Business

Audit finds pattern of loose spending at Broward tourism bureau

Nicki Grossman, (center waving) the former president of the Greater Fort Lauderdale Convention & Visitors Bureau, at a marketing event in February 2015. Grossman left the bureau in June 2016.
Nicki Grossman, (center waving) the former president of the Greater Fort Lauderdale Convention & Visitors Bureau, at a marketing event in February 2015. Grossman left the bureau in June 2016. Miami Herald staff

Loose spending and a disregard for county procedures characterized at least the last several years at the Greater Fort Lauderdale Convention and Visitors Bureau, according to an audit conducted after former head Nicki Grossman’s departure last summer.

The audit was conducted from June 2016, when Grossman left the job, to November at the request of the bureau as it transitioned to new leadership under former Broward County Commissioner Stacy Ritter.

Overall, the audit found the bureau had a “fundamental lack of controls over internal business processes” in areas relating to spending.

The most egregious example surrounded nearly $179,000 in sales commissions paid to 14 employees during fiscal years 2014 and 2015 without adequate proof that the employees had met the county’s guidelines.

End-of-year sales commissions are calculated at 50 cents for each room night sold beyond employees’ annual goals. But the audit was “unable to reconcile booked room nights in the CVB database to the room nights used as a basis to calculate sales commissions reviewed,” the audit read. “Without adequate supporting documentation and independent review, unjustified sales commissions may be paid.”

Grossman said in an interview Tuesday that the bureau created a number of criteria for awarding bonuses that went beyond the 50 cents per room night sold measure, including additional commissions when employees signed contracts for multiple years and commissions that took into account the seasonality of the business.

“Why [the auditor] was unable to locate that criteria I absolutely don’t know,” Grossman said. “It was firmly in place the day I walked out the door.”

The audit also found that the bureau paid cellphone expenses for five office administrative staff without the proper justification, which Grossman refuted, saying only business cell phone expenses were covered by the bureau. Business and entertainment expenses at times failed to be supported by proper documentation and were inconsistent in listing the purpose of bureau staff’s meetings and clients’ connections to the tourism industry, the audit said.

The bureau, which is funded in part by Broward County’s 5 percent tourist development tax on hotel rooms, failed to have standard written processes for some procedures, the audit found. For instance, there were no standard written procedures for sponsorship agreements or for determining which entities and organizations would be allocated tourist taxes.

Grossman, who led Broward’s tourism efforts for 21 years, also reached contracts with sponsors without approval from the county, the audit found.

But Grossman said what the auditor called sponsorships were really marketing agreements that at times had to be reached between the agency and the individual group privately.

“The county’s position on that, the county attorney, was clear there were some things that allow competitive advantage that don’t have to be fully disclosed or discussed as public record,” Grossman said. “... [They] are marketing agreements where we say to a group, ‘Yes, if you bring your business here we will host an event or do something else.’ We gave all that documentation to the accounting office before they approved all of our checks.”

According to the audit, the bureau operated with little oversight from the Tourist Development Council, which is tasked with ensuring that the bureau spends tourist taxes appropriately. Instead of submitting quarterly detailed reports, as the county auditor now recommends, the bureau provided only a periodic summary report comparing budgeted and actual expenses. The last report was submitted more than a year before the audit took place.

The audit determined the bureau’s reports lacked enough information for the council to determine whether the taxes were being used on authorized activities.

But Grossman said the Tourist Development Council was aware of all of the bureau’s expenditures and approved its budget.

“Obviously the auditor felt there needed to be more specific information included,” Grossman said.

Still, the bottom line results showed the bureau’s total expenditures were within the approved budget for the years the audit reviewed, 2016 to 2013. Its current budget is about $30 million.

Grossman’s leadership at Fort Lauderdale’s tourism bureau tripled the number of visitors to the region since she took the role of president in 1995 and garnered multiple industry awards. She was succeeded by Ritter in June, who lacked former tourism or marketing experience, but was a stand-out for her enthusiasm for the position, Grossman said at the time.

Ultimately Grossman said she agreed with the auditor’s recommendations because they “tend to tighten reporting requirements.”

“And that’s not a bad thing, as long as there is some understanding that there are some things that are going to have to be kind of ad hoc,” Grossman said.

In a memo to Broward County Mayor Barbara Sharief and county commissioners Thursday, county administrators agreed with nearly all of the audit’s recommendations and highlighted what was being done to correct past issues.

In regard to the commission payments, county administrator Bertha Henry said in the memo that the current policy is more than 10 years old, and the county has therefore hired a consultant to assist with drafting a new sales commission policy that will first be revised by county commissioners. Staff are no longer reimbursed for personal cellphone usage and bureau employees will now be more transparent about client meetings. They’re now required to specify client’s names, titles and connection to the tourism industry.

The bureau is also working to establish written policies for the allocation of tourist tax funds and agreements relating to incentives and sponsorships, the memo said. The Tourist Development Council now reviews all expenditures by the bureau.

Broward County commissioners will review the audit’s findings Tuesday and are expected to vote on whether to adopt the county auditor’s recommendations in August.

This story has been updated from its original version.

Miami Herald writer Amy Sherman contributed to this report.

Chabeli Herrera: 305-376-3730, @ChabeliH

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