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HomeMy WebLinkAboutAudit Committee Minutes 09-09-2003 Deschutes County – Audit Committee MINUTES – 9/9/2003 Re: Deschutes County Audit Committee Meeting Minutes – September 9, 2003 (Noon to 3:00 PM) Committee Members Present: Dennis Luke, Barry Jordan, Marty Wynne, George Read, Jade Mayer, and David Givans. Guests were Dave Peterson, I.T. Department; Timm Schimke, Solid Waste Department; Kristie Michaelis and Bob Dean, Road Department. Not present were Les Stiles and Mike Maier. Barry Jordan called the meeting to order at 12:15 p.m. DISCUSSION OF REPORT – Road Department – Observation of Physical Inventory as of 6/30/03 David - Observed the Road Departments physical inventory process. He did 2 -3 days of observations of work and followed-up with some recommendations. He will share the report with Moss Adams. The numbers will be used in the Financial Reports. Bob Dean and Kristie Michaelis with the Road Department presented their opinion of the review: Kristie said it was nice to have David make some recommendations to the Department. Bob said one recommendation was made to move construction signs out of the physical inventory and the second was to have procedures written up. They have already done some follow-up and made some changes on the recommendations. Jade - How often does the Road Dept. do inventories. Kristie said it depends. They will do an inventory before a project and then will do another one when the project is done. David said Road Dept. has a sophisticated inventory process. He did not look at the software used for inventory tracking. Kristie thinks they have an adequate system. They did a lot of research on their computer system. AOC is trying to come up with software (IR’s).) The software does not meet the needs of the Road Department. Road Dept went to the Kansas version and will look again at the AOC version of software again in 3 to 4 years. Dennis said that when going out of state it is hard to find software that matches the needs of the County. Marty said he thinks the software is capable but did not work for Deschutes County. David said Road Dept. did a very good job. Dennis – Does gas tax account for most of your money? Kristie said about 65%. Inventory accounts for $7 million of a $13 million dollar budget. Marty said assets include roads, bridges, etc. George - What is an inventory counter. David indicated that the inventory counter is the person responsible for counting inventory. David said stockpiles are hard to inventory. Kristie said some of the stockpiles take a couple of years to get used up. Dennis – How long does inventory take? Kristie said it depends. Parts take 2 to 2.5 days; sign shop inventory takes 2 days; stock piles may take a week as we have to drive around to all of the sites. DISCUSSION OF REPORT – Solid Waste Department – Evaluation of Internal Controls over Service Fees David – Spent quite a lot of time at Solid Waste. He looked at invoices and did surprise cash observations at the transfer sites. It was a useful process and good for attendants to see us looking over their shoulders. Minutes of Audit Committee Meeting Tuesday, September 9, 2003 Page 1 of 4 z Page 2 Timm – We have $6 million in the main fund and $7-10 million in reserves. The reserves are for the eventual closure. We have to take care of the old site for 30 years after closing, plus capitol and equipment. We just borrowed $6 million to construct the new receiving facilities which will be on 70 acres north of the current site. We will receive garbage and recycling at the location. The public will come into the building and dump their load on a concrete slab. We will go through and distribute the trash accordingly. Plus, with the new transfer site, we will be able to close the dump site a day or so each week instead of being open 7 days a week. Marty – DEQ looks over your shoulder? Timm said yes, and DEQ requires financial insurance. We use the local government financial test. We show that we have a financially healthy County. Dennis said that the County does not use Solid Waste funds for other things, although it is occasionally borrowed. Marty said County funds are co-mingled for investment purposes. Timm – We are pleased with the process. We operate as if we were in competition. The process is a lot of work (data with minimal employees.) David made some recommendations. One of the recommendations resolves around software and how we put information into the system. When we get the new system we will put a security system in. The cost to operate the landfill is $20 per ton. We charge $40 per ton and make a profit of about $20 per ton. Everyone wants to see more services. Dennis – It is mandatory for curbside collection in the City of Redmond. In the City of Bend it is not mandatory yet. Jade asked if we will see yard debris curb side. Timm said we are going to curb side recyclables first, then we will add yard debris for the summer months. Recyclables are mixed now and they go to Portland to be separated. We may get to that in the future. Timm – We review manual entries looking for patterns. The review process is on a daily basis. David said trends can be better isolated with information (why/who did it.) Timm said we look at each attendant putting a card into the cash register. Each transaction will be logged. We are diligent and watchful. David said they have to go to a manual system when the power is down. This requires additional supervision. Timm – The Alfalfa transfer station is not bringing in enough to keep it open. We may close it. David – Are their any additional audits you think you may need? Timm said some sort of a study on costs. Such as: Costs to operate landfill, systems cost, and cost accounting software system. We are trying to cut back the overhead. Dennis – Need a County Ordinance so funds are not touched. Require a certain amount of operating budget be secured. Marty said fees and revenue need to be spent on solid waste. David – Will do a follow-up in 9 months. INFORMATION SECURITY ASSESSMENT Dave Peterson – Gave an overview of the recent assessment by RedHawk. RedHawk was asked to look at: 1. How well security mechanism works. 2. How secure facilities are. 3. How secure employees are. All funding for I. T. Department is through indirect charges to other departments. Use server based computing environment. Citrix is most pediment system available. It is easier to put virus software on z Page 3 servers. We decided we should use security assessment for security, fire security, how well people use security. Our overall score is “2” (1 best – 5 worst.) One problem is we do not have a good password policy. Our virus protection is real good and it gets tested daily. Change management – anytime change is made it should be real structured. RedHawk recommended coming up with a log. We do not have the staff to do their recommendation. We do not have an Intrusion Detection System (IDS.) We have a security awareness problem and need to train County employees. Building security is not good. We need to be more aware of what we are giving out to people. We need to check out everyone before they go to work for the County. We don’t do background checks on temps or volunteers. There is a lot of work involved to implement a plan. We are working on it now. We will have RedHawk do a development training program for employees. Some suggestions: Lock up terminal or log off if going to be away from desk. We need to redesign network and secure employee area from public area (we will be able to separate the two.) We will upgrade the network. Marty – Commended I.T. for doing the study. It was a really good idea to have this study. You might look into security of remote workers. We are converting entire tax system to a new County system. George – All building records from 1983 are on line. Dennis – We have an agreement with City of Redmond. Joe Sadony works a Redmond part of the time. GIS put many of our County roads on CD’s. They can be viewed from a computer in their cars. Dave – Overall, the report is good. We came out pretty well. We have some areas that need improvement. PERFORMANCE AUDIT David – There is some subject material on audits that can be done by each individual Department: Cell phones, fleet, maintenance, credit and gas cards. Dennis – County does not have credit cards (except Sheriff/5 cards) only gas cards. Marty said that some of the Department Directors would like credit cards. Jade advised there is too much room for monkey business. Marty said the employee can get a check in advance for hotel and registration of classes, etc. David – A lot of organizations direct bill. There are audits that can be done. There is information on various audits from other County’s and from books. Marty asked when contacting other organizations ask them, of all their audits, which were the most important. David – That information is in the paperwork I handed out. For most important audits you first need to understand what the County issues are. Each County is different. No one else can tell you the issues most important for your County. I am now looking at Indirects. A sub committee has been assembled and may meet in October. We will work on a follow-up on the I.T. study and will work on Benefits Trust (Health Insurance.) Marty – Asked David how does the Committee say which direction you should go? Dennis – David works for Mike Maier and he can set David’s priorities. Marty – Would like an Audit Committee that is independent. z Page 4 Dennis – Asked David if next meeting we could discuss where we want him to go. David said he can tailor the meeting any way the Committee wants. Currently audits are determined by assessing risk, talking to the Audit Committee, and input from the Department heads. David – I think the Benefit Trust Audit is important to look at – Jackson County lost $300,000.00. On this years list will be the Benefit Trust then the Mental Health and Indirects. Marty – Has information on people who will be helpful on Benefit Trust Audit. Marty - We have a $7 million dollar budget. We do 400 – 700 checks a week ($120,000.00 per week.) David – Will use software to look at everything: Mental Health, Risk Assessment, HIPPA (good subject), and Assessor (conversion going on.) Marty – Suggested David goes to Seattle and goes through their records and sees what their controls are. HIPPA could be done as part of Benefits Trust. STATUS OF AUDIT PROJECTS FRAUD POLICY – David - Parole and Probation thought someone was taking money, it was just an accounting error. I have updated the draft on the Fraud Policy with the last edits. Anna has asked for information for the Newsletter on audit projects. INTERNAL SERVICES – George – Next time could we continue talking about Internal Audit projects? David said we can. Last meeting minutes were approved as presented. Being no further issues brought before the committee, Barry Jordan adjourned the meeting at 3:00 p.m. Respectfully submitted, _________________ Connie Thomas Senior Secretary