HomeMy WebLinkAbout1617-2 Follow-up report on WEBCO (Final 12-12-16)Follow-up report of WEBCO #16/17-2 December 2016
FOLLOW-UP REPORT
Wellness & Education Board of Central Oregon
(Internal audit report #15/16-4 issued February 2016)
To request this information in an alternate format, please call (541) 330-4674 or send email to David.Givans@Deschutes.org
Deschutes County,
Oregon
David Givans, CPA, CIA, CGMA
Deschutes County Internal Auditor
PO Box 6005
1300 NW Wall St
Bend, OR 97708-6005
(541) 330-4674
David.Givans@Deschutes.org
Audit committee:
Lindsey Lombard, Chair - Public member
John Barnett - Public member
Tom Linhares - Public member
Daryl Parrish - Public member
Michael Shadrach - Public member
Wayne Yeatman - Public member
Anthony DeBone, County Commissioner
Nancy Blankenship, County Clerk
Dan Despotopulos, Fair & Expo Director
Follow-up report of WEBCO #16/17-2 December 2016
TABLE OF
CONTENTS:
1. INTRODUCTION
1.1. Background ………………………………………...………………................................... 1
1.2. Objectives & Scope ……………………………………..………………………….…….… 1
1.3. Methodology ……………………………………………………..…………………….……. 1
2. FOLLOW-UP RESULTS ……………….…...…………………………........................... 2-3
3. APPENDIX
3.1. Appendix I – Updated Workplan for Report #15/16-4
(Status as of December 2016) …...................................................................... 4-9
Follow-up report of WEBCO #16/17-2 December 2016
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1. Introduction
1.1 BACKGROUND
Audit Authority:
The Deschutes County Audit Committee has suggested that follow-ups occur from nine months to one
year after the original report issuance. The Audit Committee’s would like to make sure departments
satisfactorily address recommendations.
1.2 OBJECTIVES and SCOPE
Objectives:
The objective was to follow-up on the outstanding audit recommendations.
Scope:
The follow-up included eighteen (18) recommendations from the internal audit report on Wellness and
Education Board of Central Oregon (WEBCO) (#15/16-4 issued February 2016).
The follow-up reflects the status as of December 2016. The original internal audit report should be
referenced for the full text of recommendations and discussion.
1.3 METHODOLOGY
The follow-up report was developed from information provided by Lionel “Chad” Chadwick, MPH, Ph.D.,
Director of WEBCO. In cases where recommendations have not been implemented, comments were
sought for the reasons why and the timing for addressing these. The follow-up is, by nature, subjective. In
determining the status of recommendations that were followed up, we relied on assertions provided by those
involved and did not attempt to independently verif y those assertions.
The updates received from the WEBCO are included in Appendix I.
Since no substantive audit work was performed, Government Auditing Standards issued by the Comptroller
General of the United States were not followed.
DESCHUTES COUNTY
INTERNAL AUDIT
REPORT
DESCHUTES COUNTY
INTERNAL AUDIT
REPORT
DESCHUTES COUNTY
INTERNAL AUDIT
REPORT
Follow-up report of WEBCO #16/17-2 December 2016
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2.
Follow-up
Results
Figure I -
How were
recommendations
implemented?
The follow-up included eighteen (18) recommendations agreed to by management. Management in
substance agreed with all but one of the nineteen recommendations. Figure I provides an overview of the
implementation status of the recommendations. The details of the updated workplan are provided in
Appendix I.
With this follow-up, thirty-two percent (61%) of the recommendations have been completed.
In November 2016, the WEBCO Board directed the WEBCO Director to develop options, plans, and
conditions to terminate WEBCO for discussion and approval at the February 2017 WEBCO Board meeting.
This includes:
1. Immediately begin a process that would explore the feasibility and facilitate a migration of all services
Follow-up report of WEBCO #16/17-2 December 2016
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from WEBCO to other organizations / counties with particular focus on the capabilities of Central
Oregon Health Council (COHC) and High Desert Education Service District (HDESD). Specific
activities are expected to include:
a. Meeting with appropriate constituencies and State of Oregon funding agencies to explore
options, preferences, and timelines
b. Meet with leadership of COHC and HDESD to identify matters of finance, governance, contract
legal concerns, and programmatic suitability
c. Explore legal transition approaches with WEBCO, member counties, and HDESD / COHC
legal counsels
2. Develop all contractual, financial, and legal matters of consideration pertaining to such a service
migration.
3. Research approaches to lingering roles of WEBCO to include recommendations regarding options of
WEBCO dissolution or maintenance of WEBCO in an inactive residual status.
4. Develop a timeline and illuminate key actions steps to conclude this process by June 30, 2017.
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3. Appendix Appendix I – Updated Workplan for Report #15/16-4 (Status as of December 2016)
Ers
Audit #15/16-4 workplan
Ag
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Implementation Status
# Recommendations Co
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Completion WEBCO comments
1 It is recommended for WEBCO, with
proper financial advice, develop an
approach to addressing the weaknesses
in developing accounting information for
financial statement preparation.
X
X
Oct-16 We have moved our financial statement
accounting to an accrual based system. We are
also segregating by program to permit enhanced
programmatic financial accountability.
2 In addition to the prior recommendation, it
might be useful to have significant fiscal
matters reviewed with an established
executive committee that would obtain
and review pertinent facts and accounting
treatment for recommendation to the
Board.
X X An Executive Committee has not been
established due to the very small board (4
members). In the event WEBCO is not
eliminated, we will establish an ad hoc financial
executive advisory group for this purpose.
Internal Auditor comment:
The nature of this recommendation revolves
around having management stakeholders
involved in advising on management decisions.
Given the organization is breaking up; this
recommendation should be considered complete.
3 It is recommended the counties be
billed/repaid for their respective
obligations/overpayments from the
settlement of the 2013 and 2014 sub-cap
reconciliations.
X X All remaining reconciliation matters have been
resolved, approved by the board, and billed. We
expect all financial transactions pertaining to the
capitation arrangement to be resolved by
January 1, 2017. Capitation arrangement with
PacificSource terminated January 1, 2016.
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# Recommendations Ag
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4 It is recommended for significant fiscal
changes be assessed for fiscal impacts
(and reviewed by an executive
committee, if implemented) and be
approved by the Board.
X X All material fiscal changes will be board approved
effective the start of the FY16-17 year.
5 It is recommended that WEBCO explore
how it could accomplish and retain all
accounting and reporting through one
accounting system.
X X Jul-17 The board has determined that it is not possible
to financially support the added financial
infrastructure, and has, instead, elected to
delegate WEBCO program to other agencies,
and dissolve the organization in FY 2017
6 It is recommended for WEBCO to
consider the process for developing
accrual adjustments and reporting. This
should include reconciliation to beginning
fund balance on the method of
presentation.
X X We have moved to an accrual based reporting of
monthly financial performance, which reconciled
to the beginning fund balance.
7 It is recommended that WEBCO staff
document their accounting policies and
procedures. These policies and
procedures should be available to all
employees and should include, in detail,
the responsibilities of each employee.
X X Jul-17 We have begun documenting our accounting
policies and procedures starting with a credit
card usage and approval policy. Remaining
accounting policies are pending discussion of
affiliation, and then potential dissolution.
Delegated programs will assume the accounting
practices of the new organization.
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# Recommendations Ag
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8 It is recommended that WEBCO
management develop some segregation
and oversight around the billing,
receivable and collection function. It is
recommended for WEBCO to have an
endorsement stamp to restrict deposit to
their account.
X X TBD WEBCO agrees with recommendation however
due to planned dissolution, we have not
implemented this recommendation due to very
small staff size and very few number of
receivables. Executive Director exercises
oversight over function.
9 It is recommended for WEBCO
management to improve the
documentation process for
disbursements.
X X All disbursements are signed off by the Executive
Directors, except disbursement to director, which
are signed off by Board Chair.
10 It is recommended that disbursements be
reviewed and authorized in total for each
period of submittal. These disbursements
should be reconciled back to what was
disbursed. It is recommended for the
executive director to sign off on credit
card transactions (not their own).
X X Per policy and practice, all credit card
transactions are signed off by Director
11 It is recommended for any executive
director disbursements or those with any
potential conflict of interest be provided
approved by an appropriate oversight
body of the Counties.
X X All Executive Director disbursements are now
approved in writing by the board chair.
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# Recommendations Ag
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12 It is recommended for WEBCO in
coordination with the County departments
determine how it can assure
accountability for purchased prepaid gift
cards. This could be through establishing
sufficient safeguards for oversight and
control of the prepaid gift cards or
discontinuing this practice. Detailed
receipts should be obtained for all
purchases made by staff with prepaid gift
cards.
X X Jul-16 In the event prepaid gift cards are used, we will
establish a policy, which assures that a written
disbursement trail is, documented which
reconciles with the aggregate card purchase.
13 It is recommended the fee withheld on
sub-capitation incentives be reversed.
The adjustments by county could be
reflected in amounts owing from Counties
on sub-capitation.
X X The board retroactively approved the fee
reduction at its March 10th meeting effective
August 2015.
14 It is recommended that sub-capitation
expenses be reviewed in total for
agreement to actual call center costs
paid.
X Our practices now reflect the reconciliation of the
call center costs and the invoices to the counties.
Retroactive reconciliation has not been
undertaken since we feel the financial effect not
to be material.
15 It is recommended for WEBCO to develop
and implement procedures for FY 16/17
to comply with local budget law under
ORS 294.900.
X X We have altered our practices to align with
budget law obligations for public entities effective
the FY 16-17 Fiscal year, including budget
committee and hearings.
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# Recommendations Ag
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16 It is recommended for WEBCO and the
counties coordinate how resources are
distributed to align with services to be
provided.
X X Effective the FY 16-17 fiscal year, the programs
receive an allocation reflective of their
consumption of allocated services.
17 It is recommended that decisions
minimize the overlap of services, seek
efficiencies and minimize overhead costs.
This should require financial forecasts be
developed for whether service payments
under a revised fee structure and
underlying resources (fund balances) can
sustain the organization.
X X Nov-16 The board held a strategic planning process to
determine if this recommendation can be
implemented. It has been determined that such
reductions will be harmful to program
effectiveness. Accordingly, the board has
directed the Executive Director to begin
establishing a plan to move programs to other
organizations and to take steps to dissolve
WEBCO as an organization.
18 It is recommended that WEBCO establish
a formal policy on the level of unrestricted
fund balance that should be maintained
for GAAP and budgetary purposes.
X X At its February 2016 meeting, the board
established an Operating Reserve Policy and
Guidelines Document establishing a policy for
reserve retention and usage.
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# Recommendations Ag
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19 It is recommended that WEBCO establish
distributions in their organizational
documents that would allow distribution of
excess reserves identified.
X X Jul-16 At its July Board meeting, the Board considered
a policy to distribute excess reserve back to the
Counties. At that meeting, the Board amended
the Operating Reserve Policy to permit the
distribution of excess reserve. Action on the
distribution was held in abeyance pending the
completion of the strategic plan process. The
board will reconsider action pertaining to an
excess distribution at its January meeting.
ation with client departments. We feel it would be better to have something in-hand when we he discupolicy that has been
vetted through client departments. I am hopef that we will have good information in time for the FY 18 Budget pr
ocess.ndfor the delay. For whatever reason I had it in my mind that it was due today.
{END OF REPORT}