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HomeMy WebLinkAbout06/04/2019 - Regular Minutes - City Council - Audit CommitteeCITY OF COLLEGE STATION Mayor Home of TexasAdM University' Karl Mooney Mayor Pro Tem Linda Harvell City Manager Bryan Woods Minutes CITY COUNCIL AUDIT COMMITTEE Tuesday, June 4, 2019 at 3:00 PM City Hall Administrative Conference Room 1101 Texas Avenue College Station, Texas 77840 Audit Committee Members Present: Karl Mooney, Mayor Elianor Vessali, Councilmember Dennis Maloney, Councilmember Mike Ashfield, Committee Member Carolyn Franklin, Committee Member City Staff: Ty Elliott, Internal Auditor Kimberly Roach, Assistant Internal Auditor Bryan Woods, City Manager Jeffrey Capps, Deputy City Manager Brian Piscacek, Assistant to the City Manager/ Special Projects Barbara Moore, Assistant to the City Manager/ Special Projects Carla Robinson, City Attorney Yvette Dela Torre, Deputy Local Registrar Council Members Jerome Rektorik Bob Brick John Nichols Elianor Vessali Dennis Maloney Regular Agenda Item No. 1— Call to Order and Announce a Quorum is Present. With a quorum present, the Audit Committee of College Station was called to order by Mayor Mooney at 3:00 p.m. on June 4, 2019 in the Administrative Conference Room of the City of College Station City Hall. Regular Agenda Item No. 2 - Presentation, possible action, and discussion of minutes for the Audit Committee meeting held on March 5, 2019. MOTION: Upon a motion made by Committee Member Mike Ashfield and a second by Councilmember Elianor Vessali, the Audit Committee voted five (5) for and zero (0) opposed, to approve the March 5, 2019 Audit Committee minutes. The motion carried unanimously. Regular Agenda Item No. 3 - Presentation, possible action, and discussion regarding modifying the fiscal year 2019 audit plan and selection of potential audits for the fiscal year 2020 audit plan. Ty Elliott, Internal Auditor, introduced intern Brittany Winters and Assistant Internal Auditor, Kimberly Roach. The Internal Auditor informed the Audit Committee that the Auditor's office does not have the expertise or resources to complete the continuous auditing program. Staff recommends a potential modification to the current 2019 audit plan and potential audits for the 2020 audit plan. The Audit Committee directed staff to proceed with the Information Technology Asset Management, Fire/EMS Operations, Payroll Aspect, Marketing, and if time allowed the Travel Expense & Reimbursement audits. MOTION: Upon a motion made by Mayor Karl Mooney and a second by Councilmember Dennis Maloney, the Audit Committee voted five (5) for and zero (0) opposed, to modify the fiscal year 2019 audit plan and selection of potential audits for the fiscal year 2020 audit plan. Regular Agenda Item No. 4 - Presentation, possible action, and discussion regarding auditing standards to be applied when conducting audit engagements. Ty Elliott, Internal Auditor, presented the Audit Committee with the two recognized sets of auditing standards in the United States. The United States Government Accountability Office has a set in place called the Government Accountability Office Government Audit Standards; also known as the "Yellow Book". The Institute of Internal Auditors has a set in place called the International Standards for Professional Practice of Internal Auditing; also known as the "Red Book". The internal auditor has never been given official instruction on what standards to adopt. Mr. Elliott proposed that the audit committee adopt a set of standards to use going forward for future audits. The Audit Committee discussed the advantages and disadvantages of each set of standards. Internal Auditor, Ty Elliott stated he was comfortable using the "Yellow Book" standards, which is the standard currently used by the City of College Station. MOTION: Upon a motion made by Councilmember Dennis Maloney and a second by Committee Member Carolyn Franklin, the Audit Committee voted five (5) for and zero (0) opposed, to adopt the Government Accountability Office Government Audit Standards; also known as the "Yellow Book". Regular Agenda Item No. 5 - Presentation, possible action, and discussion regarding future agenda items. There were no future agenda items discussed. Regular Agenda Item No. 6- Adiourn. There being no further business, Mayor Mooney adjourned the meeting at 4:17 p.m. on Tuesday, June 4, 2019 ATTEST: JOAA, Yv e Dela Torre, Deputy Local Registrar �o sue., CITY OF COLLEGF STATION Home of Texas Ae-M University' TO: The City of College Station Audit Committee FROM: Ty Elliott, City Internal Auditor DATE: June 4, 2019 SUBJECT: Potential Audit Topics In fiscal year 2019 our office has completed two audit reports, a follow-up audit of the Sanitation Division and an audit of the parkland dedication program. We have also made substantial progress in developing a fraud response plan. This being said, I recommend we modify the fiscal year 2019 audit plan to remove continuous auditing and add at least one of the following audit topics. Although I believe implementing a continuous auditing program would be extremely beneficial to the City, our office does not have the resources to complete such an endeavor at this time. Marketing: In addition to the marketing activities carried out by the City's Public Communications Offices, marketing activities are conducted within individual departments to varying degrees of success. This audit would evaluate marketing effectiveness across departments and determine whether a more centralized marketing effort would be of greater value to the City. Estimated time to completion: 2-3 months Fire/EMS Operations: According to the 2010 Risk Assessment, three Fire Department cost centers were considered higher risk areas that had not received audit coverage — this topic would include Fire Suppression or Emergency Medical Services. In addition, Fire Department overtime expenditures continue to climb and exceed budget projections. To conduct this audit, our department would most likely need to hire an outside expert. Estimated time to completion: 4-5 months Aquatics: The Parks and Recreation Aquatics Program cash handling procedures were audited in 2010 and it was discovered that significant savings could be realized. This audit would take a broader scope and assess the City-wide aquatics usage and needs for the purpose of planning strategic aquatics investments going forward. Estimated time to completion: 2-3 months Enterprise Risk Management: ERM provides a risk assessment framework for identifying risks and opportunities, assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring processes through internal controls. An ERM assessment would involve identifying methods used to implement an ERM framework for better strategic planning. Estimated time to completion: 4-5 months TY ELLIOTT CITY INTERNAL AUDITOR'S OFFICE AUDIT COMMITTEE City Internal Auditor 1101 Texas Ave. Mayor Karl Mooney telliott@cstx.gov College Station, TX 77840 Councilmember Dennis Maloney TEL: (979) 764-6269 Councilmember Elianor Vessali Mike Ashfield Carolyn Franklin City of College Station City Internal Auditor's Office City Internships: Internships offer an opportunity for students to gain experience in potential career fields and allow an organization to develop high quality candidates for future openings. An audit of internships throughout the City would evaluate how well different programs comply with legal obligations as well as the overall quality of mentorship experienced by the interns. Estimated time to completion: 1-2 months Travel Expense & Reimbursement: The current method of tracking travel expenses is an accountable plan in which individual expenditures are documented and, in some cases, reimbursed. An audit of this topic would explore the resource and time costs of this system and explore the feasibility of changing to a per diem system. Estimated time to completion: 1-2 months Technology Asset Management: Cybersecurity is an emerging risk that can have large-scale impacts on any organization that relies on data, computer systems, or online tools as part of its primary functions — particularly if that organization stores sensitive data such as social security numbers or other personal information. In previous years, the City has not had a full inventory of its technology assets and IT is currently in the process of developing one. This audit would entail examining IT policies and procedures, testing department compliance, and identifying areas of risk exposure within the City — particularly from noncompliance with technology acquisition policies. Estimated time to completion: 2-3 months Performance Evaluations: Over the course of the FY17 Risk Assessment and the COSO Assessment, we found that Employee Performance Evaluations differ greatly across City departments and divisions. An audit of this topic would focus on identifying where employees are treated differently across the City and evaluating the reasonability of the City's approach to evaluating performance. Estimated time to completion: 2-3 months Payroll Aspect Audit: An audit of a specific payroll aspect would involve review and testing over internal controls as well as analysis. Specific payroll aspects that could be covered include: Fire and Police Move - Up Pays, Short -Term Disability Payments, a specific Fringe Benefit (i.e. cell phone allowance, car allowance, etc.), or a specific department's overtime usage (i.e. Fire, Police, Public Works overtime, etc.). The aspects of payroll identified as risks during the COSO Assessment include Move -Up Pays and Short -Term Disability Payments. Estimated time to completion: 2-3 months Sincerely, CTf ae"-M- & CIA, CFE, CGAP, COSO City Internal Auditor _ 2 lPage A Brief Overview of Auditing Standards There are two recognized sets of auditing standards in the United States. The United States (U.S.) Government Accountability Office (GAO) has set in place the Government Accountability Office Government Audit Standards (GALAS). GALAS is also referred to as the "Yellow Book." *The Office of the City Internal Auditor for the City of College Station currently adheres to this set of standards. The Institute of Internal Auditors (IIA) has set in place the International Standards for the Professional Practice of Internal Auditing. The International Standards for the Professional Practice of Internal Auditing is also referred to as the "Red Book." Similarities between the two sets of standards: • Both sets of standards establish professional auditing standards and creates a framework to conduct quality audit reports. • Both sets of standards require peer review. Differences between the two sets of standards: • Though both sets of standards require peer review, the frequency of peer review is different. The Yellow Book requires a peer review every three years while the Red Book requires a peer review every five years. • The Red Book is used both nationally and internationally in both government and the private sector, while the Yellow Book is primarily utilized within the United States by governmental agencies. • The Red Book requires auditors to investigate the ethics of the organization while the Yellow Book does not. • The Red Book allows for audit shops to be not only involved in program review, but also involvement during program implementation to detect and report issues. However, the Yellow Book makes being proactive difficult because of its restrictions. Other Considerations: • Making the transition from Yellow Book to Red Book is less cumbersome than moving from Red Book to Yellow Book. Thus, the transition will be less of a burden on The Office of the City Internal Auditor • The Red Book's guidelines are more suitable for small audit shops.