Tavares, FL - Thursday, Apr. 25, 2013 - Lake County, FL
by Vance Jochim - updates will be added as received. Update: Apr. 29th - Historical elections were held and a new slate was elected and no gunfights broke out - update posted soon on this blog in separate posting.
Update Apr. 26th - see details below about today's meetings for elections.
Does Lake County, FL have a HOUSE of HORRORS instead of a Lake County History Museum? A new audit indicates that might be the case, and it is a House of Mis-Management Horrors right here in Lake County.
The Lake County Board of Commissioners requested that the Court Clerk's Audit Office audit the operations and financial records of the Lake County Historical Society which manages the Lake County History Museum under an agreement with the County. It was published today in order to be available before tomorrow's April 26th Historical Society Board Meeting.
It is a GOOD audit report indicating an appalling situation where many poor or illegal procedures are used.
No inventory exists anywhere of an estimated 2,000 to 5,000 items where the auditors could only find 800 of them. As a former, experienced internal auditor, this audit indicates a complete lack of governance of museum exhibits, property, security, preservation of items and spending. All new officers and an office manager are needed in my opinion. Many years ago, I audited Los Angeles County operations, and even tennis court concessions were run better than this Museum, which may have well meaning history buffs on the Board, but no credible fiscal or administrative oversight or leadership. This reminds me of an audit at Nissan Motor Corp. where we found the marketing driven management cooked the books and understated the cost of $2-million race cars by listing them as costing $1-million. They also had $26-million in inventory which was all obsolete race car parts, requiring an immediate write down of $26-million.
In my opinion, the fiscal and management situation indicated by the audit report is so bad that the County should change the locks on the Museum and restrict access by anyone until museum items are completely inventoried, secured in locked facilities and documentation of ownership of items is verified. This is needed to prevent sudden disappearance of more items.
There is bad blood between two groups in the Lake County Historical Society, which I have covered earlier, and newspaper articles have also covered the disputes between officers. Here is the link to an earlier blog article:
On April 21, before the Audit report was distributed, the Daily Commercial published an editorial recommending the Lake County Board "scrap the Historical Society".
Update Apr. 26: After this blog article was posted, the April 26th edition (today) of the Daily Commercial published an overview of the audit report in their print edition (they don't publish online until the next day). If you have the print paper you can read it, or our longer version, with various snappy comments below.
The Society manages the Lake County History Museum, located in the original, historical County Courthouse on Main St. in Tavares.
Due to conflicts and counter accusations, the Lake County Court Clerk, who is the Treasurer of Record, froze the Historical Society's checking account for managing the museum until a full audit was performed by the Court Clerk Internal Auditor. He also resigned as Treasurer.
The Historical Society is holding their ELECTIONS Tomorrow evening, April 26, to meet a requirement from the County Board to have official officers selected for further discussions with the County Board regarding management and funding.
Update: The April 26th Daily Commercial printed an article on this audit, and said that TWO meetings were being held by the two squabbling groups: "One faction will have its election at 5pm at the Tavares Civic Center at 100 E. Caroline Street in Tavares. The other faction will cast ballots at 6pm at the Lake County Historical Museum in the old Courthouse on Main St. in Tavares" says Greg Jones in his Daily Commercial article.
The History museum is in the first floor of the County owned building and rent is free. The County also provides most of the Society budget of $20,000+, which is mostly used to pay for a part time curator.
Lake County lists all County Historical Societies on a webpage, but this Lake County History museum has NO WEBSITE, yet they get $20,000 or more in County funding. How can anyone even find them?
http://www.lakecountyfl.gov/enjoying_lake_county/listings/historical_society
That audit of the Historical Society was published today, and you can download it, Audit BCC-107, from this site. The report was issued WITHOUT responses due to the officer conflicts.
http://www.lakecountyclerk.org/internal_audit/auditreport.aspx
Note: The court clerk's internal audit office did this audit with short notice over a period of about 30 days, which is about 3 months shorter than the previous auditor at the Lake County School District. (snicker, snicker). (I don't mean they took 30 days, but within 30 days they got it done.) Kudos to the internal audit office for bringing these items out in the open and writing a professional and ADULT audit report (I was an Audit Director for years). (And kudos also to the Lake County Board who asked for the audit).
Our Review of the 27 page Audit Report:
I am rewording the major findings with my interpretation and I changed the order of the reported issues to reflect what I think are the priority items. As an experienced auditor, I find these situations to be appalling lack of controls over museum properties. The County AND the Historical Society Officers, AND the Office Manager should be ashamed for not even having a decent system to track all museum items, verify ownership, ensure preservation and LOCK them up to prevent theft. I once audited the Los Angeles History Museum when the King Tut Exhibit was there many years ago, and they are slightly (ok, a lot) bigger, and responsibility for museum owned items was taken seriously, but clearly not here.
- The audit contains SIXTEEN categories of recommendations, with 43 recommendations in all for either the Board of Commissioners, but also for the Society officers.
- Page six of the audit lists 3 optional actions for the County Board. The final recommendations on page 7 should be followed. In my opinion, the office manager should be fired (which was the original intent of the Board) and she be removed from access to the premises. Another independent curator should be hired part time at a lower hourly pay without benefits, and they agree to implement all recommendations in the report.
- Society funds are spent on quarterly society lunches which for 2011 and 2012, lost $2200. Although they collected fees for attendees, they were less than half the expenses. This is while the Society is spending in the red every year. Lunches should be breakeven or not held. (page 19)
- The Society had an $83,000 reserve account in 2008, which was reduced to a current balance of about $45,000: Unknown to me and others, the Society had $83,000 cash reserves in 2008, and they have spent about half of it since then, while also taking County funds each year, and now $45,000 remains. Thus the Society is spending about $10,000 more per year than their income. The audit recommended the Society take action to reduce spending so as not to use up more reserves. They have a chart on page 8 that shows even with $20,000 grants per year from the County, they will run out of funds by 2019. They
- A Board member claims to be President illegally, then organizes elections without following the Bylaws: The self proclaimed President is not legal and used a controversial method of selecting officers contrary to the Bylaws, requiring mailed ballots, thus received votes select officers without any nominations from the floor or discussions at the required Board Meeting. Thus in MY opinion it is EASY to STUFF the ballot system by one way communications where members don't hear all candidates in person. The auditor also said the current officers controlling the ballot process are illegal and were not properly appointed by the official President, but appointed by a self appointed President who had no legal right to do so, based upon a written opinion from the Society attorney (who quit after the arguments started).
- There has been NO INVENTORY OR database of items owned by the History Museum managed by the Historical Society (or owned by the County, or loaned items). The auditors could only find about 800 items when some estimates provided to the auditor were for 3,000 to 5,000 items. The County has an agreement with the Society to manage the museum, and it requires an electronic database of the inventory which was not done at all. Page 12 of the audit report says one book PURCHASED with Society funds was looked for, and the office manager said it was at her house. Receipts indicated Society funds were used to purchase two cookbooks in January, 2012, which could not be located. You have to read quotes from the Museum Manager (one of the controversial folks who the prior Board wanted to fire) to understand how bad this all sounds. In 2010, 71 historical books worth $1,484 were written off because they could not be found. Additionally, a later section of the report indicates problems verifying who OWNS items in the Museum's care. It is my own opinion that much theft has taken place. Perhaps someone is selling the stuff on eBay (a speculation, but possible).
- The Office Manager says most items belong to the Society, not the County. So, any inventory should confirm the ownership of every item and require documentation for any item claimed to be owned by parties other than the County (i.e. the Historical Society). The County agreement apparently specifies that all items belong to them unless proper documentation exists to confirm they are on loan from someone else who owns the items. That documentation apparently is verbal and does not exist.
- The Museum sells books for authors, but there is NO ACCOUNTING for the revenues, inventory or commissions collected. (page 12)
- Museum items can be stolen easily due to lack of physical security over many items. Many museum exhibits are in the open and not in locked cases, AND storage areas in the building are NOT secured, thus better security is needed. "The risk of theft is significant" says the audit. Auditors were able to access the unsecured areas without detection. This is an atrocious lack of accountability.
- The Office Manager takes many days off with pay without any written policies on benefits. AND, the office manager is a PART TIME position, which in my opinion should only be paid based upon hours at the office, documented on a time-card. She is also the Society Secretary. In my view, and employee should not be on the Board or have an office and the auditor agrees, saying it is a conflict of interest.
- Office hours are only four workdays per week from 8:30 AM to 5pm. The report recommends being open some evenings and weekends, which I agree with.
- The Office Manager was apparently hiring people who lived with her, and a policy is needed to prohibit hiring relatives. In my opinion, the Board should have a hiring committee to ensure arms length procurement and hiring. Currently the Office Manager is on the Board, and her Fiance is also on the Board, which can result in excessive control of Society activities. That should also be prohibited.
- The Historical Society ignored compliance with various sections of their own bylaws and requirements of an agreement with the County. (Note: You might ask why the County didn't verify compliance from their end, which is a good question, especially when the Court Clerk, Neil Kelly was the Treasurer and HE runs the Audit Dept..)
- The Society is spending more than their revenues and are paying the Office Manager MORE than the funds provided by the County, thus using up reserves. The Society gets $20,000 per year from the County, but pays the office manager over $27,000 per year in salary and benefits, leaving little for new exhibits, event marketing, etc. Even though she is part time, a chart on page 14 shows she has taken huge amounts of leave, and in 2012, she took 117 hours of paid leave (14 days). In a visit to the office about 6 weeks ago, I was told by another society member that the office manager was working three jobs, indicating a possibility of the Society being billed while working other jobs. An employee benefits manual does not exist, and is needed.
- Retroactive wages based upon increase part time hours (from 28 to 33 hours per week) were approved in 2011 but no timesheets documented the added hours.
- Many items are not properly "preserved", meaning they are not protected from environmental degradation. This needs to be fixed. The audit report contains pictures of items stacked haphazardly, and this is with a prior full time curator, and now a current Office manager being paid for 33 hours per week. The storage rooms look like those storage units you see on reality TV where people bid on unclaimed junk.
- Petty Cash funds of $200 exist, but record keeping, in MY opinion (not the auditor's) seems really crappy. (a technical accounting term for REALLY BAD and lackadaisical practices). It seems it would be really easy for people to get or use funds for personal use. People who purchased items and received reimbursement were not identified, thus fake claims could have been submitted (my opinion).
- The County pays the Historical Society a grant of $20,000 each year, with NO Departmental oversight. As of April 1, the County Clerk resigned as Treasurer, so there is NO operational or financial oversight at all.
- The County has the above mentioned agreement, but it doesn't contain an audit clause. They need to add one. (I assume the County legal department approved the Society agreement, and blame the lack of a required audit clause on the County legal department for approving such a weak agreement. I have written in the past how the County legal department has allowed several fiscal snafus by not exercising business sense when writing agreements. )
- Numerous written policies are non-existent and are needed.
- All the above issues and recommendations were in the Audit Report. I only added some personal opinions about how BAD the situations are.
Items We Believe Need Attention that are NOT in the Audit Report:
- What exactly is the purpose of the office manager AND the Society? Based upon the audit report, it seems they didn't do much to enhance or expand the museum or its collections except occasional exhibit additions. I read about activities in local newspapers by other Lake County historical museums, but none about this one. I think a clear listing of duties and measurable objectives with timelines is needed. It should exist not just for routine duties, but fund raising duties, visitor attendance goals, inventory management, event schedules, etc.. The list is needed with oversight to ensure it is done.
- Retroactive payments to any employee should not be approved. The Court Clerk, as Treasurer, froze the checking accounts about 2+ months ago. Clarification is needed to ensure no retroactive payments are requested or made for the Office Manager or others during the frozen period. Or a complete statement should be written describing what payments will be made and approved by the County Board, since their money is involved. Otherwise, when the accounts are unfrozen, we would expect some attempt to retroactively pay individuals without approval of the Society or County Board.
- The Balance sheet included on page 26 does NOT show any valuation on the Museum collections. Valuation was not described as a component of the inventory recommended by the audit report. I recommend that a valuation or appraisal of the inventory collection be developed and be part of the inventory. It should be updated on a rolling 3-5 year basis.
- There are no nearby parking spaces set aside for visitors to the History Museum. The Sheriff takes over the entire lot at one side of the building, including double parking. The public spots in front of the building are taken by anyone, thus there is NO easy opportunity for visitors during the day to find nearby parking to spontaneously visit the museum. I don't consider the parking structure to be convenient for short museum visits, so some nearby parking should be assigned.
- There is no indicator I could find on the outside of the Museum building that there WAS a museum inside and what the hours were. Additionally, when I visited, the office door was CLOSED for an hour while I walked around, but when I knocked a volunteer came out but gave little advice. There should be a sign in the front of the building, visible from the street that says "County History Museum - OPEN 8:30 am to 5pm Mon-Thurs".
- Many visitors entering the Museum building are lost, looking for other buildings, including the Courthouse, the Appraiser and Tax Collector (who used to be in this museum building). Signs are needed by the front and side doors instructing visitors where the other departments and buildings are. I learned this from sitting inside the museum for about 90 minutes and observing.
- An "in-kind" value should be placed in the Schedule of Revenues and Expenses for County donated expenses, including rent, utilities or other services. it should be on the Society or Museum income statement as in-kind revenues with offsetting imputed expenses to reflect the true cost of operations of the Museum. This concept is common in grants. Right now, I think it is safe to say the County has no clue how much they are actually donating to the operation of the Museum.
Conclusion:
This is a GOOD Audit indicating BAD and POOR management and fiscal practices by the Society and Office Manager. There has been NO oversight and amateur management has left the museum in tatters.
All the above recommendations should be implemented by a new office manager and new Society Board, OR the County should take full control and hire a manager to run the museum without involvement of the Historical Society. No waffling.
Vance Jochim
