FY 2019-20 MID-TERM REPORT Audit Committee Activities Art Edwards - - PowerPoint PPT Presentation

The School Board of Brevard County, Florida The School Board of Brevard County, Florida

FY 2019-20 MID-TERM REPORT Audit Committee Activities

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Art Edwards Audit Committee Chairman March 12, 2020

The School Board of Brevard County, Florida The School Board of Brevard County, Florida

FY 2019-20 MID-TERM REPORT

• SBBC Financial Oversight
• Audit Committee Members
• Reporting Structure
• External Auditors
• Internal Auditors
• Internal Audit Implementation
• Internal Audit Universe
• Internal Audit Focus
• 2019 Highlights - Internal Audits Completed
• 2020 Internal Audit Objectives
• Corrective Actions & Remediation Status
• Audit Committee Goals & Highlights

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The School Board of Brevard County, Florida The School Board of Brevard County, Florida

DISTRICT STAFF AUDIT COMMITTEE INTERNAL AUDITORS

SBBC Financial Oversight “…working ng togethe her to m maint ntain a n and nd inc ncrease pu publ blic conf nfidenc nce with t h the he fiscal and nd admini nistrative respo pons nsibi bilities of t the he S Scho hool Boa

• ard of
• f B

Brevard C Cou

• unty.”

EXTERNAL AUDITORS

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The School Board of Brevard County, Florida

Audit Committee Members

• Art Edwards, Chair

District 1

• Wally Majid

District 2

• Nicole Colbert, Vice-Chair

District 3

• Don Lusk

District 4

• Jim Slate

District 5

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FY 2018-19

• Tina Descovich, School Board Chair

Ex-Officio FY 2019-20

• Misty Belford, School Board Chair

Ex-Officio

The Audit Committee’s authorization to operate is provided in School Board Policy 6700 – Audit Committee and School Board Policy 6705 – Charter of Internal Audit.

The School Board of Brevard County, Florida

The School Board of Brevard County, Florida

Audit Committee Members

• Art Edwards, Chairman – Retired Aerospace Corporate Safety Manager. Background

includes Engineering, Construction-General Contractor, Project Management and Safety. Presently, Senior Partner in a Safety Consulting firm and President/CEO Edwards Media

• Group. Audit Committee member for over 12 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. Audit Committee member for 7 years.
• Nicole Colbert, Vice Chairman – Controller with 15+ years of experience in public and

private industry accounting. Working in construction and development, she has supervised jobs from high-tech industrial manufacturing facilities to restaurant build-

• uts, with her primary focus being financial advisory and construction/real estate
• development. Audit Committee member for 3 years.
• Wally Majid – Retired Mechanical Engineer with over 28 years of experience in the

aerospace industry, having worked for United Space Alliance and Lockheed Martin. He has received numerous awards for his work on the Space Shuttle program.

• Jim Slate – Accounting/Finance professional with 40 years experience, including Internal

Audit and Compliance. Certified Public Accountant in the State of Florida.

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The School Board of Brevard County, Florida

The School Board of Brevard County, Florida

Reporting Structure

School Board of Brevard County

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Citizens of Brevard County

Superintendent District Cabinet Audit Committee Internal & External Audit School Board Attorney Quality Control*

* Quality Control reports to the District’s Chief Financial Officer

The School Board of Brevard County, Florida The School Board of Brevard County, Florida

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External Auditors

• In 2014, the Audit Committee’s 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 in 2014, including four optional
• ne-year extensions.
• Florida Auditor General (AG) is responsible for performing an external

audit every three years. The AG is currently auditing FY2019.

• The Audit Committee has previously recommended that the Board

exercise one-year options to facilitate the Auditor General working in concert with the External Auditor for a streamlined audit process. This action has proven very beneficial.

• In October 2019, Moore Stephens Lovelace, P.A. provided the District

an unqualified or “clean” audit opinion for the 2019 fiscal year. Audit Committee members completed a fraud awareness questionnaire as part of the audit process.

The School Board of Brevard County, Florida

Internal Auditors

• In 2018, the Audit Committee’s recommended to the School Board

that RSM US LLP be selected as the District’s internal auditor. The recommendation was the culmination of an extensive RFP process.

• A three-year contract was awarded with three optional one-year

extensions based on recommendation by the Audit Committee. The initial term of the contract ends in July 2021.

• Fiscal year 2019-20 total budget was Board approved at $199,500

for Internal Audit services and $116,625 for Internal Accounts

• services. The Internal Auditors have historically met all Audit

Committee requests with no budget changes.

• The Internal Auditors provide regular reporting at quarterly Audit

Committee meetings. The Internal Auditors also provide timely response to special requests for audits.

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The School Board of Brevard County, Florida

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”.

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Moderate Exposure High Exposure Low Exposure Moderate Exposure

Risk Impact Likelihood of Occurrence

Risk Coverage Self-assessment/ rotational Risk Coverage High priority Risk Coverage Periodic Risk Coverage Monitoring only

The School Board of Brevard County, Florida

As an int nterna nal a l audit dit f functio ion d n develo lops a and m d matur ures es, t the he vario ious us t types pes o

• f audit

dits p performed wi will m move t thr hrough h a lifec ecycle le of the c he control e l envir ironment i in orde der t to n not o

• nly

ly stren engthen a n and e d enha nhance processes es a and d controls ls, but ut a also t to f facilit litate strategy, d decis isio ion-making ing a and l d long ng-term p plann nning.

• ing. T

The v he vario ious us t type pes o

• f a

audit dits that a are p e propo posed h ed have i inclu luded ed a a hybr brid id mix o

• f a

audit dit t type pes, a as shown belo elow.

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The School Board of Brevard County, Florida

Internal Audit Universe

See handout

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The School Board of Brevard County, Florida

Internal Audit Focus

• District-Wide Audits
• Individual Function Audits
• Cycle Audits
• Follow-up Audits
• Additional Internal Audit Projects

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The School Board of Brevard County, Florida

Follow-up Audits

• 1. Follow-up audits are required by the Institute of Internal

Auditors’ International Standards for the Professional Practice of Internal Auditing (Performance Standard #2500).

• 2. Follow-up audits objectives are to determine if:
• Open issues from previous audit reports have been

properly remediated

• Management actions have either been effectively

implemented OR

• Senior management has accepted the risk of not taking

action

• 3. The intent of follow-up audits is to validate, on a sample

basis, the effectiveness of the remediated controls of previously reported open issues.

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The School Board of Brevard County, Florida

District-Wide Audits

• 1. District-wide audits address processes and/or functions that:
• Touch all District departments or
• Touch most departments within the District
• 2. District-wide audits are designed to gain economies of scale by:
• Taking a District-wide view
• Evaluating the implementation of policies, procedures, and

standards as well as Best Practices across the District as a whole

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.

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The School Board of Brevard County, Florida

Individual Function Audits

• 1. Individual Function audits focus on unique scenarios or

processes within a specific department.

• 2. Individual Function audits may also focus on unique

scenarios or processes within several departments (but not target all departments in the District). For example: A Purchasing Card audit of Food Services would focus on the risks and controls for transactions related only to Food Services.

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The School Board of Brevard County, Florida

Cycle Audits

• 1. Cycle audits are narrower in scope than District-wide and

Individual Function audits.

• 2. The scope of a Cycle audit will be very specific to

inherently high-risk, decentralized functions and processes.

• 3. Generally, Cycle audits provide testing and reassurance

that:

• Policies and procedures are being followed within

different departments.

• Controls continue to be effective once it has been

determined that they have been appropriately designed and implemented. For example: Property Control

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The School Board of Brevard County, Florida

Additional Internal Audit Projects

• 1. Internal Audit Projects focuses internal audit

resources on areas or functions that are (1) high exposure and (2) high priority based on Risk Ranking.

• 2. Internal Audit Projects address

situations/potential situations (outside of the existing audit plan) that the Board, Audit Committee or Management may become aware of.

• 3. Internal Audit Special Projects and Requests are

generally specifically defined and narrowly focused.

For example: Eau Gallie HS, Transportation Department

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The School Board of Brevard County, Florida The School Board of Brevard County, Florida

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FY 2018-19 Internal Audits Completed

 Overall Follow-Up

District-Wide:

HR Recruitment and Onboarding  Information Technology Data Protection

Individual:

 Half Cent Sales Surtax – Round 6  Half Cent Sales Surtax – Round 7

 Additional Audit Projects:

 Internal Accounts – FY 2018  Specific Review - Pharmacy

Benefits Manager Bid Award 18-P-069-WH

 Investigation of Specific

Allegations Related to Whistleblower Complaint WB 18-001

 Fraud Awareness

 Completed ■ In progress



Not yet started

Follow-up

The School Board of Brevard County, Florida The School Board of Brevard County, Florida

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FY 2019-20 Internal Audits Completed

 Overall Follow-Up

District-Wide:

 Purchasing

• Internal/External Penetration

Testing

Individual:

 Legacy Academy  Half Cent Sales Surtax – Round 8  Half Cent Sales Surtax – Round 9

 Additional Audit Projects:

 Internal Accounts – FY 2019

 Fraud Awareness

 Completed ■ In progress



Not yet started

Follow-up

The School Board of Brevard County, Florida The School Board of Brevard County, Florida

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• 170 audits completed since inception of Audit Committee in FY2000:
• 35 Cycle Audits
• 36 District-Wide Audits
• 70 Individual Audits covering significant High-Risk Areas including

Internal Accounts

• 29 Additional Audit Projects
• Follow-up procedures are conducted and reported to the Audit

Committee.

• 377 total corrective actions have been reported since the inception of

Audit Committee.

• 98% of total corrective actions have been validated and closed through

the Formal Follow-up Process.

• Significant improvements have been gained through sharing of Lessons

Learned & Best Practices across the District.

Corrective Actions & Remediation Status

The School Board of Brevard County, Florida The School Board of Brevard County, Florida

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Audit Committee Goals & Highlights

• Annual half day off-site workshop and training was conducted

September 5, 2019. The next off-site training is scheduled for September 3, 2020.

• Annual Evaluations of the Internal Auditors and External Auditors.
• Documentation of External Audit RFP process completed in late 2014.
• Revisited the RFP process for 2018 Internal Audit procurement.
• Internal Audit and External Audit contract recommendations to the

Board.

• Continued improvements in the Audit Committee’s function achieved by

identifying, prioritizing, and managing Action Items.

• Sensitivity maintained to “Opportunities for Improvement”.
• Half-Cent Sales Tax Accountability supported as needed.
• Audit Committee Charter to be updated to include Internal Audit &

Quality Control Interfaces.

• 100% completion of Goals & Objectives.

The School Board of Brevard County, Florida

Questions

?

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