Audit Committee - RCPS

Minutes of the Roanoke City School Board Audit Committee March 23, 2017 Audit Committee Members: Bill Hopkins, Committee Chair - Present Laura Rottenborn - Absent A quorum was not in attendance, however; the presentations were made as set out on the agenda and the meeting remained open to the public. Others Present: Steve Barnett, Deputy Superintendent for Operations Kathleen Jackson, Chief Financial Officer Donna Caldwell, Director of Accounting John Aldridge, Partner, Brown, Edwards & Company Drew Harmon, Municipal Auditor, City of Roanoke Cari Spichek, Senior Auditor, City of Roanoke 1. Call to Order Mr. Hopkins called the meeting to order at approximately 9:15 AM. 2. Presentation of General Audit Plan – FY 2017 John Aldridge, Partner with Brown Edwards & Co., presented the general audit plan for RCPS. Mr. Hopkins asked if there is anything different in this year’s plan than in previous years. Mr. Aldridge responded that there have been no changes regarding standards, staffing, etc. He noted that the major federal program to be audited this year is expected to be Title 1 at this time. He anticipates one (1) additional program will have to be reviewed to reach the required 20% threshold of federal dollars spent. Mr. Aldridge noted that the significant audit areas this year will consist of: • Intergovernmental Revenue • City transactions – Due to/from amounts with the City • Payroll – Division’s largest expenditure Mr. Aldridge discussed the fact that RCPS is the only school division Brown Edwards audits that reports accounts payable for School Activity Funds. Mr. Hopkins asked if that was a problem and if Brown Edwards had a preference. Mr. Aldridge responded that it was not right or wrong, just different. He noted that it affects the timing of audit fieldwork while expenses are accrued and payables finalized after year-end. Mr. Hopkins asked about the mediation clause in the engagement letter identifying McCammon Group as the mediator. Mr. Aldridge responded that this is a new item that their attorneys advised them to include. Mr. Hopkins asked if RCPS could select another firm if mediation were to become necessary, Page 1 of 3 Audit Committee Minutes March 23, 2017 as McCammon’s fee structure is higher than other mediators. Mr. Aldridge indicated that another firm could be selected. Mr. Hopkins asked what RSI was and requested clarification. Mr. Aldridge stated that RSI is “Required Supplementary Information” that goes beyond the information in the footnotes. He gave two (2) examples of RSI: 1) Pension Liability, and 2) Management’s Discussion and Analysis. Mr. Aldridge stated that if there are other areas that the Board would like reviewed, just let him know. Mr. Hopkins asked if there were any other questions for Mr. Aldridge. Hearing none, the presentation was received and filed. 3. Audit Plan Development for FY-18 Mr. Hopkins asked about audits currently in progress. - Special Education - Bank Reconciliations - Fixed Assets - Substitute Teachers planning began on March 22 Ms. Caldwell noted that some of the outstanding items on the reconciliations are not true reconciling items. These relate to how the accounting system processes journal entries in the general ledger and the banking module. The Division is working with the vendor on a solution to remove these entries. The Committee discussed the annual risk assessment and audit plan: - Transportation ranked highest and is scheduled for another follow up audit in FY18. - Purchasing Services has been restructured, has new management, and is heavily regulated. The area was last audited in 2011. - IT Security was identified as high risk based on the valuable personally identifiable information in school systems, the evolving threats to security, and the pace of change in technology. The audit would look at the framework for governing technology, including the security standards followed. - Maintenance implemented a new work order module for capital equipment maintenance in 2015 to help ensure equipment is properly cared for and replaced timely. Mr. Hopkins asked if anyone else had any further questions. There were none. 4. Follow-Up Report – Student Health Services Page 2 of 3 Audit Committee Minutes March 23, 2017 Mr. Hopkins asked if there were any issues still outstanding. Mr. Harmon confirmed that Student Health Services had completed its action plans. He noted that the Coordinator of Occupational and Student Health Services is doing a great job. Mr. Hopkins asked if anyone else had any further questions. There were none. 5. Follow-Up Report – Workers Compensation Mr. Hopkins asked about the Division’s insurance provider and the amount of coverage. Ms. Jackson responded that she would need to research the exact amount and get back with him later. Mr. Hopkins asked how much RCPS pays in workers compensation expense. Ms. Caldwell stated that expenses have recently ranged from $50,000 to $60,000 per month. Ms. Spichek directed Mr. Hopkins to the graph on page 4 of the report that identifies workers compensation expense over the last four (4) fiscal years, as well as the forecasted expense for FY16 and the budgeted expense for FY17. Regarding the Audit Report, Mr. Hopkins asked if there were any issues still outstanding. Mr. Harmon responded that there was only one (1) issue pending. Indemnity payments were found to have minor errors as was noted in the original audit. Overpayments occurred in two cases due to using incorrect wage periods. After an in-depth discussion of the regulations, the Coordinator developed and documented criteria to be used when requesting a wage report from the Payroll Department. Municipal Auditing will follow-up on this issue in FY18. Mr. Hopkins asked if anyone else had any further questions. There were none. 6. Other Business Mr. Hopkins asked about the date for the next workshop. Mr. Barnett confirmed that the next workshop is scheduled for April 27, 2017 at 11:00 AM. 7. Adjournment Mr. Hopkins adjourned the meeting at 9:55 AM. Page 3 of 3