile Drug Court Child Support Enforcement Child Custody Investigation Family Mediation The Sixth Judicial Circuit is comprised of Pinellas County and Pasco County. The Sixth Judicial Circuit is funded and staffed by the state, Pinellas County, and Pasco County. The state operates on a July 1 through June 30 fiscal year. The two counties operate on fiscal years that start on October 1 and end September 30. The following table shows the support provided by each governmental entity for the fiscal years that ended in 2000 and the number of employees provided by each. State of Florida Pinellas County Pasco County Expenditures $9,028,343. $10,649,595. $1,653,286 Number of Employees Circuit Filings 51,416 15, County Filings 188,644 66,152 The state pays the salaries for all of the circuit and county court judges, as well as their judicial assistants. The largest portion of Pinellas County s budget is approximately $3.2 million for Management Information Systems. The Court Administrator s Pinellas County budget includes $2,306,340 for court reporters, interpreters and other professional services provided in the courtroom. When the Public Defender cannot provide a defense due to a conflict of interest or lack of funds, the court will appoint an attorney. This attorney is paid from the Court Administrator s budget, as well as any expenses approved by the Court. They also pay for psychological evaluations of indigent individuals in guardianship proceedings. An Organization Chart of the Administrative Office of the Courts follows:
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6 Our audit disclosed certain policies, procedures, and practices that could be improved. Our audit was neither designed nor intended to be a detailed study of every relevant system, procedure or transaction. Accordingly, the opportunities for improvement presented in this report may not be all-inclusive of areas where improvement may be needed. 1. Pinellas County May Be Subsidizing Pasco County Operations Of The Administrative Office Of The Courts For The Sixth Judicial Circuit. During our review of Pinellas County expenditures, we noted the following situations that indicate possible subsidizing of Pasco County by Pinellas County totaling $33,434 through the Sixth Judicial Circuit: A. Pinellas County personnel provide General Master services to Pasco County on an as-needed basis. An interlocal agreement between Pinellas and Pasco County dated December 10, 1996 defines the terms for the provision of these services. Section 3 of the agreement states: Pinellas County agrees that county funded court employees whose salaries, benefits, etc., are paid by Pinellas County may provide general or special master services in Pasco County, provided Pinellas County is reimbursed by Pasco County for the cost of providing such services. The agreement established the reimbursement rate at $150 per day. Consecutive two-year extensions have been exercised during which time the reimbursement rate has not been increased. An analysis was done of the cost of providing such services by Pinellas County. It was determined that the actual cost to Pinellas County was between $351 and $406 per day. This cost is more than twice the reimbursement received from Pasco County. Our review of the utilization of Pinellas County employees for General Master services in Pasco County from October 1, 1999 to February 23, 2001 shows that Pinellas County received reimbursement of $3,750 (25 days at $150 per day). The actual cost to Pinellas County for salary and fringe benefits relating to the service provided was $10,011. The difference of $6,261 is the amount that Pinellas County subsidized Pasco County in the provision of these services. B. Pinellas County paid the entire cost of having an ASX200 ATM switch and a power hub moved from the Pasco County Sheriff s office to the government complex in New Port Richey, installing it, programming it, and getting it up and running. This equipment provides improved
7 communications between the Pasco and Pinellas County judges and employees of the Sixth Judicial Circuit. The Court Administrator charged the cost to rentals and leases; however, it was actually a capital cost related to the equipment installed in Pasco County. Generally accepted accounting principles require that costs of installation and set up be included as part of the cost of the equipment. The total cost of $27,173 was divided equally between the Court Administrator, Public Defender, and State Attorney; however, they all paid for their portion of the expense from their Pinellas County funding without written documentation justifying the use of Pinellas County funds. At our request, written documentation was subsequently provided identifying the benefit to Pinellas County. To ensure the citizens of Pinellas County are not subsidizing Pasco County, a benefit analysis should be performed and documented on any expenditure that may not have a clear primary benefit to Pinellas County. We Recommend the Court Administrator: A.1.) Work with the Chief Judge to seek a modification to increase the reimbursement amount to approximately $400 to cover Pinellas County s current cost effective on June 30, 2001, the next extension date of the interlocal agreement for special and general master services. 2.) Work with the Chief Judge to seek to add an inflation clause to the agreement that is tied to the average increase in wages for personnel of the Administrative Office of the Courts. The agreement should also require a periodic review of actual costs to verify that the reimbursement rate covers Pinellas County s costs. B. Prepare a benefit analysis for any proposed Pinellas County expenditure that does not clearly primarily benefit Pinellas County. Management Response: A. The audit comments regarding the subsidizing of Pasco County operations of the Courts are duly noted. However, these comments raise policy decisions of the Boards of County Commissioners rather than a compliance issue of the Administrative Office of the Courts. When the Interlocal Agreement is read in its entirety, it is clear that it was not the intent of the Boards that there be reimbursement of actual costs of providing services. And, as a further indication of such intent, the agreement has been renewed, most recently just two months ago. I will forward a copy of your audit staff comments to the Pinellas County Attorney for her review. Should she find that the specified reimbursement
8 rates were not the intent of the Board, I will recommend to the Chief Judge that the Interlocal Agreement be amended accordingly. Otherwise the agreement can be clarified by simply amending the language to specify a flat rate rather than specifying the costs of providing such services. B. We have addressed in great detail by separate correspondence, a copy of which is attached herewith as Attachment 1, the computer network which exists in the Sixth Judicial Circuit and what each county and each agency in both counties have contributed to its establishment and maintenance. We accept the suggestion of your staff that a benefit analysis be conducted for any proposed Pinellas County expenditure that does not clearly primarily benefit Pinellas County. In this instance, the State Attorney, the Public Defender, and this office firmly believe that the benefits of the network connection between the counties are of primary benefit to the agencies resident in Pinellas County. These issues are addressed in Attachment 1 (See Appendix). In sum, we appreciate the concerns expressed by your audit staff with regard to a fair apportionment of costs between Pinellas and Pasco counties for services provided to the Courts and the Justice System. We will make every effort to ensure that the benefits of such services are carefully weighed and that the costs for such services are clearly understood by, and have the approval of, the two Boards of County Commissioners. Internal Audit Reply: A. We agree this is a policy decision of the Board of County Commissioners, so long as the subsidy for Pasco County Master services serves a public purpose for Pinellas County citizens. While the established reimbursement rate may have been the intent of the Board, the Board may not have been aware of or considered the amount of subsidy that Pinellas County citizens are actually providing to Pasco County. 2. Notification Of Services Are Not Provided As Required By Interlocal Agreement. When a Pinellas County employee goes to Pasco County to provide special or general master services for them, it is the responsibility of the employee to invoice Pasco County. Pasco County has controls in place to ensure that all services are billed and a check is issued to Pinellas County. However, there is no process in place for the Court Administrator to inform the Pinellas County Accounts Receivable Section that a reimbursement is due from Pasco County.
9 Section 5 of the interlocal agreement requires the Administrative Office of the Court to advise Pinellas County of the receivable. The current procedure does not provide assurance that all payments are received for all billed services. We Recommend the Accounts Receivable Supervisor in Pinellas County s Finance Division be notified, possibly by , whenever an invoice is sent to Pasco County. Management Response: I appreciate this finding of your staff and have already instituted a procedure through which this notification will be given to your Finance Department. 3. Review of Invoices For Court Reporter Services Is Not Adequate. Invoices for court reporter services contained numerous errors in billing; yet, they were authorized for payment. Specific errors noted are as follows: A. The agreement for court reporter services allows for overtime for hours past 5 p.m. The rate schedule states that the rate is for the first hour or portion thereof. Where the services commence after 5 p.m., on a holiday, or a weekend, there is a minimum one-hour charge. The minimum does not apply if the service began before 5 p.m. on a normal workday. There were numerous billings for services that began on a weekday before 5 p.m. and extended past five by only minutes, yet a full hour of overtime was billed. Our review of the invoices paid during the audit period disclosed overpayments totaling $1,137. B. The agreement establishes a minimum billing of 2.5 hours per half day for attendance at criminal court sessions. There were several instances noted where two minimum fees were charged for the same half day with the same court reporter and judge. There is no documentation that the charges were questioned to determine if there was an error in the billing or a situation that would warrant two minimum charges. There were also several instances where a session went past noon, but the billing was cut off at noon and billed as two separate sessions, thereby billing the extra hour or hour and a half as a 2 ½ hour minimum. There is also no documentation that these were questioned. These questionable minimum billings reflect a potential overpayment of $1,043. C. There were two instances that appear to be a double billing. In one case, a court reporter was billed as being with one judge from 10 a.m. 6 p.m. and from 8:30 a.m. to 12 p.m. on one date. This represented a total billing of 11 ½ hours for the one day. The other instance is a billing for one reporter with the same judge from 1:30 p.m. 4:45 p.m. and 1:30 p.m. 5:00 p.m.
10 on the same date. This indicates a total billing of 6 ¾ hours for what appears to have been a maximum of 3 ½ hours. There is no documentation that either of these situations was questioned before they were authorized for payment. We noted that over the last two months of the audit period questionable billings by court reporters were being returned to them for clarification. A different staff member performed the review of these invoices during that period. We Recommend the process for completely reviewing invoices and investigating questionable items be reviewed with staff responsible for this task. A refund should be sought from the vendor for a minimum of $1,137, which represents the amount of confirmed over-billings during the audit period. Management Response: A. We agree with this finding and will request reimbursement from the contractor. B. We believe that some discretion is needed when authorizing payments for attendance fees. We will seek further clarification from the Chief Judge with respect to how these billings will be made. In this regard, we would appreciate assistance from your audit staff in developing a form and procedure for contract court reporters to submit their attendance fee billings. We think a standard form would help to clarify for this office, and the contractor, exactly what services may be billed for and at what rates. C. We agree with this finding and will seek reimbursement from the contract court reporter for these overpayments. We would appreciate assistance from your audit staff in the development of a form and procedure to ensure that such double billings do not occur again. We have also initiated more intense supervision of staff responsible for approval of these payments. 4. Travel Forms Are Not Processed In Accordance With Established Procedures. Section 5.1.A. of the Standard Operations Manual of the Sixth Judicial Circuit states, Approval by the Courts Administrator (or the Chief Judge for the judiciary) is required prior to the travel. That section further states, A Travel Form D is to be completed within five days upon your return from out-of-town travel, even if reimbursement is not due. (Emphasis Added)
11 Seven of the 20 travel reimbursements tested were for out of town travel and, therefore, required prior approval and the submission of a Travel Form D. We noted the following specific concerns: A. One of the travel requests was not submitted until after the travel was complete. B. Of the seven travel reimbursements that required the submission of a Travel Form D, two were not submitted within five days as required by policy. One of the travelers received an advance on August 11, 2000 and returned on September 1, A Travel D Form was received by Pinellas County s Finance Department on March 1, The other payment was made for registration only. The traveler completed their trip on September 27, 2000 and had not submitted a Travel Form D as of February 22, The Finance Division was subsequently notified that there would be no other expenses submitted. Our prior audit, Report No. 96-9, addressed this same issue. The Court Administrator responded that a system to track all travel reimbursement vouchers had been established. Based upon the results of our audit procedures, it would appear that the system established does not provide adequate follow-up to verify that required documentation is submitted in accordance with established policy. We Recommend the Court Administrator revise their system for tracking travel reimbursement to ensure that all Travel Form D s are submitted in accordance with the established policy of the Sixth Judicial Circuit and that all travel is approved in advance. Management Response: We agree with this finding by your audit staff. This is a difficult issue with staff of the court because some expenditures require the use of Travel Form D when no travel is involved. One example recently comes to mind. A member of staff who has been approved for extensive computer training was required to take an examination and was charged $100 for the test. The employee did not consider this expenditure to be associated with travel. We will once again clarify for staff the necessity of contacting our Fiscal Office when any expenditure is to be incurred to ensure that proper authorization has been made.
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