Audit Committee Meeting

MINUTES Audit Committee Meeting Monday, September 28, 2020 at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, South Dakota 57104 1. Call To Order Present: Committee Member Dean Buckneberg (Via telecom), Committee Member Tony Goettsch, Committee Member Rose Grant, Committee Member Alex Jensen, Committee Chair Rick Kiley, Committee Member Greg Neitzert Absent: Committee Member Curt Soehl Committee Chair Rick Kiley called the meeting to order at 4 p.m. 2. Approval of Minutes A. Monday, March 23, 2020 A motion was made by Committee Member Neitzert and seconded by Committee Member Buckneberg to approve the minutes of Monday, March 23, 2020. Roll call vote to approve. 6 Yes: Buckneberg, Goettsch, Grant, Jensen, Kiley, Neitzert; 0 No: (None). Motion Passed. 3. Reports and Updates A. Audit Report 19-02: Employee Payroll Deductions Objectives of the report included: determining if payroll deductions are properly authorized and calculations are accurate; determining if proper internal controls are in place to ensure payroll deductions are submitted timely and accurately to the appropriate third party; and, determining if an accurate and timely reconciliation is prepared between the payroll account and the general ledger. The purpose of the audit was to review employee payroll deductions and the policies and procedures over employee payroll deductions. The audit scope included a review of voluntary payroll deductions, current system access, and policies and procedures as they are currently in place. The City of Sioux Falls (City) offers its employees a wide range of benefits. Employees have the option to participate in several voluntary deduction programs. Voluntary deductions are deductions that employees have the option to elect to participate in. Such benefits include health insurance, dental insurance, vision  insurance, deferred compensation, union dues, flexible spending accounts, third party insurance, or charitable contributions. In calendar year 2019, the payroll voluntary employee deductions totaled $10.8 million for the City. Of the 1,213 total City employees in 2019, over 1,100 employees participated in at least one of the voluntary deductions that were included in the scope of this audit. The audit found that completed ACH forms for nine after payroll vendors are not on file in the Munis financial system. Specifically: the City did not require vendors to reregister with the migration to the Munis software system. The information that had been set up in the previous financial system was used in the vendor set up in the Munis system; keeping necessary, required ACH paperwork on file is critical to ensuring that vendor accounts are set up in the system with the correct bank account information so that payments go to the correct vendor account; and, not having this information on file could create an opportunity for fraud, if a fraudulent request to update a vendor bank account was received by the City. It is recommended that management ensure that ACH forms are completed, signed, and filed for all vendors that the City of Sioux Falls issues payment to electronically. Discussion followed about making changes to deductions. A motion was made by Committee Member Jensen and seconded by Committee Member Buckneberg to submit Audit Report 19-02 to the City Council. Roll call vote to submit. 6 Yes: Buckneberg, Goettsch, Grant, Jensen, Kiley, Neitzert; 0 No: (None). Motion Passed. B. Follow-Up Audit 20-01: Purchasing Card Program The purpose of the follow up audit is to assess the status of management action plans for the recommendations previously noted in the Purchasing Card Audit Report 18-03, which was issued in September 2019. Two of the three recommendations were implemented (Recommendations 2 and 3) with recommendation 1 partially implemented. Recommendation 1 was "that both initial and ongoing training be provided consistently to all cardholders who are issued a City of Sioux Falls purchasing card in their name. The Purchasing Card Program Guide states training will be provided by the Program Administrator. It was recommended that trainings be documented and filed as proof that cardholders did, in fact, attend required training." Management agrees with the recommendation and will utilize "Target Solutions," a training and tracking software, to develop a program. The solution will go live in the third quarter of 2020. Discussion followed about the allocation process. C. Revised Audit Plan Shana Nelson, Internal Audit Manager, reviewed the proposed Audit Plan. She explained that several items are recommended for deferral due to the disruption caused by COVID-19. David Bixler, Budget Analyst, explained that the Parking  Enterprise System audit preliminary objective is a financial risk assessment. Discussion followed about defining the timeline for the Capital Expenditures audit. A motion was made by Committee Member Neitzert and seconded by Committee Member Goettsch to recommend the amended Audit Plan to the City Council for approval. Roll call vote to recommend. 6 Yes: Buckneberg, Goettsch, Grant, Jensen, Kiley, Neitzert; 0 No: (None). Motion Passed. D. Department Updates Nelson explained that a hiring panel is in the process of reviewing Internal Auditor applications; the Internal Audit webpage was updated; and her office is taking steps to begin preparing a proposed 2021 Audit Plan. 4. Open Discussion There was none. 5. Public Comment There was none. 6. Adjournment Committee Chair Rick Kiley adjourned the meeting at 4:28 p.m. Thomas M. Greco, City Clerk