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Rick Scott, Governor
Florida Department of Corrections, Secretary Michael D. Crews

Florida Department of Corrections
Timothy H. Cannon, Interim Secretary

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Bureau of Internal Audit

Mission

The mission of the Bureau of Internal Audit is to assist the Secretary and the Department in ensuring that: (1) agency goals are met; (2) all resources are used consistent with laws, regulations, and policies; (3) all resources are safeguarded against waste, loss, and misuse; and (4) reliable data is obtained, maintained, and fully disclosed.

Goals

Our primary purpose is to take a proactive approach in meeting our agency's needs and protecting its resources. Toward that end, we have established four key goals:

  • Provide quality audits, reviews, studies, and investigations

  • Report results to management in a timely manner

  • Use agency resources efficiently; and

  • Provide adequate audit/review coverage to mitigate risks.

Bureau Organization and Responsibilities

The Bureau of Internal Audit is comprised of three sections: (1) Audit, (2) Information Technology and (3) Contract Review reporting to the Bureau Chief who functions as the Director of Auditing. The Director of Auditing is a Certified Public Accountant (CPA).  The Bureau conducts compliance, performance and information technology audits and contract reviews per Section 20.055 Florida Statutes. The audits are conducted in accordance with the current International Standards for the Professional Practice of Internal Auditing published by the Institute of Internal Auditors.

Compliance/Performance Audit Section
The Audit Section employs an Audit Supervisor and six (6) auditors. Staff includes a Certified Internal Auditor (CIA) and a Certified Fraud Examiner (CFE). During FY 2006-07, the Audit Section completed 7 audits, 5 follow-up audits and 7 reviews. The reports issued are summarized in the chart below:

FY 2006-07 Audit Section
Report Number Project Title Report Issue Date
R06018F Salary Overpayment/Underpayment 7/17/2006
R06019F Healthcare – Co-Payments by Inmates 7/18/2006
R07004 Risk – Florida Kids Computer Program 7/21/2006
A06021 Employee Club – Lancaster CI 7/27/2006
A05010 Entering/Exiting DC Facilities 8/14/2006
A06015 DC Recycling Program 8/31/2006
R07008 Employee Club – Okaloosa CI 10/27/2006
A07002 LABCORP Contract 12/15/2006
A07001 Vending Services Contracts 1/8/2007
R07006 ARAMARK – Analysis of Per Diem Costs 1/10/2007
A07012F Entering/Exiting DC Facilities Follow-up 3/7/2007
A07003 Tool and Sensitive Item Control 3/7/2007
A07015F OPPAGA Report 06-37 Follow-up 3/15/2007
A07013F DC Recycling Program Follow-up 3/16/2007
R07017 Review of Staff Housing 3/26/2007
R07019 Operational Review – Hendry CI 4/13/2007
A07005 DC Water/Waste Water Contracts 4/24/2007
A07009 Jacksonville Memorial Hospital Contract 5/7/2007
R07014 Quality Assurance Review – Internal Audit 6/20/2007

IT Audit Section
The Information Technology Section employs one Audit Supervisor. This individual is a Certified Information Systems Auditor (CISA). This is a newly created section which will conduct IT audits/reviews.

Contract Management Review Section
The Contract Review Section (CMR) employs an Audit Supervisor and two (2) auditors. Staff includes a CIA and a Certified Government Audit Professional (CGAP). During FY 2006-07, the Contract Management Review Section completed 6 contract reviews and 3 follow-up reviews. The reports issued are summarized in the chart below:

FY 2006-07 Contract Management Review Section
Report
Number
Project Title Report
Issue Date
CMR06001 MCI Contract 7/24/2006
CMR06002 Prison Health Services Contract (PHS)Taylor CI 10/18/2006
CMR06003 Dr. Schlofman Contract 10/18/2006
CMR07001 Bridges of America Contract – St. Petersburg 1/7/2007
CMR07002 Bridges of America Contract – Polk 3/29/2007
CMR07004F MCI Contract Follow-up 4/4/2007
CMR07008F PHS Contract Follow-up – Taylor CI 5/19/2007
CMR07009F Dr. Schlofman Contract Follow-up 5/19/2007
CMR07003 Non-Secure Inc. Contract – Orlando PRC 6/25/2007


Selected Bureau Reports With System-Wide Impact

The Bureau views its audit/contract review mandate as an opportunity to not only identify site specific deficiencies and problems with a statewide impact, but also to identify areas that are well designed and are meeting management's goals. Three of the reports with statewide impact conducted by the Bureau of Internal Audit this fiscal year included:

Vending Services Contracts

Our audit indicated that the contractors are generally in compliance with the terms and conditions of the contract. The issues of non-compliance identified during the audit appear to be systemic deficiencies that were previously identified by staff in DC’s Bureau of Institutional Support Services during their contract monitoring process. We identified issues regarding DC’s lack of internal controls to verify the accuracy and completeness of commission revenues and the Bureau of Institutional Support Services’ inability to perform follow-up monitoring due to the limited number of personnel resources. These issues warrant management’s attention and allow us to provide recommendations to improve the effectiveness and efficiency of the contracts.

ARAMARK – Analysis of Per Diem Costs

We conducted this analysis as part of our continuing efforts to identify “problem-opportunity” issues within the Florida Department of Corrections (Department) operational matrix and bring them to management’s attention.

Aramark Contract C1927 was selected for review based on its high dollar amount ($71 million annually) and numerous irregularities brought to our attention involving its operations. When we started the review, we found that most documents related to food service performance prior to 2004 had been purged from Department files; however, during our examination of archives related to the initial 2001 Request for Proposal (RFP), we uncovered documentation that provides a baseline for performance comparisons and conclusions.  By comparing that baseline to the results of the contract manager’s recent reviews of Aramark’s performance, we were able to identify two critical issues worthy of management’s attention.  They are: 

  1. Feed rates have declined sharply since the contract’s inception in 2001, creating a windfall for the vendor and reducing the value of the services provided without a proportionate decrease in per diem rates charged to the Department.
  2. During the first 24 months following the contract’s inception, the food service master menu was changed repeatedly, allowing the vendor to substitute less costly meat products such as ground turkey for previously required beef products. This cut the vendor’s production costs with no proportionate decrease in per diem rates charged to the Department.

These two dynamic changes in the cost/value balance of the contract suggest that the Department’s needs would be better served either by modifying and re-bidding the contract to address the above issues, or by restoring food service as an in-house operation.

MCI Inmate Telephone System (ITS) Contract Review
Although identifying several issues requiring management’s attention, we determined that overall, MCI has provided an effective ITS which meets the operational and fiscal specifications enumerated in the contract.

We also identified an alternative to the existing collect-call only ITS that could provide cost savings to inmate family and friends and yield adequate revenue to DC and the contractor.

To reduce the cost to inmate families and friends and take advantage of current technology, DC should consider offering an ITS that allows prepaid/debit and collect call capabilities. Rates for prepaid calls are significantly less than a collect call because these calls can eliminate both the surcharge cost and the risk of uncollectible or bad debt to the telephone provider. Currently, telephone provider contracts with the Departments of Corrections in Virginia, Ohio and Missouri offer prepaid discounts ranging from 10 to 20 per cent of the normal collect call rate. It is highly probable that the reduction in cost to the call recipients will cause an increase in the volume of calls made which could increase the net revenue to DC.

Prepaid calls offer a win/win situation for all parties involved. It provides a reduction in cost to inmates and their family and friends, eliminates bad debt to the telephone provider and continues to provide revenue to DC without compromising security.  In addition to offering prepaid calls, DC could increase the inmate telephone call list from 10 individuals to 15 individuals and extend calls longer than the now 15 minutes.

We also identified five significant issues in contract performance and oversight which we feel warrant management’s attention. They are as follows:

Finding No. 1: Operations Contract Managers did not monitor and document contractor performance.

Finding No. 2: Management neglected to assess $722,000 in liquidated damages for MCI’s failure to complete routine service repairs within 24-hour time limits.

Finding No. 3: New inmate PIN numbers are not being processed and activated timely.

Finding No. 4: MCI’s CPA firm’s methodology in testing for reliability of the ITS has weaknesses in that the same telephone numbers have been called since the inception of the contract in 2001.

Finding No. 5: MCI has not provided proof of required performance guarantee.