2014 ANNUAL & 2015 MID-TERM REPORT

Transcription

1 2014 ANNUAL & 2015 MID-TERM REPORT Audit Committee Activities Art Edwards Audit Committee Chairman April 30,

2 2014 ANNUAL REPORT SBBC Financial Oversight Audit Committee Members Finance Reporting Structure Internal/External Auditing External Auditors Internal Auditors Internal Audit Implementation Internal Audit Universe 2014 Highlights - Internal Audits Completed 2015 Internal Audit Objectives Corrective Actions & Remediation Status Audit Committee Goals & Highlights 2

3 AUDIT COMMITTEE EXTERNAL AUDITORS INTERNAL AUDITORS DISTRICT STAFF working together to maintain and increase public confidence with the fiscal and administrative responsibilities of the School Board of Brevard County. 3

4 Audit Committee Members Art Edwards, Chairman District 1 Tim Skeldon, Vice Chairman District 4 Don Lusk District 2 Frank Zilaitis District 3 Jim Milucky District 5 FY 2014 Karen Henderson, School Board Chair Ex-Officio FY 2015 Amy Kneessy, School Board Chair Ex-Officio 4

5 Audit Committee Members Art Edwards, Chairman - Retired Aerospace Corporate Safety Manager. Certified State of Florida General Contractor. Presently, Senior Partner in a Safety Consulting firm. Background includes Engineering, Construction, Project Management and Safety. Member for over 10 years. Tim Skeldon, Vice Chairman - Executive Vice-President of Corporate Finance for Parrish Medical Center for 15 years and a Brevard County native. Member for over 6 years. Don Lusk - Retired Administrator with 30+ years of local government experience. Certified Workforce Development Professional. Presently, Senior Policy and Program Officer with local non-profit workforce investment agency. Background includes Health & Human Services, Public Safety, Emergency Management and Community Service programs. Member for 4 years. Frank Zilaitis - JD, MBA, MSEE, BSEE. Attorney/President - Zilaitis Law, P.A. Member for 4 years. Jim Milucky - CPA with practice in Brevard County for the last 13 years. Certified as fraud examiner and forensic accountant. Public service includes Malabar Town Council and Brevard County Investment Committee. Member for 2 years. 5

6 Reporting Structure Citizens of Brevard County School Board of Brevard County Superintendent School Board Management & Staff Audit Committee Internal & External Audit 6

7 External Auditing External auditing is the process not only of examining the most recently completed fiscal year financial statements, but also of testing the underlying accounting records and internal controls of the organization. An objective opinion is expressed regarding the fairness of the presentation and information contained in the financial statements. Internal Auditing Internal auditing is an independent objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. 7

8 External Auditors The Audit Committee recommendation to the School Board for Moore Stephens Lovelace, P.A. to be selected as the District s external auditor was the culmination of an extensive RFP process. A three year contract was awarded with four optional one-year extensions (based on recommendation by the Audit Committee). The initial term of the contract will end December 31, Execution of the four one-year options would extend the contract to December 31, In October 2014, Moore Stephens Lovelace, P.A. provided the district an unqualified [highest level] audit opinion this last fiscal year. Audit Committee members completed a fraud awareness questionnaire as part of the audit process. Florida Auditor General (AG) is responsible for the external audit every three years; FY 2016 is the next AG cycle. 8

9 McGladrey LLP Internal Auditors Hired through competitive source selection via request for proposal process negotiation of internal audit contract; term renewed through June 30, An additional one-year renewal is available through June 30, Fiscal year budget approved at $199,500. The Internal Audit firm has maintained a high-degree of sensitivity to Brevard County School budgetary challenges. Has met all internal audit committee requests with no budget changes. Regular reporting at quarterly meetings. 9

10 Risk Impact Internal Audit Implementation Functions with High Exposure and High Priority are included in the audit plan these are areas that Keep Senior Leadership and the Board awake at night. Moderate Exposure High Exposure Risk Coverage Periodic Risk Coverage High priority Low Exposure Moderate Exposure Risk Coverage Monitoring only Risk Coverage Self-assessment/ rotational Likelihood of Occurrence 10

11 Internal Audit Universe See handout 11

12 Follow-up Audits Defined Required by the Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing (Performance Standard #2500) The objectives of the overall follow-up procedures are to determine if: - Open issues from previous audit reports have been properly remediated. - Management actions have been effectively implemented or that senior management has accepted the risk of not taking action. The intent is to validate, on a sample basis, the effectiveness of the remediated controls of the previously reported open issues. 12

13 Audits Defined cont. District-Wide Audits Address processes and/or functions that touch all or most departments within the District, such as Human Resources, Finance, Budgeting, Procurement, and Information Technology. These audits are designed to gain economies of scale by: - Taking an entity-wide view; - Evaluating best practices and standards across the entity as a whole (rather than making department or function-specific recommendations that may not be consistently interpreted or applied). 13

14 Audits Defined cont. Individual Function Audits Focus on unique scenarios or processes within specific departments, or a more narrowly-defined portion of a larger process. For example: - A District-Wide audit of Purchasing Cards will focus on the overall process for the District, including Purchasing Cards issued to schools and departments. - A Purchasing Card audit of Food Services would focus on the risks and controls for transactions related only to Food Services. 14

15 Audits Defined cont. Cycle Audits Cycle Audits are narrower in scope than District-Wide and Individual Function Audits. The scope is very specific to inherently high-risk, decentralized functions and processes. For example, Full-Time Equivalent and Property Control are cycle audits. Generally, cycle audits provide testing and reassurance that policies and procedures are being followed within different departments, or that controls continue to be effective once it has been determined that they have been appropriately designed and implemented. 15

16 Audits Defined cont. Additional Internal Audit Projects Focuses internal audit resources on areas or functions that are high exposure and high priority - based on Risk Ranking. Addresses situations/potential situations that the Board, Audit Committee or management may become aware of (outside of the existing audit plan). Special Projects and Requests are generally specifically defined and narrowly focused. For example, the 2014 audit of the WHI Pharmacy Claims was done by request. 16

17 FY 2014 Highlights Follow-up, including Property Control District-Wide: Food Services, including property Educational Technology Internal and External Security Individual: Charter Schools Internal Audits Completed Cycle Audits: Full-Time Equivalent Student Membership Property Control Timekeeping Additional Audit Projects: Pharmacy Claims After School Care Internal Accounts FY 2013 Completed Fraud Awareness 17

18 2015 Internal Audit Objectives Follow-up District-Wide: Educational Technology Internal and External Security Follow Up Purchasing Card Individual: Communications - Advertising Revenue Charter School Emma Jewel Cycle Audits: Full-Time Equivalent Student Membership Property Control Additional Audit Projects: Self Insurance Claims After School Care Internal Accounts FY 2014 Fraud Awareness Completed In progress Not yet started 18

19 Corrective Actions & Remediation Status 130 audits completed since the inception of Audit Committee in FY 2000, including: Cycle Audits Entity-Wide Audits Individual Audits covering significant High Risk Areas including internal accounts Special Requests Follow-up procedures are conducted and reported to the Audit Committee 345 total corrective actions reported since the inception of the Audit Committee 96% of total corrective actions have been validated and closed through the Formal Follow-up Process Significant improvements gained through Sharing of Lessons Learned & Best Practices 19

20 Audit Committee Goals & Highlights 2014 Continued focus on the Audit Committee s Strategic Plan Processes (begun in 2010) Half day off-site workshop and training conducted in September 2013 Maintained continuity in Internal Audits through retention of McGladrey External Auditor selection recommendation 100% of 2014 Internal Audit Goals met 20

21 Audit Committee Goals & Highlights 2015 Half day off-site workshop and training conducted September 2014 The Annual Evaluation of the Internal Auditors 2014 performance completed in September 2014 The Audit RFP process documented in the fall of 2014 Continue improvements in identifying, prioritizing, and managing Action Items Goal of 100% completion of 2015 planned Internal Audits Maintain sensitivity to Opportunities for Improvement Identify IA Role in ½ cent Sales Tax Accountability - support as needed 21

22 Questions? 22