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HomeMy WebLinkAboutAudit Committee Minutes 11-29-18� �JTES CO 2 LU -A 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 x Daryl Parrish, Chair, (P) Retired - City Manager of Covina, CA x 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 x Nancy Blankenship, (CM) County Clerk x I Dan Des oto ulos, CM Deschutes County Fair & Expo Center Director Others Present: x Tom Anderson, County Administrator x Wayne Lowry, Finance Director x David Inbody, Janice Garceau, Cheryl Smallman, Arielle Samuel, Jillian Weiser — D.C. Health Services x Laura Skundrick, Administrative Assistant — BOCC x James Wood, Accounting Manager x Captain Mike Shults, Lieutenant Michael Gill — D.C. Sheriff's Office x James Lewis, Property Manager (incoming audit committee member 1/2019) x Erik Kropp, Deputy County Administrator x Melissa Goddard, On call auditor x 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