Summary

This audit of the Florida Department of Business and Professional Regulation focused primarily on selected personnel issues, a review of audits within the Division of Alcoholic Beverages and Tobacco, an overall review of the Bureau of Operations within the Division of Pari-Mutuel Wagering, and a review of the Construction Industry Licensing Board’s procedures for conducting random sample audits of licensees for appropriate insurance coverage. For each of these areas, our audit included examinations of various transactions (as well as events and conditions) during the period October 1, 1996, through September 30, 1997, and selected Department actions taken through December 31, 1997. Matters coming to our attention relating to noncompliance with various guidelines and those relating to significant deficiencies in the design or operation of the internal control for those operations audited are as follows:

Personnel Administration

Salaries and Benefits Appropriations. The Department made entries in the Cooperative Personnel Employment Subsystem (COPES) to rotate existing employees through positions that had actually remained continuously vacant for an extended period of time. These COPES entries may have made it more difficult for the Executive Office of the Governor and the Legislature to readily identify long-term vacant positions. Information on long-term vacant positions is essential to these oversight entities’ full consideration of the Department’s human resource and related budgetary needs. (See paragraphs 22 through 28.)

Payroll Direct Deposit Program. The Department had not established effective follow-up procedures to ensure that all new employees enrolled in the payroll direct deposit program. We noted several instances in which employees had not enrolled in the program within three months (or six biweekly pay periods) after their hire dates. The direct deposit of payroll warrants by electronic funds transfer reduces the processing time and cost of the payroll function of the State of Florida. (See paragraphs 29 through 32.)

Exit Interviews. The Department did not always ensure that exit interviews were performed and documented in accordance with Department of Management Services Rule 60K-10.007, Florida Administrative Code. Exit interviews can provide management with information pertaining to work conditions, employee morale, and job satisfaction and, as a result, the reviews may be useful to management in making decisions regarding personnel administration. (See paragraphs 33 through 37.)

Employee Performance Reviews. Contrary to established rules promulgated by the Florida Department of Management Services, employee performance reviews were not always completed in a timely manner. Additionally, the failure to complete these performance reviews on time was not documented in writing and attached to the applicable supervisors’ personal performance reviews. Similar findings were noted in audit report No. 12892, paragraphs 58 through 64. (See paragraphs 38 through 43.)

Division of Pari-Mutuel Wagering: Bureau of Operations

Department procedures for providing security and accountability for collections received by Bureau of Operations personnel at each pari-mutuel facility could be improved by requiring the restrictive endorsement of all checks immediately upon receipt, as well as the timely deposit of moneys received. The restrictive endorsement of checks immediately upon receipt limits negotiability should the checks become lost or stolen. The timely deposit of all revenue collections minimizes the risk of loss or misappropriation. (See paragraphs 48 through 51.)

Alcoholic Beverages and Tobacco Audits

The Department had not established procedures to require the use of audit programs or checklists for the various types of audits performed by the Bureau of Auditing and Tax Collection. In addition, documentation evidencing supervisory review of audits performed by the Bureau was not consistently available in the working papers. The establishment of a list of audit procedures (an audit program) during the planning phase of an audit greatly facilitates the efficient conduct of a complete and comprehensive audit. An audit program, when properly annotated by the auditor and the supervisor, can also be used by the auditor and supervisory personnel to document that all relevant audit procedures have been completed. (See paragraphs 55 through 57.)

Construction Industry Licensing Board

Construction contractors, as a condition of licensure, must provide to the Construction Industry Licensing Board an affidavit attesting to the fact that the applicant has obtained workers’ compensation insurance as required by Chapter 440, Florida Statutes; public liability insurance; and property damage insurance for the safety and welfare of the public, in amounts determined by rule of the Board. To verify the accuracy of the affidavits, the Board has adopted administrative rules requiring that Board personnel, from time to time, conduct random audits of licensees. Our review disclosed that audits of licensed construction contractor insurance affidavits were not timely performed by the Board. Our inquiry disclosed that the last random sample insurance audit was conducted by the Board in 1994. Although Department rules do not specify how often the audits should be conducted, we believe that the importance of construction contractor insurance coverages merits a much more timely audit of the insurance affidavits. The Department’s Office of the Inspector General reported a similar finding in Audit Number 9703 CILB and concluded that, since the affidavit is a signed part of the application, it should be subjected to a random sample audit at the end of each renewal period. (See paragraphs 58 through 63.)

The Secretary’s written response to the audit findings and recommendations included in audit report No. 13293 is presented as Exhibit B.