Supervisor of Elections Audit. May 28, Report #694

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1 Supervisor of Elections Audit May 28, 2010 Report #694 Released on: January 7, 2011

2 EXECUTIVE SUMMARY AUDIT REPORT #694 INTRODUCTION STATEMENT OF OBJECTIVES STATEMENT OF SCOPE AND METHODOLOGY STATEMENT OF AUDITING STANDARDS AUDIT CONCLUSIONS OVERALL OPPORTUNITIES FOR IMPROVEMENT AUDIT OBJECTIVE # AUDIT OBJECTIVE # AUDIT OBJECTIVE # ATTACHMENT A - SOE AUDIT RESPONSES AND EXHIBITS ATTACHMENT B CITY S ACCOUNTING DIVISION AUDIT RESPONSE

3 OFFICE OF THE COUNCIL AUDITOR Suite 200, St. James Building May 28, 2010 Report #694 EXECUTIVE SUMMARY Pursuant to Section 5.10 of the City of Jacksonville Charter and Chapter of the Jacksonville Municipal Code, we conducted an audit of the Supervisor of Elections Office (SOE) for the time period October 1, 2008 through September 30, AUDIT CONCLUSIONS Based on our audit, we reached the following conclusions: 1. It appears that the SOE did remove ineligible voters from the registry in accordance with Florida Statutes. Although the Florida Statutes do not specify a clear time frame by which the Supervisor of Elections must remove ineligible voters from the registry, we did note that the time frame for removing ineligible voters varied significantly. 2. Overall, it appears that the SOE did properly maintain custody of its capital assets; however, we did note some issues related to the accounting for capital assets which require corrective action. 3. Although payments made to poll workers and precinct locations were found to be materially accurate, we did note that several payments to poll workers lacked proper supporting documentation. We also noted internal control weaknesses in the poll worker payroll process that need to be addressed to ensure that payments are made to authorized poll workers. 117 West Duval Street Jacksonville, Florida Telephone (904) Fax (904)

4 OFFICE OF THE COUNCIL AUDITOR Suite 200, St. James Building May 28, 2010 Report #694 Honorable Members of the City Council City of Jacksonville INTRODUCTION Pursuant to Section 5.10 of the City of Jacksonville Charter and Section of the Municipal Code, we conducted an audit of the Supervisor of Elections Office (SOE). The SOE is a constitutional office established pursuant to Article VIII Section 1 (d) of the Florida Constitution and Article IX of the Charter of the City of Jacksonville. Specifically, Section 9.01 of the City Charter states the supervisor of elections shall have responsibility for maintaining rolls of qualified voters of the consolidated government and for the conduct of all elections. Florida Statute (3) states the supervisor shall update voter registration information, enter new voter registrations into the statewide voter registration system, and act as the official custodian of documents received by the supervisor related to the registration of electors and changes in voter registration status of electors of the supervisor's county. Furthermore, Florida Statute (2) states that each county supervisor shall implement the minimum voter education standards, and shall conduct additional nonpartisan education efforts as necessary to ensure that voters have a working knowledge of the voting process. Per the SOE, the mission of the office is to provide to the voters of Duval County fair, accurate and transparent elections. In the General Fund budget for fiscal year 2009/10, the SOE was provided funding of $8,556,799 and was authorized to have 34 full-time positions. STATEMENT OF OBJECTIVES The objectives of the audit were as follows: 1. To determine whether the SOE had adequate controls in place to ensure that all known felons, mentally incapacitated (by court system), and deceased registered voters were removed from the county registry upon notification from the State Division of Elections Office and to substantiate that there was adequate support for removals that were not initiated by the State Division of Elections Office. 2. To determine whether or not the SOE properly accounted for and maintained custody of its capital assets. 3. To determine whether payments made to poll workers and precinct locations were accurate and properly supported. 117 West Duval Street Jacksonville, Florida Telephone (904) Fax (904)

5 STATEMENT OF SCOPE AND METHODOLOGY The scope of our audit was October 1, 2008 through September 30, 2009, unless otherwise noted. To complete the audit, we conducted interviews with staff, observed staff performing daily functions, reviewed relevant systems in place, and examined supporting documentation. More specifically, we: Obtained a listing of all registered voters who were removed from the registry during fiscal year 2008/09 per the SOE Voter Registrations System and verified on a sample basis that there was support to substantiate removal. Obtained a listing from the State Division of Elections Office of all possible ineligible voters due to mental incapacitation, being a known felon, or deceased, for Duval County from October 1, 2008 until the date the request was processed, April 21, Although we requested one fiscal year of information from the state we were actually provided information beyond our audit scope. As a result, the testing related to objective one for this sample was expanded through April 21, We tested to determine whether the SOE was properly removing ineligible voters. o Per Florida Statute (7), the process of removal starts with a notification letter being sent out to the registered voter by the SOE within 7 days of the office being notified by the State Division of Elections Office. If there is no response to the notification letter within 30 days, a notice is to be published in the newspaper per Florida Statute (7). If after 30 days there is no response to the notice in the newspaper, the SOE may remove the voter from the registry. Therefore, there is a minimum of 60 days between the initial notification letter and removal from the registry if there is no response from the registered voter. Obtained a listing and reviewed the supporting documentation for all who worked at early voting and Election Day voting sites during the 2008 General Election. Obtained a listing of all capital assets of the SOE and verified physical existence on a sample basis. Selected on a judgmental basis a sample of capital assets to trace back to the capital asset listing to verify completeness. Reviewed the usage of overtime by the SOE. Reviewed the payments made to polling locations to verify that payments were made to the actual polling locations utilized on Election Day. Reviewed on a sample basis the amount paid to the polling location to verify the amount agreed to the contract. Our report is structured to identify Internal Control Weaknesses, Opportunities for Improvement and Audit Findings as they relate to our audit objectives. Internal control is a process implemented by the SOE to provide reasonable assurance that they achieve their objectives in relation to the effectiveness and efficiency of operations and compliance with applicable laws and regulations. An Internal Control Weakness is therefore defined as either a defect in the design or operation of the SOE s internal controls or is an area in which there are currently no internal controls in place to ensure that objectives are met. An Audit Finding is an instance where management has established internal controls and procedures, but responsible parties are - 2 -

6 not operating in compliance with the established controls and procedures. An Opportunity for Improvement is a suggestion that we believe could enhance the SOE s operations. Suggested Additional Audit Work In limiting the scope of this audit, we did not pursue the following areas, and as such they should be considered for future audit work: Staffing levels of Election Day and Early Voting sites Distribution and number of Election Day and Early Voting sites utilized for each election Ballot security before, during and after an election Security of voting systems after being programmed for an election STATEMENT OF AUDITING STANDARDS We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. AUDITEE RESPONSES Responses from the auditee have been inserted after the respective finding and recommendation. We received these responses from Jerry Holland (Supervisor of Elections) on December 23, 2010 and Kevin Stork (City Comptroller) on August 11, AUDIT CONCLUSIONS By Objective 1. It appears that the SOE removed ineligible voters from the registry in accordance with Florida Statutes. Although the Florida Statutes do not specify a clear time frame by which the Supervisor of Elections must remove ineligible voters from the registry, we did note that the time frame for removing ineligible voters varied significantly. 2. Overall, it appears that the SOE properly maintained custody of its capital assets; however, we did note some issues related to the accounting for capital assets which require corrective action. 3. Although payments made to poll workers and precinct locations were found to be materially accurate, we did note that several payments to poll workers lacked proper supporting documentation. We also noted internal control weaknesses in the poll worker - 3 -

7 payroll process that need to be addressed to ensure that payments are made to authorized poll workers. OVERALL OPPORTUNITIES FOR IMPROVEMENT Opportunity for Improvement 1 *Prepaid Postage Balance* The SOE at times has had large prepaid balance at the Post Office. Sometimes this prepaid balance crosses fiscal years. While there is the need for the SOE to maintain a prepaid balance at the Post Office before elections and throughout the year for registration of voters, the balance needs to be reasonable and needs to be discussed with the Budget Office during the budget preparation process. We noted balances in excess of $190,000 at the end of fiscal years 2006/07, 2007/08, and 2008/09. Recommendations to Opportunity for Improvement 1 For future budgets, the estimated prepaid postage balance at year end needs to be factored into the budget calculations as the SOE and Budget Office arrive at the proposed budget to ensure that all parties are aware of this separate funding source and to ensure transparency in determining the cost of elections. Also, the amount advanced to the Post Office should be reduced to a smaller amount to ensure that the amount of prepaid City funds held with a third party vendor is minimized. SOE Response to Opportunity for Improvement 1 The amount of postage carried over by the elections office is often large because the budget year ends on September 30th. Every other year we are in between the primary and general election during this time and absentee ballots are also being returned. All funds deposited with the United States Postal Service can only be used for postage, We always take in account the amount deposited on hand when presenting our next year s budget request. Due to the demand, we must always have funds prepaid for the postage or the ballots will be returned to sender, an unacceptable alternative. Where possible we will minimize the amount and the advance time we prepay. Council Auditor Rebuttal to the SOE Response to Opportunity for Improvement 1 While we understand that there are elections in the even years that will be taking place shortly after fiscal year changes, this obviously does not apply to each of the years noted due to the fact that this occurred for three years. Although the funds can only be utilized while with the Post Office, there is always the possibility that a refund be requested from the Post Office and the funds could be utilized for other purposes. Additionally, if this leftover balance at the Post Office is carried forward, this enables the SOE to utilize a smaller portion of the next year s - 4 -

8 budget, which creates the possibility for the SOE to move excess funds around to be used for other expenses. Opportunity for Improvement 2 *Organization of Records* The SOE needs to improve the overall organization of its files. Best practice includes not just retaining the records that are required by statute, but doing so in an organized manner whereby they are available for review in a timely manner. For example, poll worker payroll records were not maintained in a manner conducive to review and in fact some support was not retained as noted in Finding 3-1. Additionally, there are some items that should be retained even if the statutes do not specifically require so that the office can prove compliance with other requirements. For example, during our testing, we noted that supporting documentation for removal of deceased voters or voters that moved to a different state was retained; however, it was not retained in an organized manner. We also noted that the proof of notification via mail and newspaper is not included or even mentioned in the file that is maintained for each possible felon and mentally incapacitated voter. However, this particular issue has since been addressed. The SOE may be unable to prove that they have been compliant with the Florida Statutes simply because they are unable to locate the necessary support. Recommendation to Opportunity for Improvement 2 We recommend the SOE review the current records management process and incorporate technological advancements where able to establish a more centralized approach for retention of records. SOE Response to Opportunity for Improvement 2 Although, we have maintained records in accordance to state statutes, and in a manner in which the previous Supervisor of Elections have done, we will incorporate technological advancements where we are able to establish a more centralized approach for retention of records. Council Auditor Rebuttal to the SOE Response to Opportunity for Improvement 2 We disagree with the statement that the SOE has maintained all records in accordance with the state retention laws as noted in Finding 3-1 and 3-4. The facts surrounding finding 3-4 clearly indicate that the SOE office did not retain contracts for some of the polling locations from the 2008 General Election. There is a five year retention period for these records, so there is no question that the contracts could not have been destroyed in accordance with the General Records Schedule for State and Local Agencies (GS1-SL)

9 Opportunity for Improvement 3 *Overtime to Exempt Employees* In FY 2008/09, SOE employees exempt from the Fair Labor Standards Act (FLSA) were paid cash totaling $75,736 for overtime worked. Employees covered under FLSA are to be monetarily compensated for overtime while exempt employees are not required to be monetarily compensated. Currently, every employee in the SOE office (with the exception of the Supervisor of Elections) is compensated monetarily for overtime. This has been a policy decision made by the SOE. As a result, the City is incurring overtime costs in relation to the operations of elections, rather than providing the employees with compensatory time. We previously noted this same issue in our Overtime Audit Report (#644). Recommendation to Opportunity for Improvement 3 The SOE should revisit the practice of monetarily compensating FLSA exempt employees for overtime to determine whether there may be a more cost effective solution. For example, the SOE should consider the utilization of a combination of flex time, compensatory time, and parttime hours to mitigate overtime costs. SOE Response to Opportunity for Improvement 3 Unlike other areas of city government, we do not avoid the appearance of necessary overtime by paying bonus payments nor do we over-inflate base salaries to cover overtime so that when there are no elections the salaries are higher than necessary. Not noted in the audit was how extensive we use flex time to cover overtime worked and how we hire an extensive amount of temporary help to supplement full-time employees. Also, we have reduced the use of outside city employees working to fill temporary positions. The audit never captured the fact that we are a staff of 34 full time employees that require at times over 2500 employees to conduct an election; a very unique and successful operation that is quite different than most other functions of city government. Council Auditor Rebuttal to the SOE Response to Opportunity for Improvement 3 We understand that the SOE office has a unique function compared to other departments within the City. All of the Constitutional Offices and City Departments are extremely different in their own ways and that is why we have to assess each office independently of others. We understand that overtime most likely must be utilized in some form; our issue is not with the payment of overtime to all employees within the SOE office, but instead the payment of exempt employees for overtime. We feel it is not a cost effective use of tax payer dollars to pay overtime when not required by law. Opportunity for Improvement 4 *Overtime for other City Employees* We noted that City employees outside of the SOE are compensated at a pay rate equal to one and half times their normal salary while assisting during election activities. The employees utilize - 6 -

10 leave time while working for the SOE, and, as a result, the employees are earning pay equal to two and a half times their normal pay rate. Recommendation to Opportunity for Improvement 4 If the City is required to compensate City employees who utilize their leave time to work an election at one and half times their salary, thereby resulting in paying these particular poll workers pay equal to two and a half times their normal rate, the SOE should consider utilizing alternate temporary workers where practical. SOE Response to Opportunity for Improvement 4 The elections office has drastically reduced the number of outside city workers where possible. However, there are no acceptable substitutes for the major portion of city employees which we currently use now. Those employees are uniformed police officers for security and transportation of ballots. Council Auditor Rebuttal to the SOE Response to Opportunity for Improvement 4 Our comments are not related at all to the utilization of uniformed police officers for security and/or transportation of ballots. We are instead commenting on the payment of overtime to City employees who are utilizing leave from their normal position within the City. Either the SOE needs to find other citizens to fill these roles or the home Department of the employee should loan the employee to the SOE with proper approval whereby no leave is needed to be used and thus no overtime rate would need to be paid. Additionally, it needs to be considered whether it is more beneficial to have a City employee with all of the salary and benefits costs or a part-time employee performing these functions. AUDIT OBJECTIVE #1 To determine whether the SOE had adequate controls in place to ensure that all known felons, mentally incapacitated (by court system), and deceased registered voters were removed from the county registry upon notification from the State Division of Elections Office and to substantiate that there was adequate support for removals that were not initiated by the State Division of Elections Office. Internal Control Weakness 1 1 *Compliance with Notification Requirements* During our testing, we noted that the exact date on which a notification of a possible felon or mentally incapacitated registered voter is received from the State Division of Elections Office is not tracked. The SOE is required to send out notifications to the registered voter per Florida Statute Section (7) within 7 days of being notified by the State Division of Elections Office. Because notifications from the State were not marked with a received date, there is no - 7 -

11 way of verifying whether the SOE has complied with statutory requirements. However, this issue has since been addressed by the SOE. Recommendation to Internal Control Weakness 1 1 As mentioned above, the SOE has now started date stamping all notices received from the State Division of Elections Office of possible felons and mentally incapacitated registered voters so timeliness can be tracked to ensure compliance with Florida Statute. We recommend the SOE continue implementation of this practice. SOE Response to Internal Control Weakness 1 1 We will continue to follow state procedures and the suggestions of the auditors. However, it is very important to note that Council Auditor Kirk Sherman has advised his staff to blatantly ignore the Charter of Jacksonville Charter Section 5.10 and by doing so he has exceeded the scope of his authority. (See attached opinion from General Counsel) The authority granted by the charter was to examine the accounting systems used. This authority was established because the auditors were not staffed with the expertise to go beyond this. This blatant disregard for the charter weakens the integrity of an audit while also showing a disregard for the use of tax payer dollars. Council Auditor Rebuttal to the SOE Response to Internal Control Weakness 1-1 We are pleased that the SOE has and will continue to follow this recommendation, but the response from the Supervisor of Elections Jerry Holland is blatantly misleading. In an attempt to silence an area of my report, he has pursued legal guidance six months after our field work was completed. He failed to exhibit any concerns about my authority until our work produced results worthy of comment. Our audit scope was discussed at the audit entrance conference we held with the Supervisor on February 8, Note that the letter from an Assistant General Counsel is December 23, It is my understanding that a letter from an Assistant General Counsel is merely legal advice, and that binding legal opinions are issued only under the signature of the General Counsel. The attorney who signed this letter has been employed by the General Counsel for two months and never spoke to me on this matter to gain an understanding of the subject. This audit was performed pursuant to Council Ordinance E, codified as Municipal Code Section , which requires that I audit each of the constitutional officers once every five years. This relatively new requirement has resulted in audits of the Sheriff, Tax Collector and Clerk of Court, none of which resulted in a legal request regarding my authority. The Charter fails to address the topic of performance auditing, however it does address the auditor s duty to perform other such research requested by the Council concerning the management of the consolidated government. The work we performed is simply reviewing the administrative efficiency of a process. As is the case in all performance audits, we are not experts in this subject matter, but have the capability to learn the process and note inefficiencies

12 The Supervisor is displaying a disregard for taxpayer dollars by attempting to force me into retracting two comments he does not like. I cannot fail to report after finding reportable conditions as a result of performing work. That would be a waste of taxpayer dollars and a violation of ethics. The Supervisor has shown a disregard for City resources due to the excessive amount of time we have spent following up on matters that his staff should have answered satisfactorily months ago. The voluminous response exhibits he has created regarding capital asset errors fails to answer our findings and are the result of considerable staff time being spent to follow up matters that should have been competently documented and available over six months earlier. As a result of this exchange with the General Counsel and the SOE, I will recommend the City Council consider engaging in a discussion regarding Charter provisions governing the audit rights of the Council Auditor s Office. Opportunity for Improvement 1 1 *Removal of Ineligible Voters from the Registry* Currently, the unwritten goal of the SOE office is to remove ineligible voters (felons, mentally incapacitated, deceased) prior to the next election once notified by the State. The Florida Statutes do not require that counties remove ineligible voters within a specific time frame. The SOE s goal works for most elections; however, Special Elections could present problems for fulfilling this goal since they occur on short notice. We believe that establishing general time frames for employees to process the removal of ineligible voters would assist employees and provide a base benchmark, especially in the event a special election occurs. We identified this process as an Opportunity for Improvement based on testing we performed that measured how long it took from the time the initial letter was sent out by the SOE until the time the voter was removed. The results from testing were as follows: Summary of Days to Remove Range of Days Frequency From To in Range We found no evidence to indicate that any of the ineligible voters in our sample had the ability to vote in an election that took place within our audit scope time period

13 Recommendation to Opportunity for Improvement 1 1 We recommend that the SOE implement written time frames to provide guidance to employees on processing the removal of ineligible voters. Our recommendation is that the process to remove ineligible voters should take no more than 90 to 120 days from the initial notification letter to removal, when there are no challenges from voters. SOE Response to Opportunity for Improvement 1 1 Our goal is to make sure no voter is removed from the voting rolls without due process and to make sure that no one who is in-eligible to vote cast a ballot. We will continue to use that as our goal; we have been very successful in doing so. Council Auditor Rebuttal to the SOE Response to Opportunity for Improvement 1-1 Success in the past does not guarantee success in the future. There is a real concern that under the current system in place the SOE office would not be able to remove ineligible voters in cases of Special Elections. While we did not note any instances where an ineligible voter was able to vote in an election, we did note two instances where individuals would have been able to vote in the 2009 Special Election if the precinct of the individuals would have been one of the precincts voting in the election. AUDIT OBJECTIVE #2 To determine whether or not the SOE is properly accounting for and maintaining custody of its capital assets. Finding 2 1 *Discrepancies in Capital Assets Listing* The capital asset listing for the SOE is inaccurate due to various discrepancies and items being lost, stolen, or missing. Although this can lead to a possible overstatement of assets due to missing, lost, or stolen items not being removed from the City s property records, it is unlikely to be materially significant. The main issue is that the City may have to replace the missing or misplaced items. The book value of the capital assets in our sample was $1,028, The purchase price of items in our sample was $2,141, Out of the 275 items from the sample tested, we found the following: (1) 25 (or 9.09%) of the items were unable to be located. The book value of the items missing was $9, (or.96%). The purchase price of the items missing was $88, (or 4%). The missing items were purchased at various times between March 1983 and August a. 17 out of the 25 items were included on a police report which was filed on March 26, A police report is required to be filed in order to have any assets officially removed from the capital asset inventory records maintained by the

14 City s Accounting Division. The book value of these 17 items was $1, The purchase price of these 17 items was $64, b. Subsequent to the completion of field work, on December 1, 2010, we went back to the SOE office at the request of the SOE due to his office locating 2 of the 17 items (noted above) from our sample that were originally included on the police report and unable to be located by the SOE staff at the time of our field work. These two items had a book value of $1, and an original purchase price of $3, c. Additionally, on December 6, 2010, we went back to the SOE office and were shown 5 of the 25 items that were unable to be located by the SOE staff at the time of the original field work. The items had a net book value of $8, and an original purchase price of $18, These five items had handwritten City tag numbers on the devices and the serial numbers did not match the inventory record. The SOE explained that the serial numbers did not match because these five items were replacements for the original items that had to be sent back to the company. However, the SOE was unable to provide us written documentation so that we could verify that these assets were replacements. (2) There were 31 (or 11.27%) items with a serial number or assigned City tag that was missing or did not match records. The book value of these 31 items was $66, (or 6.44%) with a purchase price of $136, (3) There were 2 instances (or.73%) where items were disposed of or transferred and the supporting paperwork was previously completed. These items were never removed from the list of the capital assets; however, they had no book value. (4) There was also an instance where 1 item (or.36%) was transferred to the Information Technology Department, but no transfer paperwork was filed. This item had no book value. We did verify with the Information Technology Department that they had custody of the asset in question. Recommendation to Finding 2 1 We recommend the SOE take a complete physical inventory, compare it to the property records provided by the City s Accounting Division and reconcile any discrepancies. Section , City Municipal Code, requires an inventory shall also be taken whenever there is a change in accountable officers, for the property under the control and in the custody of the accountable officer; and the accountable officer shall not be relieved of his responsibility and accountability for this property until the inventory is completed, any discrepancies are reconciled and his successor has accepted the inventory, which shall be the basis for the successor accountable officer's initial accountability under this Part. As a general note, missing items need to be reported to the City s Accounting Division at the time they become missing, whether they were purchased before or after a change in the accountable officer. SOE Response to Finding 2 1 The two previous Supervisor of Elections, did not do inventories during changes in the accountable officers. Records show that items were carried forward on the inventory that were either sent to surplus or destroyed. When we discovered this, it was discussed with the

15 Accounting department and they advised us in order to remove the items we would need to obtain a police report listing the items missing. Because we did not have complete documentation from prior Supervisors, we did as suggested and obtained police reports. The inventory or dispositions of all items sampled (Exhibit G) have been accounted for. (see attached Summary of Inventory findings. Exhibits A-F) Council Auditor Rebuttal to the SOE Response to Finding 2-1 Whether or not previous SOEs did or did not perform inventories upon the change of accountable officers is irrelevant to this report. The only facts stated and confirmed are that the current SOE did not. The next point that must be made clear is that our office worked with the SOE office to perform the original inventory. We were unable to substantiate the location of a set number of items. We provided this listing to the SOE office which at that time worked to locate the additional items. The day of the original inventory was on April 2, 2010 and April 5, On April 6, 2010 we relayed the results of our preliminary findings to the SOE office. On April 9, 2010 we were provided with our first update relating to this information and subsequently we were provided general information again on April 12, On April 20, 2010 we went back out to the SOE office to clear exceptions. We additionally had to meet with other staff on April 21, 2010 to clear an item. On April 29, 2010 we provided the SOE office with an updated list of exceptions. We did not hear anything back from the SOE office regarding the inventory until we received preliminary responses from the SOE office on November 19, At every point in the process we requested the SOE office to provide us with additional detail that could clear any of these exceptions. Overall, after reviewing all of the new evidence provided by the SOE, our conclusions for this finding are still the same. The SOE, at the time of the audit, was unable to substantiate why these items were in not in the possession of the SOE office. A few of the items the SOE claims have now been found have never been shown to us, despite the fact that we returned to the SOE office on December 1, 2010 and December 6, 2010, specifically at the SOE s request to follow up on fixed assets in question. Additionally, most of the evidence provided is inconclusive at best and instances where proper support is provided further reinforces why there needs to be a full inventory of assets performed when there is a change in the accountable officer. Finding 2 2 *Capital Assets Not Included on Inventory Listing* We found there were capital assets in the custody of the SOE that were not included on the official capital asset listing maintained by the City s Accounting Division. As part of the annual inventory process, the SOE is to add any capital assets to the listing that are not included on the capital asset listing provided by the City s Accounting Division. Out of 15 pieces of equipment and furniture that we selected on site, we were not able to find one item (or 6.67%). Similar items on the City s capital asset listing have an original cost of $3, and a current book value of $1, Also, the serial number of another item (or 6.67%) did not match the serial number on record

16 Recommendation to Finding 2 2 We recommend that the SOE comply with Section of the Municipal Code and carefully perform an annual physical inventory to ensure that all capital assets assigned to the SOE are accurately reflected on the capital asset listing. SOE Response to Finding 2 2 The inventory or dispositions of all items noted have been accounted for. (see attached Summary of findings. Exhibit F) The items not matching original serial numbers were items that the manufacturer switched out with new equipment rather than delay us waiting for repairs, we have documentation of this action. Council Auditor Rebuttal to the SOE Response to Finding 2-2 Exhibit F appears to have been referenced in error as it is a transfer/disposal request form and does not apply to either of these items in our finding. The listing of the 15 assets that we picked from the SOE office to trace to the SOE s inventory records is not included in any of the SOE s attached exhibits. Our finding relates to two different assets. The first item that we noted should have been recorded in the inventory as a capital asset, but was not. This is an issue because it means the inventory listing could be incomplete. On the second item, the serial number on the asset differed from the serial number listed in the inventory records. This raises a question about the accuracy of the inventory listing. The letter from the manufacturer, which is the SOE s Exhibit C, does not address this particular item as the serial number actually on the asset was compared to the inventory records which reflected a serial number of Neither of these serial numbers is referenced in Exhibit C. So if documentation exists to substantiate this claim it is not in the attached exhibits provided by the SOE office. Finding 2 3 *Capital Asset Management* During our testing of the capital assets that are in the SOE custody, we noted various problems with the management of capital assets, which resulted in inaccurate records being maintained on the SOE assets. Specifically, we found the following: (1) On June 30, 2009, the City s Accounting Division printed the inventory report to be sent out to the various Departments throughout the City for the annual inventory for fiscal year 2008/09 as required by Section of the Municipal Code. On October 14, 2009, the SOE submitted the annual inventory for the office. During our audit testing, on March 26, 2010, the SOE filed a police report about numerous missing/stolen capital assets. The SOE did not provide a copy of the police report to the

17 City s Accounting Division until May 14, 2010 when they provided an updated capital asset report for fiscal year 2008/09; moreover, many of the items that were reported missing/stolen on the police report were marked as found on the police report provided to the City s Accounting Division. (2) SOE did not notify Council Auditor s Office about stolen/missing capital assets when the police report was filed as required by section of the Municipal Code. (3) The City s Accounting Division provided us with a signed capital asset listing on October 14, Neither the City s Accounting Division nor the SOE could provide any previous capital asset listing since Therefore, we were unable to determine whether the items on the police report were lost/stolen in the prior 12 months or several years, possibly prior to the current SOE taking office. (4) In fiscal year 2008/09, two capital assets (laptop and folder/inserter) were acquired by the SOE Office; however, these items were not included in the capital asset inventory list because they were purchased with operating funds rather than capital. The total cost for these items was $22, (5) There are numerous discrepancies between the actual serial/city tag numbers and the serial/city tag numbers in the accounting records. There are various chapters in the Municipal Code that provide guidance on capital assets management. Also, the Accounting Division communicates the required procedures to all City Departments. By not following the procedures described in the Municipal Code, SOE creates increased possibility for assets to be misappropriated as well as for the capital assets to be inaccurately presented on the City s financial reports. Recommendations to Finding 2 3 The SOE should review and follow the Municipal Code in relation to capital asset management. The SOE should also work with the City s Accounting Division to obtain an understanding of the required procedures in relation to capital asset management. The City s Accounting Division needs to improve controls and increase monitoring of the annual inventory process of the capital assets to eliminate the possibility of a department or office not submitting a completed inventory. The City s Accounting Division needs to ensure that reports are filed on time by all departments and retained as required by law. SOE Response to Finding 2 3 The dispositions of all items noted have been accounted for. We are pursuing a grant for a more advanced and accurate inventory system. City s Accounting Division Response to Finding 2 3 There are various chapters in the Municipal Code that provide guidance on capital assets management. The Accounting Division communicates the required procedures to all City Departments including State and Local Laws, and Standard Operating Procedures and includes them on the Accounting Division s Capital Asset area s (Capital Assets) website along with a

18 PowerPoint presentation. Capital Assets and the Administrative Services Division monitor reports during and after due dates and send out reminders for items not received. When action is not taken these are channeled up to the Accounting Division s Fund Accounting Manager and the City Comptroller. In ASD they are channeled up to the Division Chief and Department Head. The City Comptroller has added a stronger step to the Accounting Division s process. A memo will be sent from his office advising the Divisions that do not meet the inventory deadlines they will be reported, in written form, to the City s Chief Administrative Officer and the Chief Financial Officer as non compliant. Section of the Ordinance Code requires lost and stolen property to be reported to the Council Auditor's Office at the same time it is reported to the Sheriff s Office. This information is also included in the information provided by Capital Assets and on the Accounting Division s Capital Asset website. Items listed as lost/stolen would occur in the year of the inventory report and would not represent multiple years as long as proper inventory procedures are followed. Lost/stolen items are removed from the Capital Asset system annually when the certified inventories are received. Capital Asset s policy is to retain certified inventories for a period of three full years. The following procedures have been put in place to improve controls and increase monitoring; The Accountant 1 was previously assigned to log in inventories. This function has been reassigned to the Accountant Principal position. Copies of inventories are being saved on two separate computer addresses. The Accountant Principal will begin a new process of creating a log book to document the receipt of all inventories. The Account Technician Specialist will certify and maintain the log by requiring a sign in/out for any movement of the inventory documents. Capital Assets perform extra steps to monitor a chosen number of high volume operating expenditures. It is not feasible, with the existing staffing levels, for the Accounting Division to monitor additional operating expenditures in the City. The Accounting Division has addressed this issue with the Departments/Divisions and Procurement, who process the requisitions and encumber capital expenditures in operating subobjects. Procurement has declined to include this as part of their encumbering process and rely on the Departments to correctly submit their requisitions using the correct subobject. Capital Assets reviewed the noted serial/city tag number discrepancies and found 12 of the 330 voting machines had typographical errors with one character off. There are approximately 5,000 tags keyed into the City s subsystem annually and Capital Assets cross checks and verifies the dollar value totals, but doesn t review keying other than a cursory review due to staff time limitations. Capital Assets will spot check the keying to reduce the possibility of typographical errors on serial/city tag numbers

19 Council Auditor Rebuttal to the SOE Response to Finding 2-3 We applaud the Supervisor of Elections for pursuing grant funding; however, we do question the need for a system. The act of not monitoring these assets in the past does not necessarily warrant the need for a new system. AUDIT OBJECTIVE #3 To determine whether payments made to poll workers and precinct locations were accurate and properly supported. Internal Control Weakness 3 1 *Verification of Poll Worker Payroll* Currently, there are insufficient controls in place to prevent or detect the SOE employee who processes the poll worker payroll from adding fictitious poll workers or increasing the pay rate to existing poll workers. The current process provides for one employee to enter the poll worker information for Election Day and early voting into the SOE poll worker system. Next, the employee calculates the payment amounts based on the hours and position worked per supporting documentation provided. After the employee is finished, a list of the poll workers and amounts to be paid are sent to a supervisor in the SOE for verification; however, the support is not forwarded. The only verification of the payroll is a visual check performed by a supervisor to determine whether there are errors; therefore, the employee entering the information into the system could add fictitious poll workers or increase the amount paid to existing poll workers without being detected. After the information is reviewed by a supervisor in the SOE office, the payroll information is uploaded to Oracle (City payroll system). Once the information is uploaded to Oracle, the information is again reviewed by the SOE office to verify accuracy. The SOE office s the City s Treasury Division to confirm whether or not the payroll is accurate so that checks can be printed and mailed out directly by the City Treasury Division. Also, we noted that the precinct managers are not required to sign beside each poll worker s signature on Election Day time sheet which creates the possibility of names being added without the precinct manager s consent. Recommendations to Internal Control Weakness 3 1 The SOE should add a verification step to the poll worker payroll process whereby the source documentation would be verified prior to payment by an employee who did not enter the payroll information. If there are any discrepancies, it could be sent back to the originator to be corrected. Then, after both employees agree to the total amount, they could both sign-off before the payroll is input into the City payroll system. Also, someone other than the person

20 responsible for processing payroll for the poll workers should have the system capability to add poll workers to the payroll. Additionally, the SOE should have the precinct managers sign next to where each worker signs his name on the time log sheet to ensure that there are no names added without the precinct manager s consent. SOE Response to Internal Control Weakness 3 1 The system that was in place has been the same system for the last three SOE s. We have put in place an additional person in the process and added a manager sign-off step in the procedure. Although the auditors stated the potential to pay a fictitious worker was possible they found no evidence of this ever occurring. Council Auditor Rebuttal to the SOE Response to Internal Control Weakness 3-1 Whether or not previous SOE s had satisfactory controls in place regarding poll worker payroll is irrelevant to this audit and furthermore there is no evidence to substantiate this claim. The current SOE was first elected in March of 2005, which is ample time to ensure that proper controls are put into place. Additionally, given that there was a change in 2008 in the payroll system used to process payments to poll workers, we cannot be certain that the controls and processes have always been the same for the last three SOE s nor is prior practice relevant to this audit. Regarding the potential risk that that payments could be made to fictitious workers, no where in our report do we state that we found no evidence of this ever occurring. We are merely identifying a potential risk that fraud could occur based on a lack of adequate controls in the poll worker payroll process. Also, it is important to note that the scope of our audit is limited to a particular period of time. Our audit procedures were designed in accordance with Section 7.30, Government Auditing Standards, which states that, In planning the audit, auditors should assess risks of fraud occurring that is significant within the context of the audit objectives. Finding 3 1 *Not Properly Retaining Poll Worker Records* Pursuant to the State of Florida General Records Schedule GS3 for Election Records, the SOE shall maintain all poll worker applications, assignment notices, availability notices, class attendance notices and sign-in information, correspondence, payroll records, surveys completed by poll workers, and tests/quizzes issued to poll workers. The records shall be maintained for 22 months after the certification of federal elections and 12 months after the certification of state and local elections. The retention of these records enables the public to verify that poll workers were properly trained in accordance with the State requirements. We requested the sign-in information and training exams taken by poll workers for the 2008 General Election to verify that the poll workers that were paid had actually received training and passed the exam as required of all poll workers in Duval County. We were informed these records were not retained

21 as the employee overseeing the training records was not aware of the record retention requirements. In addition, applications were not retained past the election. Subsequent to the completion of our audit field work, the SOE informed our office that he did retain these records; however, given the time that has since elapsed between completion of our audit field work and notification from the SOE, the records were destroyed pursuant to Florida Statute. We then requested the forms that authorized the destruction and information detailing what was destroyed. After reviewing this information, we concluded there was no evidence that the records we originally requested were actually on the destruction list. Recommendation to Finding 3 1 The SOE should retain the applications, sign-in cards, and exams as required by GS3. Additionally, the SOE needs to revisit GS3 and determine whether there are any other items that are not properly retained by the office. Where deemed necessary, appropriate employees should be trained on the specific record retention and destruction policies to ensure compliance. SOE Response to Finding 3 1 The SOE does retain all records according to the State of Florida General Records Schedule GS3 for Election Records, which are kept off site. In accordance to the destroy schedule of the State of Florida, records are destroyed as soon as allowed to reduce storage cost. Council Auditor Rebuttal to the SOE Response to Finding 3-1 Either the SOE office is not properly labeling the records retained off site or the SOE office destroyed records in a manner inconsistent with the GS3 schedule. If the records are being mislabeled, this is just as bad as destroying the records early because records retention is meaningless if the records are unable to be located. While it is a possibility that the items were mislabeled, it appears based on the evidence that this is not what occurred in relation to these records. We have s from SOE employees with the SOE copied where it is stated that the applications are not retained after the information is entered into the system and the only sign-in cards available as of April 28, 2010 were retained from the Countywide Voter Registration Drive. In relation to the poll worker exams, we have s from April 20, 2010 and April 23, 2010 from our office sent to SOE employees stating that we were informed in phone conversations that tested and scored exams were not retained and there was no indication given by the SOE employees that these statements were inaccurate. The employees we notified were the individuals in charge of records retention and poll worker training, as well as the Chief Elections Assistant. Finding 3 2 *Lack of Support for Poll Worker Payroll* The SOE is processing poll worker payroll in a manner that lacks sufficient controls as noted in ICW 3-1. To determine the extent of the possible risk due to the lack of controls, we tested the

22 poll worker payroll for the 2008 General Election. We reviewed the supporting documentation, recalculated the payroll, and found the following: (1) Out of 3,197 poll workers that were paid, 33 (or 1.03%) were paid inaccurately, but only by a total amount of $680 out of the $807,974 paid for the election payroll. (2) The supporting documentation for 233 out of 3,197 (or 7.29%) poll workers was not adequate. In total, there was not adequate supporting documentation to substantiate $54,335 out of $807,974 (or 6.81%). (3) 52 out of 3,032 (or 1.72%) poll workers on Election Day and 6 out of 295 (or 2.03%) workers during early voting either did not provide their address on the payroll timesheet or the address provided did not match the address where the check was addressed. The majority of these poll workers were assigned to the precincts either on election day or just prior to election day, and therefore provided their personal information on the special payroll log form that is missing an address field. (4) 4 out of 3,032 (or 0.13%) poll workers that were included on a time sheet for Election Day (and were subsequently paid) did not sign the time sheet. 19 out of 295 (or 6.44%) workers during early voting had time sheets that lacked signatures or initials to support the hours worked for at least one day. Additionally, SOE does not have a policy that requires supporting documentation be maintained for additional payments made to poll workers for using their personal cell phones, working the drop zones, or driving to remote polling sites. During our testing of the payroll payments for the 2008 General Election, we noted that SOE reimbursed poll workers for: o Using their personal cell phones ($10 per person, 547 workers, total of $5,470). o Working additional hours at drop zones after election night ($40 per person, 64 workers, total of $2,560). o Driving to remote locations (typically $30 per person, 27 workers, total of $830). The only supporting documentation that the SOE had was an excel spreadsheet (or hand written list) of employees authorized to be reimbursed. Neither employees nor managers were required to sign-off. Recommendations to Finding 3 2 The SOE should follow the procedures recommended in ICW 3-1 and also maintain adequate supporting documentation to substantiate all payments made to poll workers. Additionally, poll workers should be informed payments will be mailed to the address indicated on the timesheet and no payment will be processed without the poll workers signatures, as well as the team leader/precinct manager s signature on the timesheet. Finally, the forms used for payroll log should be reviewed and modified as necessary. We recommend that the SOE modify the payroll log forms to include cell phone, drop zone and mileage reimbursement fields. If this is not possible, there should be a separate form detailing who was authorized for each type of reimbursement that can be signed by both the poll worker and precinct manager on Election Day. Reimbursements should be based on the information provided from the updated form

23 SOE Response to Finding 3 2 Although the auditors stated the potential of fraud, there was no evidence of any fraud ever occurring. We have since changed and implemented additional support documentation to meet the auditors requirements. However, this is a good example where the auditors note a need for additional internal controls but no where in the audit process does it examine a cost benefit to execute any internal controls. Council Auditor Rebuttal to the SOE Response to Finding 3-2 Regarding the potential risk that that fraudulent payments could be made to fictitious poll workers, no where in our report do we state that there was no evidence of any fraud ever occurring. We are merely identifying a potential risk that fraud could occur based on a lack of sufficient controls in the poll worker payroll process in addition to a lack of adequate supporting documentation for poll worker payments. Also, it is important to note that the scope of our audit is limited to a particular period of time. Our audit procedures were designed in accordance with Section 7.30, Government Auditing Standards, which states that, In planning the audit, auditors should assess risks of fraud occurring that is significant within the context of the audit objectives. Additionally, our recommendation does not entail that any new work be performed, but instead puts in place the appropriate segregation of duties. Although any added time associated with this processing should be minimal, the potential impact from a fraud associated with payroll is far to great to ignore in this situation. Finding 3 3 *Polling Location/Precincts Rental Contracts* Based on our review of rental payments made to polling locations, we noted several items: In two instances out of 332 payments, or 0.6%, during our testing of elections in fiscal year 2008/09, we noted that payments for rental of polling facilities were issued to individuals (i.e. managers of the rental facilities) rather than the entity. The amounts of the payments totaled $625. We also noted that precinct rental contracts did not list the names of the entities that agreed to provide the rental space for the 2008 General Election; however, this issue was corrected for the 2009 Special Elections. Finally, it appears that neither the Mayor s Office nor the City s Office of the General Counsel was involved in the creation and execution of rental agreements at each of the polling locations. Although each contract by itself is immaterial, rental payments in the fiscal year 2008/09 were $44,210. Pursuant to Section of the Municipal Code, Contracts to which the City is a party and which are not the subject of another provision of law shall be in writing and shall be executed or signed by the Mayor and the Corporation Secretary

24 Recommendations to Finding 3 3 The SOE should issue payments only to the parties specified in the contract and should continue to incorporate the names of the parties in the precinct rental contracts. Additionally, the SOE should work with the Office of General Counsel to establish a process and a template to utilize for each rental agreement that could address any legal issues. SOE Response to Finding 3 3 We are currently in the process of requesting City Council approval for the ability to approve contracts for this purpose without seeking Mayoral approval each time. Until such approval we will continue to have the Office of General Counsel approve the language for polling location contracts. For the record, we have never had any disputes or litigation on any contract ever on this matter. Council Auditor Rebuttal to the SOE Response to Finding 3-3 We applaud the SOE office for working with the Office of General Counsel and feel that the contract template attached to the proposed legislation that was introduced on December 14, 2010 is significantly better than the template utilized in the past. Additionally, while the SOE has stated there has been no litigation in the past (this has not been researched by our office), we know that there have been disputes over the payment amounts as noted in finding 3-5. We simply wanted to ensure that the City s Office of General Counsel and Risk Management were involved in the creation of the standardized contract language to protect the City s best interests and minimize the City s risk exposure. Finding 3 4 *No Contracts on File for Polling Locations/Precincts* While reviewing particular payments to and listings of actual precinct locations, we found that contracts for three precinct locations were not on file with the SOE. Additionally, while testing a separate random sample of 96 precinct locations to determine if the correct amount was paid, we discovered that contracts were missing for 6 (or 6.25%) precinct locations. General Records Schedule for State and Local Agencies (GS1-SL) states that contracts should be maintained for 5 years assuming the applicable audits have been released. Recommendation to Finding 3 4 The SOE should retain all contracts as required by GS1-SL. SOE Response to Finding 3 4 We are maintaining a copy of all contracts on file

25 Council Auditor Rebuttal to the SOE Response to Finding 3-4 We cannot comment as to whether the SOE office is now maintaining these contracts at the time of the release of the audit report, but we must reiterate the fact that the SOE could not provide us all of the contracts for polling locations that we requested. Of note, we followed-up with SOE staff on December 1, 2010 to confirm that these contracts were not on file at the request of the SOE. No further evidence was provided to us to clear our finding. Finding 3 5 *Polling Location/Precinct Payments* There were instances where the SOE issued payments for polling location rental expenses inaccurately. Some polling locations were underpaid while others were overpaid based on the amount owed per the contract. If an entity is underpaid, the entity may not be willing to be a polling location in the future, and, if an entity is overpaid, it is a misuse of funds. While testing a sample of polling sites, we found that in 16 out of 96 (or 16.66%) instances, there was an inaccurate payment issued. The SOE overpaid $150 out of $9,325 (or 1.60%) and underpaid $1,550 out of $9,325 (or 16.62%) to various locations. The net variance resulted in the Supervisor of Elections underpaying $1,400 out of $9,325 (or 15.01%). Additionally, in a separate review of all payments to polling sites totaling $44,210 in fiscal year 2008/09, we found that incorrect payments were made in four instances that totaled $550: o A payment of $150 was issued to a location for additional services performed in the past that were not included in the contract. o A payment of $125 was issued to the wrong location. o An additional payment of $125 was issued to a location. o A payment of $150 was issued to a location while there was no fee to be paid per the rental contract. Recommendation to Finding 3 5 The SOE should improve the rental operations process. Polling locations should be paid the amount owed per the contract. If there are adjustments to the contracted amount, they should be in writing and attached to the original contract. SOE Response to Finding 3 5 We have since changed and implemented additional support documentation to meet the auditors requirements. Once again, this is another example where the auditors note a need for additional internal controls but without any examination of the cost benefit to execute the internal controls

26 Council Auditor Rebuttal to the SOE Response to Finding 3-5 Again, the cost of requiring this would be minimal as it is not often that there would need to be changes from the original contract. We are merely stating that there needs to be proper support for the payments to all polling locations. As with any purchase made within the City there needs to be support for the payment. If the payment is for an amount that contradicts the contract amount then the contract is not in fact proper support and the payment is unauthorized. As a governmental entity we need to be transparent in our business dealings for the benefit of the citizens of Duval County to protect their tax dollars. We note with sadness the passing of Sandra Henderson on July 4, Members of our office enjoyed working with her since July 1, 1999, when she first served as the Executive Council Assistant to Mr. Holland. We share our condolences with her family and the Supervisor of Elections Office and will miss her. Respectfully submitted, Kirk A. Sherman Kirk A. Sherman, CPA Council Auditor Audit Performed By: Kim Taylor, CPA Elena Korsakova, CPA Brian Parks

27 ATTACHMENT A - SOE AUDIT RESPONSES AND EXHIBITS

28 Responses for Superisor of Elections Audit I j 9, r( Page 4. (1) Auditee Response to Opportunity for Improvement 1 The amount of postage carried over by the elections office is often large because the budget year ends on September 30 th Every other year we are in between the primary and general election during this time and absentee ballots are also being returned. All funds deposited with the United States Postal Service can only be used for postage, We always take in account the amount deposited on hand when presenting our next year s budget request. Due to the demand, we must always have funds prepaid for the postage or the ballots will be returned to sender, an unacceptable alternative. Where possible we will minimize the amount and the advance time we prepay. Page 5. (2) Auditee Response to Opportunity for Improvement 2 Although, we have maintained records in accordance to state statutes, and in a manner in which the previous Supervisor of Elections have done, we will incorporate technological advancements where we are able to establish a more centralized approach for retention of records. Page 5. (3) Auditee Response to Opportunity for Improvement 3 Unlike other areas of city government, we do not avoid the appearance of necessary overtime by paying bonus payments nor do we over-inflate base salaries to cover overtime so that when there are no elections the salaries are higher than necessary. Not noted in the audit was how extensive we use flex time to cover overtime worked and how we hire an extensive amount of temporary help to supplement full-time employees. Also, we have reduced the use of outside city employees working to fill temporary positions. The audit never captured the fact that we are a staff of 34 full time employees that require at times over 2500 employees to conduct an election; a very unique and successful operation that is quite different than most other functions of city government. Page 6. (4) Auditee Response to Opportunity for Improvement 4 The elections office has drastically reduced the number of outside city workers where possible. However, there are no acceptable substitutes for the major portion of city employees which we currently use now, Those employees are uniformed police officers for security and transportation of ballots.

29 Page 6. (5) Auditee Response to Opportunity for Internal Control Weakness 1 -l We will continue to follow state procedures and the suggestions of the auditors. However, it is very important to note that Council Auditor Kirk Sherman has advised his staff to blatantly ignore the Charter of Jacksonville Charter Section 5.10 and by doing so he has exceeded the scope of his authority. (See attached opinion from General Counsel) The authority granted by the charter was to examine the accounting systems used. This authority was established because the auditors were not staffed with the expertise to go beyond this. This blatant disregard for the charter weakens the integrity of an audit while also showing a disregard for the use of lax payer dollars. Page 7. (6) Auditee Response to Opportunity for Improvement I - Our goal is to make sure no voter is removed from the voting rolls without due process and to make sure that no one who is in-eligible to vote cast a ballot. We will continue to use that as our goal: we have been very successful in doing so. Page 9. (7) Auditee Response to Finding 2-1 The two previous Supervisor of Elections, did not do inventories during changes in the accountable officers. Records show that items were carried forward on the inventory that were either sent to surplus or destroyed. When we discovered this, it was discussed with the Accounting department and they advised us in order to remove the items we would need to obtain a police report listing the items missing. Because we did not have complete documentation from prior Supervisors, we did as suggested and obtained police reports. The inventory or dispositions of all items sampled (Exhibit G) have been accounted for. (see attached Summary of Inventory findings. Exhibits A-F) Page 9. (8) Auditee Response to Finding 2-2 The inventory or dispositions of all items noted have been accounted for. (see attached Summary of findings. Exhibit F) The items not matching original serial numbers were items that the manufacturer switched out with new equipment rather than delay US waiting for repairs. we have documentation of this action. Page 11. (9)

30 The dispositions of all items noted have been accounted for. We are pursuing a grant for The system that was in place has been the same system for the last three SOE s. We have put in place an additional person in the process and added a manager sign-off step in the The SOE does retain all records according to the State of Florida General Records Page 14. (12) Auditee Response to Internal Control Weakness 3-1 Page 12 (10) Page 12. (11) a more advanced and accurate inventory system. Auditee Response to Finding 2-3 procedure. possible they found no evidence of this ever occurring. Auditee Response to Finding 3-1 Schedule GS3 for Election Records, which are kept off site. In accordance to the destroy schedule of the State of Florida. records are destroyed as soon as allowed to reduce storage cost. ever occurring. We have since changed and implemented additional support where the auditors note a need for additional internal controls hut no where in the audit Page 14. (13) such approval we will continue to have the Office of General Counsel approve the We are currently in the process of requesting City Council approval for the ability to or litigation on any contract ever on this matter. We are maintaining a copy of all contracts on file. Page 15. (15) Auditee Response to Finding 3-2 Although the auditors stated the potential of fraud. there was no evidence of any fraud process does it examine a cost benefit to execute any internal controls. Auditee Response to Finding 3-3 approve contracts for this purpose without seeking Mayoral approval each time. [ntil language for polling location contracts. For the record, we have never had any disputes Auditee Response to Finding 3-4 Page 15. (14) the auditors stated the potential to pay a fictitious worker was documentation to meet the auditors requirements. However, this is a good example Although

31 I Auditee Response to Finding 3-5 We have since changed and implemented additional support documentation to meet the auditor? requirements. Once again, this is another example where the auditors note a need for additional internal controls but without any examination of the cost benefit to execute the internal controls.

32 CINDY A. LAQtJIDARA GENERAL CouNsEL OFFICE OF GENERAL COUNSEL CITY OF JACKSONVILLE KAREN M. C}JASTAIN CHIEF DEPUTY GENERAL COUNSEL MCHANLJ, ARNoTON DEBRA A. BRAGA WAUAM B. BURKLYrr D,EBUR. Q. CUAThION DAvo1. DAGATA FYANRL Ouegwopii, [ORNEL FRENCH JASON R. GABRoL JOHN F. GERMANY, JR. SEAN B. GRANAT LAws1oAJ, Hooc,Es J.TMomy HosRAN MAEY W. JARMOT HOWARD M, MALTZ NWLLW, MCARThUR,JR. JAMES R. MCCAIN,JR CAROL MflAND0 MICHEU.N M. MOORE CITY HALL, ST. JAMEs BUILDING 117 WEST DUVALSTREET, Sums 480 JACKSONVILLE, FLORIDA December 23, 2010 Wp,oy MUMMAw Dououss B, MYERS, JR. FRIsTINA 0. NELSON GAvu P,owE JON R. PBwFs STF.PMSN J. POwsu. DylANT. RSINoO,o STEvEN F. ROHAN JUUANA ROwLAND CHERRY A. SEAw MnoARET N, StDMAN JEFFREY B. SMrrn EDwARO C. TowEN JASON R. TEAL ADINA TEODORESCI, Dsaos.sH B. WALTERS McHAEL B. WRONES GABY YOUNG Mr. Jerry Holland Supervisor of Elections 105 East Monroe Street Jacksonville, FL Dear Mr. Holland: rfhis responds to your request for a legal opinion on whether the City Charter or the Municipal Code grants the Council Auditor s Office the authority to perform Audit Objective 1 of its current audit of the Duval County Supervisor of Elections Office. Audit Objective 1 is described as follows: To determine whether the SOE has adequate controls in place to ensure that all known felons, mentally incapacitated (by court system), and deceased registered voters are removed from the county registry in a reasonable period of time when notified by the State Division of Elections Office and to substantiate that there was adequate support for removals that were not initiated by the State Division of Elections Office. It is our opinion that Audit Objective I is not within the Council Auditor s authority. This opinion is based on our reading of Section 5.10 of the City Charter and our view that Audit Objective 1 is a performance-related audit rather than an audit relating to the accounting systems or fiscal operations of the Supervisor of Elections Office. Further, while Section of the Jacksonville Municipal Code requires the Council Auditor to include in its audit appropriate commentary on the management efficiency of the SOE s office, such language does not equate to an audit, Office Telephone (904) Writers Direct Line (904) Facsimile (904) Writer s Address JHorkan@coj.net Office Web Site GeneralCounsel.coj.com

33 Mr. Jerry Holland December 23, 2010 Page 2 Please let us know if you would like to discuss this advice further. Thank you. Sincerely, JTH:xdw cc: Kirk Sherman, Council Auditor J. Timothy Horkan Assistant General Counsel

34 Summary of Inventory Findings The Council Auditor s Office submitted a Capital Assets Missing Items list that the Supervisor of Elections Office has researched. Our findings are noted in this summary. In our search for trussing items we were successful in locating all of the Desks and Credenza that were listed on the auditor s report. Item numbers 3, 17, 161, and 162 referenced on their report matched the city tag numbers. (City tag # s , , , ). Item #9, the Bar Code Scanner, (Arrival Tracking Assistant), was replaced with new equipment in The Service Request form from Pitney Bowes supporting this transaction was located and is noted as Exhibit B (City Tag , Serial number ). Item #11 on the auditor s report is a computer, City Tag , Serial Number 99-BX807. This item was listed as missing and a police report was filed. Ihe computer was later found and a supplemental police report was filed, Item #157. computer, City Tag , Serial Number 23 TCLKP, that was sent to surplus. 1/nclosed is the surplus transfer form dated 1/7/02, to support this transaction and is noted as Exhibit E. Of Item # s 4, 5, 14, 15, 158, 160, 1 65, 167, and 168, there are eight computers and two monitors, which were acquired between the years of 1995 and It was noted that some of these items were transferred as surplus material and others were returned to ltd. The supporting documentation was not available. (#4: City tag , Serial Number 90F2BEB2R4; #5: City tag , Serial Number 99-RRZNGD; #14: City tag 17458$, Serial Number ; #15: Ci tag , Serial Number KCDG9LB; #158: City tag ; No Serial Number listed; #160: City tag ; No Serial Number listed; #165: , No Serial Number listed; #167: Cit tag , No Serial Number listed; #168: 16778$, No Serial Number listed). Item #s 59, 125, 126, 127, and 263 are four TSX Iouchscreens and one Automark. 11w original voting equipment items were covered under the vendor s extended warranty agreement and were replaced due to repair and/or maintcnance issues. Enclosed is a letter from the vendor supporting the equipment replacement and is noted as Exhibit C. ;\dditionally, the supporting documentation will be provided to Accounting to update the inventory report. (#59: City tag , Serial Number ; #125: City tag , Serial \urnbcr r1 26 (ir t ig SemI Number #127 it\ t ig I Serial Number : #263: City tag Serial Number AM( )30743U424). Item #1 56. the Crimping Machine was acquired in March and sent to Nt ttithland e cling in 12 UI I iii Ictt d I the pick up tiek t Horn out1 bnd Ri e clini t k ( iii d 12/ to supp tn this transacru tn and is noted as Exhibit 1). ( hiv rag 96.35), Item Mechanical I lie System vasacqiiired in December It was tlimnanrled amid removed by the vendor in 21)114.upporting documentation is not available. 4: rag l49552.

35 Item #164, Mobile Storage System was acquired in December It was dismanded and sent to surplus. Supporting documentation is not availabla (City tag ). Item #169, Shelving Utility, City Tag #170840, was sent to surplus. Enclosed is the surplus transfer form dated 7/10/08, and is noted as Exhibit F. (City tag ). 2

36 Comments Item identifiea by City Tag number and accounted for SEELO11 DESK Jul-02 (Piner s Office) tern noted as missing by Council Auditor s Computer items were Supporting documentation not available Computer items were returned to ltd Supporting documentation not available Ser # as replaced attached See Exhibit B Item #11 Ser # 99-BX807 was located and Supplemental Police SEELO BX807 COMPUTER Sep-04 Report filed See Exriibit A Exhibit A Update this is a 1 5 IBM laptop that now cannot be located This is a toucri screen that documentation not avaiiabie Computer items were Exhibit # Asset Asset 1 (sample) (population) o City Tag Index Serial Number Description Category Price Description Value Acquired SEELO1 1 9OF2BEB2R4 PORT COMPUTER Aug-02 returned to ltd SEELO RRZNGD LAPTOP COMPUTER Aug-03 BAR CODE SEELO SCANNER (Arrival TRACKING PLAYER with new equipment in 2008 Supporting Sep-04 Documentation for Pitney Exhibit B Tracking Assistant) Bowes Service Request for pickup on 9/23/08, is SEELO AV TS R6 UNIT TOUCH SCREEN was replaced in 2004 and was traded in for the TSX MONITOR Oct-04 model due to maintenance issues Supporting SEELO11 KCDG9LB COMPUTER 1489, Nov-04 returned to ITD, but supporting documentation was not available

37 tern dent;fed by City Tag number ano located SEELO1 1 DESK Sep-05 (Angelias desk>, item noted as missing by Council Auditors See Exhibit C See Exhibit C. See Exhibit C Equipment was replaced by TSX VOTING Vendor. Supporting SEELO Nov-06 Exhibit C TOUCHSCREEN SELECTOR Documentation provided See Exhibit C Crimping machine was sen Exhibit 0 Computer item sent to documentation provided See Exhibit E. Computer items were sent documentation not available not available, Computer items were sent documentation not available Item identitied by City Tag number and located /Greg SEREO Apr-97 Powers Office), item noted DESK Auo tors as missing by Council TSX VOTING SEELO Feb-06 Equipment was replaced by Vendor, Supporting TOUCHSCREEN SELECTOR Documentation provided. Exhibit C TSX VOTING t81502 SEELO Nov-06 Equipment was replaced by Vendor. Supporting TOUCHSCREEN SELECTOR Documentation provided Exhibit C TSX VOTING SEEL Nov-06 Equipment was repiaced by Vendor Supporting TOUCHSCREEN SELECTOR Documentation provided. Exhibit C CRIMPING SEREO Mar-83 Services. 12/10/01 Pickup Exhibit 0 MACHINE to Southland Recycling Ticket provided. See SEREQI1 23 TCLKP COMPUTER Oct-95 5pbu5, 1/8/02. Supporting Exhibit E SEREO11 COMPUTER Nov-95 to surplus Supporting Dismantled and removed FILE SYSTEM, by vendor in SEREO11 POWER FILES Dec-95 MECHANICAL Supporting documentation SEREO11 COMPUTER Dec-96 to surplus Supporting

38 tern dentifiec by City Tag number and located SEREO11 CREDENZA Apr-97 (Supervisors Office), tern noted as missing by Council Auditors supporting Computer Items were sent documentation not available. Computer Items were supporting documentation was not found. Computer Items were Supporting documentation not available Shelving Utility was sent to SHELVING surplus in 2008, supporting SEREO Aug-02 ExflibitF UTILITY documentation attached See Exhibit F. Equipment was replaced by VOTER ASST Vendor Supporting CTSEO SEREO11 AM AUTDMARK Aug-08 Exhibit C TERMINAL Documentation provided. I See Exhibit C SEREOI 1 STORAGE Dec-98 MOBILE Dismantled and sent to SYSTEM documentation not available SEREO11 MONITOR Sep-99 to surplus Supporting SEREO11 COMPUTER Jul-00 returned to ltd. but SEREO11 COMPUTER Dec-00 returned to ltd

39 iipr Drug L nit Description Type Coile: COMPUTER HARDWARE SOFTWARE Weight Unit of Meature Qet 1.00 Drxig Type Serial flumber 99.8X801 Color: Manufacturer Weapon Caliber garrel Lengi4 full-automatic Firearm STOLEN AND RECOVERED Swiux Code Dcxc-- Weapon Tipe Weapon Model Property Section: ITEM #9 UP PigeJ sj t DaiePriistcd b./24lolil JOHN H. RUTHERFORD, SHERIFF 2OlO I SUPj Status Code STOLEN AND RECOVERED Proper Received from: Disposition ofevidence / Property NA - Drug I/nit T;pe: Weight: Unit ofmeasure: Description span C idiber Ba,rel Length Full-Automatic Firearm Value Stolen or DarnaRed- $1, Value Recovare4- Victim Complaint Signed Signature Card: NA Weapon l),pe Weapon Dane: upon Ilpe Weapon Dcxc. tics C ode STOLEN AND RECOVERED -operry Section: ITEM #13 ye Code COMPUTER HARDWAREISOFTWARE Serial Number: 99BX807 Color: ri opr ii ii. ned By Victim 4 t ni Iipr Weight L:nit of ftdeuswe i 1.00 Drug Type: capon Caliber Barrel Length Fun-Autotnatic Firearm: fanu/ec liner Model rlal.iimlser 99SX803 Color Lotus Code STOLEN AND RECOVERED Property Section: ITEM #12 ;pe Code COMPUTER HARDWAREJSOFTWARE Manufacturer. Model. roper:) Received From: Oviposition ofevidence / Properry: NA Property Section: ITEM #11 Type Code COMPUTER HARDWARE1SOFTWARE I chicle Properr Recovered From: Disposition ofevidence / Property: NA FuE-Autornaric Firearm: Des cripoon Value Stolen or Dainaed $1, Value Recovered: Victim / Cwnplaird Signed Signature Card. NA Qey 1.00 Drug Type: Weapon Type Weapon Date. LengIlL Weapon Caliber FuU-AiaonwIic Firearm Barrel Weapon Caliber- Barrel Length. Qry 1.00 Drug Type: Sfamfaclw er C)svned By Victim Property Property Receired From: ropert) OivnedBy Victim Mod_el, Status Code. STOLEN AND RECOVERED Drug Unit Ttpe chicle Propeny Recovered From: capon Ttpe. Weapon Dcxc. Type Coder COMPUTER HAROWAREISOF1WARE e-ic,,pi -,n Weight Unit ofmeasure Property Seciion: Serial Number. 998X812 Color: lee SioIx or L)amaecd $1 p Value Recovered: Victim / Complaint Signed Stgnaiure Card NA open, Iirceiw4 From Ottposuwn ofevidence / Property NA hick Properçt Recuiered From ITEM #10 Prs,peri os. et as-. Victim I alue Stolen Damayed $1,73400 Value Recovered Victim / Complaint Signed Signature Card: NA I chicle Propert; R covrcd From fr (

40 SR Parent SR# Created Date Czeated By Dist If Status Prlody PM PBGOMINT 0024 Open 3 Medium 4+ (F fflt ttc.. it,.- n C- C? tfl, fl.sj tj.,, Account CAN * BPfJ N Sates Orders SUPERVISOR OF ELECTIONS ooi Address Cfty StateiProvlnce Postal Code 5200 florwqot) AVE STE 2 JAG KSONVI LL FL Contact Name Work Phone # Requested ByIWho To See Requested By Phone If Postage By Phone N sandra (904) Acdvltles For SR q..-..y4pjt. Jf82 30D42.0 PBGCM:NT R SSYMiE- fthdrwa; 3X4AVPS 1E03 ( (1 ready for pickup PBCOMINT RIGSB MlCI-AEL VMJ)drawaI 3X4AV0 E / ready for pickup PBCOMINT RIGSYMlCHAEL W thdrawai 3-X4AVQS J / ready for pickup PBCOMINT RIGSBYMICHAEL Wthdrawal 3-X4AVQG / ready for pckup PBCOMINT RIGSBYMIChAEL thdrawai 3-X4AVQO I E03 ready for pickup PBCOMINT RIGS8MICHAEL Wthdraw& 3-X4AVQW V ready for p4clc%.tp PBCOMINT RIGSBYMICHAEL lmthdrawdl 3-X4AVR V ready far PSCOMIr4T RIGSBYMICHAEL Wthdrawal 3-X4AVRC ready for pkup PSCOMINT RIGSBY,MICHAEL Withdrawal 3-X4AVRK V ready for pickup PBCOMINT RIGSBY,MICHAEL thdrwa 3-X4AVRS ready for pckip P3C.OMINT RlGSBYMICHAEL Wthdrawal 3-X4AVSO V ready for pickup PBCOMINT RGSBY,MICHAEL Withdrawal 3-X4AVS ready for pickup PBCOMINT RIGSBMICHAEL Withdrawal 3-X4AVSG L/ ready for pckup P800MINT RLGSB\çMICRAEL Withdrawa? 3-X4AVSO LI ready for pickup PBCOMINT RIGSBY.MICF Wlthdrawaf ReportGefleratedforNEX8QMY ori9ils! L L3 L Page 1 of 6

41 -Zr,ryir. tfffl,jr4 f?c tic.. %-t. flf COt)a flpli,f IC t,t3tt SR I#: Parei SR#: Created Date: Created By: DIst 4: Status: Priozity: 3-206O AM X24 Opet Account: CAN *: BPN 4: Sa es Order 4: SLPERVIOR DF ELECTONS Address: City: SefProdne: Posta Code: 5200 ORWOQD AVE STE 2.JACKSONVILL F Contact Name: Work PIone: Requested ByiWho To See Requested By PIone %: Postage By Phone 4: sw1rich CAlLfJRG 9C c9 AcfivtIes Foi SR ?. -.0 T C CIi 8c(eai TStan.iupbyiDs PBCOMNT RGSB1,MiCHAE n&awa 7iVJ ce? w tha a. 0 q 73 t/ - /7S- J t9 - Report Geeiated for NEXBQMY Page 3of S 911at2005

42 IIONF VOTiNG Mr. Jerry Holland, Supervisor of Elections Duval County 105 E. Monroe St. Jacksonville, FL Dear Jerry, Per our records, listed below by serial number are the original voting equipment items, covered under our Extended Warranty Agreement, that were replaced during the year due to repair and/or maintenance issues. Equipment Original Equipment Replacement Equipment Description Serial Number Serial Numbers AccuVote-TSX AccuVote-TSX AccuVote-TSX AccuVote-TSX AutoMARK (VAT) AM AM If I can be of further service, please do not hesitate to contact me. Sincerely, Robert Pickett Regional Sales Manager 605 ONeill Dr Jamestown, NC Off: Ccli: robertpickettdominionelections.com

43 flt Schedule: Customer: Z 2 Phone (904) Fax (904) C gj P.O. Box Jacksonville. FL Southland Recycling Services Pickup Ticket 1)I. / (iiiputcr Input: Mgr Reicw: f_..;c. t-( ti?o. t1ch T instructions: - L c r J fr( Grades: Time: --- Nitles:- - Truck: Time Out: Finish Odom: Driver: Sn;? Time In:. Stan Odorn: 2 Date: I Coc Eq Picked Up:. Delivered: -V Customer Sienature * -. r ith [)river Remarks i- c j 7 Contact: i L c 1 /3 EY c Phone: bo 7 q x

44 I 1 ii

45 PROPERTY NUMBER - DCCI AREF1S ror COPY CO DETACH 6- PNi< COP 3- GREEN COPY 4- YELLOW CO Y SURPLUS PflQPERY 2 BLUE COP ACCOUNTING ACCOUNTING ACCOUNTING 5 3OLi NROD COPY F!NA. :SPDSIT O\ TO BE COMPLETED BY PROPERTY OFFICER MULTIPLE ITEMS MAY BE SUBMITTED - DATE PART 1 TRANSFER NO WHITE COPY OR SURPLUS MATERIAL TRANSFER OR DISPOSAL OF PERSONAL PROPERTY CITY OF JACKSONVILLE FLORIDA - - SERIAL NO. ON ONE FORM WITH AN ATTACHED LIST PURCHASING DIVISION ONE COPY WILL BE TO EACH PROPEPI Y OF FICER SIGNING THE TRANSFER. 2 AL TRANSFERS EXCEPT FROM THE CITY SLRPLUS YARD ARE SUBJECT TO PRIOR APPROVAL BY 1HE AVENUE FOR VEHICLES AND OTHER MOTOR POOL ITEMS. OR 1096 NORTH McDUFF AVENUE FOR ALL OTHER ITEMS OF SURPLUS. TAN3IDLE PROPERTY WHEN IT IS DElEPED BY THE DECLARER 0 E:1HER 253 COML1ONWEAJH J DECLARED SURPLUS I UNDERSTAND THAT PROPERTY BEING DECLARED SURPLUS MAY REQUIRE UP TO 30 DAYS BEFORE BEING RELIEVED 1 A COPIES OF THE TRANSFER OR DECLARA1 ION OF SURPWS 9ROPERTV FORM ACCOMPANY THE SIGNATURE OF SURPLUS PROPERTY OFFICER DATE a TRADED -- REQ. NO. DATE TRADED IN VALUE a SOLD AUOT. NO. DATE PROCEEDS SIGNATURE OF SURPLUS PROPERTY OFFICER DATE 0 OTHER a AUTHORIZE DECLARER TO DISCARD VIA CITY WASTE COLLECTION OR CITY LANDFILL SITE. 0 AUTHORIZE DECLARER TO CANNIBALIZE 0 HOLDING FOR FUTURE SALE AS SCRAP i HOLDING FOR FUTURE SALE AS WHOLE TO BE COMPLETED BY PURCHASING DIVISION ACKNOWLEDGED BY ACCOUNTING DIVISION SURPLUS DISPOSITION PART II J CITY (LOCAL) FUNDS. J FEDERAL (OR SPECIAL) GRANT FUNDS (SEE EXECUTIVE ORDER NO. 38). THIS PROPERTY WAS ACQUIRED FROM: CHECK ONE: a STOLEN POLICE REPORT ATTACHED OF ACCOUNTABILITY SIGNATURE OF ACCOUNTABLE OFFICER NEW EXACT LOCATION: DIVISION INDEX CODE GNATURE OF PROPERTY OFFICER j TRF D TO SIGNATURE OF ACCOUNTABLE OFFICER DIVISION INDEX CODE SIGNATURE OF PROPERTYOFFICER FROM CONTACT TELEPHONE ORIGINAL COST CONDITION: DESCRIBE BRIEFLY: ALSO MENTION APPR. COST OF REPAIR. IF APPLICABLE) PROPERTY DESCRIPTION PROPERTY TAG ATTACHED: a YES J NO

46

47 ATTACHMENT B CITY S ACCOUNTING DIVISION AUDIT RESPONSES

48 ACCOUNTING DIVISION August 11, 2010 MEMORANDUM TO: FROM: RE: Kirk A. Sherman, CPA, Council Auditor Kevin G. Stork, Comptroller; Chief, Accounting Division Accounting Division - Auditee Response to Supervisor of Elections to Finding 2-3 Capital Asset Management There are various chapters in the Municipal Code that provide guidance on capital assets management. The Accounting Division communicates the required procedures to all City Departments including State and Local Laws, and Standard Operating Procedures and includes them on the Accounting Division s Capital Asset area s (Capital Assets) website along with a PowerPoint presentation. Capital Assets and the Administrative Services Division monitor reports during and after due dates and send out reminders for items not received. When action is not taken these are channeled up to the Accounting Division s Fund Accounting Manager and the City Comptroller. In ASD they are channeled up to the Division Chief and Department Head. The City Comptroller has added a stronger step to the Accounting Division s process. A memo will be sent from his office advising the Divisions that do not meet the inventory deadlines they will be reported, in written form, to the City s Chief Administrative Officer and the Chief Financial Officer as non compliant. Section of the Ordinance Code requires lost and stolen property to be reported to the Council Auditor's Office at the same time it is reported to the Sheriff s Office. This information is also included in the information provided by Capital Assets and on the Accounting Division s Capital Asset website. Items listed as lost/stolen would occur in the year of the inventory report and would not represent multiple years as long as proper inventory procedures are followed. 117 West Duval Street, Suite 375 Jacksonville, Florida Phone: Fax: