SNOHOMISH COUNTY COUNCIL Snohomish County, Washington MOTION NO

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3 SNOHOMISH COUNTY COUNCIL Snohomish County, Washington MOTION NO RELATED TO THE OFFICE OF THE COUNTY PERFORMANCE AUDITOR; ADOPTING THE 2015 PERFORMANCE AUDIT PLAN WHEREAS, Chapter SCC establishes the Office of County Performance Auditor for the purpose of reviewing, evaluating, and reporting on the integrity of the county s financial management system, the accuracy of financial recordkeeping, compliance with applicable laws, policies, guidelines and procedures, and the efficiency and effectiveness of operations and programs; and WHEREAS, SCC provides that the performance auditor shall annually prepare, in consultation with the Performance Audit Committee, a Performance Audit Plan for the County Council (Council) to consider adopting for the upcoming year; and WHEREAS, by Motion , Council approved a contract with Sjoberg Evashenk Consulting (Consultant) for limited performance audit services (Phase 1 Trial Phase); and WHEREAS, these services included reviewing the 2013 Risk Assessment and the 2013 Audit Plan, which Council adopted by Motion ; and WHEREAS, the Consultant presented the results of the review and presented audit topics to consider for the 2015 Performance Audit Plan to the Performance Audit Committee (January 26, 2015) and Council s Operations Committee (January 27, 2015); and WHEREAS, Council considered the Consultant s and Performance Audit Committee s advice related to adopting a 2015 Performance Audit Plan; and WHEREAS, Council has considered an Audit Approach Memorandum, to determine which of the performance audit topics of the 2015 Performance Audit Plan, to have analyzed; NOW, THEREFORE ON MOTION, the Snohomish County Council (1) approves the attached 2015 Performance Audit Plan and (2) directs County Staff to issue a notice to proceed to the Consultant to complete a performance audit of audit topic #6 in the attached 2015 Performance Audit Plan. PASSED this day of, SNOHOMISH COUNTY COUNCIL Snohomish County, Washington ATTEST: Council Chair Asst. Clerk of the Council

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5 Office of the County Performance Auditor Phase I Trial Phase Task #3, Audit Approach Memorandum February 4, Capitol Mall Suite 700 Sacramento, California Tel Fax

6 On January 27, 2015, the Snohomish County (County) Council directed Sjoberg Evashenk Consulting (SEC) to develop an Audit Approach Memorandum that proposed specific audit approaches to eight potential audit topics on the 2015 Audit Plan. This memorandum is intended to help prioritize the audit projects in the audit plan and to assist the County Council in selecting the audit engagement SEC will perform as part of the existing Phase I Trial Phase contract. This Audit Approach Memorandum is organized into four sections: A. Proposed 2015 Audit Plan a brief discussion of the audit topics proposed for Council s consideration of adoption within a 2015 Audit Plan; B. Proposed Trial Phase Audit Schedule proposed schedule based on the key milestone dates set forth in the Trial Phase contract; C. Audit Approach Summaries proposed audit approaches, including objectives, scope, schedule, budget, and general audit approach for each audit topic; and D. Recommendations the recommended priority of potential audit topics. A. Proposed 2015 Audit Plan The Draft 2015 Audit Plan includes the follow potential audit engagements: A.1. Human Resources Performance Audit to determine County s compliance with legal personnel and hiring requirements and best practices. A.2. Assessment of County exposures related to the aging workforce and recommendation to mitigate any risk identified from rapid turnover. A.3. Review use of departmental overtime. Determining drivers of overtime usage and assessing the tradeoffs between overtime use and increased staffing. A.4. Complete a performance audit of overtime in the Snohomish County Sheriff s Office including: identifying actual use of overtime over a five year period to include hours and cost; comparing budgeted versus actual use of overtime; evaluating policies, procedures, staffing level, coverage, and other issues that contribute to overtime; identifying and comparing alternatives to reduce overtime; and identifying and comparing methods to better budget for overtime in future budget years. A.5. Review technology systems in place for main county information systems and determine degree to which purchased technology has been implemented. Develop recommendations for implementation of system capabilities that have not been integrating into County s version of the systems. A.6. Complete a performance audit of the cost of information technology data storage including: identifying operations, maintenance, and labor costs to support existing data storage methods; and identifying and comparing the cost of alternatives methods (including using cloud storage technologies ) to existing data storage over time. A.7. Review organizational structure and operating policies to determine whether they provide the best structure to facilitate effective performance of the Medical Examiner s office. SJOBERG EVASHENK Page 1

7 A.8. Review countywide Public Records process to determine that records management policies reflect best practices and are consistent with state rules and regulations. Include a review of the county resources being dedicated to compliance with Public Records Act. B. Proposed Trial Phase Audit Schedule In Section C, SEC presents proposed audit approaches for each of the audit topics listed in the 2015 Audit Plan. Of primary importance to the County Council is the identification of the highest priority audit engagement that can be completed within the parameters of the existing Trial Phase contract, including a contract expiration date of July 8, 2015, and a remaining budget not to exceed $40,300. Based on these parameters; the audit procedures that must be performed on all GAGAS-compliant audit engagements; and the time needed to schedule Performance Audit Committee, Operations Committee, and County Council meetings; we propose that the selected audit engagement generally follow the schedule provided in Table A. Key Milestones Table A: Proposed Phase I Trial Phase Audit Schedule Anticipated Completion Date County Council Adopts the 2015 Audit Plan Feb 12, 2015 County Council Selects Audit Engagement from 2015 Audit Plan Feb 12, 2015 SEC Commences Audit Planning Feb 13, 2015 SEC Meets with Performance Audit Committee and Begins Fieldwork SEC Briefs Council Contact and Auditee of Preliminary Observations Mar 9, 2015 April 20, 2015 SEC Submits Draft Report to Council Contact for Discussion May 4, 2015 SEC Submits Draft Report to Auditee for Review and Comment May 11, 2015 SEC/Auditee Conduct Exit Conference May 18, 2015 Auditee Provides Written Comments to SEC May 26, 2015 SEC Presents Final Report to Performance Audit Committee June 8, 2015 SEC Presents Final Report to Operations Committee June 9, 2015 Follow Up with Operations Committee June 23, 2015 Phase I Trial Phase Contract Expiration July 8, 2015 This schedule provides for nine weeks to conduct audit planning and fieldwork and another two weeks to prepare the draft report. Given the relatively short timeframe for this audit, we have indicated in each of the Audit Approach Summaries provided under Section C whether SEC finds that the project can be completed under the existing contract. SJOBERG EVASHENK Page 2

8 C. Audit Approach Summaries On the following pages we present our proposed objectives, scope, schedule, budget, and general audit approach for each audit topic in the 2015 Audit Plan. SJOBERG EVASHENK Page 3

9 2015 Audit Plan Item PROPOSED AUDIT A.1. Human Resources Performance Audit to determine County s compliance with legal personnel and hiring requirements and best practices. Audit Objectives To determine compliance of the County s Human Resources activities with federal, state, and local laws and regulations. To identify best practices for consideration. Audit Scope Existing practices, including a review of activities during the three Fiscal Years Audit Approach Interview key Human Resources personnel and conduct background research, including interviewing key personnel and reviewing pertinent laws and regulations, policies and procedures, strategic plans, and best practices publications. For each of Human Resources core responsibilities such as employee benefits; administration of rules and regulations; recruitment and retention; training and employee development programs; classification and compensation systems; status change procedures and position control; new employee services; and safety and risk management identify the personnel resources dedicated to each function, and the activities performed by staff to carry out these functions. Assess key performance indicators, including resource indicators (budget, FTEs), workload indicators, backlogs, service indicators (including processing time and responsiveness), etc. Obtain input from key stakeholders, including other County departments and offices, regarding their experience with Human Resources as customers. Determine overall compliance with rules and regulations, and identify opportunities for improvement. Proposed Schedule This audit can be completed within the Phase I Trial Phase schedule described in Section B of this memorandum. Proposed Budget We propose to complete this audit engagement within the parameters of the Phase I Trial Phase contract, within the remaining budget of $40,300. SJOBERG EVASHENK Page 4

10 2015 Audit Plan Item PROPOSED AUDIT A.2. Assessment of County exposures related to the aging workforce and recommendation to mitigate any risk identified from rapid turnover. Audit Objectives To evaluate employee turnover rates, overall and by department, and employee aging trends. To determine whether there are steps the County can take to mitigate risks posed by potentially high turnover and workforce aging. Audit Scope Existing practices, including a review of activities during the three Fiscal Years Audit Approach Interview key Human Resources personnel and conduct background research, including interviewing key personnel and reviewing pertinent laws and regulations, policies and procedures, strategic plans, prior compensation and benefit studies, labor agreements, exit interview information, and best practices publications. Through interviews, identify potential challenges to recruitment and retention throughout the County and/or whether challenges are faced by specific departments or offices. Obtain and review the County s Human Resources strategic plan, succession plans, training policies and programs (including those that promote cross training, supervisory training, professional growth programs, etc.), and other guidelines and initiatives designed to address recruitment, retention, and employee development. Obtain and review key statistics and information e.g., employee turnover statistics, employee aging reports, retirement statistics and average retirement age, and length of service statistics by department and office, as well as general information related to the County s competing labor markets. Conduct benchmarking research of similarly situated counties and/or other public entities to determine if their experiences are similar to the County and to identify measures taken. Determine whether the County s recruiting and retention, employee development, and succession planning efforts are consistent with best practices or whether additional steps are required. Proposed Schedule This audit can be completed within the Phase I Trial Phase schedule described in Section B of this memorandum. Proposed Budget We propose to complete this audit engagement within the parameters of the Phase I Trial Phase contract, within the remaining budget of $40,300. SJOBERG EVASHENK Page 5

11 2015 Audit Plan Item PROPOSED AUDIT A.3. Review use of departmental overtime. Determining drivers of overtime usage and assessing the tradeoffs between overtime use and increased staffing. Audit Objectives To determine drivers of overtime usage throughout County departments and offices. To assess the cost-benefit of increasing staffing resources versus overtime. Audit Scope Existing practices, including a review of overtime usage during the three Fiscal Years Audit Approach Review pertinent laws, regulations, HR rules, ordinances, and labor agreements relating to overtime and employee rights within the County, as well as County rules and policies regarding the administration of overtime both centrally and within each department or office. Review payroll data showing overtime usage trends by department and office over the three-year period, including overtime accrual, banking compensatory time off, retention, and earning payouts. Identify key users (departments and offices) of overtime, and select a judgmental sample of departments/offices to compare budget-to-actual overtime usage and cost. Evaluate policies, procedures, staffing level, coverage, and other issues that contribute to overtime. Review budget and staffing trends over the three-year period, and evaluate budget-toactual overtime usage and costs. Identify methods employed by departments and offices to minimize overtime, and determine whether alternatives exist to better budget for overtime usage and to reduce overtime costs. Determine compliance with County rules relating to the administration of overtime. Proposed Schedule This audit can be completed within the Phase I Trial Phase schedule described in Section B of this memorandum. Proposed Budget We propose to complete this audit engagement within the parameters of the Phase I Trial Phase contract, within the remaining budget of $40,300. SJOBERG EVASHENK Page 6

12 2015 Audit Plan Item PROPOSED AUDIT A.4. Complete a performance audit of overtime in the Snohomish County Sheriff s Office including: identifying actual use of overtime over a five year period to include hours and cost; comparing budgeted versus actual use of overtime; evaluating policies, procedures, staffing level, coverage, and other issues that contribute to overtime; identifying and comparing alternatives to reduce overtime; and identifying and comparing methods to better budget for overtime in future budget years. Audit Objectives To evaluate the use of overtime in the Sheriff s Office, overtime trends and administration, and alternative approaches that could be adopted to manage overtime costs within budget constraints. Audit Scope Existing practices, including a review of activities during the five Fiscal Years Audit Approach Review pertinent laws, regulations, HR rules, ordinances, and labor agreements relating to overtime and employee rights within the County, as well as County rules and policies regarding the administration of overtime both centrally and within each department or office. Identify actual overtime accrued over a five year period to include hours and cost, and compare budget-to-actual overtime usage and cost. Through interviews, ascertain the Sheriff s Office approach to staffing, resource allocation, and administration of overtime. Review factors that impact sworn staff resource needs, including policies and procedures; crime rates and anticipated growth and decline; call volume and response times; organizational structure, capacity and vision; shift and scheduling protocols; demographic and geographic characteristics; uncommitted time; labor agreements; Review and/or develop trend analyses demonstrating budget resources and staffing trends; workload trends and anticipated workload; officer/population ratios, crime levels, officer/crime ratios, and response times; and trends in citizen complaints. Identify alternatives to better budget for overtime usage and to reduce overtime costs. Proposed Schedule This audit can be completed within the Phase I Trial Phase schedule described in Section B of this memorandum. Proposed Budget We propose to complete this audit engagement within the parameters of the Phase I Trial Phase contract, within the remaining budget of $40,300. SJOBERG EVASHENK Page 7

13 2015 Audit Plan Item PROPOSED AUDIT A.5. Review technology systems in place for main county information systems and determine degree to which purchased technology has been implemented. Develop recommendations for implementation of system capabilities that have not been integrating into County s version of the systems. Audit Objectives To determine the degree to which purchased technology has been implemented and the extent to which the systems capabilities have been optimized and integrated. Audit Scope Existing practices, including a review of activities during the three Fiscal Years Audit Approach Interview key Department of Information Services (DIS) personnel and identify DIS policies and procedures for the acquisition and implementation of information systems throughout the County, including the extent to which system acquisition, development, implementation, support, and maintenance are centralized or decentralized. Obtain and review DIS policies and procedures, IT governance and strategic planning documents, and other County ordinances, rules, directives, or other guidance relating to the acquisition, development, implementation, support, and maintenance of information systems. Inventory existing systems, both centralized and decentralized, and identify the role of DIS, each department or office, or third party in acquiring, developing, implementing, or supporting the system. Identify all technology purchases during the three year scope of this audit, and evaluate those systems with capabilities that have not been integrated into County s version of the systems. Recommend steps to ensure proper integration of the systems, if feasible, and recommend protocols that could be addressed to mitigate potential implementation risks in the future. Proposed Schedule SEC finds that the complexity of this audit will require an increased level of fieldwork and analysis that exceeds the existing parameters of the Phase I Trial Phase schedule and budget. Proposed Budget SEC estimates that this project will require a budget of approximately $60,000 to $80,000, depending on the scope of the County s existing information systems, the extent to which they are administered in-house or are outsourced, and the existence of any sensitive or protected data requiring additional security measures. Therefore, additional scoping efforts will allow SEC to refine its estimate. SJOBERG EVASHENK Page 8

14 2015 Audit Plan Item PROPOSED AUDIT A.6. Complete a performance audit of the cost of information technology data storage including: identifying operations, maintenance, and labor costs to support existing data storage methods; and identifying and comparing the cost of alternatives methods (including using cloud storage technologies ) to existing data storage over time. Audit Objectives To determine whether alternative data storage protocols could provide a more costeffective approach in the future. Audit Scope Existing practices, including a review of activities during the three Fiscal Years Audit Approach Interview key Department of Information Services personnel to identify existing methods of storing data, and identify the factors that contributed to the County s decision to implement the existing data storage methods. Review budget and fiscal information to identify operations, maintenance, and labor costs to support existing data storage methods, and compare budget-to-actual costs. Conduct benchmark research and identify other similarly situated local government entities that have employed alternative data storage protocols, related costs, and the benefits and challenges observed. Identify, at a high-level, centralized and decentralized information systems, including systems requiring specialized security measures such as those involving justice partners or those containing personal or medical information. Identify alternative data storage methods and compare the use and establishment of alternatives methods to existing data storage over time. Proposed Schedule This audit can be completed within the Phase I Trial Phase schedule described in Section B of this memorandum. Proposed Budget We propose to complete this audit engagement within the parameters of the Phase I Trial Phase contract, within the remaining budget of $40,300. SJOBERG EVASHENK Page 9

15 2015 Audit Plan Item PROPOSED AUDIT A.7. Review organizational structure and operating policies to determine whether they provide the best structure to facilitate effective performance of the Medical Examiner s office. Audit Objectives To determine whether the organizational structure and operating policies and procedures provide the best structure to facilitate effective performance of the Medical Examiner s Office. Audit Scope Existing practices, including a review of activities during the three Fiscal Years Audit Approach Interview Office management and key staff and review pertinent background information, applicable state laws, local ordinances, policies and procedures to identify core responsibilities and functions of the Medical Examiner s Office, including significant activities designed to carry out these functions. Determine the FTEs and any outsourced resources dedicated to each activity. Review workload and performance indicators including timeliness and backlogs, complaint and service indicators, workload trends, processing times to determine the extent to which the Office is managing its existing workload, and determine whether expected changes in staffing resources or workload trends can be anticipated. This data will be used as general indicators of efficiency and effectiveness. Review quality control measures established by the Office, including professional association membership and ongoing training, established policies and procedures, review and monitoring activities, security and control of evidence, and other quality control protocols. Conduct benchmark research by selecting a sample of medical examiners throughout the state to identify workload and performance trends, staffing resources, backlogs, organizational structure, and core activities performed. Determine whether there exist any impediments to the efficient and effective operation of the Medical Examiner s Office Proposed Schedule This audit can be completed within the Phase I Trial Phase schedule described in Section B of this memorandum. Proposed Budget We propose to complete this audit engagement within the parameters of the Phase I Trial Phase contract, within the remaining budget of $40,300. SJOBERG EVASHENK Page 10

16 2015 Audit Plan Item PROPOSED AUDIT A.8. Review countywide Public Records process to determine that records management policies reflect best practices and are consistent with state rules and regulations. Include a review of the county resources being dedicated to compliance with Public Records Act. Audit Objectives To determine whether the County s policies and procedures to administer public records requests ensure compliance with state law and are cost-effective. Audit Scope Existing practices, including a review of activities during the three Fiscal Years Audit Approach Review public records standards and procedures, applicable ordinances and policies, and state law. Interview the Public Records Officer and key representatives in each County department and office. Review the extent to which County records are readily available on the County s website or other sources designed to reduce the need for staff to address individual requests. Identify and walk through processes for recording and tracking requests, monitoring compliance with state law and local policies, and responding to public records requests. Obtain and review workload and performance trends related to public records requests (e.g., number of requests, volume of records provided, format of records provided, turnaround times from request to delivery, number of FTEs involved in responding to public records requests, budgeted resources, and actual costs of responding to requests). Select several counties and cities throughout the State of Washington to obtain similar information regarding the methods employed to ensure compliance with state laws and the workload and performance trends observed. Determine whether the County s policies and procedures to administer public records requests ensure compliance with state law and whether alternatives may be cost-effective. Proposed Schedule This audit can be completed within the Phase I Trial Phase schedule described in Section B of this memorandum. Proposed Budget We propose to complete this audit engagement within the parameters of the Phase I Trial Phase contract, within the remaining budget of $40,300. SJOBERG EVASHENK Page 11

17 D. Recommendations Regarding the Priority of Audit Topics Based on SEC s development of proposed audit methodologies for each item in the 2015 Audit Plan, the budget and schedule for all but one of the audits in the plan fall within the parameters of the existing Phase I Trial Phase contract. While the scope of one of the potential audits, A.5, exceeds what is achievable under the existing contract, this audit raise important questions and can be considered later in 2015 or on the 2016 Audit Plan. SEC is ready to commence one of the remaining seven audits on the 2015 Audit Plan, or to provide additional information and/or clarification regarding the identified audits, at the County Council discretion. SJOBERG EVASHENK Page 12