Summary

This audit focused primarily on assets, liabilities, revenues and cash collections, expenditures and disbursements, design and engineering contracts, construction contracts, right-of-way acquisition, budgetary controls, and other contractual agreements for the fiscal year ended June 30, 1996. Matters coming to our attention relating to noncompliance with various guidelines and those relating to significant deficiencies in the design or operation of the system of internal control for those operations audited are as follows:

Financial Condition

The Authority, in its previously issued audited financial statements, reported unreserved retained earnings deficits for the fiscal years ending June 30, 1993, through June 30, 1996; however, these deficits were primarily attributable to the application of accounting principles relating to depreciation, bond refunding, and other issues. The Authority's 1996-97 audited financial statements reported unreserved retained earnings of $116,723,000 at June 30, 1997. This positive unreserved retained earnings amount reflects the efforts of Authority management and the Authority's certified public accountant to thoroughly review and update the application of certain generally accepted accounting principles. (See paragraphs 40 through 44.)

Budgetary Controls

During the 1995-96 fiscal year, actual expenditures exceeded the legal level of budgetary control established of record by the Authority (object level) for numerous expenditure categories. (See paragraphs 45 through 50.)

Investments

The Authority invested moneys held in the Authority's Revenue Fund bank account in overnight repurchase agreements; however, because the Authority did not obtain the actual securities, trust receipts from a trustee, or third-party safekeeping receipts perfecting the Authority's secured interest in the securities pledged as collateral, such investments were subject to an increased risk of loss. (See paragraphs 51 through 55.)

Tangible Personal Property

The value of property shown on the Authority's listing of furniture and equipment ($771,040.30) had not been reconciled to the value of furniture and equipment recorded in the general ledger control account ($113,012.58). In addition, furniture and equipment purchases and Authority approved deletions had not been reconciled to changes to the property listing. (See paragraphs 56 through 60.)

Related Organizations

Our audit disclosed several Authority actions taken with respect to the OOCEA Foundation, Inc., a not-for-profit corporation created by the Authority, that did not appear to be authorized by applicable State law. (See paragraphs 65 through 68.)

The Authority contributed $35,000 to the Metropolitan Planning Organization (MPO) towards the MPO's operating budget. While the Authority's contribution to the MPO may be necessary to facilitate the Authority's active participation in the MPO, the Authority's records did not demonstrate how the Authority determined that the $35,000 contribution was appropriate. (See paragraphs 69 through 73.)

Other Organizations

The Authority made payments totaling $56,000 to the Minority/Women Business Enterprise Alliance, Inc. (Alliance) to provide funding for the operations of the Alliance and to fund a surety and risk assistance program. We are unaware of any statutory authority for the Authority to provide funding to not-for-profit organizations. (See paragraphs 74 through 77.)

The Authority incurred expenses totaling $561.80 for food and alcoholic beverages relating to a reception for the Florida Transportation Commission. We are unaware of any specific legal authority for the Authority to expend funds for this purpose. (See paragraphs 78 and 79.)

Communication Expenditures

Telephone logs or similar records identifying the parties called and/or the purposes of telephone calls were not maintained by Authority staff for either long-distance or cellular telephone calls. In the absence of documentation evidencing the public purpose served by such calls, Authority personnel could not be assured that the calls made served an authorized public purpose. (See paragraphs 80 through 83.)

Travel Expenditures

The Authority's travel policies were not consistent with Section 112.061, Florida Statutes. (See paragraphs 86 through 89.)

The Authority's records relating to travel expenses were not always adequate to demonstrate the authorized public purpose served and/or compliance with State law. (See paragraphs 90 through 92.)

Lobbying Services

The Authority contracted with and made payments during the 1995-96 fiscal year to two consultants to provide lobbying services. Although the Authority concluded that the consulting services were necessary to the conduct of the Authority's statutory responsibilities, the Attorney General has opined that public funds may not be expended by statutory entities for lobbying purposes unless expressly and specifically authorized by State law. (See paragraphs 93 through 96.)

Appraisal Reviews

The Authority's Right-of-Way Acquisition Procedures Manual requires that appraisal reports be reviewed by qualified review appraisers to ensure the appraisal reports are mathematically correct, complete, reasonable, and in conformance with the Uniform Standards of Professional Appraisal Practice. For three of the six parcel acquisitions we reviewed, the review appraiser noted deficiencies in the appraisal report; however, Authority records did not evidence that these appraisal report deficiencies, several of which were major deficiencies, had been corrected. (See paragraphs 106 through 108.)

Purchase Agreements

Our review disclosed three instances in which the Authority reached agreement on the purchase price for a parcel identified for right-of-way acquisition before the Authority's appraisal report was completed, reviewed, and accepted. Purchase prices for two of these parcels were 49.37 and 111.04 percent greater than the appraised values. In the absence of an independent appraisal for these parcels at the date of the purchase contract, it is not apparent how the Authority made an informed purchase offer on the parcels. (See paragraphs 109 through 114.)

For four of the six parcel acquisitions we reviewed, the purchase agreement included a provision that required that the property owner be paid the agreed-upon purchase price or the appraised value, whichever is higher, and obligated the Authority to pay the agreed-upon purchase price even if the appraised value was determined to be less than the purchase price. This provision appears to be contrary to the Authority's Right-of-Way Acquisition Manual which requires that negotiations attempt to reach a fair settlement and protect the interest of both the property owner and the Authority. (See paragraphs 115 through 117.)

Motor Vehicle Assignment and Use

Authority-owned and/or leased vehicles were assigned to four employees on a full-time basis. The Authority had not established adequate written policies governing the assignment and use of Authority vehicles. Vehicle usage records were not maintained and/or adequate to identify and report the amount of taxable fringe benefits attributable to the personal use of the vehicles. Also, the Authority had not included the value of the personal use of employer-provided vehicles in reporting earnings for the employees, contrary to applicable United States Treasury Regulations. (See paragraphs 118 through 121.)

The Executive Director's written response to the audit findings and recommendations included in audit report No. 13116 is presented as Exhibit C.