The School Board of Brevard County, Florida The School Board of Brevard County, Florida FY 2019-20 MID-TERM REPORT Audit Committee Activities Art Edwards Audit Committee Chairman March 12, 2020 1
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 2
The School Board of Brevard County, Florida The School Board of Brevard County, Florida AUDIT COMMITTEE EXTERNAL INTERNAL AUDITORS AUDITORS DISTRICT STAFF 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 oard of of B Brevard C Cou ounty.” 3
The School Board of Brevard County, Florida 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 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. 4
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- outs, 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. 5
The School Board of Brevard County, Florida Reporting Structure Citizens of Brevard County School Board of Audit School Board Brevard County Committee Attorney Superintendent District Cabinet Internal & External Audit Quality Control* * Quality Control reports to the District’s Chief Financial Officer 6
The School Board of Brevard County, Florida The School Board of Brevard County, Florida 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 one-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. 7
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. 8
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”. Moderate High Exposure Exposure Risk Impact Risk Coverage Risk Coverage Periodic High priority Low Exposure Moderate Exposure Risk Coverage Risk Coverage Self-assessment/ Monitoring only rotational Likelihood of Occurrence 9
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 of 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 only 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 of a audit dits that a are p e propo posed h ed have i inclu luded ed a a hybr brid id mix o of a audit dit t type pes, a as shown belo elow. 10
The School Board of Brevard County, Florida Internal Audit Universe See handout 11
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 12
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. 13
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. 14
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 . 15
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 16
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