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6-18-20 Audit Committee MinutesYvI Es. C'0 For Recording Stamp Only Minutes of the Meeting of the Deschutes County Audit Committee Friday, June 18, 2020 Members consist of 6 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 Tom Linhares, (P), Retired - Executive Director, Multnomah County Tax Supervising and Conservation Commission x Scott Reich (P), Umpqua Bank— VP Fair Lending Stan Turel (P), resident, Columbia Pacific Tax Service LLC Patti Adair, C CountyCommissioner Nancy Blankenship, (CM) County Clerk x Nick Lelack CM C -- ft, Devel ment Director kx x Jodi Burch, CFO Redmond Fire and Rescue x Summer Sears, Summer Sears CP LLC Others Present: x Tom Anderson,County Administrator x Erik Kropp, Deputy County Administrator x Greg Munn County Chief Financial Officer x James Wood, County Accounting Manager x Lealan Miler Partner— Eide Baill LLP x Richard Walker, Manager — Eide Baill LLP x Melinda Campbell, IT Applications Specialist III x Sherri Pinner Senior Management Analyst x Kathleen HinmanHR Director x Jason Bavuso HR Analyst x Elyse West, Deschutes County Administrative Assistant The meeting was held via the virtual platform Zoom. CALL TO ORDER: Chair Daryl Parrish called the meeting to order at 12:06 pm. AGENDA: • Introductions/Announcements. Introductions were made. Approval of Minutes: Motion made by Member Scott Reich and supported by Chair Parrish to approve the minutes of the Audit Committee Meeting of March 13, 2020. Motion carried. AUDIT COMMITTEE MEETING Thursday, June 17, 2020 Page 2 of 6 EXTERNAL AUDIT PLAN for FY 18/19 Lealan Miler introduced Richard Walker, new manager for Eide Bailly LLP. Mr. Miler confirmed that the External Audit is tentatively scheduled to begin on September 13 and be available for review by October 9. He has been in contact with Greg Munn and James Wood in Finance for needed documents. The audit work typically focuses the first week in the office, weeks two and three in the field, and the final week back in the office. Traveling rules of Idaho and Oregon due to COVID-19 will dictate travel ability; along with the firm's cautious approach to client visits. If travel is not possible, remote audits have been successfully conducted since March, and no difficulty doing so is anticipated. The final report will be issued earlier than November 14i6, and the firm will meet with the Audit Committee in December for the CAFR presentation. The engagement and planning letters have been submitted with no changes from last year. Mr. Miler pointed out that GASB has extended implementation dates to June 30, 2021 and 2022. Two significant standards that would affect Deschutes County is GASB 84 and 87. No new GASB standards will be enacted for this year. He reiterated the independent nature of Eide Bailly and unbiased relation to Deschutes County. Summer Sears asked if the County will implement the lease pronouncement early. James Wood responded that Finance is awaiting additional guidance from other entities already making the change. Given the option to await the results, Eide Bailly LLP and Finance agreed to wait but can move forward if needed. Ms. Sears asked if any estimates are being used for year-end, as some organizations are closing the year.early with estimates. Mr. Wood answered there is a 60 -day window for revenue estimates that will lead to finalizing in September. He is open to closing earlier if requested. David Givans asked how closing early would affect the timing for completing the audit. Mr. Miler responded that there could be scheduling challenges, but it could be done and he will follow the County's lead. Current remote working conditions could afford more effectiveness to the process. MUNIS UPDATE Mr. Wood reviewed the conversion from Munis version 11.3 to Mullis 2019, effective Monday, June 15, 2020. During the last two months both versions have been running parallel, with staff testing processes in the new system. Remote trainings via webinars and YouTube offered staff effective advance preparation. On Friday, June 12, 2020, the previous version was shut off and Tyler Technologies loaded Mullis 2019. Our diverse group of 300+ County end-users began using the new version on Monday successfully. Minor adjustments have been made from staff feedback, which has been largely positive. He outlined the benefits to the upgrade, including Tyler Hub and an improved platform and simpler user interface. David Givans asked if speed has increased. Mr. Wood said the movement from a Sharepoint platform to a .NET platform does increase speed. Mullis 2019 also offers the ability to tap into API—connecting the systems to others in the County such as Accela. Finance will work with IT and HR on future upgrade to Mullis 2020. Melinda Campbell shared that she continues working with many Finance and HR staff to streamline the transition; and permissions is one topic that has been revisited during the process. COVID-19 UPDATE Chair Parrish said he suggested the addition of this topic due to local media and community discussion of the financial effects from COVID-19. County Administrator Tom Anderson confirmed that the financial effects have been felt by Deschutes County and its departments. Public Health staff have been working nonstop and the Emergency Operations Center (EOC) setup at the Sheriff's Office has been active with many County staff. Deschutes County and Oregon have both seen low infection rates, which he credited to the public's efforts. Deschutes County is currently in a tentative recovery phase with some businesses reopening, but Administration remains guarded against potential surges—similar to one currently being experienced in Union County. Business resources and trainings are being provided to local businesses to assist them in reopening. Balancing economic recovery and public health is a continuing focus in forward movements. AUDIT COMMITTEE MEETING Thursday. June 17. 2020 Paee 3 of 6 Greg Munn shared that remote work and utilizing technology has been a new focus for Deschutes County. These processes can continue to improve efficiencies. He reviewed the financial impact of COVID-19 to. departments. Fair & Expo saw lost revenue due to cancelled events and cancelled annual fair. For FY20 they have a deficit of $600,000, and anticipate an additional $250,000 shortfall in FY21. To balance out the funds, the Budget Committee approved utilizing unallocated TRT revenue and $300,000 of Fair & Expo Capital Reserve Fund dollars—currently a $1.1 M—to balance the funds. Other areas that saw impact include Video Lottery distribution, which supports economic activity around the county. These funds were affected with the closure of bars and restaurants. The final payments received was $116,000 less than expected, with a total of $830,000 for the year. Next year's Video Lottery projected revenue is $500,000. The Budget Committee approved moving $300,000 of funds normally dedicated to Video Lottery to unallocated TRT tax instead. Other budget impacts include a 96% from 94% reduction in the collection rate on property tax revenue in FY20. Deschutes County has been running between 95 and 96% the last several years. General consensus across finance leaders in the region was a 2% reduction with some deciding a 4% reduction or even more conservatively at flat revenue. A decrease of $600,000 of tax revenue is expected in FY21, but will be collected in future years. The CARES Act funded through CRF Coronavirus Relief Fund in Deschutes County has historically been distributed by the State to counties with a population of less than 500,000. Mr. Wood has submitted Deschutes County's fust round of reimbursements in the total of $920,000 spent through May 13. Commissioner Adair stated that she learned yesterday that 50% of expected Video Lottery dollars will not be received due to State withholding. She expressed concern that the State received CARES Act funds from the federal government, but Deschutes County is still awaiting reimbursement regardless of submitting the request as instructed. Delays in requested PPE equipment from the State is also being experienced. Ms. Sears asked if the state offered explanation for the delays. Commissioner Adair responded there was no additional explanation except that the funds were needed by the State. She was thankful Deschutes County did not have to reduce EDCO funding. County Administrator Anderson shared that each department was directed to provide business continuity plans; and to identify services tied to revenue and decreases in those revenue streams. Also included in these plans is how to address internal financial decline, including staffing level changes. These plans will be a good resource for dealing with continued financial impacts. Mi. Linhares asked if the transfer of capital reserves for sustaining operations was legal. Mr. Munn confirmed it is expected for a one-time funding of expenditures. Items planned for capital improvement will be pushed out. County Administrator Anderson said the funds are discretionary as transfers -in from unallocated TRT and general funds. It was a thoughtful decision made by the Budget Committee and business activity at Fair & Expo will determine how much is utilized. Replenishing the fund is important for facility maintenance. Nick Lelack asked if there is a role for audit committee to look broadly at operations during COVID-19 and make note of lessons. Future audit scope could use this information as future crisis preparation. Mr. Givans confirmed that is a question shared among his colleagues and agrees it is attainable with time and resources. He supported the suggestion and encouraged insight from Administration and the committee. INTERNAL AUDIT REPORT: Community Development Department — Cash Handling #19/20-10 Mr. Givans reviewed the completed audit and said the approach is receiving good feedback and departments are implementing staff training for improved processes. The audit involves self -identification of departmental cash handling processes. Two low-level recommendations resulted from the audit: one increased efficiency and one resolved petty cash procedure. Petty Cash procedure improvement is commonly needed across departments and he is working with Finance for a more efficient management process. Sherr Pinner agreed that the audit feedback was positive and she appreciates the continuing training from management and Mr. Givans. She said the CDD team has an increased level of staff training AUDIT COMMITTEE MEETING Thursday. June 17. 2020 Paee 4 of 6 and she appreciates the improvements made from the audit. Mr. Lelack said the audit was welcomed and noted the department has. experienced several successful past audits. He expressed appreciation of Mr. Givans' work, his team's participation and the Audit Committee's support. Mr. Givans offered request of the committee, management and CDD to complete the survey. Follow-up report: Supervisory topics — performance manaeement #1920-11 Mr. Givans gave a follow-up report on the performance management report and the three resulting recommendations. All recommendations have been completed and internal processes have been made about the evaluation process. Kathleen Hinman shared that HR addressed their role in providing tools and support to supervisors for performing staff evaluations and holding them accountable. Jason Bavuso outlined the priorperformance evaluation procedure which was manually created by HR and emailed monthly. These reports provided high level information to supervisors, department heads, and the County Administrator. HR staff sought input from these contacts who reviewed the current system. Top recommendations asked for future evaluations timeliness, a rolling year picture, and a broad evaluation status sent to supervisors. This sharable information would better allow for coverage in supervisor absences. The resulting new reports that will be live on the network and available anytime to supervisors are: Performance Evaluation: Status Summary by Department and Performance Evaluation: Upcoming and Past Due. A follow-up six month survey will be sent to departments for feedback about the new reports, with slight updates made if needed. Mr. Bavuso shared the Deschutes County Reporting System at Reports.Deschutes.org, is updated in real time and supervisors can see updates on their own departments and a high level view of other department stats. County Administrator Anderson shared he instructed departments heads, with the exception of elected officials, to bring their evaluations up to date by end of the 2019 calendar year and most did. The current Status Summary by Department report shows a need for increased effort in completion this year, and he recognized COVID-19 and resulting remote work may have affected this number. He and department heads will work again to bring all evaluations to completion by end of the 2020 calendar year. Ms. Sears asked if the Audit Committee could encourage accountability of elected officials to increase their performance review completion. County Administrator Anderson said a signed letter of support from committee's public members would be appropriate. Ms. Sears asked the committee's opinion. Mr. Reich gave support of the letter and offered reminder that performance evaluation completion is important, and measuring the effectiveness of operations and satisfaction of staff leads to improved function. Mr. Linhares said he recognizes the distinction of elected officials and the importance of prioritizing evaluations. He appreciates the accountability offered with the new report and gave support of the letter. Chair Parrish gave support of the letter shows a high percentage of performance evaluations completed and gave support of the letter. Mr. Givans offered to work with Chair Parrish to compose the letter over the coming week, and called for a vote from the Audit Committee members. Motion that David Givans, Internal Auditor, draft a letter acknowledging that the Audit Committee supports the use of these performance evaluations and tools; and acknowledges that elected officials do not have a satisfactory level of completing these evaluations and encourage them to do so. Ms. Sears made the motion and Mr. Linhares seconded the motion. All present were in approval, none opposed. Motion passed. Homework_ County Code review and Audit committee self-assessment survey discussion Chair Parrish said the self-assessment survey handed out at the last meeting contained nothing that stood out to him. He noted changes both up and down—with those changes down being situations that did not occur. Ms. Sears was in agreement. Mr. Reich asked for confirmation that topics did not occur if they were not mentioned. Mr. Givans said that is accurate and shared that very little negative communication was received. The committee will be apprised when topics do arise. The survey was designed to function for this committee but could be adjusted, and non -applicable items could be dropped. Ms. Sears suggested that the items' status could be mentioned on the agendas. She offered support of succession plan AUDIT COMMITTEE MEETING Thursday, June 17, 2020 Page 5 of 6 discussion amongst the committee. Mr. Reich agreed the items should remain in the event they occur, but suggested a statement could be made upon occurrence. Mr. Givans said he could.place it on the agenda for routine addressing. Chair Parrish and Mr. Linhare offered support and Mr. Givans confirmed the items will be mentioned starting on September's agenda. Mr. Givans said the last change to the committee's code was placing a statement at the beginning of the code. Mr. Lelack proposed no changes but asked if the code is as comprehensive as what is reflected in the State's audit code. Mr. Givans said the code is broad in allowance of his audit topics. They are chosen based on what topics need addressing for better efficiency. Mr. Reich asked Mr. Givans if his experience offers any recommendations for change of scope and if the committee needs to review the list more closely. Mr. Givans said the code is foundational for both the auditor position and the committee, and is set up to allow for flexibility. He believes the current code is close to standardized charters and includes appropriate language. He has not encountered an issue in which he had to refer to the code for support. He appreciates the committee's support and encouraged their continued questions. He believes the Audit Committee's advice to the BOCC is significant and helpful.. Member renewals — Extend through 6/30/2022? Mr. Givans asked Chair Parrish and Mr. Linhare if they are willing to be renewed as a members of the Audit Committee. Chair Parrish confirmed he will be renewed as a member. Mr. Linhare said he will respond with an answer within the week. Mr. Givans said he will reach out to Stan Turel whose membership also requires extension. UPDATES/Other Items: (David): Mr. Givans provided updates and explanations regarding other items: Mr. Givans shared that his remote work during COVID-19 has been successful, with most projects seeing no effect of the change. He has spent 90-100 hours conducting small business website guidance related to COVID-19, and building content for small businesses on the County website. He has acted as liaison for COIC, the State, and the BOCC for grant and loan money for small businesses. County Administrator Anderson praised Mr. Givans' volunteering to help and expressed Deschutes County's gratefulness for his outstanding work responding to COVID-19. Mr. Givans shared a proposal he is developing at the request of the BOCC and the Budget Committee; to perform a fiscal audit on Fair & Expo. He will make the scope proposal during discussion with the BOCC next week. He anticipates the audit to take 160 hours. He noted this audit is outside of his current work plan but could be approved by committee. He asked for tentative approval from the committee to continue working on the proposal. Chair Parrish offered support. Mr. Linhare asked what the scope of the audit would be. Mr. Givans responded that the scope is still being decided but the Budget Committee requested clarity on several line item trends. He has spoken with County Administrator Anderson and the Fair & Expo Director and received their support for the audit. Mr. Linhare made motion to approve the Internal Auditor to commence an audit of the Fair & Expo financials. Mr. Lelack seconded the motion. All present were in approval, none opposed. Motion passed. Commissioner Adair offered her gratitude. Mr. Givans said that the BOCC has approved a whistleblower hotline policy. He will oversee the effort and has contracted a vendor. Ms. Sears asked about an audit performed related to COVID-19, including fraud risk in the community. Mr. Givans said once the Fair & Expo audit is complete, there would be time to determine how a COVID-19 audit could be assessed. He recognizes the opportunity to determine lessons learned and that his position could be a good hub for obtaining this information. He noted the EOC has valuable information they could offer. Jodi Burch recommended analyzing the AUDIT COMMITTEE MEETING Thursday, June 17, 2020 Page 6 of 6 efficiency of remote workers and if it could become a new normal. County Administrator Anderson shared the question of determining if adequate PPE material has been stockpiled. This could support future pandemic best practices and response. Commissioner Adair mentioned that 28 ventilators were ordered by Deschutes County that have not yet been received. Mr. Givans said he has received fraud alerts related to similar equipment purchases and had shared them with the EOC. • Next committee meeting in September will focus on the External Audit discussion. No audit REP will occur until the beginning of the year. Mr. Givans' peer review was planned for September but with the GASB delay, it is expected to be pushed out at least one year. OTHER BUSINESS/CLOSING: Adjournment: Being nofirther issues brought before the Committee the meeting uvs adjourned at 1:53 p.m. Respectfully submitted, , 2 ( X A est Deschutes County Administrative Assistant