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HomeMy WebLinkAbout1-6-22 Audit Committee Minutes ApproveduT E S COG o�< Minutes of the Meeting of the Deschutes County Audit Committee Thursday, January 6, 2022 X I Facilitator: David Givans, County Internal Auditor Audit Committee Public Members (6 members) X Daryl Parrish, Chair X I Tom Linhares X Scott Reich X Stan Turel X Jodi Burch Summer Sears Audit Committee County Management Members (3 members) X Patti Adair, Commissioner X I Charles Fadeley, Justice of the Peace X Lee Randall, Facilities Director Others Present: X Nick Lelack, County Admin. X Greg Munn, CFO/Treasurer X Lealan Miller, Eide Bailly X Geoff Hinds, Fair & Expo Director X Jana Cain, Accounting Mngr X Carol Martin, BOCC Adm Asst X Tony DeBone, Commissioner X Whitney Hale, Depty County Adm X Elizabeth Pape, City of Portland This meeting was audio and video recorded and held virtually via Zoom Conference Call CALL TO ORDER: Chair Daryl Parrish called the meeting to order at 10:05 am. AGENDA: Introductions/Announcements: Introductions were made. Approval of Minutes: Minutes of the September 16, 2021 meeting were approved by Scott Reich, and supported by Patti Adair. Motion carried. AUDIT COMMITTEE MEETING Date: Page 1 of 8 Presentation of CounWs Annual Comprehensive Financial Report for Fiscal Year ended June 30 2021, Eide Bailly LLP, Lealan Miller, Partner Lealan Miller, Partner at Eide Bailly, gave a presentation of the Deschutes County Audit. The report was issued to attendees and the presentation is attached to the record. Mr. Miller thanked all who contributed their time in order to complete the Audit in a timely manner. Issued an unmodified opinion on all entities that were audited. Financial statements being presented are materially correct and based on their procedure performed had come to that conclusion. In the County s report there was an emphasis of a matter paragraph as a result of implementing a new standard - GASB 84 which addresses any of the County s fiduciary activities. Mr. Miller explained the meaning of this and that it did not affect the financial statements. Regarding Federal funds which come via the State, they are required to perform a single audit. This has not yet been completed but will be issued within the next two weeks. In answer to a question, Mr. Miller explained that the testing has been done but there is a need to have a second partner review the findings as the funds are very detailed. With the changes to rules and regulations by the Government, this has taken a lot of additional time to complete. He noted that internal controls were also reviewed within the accounting system and there were no findings that needed to be reported to the Audit Committee. With regard to significant and unusual transactions he reviewed what those were. With regard to accounting policies and practices, there are a lot of estimates that have to be made. They cover Pension, OPEB Liability, Self -Insurance and Landfill Closure and Post closure. He explained what these were in detail and they are included in the footnotes. They are also noted as significant risks. The financial statements are reporting a year behind when it comes to unfunded liability. Looking at significant risks, he was happy to report that no items in their review came to their attention for potential fraud. New for next year will be GASB 87 when Leases will be reviewed. Both as lessee and lessor. They will work with the County on a process going into 2022. Under Required Communications Mr. Miller covered the key points. Significant accounting Policies and accounting estimates. He noted that there were no difficulties encountered with management. That there were no corrected or uncorrected adjustments identified or reported which meant that the year-end Deschutes County Audit Committee Meeting January 6, 2022 Page 2 of 8 closing was catching everything that needed to be done as part of the audit. There were no disagreements with management. They have received the signed letter regarding Management Representations. There were no communications they were aware of, with another independent accountant. In answer to a question raised by Mr. Turel regarding large law suits, contingent liabilities or employee law suits, Mr. Miller noted they were not aware of any at this time but may be aware of in the future. Mr. Miller reiterated that Eide Bailly is an Independent firm and he was not aware of any non -independent relationships with the County as at June 30, 2021. He noted that the audit is done from a risk basis and that nothing came to their attention that caused concerns. Mr. Miller answered questions on the report. With regard to negative fund balances, he noted that this was a matter of accounting timing and no problems were found. Regarding post -employment benefits and an outside actuarial firm hired for a report, he noted that this was done every two years and thought it was the alternative year but that the most up to date report would be reviewed as part of the audit. No problems were found. Regarding post -closure landfill costs, there hadn't been any significant changes for this year. Greg Munn recognized Mr. Miller's work that had gone into the report and thanked him for his presentation. He also recognized Jana Cain's work on the report and introduced her to the Committee. Ms. Cain briefed on the work involved. There have been challenges and hopefully some new software may help the process to be automated next year. Adding additional funds is difficult, so new software might help. Mr. Munn briefed on problems encountered so will review software and bring back to the Board. He hopes this will enhance staff time. Ms. Cain also noted answers to questions raised. All lawsuits have been accounted for in the loss calculations, so no change after November 1, 2021. Last actuarial report was done in 2019. For Landfill, the last actuarial report was done in July 2021. Mr. Givans noted that we usually follow up the ACFR with a popular Annual Financial Report that is more of a public view of the County's Financials. When available this will be shared with the Committee. It is prepared by Finance. Commissioner DeBone thanked everyone for their input, especially Jana, who worked with our long time external auditors. He looks forward to the popular Deschutes County Audit Committee Meeting January 6, 2022 Page 3 of 8 Annual Financial report. There was discussion about Federal funding and how it may impact our budgeting in the future. In answer to a question from Commission Adair regarding our Moody's rating, Mr. Munn noted we are still Aa1 rating and it has not changed. Mr. Turel raised a query about how many employees may be currently working from home and if there is any sense on how many may doing this? Mr. Munn noted there is no specific detail on this. Nick Lelack noted that a policy for remote working will be taken to the Board later this month. Mr. Parrish thanked all for their presentations and for the questions raised. Audit Committee 2020/21 Annual Accomplishments Report Mr. Parrish directed members to the report attached to the agenda and reviewed the work that has taken place. There were no questions or comments. 2021 ALGA Peer Review Report Dave Givans introduced Elizabeth Pape from the City of Portland, Leader of the Peer Review team. Carol Holley, the other team member from the City of Surprise, Arizona, could not be present for today's meeting. Mr. Givans noted that we are subject to a Peer Review Process under the GAO which calls for peer reviews every three years. It was delayed one year by the pandemic but it finally took place during the week of October 18th, 2021. Ms. Pape presented the review and findings. She first noted the Government audit standards. The Peer review is one of the Quality Control standards. It is designed to assess the organization's overall level of compliance with Government Auditing Standards based on the answers to two questions: 1. Did the audit organization have an internal quality control system that provided reasonable assurance that audit work conducted was in accordance with applicable government auditing standards? 2. Did the audit organization follow its system of internal control and comply with applicable government auditing standards in the work it conducted during the period under review? She briefed on the Association of Local Government Auditors and gave background on the team and their experience and the scope of the review. Overall, there was Deschutes County Audit Committee Meeting January 6, 2022 Page 4 of 8 full compliance with standards. A management letter was issued with a single recommendation under Standard 8.27 - Document inquiry of management about the status of any legal proceedings. In response from Deschutes County, they will make inquiry and documentation of this standard a part'of normal engagement start process. Also, observations were made that the Internal Auditor added value through extensive knowledge of the County s financial systems, was productive with a high number of audits, had a good relationship with Administration and the Board of County Commissioners, and personally contributed to the professions through his ALGA activities. Committee members thanked both the Review team members and Mr. Givans for their work on Peer review and the work they do on Audits. Internal Audit Report: 2021 County Fair - Ticketing and selected areas Mr. Givans presented a report on this Audit. It was not on the work plan but added as a request. Is the only event the County hosts at the Fairground and Expo Center and a significant revenue generator. New ticketing system software had been introduced and new contract support employed. Mr. Givans was brought in to see if improvements could be made. He reviewed procedures for the ticketing machines and sales oversight, for handling monies, change and deposits, and to review and observe oversight over third party food concessions sales. He noted the increase in revenue over the last three years and the estimates for this year. He gave background information and areas of recommended changes for the future. Geoff Hinds thanked Mr. Givans for his input. He briefed on the background and short run up to the fair and the new system - Saffire, and the audit highlighted areas that it could be improved upon. The data from the system provided was excellent and will enhance the fair going forward. Mr. Parrish thanked Mr. Givans and Mr. Hinds for their briefing, in answer to a question they noted that this audit only covered the fair ticketing and did not cover anything externally such as RV and boat storage. Commissioner Adair thanked Mr. Hinds and his staff for their preparation, planning and running of the fair with such a short run up. Internal Audit Report - County Accounting System (Munis) Purchasing Topics - Part IV - Analyses Deschutes County Audit Committee Meeting January 6, 2022 Page 5 of 8 Mr. Givans presented a report on the fourth installment on Munis. Most of these came up during implementation of the system. He briefed on the background of selection of the system and the analyses. His Audit objectives were to analyze purchases in a number of areas, including: a) Effectiveness of approvals b) Duplicate payments search c) Whether transactions have been split to avoid proper approvals or purchasing requirements d) Benford's analysis - identifies unusual disbursement amounts. Duplicates were very small number - 19 - representing .04%, one recommendation made for billed invoices that do not have an invoice number, that staff add descriptors to make them unique. For Requisition and Purchase order process - more use of the purchase order system could improve processes and staff could be given more guidance on how to use this system. More use could be more efficient for bulk invoices, contracts and routine payments. For Approvals, a recommendation of more training for approvers to actually review invoices, not just batch approve without review. Use of accountable plan should be limited to employee payments. Mr. Munn thanked Mr. Givans for his review and recommendations, Finance will work on a plan and come back to the Committee when it is complete. Follow-ups and updates Mr. Givans briefed on the 2021 Global Follow-up, (#21-22-2), which is the annual catchup on outstanding recommendations for a year or more. Went well, less than last year. He briefed on specifics but overall the Countys implementation rate is 90% for the last three years which is outstanding. On Munis Part 1, (#21-22-4). Finance are working on these, new hires within the department will help the follow up, of these. 6% complete, 94% underway. r On the PCE recommendations for DA's office (321-22-3). There were a lot of recommendations - 86 - and the goal was to provide feedback to the Budget Deschutes County Audit Committee Meeting January 6, 2022 Page 6 of 8 Committee on how the DA was responding to these so that budgetary decisions could be made. The office has completed 29% in six months. Another follow up will take place in April/May. Mr. Turel raised concerns about the lack of prosecution of serious cases. He would ask for an analysis on the ratio of charges brought to those dismissed and would ask that this be noted in the minutes. Mr. Givans noted that this may be a request for the Budget Committee, not the Audit Committee. Lee Randall briefed on the Clerk's Office security consultation. There were 30 recommendations, of which 25 have been completed. Two are underway and should be completed in the next few months. The remaining three relate to downtown campus and buildings and are not specific to the Clerk's office. Those that are higher cost will have to be worked through the Budget process. Performance Auditor recruitment update Mr. Givans briefed on the process. He had two applicants and interviews would take place shortly. Update - County leadership recruitment/changes Mr. Lelack briefed on the changes of department heads. Three hired recently. CDD Director - Peter Gutowsky, Director of Community Justice - Deevy Holcomb and Director of Solid Waste - Chad Centola. We knew that Chad will retire in June 2023, so have been able to hire an Interim Director who will transition into the role when he retires. Dr. George Conway has moved from Health Services Director to Health Officer. Erik Kropp, will serve as Interim Health Services Director while recruitment takes place. Internal audit program - budget request & succession planning Mr. Givans briefed on budget planning for coming year. External auditor RFP update Mr. Givans briefed that he had sent this out through Constant Contact. There is some interest from firms and a sub -committee for this process. The deadline for questions is January 31. Proposals are due by February 14. Following this, one month to come up with a recommendation. He will prepare some scoring templates for the sub -Committee to bring a recommendation to the full Audit Committee and the need to set up any interviews. County Internal Controls (fiscal - continued) Deschutes County Audit Committee Meeting January 6, 2022 Page 7 of 8 Mr. Givans briefed on Fiscal Policies for Capital Assets. The policies are F-4, F-5 and F-6. Capital asset is anything over $5,000. He briefed on each policy. Updates/other items Mr. Givans directed members to the list on the back of the agenda to review the status of the list. Audits and follow ups - Case investigation and Call taking. He is experiencing a delay in getting information from the State which he is working through with County Counsel. He hopes to get the information, should he not, it will limit his scope of the work. Mr. Givans shared the three month report on Audit work undertaken. Is planning some audits for the future covering IT and Cyber security and also ARPA funding. Other Business/closine Committee members thanked Mr. Givans for all the work he does to keep the Departments on track. Next Meeting: March 11, 2022 at 12-3 pm Adjournment: Being no further issues brought before the Committee the meeting was adjourned at 12:22 pm. Respectfully submitted, Carol Martin BOCC Administrative Assistant Deschutes County Audit Committee Meeting January 6, 2022 Page 8 of 8