HomeMy WebLinkAboutAudit Committee Minutes 11-29-18� �JTES CO 2
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For Recording Stamp Only
Minutes of the Meeting of the
Deschutes County Audit Committee
Thursday, November 29, 2018
Members consist of S Public (P), and 3 County Management (CM)
Quorum =five
Committee Members resent:
x
Facilitator: David Givans, County Internal Auditor
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Daryl Parrish, Chair, (P) Retired - City Manager of Covina, CA
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Lindsey Lombard, P Administrative Services Director, Bend Park & Recreation District
Wayne Yeatman, (P) Professor, COCC
x
I John Barnett, P CPA, Barnett & Company CPA
Tom Linhares, (P), Retired - Executive Director, Multnomah County Tax Supervising and
Conservation Commission
x
AnthonyDeBone, CM County Commissioner
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Nancy Blankenship, (CM) County Clerk
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I Dan Des oto ulos, CM Deschutes County Fair & Expo Center Director
Others Present:
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Tom Anderson, County Administrator
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Wayne Lowry, Finance Director
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David Inbody, Janice Garceau, Cheryl Smallman, Arielle Samuel, Jillian Weiser — D.C. Health
Services
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Laura Skundrick, Administrative Assistant — BOCC
x
James Wood, Accounting Manager
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Captain Mike Shults, Lieutenant Michael Gill — D.C. Sheriff's Office
x
James Lewis, Property Manager (incoming audit committee member 1/2019)
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Erik Kropp, Deputy County Administrator
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Melissa Goddard, On call auditor
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Lealan Miller, Partner, Eide Baill LLP
x
Patti Adair, incoming County commissioner
CALL TO ORDER: Chair Parrish called the meeting to order at 12:03pm.
AGENDA:
• Lunch/Introductions/Announcements. Introductions were made.
• Outstanding Audit Committee Topics. An agenda item was added: Solid Waste —
Controls Over Revenues follow-up report.
AUDIT COMMITTEE MEETING Thursday, November 29, 2018 Page 2 of 5
Approval of Minutes: Motion made by Member Lombard and supported by Member DeBone
to approve the minutes of the Audit Committee Meeting of June 14, 2018. Motion carried.
Presentation of County's Comprehensive Annual Financial Report for Fiscal Year ended
June 30, 2018 — Eide Bailly LLP, Lealan Miller, Partner
Lealan Miller presented this year's external audit. He stated the report presented unmodified
opinions with two emphasis of a matter findings: adoption of a new accounting standard; and
correction of an error, a material weakness. He explained these findings are shown on page 235,
adding that from an auditor's perspective, these are not considered telling of a larger issue, as
they take into account the many communications between various departments and Finance.
He stated that because the county receives more than $750,000 in federal funds, a separate single
audit is also required, which returned no compliance issues. The finding from the financial
statement gets filed, along with management response for moving forward. As of now, they will
test one extra program per year for the next two years.
Mr. Miller also explained the 2018 reporting standards required by the Governmental
Accounting Standards Board (GASB). He summarized various reports provided then highlighted
several pages within the CAFR that he would note as important or helpful:
• Page 12 provides management's discussion and analysis, which is great information to
reference throughout the year.
• Page 24 and 26 provides the statement of activities.
• Page 28 shows fund statements for what are referred to as the major funds, where the
focus is from a management perspective. Up to page 40 provides additional information.
• Page 79 begins with reports required by GASB.
• Page 219 contains a separate report required by the state regarding statute compliance.
• Page 222 is a report required by the state for auditing governmental auditor standards,
with no non-compliance identified.
County Finance Director and Treasurer Wayne Lowry highlighted several pages of note as well:
• Page 69 further explains the prior period adjustment finding, which Finance staff
identified and now have procedures in place with Health Services for these types of
transactions.
• Page 88 shows the balance sheet of sub -funds within the general fund.
• Page 28 shows the balance sheet of major funds.
Mr. Lowry noted the success of the financial statements and annual report are a result of Jeanine
Faria's 20+ years of experience and hard work prior to her retirement. He then introduced James
Wood, who replaced Jeanine as Accounting Manager. Mr. Wood provided a hand out, detailing
the measurement focus used for the full accrual statements and modified accrual statements
within the Comprehensive Annual Financial Report.
Audit Committee 2017-18 Annual Accomplishments Report - Daryl
Chair Parrish reviewed the accomplishments attachment.
AUDIT COMMITTEE MEETING Thursday, November 29, 2018 Page 3 of 5
INTERNAL AUDIT REPORT: 17/18-7 Sheriffs Office — Jail Inmate Health Services,
Captain Shults
Mr. Givans summarized the audit process and work done already, and introduced Captain Shults.
Captain Shults noted how beneficial the audit process has been, and the steps taken to address
weaknesses identified. He explained they are taking steps to stabilize their medical team,
reviewing accreditation programs, and looking to implement a database system to improve
documentation of health records and notetaking. Lieutenant Gill further explained steps taken
toward improvements and trainings for staff. Captain Shults concluded they will visit the
committee in about six months with more progress made. Ms. Lombard commended the
Sheriff s Office for taking those steps, mentioning her experiences with accreditation and
although it is time consuming and requires great effort, the process becomes the most valuable
part.
INTERNAL AUDIT REPORT: 17/18-8 Health Services — Fiscal Revenue Controls, David
Inbody
Mr. Givans summarized the audit and introduced Mr. Inbody, who confirmed the audit helped to
identify opportunities for improvement and to showcase why improvement is needed. Mr.
Inbody provided quick highlights of the recommendations and the department's efforts to
address them. He provided detail on the material weakness found regarding costs the department
was still responsible for from a previous agreement with PacificSource, which has since been
corrected. Commissioner DeBone asked about funds stabilizing and changes in future years, and
Mr. Inbody summarized ways they will be able to learn about those changes earlier than in
previous years, rather than after the change happens.
Follow-up report: 18/19-1 Global Follow-up 2018
Mr. Givans introduced the report which includes outstanding recommendations, 65% of which
have been completed, and some are still in process as multi-year projects. All outstanding
recommendations are making great progress.
Solid Waste — Controls Over Revenues report
Mr. Givans explained the department has done substantive work toward getting their
recommendations completed.
Ms. Lombard asked whether the audit function is helping departments see holes in staffing, and
if those come up as staffing and budget requests to the Board of Commissioners. County
Administrator Tom Anderson replied that the function of the auditor is not to add staffing, but it
has certainly identified where some departments lack certain types of staff or skills, and those
changes have created great improvements.
Internal audit program — budget request — David
Mr. Givans explained the Internal Audit program budget was $25,000 over the last two years.
Over that time, he has used $9,500 and would make the request to carry forward the remaining
$15,000. Commissioner DeBone inquired about work still to be done, and Mr. Givans explained
he has spent a lot of time working with the Munis payroll implementation and has other projects
he would like to complete. Ms. Lombard asked about the timeline of the Munis work and Mr.
Givans stated it will likely finish up in January, adding he will soon be auditing the Munis
system since it was implemented about a year ago. Ms. Lombard asked if Munis has increased
AUDIT COMMITTEE MEETING Thursday, November 29, 2018 Page 4 of 5
audit work to be done, and Mr. Givans replied it has increased the ability of audit work. It offers
computerized reports that were not available previously or that were done through manual data
collection. Ms. Lombard stated she continues to support the audit work as it seems to benefit the
organization and it continues to showcase its value even outside of fraud -catching and
prevention. County Administrator Anderson added that when they originally considered capacity
for the audit program, they researched other audit programs, and there are many smaller
organizations that have larger audit departments.
Fair update - Dan
Mr. Despotopulos stated that the 2018 fair generated more revenue than ever before. He provided
a handout summarizing revenues, and reviewed changes made within the last several years. He
highlighted the new fair rides contractor they've use and benefits seen since then, as well as
improving digital advertising. He added that even with these changes and improvements, staff
levels have not changed over the years.
UPDATES/Other Items: (David):
Mr. Givans provided updates and explanations regarding other items:
• Audits and follow-ups in process include cellular costs, supervisory topics, a Solid Waste
follow-up, and looking at span of control, county wide.
• Other items:
o The hotline policy — Deputy County Administrator Erik Kropp explained the is
currently ready for board review;
o The County College survey — evaluating how students value risk assessments
across departments. Three responses were returned and all came back with low
assessment of risks;
o Internal control newsletters, offered through the Federal Green Book, were
provided as a handout.
• There is an open recruitment for the audit committee's public position, with two
candidates which will be reviewed soon and interviewed.
• External audit contract extension/option FY 19 & 20 — completed
• Audit committee 2.15 and internal auditor 2.14 code amendments — completed
• Mr. Givans completed Peer Review at US Holocaust Museum in Washington DC, for
their single person audit department.
• See Internal Audit status report June 2018 through October 2018. Mr. Givans explained
the Association of Local Government Auditors did a benchmark survey, and a handout
was provided. This is used to provide benchmarks to some of our performance measures.
County Administrator Anderson inquired about the acceptance rate and asked whether
Mr. Givans would present recommendations that wouldn't be received well. Mr. Givans
stated that he would, but there is also discussion along the way during the audit process
and we work together. So, even if they don't agree with the recommendation, it at least
AUDIT COMMITTEE MEETING Thursday, November 29, 2018 Page 5 of 5
pushes them to look at their department and they could come up with another way to
correct an issue. Commissioner DeBone added that could show the culture of the
department as well, if they don't receive a recommendation well, that could be one of the
issues.
Chair Parrish added that any non -audit work being done with departments allows them to
use Mr. Givans' expertise and experience. He added that the Audit Committee
understands the benefit of non -audit projects and supports that work.
OTHER BUSINESS/CLOSING: None presented.
Mr. Givans asked incoming Commissioner Adair if she had any questions, and she inquired
about Mr. Givans background. He provided a summary of his training and background.
Adiournment: Being no further issues brought before the Committee the meeting was
adjourned at 1:59 p.m.
Respectfully submitted,
4 1 kik I 1r\ A I A (-A)
L ura k6Mrick
Administrative Assistant - BOCC