Audit Committee - RCPS

Roanoke City Public Schools Audit Committee Meeting March 21, 2019 11:00 to 12:00 School Administration Building Media Center 1. Call to Order Bill Hopkins, Audit Committee Chair 2. Audit Report – Time & Attendance Follow Up Drew Harmon, Municipal Auditor 3. Audit Plan Development Drew Harmon, Municipal Auditor 4. Other Business Bill Hopkins, Audit Committee Chair 5. Adjournment Bill Hopkins, Audit Committee Chair MUNICIPAL AUDITING REPORT CITY OF ROANOKE RCPS Time and Attendance Follow-Up January 23, 2019 Report Number: 19-003 Audit Plan Number: 19-104 Municipal Auditing Department Chartered 1974 www.roanokeva.gov/auditing Phone 540.853.5235  TABLE OF CONTENTS Audit Objectives & Scope .................................................................................. 1 Background ....................................................................................................... 3 Objective 1 – Generic Overtime Justifications ................................................... 4 Objective 2 – Overtime Hours ........................................................................... 6 Objective 3 – Exempt Employee Attendance .................................................... 8 Objective 4 – Missed Punch Reports ................................................................ 9 Objective 5 – Non-Exempt Employee Hours ..................................................... 12 Summary of Management Action Plans ............................................................ 13 Management Comments ................................................................................... 18 Acknowledgements .......................................................................................... 19 January 23, 2019 Report # 19-003 AUDIT OBJECTIVES & SCOPE Audit Objectives: 1. Do requests for overtime for planned events require specific information about the event, its date, and the amount of hours of overtime anticipated? No – No changes were made to the overtime approval process or to the use of the overtime request form since the prior audit. A blanket request continues to be prepared each quarter, estimating the expected overtime hours with generic justifications. 2. Did management convene a Task Force to study overtime and engage a consultant to coordinate and guide the analysis? No – A formal evaluation of Building Operations staffing, pay and scheduling was not performed as originally planned. While the utilization of overtime has significantly declined over the past two years, no benchmarks or analyses were developed to help ensure cost effective utilization of overtime. Management provided a benchmark analysis in response to this follow-up audit. 3. Did management establish an ad hoc committee to review the policy of having exempt employees clock in and out each day, and revise the Employee Handbook accordingly? Yes with Qualifications – An ad hoc committee was not established, however; informal dialogue with managers indicated no clear preference for changing the existing policy. The policy of requiring all employees to clock in and out daily remains in the Employee Handbook. Our testing showed improvements in compliance. 4. Did management remind staff about the purpose and proper use of Missed Punch Reports? Yes with Qualifications – Management reminded staff about the requirements of Missed Punch Reports and improvements were noted in our current review. The number of manual edits might be reduced with more careful monitoring and coaching by supervisors. A procedure requiring Service Report Preparers to document reasons for editing time cards and employee consent should be developed. 5. Does the Operations worker who cares for the transportation building sign his / her time sheet to validate hours worked in lieu of clocking in and out of the Attendance Enterprise system? Page 1 January 23, 2019 Report # 19-003 No – Due to turnover in positions involved in this action plan, the process of printing and signing the weekly time sheets had been abandoned sometime prior to our follow-up audit. Audit Scope: We reviewed pre-approved quarterly overtime requests for the 3rd and 4th Quarters of FY 18 for Maintenance and Capital Programs (Facilities and Grounds), Building Operations, and Safety and Security Departments. We used AptaFund Payroll Register Overtime Hours reports from FY 2014 through FY 2018 for developing totals of overtime hours, costs, and to perform our overtime analysis. We reviewed Attendance Enterprise Employee Time Card Reports for May 2018 for a sample of exempt employees, and for various dates in calendar year 2018 for the William Fleming Building Operations non-exempt employee responsible for the Transportation Department. We reviewed Attendance Enterprise Supervisor Edit Reports for the months of March and May 2018 for added/deleted punches and time adjustments. End of Audit Objectives and Scope Page 2 January 23, 2019 Report # 19-003 BACKGROUND Roanoke City Public Schools began using an integrated payroll, human resources and financial software system from Harris School Solutions in 2008. The AptaFund system is maintained by the vendor and resides on the vendor’s servers in Canada and the United States. All of the School Division’s accounting, purchasing, payroll and employee data also reside on the vendor’s servers. In August 2013, Roanoke City Public Schools implemented the Attendance Enterprise system from Harris School Solutions. Attendance Enterprise is a web-based time and attendance system that can be integrated with the AptaFund system to automate much of the time and attendance process. At least one time clock is located within each building, with the exception of the transportation building. All employees are required to clock in and out by swiping their badges at the time clock. Supervisors review and approve their employees’ time cards in the Attendance Enterprise system. Edits may be required to correct for missed punches, training or travel time for work, leave, and other exceptions. Employees must file missed punch forms and certification of absence forms to support system edits. Fair Labor Standards Act [FLSA] The Fair Labor Standards Act requires that employers pay hourly [non-exempt] employees one and a half times their regular rate for hours worked in excess of 40. Roanoke City Public School’s define the Division’s workweek as running from 12:00 a.m. Saturday until 11:59 p.m. Friday. Board Policy GDN specifies that holiday pay, jury duty, school-related subpoenas, and educational leave are counted towards hours worked. Other leave, such as vacation and sick leave are not counted as hours worked when computing overtime. Our original audit report was dated February 16, 2016, and all management action plans were targeted to be completed by July 1, 2017. End of Background Page 3 January 23, 2019 Report # 19-003 Objective 1: Generic Overtime Justifications The 2016 audit found that several RCPS school sites, administrative, and operational departments offered only generic justifications for overtime requested and pre-approved on a quarterly or annual basis. Management responded with a plan to divide overtime into two (2) categories: planned events, and unplanned or emergency work. Requests for overtime for planned events would require specific information about the event, its date, and the amount of hours of overtime anticipated. Unplanned overtime requests would continue the current procedure already in place. The effectiveness of this process was to be monitored and further changes to decrease the amount of overtime were to be implemented as opportunities were identified. Action Completed / Issues Resolved – No Follow Up – September 2018: Overtime requests for planned events, such as the opening day of school or sporting events, were not prepared on an event-by-event basis. Blanket requests continue to be prepared each quarter based on historical experience. The Chief of Physical Plants confirmed that there have been no changes to the overtime approval process or the use of the overtime request form since the prior audit. We reviewed pre-approved quarterly overtime requested for the 3rd and 4th Quarters of Fiscal Year 2018 for Maintenance and Capital Programs (Facilities and Grounds), Building Operations, and Safety and Security departments. While all 30 requests for overtime we reviewed were properly approved, they all had generic justifications which were not sufficiently detailed to understand the specific reasons for overtime. The charts on the following page show the overtime hours requested and approved for each function among the four (4) departments for the 3rd and 4th quarters of FY 2018: Page 4 January 23, 2019 Report # 19-003 January ‐ March 2018 April ‐ June 2018 135 212 500 605 Facilities Facilities Grounds 24 Grounds 45 Operations Operations 2,005 Security Security 2,100 The 2,100 hours requested by Building Operations for the 4th quarter was requested in total and not broken down per building as in prior quarters. End of Objective 1 Page 5 January 23, 2019 Report # 19-003 Objective 2: Overtime Hours Building Operations claimed 25,877 overtime hours costing $466,671 from 7/1/13 through 12/31/15. The Division was paying a premium (150% of the standard hourly rate) for routine, anticipated work. Depending on the work being performed, the number of additional hours being worked, and the stamina of the person working the hours, productivity per hour could be expected to diminish. Management noted that there were many levers that contributed to overtime needs, including approved staffing levels, vacancies, absences, and the amount of seasonal and emergency work needed. Management planned to convene a task force to undertake a thorough analysis of all factors creating the need for overtime in order to arrive at an appropriate remedy. As funding permitted, management hoped to engage a consultant to coordinate and guide this analysis, looking critically at the following: • The appropriateness of operations staffing levels at all buildings • The appropriateness of responsibilities assigned to building operations workers as compared to industry standards (and how that might impact what constitutes appropriate staffing levels) • The appropriateness of pay scales for building operations workers as compared to industry standards • Best practices in hiring and retaining building operations workers • What constitutes justifiable uses of overtime • What is the most effective management structure of building operations functions within a school setting Management anticipated completing the analysis and developing recommendations by June 30, 2017. Recommendations would need to be phased in over time as they could be costly to implement. Action Completed / Issues Resolved – No Page 6 January 23, 2019 Report # 19-003 Follow Up – September 2018: A formal analysis of facility maintenance and operations staffing and responsibilities was not performed. Benchmarks for evaluating staffing and overtime utilization were not developed. Unexpectedly, the Chief of School Plants was deployed as a reservist for 12 months during this period. There were also changes in supervisory staff, including the retirement of the Supervisor of Operations. Our analysis of payroll data shows a significant decline in overtime hours utilized in maintenance and operations the past two years: Operations (#49) Facilities (#48) Period OT Hours OT Costs OT Hours OT Costs FY 2014 6,678 $ 115,853 2,541 $ 54,179 FY 2015 10,134 $ 180,464 2,126 $ 66,811 FY 2016 9,565 $ 187,560 3,987 $ 78,198 FY 2017 8,418 $ 171,602 2,068 $ 71,383 FY 2018 7,259 $ 144,631 1,650 $ 60,821 Totals: 42,053 $ 800,110 12,372 $ 331,391 Consistent with Facilities, the school division as a whole reduced its utilization of overtime in FY18: Period OT Hours % Change OT Dollars % Change FY 2014 14,227 NA $ 304,501 NA FY 2015 18,474 29.85% $ 401,009 31.69% FY 2016 18,567 0.50% $ 424,070 5.75% FY 2017 15,785 ‐14.98% $ 388,304 ‐8.43% FY 2018 13,023 ‐17.50% $ 335,813 ‐13.52% Totals: 80,076 ‐ $ 1,853,697 ‐ From the peak overtime noted in FY16, the number of overtime hours dropped ~ 30% by FY18. End of Objective 2 Page 7 January 23, 2019 Report # 19-003 Objective 3: Exempt Employee Attendance The 2016 audit identified several exempt employees that routinely failed to clock out when leaving for the day, in violation of division policy. In response, management planned to establish a committee to review the division’s time clock policies. The committee was to include representatives from Human Resources, Payroll, Building Operations, Fiscal Services, and schools. Management anticipated forming the committee by July 31, 2016, with implementation of any resulting changes in policy by the Spring of 2017. Action Completed / Issues Resolved – Yes with Qualifications Follow Up – September 2018: An ad hoc committee was not established, however; informal dialogue with managers indicated no clear preference for changing the existing policy. The requirement that all employees clock in and out daily remains in the Employee Handbook. The policy has been communicated to employees. We reviewed Attendance Enterprise Time Card Reports for a sample of 10 exempt employees from the departments of Facilities, Operations, Safety & Security, and Grounds. Our review revealed that eight (8) of the ten (10) employees are properly clocking in and out of the Attendance Enterprise system each day as required by the RCPS Handbook. No further follow-up work will be performed. End of Objective 3 Page 8 January 23, 2019 Report # 19-003 Objective 4: Missed Punch Reports In the 2016 audit we noted that documentation to support altered punches for exempt employees was not being completed and kept on file; a violation of division policy. In response, Fiscal Services planned to include a reminder about submitting Missed Punch Reports in its Spring 2016 Fiscal Services Newsletter. The Director of Payroll also planned to include a reminder and tutorial about the Missed Punch Report as part of annual training provided at the RCPS Leadership Conference in June 2016. Action Completed / Issues Resolved – Yes with Qualifications Follow Up – September 2018: Missed Punches Our review of 20 punches added to Attendance Enterprise for exempt personnel during the month of May 2018 revealed that 85% (17/20) were supported by documentation from the employee missing the punch. Two (2) of the unsupported missed punches were altered by the Service Report Preparer based on a phone call from the employee, and the other altered punch was not documented. The Director of Payroll reminded all RCPS staff prior to the start of the FY18-19 school year via email that Missed Punch Forms are required for all employees for whom punches are manually entered. Based on improvements in the current year testing, and indications that Missed Punch Forms are being required for all employees starting in the FY 18-19 school year, we considered the audit observation to be remediated. Due to the volume of missed punches identified in May 2018, we analyzed the data to better understand why such a high number of edits were required:  19 Service Report Preparers exceeded 100 edits in May (3,614 edits)  92 employees had 10 or more edits made to their time records (1,641 edits)  20 employees had at least one edit per day We interviewed a sample of Service Report Preparers to identify the reasons for the high volume of edits. Many stated that May was a hectic time of the school year with Standards of Learning (SOL) testing, end-of-school celebrations, parties, awards, etc., which contributed to a Page 9 January 23, 2019 Report # 19-003 higher than normal volume of missed punches. Other reasons noted were lost badges, working remotely, and location of the time clock. We compared March and May 2018 to validate the theory of May being an unusual month: March May Increase % Increase Added Punches 1,611 4,667 3,056 190% Deleted Punches 232 571 339 146% # SR Preparers With > 100 Edits 2 19 17 850% The numbers above support the theory proposed by both the Director of Payroll and several Service Report Preparers that the last month of the school year (May) has an unusual number of missed punches due to having more field trips, parties, and after school events, as well as demands of administering SOL testing. If we assume each of 2,000+ employees punch in and out of the system each school day, the total number of punches in a month would exceed 44,000. The effective error rate for March punches was ~ 4% and for May was ~ 12%. As noted from interviews, some employees routinely work remotely necessitating the need to manually enter their in and out times into the clock system. Overall, the data indicates that most employees are clocking in and out of the system each day. The number of manual entries might be reduced with more careful monitoring and coaching by supervisors. Adjustments to Time Worked Due to the volume of adjustments to time worked in May 2018, we performed a detailed analysis to identify locations consistently changing employee’s time records. For the month of May 2018:  20 non-exempt employees had 5 or more adjustments to their time (180 total edits)  116 of the 180 edits (64%) were for 10 minutes or less Time clocks round to the nearest quarter hour so changing a non-exempt employee’s clock out time by as little as one minute, for example from 3:38 to 3:37, could result in the loss of a quarter hour paid time. This can be done without the explicit consent or knowledge of the employee, as procedures don’t explicitly identify edits to the time card as requiring documented Page 10 January 23, 2019 Report # 19-003 explanations and employee consent. The “Missed Punch” form implies through its title and design that it is used exclusively for documenting missed punches. We interviewed a sample of the Service Report Preparers responsible for adjusting the May time entries to identify reasons for the volume of adjustments. We learned that time adjustments of just a few minutes are commonly made to keep a non-exempt employee’s time within budgeted contract hours. Other reasons cited for time adjustments included:  Employees being delayed on their way to clock out due to someone stopping them in the hall, causing them to clock out a few minutes late  Staff assigned to classrooms that are farther away from the time clock.  Staff entrances that are more distant from the time clock. Errors are sometimes made while trying to add missed punches whereby a Service Report Preparer will enter “a.m.” instead of “p.m.” or vice versa. In those instances, the time adjustments are for 420 minutes or more, as the changes are at least 7 hours. As there are no written requirements to document the reasons for adjusting time, the only support for adjustments was testimony from those people who entered them. The testimony provided an insufficient basis for assessing the appropriateness of adjustments. This outcome suggests that a procedure requiring Service Report Preparers to document the reasons for adjustments along with the employee’s consent should be developed. End of Objective 4 Page 11 January 23, 2019 Report # 19-003 Objective 5: Non-Exempt Employee Hours In our original audit, we noted that an hourly Operations worker responsible for cleaning the transportation building was not clocking in or recording his time on a manual log. In response, management developed the following plan: - The Building Manager from William Fleming will print the time card each week, and the employee and Manager will sign as to its correctness. There should be two sheets per pay period. Action Completed / Issues Resolved – No Follow Up – September 2018: We reviewed five (5) Attendance Enterprise Time Card Reports for the hourly Operations worker in calendar year 2018. Only one (1) of the Time Card Reports was signed by the hourly worker and his supervisor attesting to the time worked. The Operations worker who cleaned the transportation building and the Supervisor of Operations at the time of the original audit have both left the division. The new persons in these roles were unaware of the plan to print and sign time cards. End of Objective 5 Page 12 January 23, 2019 Report # 19-003 SUMMARY OF MANAGEMENT ACTION PLANS Management Action Plan – Non-Exempt Employee Hours A time clock has been installed at the transportation building and is being used starting on November 13, 2018. Assigned To Target Date Stan Robinson, Director of Facilities Completed Management Action Plan – Overtime Hours Overview: Based on the Department of Education’s guidelines of best practice levels, and the information presented, the Operations Department will be working to increase staffing to minimize the reliance on overtime, contingent on budget availability. Approach: In Accordance with the established benchmarks from the U.S. Department of Education the following assessment of how many building square feet that can be assigned to one properly supplied custodian in an 8-hour shift in order to meet specified levels of cleanliness. This scale specifies benchmarks for: 1) Spotless cleaning – 10,000 to 11,000 square feet *2) Intensive cleaning – 18,000 to 20,000 square feet (19,000 will be used as the median and the scale that RCPS uses) 3) Cleaning required to ensure the health and comfort of building users – 28,000 to 31,000 square feet 4) Cleaning not generally acceptable for a school environment – 45,000 to 50,000 square feet 5) Cleaning that is not considered healthy – 85,000 to 90,000 square feet Source: http://www.k12.wa.us/SchFacilities/Publications/pubdocs/FacilitiesMaintenance.pdf This exhaustive and comprehensive study that was completed in 2010 reported on the average size of the schools in Washington State based on Department Of Education standards established as early as 2003. Albeit the study was conducted in 2010 it was projected and still in use for the 2017-2018 fiscal year. Other studies reaching the same conclusions in 2015 can be found at: https://www.gssaweb.org/wp-content/uploads/2015/11/Best-Practices-for-School-District- Facilities-and-Maintenance.pdf Based on the above mentioned study, listed below are the results: Page 13 January 23, 2019 Report # 19-003 Bench Mark Square Sq. Footage Bench Mark Budgeted Difference Location Footage Per FTE FTEs FTEs in FTEs William Fleming 389,830 19,000 20.52 16 4.52 Patrick Henry 380,571 19,000 20.03 15 5.03 Addison 136,610 19,000 7.19 5 2.19 Administration 59,542 19,000 3.13 3 0.13 Breckinridge 98,415 19,000 5.18 5 0.18 Fairview 59,804 19,000 3.15 4.4 (1.25) Fallon Park 112,616 19,000 4.53 5 (0.47) Forest Park Academy 46,243 19,000 2.43 2 0.43 Fishwick 80,492 19,000 4.24 5 (0.76) Monterey 48,356 19,000 2.55 4 (1.45) RAMS 87,186 19,000 4.59 4 0.59 Madison 125,418 19,000 6.60 5 1.60 Westside 135,174 19,000 7.11 4.6 2.51 Woodrow Wilson 124,365 19,000 6.55 5 1.55 Round Hill 43,000 19,000 2.26 3 (0.74) Virginia Heights 45,194 19,000 2.38 3 (0.62) Garden City 47,214 19,000 2.48 2 0.48 Crystal Spring 51,851 19,000 2.73 2.5 0.23 Fishburn Park 40,975 19,000 2.16 2 0.16 Grandin Court 46,090 19,000 2.43 2 0.43 Taylor Academy 34,117 19,000 1.80 2 (0.20) Governor's School 34,126 19,000 1.80 1 0.80 Preston Park 35,684 19,000 1.88 2 (0.12) Wasena 55,288 19,000 2.91 2 0.91 Highland Park 55,458 19,000 2.92 3 (0.08) Morningside 40,706 19,000 2.14 2 0.14 Lincoln Terrace 39,619 19,000 2.09 3 (0.91) Hurt Park 44,750 19,000 2.36 2 0.36 Transportation 7,671 19,000 0.40 0 0.40 Facilities 84,449 19,000 4.44 1.5 2.94 Oliver Hill House 2,642 19,000 0.14 1 (0.86) Raleigh Court 0 19,000 0.00 0 0.00 Totals: 2,566,957 19,000 135.10 117 18.10 Page 14 January 23, 2019 Report # 19-003 Conclusion: An additional 18 full time equivalents would be required to meet benchmark staffing for intensive cleaning standards. Please see the implementation plan below:  FY19-20 2 FTE requested  FY20-21 4 FTE requested  FY21-22 4 FTE requested  FY22-23 4 FTE requested  FY23-24 4 FTE requested 18 Total Assigned To Target Date Stan Robinson, Director of Facilities 06/30/2024 Page 15 January 23, 2019 Report # 19-003 Management Action Plan – Overtime Justification Overview: To amend work schedules to include coverage for a workweek of Tuesday-Saturday or Wednesday-Sunday. Approach: The team met and discussed options that would achieve the outcome. The team concurred the best course of action is to “flex shift.” Conclusion: The team will pioneer a pilot project that will introduce a “flex shift” to both High Schools and all Middle Schools. That would provide coverage for all planned events at the school and would show a significant reduction in overtime. These flex shifts for the High Schools will operate all year, while the Middle Schools will Flex Shift only during the school year. The reasoning for the difference is to accommodate the amount of planned overtime at the most used facilities the High Schools, through Facility Rentals, and other special events hosted by RCPS. The implementation will need to happen slowly in order to retain staff, and prepare them for the changes in scheduling. The flex shift should be implemented in the High Schools first and disseminated to the Middle Schools. Assigned To Target Date Stan Robinson, Director of Facilities 05/31/2019 Page 16 January 23, 2019 Report # 19-003 Management Action Plan – Adjustments to Time Worked Management agrees that improvements to documentation and authorization of adjustments are needed, but management cautions that the quantity of adjustments noted could be misleading. Every change made to time in the Attendance Enterprise system is recorded. If a payroll preparer attempts to make an authorized change but makes an error while doing so, the erroneous entry plus a second entry to correct the first will be recorded. Depending on how the time is entered, it can easily show up as PM when the intent was to enter an AM time. Depending on the employee’s shift, time entered later in the evening on one day may show up on the next day instead. The employee will have to make additional adjustments, often multiple adjustments using trial and error, to get the time to show up on the correct work day. In one example included in Municipal Audit’s sample, a total of six adjustments were made to one employee’s time on one day, and the end result of all six edits was that the time returned to the original clocked time with no change. School personnel have already begun working to better document, through e-mail or missed punch reports, adjustments that are made, and the acknowledgement that those adjustments are correct by the employee whose time is in question and by the appropriate supervisor. RCPS will work to clarify its guidance on time keeping and documenting adjustments that need to be made in the coming months. RCPS is in the beginning stages of implementing a new Enterprise Resource Planning (ERP) system that will include payroll, human resources, accounting, and purchasing functions. RCPS intends to continue using the current time clock system, Attendance Enterprise, for the foreseeable future. Management expects that the new ERP system’s functionality will necessitate certain changes in procedures related to how time is turned in to payroll and how payroll is ultimately processed. This may or may not impact the steps payroll preparers are asked to take regarding the use of the time keeping system. In an effort to roll out changes in a clear and coordinated manner, RCPS intends to incorporate any changes or clarifications regarding time clocking in with discussion of new payroll preparation processes overall. RCPS is working towards a July 1, 2019 go-live date for the new ERP system. Building in additional time for potential delays due to data conversion and system set up, as well as time to test the new system’s functionality and new processes it necessitates, Management targets a March 31, 2020 date for completion of revisions to time keeping processes and guidance. The Chief Financial Officer will work with the Payroll and Human Resources departments to ensure appropriate guidelines for time keeping and documentation of any adjustments are completed. Assigned To Target Date Kathleen Jackson, Chief Financial Officer 03/31/2020 End of Summary of Management Action Plans Page 17 January 23, 2019 Report # 19-003 MANAGEMENT COMMENTS Management had no comments beyond those stated in their action plans. Page 18  Update on Audit Plans & Assignments March 21, 2019 1  Audit Plan Status - RCPS Assignment Begun Hours Report Notes Workers Compensation Follow Up 02/18 88 7/31/18 11/5/18 Audit Committee Student Transportation Follow Up 05/18 288 9/19/18 11/5/18 Audit Committee Food Services 07/18 569 Drafting report Time and Attendance Follow Up 07/18 164 1/23/19 3/21/19 Audit Committee Student Transportation RFP Development 11/18 24 NA RFP published in December Career and Technical Education NA NA Begin in June Substitutes Follow Up NA NA Summer 2019 Special Education Follow Up NA NA Summer 2019 2  Audit Plan Status - City Assignments Begun Hours Report Notes Draft design completed, data being Simplified Comparative Project 01/18 259 gathered, target June. 2 ½ year project, target go live is Tax and Treasury System Implementation 02/18 1,446 NA October 2020. Police Cash & Fees - CY17 03/18 500 7/25/18 CY18 Audit to begin March 2019 External Audit Coordination – FY18 03/18 581 NA FY19 Audit begins in April 2019 City Council Expenditures 07/18 110 9/5/18 Revenue Team 07/18 85 NA Ongoing team Miscellaneous Consultations (<8 hours) 07/18 211 NA Information Technology Committee 07/18 41 NA Ongoing team City-Wide LEAN Committee 08/18 36 NA Ongoing team Vendor Expenditure Analysis 08/18 50 NA Part of risk assessment Workforce Innovation & Opportunity Act 09/18 42 On hold 3  Audit Plan Status - City Assignments Begun Hours Report Notes Fire & EMS 10/18 452 Complete no later than April 1 Budget Team - Good Gov Revision 11/18 20 NA Jail Cost Report 12/18 82 12/19/18 External Audit RFP 12/18 19 Contract by 4/1/19 Children Services Act NA NA Reevaluate for FY20 Planning Economic Development NA NA Carryover to FY20 Plan Building Inspections NA NA Carryover to FY20 Plan Fleet Maintenance NA NA Begin < June 30 On-street Parking NA NA Carryover to FY20 Plan Storm Water Management NA NA Carryover to FY20 Plan Purchasing Cards NA NA Carryover to FY20 Plan 4  Audit Plan Status - GRTC Assignments Begun Total Report Notes Hours Fuel Management Follow Up NA NA Carry over to FY20 Fixed Route Service NA NA Carry over to FY20 Meetings & Miscellaneous Consultations 7/18 16 NA External Audit Coordination – FY18 4/18 6 NA External Audit RFP Development 1/19 2.5 NA Pending 5  Investigations / Hotline Assignments Begun Hours Report Unsubstantiated - Abuse of Enforcement Powers 05/18 85 9/5/18 Refer to DSS (Food Stamps) 06/18 2 9/5/18 Unsubstantiated - Driver Conduct Valley Metro 06/18 37 9/5/18 Refer to DSS (Welfare Fraud) 08/18 2 12/12/18 Refer to PD (Illegal Drugs) 08/18 2 9/5/18 Unsubstantiated Abuse of Time 08/18 130 1/10/19 Compliance with Program Regulations [Active] 09/18 747 Refer to PD (Suspicious Stranger) 10/18 0 12/12/18 Refer to ABC (Serving Drinks to Underage) 10/18 1 12/12/18 Refer to DSS (Illegal Housing / Abuse) 11/18 3 12/12/18 Refer to PD (Under the Influence of Drugs) 11/18 0 12/12/18 6  Investigations / Hotline Assignments Begun Total Report Hours Alleged Misconduct of City Employee [Active] 12/18 33 Refer to PD (Felon with Guns) 02/19 0 Alleged Theft / Misconduct [Active] 02/19 29 Alleged Employees Loitering [Active] 03/19 24 7  MUNICIPAL Date: AUDITING March 21, 2019 MEMO To: Members of the Audit Committee From: Drew Harmon, Municipal Auditor Subject: Audit Plan Development for FY20 One of the primary responsibilities of the Audit Committee, as set out in Board Policy DIB, is to work with the Municipal Auditor to review and recommend specific areas or functions to be audited. The universe of areas that are considered for audits is based on the cost centers used for budgeting and financial reporting. As a basis for discussing audit priorities, we developed a risk assessment based on nine (9) elements broken out as follows: Basic Objectives as Defined by the Federal Standards for Internal Control - Reporting - Operations - Compliance Qualitative Risks - Process Complexity - Time Since Last Audit - Degree of Change (People, Technology, Laws & Regulations, Responsibilities) - Control Environment Impact Risks - Financial - Reputational Each area is assigned a score of one (1) to five (5) for each element, with one representing the lowest risk. An average overall score of three (3) is used to force a relative ranking for each element, except for the “Time Since Last Audit” score. All other elements are scored based on our understanding of the Division’s strategic goals, key objectives, risk management processes, finances, and past performance in each area. March 21, 2019 Page 2 Audit Plan Development for FY20 Standards require that audit plans be based on a documented risk assessment prepared at least annually. I have attached our preliminary draft of this year’s risk assessment for your review. I would appreciate any input you might have on risk scores, as well as your ideas for specific audit objectives. Please keep in mind that the assessment is imperfect and does not account for all factors that warrant consideration. For example, the School Division is installing a new enterprise system for accounting, payroll, and purchasing with an expected go live date of July. An audit of any of these functions in FY20 could be challenging for both management and audit staff as post- implementation adjustments would be ongoing for some time. As noted last year, our IT Auditor is managing the installation of the City’s new tax and treasury system through October 2020 and will not be available for other IT related audits. Attachments - Draft FY20 Risk Assessment - Ten Year View of Audits FY20 RCPS Organizational Risk Assessment Residual Risks Impact Risks COSO Objectives Qualitative Measures Overall Ranking Reporting Risk Operational Compliance Process Time Since Degree of Control Financial Reputational Risk Risk Complexity Last Audit Change Environment Residual Risk Impact Risk High = 5 Moderate = 3 Low = 1 High = 5 Moderate = 3 Low = 1 Weighted Average: 80% Residual Risk 10% 10% 10% 10% 20% 20% 20% 40% 60% Departments / Functions 20% Impact Risk Administration, Attendance and Health 1 Data & Analysis 5 3 4 4 3 3 3 3.40 3 4 3.60 3.44 2 Human Resources 3 4 3 3 1 3 3 2.70 4 4 4.00 2.96 3 Employee Health Services 2 2 3 3 1 2 3 2.20 3 2 2.40 2.24 4 Financial Control [Accounts Payable] 3 4 2 2 3 2 3 2.70 3 3 3.00 2.76 5 Payroll 4 4 3 3 1 4 2 2.80 4 3 3.40 2.92 6 Accounting [Debt, CIP, Grants, Budget] 4 3 3 4 2 2 3 2.80 5 3 3.80 3.00 7 Purchasing Services 2 3 4 3 1 2 3 2.40 4 3 3.40 2.60 8 Safety & Security 4 3 3 3 5 4 3 3.70 3 4 3.60 3.68 Transportation 9 Transportation 3 4 3 3 1 3 4 2.90 4 3 3.40 3.00 Operations & Maintenance 10 Operations 2 3 3 3 2 4 3 2.90 3 3 3.00 2.92 11 Maintenance 3 4 4 3 2 4 4 3.40 4 3 3.40 3.40 12 Warehouse [Fixed Assets/Transhipping] 2 2 1 2 1 4 3 2.30 2 1 1.40 2.12 13 Grounds 1 2 2 2 3 2 2 2.10 2 3 2.60 2.20 Food Services 14 Food Services 4 4 4 3 1 3 3 2.90 3 3 3.00 2.92 Administrative Technology 15 PC Replacement 2 3 1 2 5 3 3 3.00 3 3 3.00 3.00 16 IT Application Support 2 4 3 4 4 3 3 3.30 3 3 3.00 3.24 17 IT Infrastructure 2 4 3 5 5 3 3 3.60 3 3 3.00 3.48 18 IT Security / Resilience 3 3 3 5 5 3 3 3.60 3 4 3.60 3.60 19 Athletics 2 2 3 2 5 3 3 3.10 2 3 2.60 3.00 Instruction 20 Regular Education 4 3 3 3 2 3 3 2.90 3 4 3.60 3.04 21 Special Education 5 3 5 4 1 4 3 3.30 4 3 3.40 3.32 22 Alternative Education 4 3 3 2 5 3 3 3.40 2 2 2.00 3.12 23 Career & Technical Education 3 3 3 3 1 3 3 2.60 3 3 3.00 2.68 24 Gifted Education 3 2 3 2 5 3 3 3.20 2 3 2.60 3.08 25 Early Childhood Education 3 2 3 2 5 3 3 3.20 2 2 2.00 2.96 26 Guidance & Counseling 3 2 3 3 5 3 3 3.30 3 3 3.00 3.24 27 Student Services 3 3 3 3 5 3 3 3.40 2 4 3.20 3.36 28 Student Health 3 2 3 3 2 2 3 2.50 2 2 2.00 2.40 3 x 28 = 84 max 84 84 84 84 NA 84 84 84 84 FY20 RCPS 3/21/19 Ranked List - No Instruction Risk Ranking Risk Score FY20 FY19 Cost Center FY20 FY19 Change 1 7 Safety & Security 3.68 3.08 0.60 2 1 IT Security / Resilience 3.60 4.20 (0.60) 3 5 IT Infrastructure 3.48 3.28 0.20 4 6 Data & Analysis 3.44 3.20 0.24 5 4 Maintenance 3.40 3.36 0.04 6 9 IT Application Support 3.24 3.00 0.24 7 2 Transportation 3.00 3.64 (0.64) 7 5 Accounting [Debt, CIP, Grants, Budget] 3.00 3.28 (0.28) 7 12 PC Replacement 3.00 2.60 0.40 8 11 Human Resources 2.96 2.76 0.20 9 3 Food Services 2.92 3.48 (0.56) 9 14 Payroll 2.92 2.32 0.60 9 8 Operations 2.92 3.04 (0.12) 10 13 Financial Control [Accounts Payable] 2.76 2.36 0.40 11 10 Purchasing Services 2.60 2.80 (0.20) 12 15 Employee Health Services 2.24 2.24 0.00 13 17 Grounds 2.20 1.84 0.36 14 16 Warehouse [Fixed Assets/Transhipping] 2.12 1.96 0.16 FY20 RCPS 3/21/19 Ranked List - All Risk Ranking Risk Score FY20 FY19 Cost Center FY20 FY19 Change 1 8 Safety & Security 3.68 3.08 0.60 2 1 IT Security / Resilience 3.60 4.20 (0.60) 3 5 IT Infrastructure 3.48 3.28 0.20 4 6 Data & Analysis 3.44 3.20 0.24 5 4 Maintenance 3.40 3.36 0.04 6 7 Student Services 3.36 3.16 0.20 7 9 Special Education 3.32 3.04 0.28 8 10 IT Application Support 3.24 3.00 0.24 8 15 Guidance & Counseling 3.24 2.40 0.84 9 12 Alternative Education 3.12 2.76 0.36 10 14 Gifted Education 3.08 2.48 0.60 11 5 Regular Education 3.04 3.28 (0.24) 12 16 Athletics 3.00 2.36 0.64 12 5 Accounting [Debt, CIP, Grants, Budget] 3.00 3.28 (0.28) 12 13 PC Replacement 3.00 2.60 0.40 12 2 Transportation 3.00 3.64 (0.64) 13 18 Early Childhood Education 2.96 2.24 0.72 13 12 Human Resources 2.96 2.76 0.20 14 3 Food Services 2.92 3.48 (0.56) 14 17 Payroll 2.92 2.32 0.60 14 9 Operations 2.92 3.04 (0.12) 15 16 Financial Control [Accounts Payable] 2.76 2.36 0.40 16 11 Career & Technical Education 2.68 2.80 (0.12) 17 11 Purchasing Services 2.60 2.80 (0.20) 18 20 Student Health 2.40 1.88 0.52 19 18 Employee Health Services 2.24 2.24 0.00 20 21 Grounds 2.20 1.84 0.36 21 19 Warehouse [Fixed Assets/Transhipping] 2.12 1.96 0.16  Audit History - Rolling 10 Year Visual 3/21/19 Highlighted boxes indicate audit work performed Fiscal Year Ending Auditable Areas/ Functions 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 1 Data & Analysis 2 Human Resources 3 Employee Health Services 4 Financial Control [Accounts Payable] 5 Payroll 6 Accounting [Debt, CIP, Grants, Budget] 7 Grant Management (NA) 8 Purchasing Services 9 Safety & Security 10 Transportation 11 Operations 12 Maintenance 13 Warehouse [Fixed Assets/Transhipping] 14 Grounds 15 Food Services 16 Admin Technology - PC Replacement 17 Admin Technology - Application Support 18 Admin Technology - Infrastructure 19 Admin Technology - Security/ Resilience 20 Athletics 21 Regular Instruction 22 Special Education 23 Alternative Education 24 Career & Technical Education 25 Gifted Education 26 Early Childhood Education 27 Guidance & Counseling 28 Student Services 29 Student Health 30 School Activity Funds Blue Box = Instruction Functions