Audit Committee

AUDIT COMMITTEE MINUTES DATE: November 28, 2018 LOCATION: CITY HALL FOURTH FLOOR CONFERENCE ROOM TIME: 4:00 PM I. CALL TO ORDER – Audit Committee Chairman II. ANNOUNCE MEMBERS IN ATTENDANCE (VERIFY QUORUM) Audit Committee Members Present: Joyce Norris, Lynn Stokes, Wilbur Berry, Jeff Henley, Jerry Weatherspoon Audit Committee Members Absent: None Quorum Verified: Yes Internal Audit Attendees: Rod Wright, Stephanie Fox, Cassie Wheeler Other Attendees: Peter Reymen (joined shortly after meeting started as noted below) III. ADOPTION OF MINUTES October 18, 2018 special called Audit Committee meeting Joyce Norris asked the Audit Committee members to review the minutes and called for a motion for approval. Jeff Henley made a motion to accept the minutes, Lynn Stokes seconded. The minutes were approved as presented. IV. DEPARTMENT REPORT A. Budget Report Cassie gave a brief update on the budget. Crosslin has invoiced the City 60% of their contract to date. We purchased the updated version of the red book standards for the department. Cassie attended the TGFOA Conference and Rod attended an ACFE conflicts of interest training. B. Update on Internal Audit activity 1. Audit schedule status The Senior Management Expense Audit was issued on 11/9/18. Sole Source Audit report is drafted and will be released soon. We are wrapping up the field work on the Payroll Audit. For the FY 2019 schedule, the Evidence Room Audit planning was started 10/12/18. Rod is about to kick off the IT Organizational Structure Audit and also the Ethics Policy Audit. Golf Course Cash Handling and Inventory Audit, I-9/E-verify Audit, and Fire Department Overtime and Staffing Audit are the other audits planned for FY 2019. 2. Audit metrics Rod said we will start reporting the audit metrics to the Audit Committee on a monthly basis. 3. Wins Rod wants to add this category to the schedule. There are things that we do that are not necessarily audits, but something that adds value to the City overall. ● Cassie attended a Power Board meeting where Lance recommended CDE hire a consultant to handle potential bankruptcy issues for a specific customer. Cassie asked if Lance had discussed this with CGW since CDE & CGW have mutual customers and he had not. This could be a costs savings for both utilities if they share the consultant and protect rates that have already been collected. Rod explained we are in a unique position within the City to connect the dots on things that individual departments may not see. Mr. Reyman joined the meeting and Rod introduced him to the Audit Committee as a potential Audit Committee member for 2019. ● Stephanie said the Evidence Room Audit, which is the first audit conducted with the red book standards, is going well so far. Planning is moving along quickly and we are starting to see how the red book could help improve efficiencies within the department. 4. RFP ATA has been informed they were selected by the Audit Committee. Rod will be working with them to finalize the contract. 5. Intern Update Intern job is posted through Austin Peay State University. We’ve already received a few applicants. The job posting ends December 5th. 6. Peer Review - Colorado Springs Rod went to a peer review in Colorado Springs, CO in October. They are an established department with a strong staff and director that use the red book. Rod said he was able to ask a lot of questions and could see how the red book was applied to the government environment. 7. Automated Workpapers / Metric Tracking Software Rod looked into automated workpapers, but it is going to be cost prohibitive for our department at this point. We’ve started using Google Sheets & Docs to notify/assign items and it is working well for us so far. 8. Project List / Timeline Rod reviewed items that the department is working on mainly related to red book implementation: ● Developing red book compliant work papers for planning, field work, and reporting stages of the audits. We are working on planning templates now. ● Developing the risk assessment - All audits will be driven based on risk. This will involve meeting with department heads, attending the risk assessment  meetings held by Finance, attending the different committee meetings, keeping up to speed with different audit shops, etc. Ultimately, we will end up with 5-6 high risk categories and the different processes within the departments will fall underneath those categories. We will be able to show our audits support the overall direction of the organization and the high risk areas are addressed in each project that we do. ● Develop a fraud policy using ACFE templates, information from the State of Tennessee, and reviewing other cities policies as guides. ● Update the Internal Audit department manual with all of the red book changes to be implemented. ● Hire new intern. ● Invite new Councilmembers to Internal Audit department, like we’ve done in the past. ● Go live with Internal Audit Facebook page. This will likely be a task assigned to the intern. ● Develop a more formal way to track all of the different follow ups that need to be done. ● Identifying different data sources where we can collect information on a regular basis to help identify potential ongoing audits. 9. Annual Report Status This report is overdue to the City Council, but we were trying to wrap up some of the FY 2018 audit reports. Rod plans on issuing this report soon. V. NEW BUSINESS A. New policy - report issuance on or before elections Rod asked the committee to review the proposed language to add to the Internal Audit Manual 4.09.4 Report Release and Distribution section. This addition would delay any release of reports around election time to avoid the content of any audit report being used as a political advantage over another candidate for any City election. The committee discussed changes to the draft policy, including specifying the election frequency and number of days prior to the election. After the changes were agreed on, the committee requested to postpone this item until the next Audit Committee meeting so the changes to the draft can be reviewed. Wilbur Berry made a motion for the draft to be revised and resubmitted to the Audit Committee. Lynn Stokes seconded. The motion passed. B. Finalize quarterly Audit Committee meeting schedule Audit Committee meetings will be held quarterly on the last Wednesday of the month at 4pm. For 2019, the meeting dates will be January 30, April 24, July 31, and October 30. This did not require a motion since it was approved previously. C. Audit Committee candidate consideration Rod welcomed Mr. Peter Reyman, who was introduced to us by Bill Harpel. He is interested in being on the Audit Committee. Rod said his operational and law enforcement background will bring a different perspective than we currently have on the committee. Mr. Reyman is the Executive Officer of Ft. Campbell, which is equivalent to the Chief of Staff at the City level. Mr. Reyman spoke about his military background and experience and was appreciative for this opportunity. The Audit Committee’s recommendation would be added to the consent agenda for Peter Reyman to replace