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HomeMy WebLinkAboutAudit Committee Minutes 01-29-2004 Deschutes County – Audit Committee MINUTES – 1/29/2004 Re: Deschutes County Audit Committee Meeting Minutes – January 29, 2004 (Noon to 3:00 PM) Committee Members Present: Commissioner Dennis Luke; David Givans, County Auditor; Barry Jordan, Jade Mayer, Jim Keller, and James Kerfoot, Public Sector. Others Present: Others present were Marty WynneCommissioners Mike Daly and Tom DeWolf (for part of the meeting) and Jeanine Faria; Finance; and Mike Maier, County Administrator. Introductions to the two new members, Jim Kelleer and James Kerfoot, were made. were. Also in attendance for part of the meeting, via conference call, was Mary Case with Moss Adams. Barry Jordan called the1. Call to Order. The meeting was called to order by Barry Jordan at 12:15 p.m. 2. Minutes from September 9, 2003 meeting. COMMISSIONER LUKE: Moved approval. LES STILES: Second. VOTE: Unanimous approval. 3. Reports Presented by David Givans Mr. Givans discussed two reports: a. Information Technologies (IT) Department Strategic Plan – The follow-up report outlined implementation rates on the audit recommendations. One new recommendation made by Internal Audit was to see if the Audit Committee wants to propose to the Board of Commissioners that a written response be done on the recommendations of any studies/surveys that are done for County Departments. LES STILES: Moved approval that a formal written response to any consulting/audit report is done. GEORGE READ: Second The Committee held further discussion on the item: It was decided that the Department heads would be notified of the audits. If any of the recommendations of the audit would be of benefit to their Department, they could be given the information as long as it did not breech security controls for the County. Minutes of Audit Committee Meeting Thursday, January 29, 2004 Page 1 of 4 VOTE: Unanimous approval. Mr. Givans will develop a policy to take to the Board of Commissioners. b. Humane Society (HS) Dog Boarding Cost Follow-up Report – Legal Department revised the new contract in areas that were identified. The County added some requirements to the contract that the HS needs to follow. The Bend HS and Redmond HS are now on a similar contract. 4. Moss Adams Review Marty Wynne briefly went over two of the letters submitted by Moss Adams: a. Management Letter – Current Year Recommendations – None. Indicates the County adopted the prior year recommendations with the exception of Justice Court revenue cycle. (Letter is recommended practice.) b. SAS61 – Standard Letter – Could have recommendations outside the Management Letter. This letter covered auditors responsibility, significant accounting policies, accounting estimates, audit adjustments, disagreement with management, consultation with other independent accounts, issues discussed with management prior to retention, and difficulties accounted in performing the audit. There were no issues on any of the components of the letter. (This letter is required as part of the audit process.) The Committee then had a discussion regarding the letters. The Committee expressed concern over the lack of new recommendations from the auditors. Commissioner DeWolf left the meeting. At 1:00 p.m. Mary Case with Moss Adams was added to the conversation via conference call. Ms. Case went over the Independent Auditor Report letter. She briefly went over pages 261 – 265 of the audit report. She also discussed the Management Letter (See attached Letter marked as Exhibit A) and SAS61 (See attached Letter marked as Exhibit B) She then discussed the role of the internal auditor (Mr. Givans.) For his material to be used by the external auditor, he would need to be governed outside of management. The Audit Committee is in line with Government Finance Officers Association (GFOA) guidelines but from the audit standpoint, there is too much management influence on the Committee. The Committee needs more members from outside the management group. Ms. Case said that there is a new auditing standard that will apply to the County in the upcoming year. That is SAS99 and relates to fraud. It sets specific guidelines auditors are required to make. Another auditing standard that has recently come out is relating to the fair value of financial instruments. Government Accounting standards board (GASB) issued statement #34 which is being addressed in the current financial statements. The new statements will be called “Statement of Net Assets” and “Statement of Activity.” (See pages 19 and 20 and 21-28 of the audit report.) Pages 5 – 16 are the management discussion and analysis. GASB requires management to include a comprehensive narrative at the beginning of the financial statement and to discuss in plain language the finances of the government. Page 2 of 4 The amount of time required by the Finance Department to implement the new changes under GASB 34 was significant. The two most time consuming pieces related to capital asset and MD&A (Management Discussion and Analysis.) The MD&A will require additional time each year because the results of each year must be compared to the prior year results in several financial areas along with explanations of increases and decreases. Ms. Case stated that County staff did a commendable job with GASB 34 and drafting the new financial statements. The audit went pretty smoothly and Moss Adams would like to thank the team involved in the audit for their assistance throughout the audit. Ms. Case left the conference call. The Audit Committee discussed Mr. Givans role and the options of changing the Audit Committee members to have 2 more members from the private sector. The Committee would then have the majority of the members from outside of County management. Mr. Givans would then be reporting to a Committee that doesn’t have the majority as management or elected officials. This would provide better independence. It will allow Mr. Givans work to be used by the external auditors and eliminate duplication of work. MIKE MAIER: Moved approval that the Audit Committee recommends that an RFP be put out for another 3 year engagement for an external auditor. The Audit Committee would make the initial selection and present the selection to the Board of Commissioners. GEORGE READ: Second. VOTE: Unanimous approval. At this time, the Board of Commissioners decided to take action on the below items: LUKE: Moved approval that the Internal Auditor and Mike Maier make up a new format of the Audit Committee (revise policy to reduce 2 government members and add two public members.) DALY: Second. VOTE: LUKE: Yes. DALY: Chair votes yes. LUKE: Moved approval that the Finance Department start the process of developing an RFP for a new external auditor. DALY: Second. VOTE: LUKE: Yes. DALY: Chair votes yes. Commissioner Luke recommended that Mr. Wynne get the RFP to the Audit Committee. Mr. Maier said the Audit Committee could meet and go over the proposals. They could then have a subcommittee go over the selection process (Mr. Wynne, Jeanine Faira, Mr. Givans and Jade Mayer.) Page 3 of 4 5. Performance Measurements Mr. Givans said Local Governments are using performance measurements to monitor and market how well they use the public’s money. He wanted to see if it made sense to go out and to get a survey of Oregon Counties. After some discussion from the Committee, it was decided that Mr. Givans would move forward with the performance measures research. Mr. Givans will follow-up with Mr. Wynne. 6. Updates Mr. Givans went over the Health Benefits Trust. He is in the planning stage, developing objectives. The major objectives being looked at are: internal controls over our health benefit claims and certain claims checked on a random basis. Mr. Givans is also looking at testing eligibility of participants and some analytical review. He has already received data from Administrators West (94,000 records.) 7. Indirect Cost Plan Mr. Givans is working on finishing up the Indirect Cost Report and is waiting on feedback from the Indirect Department Managers. 8. Status of Audit Projects and Internal Audit Program Goals – 04/05 Mr. Givans will be working with the Clerks Office on cash handling training and with the District Attorneys Office on developing controls for the bad check program. Goals for the internal audit program were shared with the Committee. 9. Other Business None. Being no further issues brought before the committee, Barry Jordan adjourned the meeting at 2:20 p.m. Respectfully submitted this 29th Day of January 2004. _________________ Connie Thomas Senior Secretary Page 4 of 4