Audit Committee

AUDIT COMMITTEE MINUTES DATE: April 24, 2019 LOCATION: CITY HALL FOURTH FLOOR CONFERENCE ROOM TIME: 4:00 PM I. CALL TO ORDER – Chairman The mee ng was called to order by Jeff Henley at 4:01pm. II. ANNOUNCE MEMBERS IN ATTENDANCE (VERIFY QUORUM) Audit Commi ee Members Present: Lynn Stokes, Jeff Henley, Jerry Weatherspoon, Peter Reyman, Joyce Norris arrived at 4:05pm Audit Commi ee Members Absent: None Quorum Verified: Yes Internal Audit A endees: Rod Wright, Stephanie Fox, Cassie Wheeler, Cassidy Bartley Other A endees: Mayor Joe Pi s Laurie Ma a, City of Clarksville Chief Financial Officer III. ADOPTION OF MINUTES November 7, 2018 and January 17, 2019 Audit Commi ee mee ngs Jeff Henley asked the Audit Commi ee members to review the minutes and called for a mo on for approval of the minutes. Jerry Weatherspoon made a mo on to accept the minutes and Lynn Stokes seconded. The minutes were approved as presented. II. DEPARTMENT REPORT A. Budget Report i. FY2019 YTD report Rod presented the year-to-date budget for FY 2019. There had been no significant changes in the budget to discuss; however, Rod pointed out that the department would be a ending a few conferences and trainings before the end of the fiscal year. Rod pointed out that there was money le in the accoun ng and audi ng line which will be used for interim work performed by ATA for the FY 2019 financial audit and for poten al IT co-sourcing engagement Kra CPAs. We an cipate an increase in the price of interim work related to the financial audit due to an increase in the planned number  of ATA staff. In prior years, there may have been 2-3 auditors present for interim work. This year, ATA plans to bring anywhere from 4-6 auditors for the interim por on of the audit engagement. ATA will be on site in mid-June. ii. FY2020 Proposed Budget There were not any significant increases except the audi ng and accoun ng line for IT co-sourcing. Rod thanked Cassie for her work in preparing the budget documenta on. Rod confirmed for Jeff that the nega ve $30,000 was for CDE/CGW charge outs related to planned IT services (discussed in detail in the commi ee ac on sec on below). There were no other ques ons. Joyce called for a mo on to approve the FY 2020 budget. Peter made the mo on, and Jeff seconded. The FY 2020 budget was approved unanimously. B. Update on Internal Audit Ac vity i. Audit schedule status Rod asked for comments or sugges ons related to the monthly reports he has been sending out. There were none. Rod gave the following brief update on audit status: ● The payroll audit has moved into the repor ng phase. ● The CPD evidence room audit has been completed. ● The IT organiza onal structure audit has been put on hold to focus on the ethics policy audit. ● Rod is wrapping up the planning phase of the ethics policy and he will give an update on findings already iden fied in execu ve session. ● The golf course audit is progressing and will be discussed further during execu ve session. ● Management has been no fied of the I-9/E-verify audit, but has not yet been officially started. ● Postponement of the Clarksville Fire and Rescue staffing and over me audit is up for commi ee ac on. The search for a new fire chief is underway, due to the current Chief’s upcoming re rement. A change in the policy for scheduling vaca on me is planned at the fire department which will significantly impact the staffing model and our audit. Therefore, we request to postpone this audit indefinitely, likely un l FY 2021. ii. Audit metrics Rod presented the audit metrics report for the period. He indicated he will likely update the audit u liza on metrics for the department in the upcoming fiscal year. iii. Weekly Mayor Report Rod gave the commi ee a copy of the “sit rep” report which is updated weekly for the Mayor’s office. iv. Standing Commi ee A endance Project Rod presented the a endance report and explained that this is an informa onal report showing a endance of City Councilmembers at assigned commi ees. Commi ee mee ngs foster communica on between the Council and departments, while influencing the control environment and overall governance of the City. The commi ee  discussed requirements and benefits for regular mee ngs, as well as the results of the 2017-2018 review. The Mayor gave some informa on about planned changes to enhance strategic planning for the en re City, while making commi ee mee ngs more effec ve. We plan to post this to our website every January for the previous year. v. Wins Stephanie reported that she passed the second part of the Cer fied Internal Auditor exam, and plans to take the third and final part of the exam in May. She also reported that as part of the fleet audit we recommended crea ng a brochure with key fleet policy informa on to keep in all City vehicles. This recommenda on was implemented by the Fleet Management Division. Cassie and Rod reported that the payroll audit has resulted in several ancillary issues coming to light, which will lead to improvements among several departments. Cassie has collaborated with several different City departments to resolve these issues and ul mately enhance the overall process. Examples include working toward paying actual hours worked and implemen ng 26 pay periods. vi. IT Co-sourcing This is the poten al arrangement with Kra CPAs which is discussed in detail in the Commi ee Ac on sec on below. vii. Intern Rod thanked our spring intern, Cassidy Bartley, for her work. She has done a great job handling assigned tasks and we are apprecia ve of her me with us. We have budgeted for another spring intern during the FY 2020 budget. viii. New Report Format The commi ee gave posi ve feedback on the new report format. During development our main focus was on iden fying the needs of our audience and simplifying the format for ease of reading. One important change will be repor ng management ac on plans rather than auditor recommenda ons, as well as developing a finding ranking system over the coming year. While we may s ll have recommenda ons, we will focus on what management is going to do to address findings. We intend to have a detailed findings mee ng with management to discuss issues and develop ac on plans that are acceptable to all stakeholders. ix. Internal Control Mee ngs Finance has begun scheduling this year’s internal control mee ngs. The mee ngs are an opportunity to meet with individual departments and discuss changes within the past year and mi gate any new or changing risks for the department. x. Policy updates to begin July mee ng Rod explained that we will begin upda ng our internal policies and procedures to reflect the change in standards to red book. We will be presen ng these changes to the commi ee for approval over the next few mee ngs. III. NEW BUSINESS A. Audit Commi ee Members for 2020-2021 Two audit commi ee members’ terms expire at the end of this year. Both Joyce and Jerry have served two terms on the commi ee, so they will be rolling off. Rod gave some requirements for the posi on. There was limited discussion about possible candidates to fill these posi ons. IV. COMMITTEE ACTION REQUIRED A. Approve Kra CPAs IT project We are looking to create a co-sourcing agreement with Kra CPAs to perform some IT audit work, where Kra would func on as a part of internal audit. The first engagement of the proposal involves Kra gaining an understanding of the organiza on, including City General, CDE, and Clarksville Gas & Water. Using that informa on, we will build a risk assessment and determine which IT engagements are necessary for the upcoming years. While we hope that this will be an enduring rela onship for IT audit services, we are not currently commi ng to a long term arrangement with Kra . We have budgeted funds in the FY 2020 budget, including charge outs for CDE and CGW, for some IT engagements. We es mate that the por on of the risk assessment applicable to FY 2019 will be $15,000. There was discussion of qualifica ons of Kra CPAs to perform these services, as well as the services to be performed. Joyce called for a mo on to approve the planned Kra CPAs IT project. Lynn made the mo on, Peter seconded. The mo on was approved. B. Approve postponement of the CFR audit Joyce called for a mo on the postpone the over me and staffing audit of the fire department. Jeff made the mo on, Jerry seconded. The mo on was approved. V. CITY COUNCIL ACTION REQUIRED VI. ADJOURNMENT OF PUBLIC MEETING Joyce requested a mo on to adjourn the public mee ng and go into execu ve session. Jeff made the mo on, Lynn seconded. The public mee ng was adjourned at 4:53 PM. VII. PUBLIC COMMENTS (5 minutes each) VIII. NEXT MEETING - July 31, 2019 4:00 PM IX. EXECUTIVE SESSION – Vote by the Commi ee to go into execu ve session. At this point in the mee ng everyone other than Audit Commi ee members and those asked to a end by the Audit Commi ee to address a pending audit issue will be asked to leave. A. Ongoing audits and inves ga ons B. Hotline reports C. Audit plan