Findings Of Fact Stipulated Facts The parties stipulated at the final hearing to factual findings set forth in paragraphs 1-3, below. The Department received the Application for Qualification on April 27, 1995. An audited financial statement of Tony DePaul & Sons, Inc., was completed on December 31, 1994. The deadline for the Department to have received the annual audited financial statement of Tony DePaul & Sons was May 1, 1995. Other Facts Petitioner in this proceeding is Tony DePaul & Sons, Inc. Respondent is the Florida Department of Transportation. Respondent's Contracts Administration Office administers a contractor qualification program in which the Department qualifies contractors to subsequently bid on Respondent projects which exceed the sum of two hundred and fifty thousand dollars. Petitioner's application was received on April 27, 1995, minus Petitioner's annual audited financial statement which had been completed on December 31, 1994. The deadline for receipt of the application and Petitioner's annual audited financial statement was May 1, 1995. Respondent's representative contacted Petitioner on May 9, 1995, as a courtesy to inform Petitioner that the annual audited financial statement had not been received. Thereafter Respondent received the annual audited financial statement on May 11, 1995. Respondent's interpretation of law applicable to the subject application dictates that an application, such as Petitioner's, must be denied where the application and annual audited financial statement are submitted more than four months after the ending date of the annual audited financial statement, unless the applicant submits an additional interim audited financial statement. Petitioner made no inquiry of Respondent's offices to ascertain whether Respondent had timely received Petitioner's application and audited financial statement. Notably, Respondent's Contracts Administration Office has not lost or misplaced a document since 1982. The total elapsed time between receipt by Respondent's offices of Petitioner's Application for Contractor Qualification on April 27, 1995, and Respondent's issuance of a Notice of Intent to deny Petitioner's application is thirteen (13) days. Respondent is required to process applications within thirty (30) days.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered denying Petitioner's application. DONE and ENTERED in Tallahassee, Florida, this 16th day of October, 1995. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of October, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings None submitted. Respondent's Proposed Findings 1.-11., Accepted. COPIES FURNISHED: William J. Cummings Tony DePaul & Sons, Inc. P. O. Box 1650 Blue Bell, PA 19422 Peter DePaul, President Tony DePaul & Sons, Inc. P. O. Box 1650 Blue Bell, PA 19422 Michael J. Lerner, C.P.A. Tony DePaul & Sons, Inc. P. O. Box 1650 Blue Bell, PA 19422-0465 Mary Dorman, Esq. Dept. of Transportation 605 Suwannee St., MS-58 Tallahassee, FL 32399-0450 Ben Watts, Secretary Dept. of Transportation 605 Suwannee Street Tallahassee, FL 32399-0450 Thornton J. Williams General Counsel Dept. of Transportation 562 Haydon Burns Building Tallahassee, FL 32399-0450
The Issue Whether the proposed decision of the Department of Children and Family Services to award the contract for Florida Assertive Community Treatment (FACT) Programs in District 4 as set forth in RFP No. 01H02FP5, to Psychotherapeutic Services of Florida, Inc., is contrary to the Agency's governing statutes, the Agency's rules or policies, or the specifications of the RFP?
Findings Of Fact Background On or about February 18, 2002, DCF issued RFP No. 01H02FP5 for the implementation of Florida Assertive Community Treatment (FACT) Programs for persons with severe and persistent mental illnesses in DCF Districts 4, 7, and 11. The review in this case is limited to DCF's proposal to award a FACT contract in District 4. Four vendors submitted proposals for District 4, including Petitioner and Intervenor. Section 5.2 of the RFP requires that each proposal include a title page as page two of the proposal and include the RFP number; title of proposal; prospective offeror's name; organization to which the proposal is submitted; name, title, phone number and address of person who can respond to inquiries regarding the proposal; and name of project director, if known. The proposal submitted by Intervenor contained a title page identifying the offeror as Psychotherapeutic Services of Florida, Inc., with a mailing address in Chesterfield, Maryland. Further, every page of Intervenor's proposal had the name Psychotherapeutic Services of Florida, Inc., printed on the bottom left corner. Section 6.1 of the RFP describes two phases of DCF's review of the proposals. The first is an initial screening of all proposals for what the RFP describes as "Fatal Criteria." The second is the qualitative review of each proposal using criteria set out in the RFP by an evaluation team. Fatal Criteria Section 5.4 of the RFP reads as follows: 5.4 RESPONSE TO INITIAL SCREENING REQUIREMENTS The initial screening requirements are described as FATAL CRITERIA on the RFP Rating Sheet (see section 6.1). Failure to comply with all initial screening requirements will render a proposal non-responsive and ineligible for further evaluations. The fatal criteria are: Was the proposal received by the date, time and location as specified in the Request for Proposal (section 2.4)? Was one (1) original and eight (8) copies of the proposal submitted and sealed separately? (section 5.12)? Did the provider include a Proposal Guarantee payable to the department in the amount of $1,000.00 (section 2.11)? Did the application include the signed State of Florida Request for Proposal Contractual Services Acknowledgement Form, PUR 7033 for each proposal submitted? Did the provider submit the Notice of Intent to Submit form contained in Appendix 2 by the required due date? Did the provider register and attend the offeror's conference? Did the proposal include the signed Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion Contracts/Subcontracts (Appendix 6)? Did the proposal include the signed Statement of No Involvement(Appendix 7)? Did the proposal include the signed Acceptance of Contract Terms and Conditions indicating that the offeror agrees to all department requirements, terms and conditions in the Request for Proposal and in the Department's Standard Contract (Appendix 8)? Did the proposal include a signed lobbying form (Appendix 9)? Did the proposal include an audited financial statement for fiscal years 1999- 2000 and 2000-2001? Did the proposal include a certification of the offeror's good standing (Appendix 1)? Did the proposal contain evidence the minimum staffing levels in section 3.11 will be hired and employed? Did the proposal contain a signed Certification of a Drug-Free Workplace program (Appendix 10)? Did the proposal contain a certification regarding electronic mailing capability as referenced in section 3.20 (Appendix 5)? (emphasis in original) Section 6.1 of the RFP includes a Fatal Criteria rating sheet requiring "yes" or "no" responses by the reviewer, which included, among other provisions, the following: 4. Did the proposal include a signed Form PUR 7033? * * * 11. Did the proposal include independent audited financial statement from a CPA firm for fiscal years 1999-2000 and 2000-2001? Form PUR 7033 Section 5.1 of the RFP, entitled, STATE OF FLORIDA REQUEST FOR PROPOSAL CONTRACTUAL SERVICES ACKNOWLEDGMENT FORM, PUR 7033, requires proposers to manually sign an original Form 7033 on the appropriate signature line. The signed form 7033 must appear as the first page of the proposal. Form PUR 7033 is not a form generated by DCF but is generated by the Department of Management Services. The RFP did not set forth any fatal criteria in connection with this form other than it be signed. The proposal of Intervenor, PSFI, contained form PUR 7033 with the signature of its Chief Executive Officer, D. Cherry Jones, within the signature block designated as "authorized signature." The name Psychotherapeutic Services appears on Intervenor's form 7033 in the block entitled "vendor name." The address which appears in the block designated as "vendor's mailing address" on Intervenor's form PUR 7033 is the same mailing address in Chesterfield, Maryland, that appears on the title page of Intervenor's proposal. The block designated on as "state purchasing subsystem (SPURS) vendor number" on Intervenor's form PUR 7033 is blank. In completing the RFP forms designated as Appendix 1, Offeror Certification of Good Standing; Appendix 5, Certification of Electronic Mail Capability; Appendix 7, Statement of No Involvement; Appendix 8, Acceptance of Contract Terms and Conditions; and Appendix 10, Certification of a Drug-Free Workplace Program, Psychotherapeutic Services appears in the blank designated for the name of the vendor or offeror. These appendices were all signed by D. Cherry Jones. Petitioner contends that the use by Intervenor of Psychotherapeutic Services or other shortened version of its full name instead of Psychotherapeutic Services of Florida, Inc., on Form PUR 7033 and the required appendices renders Intervenor's proposal non-responsive, creates confusion as to what entity was responding to the RFP, is misleading and, therefore, is contrary to competition. Petitioner notes that the Proposal Tabulation prepared by DCF referenced Intervenor as Psychotherapeutic Services, Inc., rather then Psychotherapeutic Services of Florida, Inc. In Appendix 8 to Intervenor's proposal, the corporate documents from the Florida Department of State were for Psychotherapeutic Services of Florida, Inc. As to the SPURS vendor number, the RFP did not require the provision of a vendor number on the PUR 7033 as a preliminary screening requirement of fatal criteria. The RFP does not contain a requirement that a proposer have an existing SPURS vendor number. According to Mr. Poole, there were no restrictions on who could submit a proposal. In response to a written inquiry, which asked whether local mental health agencies be given preference in the bidding process over out of state companies, DCF responded: No. We want as many entities as possible to compete for these teams. The competition is fair and open to all who meet the requirements outlined in the RFP. Thus, DCF encouraged all interested providers to submit proposals, not just those who had previously contracted with DCF. Accordingly, an offeror may not have an existing vendor number when submitting a proposal. Although Intervenor had previously contracted with DCF, the vendor number was not a specified requirement of the RFP. Timothy Griffith is Deputy Executive Director of Psychotherapeutic Services of Florida, Inc. Mr. Griffith describes their use of Psychotherapeutic Services as similar to the use of a trademark or servicemark. The parent company of all Psychotherapeutic Services affiliates, including Psychotherapeutic Services of Florida, Inc., is Associated Service Specialists, Inc. The relationship between Psycho- therapeutic Services of Florida, Inc., and Associated Service Specialists, Inc., as well as other affiliates, was set forth in sufficient detail in Intervenor's proposal. Other than the assertions of Petitioner's President and Chief Executive Officer, Robert Sommers, as to his perception, there is no evidence that anyone in DCF or its evaluators were confused as to what entity was identified in the proposal submitted by Intervenor. Stephen Poole is a Senior Management Analyst II with DCF, and is the procurement manager for the RFP. According to Mr. Poole, DCF looks within a proposal for the identity of the proposer on the title or cover page of the proposal. There was never any confusion in his mind as to what entity was making the offer to DCF. He understood Psychotherapeutic Services to be a "tradename." When asked what entity he was talking about when he refers to Psychotherapeutic Services, he replied: I'm talking about Psychotherapeutic Services, Psychotherapeutic Services of Florida, or Psychotherapeutic Services, Inc. To me, they are one in the same. We have been under contract with Psychotherapeutic Services of Florida for other programs, FACT programs. And I, early on, got accustomed, as a matter of convenience and expediency, to refer to them as PSI. Consistent with his testimony, Mr. Poole's reference to Psychotherapeutic Services, Inc., on the bid tabulation sheet was simply shorthand for Psychotherapeutic Services of Florida, Inc. Similarly, the bid tabulation sheet references Petitioner as Mental Health Resource Center even though it's full name is Mental Health Resource Center, Inc. There is no evidence that the evaluators were confused or misled as to Intervenor's identity or corporate affiliations. Evaluator Robert Miles was not confused and considered Psychotherapeutic Services and Psychotherapeutic Services of Florida, Inc. to be one and the same. Evaluator Jan Holder was not confused as to Intervenor's identity: Q And we have been calling that company alternatively Psychotherapeutic and several other shortened versions of the name. Has that created any confusion in your mind as to what entity we're talking about? A No. Petitioner's assertion that Intervenor's proposal was non-responsive as a result of the use of an abbreviated form of Intervenor's name is not supported by the above findings. Financial Statements Petitioner asserts that Intervenor failed to meet the requirement set forth in Section 5.4k of the RFP, and referenced in paragraph 11 of the Fatal Criteria checklist, that proposers include independent audited financial statements for fiscal years 1999-2000 and 2000-2001. The RFP did not provide any definition, standard, guidelines or mandatory requirement for the format or content of financial statements, audits, or audited financial statements. The RFP simply required that they be included. Intervenor's proposal contained audited financial statements for fiscal years 1999-2000 and 2000-2001. Intervenor's 2000-2001 audited financial statements consisted of an independent auditor's report from Nardone, Pridgeon & Company, P.A., Certified Public Accountants, dated August 10, 2001; balance sheets; statements of cash flow; statements of operations and retained earnings (deficit); and personnel and operating expenses. However, four pages, consisting of the Notes to Financial Statements, were omitted. There is no dispute regarding the contents of the audited financial statements for 1999-2000 submitted by Intervenor. The independent auditor's report for fiscal years 2000- 2001 stated in pertinent part: We have audited the accompanying balance sheets of Psychotherapeutic Services of Florida, Inc. as of June 30, 2001 and 2000, and the related statements of operations and retained earnings (deficit) and cash flows for the years then ended. . . . In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Psychotherapeutic Services of Florida, Inc. as of June 30, 2001 and 2000. We conducted our audits to form an opinion on the 2001 and 2000 basic financial statements taken as a whole. Luther Cox is a certified public accountant and has expertise in accounting, financial statements, and generally accepted accounting principles relative to financial statements. It is Mr. Cox's opinion that the notes to financial statements are a required element of an audited financial statement. According to Mr. Cox, notes to financial statements explain the financial statements to the reader and are, according to generally accepted accounting principals, an essential component to an independent audited financial statement. Mr. Cox acknowledged, however, that there was no negative information which should have been disclosed in the subject auditor's opinion letter and that the letter was a "clean opinion," meaning that no adverse financial information was known to the auditors which otherwise would have been required to be reported. Martin Kurtz is also a certified public accountant. He acknowledged that the omission of the notes is not consistent with the standards of the practice of accountancy in Florida. However, he was of the opinion that, based upon the way the independent auditor's opinion letter is written, the letter relates to a full set of financial statements. "They may not have all been presented in the proposal. But there was a full set of audited financial statements." Thus, the auditor's clean opinion letter included a review of the notes. According to Mr. Kurtz, the text of Intervenor's proposal contains more information about the relationship between the parent company and Psychotherapeutic Services of Florida, Inc., than the notes to the financial statements. With the above-competing opinions by certified public accountants, it is appropriate to examine the agency's use of the audited financial statements in its review of the proposals. According to Mr. Poole, the requirement to have the proposals contain independently audited financial statements was to assure DCF that the offeror possessed sufficient financial sophistication and organizational capacity to perform a FACT contract. In reviewing compliance with the requirement for an audited financial statement, DCF reviewed the submission to determine whether or not it had a letterhead from an independent auditor and whether there were financial statements. The submitted financial statements were not reviewed by a certified public accountant of DCF. According to Mr. Poole, DCF was looking generally for the "strength, administratively of the offeror. If it had the level of management expertise to be able to perform a contract in that amount of money of a million dollars." The independent auditor's letter represents that Invervenor's financial statements for fiscal years 2000-2001 were indeed audited. Petitioner's assertion that Intervenor's proposal is non-responsive because of the omission of the notes to the financial statements is not supported by the above findings. In further support for its assertion that Intervenor's omission of the notes to the financial statements renders Intervenor's proposal non-responsive, Petitioner asserts that the requirement for the inclusion of audited financial statements was not only considered within the fatal criteria of the RFP, but also was a "key consideration" for scoring criterion 36 of the RFP. Organizational capacity is set forth in section 5.5(4) of the RFP which states in pertinent part: To assist in the determination of the offeror's organizational capacity, please provide, as part of this section, the following: 4. A copy of the financial statements or audits for state fiscal years 1999-2000 and 2000-2001. 6. Evidence that the offeror has met its financial obligations in a timely and consistent manner without the need to incur loans or a line of credit to routinely meet its expenses. (emphasis in original) Section 6.3.6 of the RFP contains certain criteria for the evaluators to score with regard to the organizational capacity of the proposers. Criterion 36 reads as follows: 36. What evidence did the proposal provide that the offeror has not had to obtain loans or a line of credit to routinely meet its financial obligations and expenses in a timely and consistent manner as referenced in section 5.5(4)? Key considerations for scoring: Its independently audited financial statements for fiscal years 1999-2000 and 2000-2001 support response. Offeror's independently audited financial statements for the last two years give evidence of ability to start a new program without benefit of start-up funds. (emphasis in original) Each of the evaluation criteria contained references to key considerations for scoring. The key considerations were to assist the evaluators in assessing the merits of the proposal. In evaluating criterion 36 pertaining to lines of credit, it was the role of the individual evaluator to interpret the degree of routine reliance and assign accordingly a particular score from zero to three. Intervenor directly addressed loans and lines of credit in the text of its proposal in response to criterion 36. As with the other criteria, evaluators could score this criterion from zero to three. The Department deferred to the evaluators regarding how they interpreted offerors' responses to the requirements of 5.5(4). Thus, the omission of the auditor's notes in regard to criterion 36 goes to the weight of the information in the proposal, not whether fatal criteria were met. Evaluation Committee Process At the outset, all evaluators were to meet in Tallahassee to receive copies of the proposals they were to score at an initial meeting of the evaluators. One of the evaluators, Mr. Costlow, became ill before he arrived in Tallahassee to attend this meeting. Ms. Holder, the District 4 substitute for Mr. Costlow, did not attend the meeting and did not receive her copies of the proposals she was assigned to score until April 12, 2002. The rest of the evaluators received their copies on April 9, 2002, as scheduled. Petitioner alleges that Ms. Holder had insufficient time to review the three proposals for District According to Ms. Holder, however, she did have sufficient time to adequately review them. At the initial meeting of evaluators on April 9, 2002, Stephen Poole, the Department's procurement manager for this RFP, gave all the evaluators except Ms. Holder instructions as to how the evaluation was to be accomplished. Ms. Holder was not present at that meeting because she had not yet been appointed to serve in Mr. Costlow's place. Because of Ms. Holder's absence from this initial meeting, Petitioner alleges that she was unqualified to accomplish the task of evaluation having missed Poole's instructions, therefore rendering her scoring of its proposal not fair and contrary to the agency's procedures. However, Mr. Poole gave Ms. Holder instructions over the telephone and those instructions were essentially the same as those given to the other evaluators. Ms. Holder was experienced in evaluating proposals and was not a novice to the process. Nevertheless, she was given Mr. Poole's home telephone number and told to contact him if any questions should arise. Ms. Holder was only required to evaluate the three proposals which pertained to District 4, not all of the proposals for all three districts covered by the RFP. Petitioner also alleged that Ms. Holder was not qualified by training or experience to serve of the evaluation team. During Ms. Holder's twenty-year tenure with the Alcohol, Drug Abuse and Mental Health Program Office, she served as an evaluator between 15 and 20 times for RFP's for Mental Health and Substance Abuse. Ms. Holder was the program director for Mental Health and Substance programs in District 4, with responsibility for developing contracts for substance abuse and mental services for adults and children. She is familiar with the PACT manual and the model developed by the National Association for the Mentally Ill. She has a bachelor's degree in psychology and sociology and a master's degree in rehabilitative counseling from the University of Florida. The only evidence offered by Petitioner that Ms. Holder was not competent to perform her duties as an evaluator was testimony by Mr. Sommers, Petitioner's president and chief executive officer, that she does not answer her telephone messages as promptly as he would wish; that she did not correspond with him as quickly as he wanted her to; and other similar promptness issues. Richard Warfel is a former DCF employee with extensive experience in the area of mental health services in District 4. He has been personally acquainted with Ms. Holder for many years and did not have any reason to question Ms. Holder's competence to perform her duties. The evidence does not support Petitioner's assertion that Ms. Holder was unqualified to be an evaluator or was not sufficiently prepared to conduct the evaluation. Petitioner contends that the evaluation committee did not perform its duties in an objective and fair manner consistent with the Rating Methodology specified in Section 6.3 of the RFP. Specifically, the members of the evaluation committee reviewed the proposals for each of the three districts in random order and did not compare competing proposals to one another within each district. The members of the Evaluation Committee were given specific instruction by Mr. Poole as to how to conduct the evaluation. The evaluators were not required to go through each district's proposals before going through another, and they were to consider the RFP as the beginning and the ending of the universe in terms of the proposal. The evaluators were to read the proposals independently from one another and were to select a proposal at random and to score it based upon that proposal alone. They were not to compare one proposal to another, but evaluate a proposal on its own merit. There was no substantial or material evidence presented by Petitioner to show that any of the members of the evaluation committee's review of the various proposals was not done in an objective and fair manner consistent with the RFP and the instructions given to them by Mr. Poole.1/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Department of Children and Families enter a final order dismissing the bid protest filed by Mental Health Resource Center, Inc. DONE AND ENTERED this 27th day of September, 2002, in Tallahassee, Leon County, Florida. BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of September, 2002.
Findings Of Fact The parties Petitioner, Department of Professional Regulation, Division of Real Estate (Department), is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular Section 20.30, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent, Linda B. Schumacher, is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0171642 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, c/o Linda B. Schumacher, Inc., 155 Worth Avenue, Palm Beach, Florida 33480. Respondent, Linda B. Schumacher, Inc., is now and was at all times material hereto a corporation registered as a real estate broker in the State of Florida having been issued license number 0237256 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 155 Worth Avenue, Palm Beach, Florida 33480. At all times material hereto, respondent Linda B. Schumacher was licensed and operating as a qualifying broker and officer for Respondent Linda B. Schumacher, Inc. The Brokerage While respondent, Linda B. Schumacher (Schumacher) was a qualifying broker and officer of respondent, Linda B. Schumacher, Inc. (the "Brokerage"), at all times material hereto, the proof also demonstrates that one Marion Jones (Jones), a licensed real estate broker in the State of Florida, was also an officer of the Brokerage and duly licensed to manage its affairs during times pertinent to this proceeding. Regarding Jones' involvement in the Brokerage, the proof demonstrates that in 1988, Schumacher had accepted a proposal of marriage from one Peter Widner, and contemplated moving to Wyoming, the state of Mr. Widner's residence, and selling the Brokerage. Consequently, in or about October 1988, with the mutual expectation that acceptable terms could be negotiated with Jones for the purchase of the Brokerage, Schumacher employed Jones to operate and manage the Brokerage. Incident to such employment, Jones acquired signature authority for the escrow and operating accounts of the Brokerage, and operated the Brokerage on a daily basis from November 1988 until March 13, 1989. From November 1988 to mid-January 1989, Schumacher resided in Wyoming with her finance and from mid-January 1989, to March 13, 1989, following the breach of her engagement, she resided in Miami, Florida. During such periods, Schumacher occasionally visited the Brokerage, but the day-to-day responsibility for its operation was reposed in Jones. On March 13, 1989, Schumacher terminated discussions with Jones concerning the proposed sale of the Brokerage, and also terminated Jones' employment as manager of the Brokerage. The predicate for such action was Schumacher's belief that Jones was diverting staff and customers of the Brokerage to her own business, and the consequent belief that Jones no longer intended to purchase the Brokerage. At the time of Jones' termination, she claimed that Schumacher owed her approximately $4,000.00 for management fees, as well as $4,000.00 for the deposit she paid Schumacher toward the purchase of the Brokerage. Schumacher disputed such sums in light of the matters set forth in paragraph 8, supra. Schumacher, concerned with the possibility that Jones might attempt to access the escrow account of the Brokerage to satisfy her claims against Schumacher, closed the escrow account of the Brokerage at Florida National Bank on March 13, 1989, and contemporaneously opened a new escrow account at that institution, over which she alone had signature authority. All funds that existed in the old escrow account were deposited into the new account. 1/ When Schumacher changed escrow accounts, a number of checks were outstanding on the old account. To address such problem, Schumacher promptly drew replacement checks on the new account, and promptly forwarded such checks to most of the affected persons. Here, there is no persuasive proof that any such person was seriously inconvenienced by the change in escrow accounts or failed to receive the monies due them. 2/ While all outstanding checks were replaced with reasonable promptness, the Department points to the return of three checks drawn on the old account as evidencing some impropriety. In this regard, the proof demonstrates that on March 3, 1989, Jones drew three checks on the old escrow account, two payable to Michael Gretschel (Gretschel) in the sum of $102.50 and $57.84, and one payable to Janet Lebedeker (Lebedeker) in the sum of $341.71. 3/ Lebedeker deposited her check on March 13, 1989, when she knew that escrow account had been closed, and Gretschel deposited his checks on March 15, 1989. These checks were returned by the bank because of the closure of that account. Such checks were, however, replaced with reasonable promptness and, under the circumstances of this case, no impropriety is found in Schumacher's change of escrow accounts, and the consequent return by the bank of these checks. The Department's attempt to audit the Brokerage accounts On Friday, March 24, 1989, the Department's investigator, Sharon Thayer (Thayer) contacted Schumacher to schedule an audit of the Brokerage's escrow accounts. At that time, Schumacher agreed to make her books and records available during regular business hours on Monday, March 27, 1989. Later, on March 24, 1989, Schumacher, apparently uneasy least the escrow records not be in order following Jones' departure, contacted her attorney, G. Michael Keenan (Keenan). Keenan telephoned Thayer and told her that she had no authority to inspect the subject records. In response, Thayer directed Keenan to the legal authority for such inspection, and Keenan thereupon accused her of practicing law without a license, threatened to report her to the Bar Association, told her that she had no authority to review such records on Monday, and that she could see such records "when we're ready to let you see them." 4/ Notwithstanding the advice given the previous Friday by Schumacher's attorney that the records would not be produced, Thayer, along with another investigator, presented herself at the Brokerage at approximately 9:00 a.m. and again at 2:30 p.m., March 27, 1989, to conduct the audit. On each occasion the office was locked, and the person in attendance denied admission. On April 5, 1989, the Department, having been denied access to the records of the Brokerage, issued a Subpoena Duces Tecum to Florida National Bank to obtain copies of any trust account records that it might possess. Such subpoena was served by Thayer on April 10, 1989. 5/ By letter of May 8, 1989, Florida National Bank's counsel notified Thayer that it was customary to advise a customer of a request to produce bank records, and that unless she could provide the bank with legal authority to the contrary, the records could not be produced absent such notification. Apparently not receiving any authority to the contrary, Florida National Bank advised Schumacher of the pending subpoena and by letter of May 12, 1989, her counsel advised Thayer that: By means of this letter, please be advised that Linda B. Schumacher, Inc. and Linda B. Schumacher Real Estate, Inc. hereby object to the service of the Subpoena Duces Tecum on Florida National Bank and to the request that monthly bank statements for September, 1988 through March, 1989 on any and all trust accounts and escrow accounts in the name of Linda B. Schumacher, Inc. and/or Linda B. Schumacher Real Estate, Inc. be produced. Further, the undersigned on behalf of Linda B. Schumacher, Inc. and Linda B. Schumacher Real Estate, Inc. have advised Florida National Bank of their objection and directed Florida National Bank not to produce any said documents to the Department of Professional Regulation. As in the past, Linda B. Schumacher, Inc. and Linda B. Schumacher Real Estate, Inc. remain ready, willing and able to permit the Department of Professional Regulation to review their monthly bank statements for September, 1988 through March, 1989 for any and all trust accounts and escrow accounts upon being provided reasonable notice as to the time and date the Department wishes to make the inspection. In the event you wish to make the necessary arrangements to schedule an inspection, please do not hesitate to contact the undersigned immediately inasmuch as my clients remain willing to cooperate with the Department of Professional Regulation. While her counsel's letter of May 12, 1989, references Schumacher's past willingness to make her records available on "reasonable notice," the proof in this case is to the contrary. Rather, the proof supports the conclusion that Schumacher wanted to delay any audit until she could have the records reviewed to insure that they were in order following Jones' departure. 6/ As to her then willingness to produce the records, the proof supports the conclusion that she was then amenable to producing her records; however, the Department delayed contacting her until after May 31, 1989, when Schumacher withdrew her objection to the subpoena served on First National Bank. The audit The First National Bank records were delivered to Thayer on June 2, 1989. Between June 6 and 20, 1989, Thayer audited, with Schumacher's cooperation, the books and records at the Brokerage. The audit of such escrow accounts identified three transactions which the Department contends were improper: a deposit of $2,000.00 made by Val Gabaldon on November 17, 1988, which the Department asserts was not timely returned; a security deposit of $1,500.00 made by Mr. and Mrs. Marvin Silverman on December 2, 1988, which the Department asserts was not timely returned; and, a withdrawal of $50.00 by Schumacher on May 5, 1989, from the escrow account for petty cash. Regarding the Val Gabaldon (Gabaldon) deposit, the proof demonstrates that on November 17, 1988, Gabaldon placed in escrow with the Brokerage a $2,000.00 deposit toward the purchase of a unit at the Palm Beach Hotel. On January 17, 1989, and again on January 25, 1989, Lebedeker, an associate employed by the Brokerage, executed "escrow request forms" seeking the return of the deposit to Gabaldon ostensibly because the contact had been cancelled since financing had not been secured. However, such forms also reflect that on February 2, 1989, Jones, who was then managing the Brokerage, instructed that the deposit not be returned to Gabaldon. At hearing, the Gabaldon purchase agreement was not offered in evidence, Gabaldon did not testify, and no explanation was offered as to why Jones felt it necessary not to disperse the deposit as requested by Lebedeker. Accordingly, there was no competent proof as to the terms of the purchase agreement, when or how it was cancelled, and when the deposit became due to be returned to Gabaldon. The proof does, however, demonstrate that on March 15, 1989, two days after Schumacher regained control of the Brokerage and changed the escrow accounts, that she issued a check to Gabaldon for the return of his deposit, but because the Brokerage had the wrong address for Gabaldon he did not receive his deposit until April 25, 1989. Here, there was no complaint by Gabaldon that his deposit was not returned in accordance with the terms of his purchase agreement, and no impropriety shown regarding Schumacher's handling of this deposit. Regarding the deposit of Mr. and Mrs. Marvin Silverman (Silverman), the proof demonstrates that on or about December 2, 1988, they placed in escrow with the Brokerage a $1,500.00 security deposit under a "memorandum to enter into a lease" of property from Martin and Linda Perlmutter (Perlmutter). That memorandum agreement provided: 7. THIS MEMORANDUM SHALL NOT HAVE THE EFFECT OF A LEASE. THE PARTIES' RIGHTS HEREUNDER ARE CONTINGENT ON (A) FINALIZATION AND EXECUTION OF THE LEASE AGREEMENT WHICH IS CONTEMPLATED BY THIS MEMORANDUM, AND (B) IF APPLICABLE, APPROVAL BY THE CONDOMINIUM BOARD (ASSOCIATION). At hearing, the Department failed to offer the lease agreement ultimately executed by the parties, and consequently the terms of that agreement are not of record. The proof does, however, demonstrate that on March 27, 1989, Perlmutter wrote a letter to Schumacher advising her that the Silvermans had fulfilled their lease agreement, and requesting that their security deposit of $1,500.00 be released to them in full. On May 11, 1989, Schumacher returned the Silvermans' deposit. At hearing, no proof was offered as to when the Perlmutter letter was received by the Brokerage (it was apparently mailed from Nashville, Tennessee), or the reason for the delay, if any, in refunding the deposit. As importantly, neither the Perlmutters nor the Silvermans offered any testimony in these proceedings, and the lease agreement was not offered in evidence. Consequently, there is no competent proof that the deposit was not returned in accordance with the terms of the parties' agreement. Regarding the withdrawal of $50.00 by Schumacher on May 5, 1989, from the escrow account for petty cash, the proof demonstrates that such transaction was inadvertent on her part, in that it should have been withdrawn from her operating account, and that upon such transaction being pointed out to her during the audit of June 6, 1989, by Thayer that Schumacher promptly replaced such funds. Previous disciplinary proceedings Here, there was no suggestion or proof that Schumacher or the Brokerage had previously been the subject of any prior disciplinary proceeding.
Recommendation Based on the foregoing findings fact and conclusions of law, it is RECOMMENDED that a final order be entered finding respondents guilty of having violated the provisions of Section 475.25(1)(e), Florida Statutes, for having failed to produce their records as required by Rule 21V-14.12, Florida Administrative Code, that respondents be reprimanded for such failure, and that all other charges be dismissed. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of September 1991. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of September 1991.
The Issue The issue is whether respondent's certified public accountant's license should be disciplined for the alleged violations set forth in the administrative complaint.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Respondent, Flanagan & Baker, P. A. (respondent or firm), was a certified public accounting firm having been issued license number AD 0006179 by petitioner, Department of Professional Regulation, Board of Accountancy (Board). When the events herein occurred, the firm's offices were located at 2831 Ringling Boulevard, Suite E-118, Sarasota, Florida, and John R. Flanagan and Michael L. Baker, both certified public accountants (CPA), were partners in the firm. In addition, Thomas A. Menchinger, also a CPA, was a junior partner. The firm has since been dissolved, and Flanagan and Menchinger have now formed a new firm known as Flanagan & Menchinger, P. A., at the same address. It is noted that Flanagan, Baker and Menchinger are not named as individual respondents in this proceeding, and at hearing respondent's representative assumed that only the firm's license was at risk. Whether license number AD 0006179 is still active or valid is not of record. In 1987, respondent, through its partner, Flanagan, accepted an engagement to prepare the 1986 calendar year financial statements for Ballantroe Condominium Association, Inc. (BCA or association), an owners' association for a fifty unit condominium in Sarasota. Financial statements are a historical accounting of what transpired for an entity during a particular period of time as well as the status of its assets, liabilities and equity on a given date. They are prepared for a variety of persons who rely upon them to see what transpired during that time period. If the statements are not properly prepared, the possibility exists that harm or other problems may accrue to the users of the statements. After the statements were prepared and issued, a unit owner made inquiry with respondent in August 1987 concerning two items in the statements. When he did not receive the desired response, the owner wrote the Department in September 1987 and asked for assistance in obtaining an opinion regarding the two items. Eventually, the matter was turned over to a Board consultant, Marlyn D. Felsing, and he reviewed the statements in question. Although Felsing found no problems with the two items raised by the owner, he noted what he perceived to be other errors or irregularities in the statements. This led to the issuance of an administrative complaint on September 29, 1988 charging the firm of Flanagan & Baker, P. A., with negligence in the preparation of the statements and the violation of three Board rules. That precipitated the instant controversy. The engagement in question represented the first occasion that the firm had performed work for BCA. The association's annual financial statements from its inception in 1980 through calendar year 1983 had been prepared by Touche Ross & Company, a national accounting firm, and for the years 1984 and 1985 by Mercurio and Bridgford, P. A., a Sarasota accounting firm. Some of these statements have been received in evidence. As a part of the Board investigation which culminated in the issuance of a complaint, Felsing visited respondent's firm, interviewed its principals, and reviewed the work papers and financial statements. A formal report reflecting the results of his investigation was prepared in June 1988 and has been received in evidence as petitioner's exhibit 1. In preparing his report, Felsing relied upon a number of authoritative pronouncements in the accounting profession which underlie the concept of generally accepted accounting principles (GAAP). These included various opinions issued by the Accounting Principles Board (APB), Statements on Auditing Standards (SAS) issued by the Auditing Standards Board, and Accounting Research Bulletins (ARB) issued by the Committee on Accounting Procedure. The three organizations are a part of the American Institute of Certified Public Accountants (AICPA). With regard to the concept of materiality, which requires an accountant to consider the relative importance of any event, accounting procedure or change in procedure that affects items on the statements, Felsing did not exclude any matters on the ground they were immaterial. Rather, he included all possible irregularities, regardless of their materiality, on the theory that the probable cause panel (for which the report was initially prepared) should consider all items in the aggregate. According to Felsing, a number of irregularities or errors were found in the financial statements prepared by respondent. These are discussed separately in the findings below. The first alleged deficiency noted by Felsing concerned a change by the association from accelerated to the straight-line method of depreciation. According to APB 20, such a change is considered to be significant, and "the cumulative effect of changing to a new accounting principle on the amount of retained earnings at the beginning of the period in which the change is made should be included in net income of the period of the change." In other words, APB 20 requires the cumulative effect of the change to be reported in the net income of the current year. However, respondent accounted for the change as a prior period adjustment on the statement of members' equity. Respondent justified its treatment of the item on the ground the prior year's statements prepared by Mercurio and Bridgford, P. A., did not show any accumulated depreciation. Thus, respondent asserted it was merely correcting an error because the other firm had not reported depreciation on the balance sheet. In addition, respondent noted that the effect on the balance sheet was only $721, deemed the item to be immaterial, and concluded its treatment of the item was appropriate. However, APB 20 requires the auditor to address the cumulative effect of the change ($2,072) rather than the effect of only the current year ($721), and therefore the cumulative effect should have been reported in current income. By failing to do so, respondent deviated from GAAP. The association had designated several cash accounts as being reserve accounts for deferred maintenance and replacements. Under ARB 43, such accounts must be segregated in the balance sheet from other cash accounts that are available for current operations. This would normally be done in a separate classification called "other assets" so that the user of the statements would be aware of the fact that the reserves were not available for current operations. However, the statements reflect that three such reserve accounts were placed under the classification of current assets. It is noted that these accounts totaled $25,514, $18,550 and $30,927, respectively. While respondent recognized the difference between cash available for current operations and reserves for future use, and the requirements of ARB 43, it noted that the association's minute book reflected the association regularly withdrew funds from the accounts throughout the year to cover current operations. Also, the prior year's statements prepared by Mercurio and Bridgford, P. A., had classified the item in the same fashion. Even so, if respondent was justified in classifying the accounts as current assets, it erred by identifying those accounts as "reserves" under the current assets portion of the balance sheet. Therefore, a deviation from GAAP occurred. One of the most important items in a condominium association's financial statements is how it accounts for the accumulation and expenditure of reserves, an item that is typically significant in terms of amount. The accounting profession does not recommend any one methodology but permits an association to choose from a number of alternative methods. In this regard, APB 22 requires that an entity disclose all significant accounting policies, including the choice made for this item. This disclosure is normally made in the footnotes to the financial statements. In this case, no such disclosure was made. Respondent conceded that it failed to include a footnote but pointed out that when the statements were prepared by Touche Ross & Company, one of the world's largest accounting firms, that firm had made no disclosure on the basis of immateriality. However, reliance on a prior year's statements is not justification for a deviation from GAAP. It is accordingly found that APB 22 is controlling, and footnote disclosure should have been made. The financial statements contain a schedule of sources and uses of cash for the current fiscal year. According to APB 19, all transactions in this schedule should be reported at gross amounts irrespective of whether they utilize cash. However, respondent reported all transactions in the schedule at their net amount. In justifying its action, respondent again relied upon the prior years' statements of Touche Ross & Company and Mercurio and Bridgford, P. A., who reported the transactions in the same manner. It also contended the item was immaterial and that a detailed explanation of the item is found in the statement of members' equity. Despite these mitigating factors, it is found that the schedule was inconsistent with APB 19, and a deviation from GAAP occurred. Felsing's next concern involved the language used by respondent in footnote 6 to the statements. That footnote pertained to the unfunded reserve and read as follows: NOTE VI - UNFUNDED RESERVE As of December 31, 1986, the Association reserves amounted to $103,953 consisting of $18,931 as a reserve for depreciation and statutory reserves of $85,022. The amount funded was $95,422 leaving an unfunded balance of $8,531 due to the reserves from the operating funds. Felsing characterized the footnote as "confusing" because it referred to depreciation as a part of a future reserve for replacements. Felsing maintained the footnote contained inappropriate wording since depreciation relates to assets already placed in service and not to their replacements. Respondent agreed that the footnote, taken by itself, might be confusing. However, it contended that if the user read the preceding footnote, which he should, there would be no possible confusion. That footnote read as follows: NOTE V - RESERVE FOR DEPRECIATION The Association funds the reserves for depreciation through its operating budget. These funds are to be used for the replacement of property and equipment as the need arises. As previously noted, the Association changed its method of computing depreciation to conform with generally accepted accounting principles. As of December 31, 1986, the reserve for depreciation totaled $18,931. According to respondent, the above footnote made clear to the user that the firm was not referring to depreciation as a reserve but rather was setting aside funds equal to depreciation in an effort to have sufficient cash to purchase assets in the future. While the deficiency here is highly technical and minute in nature, it is found that the footnote is not sufficiently clear and that the user might be confused. Felsing next observed that the footnotes did not disclose how the association accounted for lawn equipment or other capital assets. According to APB 22, such a choice is considered a significant accounting policy and, whatever policy is utilized, the same must be disclosed in the footnotes to the statements. In response, Flanagan pointed to a footnote in Note I of the statements which read in part as follows: Property and Equipment and Depreciation Property and equipment capitalized by the Association is stated at cost. During 1986, the Association changed its method of depreciation from the accelerated cost recovery method to a straight line method in which property and equipment is depreciated over its estimated useful life in accordance with generally accepted accounting principles. According to respondent, this footnote was adequate in terms of explaining the method of depreciation. Also, a number of other statements were introduced into evidence to show that other entities routinely used a corresponding footnote. Flanagan's testimony is accepted as being the most credible and persuasive evidence on this issue, and the footnote is accordingly deemed to be adequate disclosure on this policy. In the statement of members' equity, there is an item in the amount of $1,730 described as "capitalization of lawn equipment expensed in previous year." Although Felsing did not question the amount shown, he faulted respondent for not properly describing whether the item was a change in accounting principle or an error correction. According to APB 20, the disclosure of an error correction is required in the period in which the error was discovered and corrected. Although respondent considered the footnote described in finding of fact 11 to constitute adequate disclosure, it is found that such disclosure falls short of the requirements of APB 20. Work papers are records and documentary evidence kept by the accountant of the procedures applied, tests performed, information obtained and pertinent conclusions reached in the engagement. They serve the purpose of documenting the work performed and provide verification for the accountant. In addition, another important, required tool is the audit program, a written plan for how the auditor intends to perform the audit. The plan serves the purpose of documenting the accountant's mental process of deciding what procedures are necessary to perform the audit and to communicate those procedures to the persons actually conducting the audit. The audit plan should include in reasonable detail all of the audit procedures necessary for the accountant to perform the audit and express an opinion on the financial statements. Although a variety of checklists have been prepared by the AICPA and other organizations, each audit program must be tailored to fit the needs of a particular client. Felsing noted what he believed to be a number of deficiencies with respect to respondent's work papers, audit program, and engagement planning. In reaching that conclusion, Felsing relied upon various SAS pronouncements which govern that phase of an auditor's work. Those pronouncements have been received in evidence as petitioner's exhibits 7-14. Although the work papers themselves were not introduced into evidence, Felsing stated that his review of them reflected they were "deficient" in several respects. For example, he did not find a planning memorandum, time budget, checklist or other evidence that planning procedures were performed as required by SAS 22. In this regard, Flanagan corroborated the fact that no formal planning memorandum to the file was prepared. Although respondent's audit program was written for a condominium association, Felsing found it "extremely brief" and was not tailored to this particular client. He opined that such a program should have included reasonable detail of all audit procedures necessary to accomplish the audit and to express an opinion on the financial statements. In particular, it was noted that some required procedures were not on the list while some procedures actually used by respondent were not included. Through conversations with respondent's members, Felsing learned that much of the audit work was performed by Menchinger, the junior partner in the firm. In addition, "a few" other work papers were prepared by an unknown assistant. Although Menchinger reviewed all work performed by the assistant, Felsing found no evidence that the papers were reviewed by the supervising partner, Flanagan. Such review, which is a required step in the audit process, is generally evidenced by the supervising partner placing check marks or initials on the individual work papers. Felsing noted further that the decision to rely on the testing of internal controls was not documented in the work papers by respondent. He added that the amount of time budgeted by respondent for this engagement (around thirty hours) was inadequate given the fact that it was the first year the firm had prepared this client's statements. Finally, Felsing concluded that the violations were not peculiar to a condominium association but were applicable to all enterprises. Respondent pointed out that the association was a small client with less than five hundred line items, and the audit program and engagement planning were planned within that context. Respondent introduced into evidence its audit program which contained the steps taken by the firm in planning for the engagement. Testimony that all steps contained therein were followed was not contradicted. Similarly, Flanagan testified without contradiction that he reviewed all work performed by Menchinger but did not evidence his review with tick marks on each page. According to Flanagan, on a small audit such as this, he considered the signing of the tax return and opinion letter evidence that he had reviewed the work papers. However, Flanagan acknowledged that someone examining the papers would not know they had been reviewed by the supervising partner. Based upon the above findings, and after reconciling the conflicting testimony, it is found that respondent violated GAAP by failing to have a planning memorandum, time budget, and evidence of testing of internal controls within its work papers. All other alleged violations are found to without merit. Respondent has continued to represent the association since the Board issued its complaint. Indeed, Flanagan noted that the association is pleased with the firm's work, and this was corroborated by a letter from the association's board of directors attesting to its satisfaction with the firm. There was no evidence that the association or any other third party user of the statements was injured or misled by relying on the statements.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of the violations discussed in the conclusions of law portion of this Recommended Order, and that license number AD 0006179 be given a reprimand. All other charges should be dismissed. DONE and ENTERED this 30th day of October 1989, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of October 1989.
The Issue Whether Respondents violated the statutes and rules alleged in the Second Amended Administrative Complaint; and, if so, what is the appropriate penalty to be imposed against Respondents.
Findings Of Fact OFR is the state agency charged with administering and enforcing chapter 560, Florida Statutes, including part II related to money services businesses. At all times material hereto, Payservices has been a foreign corporation and part II licensee pursuant to chapter 560, specifically a "money services business," as defined in section 560.102(22), and "money transmitter," as defined in section 560.102(23).4/ At all times material hereto, Mr. Danenberg has been the chief executive officer, compliance officer, and an owner of Payservices. As such, Mr. Danenberg is an "affiliated party" and a "responsible person" as defined in sections 560.103(1) and 560.103(33). Count I Licensees, such as Payservices, are required to annually file a financial audit report within 120 days after the end of the licensee's fiscal year. The financial audit report is prepared by a certified public accountant and is used to demonstrate to OFR that the licensee has the financial health to conduct its business and transmit funds within the State of Florida. Payservices' fiscal year ends December 31st. Respondents were required to provide Payservices' 2016 financial audit report to OFR by no later than May 1, 2017. On December 20, 2017, William C. Morin, Jr., OFR's Chief of the Bureau of Registration, contacted Payservices by email with regard to Payservices' failure to timely file a financial audit report within 120 days after the 2016 fiscal year ended. Mr. Danenberg responded by email that same day, telling Mr. Morin that Payservices' accountant had prepared a financial audit report "many months ago," and that it was his "impression" that it had been uploaded to the REAL system "at some point when we filed the quarterly reports." Mr. Danenberg attached to his December 20, 2017, email what OFR accepted as the financial audit report that same day. Notably, the document indicated it was prepared by a certified public accountant on June 15, 2017, after the May 1, 2017, deadline. In any event, Mr. Morin reviewed the REAL system regarding Payservices and determined there were no problems with the REAL system's ability to accept uploaded documents. Mr. Morin testified that he could see on the REAL system that Payservices successfully uploaded a quarterly report and Security Device Calculation Form on January 26, 2017, which created a transaction number. Mr. Morin also observed that Payservices started to upload its financial audit report, which would create a transaction number, but no financial audit report was actually attached and uploaded to the REAL system on January 26, 2017, under that transaction number. According to Mr. Morin, Payservices may have attempted to start to file a financial audit report on January 26, 2017, but it did not complete the transaction because no financial audit report was attached. At hearing, Mr. Morin acknowledged that: "When I looked at the Financial Audit Report transaction, nothing was attached. And I also know that the functionality of the REAL system will kind of allow for the transaction to be completed and nothing attached." Tr. p. 100. Mr. Morin testified that Mr. Danenberg was cooperative when he was contacted on Decemeber 20, 2017, and submitted the financial audit report. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not submit their financial audit report to OFR until December 20, 2017, almost eight months after the May 1, 2017, deadline. Count II Licensees, such as Payservices, are required to annually file Form OFR-560-07, Security Device Calculation Form, by January 31st of each calendar year for the preceding calendar year. The Security Device Calculation Form requires licensees to report to OFR the dollar amount of transactions with Florida consumers. The dollar amount of transactions identified in the form is then utilized by OFR to determine if additional collateral is necessary to protect Florida consumers in the event a claim is made against the collateral for monies that were not properly transmitted by the licensee. Andrew Grosmaire, OFR's Chief of Enforcement in the Division of Consumer Finance, acknowledged at hearing that a licensee has 60 days to amend the face value of its surety bond, should an increase be required, and that at all times material hereto, the value of Payservices' surety bond has been correct for the minimum amount required. Nevertheless, Mr. Morin testified that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. The persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not file Form OFR-560-07, Security Device Calculation Form, until February 10, 2018, ten days late. Count III Licensees, such as Payservices, are required to update information contained in an initial application form, or any amendment to such application, within 30 days after the change is effective. In Payservices' initial application dated September 25, 2015, Respondents identified Corporate Access, Inc., as its registered agent with an address for service of process at 236 East 6th Avenue, Tallahassee, Florida 32303. According to the Department of State, Division of Corporation's records, on January 10, 2017, Mr. Danenberg was appointed as Payservices' registered agent with a new address for service of process at 300 West Palmetto Park Road, A210, Boca Raton, Florida 33432. Respondents filed an amended license application with OFR on August 28, 2017, which still listed Corporate Access, Inc., as the registered agent for service of process. On February 26, 2018, Respondents amended their registered agent information with the Department of State listing a new address for Mr. Danenberg at 14061 Pacific Pointe Place, No. 204, Delray Beach, Florida 33484. Mr. Morin testified that at no time have Respondents updated their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.5/ Mr. Morin and Mr. Grosmaire testified that the reason a licensee needs to update a change in the registered agent's name and address is so that OFR may effectuate service of process against the licensee. Yet, Mr. Grosmaire acknowledged that OFR has access to the Division of Corporation's records. Nevertheless, the persuasive and credible evidence adduced at hearing clearly and convincingly establishes that Respondents did not update their initial application with OFR to reflect Mr. Danenberg as the registered agent for Payservices and his address as the registered agent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that OFR impose an administrative fine against Respondents in the amount of $6,000. DONE AND ENTERED this 16th day of December, 2019, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of December, 2019.
The Issue The issues are whether Respondent’s decision to disqualify Petitioner’s response to an invitation to negotiate was clearly erroneous, contrary to competition, arbitrary, or capricious and whether Respondent’s decision not to disqualify Intervenor’s response to the same invitation to negotiate was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact On May 26, 2000, Respondent’s Office of the District Administrator, District 1, issued Invitation to Negotiate ITN-00-AJ01 (ITN). The ITN is for a contract under which the successful applicant would become the “community-based lead agency for foster care and related services in Escambia County.” Section 1 of the ITN is the Introduction. Section 1.1 of the ITN states that Section 409.1671, Florida Statutes, “directs [Respondent] to identify and contract with highly qualified community based organizations that are interested in serving as the lead agency for an integrated system of foster care and appropriate related services.” In response to this legislative mandate, District 1 “is planning a system redesign in which community-based organizations will assume the service provision role currently held by the state.” Section 1.2 of the ITN states that the purpose of the ITN is to solicit the community-based agency that will serve as the lead agency in Escambia County for the integrated provision of foster care and related services. Foster care and related services include “protective services, family preservation, independent living, emergency shelter, residential group care, foster care, therapeutic foster care, intensive residential treatment, foster care supervision, case management, post- placement supervision, and family reunification.” Section 1.2 notes that state-employed protective investigators will continue to receive and investigate complaints of child abuse. Section 1.2.A of the ITN describes this project as one of “major scope” and cautions that “[i]t will take a significant period of time for the selected lead agency to fully develop and implement a community-based system of care for this population.” Within the framework of existing laws, the selected agency “will be encouraged to develop innovative child focused intervention protocols and program components.” Section 1.2.A identifies the “minimal design elements” that must be included in any contract, regardless how the selected lead agency structures the project. These elements include: The selected lead agency will be responsible for all aspects of the delivery of foster care and related services. Within the scope of their expertise and resources, the lead agency can directly supply needed services to children and their families. A network of sub-providers will be developed by the lead agency to assure access to services not available through the lead agency. Capacity and financial risk issues will be managed by the lead agency. An automated system will be put in place by the district in collaboration with the selected lead agency that will allow for real-time communication as well as data transfer between [Respondent], the lead agency and the judicial system. This mechanism will allow judges to be quickly apprised of the progress of children and families under the supervision of the court. A comprehensive quality improvement system must be established by the lead agency. The lead agency and provider network will be accredited in accordance with department policy. In addition, the lead agency will identify and meet the training and job skill development needs of all employees of the system. . . . Section 1.2.C of the ITN describes the relationship between District 1 of Respondent and the lead agency. This ITN starts the process by which Respondent will be relieved of responsibility for foster care and related services in Escambia County. Section 1.2.C notes: “The district will shift from performing to technical assistance and quality assurance.” Section 1.2.E of the ITN describes the start-up process. Section 1.2.E states that the most important part of this process of the privatization of foster care and related services is “[m]oving forward in a planned and deliberate manner.” Section 1.2.E warns: “Transitioning from a broad concept to a carefully implemented system of community-based care requires a period of concurrent planning between the district, the alliance [a community group initially comprising the District 1 Health and Human Services Board and the Circuit Court Chief Judge’s Children’s Council] and the selected lead agency.” Section 1.2.E anticipates a “start-up contract” for a term of six to nine months, during which time Section 1.2.E identifies several deliverables that Respondent will require from the lead agency. Among these deliverables is: “The lead agency will develop a plan for the maximization of Medicaid dollars and all other federal funding streams associated with child protective services.” Section 1.2.E states that, during the start-up period, Respondent will continue to assure the safety of children, while the lead agency submits the deliverables. The end of the start-up contract occurs when the lead agency “demonstrates readiness to assume the management of the sub- provider network and the actual delivery of foster care and related services.” Section 1.2.E states that, at this point, Respondent and the lead agency will negotiate a “service contract,” which will “systematically stage the transfer of foster care, protective supervision, adoptions and all related functions from the department to the lead agency.” Section 1.2.E contemplates that the parties will sign the service contract by July 6, 2001. Section 1.3 of the ITN restates that Respondent will enter into a “start-up contract” with the applicant that Respondent chooses as the lead agency. Conflicting somewhat with Section 1.2.E as to the term of the start-up contract, Section 1.3 states that the term may be six to twelve months. More importantly, Section 1.3 restates the purpose of the start-up contract: “At the conclusion of this contract, [Respondent] will make a determination of the readiness of the provider for a service contract. This determination will be made on the basis of a review of the deliverables required under the start-up contract . . ..” The resulting service contract will be for a three-year term. Section 1.4.A of the ITN defines “[a]pplicant” as: “A not for profit community-based agency that successfully submits an application for consideration under this [ITN].” Section 1.4.R defines “[s]elected applicant” as: “The applicant selected for negotiation under the terms and conditions of this [ITN].” Section 1.4.M defines “[l]ead agency” as: “The not for profit community-based provider responsible for coordinating, integrating and managing a local system of supports and services for children who have been abused, abandoned or neglected and their families. The lead agency is also referred in any contract awarded from this [ITN] as the ‘Provider.’” Section 2 of the ITN is the Invitation to Negotiate Information. Section 2.2 of the ITN warns: Failure to have performed any contractual obligations with [Respondent] in a manner satisfactory to [Respondent] will be a sufficient cause for termination. To be disqualified as an applicant under this provision, the applicant must have: 1) previously failed to satisfactorily perform in a contract with [Respondent], been notified by [Respondent] of the unsatisfactory performance, and failed to correct the unsatisfactory performance to the satisfaction of [Respondent] or, 2) had a contract terminated by [Respondent] for cause. Section 2.6 of the ITN states: “Attendance at the applicant’s conference is a prerequisite for acceptance of applications from individuals or firms.” Section 2.9 of the ITN sets a deadline for submitting all applications by 5:00 p.m. local time on August 24, 2000. This section adds: “[Respondent] reserves the right to reject any and all applications or to waive minor irregularities when to do so would be in the best interest of the State of Florida. Minor irregularities are defined as variations from this [ITN] terms and terms and conditions which does [sic] not effect [sic] the price of the application, or give the prospective applicant an advantage or benefit not enjoyed by other prospective applicants, or does not adversely impact the interest of [Respondent].” Section 2.13 of the ITN provides that any person who is adversely affected by Respondent’s decision concerning a procurement solicitation or contract award may file a protest, pursuant to Section 120.57(3), Florida Statutes. Section 2.14 of the ITN sets forth the evaluation procedures. Section 2.14.A states: “Before the district initiates a negotiation with any potential provider, all applications received will be ranked according to the evaluation criteria and score sheet contained in Appendix II of this [ITN]. . . .” Section 2.14.B states: [The evaluation] team will utilize the methods described in Section 7 and the criteria listed in Appendix II of this [ITN] to rank each application received by the district. . . ..” Section 2.14.C adds: “At the conclusion of the evaluation process, the District Administrator will designate a Lead Negotiator and four additional persons to enter into negotiations with the highest ranked applicant for selection of a lead agency. This negotiation for a start-up contract will begin with the highest ranked applicant and continue through the rankings until an award is made. ” Section 3 of the ITN identifies the Minimum Program Requirements. Section 3.1 of the ITN describes Respondent’s expectations of the services to be delivered by the “selected applicant.” Section 3.2 of the ITN adds that the “selected applicant” shall be knowledgeable of all relevant state and federal laws and shall ask Respondent for assistance when necessary. Section 3.2 notes that, at a minimum, the “selected applicant” will be conversant with nine groups of federal and state laws. Among these requirements is Section 3.2.D, which states: “The selected applicant shall ensure compliance with Title IV-B of the Social Security Act, Title IV-E of the Social Security Act, Social Services Block Grant (SSBG), Title XIX (Medicaid), and Temporary Assistance for Needy Families (TANF) requirements.” Section 3.3 of the ITN states: “The purpose and intent of any contract awarded from this [ITN] is to meet the following departmental goals and the principles outlined in Section 1.1 of this [ITN] . . ..” What follows are 13 specific goals to assure the safety and welfare of the children served by the lead agency. Section 3.8 of the ITN states: “District 1 intends to enter into the start-up contract referenced above. The objective of this start-up contract is to prepare the selected lead agency to perform the tasks listed in this section. Written evidence of an organization’s capacity, prior experience and potential to ultimately perform tasks of this scope will be given considerable emphasis and weight when [Respondent] determines with which applicant to enter into negotiations.” Section 3.8.A then details numerous requirements to be imposed by the “selected applicant,” including the submittal, for prior approval, of any new procedures or policies that may affect the State Plan regarding Title IV-E claims or other sources of federal funds. Section 3.9 of the ITN states: Applicants shall include in their application the proposed staffing for technical, administrative, and clerical support. The successful applicant shall maintain an adequate administrative organizational structure and support staff sufficient to discharge its contractual responsibilities. The selected applicant and any subcontractors shall meet, at a minimum, the staff ratios found in Chapter 65C-14, F.A.C., for residential group care. Section 3.10 of the ITN requires the “selected applicant” to ensure that its staff and the staff of its subcontractors meet the qualification requirements of Chapters 65C-14 and 65C-15, F.A.C.; the background screening requirements of Section 435.04, Florida Statutes; and the training and certification requirements of CFOP 175-78, Certification Procedure for Professional Child Protection Employees. Section 3.20 of the ITN identifies the performance measures to be applied to the evaluation of the services provided by the lead agency. Section 3.20.A lists outcomes such as 95 percent of the children served will not be the victims of verified reports of abuse or neglect while receiving services, 85 percent of the children in foster care for less than one year will have had less than two placements, and 100 percent of all judicial reviews will be completed within the statutory deadlines. Section 3.20.B identifies other outcomes whose percentage of achievement will be established in the future; samples of these are the percentage of children who have been in shelter for more than three days who have a family-safety plan upon their release from the shelter and the percentage of children who are placed in out-of-home care and who are later reunited with their families. Section 3.21.C of the ITN warns: “Upon execution of the contract resulting from this [ITN], the successful applicant must meet the standards set forth in Section 3.20 ” Section 3.23 of the ITN provides that the “selected applicant will agree” to coordinate with various other agencies in providing foster care and related services. Section 4 of the ITN covers Financial Specifications. Section 4.2 of the ITN requires the “selected applicant” to submit a “cost allocation plan” that it has been developed in accordance with the Office of Management and Budget (OMB) Circular A-122. The cost allocation plan “must describe the allocation methodologies used by the selected applicant to claim expenditures for reimbursement under any service contract awarded from this [ITN].” Section 4.4 of the ITN requires the “selected applicant” to submit a “financial and service plan” that assures that, among other things, “[s]tate funds in the contract must be spent on child protection activities in ways that allows the state to maximize federal funding.” Section 5 of the ITN addresses Standard Contract Provisions. Section 5.1 of the ITN incorporates the appendix containing model contract provisions to be incorporated into any contract resulting from the ITN. Section 6 of the ITN contains Instructions to Prospective Applicants to the ITN. The flush language under this section states that Respondent “will not . . . consider. . .” applications submitted after the deadline and that applicants must submit one original and nine copies of their applications. Also, an officer of the “selected applicant agency” must sign at least one copy of the application. Another provision covers the typographical presentation of application material. The last sentence of the flush language states: “Each application must follow the document structure listed in Sections 6.1 through 6.9 of this [ITN].” Section 6.1 of the ITN requires the execution of a standard acknowledgement form. Section 6.2 requires that the second page of the application consist of a title page with such information as the ITN number and name of the applicant. Section 6.3 requires a one-page executive summary of the application. Section 6.4 requires a table of contents following the executive summary and, after the table of contents, a cross-reference table covering all of the responses required by Section 6 of the ITN. Section 6.5 requires a demonstration of the applicant’s “comprehensive understanding of the scope of the issues associated with the delivery of child protection services in Escambia County” and a presentation of the applicant’s “perspective regarding community[-]based . . . care with foster care and related services. ” Section 6.6 of the ITN is entitled, “Description of Organizational Capacity.” The flush language in Section 6.6 states: “In this section the applicant will, at a minimum[,] address the following factors ” Section 6.6.A is headed, “Description and Qualifications of the Organization.” Section 6.6.A requires 13 items, including articles of incorporation, services currently provided, and formal and informal connections to Escambia County. Section 6.6.B is headed, “Administrative/Fiscal: The applicant must supply the following information ” Section 6.6.B requires the following nine items: The organization’s annual budget. A three-year history of audited financial statements. An estimate of advance payments (if needed) to support this project. The most recent audit reports complete with the management response. Evidence of compliance with previous correction action plans proposed by [Respondent] through any contract. A documented history of maximizing Medicaid revenues. Provide a discussion of the organization’s system of staff recruitment, screening, pre-service training, in-service training, staff development and employee evaluation. Include a three-year staff retention study. A copy of the organization’s disaster readiness plan(s). [Deleted from ITN] A copy of minority business enterprise certificate issued by the Department of Management Services, if applicable. Section 6.6.C is headed, “Scope of the Organization: The applicant must address the following capacity issues . . ..” Section 6.6.C requires eight items, including Section 6.6.C.2, which states: “Evidence of an infrastructure that includes automated communication and record keeping systems that can be linked to the judicial system and the department.” Section 6.6.D is headed, “Clinical Capacity: The application must address each of the following items ” Section 6.6.D lists six items. Section 6.6.E is headed, “Quality Improvement: The application must address each of the following items ” Section 6.6.E lists seven items, including Section 6.6.E.3, which states: “The ability of the organization and the structure through which the standards found in Section 3.20 of this document will be met.” Section 6.7 of the ITN is entitled, “Proposed Statement of Work.” The flush language explains that the statement of work is “to be general and increase in specification during the period of time covered by a start-up contract.” Section 6.7.G states: “Explain how the applicant will provide for integrated generic and specialized case management.” Section 6.8 of the ITN is entitled, “Proposed Implementation Plan.” This section requires the “applicant’s proposed time-lines for sequencing of all the activities that will lead to full implementation of the items in Section 3.” Section 6.9 of the ITN is entitled, “Mandatory Certifications, Assurances and Statements.” This section lists several executed documents that the application must include. Section 7 of the ITN is entitled, “Application Evaluation Criteria and Rating Sheet.” Section 7.A states that the score sheets “for evaluating the [ITN responses]” are in Appendix II. Section 7.A warns: “The score sheet is the instrument used to assess the degree to which the applicant’s response meets the criteria of this [ITN].” Appendix II of the ITN is entitled, “Evaluation Criteria and Scoring Sheet.” The first section of Appendix II is the “Evaluation Methodology,” which states in its entirety: The evaluation team will score the application using the criteria and scoring procedures found in each domain of this appendix. The score for each criteria will be established by consensus of the evaluation team. The scores assigned to each criteria [sic] will be added to determine the final score for each domain. The scores from each domain will be summed to determine the final score for the application and annotated on the attached score sheet. Domain A (Disqualifying Criterion) contains fatal items that must be present if the application is to be scored. With no disqualification resulting from the review of Domain A, Domains B though E will be scored based on the procedures and standards listed. Appendix II, Domain A is entitled, “Disqualifying Criteria.” The first section under Domain A is “Scoring Procedure,” which states: “Score each criteria [sic] as present or absent. If any of these criteria are scored as absent, the applicant is disqualified.” The second section under Domain B is “Criteria,” which lists 23 items. The 23 items are: Application was received at the time and date specified in Section 2.9 of this [ITN]. One original and 9 copies of the application were received by the department in the manner and location specified in Section 2.9 of this [ITN]. The application included a signed and original State of Florida Invitation to Negotiation Contractual Services Acknowledgement Form, PUR 7105. (See Appendix IX) The application included an original signed Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion Contracts/Subcontracts. (See Appendix X) The application included an original signed Acceptance of Contract Terms and Conditions indicating that the applicant agrees to all department requirements, terms and conditions in the [ITN] and in the department’s Standard Contract. (See Appendix XI) The application included an original signed Statement of No Involvement form. (See Appendix XII) The application included an original signed District 1 Statement of Assurances (See Appendix XIII) The application followed the document structure listed in Section 6.1-6.9 of this [ITN]. All forms submitted included an original signature from an individual authorized to bind the applicant to the terms and conditions of this [ITN]. The application contains the title page, the abstract, the table of contents and cross reference table as required in Sections 6.2-6.4 of this [ITN]. Articles of Incorporation. [deleted from ITN] Certificate of Good Standing from the Secretary of State. Documentation from the U.S. Internal Revenue Service of the organization’s Section 501(c)(3) status. Evidence that the applicant provides for and supports a Drug-free Workplace. Evidence that the applicant is willing to comply with the Environmental Tobacco Smoke Restrictions. Evidence the applicant does not employee unauthorized aliens. Three history of financial statements. A disclosure of any financial difficulties and extraordinary obligations. An estimate of advanced payments if needed to support this project. Documentation of compliance with past departmental or Florida state contracts. Most recent financial audit reports complete with management response including evidence of sound credit rating. A copy of the Application Guarantee. Attendance at all applicant conferences is a pre-requisite for acceptance of applications from individuals or firms. [deleted from the ITN] Appendix II, Domains B through E are score sheets. Domain B covers Section 6.5, Domain C covers Section 6.6, Domain D covers Section 6.7, and Domain E covers Section 6.8. Domain C, Factor B, Item 2 covers Section 6.6.B.2. This item states: 2. Analysis of the three year audited financial statements. (See Section 6.6B.2) Points Standard Poor Average Above Average Excellent NOTE: The analysis of the financial statements by the department will at a minimum include: Calculation of selected financial ratios Review of accounting policies A review of credit history will be included in this analysis No items in Domains B through E cover Section 6.6.B.3 through 6.6.B.5. Domain C, Factor B, Item 3 covers Section 6.6.B.6. This item states: 3. History of maximization of Medicaid revenues. (See Section 6.6B.6) Points Standard No history Some experience Experienced Well documented history Domain C, Factor B, Item 4 covers Section 6.6.B.7. This item states: 4. Organization’s system of staff recruitment, training, evaluation and retention. (See Section 6.6B.7) Points Standard No system Incomplete system System in place Well developed / comprehensive system Domain C, Factor C, Item 2 covers Section 6.6.C.2. This item states: 2. Automated communication and record keeping systems. (See Section 6.6C.2) Points Standard No automated systems Limited automation, internal only Currently automated, limited external applications Comprehensive systems Petitioner and Intervenor attended the applicant’s conference, which was held on June 23, 2000. Respondent duly answered all questions of Petitioner and Intervenor. Petitioner timely submitted a response to the ITN on August 22, 2000, and Intervenor timely submitted a response to the ITN on August 24, 2000. These were the only responses to the ITN. Respondent opened the responses on August 25, 2000. Respondent initially disqualified Petitioner’s response by, letter dated August 29, 2000, on the erroneous ground that Petitioner had not attended the applicant’s conference. Withdrawing the August 29 letter, Respondent disqualified Petitioner’s response on other grounds, as cited in a letter dated September 6, 2000. The September 6 letter disqualifies Petitioner’s response because it omitted several items identified in three criteria contained in Appendix II, Domain A. The September 6 letter cites seven “mandatory elements from Section 6 that were referenced in Criteria [sic] 8,” but Respondent later cited only three omissions under Criterion 8: 6.6, B.2: only the 1998-1999 fiscal year audited financial statement was included. 6.6, B.5: Family Safety Program contract corrective action plans were not included. 6.6, B.7: a three year staff retention study was not included. Relying on Criteria 18 and 21, respectively, the September 6 letter cites the following grounds for disqualification of Petitioner’s response: Only two years of financial statements were included, but three were required. Incomplete documentation was provided. No evidence of compliance with the Family Services Program was found in the proposal. Petitioner timely filed a protest and formal written protest of Respondent’s disqualification of Petitioner’s response. Petitioner contends that the disqualification of its response was clearly erroneous, contrary to competition, arbitrary, and capricious. In particular, Petitioner contends that Respondent applied more stringent standards in its examination of Petitioner’s response than it did in its examination of Intervenor's response. The introduction to Petitioner’s response identifies Bridgeway Center, Inc., as the proposed lead agency, and Foster America, Inc., as its presumably prime subcontractor, although Foster America, Inc., will do business in Florida under the name of Managed Family Services. The title page to Petitioner’s response identifies Bridgeway Center, Inc., and Managed Family Services as the “applicant organization.” Section 2.1.B of Petitioner’s response details the substantial experience of Foster America, Inc., as “the first company established in the United States to address the issues pertaining specifically to the management of foster care.” Considerable portions of the ensuing sections of Petitioner’s response describe the capabilities of Foster America, Inc., to meet the requirements of the ITN. Appendix 16 of Petitioner’s response is entitled “Three-Years of Financial Statements.” Appendix 16 consists of the following financial information for Bridgeway Center, Inc.: statements of financial position for fiscal years ending in 1996-99 and statements of activities for fiscal years ending in 1996-99. At the bottom of each of the four pages containing these statements is the declaration: “The accompanying notes are an integral part of these financial statements.” No notes accompany the financial statements contained in Appendix 16. Nothing in Petitioner’s response indicates that these financial statements were audited. These financial statements do not include a statement of functional expenses and statement of cash flows. The attached financial statements do not contain auditor’s reports describing the scope of the opinion. Appendix 18 of Petitioner’s response is entitled, “Most Recent Audit Reports with Management Response Including Evidence of Sound Credit Rating.” Pertaining to fiscal year ending 1999, this set of documents starts with an “independent auditor’s report, stating, among other things, that the financial statements “present fairly, in all material respects, the financial position of Bridgeway Center, Inc. as of June 30, 1999 and the statement of activities and its cash flows for the year then ended in conformity with generally accepted accounting principles.” Following the main independent auditor’s report, the 1999 financial statements comprise a statement of financial position, statement of activities, statement of functional expenses, and statement of cash flows. Following the four financial statements, twelve pages of notes explain in detail many of the individual items contained in the financial statements. Following a nonrequired schedule of revenues, a schedule of expenditures of federal awards and other contract and grant activity, with accompanying notes, responds to the requirements of OMB Circular A-133. Following these items is another independent auditor’s report, also responding to the requirements of OMB Circular A-133. Next is another independent auditor’s report, responding to the state requirement that it opine as to management’s assertion of its compliance with state law. The final document in this set is a management letter from the auditor identifying deficiencies in internal controls, making recommendations for improving operating efficiency, and recording management’s response to each of these observations and recommendations. Strictly speaking, Appendix 18 of Petitioner’s response contains audited financial statements, including notes, only for the fiscal year ending in 1999. However, the statement of financial position and statement of cash flows contain the identical information for the fiscal years ending 1998 and 1999. The statement of activities contains nearly the same information for both years, adding for 1999 only a breakdown of which revenues are unrestricted and which are restricted. The statement of functional expenses contains considerably more detailed information for 1999. The main independent auditor’s report states: “Information for the year ended June 30, 1998, is presented for comparative purposes only and was extracted from the financial statements from that year, on which we presented an auditor’s report dated [approximately one year earlier].” Thus, Petitioner’s response contains audited financial statements only for the fiscal year ending in 1999, but also contains considerable, but not all, information from the audited financial statements for the preceding fiscal year. Petitioner’s response contains considerably less information for the fiscal year ending in 1997. The adequacy of Petitioner’s response, of course, depends on the determination of the specific requirements of the disqualification provisions. There is little agreement on these specific requirements. Respondent and Intervenor erroneously contend that Criterion 8 of Domain A incorporates by reference all of the requirements of Sections 6.1 through 6.9. However, Criterion 8 requires only that the “application followed the document structure listed” in these sections. Nothing in the record casts much light upon the meaning of “document structure.” At a minimum, though, the requirement that each application “follow” the “document structure” listed in Sections 6.1 through 6.9 would be an odd way of requiring that the application contain all of the items required in these sections. In opposition to this contention of Respondent and Intervenor, Petitioner identifies several scoring matrices that assign zero points to responses showing no evidence in response to a specific requirement within Sections 6.1 through 6.9. Petitioner reasons that the absence of evidence is tantamount to the omission of an item. Petitioner then concludes that it would make little sense if the absence of evidence, or omission of such an item, meant the disqualification of the application. Petitioner makes a good point here. The scoring matrices for items for which an omission explicitly means disqualification, such as financial statements, do not assign zero points for the omission of such items. The scoring matrices assign zero points for the omission of an item only as to items that are not explicitly the subject of disqualification. Petitioner relies upon the common definition of structure as, according to Webster’s III New College Dictionary (1995): “Something made up of a number of parts held or put together in a specific way. The manner in which parts are arranged or combined to form a whole.” This is a good definition of “structure” and helps define the meaning of the somewhat obscure phrase, “document structure.” It suffices for this case to determine that “document structure” does not mean each and every requirement contained in Sections 6.1 through 6.9. Most likely, “document structure” means only that each application has to contain documents corresponding to each of the requirements stated in each of these sections: i.e., a standard acknowledgement, title page, executive summary, table of contents and cross- reference table, organizational perspective, description of organizational capacity, proposed statement of work, proposed implementation plan, and all of the specified mandatory certifications. Thus, an applicant could avoid disqualification under Criterion 8 by, as to Section 6.6, including a document describing its organizational capacity, even though the document may have omitted certain items required under Section 6.6, such as professional affiliations of the applicant. Because “document structure” does not incorporate all of the Section 6 requirements into Criterion 8, Respondent has erroneously relied upon the first three, bulleted grounds for disqualification, which identify omissions of Section 6 requirements. Respondent and Intervenor have never contended that Petitioner’s response fails to satisfy the narrower interpretation given “document structure” in this recommended order. Thus, Criteria 18 and 21 are the only grounds on which Respondent could disqualify Petitioner’s response. Criterion 18 requires a “three [sic] history of financial statements.” This obvious typographical error did not obscure for Petitioner the intended meaning of this criterion: any application omitting three years of financial statements would be disqualified. The key question is exactly what the ITN requires, as to financial statements, to avoid disqualification. The failure of Criterion 6 to incorporate, among other provisions, the specific requirements of Sections 6.6.B.2 for a three-year history of “audited” financial statements is significant. Criterion 18 does not require “audited” financial statements, so, unless Criterion 18 incorporates Section 6.6.B.2 into the disqualifying criteria, the omission of audited financial statements, while possibly a scoring matter, is not a basis for disqualification. The identification of a requirement in Domain A does not equate to the identification of a near counterpart to that requirement in Sections 6.1 through 6.9. For example, Criterion 19, which requires disclosure of “any financial difficulties and extraordinary obligations,” has no counterpart in Section 6, or anywhere else in the ITN. Likewise, the portion of Criterion 22 requiring “evidence of sound credit rating” has no counterpart in Section 6, or anywhere else in the ITN. By adding new requirements for disqualification purposes, Domain A does not serve merely as a collection of references to requirements contained in Section 6 or elsewhere in the ITN. This means that it is not possible to read into or out a specific Domain-A requirement that resembles a specific Section-6 requirement those elements necessary to transform it into the Section-6 requirement. Therefore, except for the uncontroversial correction of the obvious typographical error, Criterion 18 is a complete statement of the disqualification requirement concerning financial statements. And Criterion 18 obviously omits the requirement in Section 6.6.B.2 that the financial statements be “audited.” For a not-for-profit corporation, a set of financial statements comprises four financial statements: a statement of financial position, statement of activities, statement of functional expenses, and statement of cash flows. Petitioner’s response contains a full set of the four, audited financial statements applicable to not-for-profit corporations, but only for the fiscal year ending in 1999. These 1999 financial statements are accompanied by all required independent auditor’s reports and notes. Petitioner’s response also contains the three prior years of two of the four financial statements--the statement of financial position (resembling what was traditionally known as the balance sheet for for-profit corporations) and the statement of activities (resembling what was traditionally known as the income statement for for-profit corporations). However, these additional financial statements are unaccompanied by notes and independent auditor’s reports. Petitioner’s response for 1997 and 1998 includes the two financial statements that provide the most information and for 1998 includes considerable information from one of the two missing financial statements. Criterion 18 does not explicitly require all of the financial statements that constitute a complete set of financial statements, so the omission of the information from the 1997 and 1998 financial statements is not necessarily disqualifying, at least if the information provided is substantially complete. The omission of the notes for 1997 and 1998 merits careful consideration. Petitioner’s auditor warns, on each financial statement, that the accompanying notes are an “integral” part of the financial statements. According to the American Heritage Dictionary (1981), “Integral” means: “Essential for completion; necessary to the whole constituent.” In other words, the financial statements submitted by Petitioner are not whole or complete without the accompanying notes. The notes accompanying the 1999 financial statements add explanatory material. Note 1 discloses that Bridgeway Center, Inc. is an accrual-basis taxpayer; values its inventory on the lower of cost or market basis on a last-in, first-out basis; and capitalizes all equipment expenditures over $500 and depreciates its fixed assets over stated cost-recovery periods. Note 3 schedules the receivables owed Bridgeway Center, Inc. by payor and, in the case of Respondent, program. Note 6 details notes payable and lines of credit with terms, interest rates, and monthly payments. Note 7 describes a bond payable in the amount of nearly $2 million. Note 8 identifies real estate leases and rental payments for which Bridgeway Center, Inc. is obligated. Note 10 itemizes by program the sources of income from the State of Florida. As explained in the Conclusions of Law, the determination of whether Petitioner’s response contains three years of financial statements is governed by the less- deferential standard of a preponderance of the evidence, rather than the more-deferential evidentiary standard of clearly erroneous, contrary to competition, arbitrary, or capricious. Petitioner has proved by a preponderance of the evidence that the omission of two financial statements for 1997 and the omission of some information from the same two financial statements for 1998 does not necessarily preclude its satisfaction of the disqualification requirement of three years of financial statements. However, Petitioner’s omission of the notes for 1997 and 1998 precludes its satisfaction of this disqualification criterion, even by a preponderance of the evidence. Petitioner’s auditor describes the notes as “integral” to those selected financial statements that Petitioner submitted. Absent an integral part of the already-incomplete submission, Petitioner has failed to prove, even by the less deferential preponderance standard, that its response satisfies the requirement of Criterion 18 for three years of financial statements. Criterion 21 requires “[d]ocumentation of compliance with past departmental or Florida state contracts.” Appendix 19 of Petitioner’s response contains, by program type, 171 schedules identifying compliance issues, corrective action plans, responsible persons, and completion dates. Again, Respondent and Intervenor attempt to add elements from Section 6 to this disqualification criterion of documentation of compliance with past agency contracts. Both parties contend that Criterion 21 should be read in conjunction with Section 6.6.B.5, which requires: “Evidence of compliance with previous correction action plans proposed by [Respondent] through any contract.” For the reasons set forth above, it is impossible to engraft onto Criterion 21 the more demanding requirements of Section 6.6.B.5. In this instance, Respondent answered a question posed by Intervenor consistent with Respondent’s present interpretation of Criterion 21, but this answer--absent an accompanying amendment of the ITN--cannot override the clear disqualification requirement imposed by Criterion 21. Petitioner’s response omits corrective action plans related to contracts for the Family Services Program. This omission was inadvertent, occasioned by the death of the sole Bridgeway employee with knowledge of these matters. As for Criterion 21, Petitioner has proved by a preponderance of the evidence that its response contains documentation of compliance with past agency contracts. Even if a substantiality requirement were inferred as to Criterion 21, Petitioner’s substantive response would still, by a preponderance of the evidence, satisfy this disqualification requirement. Criterion 21 does not incorporate the comprehensiveness required by Section 6.6.B.5, which requires information concerning “any contract.” Petitioner raises numerous challenges to Intervenor’s response. Partly, these challenges are intended to show how Respondent evaluated Petitioner’s response more stringently. Partly, these challenges are intended to show that Intervenor’s response should be disqualified, regardless of whether Petitioner prevails on its challenge to the disqualification of its response. The latter purpose of Petitioner’s challenges depends upon a ruling allowing it to amend its petition to raise the issue of whether Intervenor’s response should also be disqualified. In challenging Intervenor’s response, however, Petitioner repeats the same mistaken assumptions made by Respondent and Intervenor about the relationship between Domain A and Section 6. In fact, Petitioner extends these mistaken assumptions one level by faulting Intervenor’s response for failing to satisfy non-Domain A provisions that are not even applicable to responses to the ITN. The ITN imposes very few requirements upon ITN responses outside Section 6 and Domains A through E of Appendix II. The two such requirements are Section 2.2, which disqualifies certain applicants with unsatisfactory histories with Respondent; Section 2.6, which requires attendance at the applicant’s conference; Section 2.9, which sets the deadline for submitting responses; and Section 3.9 (first sentence), which requires that responses include proposed staffing for technical, administrative, and clerical support. Apart from some general background descriptions contained in the introductory sections of the ITN, the remainder of the ITN, apart from Section 6 and Domains A through E, deal with the start-up contract and the ultimate service contract. This orientation is amply revealed by frequent use in these provisions of the future tense and descriptions of the non-agency party as the “successful applicant,” “lead agency,” or “selected applicant.” In its proposed recommended order, Petitioner first challenges Intervenor’s response with respect to Criterion 22, which requires the most recent financial audit reports “complete with management response.” Criterion 22 is in Domain A, so it is a disqualification requirement. However, Petitioner failed to prove by a preponderance of the evidence that such a response is required when, as here, Intervenor’s auditor uncovered no material weaknesses or disagreements to which Intervenor was obligated to respond. In its proposed recommended order, Petitioner challenges Intervenor’s response with respect to Section 6.6.E.3, which addresses the ability of the applicant with respect to federal funding. This is not a Domain-A requirement. In fact, Petitioner’s contentions require application of ITN provisions apart from Section 6 and Domain A that involve the start-up process and are inapplicable to the present stage of this procurement. The deficiency described in the preceding paragraph characterizes the remainder of Petitioner’s challenges to Intervenor’s response, such as with respect to a staff- retention study and demonstration of infrastructure capability. It is thus unnecessary to consider the extent to which Intervenor’s response addresses these items. Based on these findings, Petitioner has failed to prove that Respondent’s proposed determination disqualifying Petitioner’s response is clearly erroneous, contrary to competition, arbitrary, or capricious. Based on these findings, Petitioner has failed to prove that Respondent’s proposed determination failing to disqualify Intervenor’s response is clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation It is RECOMMENDED that the Department of Children and Family Services enter a final order dismissing the protest of Petitioner to the disqualification of its response to the ITN and to the failure to disqualify Intervenor’s response to the ITN. DONE AND ENTERED this 2nd day of February, 2001, in Tallahassee, Leon County, Florida. ___________________________________ ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of February, 2001. COPIES FURNISHED: Virginia A. Daire, Agency Clerk Department of Children and Family Services 1317 winewood Boulevard Building 2, Room 204B Tallahassee, Florida 32399-0700 Josie Tomayo, General Counsel Department of Children and Family Services 1317 Winewood Boulevard Building 2, Room 204B Tallahassee, Florida 32399-0700 Wilbur E. Brewton Kenneth J. Plante Gray, Harris & Robinson, P.A. 225 South Adams Street, Suite 250 Tallahassee, Florida 32301 Katie George Chief Legal Counsel Lori Lee Fehr Legal Counsel Department of Children and Family Services District 1 160 Government Center, Room 601 Pensacola, Florida 32501 Martha Harrell Chumbler Kelly A. Cruz-Brown Carlton Fields Post Office Drawer 190 Tallahassee, Florida 32302
Findings Of Fact Basic is a general contractor specializing in asphalt resurfacing and related construction activities. Its principal offices are in Orlando, Florida. Basic is not currently qualified to bid on construction projects to be let by DOT. Its certificate of qualification expired on June 30, 1984. Until the expiration, Basic had been continuously qualified by DOT to bid on such jobs since 1975. During the time it was qualified, Basic successfully performed approximately fifty state jobs. In early September, 1984, Basic received its annual audited financial statement from its accountants, Fox and Company (Fox), which reflected Basic's financial condition for the year ending on March 31, 1984. On or about September 14, 1984, Basic filed its application for renewal of its certificate of qualification. With the application, Basic filed the audited financial statement prepared by Fox and Company and an additional financial statement prepared by Basic's new accountants, Colley, Trumbower and Howell (Colley). This Colley financial statement was merely a compilation and covered the period April 1, 1984 through June 30, 1984. The audited statement of Fox contained the opinion of a certified public accountant; the compilation of Colley contained no opinion. The audited statement preceded the date of filing by approximately 170 days. DOT reviewed the application and denied it on the ground that the financial statements submitted were of a date more than 120 days prior to the application DOT did not perform a fiscal analysis or further review of the application after it determined that the application did not contain what it believed to be the necessary financial statements. In response to the denial, Basic had Colley prepare an additional financial statement which reflected its financial condition through September 30, 1984. This financial statement was a review and did not contain an opinion of a certified public accountant (See transcript p 47, lines 22 and 23). DOT declined to accept this review. An "audited" financial statement is a financial statement that has been subjected to full audit scrutiny and verification. A compiled financial statement is merely a compilation of financial information as supplied by the client. A reviewed financial statement consists of inquiries and compilation of financial data with application of analytical procedures and is less in scope than an audited financial statement. An "opinion" is a term of art in the field of accounting and refers to an opinion that the basic financial information taken as a whole is fairly stated in all material respects and is in accordance with generally accepted accounting principals. A qualified opinion is subject to the same definition and level of scrutiny, but is qualified as it relates to one or more items in the financial statement. DOT only accepts audited financial statements which express an opinion. The financial information in the reviewed financial statement, when read in conjunction with the audited financial statement reflects that Basic is in an adequate financial situation with positive current rates and a substantial adjusted net worth. Basic is making a profit.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying the application of Basic for a certificate of qualification. DONE and ORDERED this 8th day of February, 1985, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 8th day of February, 1985.
The Issue The issue for determination is whether Respondent committed the offenses set forth in the Notice to Show Cause, filed on September 14, 2010, and, if so, what action should be taken.
Findings Of Fact The Department is the state agency charged with regulating condominiums, including condominium associations, pursuant to chapter 718, Florida Statutes. At all times material hereto, Whitehall was a condominium association operating in the State of Florida. At all times material hereto, Whitehall was responsible for managing and operating Whitehall Condominium in West Palm Beach, Florida. Pertinent to the case at hand, regarding a condominium's year-end financial statement, section 718.111, Florida Statutes, provides in pertinent part: (13) Financial reporting. --Within 90 days after the end of the fiscal year, or annually on a date provided in the bylaws, the association shall prepare and complete, or contract for the preparation and completion of, a financial report for the preceding fiscal year. Within 21 days after the final financial report is completed by the association or received from the third party, but not later than 120 days after the end of the fiscal year or other date as provided in the bylaws, the association shall mail to each unit owner at the address last furnished to the association by the unit owner, or hand deliver to each unit owner, a copy of the financial report or a notice that a copy of the financial report will be mailed or hand delivered to the unit owner, without charge, upon receipt of a written request from the unit owner. The division shall adopt rules setting forth uniform accounting principles and standards to be used by all associations and addressing the financial reporting requirements for multicondominium associations. The rules must include, but not be limited to, standards for presenting a summary of association reserves, including a good faith estimate disclosing the annual amount of reserve funds that would be necessary for the association to fully fund reserves for each reserve item based on the straight-line accounting method. This disclosure is not applicable to reserves funded via the pooling method. In adopting such rules, the division shall consider the number of members and annual revenues of an association. Financial reports shall be prepared as follows: (a) An association that meets the criteria of this paragraph shall prepare a complete set of financial statements in accordance with generally accepted accounting principles. The financial statements must be based upon the association's total annual revenues, as follows: * * * An association with total annual revenues of $ 400,000 or more shall prepare audited financial statements. (emphasis added). Whitehall's annual revenue is in excess of $400,000.00. Therefore, Whitehall is required to produce audited year-end financial statements. Whitehall's fiscal year coincided with the calendar year. As a result, Whitehall's 2009 year-end financial statement was due on or before May 1, 2010. On December 11, 2009, Whitehall engaged Hafer Company, LLC (Hafer), a Certified Public Accountant (CPA) firm, to produce its audited 2009 year-end financial statement. Whitehall must rely upon a third-party vendor, such as Hafer, to produce its audited financial statement. Hafer assigned Nicole Johnson as the auditor to produce Whitehall's audited 2009 annual financial statement.4/ Ms. Johnson's process involved, among other things, preparing a draft audit; providing a draft audit to the condominium board, which reviews the draft audit with Ms. Johnson; and then preparing the final audit. Whitehall's engaging Hafer in December 2009 did not contribute to any delay in producing Whitehall's audited financial statement. Ms. Johnson wanted to begin the auditing process early and made a request to Whitehall to begin on or about January 6, 2010, but Whitehall was not prepared to go forward at that time. She was not concerned with beginning at a later date because, among other things, her suggested date was an early date for beginning the auditing process. Whitehall's day-to-day bookkeeping and accounting was performed by a third-party vendor, The Accounting Department, Inc. (Accounting). On February 3, 2010, Ms. Johnson met with Accounting's representative who was handling the day-to-day bookkeeping and accounting. Having the meeting occur in February 2010 was not late or abnormal in the ordinary course of preparing an audited year-end financial statement for a condominium; and did not contribute to any delay in Ms. Johnson's producing Whitehall's audited 2009 year-end financial statement. On February 3, 2010, Ms. Johnson began her field-work and received the primary bulk of the accounting information necessary to complete the audit. From February 3, 2010, Ms. Johnson maintained communication, whether by telephone, email, or other methods of communicating, with Whitehall's directors and officers, and its property manager, Michael Weadock, who is a licensed Community Association Manager (CAM). Ms. Johnson's communications included requesting additional information, asking questions, and obtaining clarifications regarding items for the audited year-end financial statement. One of the items needed by Ms. Johnson to complete the audited year-end financial statement was independent verification from Whitehall's banks regarding Whitehall's certificates of deposit (CDs). Ms. Johnson, as the auditor, was responsible for obtaining the independent verification of the CDs from Whitehall's banks. Due to the economic crisis, which occurred in 2009, banks nationwide were taking an unusual amount of time to respond to auditors' requests associated with the independent verification of bank account information. The banks from which Ms. Johnson was requesting independent verification were no different. She did not receive independent verification of Whitehall's CDs until after the May 1, 2010, due date for Whitehall's audited 2009 financial statement. Whitehall could do nothing to expedite the banks' response to Ms. Johnson's requests. Additionally, on May 28, 2010, Ms. Johnson sent an email to Mr. Weadock requesting additional items that were outstanding. The requested items were non-bank items and were not items that would delay the completion of a draft audit, but were required for the final audit. The next business day, Whitehall provided the requested items. Whitehall had control over these non-bank items, which delayed completion of the final audit. Subsequently, Ms. Johnson received the independent verification of Whitehall's CDs from the banks. On June 23, 2010, Ms. Johnson completed Whitehall's audited 2009 Financial Statement and forwarded a copy to the Department. Even though the final audit was not completed until June 23, 2010, on or about June 10, 2010, Whitehall posted on its bulletin board a notice indicating that copies of the audited 2009 Financial Statement were available in its office. However, subsequently, another notice was posted on the bulletin board indicating, among other things, that copies of the audited 2009 Financial Statement would be available at the Board of Directors Meeting on July 1, 2010, in order to provide for the completion of the audited year-end financial statement. Whitehall does not dispute that neither notice complies with the manner/method of delivery requirement in section 718.111(13). Additionally, Whitehall provided notice to its unit owners as to the availability of the audited 2009 Financial Statement through its community television channel, website, and email blast. This same manner/method of sending the notices to unit owners was used in the past by Whitehall. Whitehall does not dispute that this manner/method of providing notice does not comply with the manner/method of delivery requirement in section 718.111(13). At the time of hearing, Whitehall had not provided its unit owners with a copy of the audited 2009 Financial Statement by mail or hand-delivery. Whitehall has prior disciplinary history regarding its failure timely to prepare and provide its audited year-end financial statements in prior years. On April 1, 2010, Whitehall and the Department entered a Consent Order resolving several statutory violations. One of the violations in the Consent Order was Whitehall's failure timely to prepare and provide its 2005, 2006, 2007, and 2008 audited year-end financial statements. As to this violation, the Consent Order concluded that Whitehall failed timely to prepare and provide the audited year-end financial statements for the four consecutive years. The Consent Order did not include a violation of the manner/method of delivery of notices regarding the year-end financial statements for the four consecutive years. Subsequent to the Consent Order, the Department received a complaint from a one of Whitehall's unit owners regarding Whitehall's failure timely to provide a copy of the 2009 audited year-end financial statement. The Department's usual practice is that, if a repeat violation occurs within a two-year period, administrative action is taken resulting in a consent order or notice to show cause. Considering the recent Consent Order, the Department followed its usual practice and appropriately pursued the complaint. On September 14, 2010, the Department filed a Notice to Show Cause against Whitehall, which is the subject matter of the instant case. Even though the unit owner's complaint did not include the manner/method in which notice was provided, the evidence fails to demonstrate that the Department was restricted to investigate only that which was complained of. The evidence fails to demonstrate that the Department's investigation of a violation of section 718.111(13) by Whitehall was improper. Further, the evidence fails to demonstrate that the Department's enforcement of the requirements of section 718.111(13) was selective enforcement against Whitehall. The evidence demonstrates that the Department participated in this proceeding primarily due to Whitehall having previously, within a short period of time, violated section 718.111(13) regarding Whitehall's failure timely to provide its unit owners a copy of audited year-end financial statements. Additionally, the evidence fails to demonstrate that either the Department or Whitehall needlessly increased the cost of litigation in the instant case.5/ Consequently, the evidence fails to demonstrate that the Department participated in this proceeding for an improper purpose as defined by section 120.595(1)(e)1.6/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Florida Condominiums, Timeshares, and Mobile Homes, enter a final order: Finding that Whitehall Condominiums of the Villages of Palm Beach Lakes Association, Inc., violated section 718.111(13), Florida Statutes, by failing to deliver, in the manner authorized by statute, a copy of its audited 2009 year- end financial statement to all of its unit owners no later than 120 days after the end of the fiscal year, and by failing to make audited 2009 year-end financial statement available in the manner authorized by statute, when it became available; and Imposing a fine in the amount of $5,000.00. DONE AND ENTERED this 21st day of May, 2013, in Tallahassee, Leon County, Florida. S ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 2013.
