Audit Committee

MINUTES Audit Committee of Roanoke City Council Location: Council Conference Room Noel C. Taylor Municipal Building, Room 451 South Date: December 12, 2018 Time: 4:02 p.m. to 4:36 p.m. Attendees: Audit Committee Member Present (Y/N) Anita Price (Chair) Y William Bestpitch (Vice-Chair) Y Michelle Davis (Member) Y Sherman Lea (Ex-Officio) Y Bob Cowell, City Manager Sherman Stovall, Assistant City Manager for Operations Brian Townsend, Assistant City Manager for Community Development Amelia Merchant, Director of Finance Dan Callaghan, City Attorney Drew Harmon, Municipal Auditor Dawn Hope Mullins, Assistant Municipal Auditor Cari Spichek, Senior Auditor Brian Pendleton, Senior Auditor Emma Coole, Senior Auditor Andrea Trent, Manager of Retirement Services Margaret Lindsey, Accounting Supervisor Dorothy Hoskins, Senior Accountant Amanda Dooley, Accounts Payable Supervisor Rob Churchman, Partner, Cherry Bekaert 1. Call to Order: Ms. Price called the meeting to order at 4:02 p.m. 2. Approval of the Minutes from the September 5th Meeting: Ms. Price asked if there were any corrections to the minutes. Hearing none, the minutes were received and filed as written. December 12, 2018 Page 2 of 3 3. Review Results of Financial Audit for the Year Ending June 30, 2018: Mr. Churchman reported that the FY2018 Comprehensive Annual Financial Reports [CAFRs] have been issued. He discussed the purpose of Cherry Bekaert’s presentation, explained their deliverables and reviewed each presentation section in order. Mr. Churchman highlighted the overall audit results, as follows: - Unmodified opinion on the City and Pension Plan financial statements - New requirement to accrue a liability for non-pension benefits was a large endeavor for all entities in Virginia. Appropriately implemented resulting in over 30 pages of new disclosures. - Material weakness of controls over Workforce Innovation and Opportunity Act [WIOA] funds related to monitoring of sub-recipient spending - Non-material finding related to Electronic Benefit Transfer card security - Four minor findings related to Auditor of Public Account compliance procedures - Unmodified opinion on Virginia Retirement System census data reporting - Review of Sheriff’s internal controls resulted in the identification of minor control matters, all of which are common in Virginia - Management finding related to a lack of timely review of information system access rights Mr. Churchman covered the required communications, noting that management cooperated throughout the audit and provided all the records, information and representations requested by the auditors. He certified that the firm and its employees performed their work in an independent and objective manner. Related to the WIOA finding, Mr. Bestpitch asked if there was any concern about money being misspent. Mr. Churchman responded that at the City level, the main requirement is to monitor to whom the money went. The two entities between the City and ResCare identified issues that were not remediated; the City did not follow-up to determine if those findings were being addressed. As the City is the grantee, it’s responsible to the Federal government. Single audit findings can trigger federal agencies to do their own audits. Management responded to the auditors that they are working to put additional monitoring procedures in place. Additionally, the Workforce Development Board is making changes in their structure to address identified issues. Mr. Harmon commented that there is not a high level of confidence that ResCare did a good job and that the money was effectively used. The Workforce Development Board has since changed providers. There were no further questions about this issue. Ms. Price thanked Mr. Churchman and asked if there were any additional comments or questions. Mr. Harmon stated that Audit Committee Members received CAFRs in their packets and that findings and responses are summarized in back. Additionally, he noted that for the first time in many years, required reports were filed by the Auditor of Public Accounts deadline of November 30th. He applauded Ms. Lindsey and her staff for their hard work and accomplishment. He also thanked to Cherry Bekaert for their efforts. Mr. Churchman added that being able to file timely is a testament to Finance’s effort to get it done. Ms. Price thanked Ms. Lindsey and her staff for all their hard work. There were no further questions or discussion. The results were received and filed. December 12, 2018 Page 3 of 3 4. Hotline Update Mr. Harmon noted that there have been a lot of public/criminal reports, none of which involved City employees. Municipal Auditing’s hotline comes up first when doing an internet search for hotline. He has made some changes to the online description to provide additional information on who to call about other issues. Mr. Harmon discussed a report received about employees participating in a football pool on city time and premises. Sports pools are a fairly common activity. State and city code have not yet caught up with social gambling, and states are not able, from a federal standpoint, to legally allow gambling. Mr. Harmon met with city management, who determined that measured approach was best. The City will keep its policy against gambling, and administration will manage identified gambling activity on a case- by-case basis. Mr. Bestpitch commented that he understands the issue, but has a concern about the City having a policy prohibiting gambling, but management turning a blind eye to the same activity. That could create tensions at work or be negatively received by public. Mr. Harmon expanded that there is some gray area around whether social gambling is truly against the law. Mr. Callaghan stated that games of chance in the home are allowed by Virginia code. One of the primary questions about a gambling pool is whether the facilitator is making money from the pool. In the reported incident, no one was making any money; all the proceeds were going to the winner. That is the real issue that is seen as a problem. He added that the way to implement the policy is to communicate to employees that there is no gambling at the office; manage your pool at home. It is a very difficult issue to enforce, and. Virginia may eventually amend the code. Until then, the best approach is to encourage staff to do their betting at home. Hearing no further questions, the update was received and filed. 5. Other Business: Mr. Harmon received a copy of the Auditor of Public Accounts Report on Commonwealth Collections right before the meeting. There was one finding as a result of the Treasurer not being notified to remit the state’s portion of excess collection fees timely. The underlying issue has been addressed. Ms. Price thanked Mr. Harmon for the update. 6. Adjournment: Ms. Price and Mr. Lea wished everyone a joyous and peaceful holiday and thanked staff for their hard work and commitment. Ms. Price reminded attendees that the next meeting will be held on March 6, 2019 and adjourned the meeting at 4:36 p.m.