OKALOOSA -WALTON COMMUNITY COLLEGE by xvi11400

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									JULY 2004                                                                                 REPORT NO. 2005-003




                            AUDITOR GENERAL
                                    WILLIAM O. MONROE, CPA


                   OKALOOSA-WALTON COMMUNITY COLLEGE
                                             Operational Audit


                     SUMMARY                                 members who served during the audit period are listed
                                                             on Exhibit 1.
This operational audit for the period January 1,
2003, through December 31, 2003, and selected                The Okaloosa-Walton Community College has
transactions through February 29, 2004, disclosed            campuses in Niceville and Fort Walton Beach, and
the following:                                               centers in DeFuniak Springs, Crestview, Eglin Air
Finding No. 1: The College had not fully                     Force Base, and Hurlburt Field. Additionally, credit
developed comprehensive written procedures for               and noncredit classes are offered in public schools
all accounting and other business-related
functions.                                                   and other locations in Okaloosa and Walton Counties.
                                                             The College reported enrollment of 5,074 full-time
Finding No. 2: The College did not reconcile
its monthly cash advances from the Florida                   equivalent students for the 2002-03 fiscal year. The
Department of Education (FDOE) to the                        President of the College is Dr. James R. Richburg.
College’s accounting records.
                                                             The results of our audit of the College’s financial
Finding No. 3: The         College     incorrectly           statements are presented in audit report No. 2004-
reported Public Education Capital Outlay
expenditures totaling $1,577,133 to FDOE.                    082.

Finding No. 4: The College purchased land                    An examination of expenditures of Federal awards
from its Foundation for $115,025 in excess of the            administered by the College under contract and grant
amount paid by the Foundation.                               agreements to finance specific programs and projects
Finding No. 5: The College did not obtain an                 is included in our Statewide audit of Federal awards
environmental survey prior to purchasing a parcel            administered by the State of Florida, audit report No.
of land.
                                                             2004-168.
                   BACKGROUND
                                                                    FINDINGS AND RECOMMENDATIONS
The College is under the general direction and control
of the Division of Community Colleges, and is                Finding No. 1:     Written Procedures
governed by law and State Board of Education rules.
A district board of trustees governs and operates the        Written procedures clearly defining the responsibilities
College. The Board constitutes a corporation and is          of employees are essential to provide both
composed of eight members appointed by the                   management and employees with guidelines regarding
Governor and confirmed by the Senate. The Board              the efficient and consistent conduct of College
                                                             business and the effective safeguarding of College

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JULY 2004                                                                                   REPORT NO. 2005-003

assets. In addition, written procedures, if properly          items such as expenditures incurred by the College
designed, communicated to employees, and effectively          but not recorded by FDOE. However, the $187,293
placed into operation, provide management additional          was shown on the FDOE report as of July 31, 2003,
assurance that College activities are conducted in            not the June 30, 2003, report. Also, at July 31, 2003,
accordance with applicable laws, rules, and other             the College’s accounting records showed a balance
guidelines. Written procedures would also help                due from FDOE of $0, which differed from the
ensure that College financial records provide reliable        amount shown on the FDOE report by $187,293.
information necessary for management oversight, and
                                                              College personnel should analyze Federal cash
assist in the training of new employees.
                                                              advance accounting transactions and make any
The College did not have written procedures for many          corrections necessary to allow them to reconcile the
of its accounting and other business-related functions.       accounting records to the FDOE reports. Periodic
Written procedures were not available to document             reconciliations of the FDOE reports to the
controls over such functions as reconciliations with          accounting records will allow the College to
State financial reports, budgets, and capital assets.         adequately identify all differences, and to timely detect
                                                              and correct any unreported expenditures and errors
Recommendation:        We recommend that the                  made by College personnel or FDOE.
College develop and maintain comprehensive
written procedures to enhance the effectiveness of
                                                              Recommendation:       We     recommend      that
its accounting and other business-related
                                                              monthly reconciliations of FDOE cash advance
functions.
                                                              reports to College accounting records be timely
                                                              and accurately prepared, with all differences
                                                              identified and appropriately corrected, and that
Finding No. 2: Cash Advance Reconciliations                   the annual reconciliation be timely filed with
                                                              FDOE.
The College received advances of Federal cash
through the Florida Department of Education
(FDOE) to pay for expenses of various Federal                 Finding No. 3: Reporting of Public Education
projects.     FDOE sent the College monthly                                  Capital    Outlay    (PECO)
Distributive Aid and Cash Advance Status Reports                             Expenditures
listing Federal cash advanced to the College and              Section 1013.65(3), Florida Statutes, provides that
expenses incurred by project as reported to FDOE by           FDOE shall disburse sufficient PECO appropriations
the College. Our review disclosed that the College did        when requested by the College to meet encumbrance
not prepare monthly reconciliations of these FDOE             authorizations for the following month. FDOE has
reports to the College’s records. Such periodic               developed a Project Disbursement Request Report
reconciliations help ensure the accuracy of required          (OEF 442) for use by PECO recipients to report
financial reports and prevent potential disallowance of       actual    and     estimated    future   expenditures
project expenses due to inaccurate or untimely                (encumbrances) and to request PECO funds for the
reporting.                                                    estimated future expenditures on a monthly basis.
The Distributive Aid Cash Advance Reconciliation at           FDOE uses these reports to determine the amount of
June 30, 2003, was due to FDOE by November 1,                 PECO appropriations to disburse to the College.
2003, but was not filed until December 17, 2003. The          Our review of the OEF 442 reports that the College
reconciliation reported an amount of $187,293 as due          submitted for the period January 1, 2003, to
to FDOE from the College, but listed no reconciling           December 31, 2003, showed that expenditure


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amounts reported by the College on the OEF 442                County Board of County Commissioners (County)
reports for specific PECO appropriations did not              pursuant to Chapter 98-336, Section 15, Laws of
agree with the College’s accounting records for the           Florida. The County sold approximately 46 acres of
capital outlay projects funded by the appropriations.         the property to the Walton County District School
During the 2003 calendar year, the College reported           Board (School Board) in September 1999.
cumulative expenditures totaling $6,913,305 on the            Additionally, the County sold approximately 27 acres
OEF 442 reports; however, $1,577,133 of these                 of the property to the Okaloosa-Walton Community
expenditures were for capital outlay projects unrelated       College Foundation, Inc. (Foundation) in April 2002.
to the specific PECO appropriations. For example,             Subsequently, in October 2003, the Foundation sold
we noted that the College reported cumulative                 its 27 acres of the property to the College.
expenditures on the December 2003 OEF 442 report
                                                              The quitclaim deeds between the County and the
of $3,129,964 for construction of the Library Building
                                                              Foundation, and between the Foundation and the
– Main. However, $1,107,014 of the expenditures
                                                              College, required that the land be used to build
reported as Library expenditures on the OEF 442
                                                              instructional facilities. The deed restrictions also
report were for unrelated projects, such as remodeling
                                                              required the College to reimburse the County for the
and renovations of Building E/Facility 50 ($566,428)
                                                              College’s proportional share of infrastructure costs
and Building M ($376,391). In another example, the
                                                              based on a July 1999 consultant’s estimate of costs.
College received a PECO appropriation of $3,385,729
                                                              The College’s proportional share of the estimated
for Remodeling and Renovation of Buildings and
                                                              costs was approximately $1.2 million according to
Laboratories – Collegewide and for the Construction
                                                              College records. However, the deed restrictions
of an Amphitheater. However, the College reported
                                                              provided that the proportional costs would be
expenditures totaling $413,070 on the OEF 442
                                                              reduced by any Federal or State funds that the County
reports for the construction of the new Amphitheater
                                                              may receive for the infrastructure costs, and that the
and Visual Arts Building to PECO maintenance.
                                                              College’s proportional share of the costs would not
When the expenditure information reported on the              exceed the proportional share paid by the School
OEF 442 reports is not correct, FDOE cannot be                Board. As of February 2004, the County had not
assured that PECO disbursements to the College are            requested reimbursement, and neither the School
in agreement with the specific PECO appropriation.            Board nor the Foundation had made payment to the
                                                              County for any infrastructure costs related to the
Recommendation:       We recommend that the                   property.
College review its accounting and PECO                        The College’s Board unanimously approved the
reporting procedures and take corrective action to
ensure that the OEF 442 reports submitted to                  College’s request to pay the Foundation $125,000 for
FDOE appropriately reflect actual and estimated               27 acres of the property in September 2003. College
expenditures    for    each    specific    PECO               personnel said that they paid $115,025 more than
appropriation.                                                what the Foundation paid for the land to cover a
                                                              portion (approximately 10 percent) of the College’s
Finding No. 4: Land Acquisition – New Town                    proportional share of the estimated infrastructure
               Center                                         costs relating to the property. However, since the
                                                              Foundation had not paid the County for any
In May 1999, the State transferred approximately 114
                                                              infrastructure costs, we question the College’s
acres in South Walton County, known as the New
                                                              payment of $115,025 to the Foundation for these
Town Center property (property), to the Walton
                                                              additional costs. Also, if in fact an amount was due


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from the College for these costs, reimbursement
                                                                Recommendation:         We recommend that the
should have been made to Walton County, not the                 College document that a site is free of hazardous
Foundation, since the Foundation had made no                    materials and underground contamination before
payments to the County.                                         any future land acquisitions.


Recommendation:         We recommend that the                        SCOPE, OBJECTIVES, AND METHODOLOGY
College provide sufficient justification for the
payment of $115,025 in excess of the amount paid                The objectives of this operational audit were to obtain
by the Foundation for the 27 acres of property. If              an understanding and make overall judgments as to
sufficient justification cannot be provided, the                whether College management controls promoted and
College should request that the Foundation
return the excess amount.                                       encouraged compliance with applicable laws,
                                                                administrative rules, and other guidelines; the
                                                                economic, effective, and efficient operation of the
Finding No. 5: Environmental Survey – New                       College; the reliability of records and reports; and the
               Town Center                                      safeguarding of assets. Specifically, we reviewed
Prior to acquiring the New Town Center land                     management controls and administration of
discussed in finding No. 4, College personnel had not           accounting records and management reporting, board
determined that the land was clear of hazardous                 organization and control environment, capital assets,
materials     and     underground      contamination.           collections and revenues, compensation and benefits,
Subsequent to our request, College personnel                    expenses, and information technology for the period
provided copies of environmental surveys conducted              January 1, 2003, through December 31, 2003, and
for the School Board. These surveys determined that             selected transactions through February 29, 2004.
approximately 46 acres of land acquired by the School
                                                                              PRIOR AUDIT FINDINGS
Board, which is near the College’s land, was free of
hazardous materials and underground contamination.              We determined that the College had substantially
                                                                corrected the deficiencies noted in audit report No.
College personnel indicated that it was likely that its
                                                                02-218.
property was also free of hazardous materials and
underground contamination based on the School
Board’s environmental surveys and the historical use
of the land, and would not be cost-effective to have
another survey performed.          However, Section
1.4(2)(p), State Requirements for Educational Facilities,
suggests that the College obtain such a determination
prior to acquiring the land.         Without such a
determination, the College is not assured that the land
is free of hazardous waste and environmental
contamination.




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JULY 2004                                                                                          REPORT NO. 2005-003

                     AUTHORITY                                                       AUDITEE RESPONSE

Pursuant to the provisions of Section 11.45, Florida               The College’s response is included as Exhibit 2. The
Statutes, I have directed that this report be prepared             College references several attachments that it included
to present the results of our operational audit.                   with its response. These attachments are not included
                                                                   in Exhibit 2, but may be viewed with this report on
                                                                   our Web site, or obtained from the College.

William O. Monroe, CPA
Auditor General




 To promote accountability in government and improvement in government operations, the Auditor General makes
 operational audits of selected programs, activities, and functions of community colleges. This operational audit was made in
 accordance with applicable Government Auditing Standards issued by the Comptroller General of the United States. This audit
 was coordinated by Debbie Jabaley, CPA, and supervised by Jim Kiedinger, CPA. Please address inquiries regarding this
 report to Jim Raulerson, CPA, Audit Manager, via e-mail at jimraulerson@aud.state.fl.us or by telephone at (850) 487-4468.
 This audit report, as well as other audit reports prepared by the Auditor General, can be obtained on our Web site at
 www.state.fl.us/audgen; by telephone at (850) 487-9024; or by mail at G74 Claude Pepper Building, 111 West Madison
 Street, Tallahassee, Florida 32399-1450.


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JULY 2004                                                                                  REPORT NO. 2005-003

                                             EXHIBIT – 1
                                 OKALOOSA–WALTON COMMUNITY COLLEGE


Members of the College’s District Board of Trustees who served during the audit period are listed below:


                         Board Member                                          County
                         Elizabeth S. Campbell, Vice Chair to 6-30-03,
                           Chair from 7-1-03                                   Walton
                         Joseph W. Henderson, Vice Chair from 7-01-03          Okaloosa
                         Dr. Connie S. Hall                                    Okaloosa
                         Lamar (Skip) Rainer                                   Okaloosa
                         J. E. Smith                                           Okaloosa
                         William Thornton, Chair to 6-30-03                    Okaloosa
                         Esteena K. Wells                                      Walton
                         Wesley Wilkerson                                      Walton




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                        EXHIBIT – 2
            OKALOOSA–WALTON COMMUNITY COLLEGE




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