Audit Committee

MINUTES Audit Committee of Roanoke City Council Location: Council Conference Room Noel C. Taylor Municipal Building, Room 451 South Date: September 6, 2017 Time: 4:01 p.m. to 4:33 p.m. Attendees: Audit Committee Member Present (Y/N) William Bestpitch (Chair) Y Anita Price (Vice-Chair) N Michelle Dykstra Y Sherman Lea (ex-officio) Y Tasha Burkett, Financial Systems Auditor Dan Callaghan, City Attorney Drew Harmon, Municipal Auditor Bob Cowell, City Manager Dawn Hope Mullins, Assistant Municipal Auditor Wayne Parker, Senior Auditor Amelia Merchant, Acting Director of Finance Paul Workman, Acting Accounting Supervisor Andrea Trent, Assistant Director of Finance Cari Spichek, Senior Auditor Sherman Stovall, Assistant City Manager for Operations Brian Townsend, Assistant City Manager for Community Development 1. Call to Order: Mr. Bestpitch called the meeting to order at 4:01 p.m. 2. City Council Expenditures - FY 17: Mr. Harmon noted that council members finished the year within budget, as shown in Exhibit 1. Overall expenditures for fiscal year 2017 were up about 4% over fiscal 2016. Training, travel and business meal expenses accounted for most of the increase. The City Clerk’s budget for council expenses increased about 8% over the prior year, as shown in Exhibit 2. Mr. Harmon noted that one-time expenses related to hiring a city manager and renovating the Mayor’s office accounted for most of the increase. September 6, 2017 Page 2 of 3 Ms. Dykstra asked if the audit reviewed transfers between accounts, specifically transfers within budgeted items made to cover expenses that go over budget. Mr. Harmon responded that transfers between accounts and between council members were audited. Policy requires that transfers between members of council be approved by a simple majority of council. Mr. Bestpitch commented that auditors usually select a random sample of transactions, but this audit covers 100% of the expenses. He felt that it is a good approach which the council appreciates. Mayor Lea concurred and added that the audit is an important part of the process that he appreciates. The report was received and filed without objection. 3. Annual Report – FY 17: Mr. Harmon began on page two of the report, noting that the school system reimburses the city for one full time equivalent. Having 18 % of audit resources utilized on school related work was consistent with the school agreement. The breakdown of audit activity on page three showed that consultations were emphasized in fiscal 2017. This included work on restructuring the tax and treasury functions as well as analyzing revenue shortfalls. The revenue work involved monthly meetings and retrieving data out of various systems to analyze trends. A revenue team that includes the City Manager’s office, Finance, City Attorney, Auditing, the Treasurer and Commissioner continues to meet monthly to discuss revenue. Mr. Bestpitch suggested that management mention the revenue team’s work at the Council’s planning retreat. Mr. Stovall confirmed it would be part of the briefing. Performance audits were a significant category of activity, as outlined on pages six and seven of the annual report. Mr. Harmon highlighted work on school transportation, special education, and the purchasing card program. Work on financial related audits, follow up audits, and information systems accounted for the remaining audit activity. Mr. Harmon noted that work in the area of information systems and technology was only 2% of audit activity and will need more attention in the future. On page 11 of the report, Mr. Harmon noted that the percentage of time worked directly on audits did not meet its benchmark of 68%. Indirect time consumed 37% of available resources, primarily in the areas of paid leave, employee development, meetings, and administrative tasks. Continuing education is an important component of employee development and is required to maintain each person’s professional certifications. The department also holds daily briefings that support better collaboration and communication. Lastly, page 13 of the report covered department performance measures. Large projects like the tax and treasury project consumed significant hours that would have been used for other assignments. September 6, 2017 Page 3 of 3 The department fell well short of its goal to complete eight (8) assignments per person. Client satisfaction ratings continued to be very good and departments completed 93% of the actions they agreed to take to address audit findings. Mayor Lea asked City Manager Cowell how often all of the Department Directors meet. Mr. Stovall responded that they meet once a month. Mayor Lea asked for an invitation to the October meeting as he would like to attend. Mr. Bestpitch asked if the investigations shown on page three were the ones that come through the hotline, noting that it was 8% of activity. Mr. Harmon confirmed that these were hotline investigations and that activity tends to fluctuate from year-to-year. The report was received and filed without objection. 4. Other Business: Mr. Bestpitch asked Mr. Harmon to update the committee on department staffing. Mr. Harmon stated that Senior Auditor accepted an offer from his former employer that was more money and allowed him to work from home. A new Senior Auditor has been hired in his place and starts on September 12. She previously worked at Cherry Bekaert and is a CPA with a Master’s Degree in Accounting. A new project manager position will report to Auditing and be responsible for overseeing the implementation of a new tax and treasury system. Mr. Bestpitch asked if the position is being recruited as a time-limited position. Mr. Harmon confirmed that it was a temporary position that will be paid out of the capital project fund. Mr. Harmon reminded the committee of future meeting dates: • 12/13/17 • 3/7/18 • 6/6/18 Mr. Stovall shared with the committee his appreciation for Dawn Mullins work in Finance, helping to close the books for fiscal year 2017. He wanted to publicly and specifically thank Dawn for all of her efforts. Mr. Bestpitch also recognized and thanked Amelia Merchant for her efforts as Acting Director of Finance. 5. Adjournment: Mr. Bestpitch adjourned the meeting at 4:33 p.m.