Audit Committee - RCPS

Minutes of the Roanoke City School Board Audit Committee May 15, 2018 Audit Committee Members: Bill Hopkins, Committee Chair - Present Laura Rottenborn, Committee Member - Present Others Present: Steve Barnett, Deputy Superintendent Kathleen Jackson, Chief Financial Officer Donna Caldwell, Director of Accounting Eric Thornton, Director of Purchasing John Aldridge, Partner, Brown Edwards & Company Justin Martin, Manager, Brown Edwards & Company Drew Harmon, Municipal Auditor Cari Spichek, Senior Auditor 1. Call to Order Mr. Hopkins called the meeting to order at approximately 11:05 AM. 2. General Audit Plan – Brown Edwards Mr. Aldridge reviewed the audit plan and noted that the areas of emphasis for testing. The Division is a low risk auditee which allows single audit testing to cover as little as 20$ of grant expenditures. At this time, Mr. Aldridge anticipates having to audit only two grants: Child Nutrition and Title II-A. Mr. Hopkins asked about the auditing procedures to be performed on child nutrition. Mr. Aldridge responded that auditors would be looking at compliance, for example verifying that children receiving free or reduce lunches completed an application and met the requirements. Mr. Hopkins asked how many Division schools participate in the 100% free lunch program. Ms. Jackson responded that there are 19 currently participating. Mr. Barnett noted the Division is planning for five (5) additional schools to apply for the program. Mr. Aldridge believes the auditors will have to look at activity at schools with 100% free lunch. Mr. Harmon noted that his office will be auditing Food Services in the coming fiscal year and will be sure not to duplicate any work performed by Brown Edwards. Mr. Hopkins asked about audit procedures related to Title IIA. Mr. Martin responded that procedures would include verifying that teachers paid through the grant are working at the specified locations. Mr. Aldridge noted they would also confirm training was being provided as specified by the grant. Mr. Hopkins commented that he had signed the engagement letter, noting that fees had risen slightly in accordance with the original contract. He noted that the fees for audit of school activity funds were nearly as much as the fees for the audit of the CAFR, but involved far fewer dollars. Mr. Aldridge Page 1 of 3 Audit Committee Minutes May 15, 2018 responded that even though there are fewer dollars, the activity funds are more complex due to the number of people involved and the many points of entry for cash. Mr. Hopkins asked if there were any other questions. Hearing none, he thanked Mr. Aldridge for his presentation. The plan was received and filed. 3. Audit Report – Purchasing Mr. Hopkins asked Mr. Harmon to comment on his principal takeaways from the audit. Mr. Harmon stated that Purchasing was functioning well overall. The Division utilizes State and cooperative contracts when possible, which saves time while ensuring competition. Important changes coming out of the audit include requiring employees with significant responsibilities for procuring goods and services to acknowledge compliance with laws and regulations annually. Also, requiring employees who use the purchasing card to enter a description of their purchase in the system so supervisors have the information necessary to understand the purchase. Mr. Harmon also pointed out that fewer than 1% of purchases were categorized as “emergencies.” Prior to the current administration, emergency procurements were used excessively as a means to avoid having to obtain competitive quotes. Mr. Hopkins asked about the one purchase in which an earnest effort to obtain competitive quotes was not made. He asked if there was any conflicts of interest involved, such as a family member. Mr. Harmon responded that it did not involve a conflict of interest. It was an odd situation involving two vendors who attended the pre-bid meeting, who had a business relationship. One vendor submitted the bid of the other vendor as his own; it was the only bid on the project. Auditing was unable to determine if there was any effect on the costs of the project. Mr. Hopkins asked if there were any other questions or comments. Hearing none, the report was received and filed. 4. Audit Plan - FY19 Mr. Harmon reviewed the plan, noting that the specific objectives of each audit would be determined after working with department management to identify priorities and review risks. Food Services and Career and Technical Education (CTE) are the two functions identified for audit in this year’s plan. Mr. Hopkins asked about the reasons for moving CTE into the plan over functions assessed to be higher risk. Mr. Harmon reminded the committee that in the March discussion, Mr. Barnett had suggested considering CTE for an audit. The primary considerations were the growing emphasis being placed on CTE as indicated by measures in the Board’s balanced scorecard, and the audit history showing CTE has not been audited in the past, Mr. Hopkins noted that other than Technology, the only other area above CTE that he might consider a priority would be Security. However, given the recent appointment of Mr. Perkins as Chief Security Page 2 of 3 Audit Committee Minutes May 15, 2018 Officer, it is likely he will be identifying changes to be made and an audit would be better timed in another year. Ms. Rottenborn also felt that security was a priority that should be considered in subsequent year, possibly the FY20 audit plan. She supported the CTE audit based on its relevance to Board priorities and having not been audited in the past. She also noted that the follow up audits in this year’s audit plan are more substantial than in past years. Including security and food services with these follow up audits might overload the plan. Mr. Hopkins and Ms. Rottenborn both expressed concern about Technology being rated as the Division’s top risk and not being addressed. As discussed in March, the Auditing department’s Information Systems Auditor is unavailable while the City installs a new revenue system. Ms. Rottenborn asked how long the revenue system installation would take. Mr. Harmon responded that it was planned to take 24 months. Mr. Hopkins suggested contracting for IT audit services in the interim. Ms. Rottenborn agreed that such an option should be discussed with the School Board. Mr. Harmon noted that Board Member Willis had chaired the Board’s Technology Committee several years ago when the Division reviewed its disaster recovery plans. Mr. Hopkins will speak with Mr. Willis about the contracting option. He asked Mr. Harmon to be prepared to provide input should the Board decide to contract IT audit services. Mr. Hopkins asked if there were any other comments or questions. Hearing none, the audit plan will be recommended to the Board for approval as presented. 5. Other Business Mr. Hopkins stated that he had talked with the School Board Attorney, Tim Spencer, regarding the contract with Mountain Valley Transportation. Mr. Spencer’s advice was to go back out for proposals as scheduled for 2019 and not to attempt revising the current contract. Mr. Hopkins will ask that the transportation contract be placed on the Board’s agenda in an upcoming meeting. He asked when Auditing expects to complete the follow up audit of transportation. Mr. Harmon responded that his office already had some of the date from the State. The auditor will meet with the Director of Transportation after RCPS+ bus routes are in place, probably the 2nd week in June. Mr. Harmon estimates that his office will have good data to share with the Board by early August. 6. Adjournment Hearing no other business offered, Mr. Hopkins adjourned the meeting at 11:30 AM. Page 3 of 3