The Need for a Centralized Comptroller for the Three Ad Authorities
The recent fiscal problems of several ad authorities, the continued display of ineptitude of the various executive directors, and the recent revelations by the outgoing Halifax Advertising Authority (HAAA) Executive Director, shows that there remains continued problems with the handling and use of tax funds by these County authorized government agencies. The fact that the Executive Directors have some responsibility for the proper encumbrance and subsequent disbursement of government money has clearly proven to be more a goal than a reality, especially with the HAAA and SVAA operations. But given they represent the majority of the expenditures, the failures of their Executive Directors to pay attention to business warrants immediate County action just a certain as it did when the County took over the SVAA some two years ago. And that action is the implementation of an Ad Authority Comptroller's Office within County government that will assume and retain all control over fiscal operations of the three Ad Authorities.
A recent failure on the part of the SVAA to match purchase orders to invoices is a good example of how lax their standards are and how such failure to control the money could have resulted in far more serious action by other governmental authorities. These failures, coupled with the absence of an approved marketing plan further frustrate accountability for their actions. They issued a series of purchase orders, all to the same vendor for Fall BeachWeeks activity. The subsequent invoices requested payment to a different vendor at differing addresses, albeit another corporation under a larger umbrella. (Click HERE to see the referenced PO and subsequent invoice with different names) When the SVAA Office Manager authorized this change (without benefit of revising the purchase order, which is an accepted accounting practice), some questions were raised by the SVAA Treasurer about why the change was asking, improperly, for payment to the new vendor. When pointed out, it is our understanding that the County Attorney had the payment reversed to the original vendors, as he should have. Accepted financial and accounting standards as well as subsequent auditing requirements, do not allow for a payment to a vendor who is not the vendor of the purchasing order just because that vendor requests it. Part of the reason for this failure appears to be an unacceptable purchase order format used by the SVAA, raising the question as to what is used by the other authorities and who is checking on them (See below for an explanation of the problems with the PO). Certainly not the County Council who has again failed in their fiscal oversight responsibilities.
Such an office might be comprised of a professional and trained comptroller, supported by one or two purchasing/invoicing qualified staff. The requirements for the Ad Authorities themselves to develop their budgets and controlling annual marketing plans would not change, nor would the need for appointed board oversight of these, at least not for the immediate future. What would change would be the process whereby funds approved by the boards and subsequently by the County Council, would be encumbered and then disbursed. The process relating to contracts, credit card bills and marketing initiatives would flow somewhat like this:
1. On an annual basis the Executive Director of each as authority would submit to the AA Comptroller the approved budget and marketing plan for that fiscal year. The critical element here is the marketing plan, which remains non-existent at all three boards.
2. As needed, the authority ED, with or without board approval or review (depending on spending limits) would prepare a purchase order for services.
3. That purchase order would be sent to the AA Comptroller, who would match is against the approved budget and marketing plan.
4. If the request is documented within the approved budget and marketing plan, the comptroller countersigns the purchase order and forwards to the vendor, with a notice of action sent back to the ad authority ED; if it does not, the purchase order is returned to the appropriate ED marked as denied, noting a change to the budget and marketing plan is required.
5. Once services have been rendered and the vendor submits an invoice to the AA ED, that invoice, along with a copy of the original purchase order and appropriate documentation to demonstrate that the service has been rendered, will be forwarded to the AA Comptroller.
6. After validating the paperwork, the AA Comptroller will either approve payment and forward to the appropriate AA check cutting operation and notify the AA ED of such action, or if not approved, return to the appropriate AA ED for further documentation.
7. The AA Comptroller would also review and approve all bills of housekeeping nature such as utilities, etc., but with an abbreviated process (Click HERE for a flow chart of this recommendation )
The above assumes two things:
1. A universal purchase order and, either that used by the County or one designed specifically for AAs use will be designed and placed in service as the current ones lack numerous fiscal safeguards and processing controls (click HERE to see an annotated sample purchase order from the SVAA).
2. That a universal policy on purchasing and invoicing, that follows the above general guidelines, but which is more specific regarding the steps and forms, along with data flows and databases needed to support the system, has been placed into service.
Such a comptroller system will ensure that all funds expended are done in accordance with an approved annual budget and marketing plan during the course of business as opposed to errors being found after the fact by audits. This is not to say that audits are not necessary and required, but only that a comptroller system is live and active as part of the daily routine of operations and is but another of the needed safeguards needed to control the use of these tax funds, which are subject to highly politicized expenditure pressure, when they should be focused on increasing tourism to Volusia County through prior and adequate planning and evaluation procedures that are in essence annual marketing plans.
In presenting this solution, it should be stressed this is but one of several steps that are necessary to remove this fiscal function from the political circus and return it to the marketing arena managed by professionals where it belongs. You will hear more about the ultimate solution in another story in our continuing series on the Ad Authorities.