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M Ma ar r c ch h 1 15 5, , 2 20 01 12 2











P Pr r e ep pa ar r e ed d B By y: :


Table of Contents





Transmittal Letter .................................................................................................................. 1

Executive Summary ......................................................................................................... 2 - 3

Background ...................................................................................................................... 4 - 6

Objectives and Approach ................................................................................................. 7 - 8

Observations and Recommendations ............................................................................ 9 - 15

Appendix:
Process Maps



























Page 1







March 15, 2012


The Audit Committee of the Board of Directors
Enterprise Florida, Inc.
800 N. Magnolia Ave., Suite 1100
Orlando, FL 32803


Pursuant to the approved 2011/2012 internal audit plan, we hereby submit our internal audit report of
purchases, payables and cash disbursements. We will present this report at the next regularly scheduled
Audit Committee meeting on April 10, 2012.

Our report is organized in the following sections:

Executive Summary - This provides a summary of the issues related to our review of the
purchases, payables and cash disbursements process.
Background - This provides an overview of the purchases, payables and cash disbursements
functions.
Objectives and Approach - The internal audit objectives and focus are expanded upon in this
section as well as a review of the various phases of our approach.
Observations and Recommendations - This section gives a description of the observations and
recommended actions.
Appendi x This section includes the following documentation, as validated by management:
o Process maps depicting the flow of in-scope processes.

As described in our objectives and procedures outlined on pages 7 and 8 of this report, the findings and
conclusions are based on our analysis of the processes, documents, records and information provided to
us by management. If our scope were to have been expanded, including performance of additional
procedures and/or sample sizes in the time period under review, it may have resulted in additional
findings.

We would like to thank EFI and all those involved in assisting us in connection with the review of the
purchases, payables and cash disbursements processes.

Respectfully Submitted,


McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
7351 Office Park Place
Melbourne, Florida 32940-8229
O 321-751-6200 F 321-751-1385
www.mcgladrey.com

























Executi ve Summary
















Purchases, Payables and Cash Disbursements Enterprise Florida, Inc.
Page 2

EXECUTIVE SUMMARY

The Risk Assessment initially prepared for Enterprise Florida, Inc. included Purchases, Payables and
Cash Disbursements as a high risk process due to the nature of the risks involved and the volume/dollar
amount of transactions associated with the processes. Each internal audit that has been performed to-
date has included relative controls and testing around purchases, payables for the in-scope processes
included with that report, including Follow Up (issued J une, 2008), Contract/Grant Compliance (issued
J une, 2008), International Offices Review (issued October, 2007), and the SAS 112 Readiness Control
Design Analysis (issued September, 2007). This report expanded the scope of those previous audits to
encompass all types of disbursements made by the company. Where practical, we have relied upon the
design and effectiveness analyses performed during those audits for the purposes of this report.

We reviewed the design adequacy and operating effectiveness, including detailed testing of transactions,
of the internal control structure in place over the purchases, payables and cash disbursements
processes. Where included in our random sample selections, we performed limited testing of payroll
disbursements and contract approval documentation. During the course of our work, we discussed the
control design and operating deficiencies with management. Our observations and recommendations for
improving controls are described in detail in this report, along with managements response.

We have assigned relative risk factors to each issue identified. This is the evaluation of the severity of
the concern and the potential impact on the operations. Items rated as High are considered to be of
immediate concern and could cause significant operational issues if not addressed in a timely manner.
Items rated as Moderate may also cause operational issues and do not require immediate attention, but
should be addressed as soon as possible. Items rated as Low could escalate into operational issues,
but can be addressed through the normal course of conducting business. There are many areas of risk to
consider including financial, operational, and/or compliance as well as public perception or brand risk
when determining the relative risk rating.

A summary of observations is provided below.

Observation Summary
Relative
Risk
1. Segregation of Duties
Two employees of the Finance and Accounting team have conflicting duties over cash
management, purchasing and accounts payable. The company has attempted over the
last two fiscal years to reduce the impact of these conflicts. We noted compensating
controls in place to monitor activities under conflicting duties, including review of the
financial statements and check registers by senior leadership.
High
2. Conflict of Interest and Related-Party Confirmati on
There is no monitoring control that requires employees to certify on a periodic (i.e.,
annual) basis that no related-party or other conflicts of interest exist. We also noted that
the company did not have copies or complete information about whether the Board
members had filed the State required Full and Public Disclosure of Financial Interests
information with the Florida Commission on Ethics, in order to evaluate any known
related party interests. Due to the nature of the entitys Board as a publicly-appointed
body and the nature of Enterprise Floridas business, we expected to, and did note
known relationships with Board members reflected in the entitys vendor listing.
Moderate
3. Vendor Setup and Approval
There is no formal vendor approval process and policy. We reviewed the process
surrounding the setup of new vendors and determined there is an informal procedure in
place, but it is not consistently applied. We further noted there was no W-9 or adequate
substitute (with certifications from the vendor on the validity of the information) available
for 10 of 35 vendors selected for testing. For 1 of these, we also noted the taxpayer
identification number was not captured in the Great Plains system.
Moderate
Purchases, Payables and Cash Disbursements Enterprise Florida, Inc.
Page 3

EXECUTIVE SUMMARY - CONTINUED

Observation Summary
Relative
Risk
4. Master Vendor Listing
We noted there is no formal, periodic review of the vendor master listing for items such
as duplicate or inactive vendors, comparison to employee addresses for unusual
activity, or a cross-check for related parties with employee names/known relationships
or Board members. As such, we identified duplicate and idle vendors in the active
vendor listing.
Moderate
5. Employee Federal Income Tax Withholding Errors
Federal income tax withholdings for 2 of 10 employees selected for testing were
improperly calculated in the payroll system because the rate of withholding did not
match the employees Form W-4 Employees Withholding Allowance Certificate on file.
Moderate
6. Contract Review Procedures
Contract review procedures for 4 of 10 contracts tested were not completely followed
and included exceptions to policy related to the date of approval (3 of 4) and the
required conflict of interest certifications by the reviewers (1 of 4). The contracts were
approved by all required parties and we noted the approvers were part of the contract
review process prior to final execution and signoff.
Low


























Background
































Purchases and Cash Disbursements Enterprise Florida, Inc.
Page 4

BACKGROUND

Enterprise Florida, Inc. (EFI) is considered the States economic development arm, receiving funds from
the State to perform economic development duties in accordance with an agreement with the State. As
of J uly 1, 2011, the Florida Department of Economic Opportunity (DEO) administers the contract with EFI.
Prior to that, it was administered by the Office of Tourism, Trade and Economic Development (OTTED).

The Risk Assessment initially prepared for EFI included Purchases, Payables and Cash Disbursements
as a high risk process due to the nature of the risks involved and the volume/dollar amount of
transactions associated with the processes. Total expenditures reported in the companys audited
financial statements for the year ended J une 30, 2011, were $19.6 million. The total expenditures for the
year ended J une 30, 2010, were $22.1 million. The categories of expenditure for the years ended J une
30, 2011, and J une 30, 2010, were as follows:

Category June 30, 2011 June 30, 2010
Payroll and related costs (including benefits) $ 6,630,436 $ 6,148,837
General and administrative 5,816,148 4,909,431
Grants to sub-recipients (pass-throughs) 2,988,711 8,282,323
Professional fees 4,009,099 2,552,983
Other (including non-cash depreciation) 160,486 245,682
Total $ 19,604,880 $ 22,139,256

Each internal audit that has been performed to-date has included relative controls and testing around
purchasing for the in-scope processes included with that report, including Follow Up (issued J une, 2008),
Contract/Grant Compliance (issued J une, 2008), International Offices Review (issued October, 2007),
and the SAS 112 Readiness Control Design Analysis (issued September, 2007). This report expanded
the scope of those previous audits to encompass all types of disbursements made by the company.
Where practical, we have relied upon the design and effectiveness analyses performed during those
audits for the purposes of this report.

Purchasing
EFI is not a state agency as defined by Florida Statute 287.012 and as such, is not required to follow
statutory requirements for purchasing and competitive selection. EFI has developed internal policies and
procedures using statutes as a guideline where practical. The Purchasing and Cash Disbursements
Policy requires that a competitive selection process be followed for total purchases greater than $25,000.
The State has thresholds starting at $20,000. As part of their agreement with the State, EFI is required to
furnish copies of the purchasing and contract policies and procedures for the States review. EFI has not
received notification from the State that the policies are not adequate or acceptable.

Non-Economic Development Goods and Services
EFI prepares an annual budget that is approved by senior leadership and presented to the Finance and
Compensation Committee, Executive Committee, and Board of Directors. The budget includes significant
purchases, such as planned trade shows and events or missions, as well as budgeted line items for each
department. Purchase orders are initiated and prepared by business unit personnel, and approved
according to the Purchasing and Cash Disbursements Policy as follows:

Up to $1,000 Business Unit Director
$1,001 - $2,500 Senior Director or Vice President (VP) of the Business Unit
$2,501 - $5,000
One of the following: Senior Vice President (SVP) of
Business Unit, Chief Operating Officer (COO), or
President/Chief Executive Officer (CEO)
$5,001 - $100,000
Joint signature of SVP of Business Unit and one of the
following: COO or President/CEO
Over $100,000 * Approval by Executive Committee

*Effective 2/7/12, the President (CEO), Executive Vice President (COO) and Chief Marketing Officer have unlimited signing
authority. Would still be reported to and/or approved by the EC, but wont preclude the execution of the contract.
Purchases and Cash Disbursements Enterprise Florida, Inc.
Page 5

BACKGROUND - CONTINUED

Purchasing continued
Purchases less than $5,000 may be approved by the SVP of the business unit and generally do not
require a purchase order (PO). A PO is required for purchases of fixed assets, promotional items over
$1,000, office supplies, technology and technology-related equipment and supplies, and purchases
unrelated to economic development goods and services. Purchases that are recurring, such as rent or
utility payments and payroll and benefit related items do not require a purchase order. The Senior
Accountant reviews and verifies the purchase order for approval, assigns a sequential PO number using
an access database, and monitors open purchase orders and copies the VP of Finance and Accounting
on the PO.

Economic Development Goods and Services
EFIs agreement with the State requires any contract established and/or managed by EFI to include
specific language and requirements to ensure appropriate use of state funds and compliance with
statutes or specific program requirements. As noted above, EFI does not require competitive selection
for contracts under $25,000. However, each contract must be documented on a contract request form
and Contract Administration works with the program or contract managers to determine the appropriate
course of action depending on the type of contract (services, grant, trade event, etc.) Contracts in excess
of $25,000 are approved using a Contract Review Sheet. Sole sourcing is allowed but must be approved
by the President/CEO, in addition to the other regularly required levels of approval, and properly justified
on a Sole Source form.

Pass-through appropriations from the State do not require competitive selection documentation, as those
are selected by the State and then administered by EFI.

Conflicts of Interest
EFI follows IRS guidelines for disclosure of family and business relationships, which allows for
transactions that are conducted in the ordinary course of business and at an arms length to be omitted
from the IRS filings. Board members are required by the State to file an annual Full and Public
Disclosure of Financial Interests form with the Florida Commission on Ethics. EFI legal counsel has
developed guidelines for ensuring that EFI Board members do not have authority over deciding contracts
with organizations where they may have a conflict of interest. These guidelines establish a threshold of
$100,000 and require a 2/3 majority vote of the Board. EFI also asks the approvers and contract
managers who may have a direct influence with a contractor or consultant should declare a conflict of
interest and not serve as the contract manager. The Contract Review Sheet includes a space for this
declaration.

Accounts Payable and Cash Disbursements
Invoices for goods and services are approved by Business Unit personnel as required by policy.
Accounting department personnel are responsible for processing invoices, running reports, matching
invoices with applicable purchase orders and receivers, sending checks to the vendors, processing wire
transfers and filing supporting documentation. The Senior Accountant is responsible for reconciling the
general ledger with the accounts payable subsidiary ledger. Disbursements are processed weekly for
any invoice that has been properly approved and matched to supporting documentation.

There are multiple bank accounts used for disbursement activity. The master account is used for most
general and non-grant disbursements. There are also accounts for specific grants which are used to
keep grant funds segregated for recordkeeping and monitoring purposes. EFI also has several accounts
designated for investments related disbursements. Each account has designated account signers and
the check signing authorities are listed in the Purchasing and Cash Disbursements Policy. Wire transfers
are also made from these accounts, with initiation and approval segregated.

The cash and investment accounts are reconciled monthly by the Senior Accountant and the
reconciliations are reviewed and approved by the VP of Accounting and Finance. Disbursements are
reviewed weekly by the SVP of Administration and COO, and financial reports are presented at each
Finance and Compensation Committee and Executive Committee meeting and placed on the consent
agenda for approval by the full Board of Directors.
Purchases and Cash Disbursements Enterprise Florida, Inc.
Page 6

BACKGROUND - CONTINUED

Statistical Data Fiscal Year 2010/2011

The tables below show the disbursements by account, including the average and median dollar amounts
per transaction and the totals. The master account has been further broken down into checks versus wire
transfers.


Fiscal 2010/2011

Disbursements Data by Account*
Checking Account Name Number
Total Dollar
Amount
Average
Dollar
Amount
Median Dollar
Amount
Master account 1689 $ 13,176,669 $ 7,801 $ 904
Corporate / Private funds 110 $ 199,571 $ 1,814 $ 140
Employee Benefit FSA 92 $ 30,753 $ 334 $ 192
Grants and other Administered Programs 235 $ 11,761,915 $ 165,493 $ 39,854
Investments and Capital Programs 75 $ 2,079,756 $ 125,301 $ 24,067
*These amounts vary from the total audited expenditures noted on page 4 due to difference in cash and accrual basis accounting as
well as pass-through activities that are not recognized on the companys financial statements.

Master Account Information Fiscal Year 2010/2011

Number of checks written 1414
Total dollar value of checks written $5,526,016
Average dollar value of checks written $3,908
Median dollar value of checks written $693
Number of wire transfers/ACH 276
Total dollar value of wire transfers/ACH $7,650,653
Average value of wire transfer/ACH $27,720
Median value of wire transfer/ACH $14,980

Organizational Chart Fi nance and Accounting


Vice President,
Finance & Accounting
Senior
Accountant
Accountant
Vacant
Accounting
Assistant























Objectives and Approach

























Purchases and Cash Disbursements Enterprise Florida, Inc.
Page 7

OBJECTIVES AND APPROACH

Objectives
Objectives of the internal audit of Purchases, Payables and Cash Disbursements include the following:
Document the purchases, payables and cash disbursements processes and related internal
controls.
Assess the risks and existing key controls against benchmark controls for similar processes.
Evaluate access controls and segregation of duties within the processes.
Determine if there are controls for monitoring purchases and expenditures for compliance,
authority and accuracy.
Determine if there are controls for monitoring related party transactions and conflicts of interest.
Determine and evaluate if records and documentation are sufficient to establish an audit trail for
all transactions involving disbursements.
Evaluate compliance with applicable Florida Statutes and EFI policies & procedures.
Determine the adequacy and operating effectiveness of the control structure over purchases,
payables and cash disbursements; and make recommendations when considered necessary.

Approach
Our audit approach consisted of three phases:

Phase I - Understanding and Documentation of the Process
During the first phase of our approach, we met with those involved with the purchases, payables and
cash disbursements processes to discuss the scope and objectives of the processes and obtain
preliminary data. In order to obtain an understanding of the process and identify related controls, we
conducted interviews, obtained detailed documentation and documented the processes. We reviewed
Florida Statues and EFI policies and procedures related to purchases, payables and cash disbursements.
We also reviewed our previously issued internal audit reports for relevant processes and controls related
to those functions.

Phase II - Detailed Testing
The purpose of this phase was the execution of applicable tests of compliance and controls around the
purchases, payables and cash disbursements processes. Each internal audit that has been performed
to-date has included relative controls and testing around purchasing for the in-scope processes included
with that report, including Follow Up (issued J une, 2008), Contract/Grant Compliance (issued J une,
2008), International Offices Review (issued October, 2007), and the SAS 112 Readiness Control Design
Analysis (issued September, 2007). Where practical, we have relied upon the design and effectiveness
analyses performed during those audits for the purposes of this report.

We performed sampling techniques on disbursements made between J uly 2010 and December 2011.
We utilized sampling and other auditing techniques as follows to meet our audit objectives outlined above
and performed the following:
We utilized computer assisted audit techniques to perform the following:
o Reviewed vendor master listing to active employee listing.
o Reviewed vendor master listing for duplicate names and addresses.
o Reviewed purchase order listing for sequence and duplicated purchase orders.
We reviewed segregation of duties over user access within Great Plains.
We selected a sample of disbursements and verified the following:
o Bid/quote procedures were followed where applicable under policy.
o Purchase orders were properly approved according to policy.
o Supporting documentation was on file.
o Disbursements were properly authorized according to policy.
o Payments were made timely according to invoice terms.

Purchases and Cash Disbursements Enterprise Florida, Inc.
Page 8

OBJECTIVES AND APPROACH - CONTINUED

Approach - continued

Phase II - Detailed Testing
We selected a sample of expense reimbursement disbursements and verified the following:
o Disbursements were properly authorized according to policy.
o Authorization form was on file and properly signed by employee and approved by a
supervisor according to policy.
o Expenditures presented for reimbursement were properly supported with documentation.
We reviewed the controls over cash disbursements, including wire transfers.
We reviewed a sample of the monthly accounts payable reconciliations to general ledger.
We reviewed a sample of the monthly bank reconciliations.
We reviewed the aged accounts payable detail listing for vendors with debit balances.
We verified financial reports were presented to the Finance and Compensation Committee and
Executive Committee.
We selected a sample of contracts and verified the following:
o Grantee selection process was properly documented on ranking sheets.
o Executive Committee pre-approved and/or reviewed contracts where required by policy.
o Conflict of interest statements were obtained from proposal evaluators and contract
approvers.
o Contract review sheet was signed by contract approvers prior to execution of the
contract.
We selected a sample of employee pay disbursements and performed the following testing
relating to the payroll and human resource functions:
o Tested payroll for accuracy by verifying the time reported and pay rate to properly
approved supporting documentation.
o Verified accuracy of tax and benefit withholdings.
o Verified that personnel information was properly input into the human resource and
payroll systems.
o Verified that the employees offer letter was properly approved and the personnel file was
organized.
o For terminated employees, verified that the termination date was input accurately,
employee did not receive a paycheck after their termination date and access to systems
and corporate credit card usage was properly removed.
o Reviewed overall organization of sampled employee file.
We verified that a completed State required financial disclosure and conflict of interest
information was on file for all board members.

Phase III - Reporting
At the conclusion of our audit, we summarized our observations related to the purchases, payables and
cash disbursements processes for EFI. We conducted an exit conference with management and
discussed the details of the report with them. Managements responses to our observations and
recommendations are included with this report.





























Observations and Recommendations























OBSERVATIONS AND RECOMMENDATIONS
Page 9
Rating Observation Recommendation Management Response
High 1. Segregation of Duties

Two employees of the Finance and Accounting
team have conflicting duties over cash
management, purchasing and accounts payable.

The company has attempted over the last two
fiscal years to reduce the impact of these
conflicts; however the schedule on the following
page shows the conflicts which remain.

We noted compensating controls in place to
monitor activities under conflicting duties,
including review of the financial statement and
check registers by senior leadership outside of the
Accounting and Finance department. The bank
used for wire transfers also has built in controls
requiring dual users on every transaction.

During our fieldwork, it was also noted that
Accounting was actively interviewing for a staff
position, and the new Chief Operating Officer had
just been brought on board. These additions to
the organizational structure should allow
management to more fully segregate and/or
expand monitoring related to the risks of lack of
segregation of duties.



Due to staffing limitations in the Finance and
Accounting department, access cannot be fully
segregated. With the expansion of personnel, we
recommend the duties be segregated as follows:
The Senior Accountant should setup vendors
(upon approval See Issue #3) and process
approved invoices.
The Senior Accountant should initiate wires, and
prepare cash and G/L account reconciliations for
their respective areas.
The VP of Finance and Accounting should
approve checks/wires, review reconciliations, and
prepare financial statements with analysis for
review and approval by the leadership team and
Board. Ideally, the VP of Finance and
Accounting should have read-only access to the
Great Plains system. If this is not practical,
manual segregation of duties should be strictly
followed.
J ournal entries should not be prepared and
posted by the same individual. Management
should consider batch-posting journal entries so
that one person can enter and another person
review and post the entries.

We also recommend that management review the
transaction limits within the online banking system
and set them appropriately for what is needed given
expected activity after the proposed banking service
contract is awarded.


Response: During the period of time
under audit, the Finance and
Accounting team consisted of three
people: Vice President, Finance and
Accounting; Senior Accountant, and
Accounts Payable Clerk. Proper
segregation of duties was not possible
due to the limited resources. An
additional accountant has recently
been added and we are working to
cross-train her among the various
functions.

Management has evaluated these
recommendations and is willing to
accept these risks as we believe
adequate compensating controls are
already in place.

Any changes to the online banking
system will be made after the banking
services contract has been awarded.

ECD: J une 30, 2012

Responsibl e Person:
Pamela Murphy,
VP of Finance and Accounting
OBSERVATIONS AND RECOMMENDATIONS
Page 10
Segregation of Duties Matrix:

A B C D
Custody
Access to enter wire transfers with SunTrust * X X X
Access to release wire transfers with SunTrust * X X
Recording
Access to maintain/modify vendor master file X X X
Access to enter and post vendor invoice X X X
Access to enter and post credit memo X X X
Access to post disbursement to vendor account X X X
Access to post journal entries X X X
Reconcil iation
Perform accounts payable reconciliation X
Perform cash account reconciliations X
Authorization
Approve accounts payable reconciliation X
Approve cash account reconciliations X


Invoice or purchase approval X
Vendor approval X
Access to modify general ledger X X X

Investments (Capital Programs)
Perform investment bank account reconciliations

X X
Signature authority on investment account checks/wires X X
Approve investment bank account reconciliations X

A = Vice President, Finance and Accounting

B = Manager, Capital Programs

C = Senior Accountant
D = Accountant
*Note: SunTrust user controls require a personal identification number (PIN), and the same PIN cannot be used for initiating and
releasing the same transaction.
OBSERVATIONS AND RECOMMENDATIONS
Page 11
Rating Observation Recommendation Management Response
Moderate 2. Conflict of Interest and Related Party Confirmation

We noted the Company Ethics policy (located in
the Employee Handbook) includes a section on
Conflicts of Interest and states that they should
be avoided, even in appearance. There is no
monitoring control that requires employees certify
on a periodic (i.e., annual) basis that no such
conflicts exist.

Further, we noted that the company routinely
follows IRS guidelines for family and business
relationships as required when filing their annual
tax return. These guidelines suggest that
transactions that occur in the ordinary course of
business and at an arms length are not required to
be disclosed. However, we noted the company
was unaware of whether the Board members had
filed the State required Full and Public Disclosure
of Financial Interests information with the Florida
Commission on Ethics. We were able to verify with
the State that these were up-to-date through
December 31, 2010 reporting requirements, which
were due by J uly 1, 2011. The December 31, 2011
disclosures are not due yet. Due to the nature of
the entitys Board as a publicly-appointed body of
influential business executives, and the nature of
Enterprise Floridas business, we expected to see,
and did note known relationships with Board
members reflected in the entitys vendor listing.
These relationships should be compiled and
presented annually to the full Board for
transparency and full disclosure.

The existence of conflicts or related party interests
is common in business. Without a formal protocol
for disclosure and evaluation of the relationships
both internally and by the Board, the risk of
negative public perception related to the improper
use of funds increases.


In addition to the recommendations in observation #3
for a formalized vendor approval process, Human
Resources should administer an annual certification to
employees via email or internet survey stating that
there are no conflicts of interest with any of the
vendors in the active vendor listing, including pass-
through agencies.

Further, management should obtain copies of the Full
and Public Disclosure of Financial Interests
statements filed by Board members each year.
Known relationships should be compiled and
compared against the active vendor listing for possible
conflicts or related-party transactions.

Any existing and/or newly identified relationships must
be disclosed and appropriate steps taken, including
but not limited to further disclosure to senior
leadership, the Board or the State; proper
documentation and evaluation of the relationship; and
possibly refraining from doing business with the
related person or entity.

Response: Rather than annually
poll all employees to disclose if a
conflict of interest exits,
management would like to know if a
conflict exists prior to executing a
contract or processing a payment to
a vendor. The contract policies
already include required disclosures
for key personnel involved in
executing a contract, and will be
extended to include the contracts
coordinator and contract manager.
This disclosure will be added to all
purchase orders and requests
formats in the future.

Management will request copies of
the Full and Public Disclosure of
Financial Interests statements in the
future and forward to accounting to
verify against the vendor list.

Relationships within the normal
course of business and conducted at
arms length with the same terms as
offered to the general public need
not be disclosed.

ECD: J une 30, 2012

Responsibl e Person:
Pamela Murphy,
VP of Finance and Accounting
OBSERVATIONS AND RECOMMENDATIONS
Page 12
Rating Observation Recommendation Management Response
Moderate
3. Vendor Setup and Approval

The organization has several operational triggers
for new vendor relationships. Contract review
sheets, grant applications, purchase orders, check
requests, vendor invoices and other
documentation are used to set up a vendor in the
Great Plains system. This can occur after the
purchase has already been completed. The
Finance and Accounting department obtains a
Form W-9 Request for Taxpayer Identification
Number and Certification in order to track whether
to issue certain tax forms to vendors at the end of
the calendar year.

We noted the following in relation to vendor setup:
There is no formal vendor approval process
and policy. We reviewed the process
surrounding the setup of new vendors and
determined there is an informal procedure in
place, but it is not consistently applied.
During our testing, we noted there was no W-9
or adequate substitute (with proper
certifications from the vendor on the validity of
the information) available for 10 of 35 vendors
selected for testing. For 1 of these, we also
noted the taxpayer identification number was
not captured in the Great Plains system.

Without formal vendor approval, the risk of
unauthorized, duplicated, or related-party vendors
increases. Coupled with observation #2 for
vendor master file review, the risk is more
significant. Without adequate documentation of
vendors certification of their taxpayer status (i.e.,
individual, corporation, etc.), required IRS tax
forms may not be filed appropriately.


We recommend that management develop a formal
vendor approval process which includes approval of
vendors before purchases are made and a vendor
form, including completion of a W-9 form for all new
U.S.-based vendors.

Steps of the approval and verification process should
include:
If a Florida corporation, validate the vendor's
status as an active corporation on the
Department of States website at
www.sunbiz.org.
Compare the vendor name/address to existing
vendor names/addresses.

If the above is performed during the vendor set up
process, the risk of setting up fictitious and/or
duplicate vendors is reduced.

In addition to the above, periodic review of the
vendor master file (see observation #4) and annual
certification of conflicts of interest or related parties
(see observation #2) will help to ensure vendors are
real and appropriately classified for tax reporting
purposes, and purchases are occurring at arms-
length.

Response: With recent proposed
changes by the IRS to 1099 reporting
over the past two years accounting
has already implemented more
vigorous procedures requiring W-9s
for all new US based vendors prior to
processing payments. All new W-9s
are matched to the IRS tax payer
identification system. All contracts
require that all new vendors submit a
W-9 with their contract.

In addition to the above, accounting
will implement a new procedure to
verify if a Florida corporation is active
on the Department of Corporation
Website prior to processing payment.

The vendor master file is already
reviewed prior to processing every
payment to verify addresses.

ECD: J une 30, 2012

Responsibl e Person:
Pamela Murphy,
VP of Finance and Accounting
OBSERVATIONS AND RECOMMENDATIONS
Page 13
Rating Observation Recommendation Management Response
Moderate 4. Master Vendor Listing

We noted there is no formal, periodic review of the
vendor master listing for items such as duplicate or
inactive vendors, comparison to employee
addresses for unusual activity, or a cross-check for
related parties with employee names/known
relationships or Board members.

We performed computer assisted audit techniques
to identify potential duplicate and inactive vendors
as of 12/31/2011. The total population of active
vendors was 3,012. We noted the following with
respect to the vendor master file in Great Plains:

Duplicate Vendors:

Similar vendor name and same
address
25
Same vendor name and similar
address
19

Inactive Vendors:

Vendors with no disbursements
since 2009 that have not been
inactivated
2,570
Vendors with no disbursements that
have not been inactivated
196

Duplicate and inactive vendors in the master file
could lead to inefficiencies, possible delay in
payment of invoices, and increase the likelihood of
duplicate payments or mismanagement. Note we
did not find any duplicate payments or
inappropriate expenditures in our testing of
disbursements. Delays in processing could lead to
finance charges on purchases.


As recommended in Issue #3, controls should be
implemented over vendor setup to reduce the
likelihood of creating duplicate vendors in the system
in error. An annual review of the vendor master file
should also be conducted to identify potential
duplicate vendors for inactivation. This review
should include a review for unusual patterns, such as
names that may be similar, but not identical to the
names of approved vendors and vendors with
multiple addresses and other irregularities.

Also, vendor master file activity should be
periodically reviewed to identify vendors for
inactivation. Vendors without a recent history of
purchases, or who are no longer approved for use,
should be inactivated.

See also observation #4 for related-party checks.

Response: Although Accounting
makes every effort to reduce
duplicate vendors, Duplicate
vendors may often need to be created
or retained as a means to separate
payments. For example, an
employee who leaves the company
but is later retained as an
independent contractor would be
setup as a vendor-employee class
for all expense reimbursements, then
a new vendor-1099 class for all
payments made as an independent
contractor for IRS reporting purposes.
Multiple vendors may also be setup
based on the types of payments (e.g.,
Defense grant or regular vendor
payment for services).

Review for the over 4,000 vendors
periodically for inactivation is a very
time consuming task which the
department has not had the resources
to complete. Management will assess
the need to devote current resources
or obtain additional resources in
completing this task.

ECD: TBD

Responsibl e Person:
Pamela Murphy,
VP of Finance and Accounting
Teresa Buckley,
Senior Accountant


OBSERVATIONS AND RECOMMENDATIONS
Page 14
Rating Observation Recommendation Management Response
Moderate 5. Employee Federal Income Tax Withholding Errors

Federal income tax withholdings for 2 of 10
employees selected for testing were improperly
calculated in the payroll system. Both errors were
caused when information from the employee-
completed IRS Form W-4 Employees Withholding
Allowance Certificate was incorrectly input into the
payroll system. In both instances, excess Federal
income taxes were withheld from each paycheck,
thus impacting the employees personal tax return.

These employees were notified of the errors during
our audit and the Payroll department is obtaining
updated Form W-4's from the employees to
document their current withholding allowances and
marital status and update, if needed. We noted
these errors occurred prior to a change in
personnel and processes in the payroll department.
Updated controls would have likely detected the
errors if the employee had submitted an updated
W-4.

Employees expect that their income tax
withholdings are based on the information they
report on their Form W-4 and can therefore face
under or over-payment situations when incorrect
amounts are withheld. It is the employer's
responsibility to ensure that taxes are withheld
using the employee-reported information for
allowances and status.


IRS Publication 15, "Employers Tax Guide, states
that employers are responsible for annually reminding
employees to submit a new Form W-4 if they need to
change their withholdings. The IRS recommends that
before December 1, employers remind employees to
submit a new Form W-4 if their marital status or
withholding allowances have changed or will change
for the next year. This will reduce the risk of
withholding income tax based on outdated W-4
information. As a general practice, W-4s should be
replaced periodically even when preferences havent
changed.

We recommend W-4 forms should be updated at least
annually, or a company-wide email or intranet
reminder should be sent to the employees to check
their withholdings and submit an updated form by a
pre-specified date in accordance with IRS guidelines.

Further, periodic checks of employee income tax
withholdings and other personnel file documentation
(such as I-9 forms, benefit selections, etc.) should be
performed for a sample of employees (e.g., 10
employees per month) to ensure withholdings are
being calculated based on the most recent
information. Appropriate follow up should be
performed to correct identified errors within the
system and notify the employee for their tax planning
purposes.


Response: HR already sends an
email annually reminding staff to
submit a new W-4 form in
December.

All employee changes including W-
4s are reviewed and verified with
every payroll by either the VP
Finance and Accounting or the
Senior Accountant which was not the
case previously.

Since the auditors identified these
discrepancies the current HR
Director and Payroll Assistant have
reviewed every active personnel file
and verified the W-4 status on the
pages form completed by the
employee agrees to the status in
ADP.

ECD: Completed

Responsibl e Person:
Pamela Murphy,
VP of Finance and Accounting
Sharon Blake,
Director of Human Resources and
Office Services

OBSERVATIONS AND RECOMMENDATIONS
Page 15

Rating Observation Recommendation Management Response
Low 6. Contract Review Procedures

We noted the following in assessing compliance
with contract review procedures for a sample of 10
contracts:
The contract review sheets for 3 contracts
were not signed by 1 of the 4 required
approvers prior to execution of the contract or
contract start date. There were delays
between 1 and 3 days for the required
signatures.
The conflict of interest check for 1 contract not
completed by 1 of the 4 required approvers.
Also, 1 of the 4 contract approvals for the same
contract was provided by email message which
did not include the conflict of interest
statement.

We noted that although these documentation errors
occurred, the contract approvers were aware of
and involved in the contract review process prior to
execution and signoff on the required forms.

The contract review sheet is the main contract
management form. It should be fully completed
and approved prior to execution of the contract to
evidence that the contract review and approval
procedures were done prior to the contract
commitment. Further, the conflict of interest
statements should be addressed by all approvers
to ensure proper disclosure and evaluation.


The Contract Execution Guidelines (revised May
2011) state that a contract will not be signed and
executed by an authorized EFI officialuntil a
Contract Review Sheet has been completed.

We recommend that the contract review process be
enhanced to include a step for overall review of the
contract documentation for completeness.
Appropriate follow up should be performed on any
missing signatures or conflict of interest statements,
and any other inconsistencies.

If one of the contract approvers is not available to
manually sign the contract review sheet prior to
execution of the contract, the approval should be
documented in a format that includes the conflict of
interest statement and overall approval of the
contract.




Response: Delays in signing a
contract review sheet are most
frequently due to the availability of
staff.

Management will assign a form to
document approval and conflict of
interest status when one of the first
three signers are not available (Unit
SVP, VP of Administration, or VP of
Finance and Accounting).

ECD: J une 30, 2012

Responsibl e Person:
Michele Miller,
VP of Administration





















APPENDIX A PROCESS MAPS

The purpose of the process map is to illustrate key processes and
highlight key control points within the process. Process maps may be
used as a procedural or training tool by the Company to provide a visual
depiction of the key steps within a process that need to be followed.






















Vendor Setup Enterprise Florida, Inc. 1
S
t
a
f
f

A
c
c
o
u
n
t
a
n
t
V
P

F
i
n
a
n
c
e

&

A
c
c
o
u
n
t
i
n
g
B
u
s
i
n
e
s
s

U
n
i
t
Gap Control
Process
Step
Legend:
Annually: Review
vendor master file for
duplicate and inactive
vendors and ensure
completeness of files
Enter vendor
information into
Great Plains
End
Start
Receive vendor
setup form
along with copy
of W-9
Review vendor
information and
assign vendor
number
Prepare vendor
setup form
Purchase Initiation Enterprise Florida, Inc. 2
V
e
n
d
o
r
s

/

S
e
r
v
i
c
e

P
r
o
v
i
d
e
r
s
C
o
n
t
r
a
c
t
s

C
o
m
p
l
i
a
n
c
e
B
u
s
i
n
e
s
s

U
n
i
t
Provide assistance
in obtaining bids/
quotes and
selecting vendor/
provider
Start
Purchase requires
multiple bids or
sole source
justification.
Purchases >
$25,000 in a
fiscal year?
Yes
Submit proposals
for bids and formal
quotations based
on advertisements
No
Summary of bid/
quotes or cost
comparisons must
be kept in a file
and available for
audit
Purchases >
$100,000 in a
fiscal year?
Procurement is
reported to the
Executive
Committee
PO required under
Purchasing policy?
No bids/quotes are
required.
Purchase is
approved
according to the
approval matrix.
No
Procurement is
pre-approved by
the Executive
Committee
Purchase in
Annual Approved
Budget?
Yes No
Yes
PO
Yes
Goods/
Services
No
Control
Legend:
Process
Step
Gap
Purchase Order Enterprise Florida, Inc. 3
B
u
s
i
n
e
s
s

U
n
i
t
A
c
c
o
u
n
t
i
n
g

D
e
p
a
r
t
m
e
n
t
V
P

F
i
n
a
n
c
e

&

A
c
c
o
u
n
t
i
n
g
Gap Control
Process
Step
Legend:
(1) Approval Limits
0 - $1,000 =Director
$1,001 - $2,500 =Senior Director or Vice President
$2,501 - $5,000 =Senior Vice President, SVP-Administration/COO, or President/CEO
$5,001 - $99,999 =J oint signature of the Division Senior Vice President, and either SVP-Administration/COO or President/CEO
$100,000 +=Executive Committee
Enter PO information
in an Excel log for
maintenance of
outstanding balance
and other details
Obtain and file
copy of PO
Verify purchase
order details
(amounts,
available funds,
etc.)
Assign a
sequential PO
number from
Access database
Prepare purchase
order (non-
recurring items)
Obtain original PO
and place order
Obtain proper
approval per
approval limit (1)
PO
Review Purchase
Order Excel log for
open POs
annually
Goods/
Services
Receive Goods & Services Enterprise Florida, Inc. 4
A
c
c
o
u
n
t
i
n
g

D
e
p
a
r
t
m
e
n
t
V
P

F
i
n
a
n
c
e

&

A
c
c
o
u
n
t
i
n
g
B
u
s
i
n
e
s
s

U
n
i
t
Gap Control
Process
Step
Legend:
Correct
discrepancy
Receive goods
and/or services
Prepare request for
payment with proper
approval per approval limit
matrix and check box for
service or good received
Contact vendor to
correct
discrepancy
Match?
Perform 3 way
match of invoice,
purchase order
and packing slip.
PO
No
Open mail and
receive vendor
invoice
C/D
Review request for
payment and invoice for
proper approval and
mathematical accuracy
and update PO log
Enter invoice or
any applicable
credit memos into
Great Plains &
record in A/P
Accurate?
Review and
approve invoice
batch
Approve receiving
documentation or
packing slip
Purchase
Order?
No
No
Yes
Yes
Yes
Cash Disbursements Enterprise Florida, Inc. 5
P
r
e
s
i
d
e
n
t
/

C
E
O
V
P

F
i
n
a
n
c
e

&

A
c
c
o
u
n
t
i
n
g
M
a
n
a
g
e
r
,

C
a
p
i
t
a
l

P
r
o
g
r
a
m
s
S
V
P

o
f

A
d
m
i
n
.

/

C
O
O
S
e
n
i
o
r

A
c
c
o
u
n
t
a
n
t
S
t
a
f
f

A
c
c
o
u
n
t
a
n
t
End
Goods/
Services
Check/ wire
transfer?
Process
Step
Control Gap
Wire Transfer
Release wire transfer
via secure pin
number**
Provide checks and
supporting
documentation to VP
Finance and
Accounting.
Prepare check
register (weekly and
monthly)
Release wire transfer
via secure pin
number**
Release wire transfer
via secure pin
number**
Checks
Review and sign
checks. Two
signatures needed if
check is over $5,000.
Review and sign
checks. Two
signatures needed if
check is over $5,000.
Review and sign
checks. Two
signatures needed if
check is over $5,000.
Review check
register weekly and
sign Check Register
Approval Memo.
Copy checks and
mail. Copy wire
transfers and file
with approved wire
transfer request
form.
Legend:
Release wire transfer
via secure pin
number**
SunTrust system will
not allow the release
of wire transfers by
the same user that
entered the wire.
Review checks and supporting
documentation for approvals,
proper coding, and accuracy.
Enter into PO Log.
* All invoices submitted and properly authorized/matched by Friday are included for payment the next week.
** The following individuals have access to release wire transfers: Senior Accountant, VP Finance and accounting, SVP of Administration, and Manager, Capital Programs. The
Manager, Capital Programs, has access to release wires
***The CEO, SVP Administration, and COO have signing authority on all accounts. The VP Finance & Accounting and Manager, Capital Programs, have signing authority only for the
investment related accounts. The SVP Strategic Partnerships has signing authority only over the non-investment related accounts.
Travel expenses related to budgeted events are pre-approved through the annual budget approval. For disbursement approval, they must also be supported by expense reports and
supporting documentation, authorized by the employees supervisor. The total expense report amount must be approved in accordance with the purchase approval limits.
Review Wire
Transfer Request
Form and approve.
Generate checks weekly
and review batch.
Enter wire information in
SunTrust On-Line Treasury
Manager system.
Approve and sign
wire transfer request
form.
Approve and sign
wire transfer request
form.
Monthly Enterprise Florida, Inc. 6
V
P

o
f

F
i
n
a
n
c
e

&

A
c
c
o
u
n
t
i
n
g
M
a
n
a
g
e
r
,

C
a
p
i
t
a
l

P
r
o
g
r
a
m
s
E
x
e
c
u
t
i
v
e

a
n
d

F
i
n
a
n
c
e

C
o
m
m
i
t
t
e
e
s
S
V
P

o
f

A
d
m
i
n
i
s
t
r
a
t
i
o
n

/
C
O
O
S
e
n
i
o
r

A
c
c
o
u
n
t
a
n
t
Prepare monthly
bank
reconciliations.
End
Review monthly
activity with VP of
Finance and
Accounting
Start
Annually:
Payables are
recorded through
cut-off date.
Gap
Process
Step
Legend:
Control
Review financial
status and reports
at periodic
meetings.
Approve financial
statements.
Review and
approve
investment bank
account
reconciliations.
Review and
approve bank
reconciliations.
Prepares quarterly
investment bank
account
reconciliations.
Print and review
balance sheet,
profit & loss
statement and
detail trial balance
Prepare monthly
accounts payable
reconciliations.
Review and
approve accounts
payable
reconciliations.