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More on AB&T

In 1995 AB&T added several layers to its management structure in all three of its bureaus. The rank structure in enforcement shifted at least one grade higher. Licensing created additional district level positions. Auditing added a layer of supervisors to each of its four south Florida field offices and another layer in Central Office.

After shedding personnel for the last four years AB&Ts personnel structure no longer supports the current management scheme. For example, the Department of Management Services rules require a Senior Tax Audit Supervisor to supervise at least two Audit Group Supervisors or one Audit Group Supervisor and a Tax Auditor in a satellite office. The field offices each have only one Tax Audit Supervisor and all the satellite offices have been closed. There is no basis for these positions yet they continue on. I estimate that redundant management cost the state in excess of $ 1,000,000 per year.

To correct this problem an outside agency should review from top to bottom the AB&T management structure and determine that each position is justified under Department of Management Services Rules.

The failure of AB&T to collect interest and penalties as required by statute.

Florida statute 210.02(6) requires AB&T to collect interest on cigarette excise tax audits. They don't. Florida statute 210.55(6) requires AB&T to collect a 10%, 25% or 50% penalty on Other Tobacco Product excise tax audits. They don't. I estimate that the failure to enforce these two statutes cost the state in excess of $ 1,000,000 per year. The Department should begin to immediately enforce these statutes.

The failure to track audits and manage audit inventories.

There is no program in Central Office Auditing to assign and track audits at the district offices. As a result major wholesale licensees can get years behind in the audit cycle. After three years the licensee is no longer required to maintain records and the statute of limitations expires on this period of the audit. When auditors leave the department, their inventories of surcharge audits sit in boxes until the half done audit files are eventually trashed. The state's investment in auditor time and the audit tax liability are gone. Audits transferred to other district's enforcement offices go missing when the enforcement agent transfers out. Audit supervisors let audits sit on their desks for months before reviewing them while the statute of limitations clock, but not the interest clock is ticking.

The Office of Program Policy Analysis and Government Accountability prepared two reports on AB&T, reports 96-62 and 98-80. Both these reports cite a lack of standardized policies and procedures as a reoccurring AB&T problem. I estimate the lost and missing audits and the lack of a centralized tracking system cost the state $ 1,000,000 per year in lost revenue.

Salaries

Most employees of AB&T spend their entire careers at the minimum of the salary range. An exception is made for three types of employees. First, bad management has a reciprocal mechanism to recommend and justify salary increases for each other. Second, bad management justifies pay increases to their favored employees. Third is to provide a sterilized form of hush money to cover-up management misdeeds.

In private business there is pay for performance. AB&T has completely decoupled pay and performance. Supervisors make 20%+ over the minimum salary while the offices they supervise are documented disasters!

The old adage - follow the money - holds true here too. To correct this an outside agency should review all AB&T salaries that are 20% or more over the minimum. Travel and per diem should also be factored in. Then adjust them accordingly. I estimate that unearned excess salary cost the state over $ 200,000 a year.
....me again, 4/30/03

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AB&T workers get chance at jobs! - Their own!

It's finally decided, the licensing personnel at the Division of Alcoholic Beverages and Tobacco are to be given the change to reapply for their own jobs.  One supervisor said "Good, now we can get rid of some people we don't like!"  The chances of any AB&T firing / rehiring process being fair and unbiased are between zero and none.  
Bad management will get rid of the few remaining competent workers and get to remake the division in their own image.  The only good news is that management will have to live with this organization until Jeb finally gets rid of them too.
...John Smith

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Changes needed to a bad system: The Point System

About two year ago Tallahassee Central Office (TCO) and the field office supervisors for AB&T started the point system.  They designed a system to assign a point value from 1 to 5 to each audit.  Auditors would be required to make at least 12 audit points each month to meet standards.  As with so much else the division does, what was supposed to be very good instead became very bad.

The idea of a point system was doomed right from the start.  You would think that the best and the brightest auditors would be promoted to supervisor and senior management - and you would be wrong.  There is an active mechanism at work in the division to insure that only the least capable people are promoted to management.  This topic will be addressed in another letter.  The result showed that the designers of the system didn't really understand the audit work or realistically assign a point value to the audits. The system was designed to fail.

After designing a poor system, management then failed to implement it properly.  Each year employees sign a RAPP form.  This form is a job description, based on state standards, which is a contract between the Department and the employee on what the employee must do and how he or she is to be evaluated.  The RAPP form provides a completely different standard from the point system on what work an auditor must do. So while management tries to use the point system to beat auditors over the head, the contract which management signs each year requires the auditors to be evaluated under a completely different system.

Shortly after starting the new system, management found things to love in it. Its bad design produced anonymities, which the supervisors could exploit for their own ends.  The supervisors for their own benefit could manipulate the new point system.

For example, a very large wholesale distributor may require hundreds of man-hours to audit.  The point system assigns this audit the maximum value of 5 points.  A distributor with no activity (a zero audit) requires about thirty minutes to change the company name and date on the audit program, hit the print button to print up all zero work papers, and then staple the papers together. The point system assigns this type of audit 1 point. In no time, everyone realized that it was much easier to make five points doing five zero audits or simple surcharge audits, than to make five points auditing a large wholesaler.

Supervisors quickly learned how to exploit this system.  Because the supervisors control the work assignments, they assign employees they like zero audits and surcharge audits.  The favored employee can easily make 20, 30 or even 40 points a month. Those employees the supervisors don't like are assigned the very large wholesale audits.  Work as hard as they like, they will never reach the required 12 points.

By controlling the audit assignments, supervisors then manipulate the points employees receive as a basis for promotion and recommending bonuses for employees they favor.  They can also manipulate the system to insure that employees they don't like never meet standard.

Supervisors also love the point system to camouflage falling revenue and production.  The field offices can report to the central office that they did hundreds of points worth of audits. They are producing more points each month with less people.  They hope that the large point total will cover the fact that the majority of the audits are worthless and that real revenue and production is going down every month.

Central office loves the point system too.  They can pretend to believe that the field offices are producing work.  They can tell the Secretary and the legislature that AB&T is more productive than ever, when this is not true.

The point system also allows supervisors to cover the management failings at the district field offices.  A good supervisor understands the work that his office must do.  He will insure that the most important work is given priority. He makes sure that his auditors are efficiently and effectively employed on the most important audits.  Bad supervisors use the point system to run their offices on autopilot.  They don't understand the work, they can't manage and they can't prioritize. The audit staff chases points on their own while real audit production grids to a halt.

The Negative Impact of the Point System

The point system creates the illusion of production but actually does quite the opposite.  The field offices turn in more points each month, but fewer dollars.  Some district offices have started auditing tax paid accounts again, which the Department stopped auditing in 1994 because there is never any money involved.  Yet the supervisors have assigned these worthless audits a point value, and auditors do them as desk audits to make easy points.

Auditors now delay, sometimes indefinitely, the audits of large wholesale distributors to pursue worthless zero and surcharge audits.  Four years ago, all wholesale audits were suppose to be finished and in Tallahassee within 90 days of the inventory date.  Now many district offices have large wholesalers who have not been audited for over two years.  When the delay hits three years, the licensees no longer have to maintain their records, and there is no longer any audit tax liability to the Department.  This is one reason for declining revenue in the Department.

Audit quality has also declined, partly as a result of the point system.  I will address this topic in a later letter.  Many of the surcharge audits are done as “desk-audits” in which the auditor never has to leave the office.  Because they are based on distributor reports and not a complete set of records, many of these audits result in credits.  The district supervisors like this because no licensee will complain to Tallahassee about a deficient audit if the result is that they get a credit.  After all, it’s not the supervisor’s money.  This easy credit policy is another reason for declining audit revenue.

The point system also works to undermine teamwork in the field offices.  For example, when two or three auditors are assigned to audit a very large wholesaler, invariably at least one of the auditors will delay, using his time instead to make easy points.  The other auditors can’t finish their parts of the audit without the third auditor’s part.  Office friction results.

Solutions

The point system should be stopped immediately.  Tallahassee should order the field offices to do the largest, oldest and big dollar audits first, and not to turn in any more worthless zero audit, desk audit, or surcharge audits until they are caught up. The personnel department should explain to the district audit supervisors that the current RAPP form must reflect the current evaluation standard.  Audits must be centrally tracked and assigned on a fair and equitable basis.  This issue will also be addressed in a future letter.
.... point buster, 2/2/03

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Garbage-in / Garbage out

Once again, AB&T is sending in the consultants, to help the Department develop best business practices, take advantage of synergies, or position us on the information super highway.  The state should save its money.  The real failure at AB&T is the leadership, especially the district auditing supervisors.  Until new competent people are in charge, any changes made by the consultants will be meaningless. You can't make a silk purse out of a sow's ear.
...Ben There; 2/3/03

Workers finish last 

While the Department Secretary tells the indians who have been working at 15+ years at the very bottom of the pay range that they may have to reapply for their jobs, the AB&T bureau chiefs reward Senior Tax Audit Administrators with 20% pay raises and lavish travel / per diems.  It's time the secretary looked at who is paid what and who actually does what.  When you want to make cuts, start at the top!
.... one of the indians, 12/05/02

DBPR secretary wants to reach out and touch you!

Alert AB&T employees.  The Secretary and her cronies are phoning various state offices posing as members of the public to test how employees answer the phone and their knowledge.  The fact that neither she or her minions have bothered to publish any guidance or provided any training for employees has stopped her in her know nothing quest to test employees. 

I would like to phone secretary Kim B-S and ask her a few questions like 1) How does it feel to be the second worst secretary in the department's history [Cynthia Henderson being the all time heavy weight champion]? 2)  How does it feel to be part of the most corrupt administration in the state's history? 3) Who is going to clean up the mess left by you guys when you leave? 4) and do you know the way to the unemployment office when Florida smartens up and gets rid of Jeb!
...danger, 10/23/02