Community Collaboration Careers We empower job seekers to meet the current and future workforce needs of employers in San Diego County

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1 Community Collaboration Careers We empower job seekers to meet the current and future workforce needs of employers in San Diego County Audit Committee date Tuesday, August 15, 2017 time 1:00pm 2:00pm place San Diego Workforce Partnership, 3910 University Ave., San Diego, CA Executive Boardroom, 4 th Floor AGENDA Welcome Omar Passons Chair o Call the meeting to order o Non-agenda public comment Action Items Omar Passons Chair Item #1: Minutes of the June 12 Audit Committee Meeting Item #2: Audit Committee Charter Item #3: Fiscal Year External Audit Firm Information Items Item #4: SDWP Internal Control Risk Assessment Adjournment PUBLIC COMMENT: Members of the public may address the Audit Committee on issues on this agenda (three minutes per speaker) and/or other items within the Audit Committee s scope. To speak, submit a Request to Speak form prior to the meeting. In compliance with the Americans with Disabilities Act, the SDWP will provide accommodations to persons who require assistance. Please call (619)

2 Item #1: Minutes of the June 12 Audit Committee Meeting Members Present Omar Passons, Chair Ed Hidalgo Tracy Sandoval Rolando Charvel Staff Present Andy Hall Chris Burlaka All reports, memoranda and letters contained in the agenda or distributed at the meeting shall by this reference become part of the original minutes. The meeting was called to order by Omar Passons, at 11:16am at SDWP with a quorum. None Public Comment The following items were approved 1-06/12/ Item 1 Minutes of the May 3 Audit Committee Meeting Approve the May 3 Audit Committee minutes. Motioned, Seconded, Carried Unanimously (Sandoval/Charvel) The following items were discussed: 1-06/12/ Item 2 Audit Committee Charter R. Charvel and T. Sandoval shared their edits of the proposed Audit Committee charter. T. Sandoval recommends changes to the charter to focus on the Audit Committee s efforts to focus on process and governance, not necessarily substance. SDWP management will update the charter with the recommendations. The Audit Committee discussed including term limits for the Audit Committee members whom are on the Workforce Development Board (WDB). The Audit Committee recommends including a provision in the audit charter that will prompt management to notify the Audit Committee of financial and non-financial events such as fraud and non-compliance with federal regulations. 2

3 O. Passons recommends including outreach to other potential stakeholders i.e. Anchor Institution if SDWP procures a firm to test internal controls. 1-06/12/ Item 3 Scope of Internal Controls Testing The Audit Committee concluded the first step SDWP will take is to complete an internal control risk assessment based on a best practice checklist R. Charvel will provide to SDWP. Based on the outcome of the internal control testing, the Committee will recommend next steps. Adjournment The meeting was adjourned at 12:10 pm. Next meeting: August 15,

4 Item #2: Audit Committee Charter RECOMMENDATION At the June 12, 2017 Audit Committee meeting, committee members R. Charvel and T. Sandoval provided edits of the proposed Audit Committee charter. SDWP management has updated the charter with the recommendations. In addition, SDWP has updated the charter to include term limits for the Audit Committee members whom are on the WDB and included a provision to notify the Audit Committee of financial and non-financial events such as fraud and non-compliance. ATTACHMENT SDWP Audit Committee Charter (v.2 Last Updated: ) 4

5 PURPOSE OF AUDIT COMMITTEE ( Committee ) AUDIT COMMITTEE CHARTER v.2 Last Updated: To assist the board of directors of San Diego Workforce Partnership ( SDWP ) in fulfilling its oversight responsibilities for the accounting and financial reporting process, the system of internal control, the audit process, and the company s governance structure, including processes for monitoring compliance with laws and regulations and the code of conduct. The audit committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to: Appoint, determine compensation, and oversee the work of any registered public accounting firm employed by the organization to engage as its independent external auditors or any firm working on those areas of responsibility for which the audit committee has oversight (i.e. single audit, internal controls testing, etc.). Resolve any disagreements between management and the auditor regarding financial reporting. Seek any information it requires from employees-all of whom are directed to cooperate with the committee s requests-or external parties. Meet with company officers, external auditors, or outside counsel, as necessary. Make recommendations to the Workforce Development Board (WDB) and Policy Board on any actions related to audits, internal controls, financial statements, and other matters related to the organizations fiscal health. Engage independent counsel or other advisors. COMPOSITION The audit committee will consist of five members: Three (3) members will be from of the Workforce Development Board (WDB) members (appointed by the WDB chair). One (1) WDB member will be authorized to be a member of the audit committee for a maximum of three (3) two-year terms and two (2) WDB members will be authorized to serve two (2) two-year terms. One (1) member will be an executive level finance professional from the City of San Diego. One (1) member will be an executive level finance professional from the County of San Diego. MEETINGS The committee will meet at least two times a year, with authority to convene additional meetings at the committee s discretion. Quorum of audit committee will be three or more members. SDWP management will notify the County and City executive finance professionals on the audit committee in the event of a material non-compliance, any instance of fraud, or disallowance in excess of $10,000. Based on this information, the County and City executive level finance 5

6 professionals will review and recommend to the chair if a Committee meeting with all members to determine action(s) should be called and scheduled. All audit committee meeting rules will be governed by the Brown Act (all meeting materials will be posted at least 72 hours prior to the meeting, meetings will be open to the public, etc.). Minutes of each meeting of the Committee shall be prepared by management and distributed to audit committee members and members of the board promptly after each meeting. RESPONSIBILITIES To implement the Committee s purpose, the Committee shall be charged with the following functions and processes with the understanding however, that the Committee may supplement or deviate from these activities as appropriate under the circumstances: Financial Statements and Single Audit Approving all audit and non-audit services with the external auditors. Review the external auditors proposed audit scope and approach. Review with management and the external auditors the results of the annual single audit and the annual financial statement audit, including any difficulties encountered. Prior to the release of the financial statements and single audit, review with management and the external auditors: o o o o o o o the reasonableness of: the financial reporting process; the methodology, fluctuations, and reasonableness of significant estimates; appropriateness and quality of accounting principles and policies; treatment of significant non-routine transactions; recommendations and any significant issues or deficiencies required to be communicated to the committee under General Accepted Auditing Standards; system of internal controls; results of work performed. Review the performance of the external auditors, and exercise final approval on the appointment or discharge of the auditors. Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the company, including non-audit services, and discussing the relationships with the auditors. Meet separately with the external auditors to discuss any matters that the committee or auditors believe should be discussed privately. Resolve any dispute between management and the external auditors. Meet separately with the external auditors to discuss any matters that the committee or auditors believe should be discussed privately. Resolve any dispute between management and the external auditors. 6

7 Internal Controls Review with management and the external auditor s policies and procedures utilized by management to ensure the effectiveness of the company s internal controls, including any significant deficiencies, material weaknesses and significant changes in internal controls. Understand the scope of external auditors or funders review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management s responses. Ensure that significant deficiencies and material weaknesses identified have been or are in the process of being remediated, including obtaining an understanding of the remediation being implemented. Discuss with the external auditor their opinion and views of the company s fraud risks and controls. Compliance Review the policies and procedures utilized by management to ensure the effectiveness of the system for monitoring compliance with laws and regulations and the results of management s investigation and follow-up of any instances of noncompliance. Review the findings of any examinations by regulatory agencies, and any auditor observations. Reporting Responsibilities Report to the board of directors about committee activities, issues, and related recommendations. Provide an open avenue of communication between the external auditors and the board of directors. Other Responsibilities Perform other activities related to this charter as requested by the board of directors. Direct and oversee special investigations as needed. Review and assess the adequacy of the committee charter annually, requesting board approval for proposed changes, and ensure appropriate disclosure as may be required by law or regulation. Confirm annually that all responsibilities outlined in this charter have been carried out. 7

8 Item #3: Fiscal Year External Audit Firm RECOMMENDATION At the June 12, 2017 Audit Committee meeting, members requested SDWP request a fiscal year engagement letter from the independent audit firm Rogers, Anderson, Malody & Scott, LLP (RAMS) to review. The recommendation is to approve year three of a three-year procurement cycle for RAMS as the audit firm to perform the FY audit for SDWP. 8

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19 Item #4: SDWP Internal Control Risk Assessment INFORMATION ITEM NO ACTION REQUIRED At the June 12, 2017 Audit Committee meeting, members requested SDWP perform an internal control risk assessment. The Audit Committee will discuss the internal control risk assessment in order to determine next steps for scoping the internal controls testing. 19