In the Office of Inspector General (OIG), our work is largely based on an Annual Risk Assessment identifying areas of audit or review in the department. However, we are sometimes called upon to conduct special reviews or consulting services per management’s request due to our collective expertise, available resources, and ability to access internal and third-party records. Consulting engagements can often provide insight and learning opportunities for everyone involved.
An example of this collaboration is a recent request from FDOT’s Office of the General Counsel (OGC). The OGC requested the OIG’s assistance in evaluating business damages related to the complaint filed against the department from a business near a FDOT project. The business claimed the department failed to adequately maintain the storm water system in front of their location during construction causing their parking lot to flood and preventing customers from entering their storefront. Consequently, the business asserted their sales, for a five-year period, were adversely impacted by $2.7 million on days when rainfall exceeded one inch.
We initiated an engagement and met with the OGC to gain an understanding of the complaint and what information or analysis the attorney was seeking from the OIG. We then contacted the business’ attorney and met with their CFO to review accounting records.
We discovered the company claimed losses for periods prior to the project start and for losses due to rain on Sundays, when the business is closed. Additionally, we discovered the company’s complaint was based on lost revenue instead of profit, which is revenue minus associated expenses (cost of goods sold).
In this example, the analysis provided by the OIG assisted the OGC in the negotiations to settle the complaint for $150,000, resulting in a cost avoidance of $2.4 million. By assisting our peers, the OIG continues to improve and discover meaningful ways to provide value to the state of Florida.
by Ryan Moore and Michael Dean | Senior Auditor, Contract Audit Section, Auditor