Audit Committee Meeting

MINUTES Audit Committee Meeting Monday, December 6, 2021 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, Committee Member Tony Goettsch, Committee Member Rose Grant, Committee Member Alex Jensen, Committee Member Greg Neitzert, Committee Member Curt Soehl Absent: Committee Chair Rick Kiley Committee Member Curt Soehl served as Chair Pro Tem for the meeting. The meeting was called to order at 4 p.m. 2. Approval of Minutes A. Monday, October 4, 2021 A motion was made by Committee Member Jensen and seconded by Committee Member Neitzert to approve the minutes. Voice vote to approve. 6 Yes: Buckneberg, Goettsch, Grant, Jensen, Neitzert, Soehl; 0 No: (None). Motion Passed. 3. Reports and Updates A. Update on External Audit of City’s 2021 Financial Statements by Eide Bailly, LLP Brian Stavenger of the Eide Bailly Fargo office, provided the presentation remotely and Joy Fiege, of the Sioux Falls office, assisted in person. Stavenger spoke about the service team assigned to the audit and reviewed the objectives. The audit will: 1) be performed in accordance with generally accepted auditing standards, Government Auditing Standards, and Title 2 U.S. Code of Federal Regulations (CFR); 2) obtain reasonable, not absolute, assurance about whether the financial statements are free of material misstatement; 3) include examining, on a test basis, evidence supporting amounts and disclosures; 4) include discussions with management; and, 5) assess the quality of accounting principles and significant estimates. Planning for the audit will take place in November/December, 2021 with interim testing taking place throughout December and January. Year-end testing will occur in January, February, and March; the final audit will be issued in late March. Stavenger explained the hybrid audit approach and emphasized the importance of  ongoing communication throughout the year using online publications, webinars, and providing access to specialists. He reviewed the risk assessment by differentiating between "inherent" and "fraud" risk and concluded with a review of new professional audit standards to be implemented within the next few years. Discussion followed about changes to accounting methods and community development block grants. B. Annual Risk Assessment Shana Nelson, Internal Audit Manager, presented a 2021 Annual Risk Assessment that included the Internal Audit Plan Development Cycle, program planning, and the top five emerging risks (supply chain issues and the ability to access necessary resources and supplies; upcoming retirements, aging workforce, succession planning and knowledge transfers; cyber security, maintaining current infrastructure/operations while keeping up with growth; and, maintaining the workforce, competitive wages and employee retention). She discussed how inherent risks were identified and stated that the organizations with the highest inherent risk are Police, Fire, Health, Technology, Water, and Parks and Recreation. After accounting for residual risks the top five were multi-media support, facilities management, affordable housing, finance accounting, and utility billing. C. 2022 Proposed Audit Plan The proposed audit plan includes the following assurance audits: Facility Security; Golf Management Agreement; Cash Handling (Planning and Development Services); Cash Handling (Utility Billing, Finance); Vendor Setup and Maintenance; Bidding Selection Process for Architectural/Engineering Services; Reconciliation of Accounts Receivable Systems into Munis; Employee Reimbursement (non-travel). It also includes two consulting audits (Fraud Task Force & Construction Project); analysis (Risk Analysis) and follow-up audits (Midco Aquatic Center, Travel Purchasing Card Expenditures, BID Tax, ASM Global Management, and Ovations Food Service (Spectra)). Items reported as carryover are: Pharmacy 340B, Damage Billing, and ASM Global. Discussion followed about the vendor setup, employee reimbursements, and construction audits as well as how cyber threats are being addressed from a risk standpoint. A motion was made by Committee Member Jensen and seconded by Committee Member Neitzert to recommend approval of the 2022 Audit Plan to the City Council. Voice vote to recommend. 6 Yes: Buckneberg, Goettsch, Grant, Jensen, Neitzert, Soehl; 0 No: (None). Motion Passed. 4. Committee Member Remarks There were none. 5. Public Comment  There was none. 6. Adjournment Committee Chair Pro Tem Curt Soehl adjourned the meeting at 4:45 p.m. Thomas M. Greco, City Clerk