Audit Committee

AUDIT COMMITTEE MINUTES DATE: October 30, 2019 LOCATION: CITY HALL FOURTH FLOOR CONFERENCE ROOM TIME: 4:00 PM I. CALL TO ORDER – Chairman The meeting was called to order by Joyce Norris at 3:59 pm. II. ANNOUNCE MEMBERS IN ATTENDANCE (VERIFY QUORUM) Audit Committee members present: Joyce Norris, Lynn Stokes, Jerry Weatherspoon, Jeff Henley, Peter Reyman Audit Committee members absent: None Quorum verified? Yes Internal Audit attendees: Rod Wright, Stephanie Fox, Cassie Wheeler Other Attendees: Dr. Brandon Di Paolo Harrison III. ADOPTION OF MINUTES: July 31, 2019 Joyce called for a motion for approval of the minutes. Jeff made the motion, and Jerry seconded. The minutes were approved as presented. IV. DEPARTMENT REPORT A. Budget Report Rod presented the FY 2020 year to date budget. He drew the committee’s attention to the auditing line and explained that the external audit firm (ATA) has not yet billed for audit work performed in this fiscal year. They did bill for interim work completed during the prior fiscal year, and those were paid from the FY 2019 budget. We anticipate the planned IT co-sourcing projects to be performed by KraftCPAs will begin in calendar year 2020. Rod also reminded the committee that charge outs in the budget are for work to be performed at CDE and CGW by Kraft related to IT. B. Update on Internal Audit Activity i. Audit Schedule Status Note: Peter Reyman entered the meeting during discussion of the audit schedule status. Rod gave the committee an update on the status of all projects.  ● City General Payroll Audit - The draft report was sent to management on 8/26/19. We have given them additional time beyond what is allowed by City Code due to timing coinciding with the external audit and year end close for FY 2019. We have received responses and are working with Finance and the Mayor’s Office to finalize the action plans and ensure they adequately address all the findings noted in the report. Jerry asked whether we would be following up on the action plans, and Rod confirmed that we will. Rod also explained the upcoming switch to 26 pay periods, which we have recommended in past payroll audits along with implementation of an electronic timekeeping system. ● Golf Course Inventory and Cash Handling Audit - The audit committee received the draft report for this audit on 10/29/19. Rod explained that we made two minor changes to the report since the draft was sent to the committee. The changes made the financial control language in observations one and three more specific to inventory and cash handling controls, and added language to indicate we would be working with finance in the upcoming financial controls project to address these issues. ● I-9/E-Verify Audit - We are finalizing remaining planning documents and working on population data validation. We will be selecting samples and beginning testing shortly. We expect that testing for this audit will be relatively straightforward. ● Senior Management Expense Audit CY 2018 - We have completed planning for this audit and are currently in the testing phase. The audit is for calendar year 2018 and is focused on the Mayor’s Office and Legislative budgets. This audit covers the last year of Mayor McMillan’s time in office. We expect testing to be completed by mid-November. ● Vendor Analysis & Financial Controls - These will not begin until the I-9 and Senior Management Expense Audits are completed. ● Ethics Survey - We will begin this project in calendar year 2020. We plan to do this annually going forward to address the red book standards requirement to review governance annually. The project will involve sending an ethics/climate survey to employees. ● Customer Disconnects (CDE & CGW) - These are planned to begin in the spring and carryover into FY 2021. ii. Audit Metrics Rod presented the audit metrics. He explained the reasons for hours over budget on the payroll and golf course audits, and stated that we expect to be under or at budget on hours for both the I-9 and senior management expense audits. We are still trying to determine an appropriate metric for a utilization percentage, but are implementing strategies to improve these. The committee also discussed categorization of various non-audit projects that are productive and beneficial for the City. iii. Ethics Compliance Report Rod described this project, as it is new for our office. We have an auditing standard that requires us to review the ethics of the organization. The City currently has a process where all employees and council members are required to take an online ethics training and electronically sign an acknowledgment that you have completed the training. Our goal with this report is to add transparency  and accountability for elected officials since they set the tone at the top for ethics. We currently have some noncompliance in the report, but we are still working with those individuals prior to finalizing the report. We plan to issue this annually in July going forward. The committee discussed the adequacy and potential improvements to ethics training for council members. iv. IT Co-sourcing Update KraftCPAs is currently updating their report, which they will be sending to Rod by the end of the week. Rod is planning to meet with Amie Wilson (IT Director), as well as representatives from CDE and CGW to discuss. We plan to have met with stakeholders and developed a couple of projects that Kraft will be working on by the January audit committee meeting. v. Internal Control Meetings There was not much to report on these meetings, except that they are continuing. Rod explained that Finance holds meetings with departments annually to discuss process changes and emerging risks and we attend these meetings. vi. Financial Audit - ATA CDE’s audit is completed and issued. ATA is currently finalizing NGAC and CGW now. All the feedback we have received from CDE and CGW has been positive, indicating the audits have gone smoothly. vii. Policy Updates We will be updating the policies and procedures to be compliant with the red book standards beginning at the January audit committee meeting. We intend to have all policy updates completed and approved by the July meeting. viii. State Comptroller Financial Statement Reports Rod had previously sent a letter we received from the State Comptroller’s office. This is included in the agenda to state that those letters were sent to us by the Comptroller’s office in error. ix. Annual Quality Assurance Review Rod has completed the quality assurance review this year in accordance with the ALGA red book peer review checklist. This process determines where we are as a department versus where we need to be to achieve full red book standards compliance. Rod presented a summary of the results to the committee and went over the findings, as well as steps we will take to address them. Overall, we still have several items to complete, but there is nothing that would prevent us from fully implementing the red book standards. Rod believes that one City Code change will be necessary to outline what types of consulting engagements are acceptable for us to participate in and describe documentation requirements and independence safeguards. x. Spring Intern This will be posted at APSU next week. It will remain posted through the Thanksgiving Holiday, and we will make a decision in early December. The intern will start in late January/early February.