Financial audit takes TDC board, director to task

A financial audit of the Gulf County Tourist Development Council revealed a series of deficiencies and weaknesses and an absence of internal controls on several levels.

After the report was released to the Board of County Commissioners last Thursday, county administrator Don Butler suspended TDC executive director Tim Kerigan for two weeks pending board action.

“He did the right thing,” said BOCC chair Commissioner Bill Williams. “This is an unfortunate set of circumstances and I think (Butler) did what he felt he had to do. I support him, absolutely.”

The audit report, prepared by Roberson & Associates, P.A. of Port St. Joe and Vance CPS, LLC of Panama City Beach, has also been provided to Gulf County Sheriff Joe Nugent who will forward the information to the Florida Department of Law Enforcement.

“Do I think there was maliciousness here? No,” Williams said. “But everybody needs to understand we are never going to be on this course again. That is my job as a fiscal steward of tax dollars.

“Reading the report I am taken aback with the level of, what is the right word, malfeasance?”

And, Williams said, there is blame to be spread around, from the Tim Kerigan to the TDC board to the BOCC to the Clerk of Courts.

The audit report details that the intent of the audit was not to find all significant deficiencies or material weaknesses, therefore “there can be no assurance that all deficiencies, significant deficiencies or material weaknesses were identified,” the report reads in part.

Among the more damning sections of the report pertain to compliance.

Under a section pertaining to conflicts of interest, the audit detailed that more than $435,000 was paid during the fiscal year ending Sept. 30, 2011, to “related” parties without review of the TDC board and some of those expenditures did not comply with county policies requiring contractual agreements and evidence of competitive bids.

These expenses pertain to those paid to Kerigan Marketing, owned by the brother of Tim Kerigan. Kerigan Marketing was awarded a contract for marketing services for the fiscal year in question, but the contract, which capped expenditures at $115,000 but was never signed.

County commissioners had noted during several recent meetings they had uncovered more than $200,000 worth of TDC marketing business secured by Kerigan Marketing. The audit puts the number at more than twice that.

The TDC also received money from BP as part of its fine payments due to the Deepwater Horizon Oil Spill. The audit questions whether some expenditures were proper under the guidelines set forth in a Memorandum of Understanding between the county and BP.

Finally, in the matter of compliance, the audit found that some per diem travel expenses were requested that exceeded the allowed amount.

The audit also took the TDC to task for its disbursement of Marketing Grants for local events. Such grants, the audit report noted, require an application with detailed information pertaining to the economic benefit to the county, impact on tourism, etc. and subsequent documentation must include the turnout for the event, proof of advertising and if goals were met, etc.

The TDC budgeted $60,000 in sponsorship grants for the fiscal year ended Sept. 30, 2011, but authorized $102,300 in sponsorship grants. Those grants were initially paid without the required documentation or accountability detail on use of the money, the audit detailed.

Some grants went to for-profit organizations, a violation of the grant process which requires only non-profits are eligible.

In one case, a $15,000 sponsorship grant went to a for-profit company in which a TDC board member had a “financial interest.” This grant was not awarded by a vote of the board, but was approved by Tim Kerigan.

Some of those grant funds were also paid with BP money. The audit report questioned whether some of those grant monies were awarded outside the parameters of the MOU between the county and BP.

The audit report also lists a series of material weaknesses, “a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility” of material misstatement concerning financial statements.

They included that TDC personnel were unfamiliar with county ordinances and state laws that govern the operations of a TDC: the TDC board did not exercise oversight responsibility over expenditures from the TDC Trust Fund; disbursements from the TDC did not comply with county purchasing policies, circumventing controls established by policies from the Clerk of Courts office in its role as county Comptroller; internal control procedures were not followed and deficiencies not acted upon in a timely fashion by the BOCC; Tim Kerigan authorized and approved expenditures without TDC board approval; and Kerigan also approved invoices for payment that were not in compliance with county purchasing policies.

A significant deficiency, or combination, is noted as less severe than a material weakness, but the auditors believed several important to “merit attention.”

First, the county had not updated the ordinance authorizing the establishment of the Tourist Development Tax and Council since 1998. No mechanism exists to review and update the ordinance as operating changes merit.

Also, certain expense reports for travel were approved by county administration that were not properly completed and did not contain all required documentation.

“This report validates my initial concern that fiscal oversight and sound judgment was not there,” Williams said. Williams and Commissioner Ward McDaniel in particular have been outspokenly critical the past few months about how the TDC and its executive director were doing business.

He noted that a series of checks and balances should be in place to ensure adherence to proper governance of the TDC, from the executive director to the TDC board to the BOCC to the Clerk of Courts.

“The checks and balances with this individual (Tim Kerigan) were not followed,” Williams said. “I want each commissioner to discuss these findings with Don Butler so they fully understand what has been going on. This is a culture that has been allowed to exist far too long.”

Williams said he would ask the county’s legal and financial teams to examine the audit report findings and address with the proper outside parties – the FDLE or BP task force – questions raised in the audit.

While acknowledging he was just one vote and all commissioners had yet to see the audit report, Williams suggested that he would ask all current TDC board members to resign immediately and re-apply, starting a clean slate.

And he said the actions of Tim Kerigan had risen to a level where significant discipline, be it suspension or termination, was warranted.

**For a PDF of the Audit Report from Robertson and Associates, please click "PDF of Audit Report" under Rich Media in the top right corner of the story.