This audit report is the tenth in a series of reports issued on audits conducted pursuant to Chapter 2001-253, Laws of Florida, Specific Appropriation 118; Chapter 2002-394, Laws of Florida, Specific Appropriation 105; Chapter 2003-397, Laws of Florida, Specific Appropriation 59; Chapter 2004‑268, Laws of Florida, Specific Appropriation 81; and Section 11.45, Florida Statutes. 

This operational audit is for the period July 1, 2003, through June 30, 2005.  The objectives of this operational audit are to determine whether the District has corrected, or is in the process of correcting, deficiencies disclosed in our report Nos. 02-126, 02-188, 03-026, 03-093, and 2004-036.  Also, the audit objectives include identifying and reporting any noted fraudulent transactions and deficiencies in internal control which increase the risk of fraudulent transactions, pursuant to Chapter 2004-268, Laws of Florida, Specific Appropriation 81.

Our findings on the status of the District’s corrective actions to address the deficiencies reported in the various audit reports previously mentioned are summarized below by topic in the order in which the deficiencies were originally reported to the District.  In addition, findings 18 and 19 are the results of audit procedures performed pursuant to provisions of Chapter 2004‑268, Laws of Florida, Specific Appropriation 81.  

Audit of Overtime Payments and Procedures (report No. 02-126, January 2002)

Finding No. 1:  Overtime payments.  Overtime expenditures recorded in the General Fund have increased significantly during the 2002-03, 2003‑04, and 2004-05 fiscal years, totaling approximately $8.1, $10.7, and $16.7 million, respectively.  District records indicated that 201 and 351 employees during the 2003-04 and 2004-05 fiscal years, respectively, were paid $10,000 or more for overtime hours worked.  A cost‑benefit analysis to study possible alternatives to overtime payments had not been conducted.

Finding No. 2:  Overtime Payments - Monitoring Procedures.  Reports of overtime worked and paid in the individual departments should be evaluated periodically to determine the reasonableness of staffing and personnel utilization.  An Office of Management and Compliance Audits (OMCA) report disclosed instances in which overtime payments did not comply with the District’s Payroll Processing Procedures Manual.

Financial, Operational, and Federal Single Audit for the fiscal year ended June 30, 2001 (report No. 02-188, February 2002)

Finding No. 3:  Capital Construction Management Reporting Guidelines.  Various reports were used by District staff to track the status of capital construction projects.  However, during our audit period, these reports were not routinely provided to the Board for purposes of the Board’s oversight and monitoring of the capital construction program. Furthermore, management reporting guidelines which would identify particular data to be included in summary reports to the Board have not yet been developed.

Finding No. 4:  Monitoring of Capital Construction Projects.  Written procedures have not been established to ensure that information in the project management system is timely and routinely updated.  District personnel informed us that input into the system may range from daily to monthly, depending on various factors such as the nature of the project, current status or progress, and time of year.

Finding No. 5:  Capital Outlay Facility Inspections.  Our review of the inspection records for five school facilities as of April 2005 indicated that the required inspections were performed.  However, approximately 800 deficiencies or facility maintenance needs noted for these five school facilities remained unresolved for two or more years after the date the inspections were performed.

Audit of Capital Construction Activities (report No. 03‑026, September 2002)

Finding No. 6:  Review of Licensure and Continuing Training for Construction and Maintenance Staff.  The District did not require active architectural or engineer licensure or other specified training for particular positions of responsibility in the facility construction and maintenance areas as a condition of employment. Some employees maintain licenses at their own discretion, but the status of their licenses is not monitored.  While those employees maintaining active licenses would receive continuing training, other employees in highly responsible positions that are not maintaining an active license are not required to receive specified continuing training.

Finding No. 7:  Direct Purchase of Construction Materials.  The District’s construction contracting procedures did not provide for the direct purchase of construction materials and, as a result, sales tax is included in the construction costs of facilities.  Consequently, the District did not utilize the most cost efficient method for purchasing construction materials for major construction projects. 

Finding No. 8:  Architect Errors and Omissions.  Architectural and engineering contracts entered into by the District in the 2004 calendar year contained provisions which allow the District to recover, from the architect/engineer and their liability insurance carriers, only a portion of the additional construction costs resulting from architectural or engineering errors and omissions.

Finding No. 9:  Project Closeout.  Our review of 19 projects disclosed many instances in which the original substantial completion date was several years prior to the initiation of the project closeout process.  After initiation of the project closeout process, projects were still not closed out in a timely manner. Since the original architects/engineers and contractors for these projects did not complete the work required by their contracts, the District incurred significant costs to complete and close out these projects.

Finding No. 10:  Contractor Prequalifications.  Two OMCA reports disclosed that the District’s prequalification process needed improvement.  Contractor evaluation and prequalification procedures should be enhanced to ensure that appropriate consideration is given to past performance of contractors during the prequalification process.

Audit of Procurement Activities (report No. 03‑093, December 2002)

Finding No. 11:  Rotation/Assignment of Staff.  Employees within the Division of Procurement Management and Materials Testing were not rotated into the different buying areas.  The District’s rotation policy was eliminated in November 2004 after District management indicated that rotation of staff had not proven to promote better coordination and uniformity among various buying areas and that rotation had disrupted the operation of the department.

Finding No. 12:  Catalog Discount Bids.  Improvements were needed in the administration of catalog discount bids.  The Board should review, evaluate, and enhance procedures relating to the catalog bid process to ensure that purchases are made at the lowest possible cost and as provided by Board policies and procedures.

Audit of Food and Nutrition Activities (report No. 2004-036, September 2003)

Finding No. 13:  Monitoring of the Purchased Food Cost per Meal.  We noted a broad range in the purchased food cost per meal among schools within each educational level.  Routine monitoring and analysis of significant variances between actual purchased food cost per meal and established parameters for District schools could enhance the efficient use of food supplies.

Finding No. 14:  Food Production and Menu Record.  Our review of Production and Menu Record forms from 12 school cafeterias disclosed instances in which the Department’s procedures were not followed, diminishing the usefulness of this form for management control purposes and increasing the risk of unauthorized or inefficient usage of District resources.

Finding No. 15:  Purchased Food Inventory Turnover Rates.  A wide range of purchased food inventory turnover rates was noted within each educational level, suggesting that the efficiency of the inventory controls at the food preparation locations is not consistent throughout the District.  Also, monthly physical inventory counts were not reconciled to an ending inventory balance calculated based on the prior month’s ending inventory, adjusted for food purchases and issues during the month, decreasing management’s ability to promptly detect differences and avoid recordkeeping errors and unauthorized or inefficient usage of inventory.

Finding No. 16:  Use of Gloves and Hairnets by Cafeteria Personnel.  At 3 of 12 school cafeterias visited (25 percent), we noted instances in which cafeteria personnel were not wearing hairnets or gloves during the preparation of food or while serving food, contrary to Department of Health requirements, increasing the risk that unsanitary conditions will make the food unsafe for eating.

Finding No. 17:  Reconciliation of Food Purchases with Food Usage and Servings Used to the Number of Meals Served.  Our tests disclosed that a comparison of the number of servings used to the number of meals served was not always performed.  In addition, Department procedures do not provide for the reconciliation of food purchases with food usage.  These conditions increase the risk of unauthorized or inefficient usage of food items without timely detection by the Department’s supervisory personnel.

Specific Appropriation 81 of Chapter 2004-268, Laws of Florida

Finding No. 18:  Employment History Verification.  We noted 11 instances in which the District’s personnel records for newly hired employees, working in Administrative/Professional positions, did not evidence that the required verification of employment history with previous employers was performed.

Finding No. 19:  Consultant Contracts.  For 6 of 20 professional and technical services contracts reviewed, we noted that the consultant contracts were not sufficiently detailed to determine if the agreed upon services were performed.  The contracts did not specify deliverables or quantities of services (e.g., hours/days) to be performed, and did not require reports summarizing the results of the work.  In addition, written evaluations of the consultants’ performance were not prepared to determine whether the services and benefits received were consistent with the intended purpose of the contracts.

The Superintendent's written response to the audit findings and recommendations is included in this report and may be viewed on the Auditor General Web site.