FY2015-16 ANNUAL & FY2016-17 MID-TERM REPORT Audit ...eagendatoc.brevardschools.org/03-08-2017 Joint... · 3/8/2017 · The School Board of Brevard County, Florida FY2015-16 ANNUAL

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

FY2015-16 ANNUAL & FY2016-17 MID-TERM REPORT

Audit Committee Activities

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Art EdwardsAudit Committee ChairmanMarch 8, 2017

http://www.brevard.k12.fl.us/


FY 2015-16 ANNUAL REPORT SBBC Financial Oversight

Audit Committee Members

Reporting Structure

External Auditors

Internal Auditors

Internal Audit Implementation

Internal Audit Universe

Internal Audit Focus

2016 Highlights - Internal Audits Completed

2017 Internal Audit Objectives

Corrective Actions & Remediation Status

Audit Committee Goals & Highlights2



DISTRICTSTAFF

AUDITCOMMITTEE

INTERNALAUDITORS

SBBC Financial Oversight“…working together to maintain and increase public confidence

with the fiscal and administrative responsibilities of the School Board of Brevard County.”

EXTERNALAUDITORS

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http://www.brevard.k12.fl.us/http://www.brevard.k12.fl.us/

The School Board of Brevard County, Florida

Audit Committee Members Art Edwards, Chairman District 1 Don Lusk District 2 Nicole Colbert District 3 Frank Zilaitis District 4 Malak Hammad District 5

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FY 2015-16 Andy Ziegler, School Board Chair Ex-Officio

FY 2016-17 Misty Belford, School Board Chair Ex-Officio

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




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 11 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 6 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 2 years.

Frank Zilaitis - JD, MBA, MSEE, BSEE. Attorney/Owner - Zilaitis Law, P.A. Audit Committee member for almost 6 years.

Malak Hammad - Vice-President with PNC Bank. She has been a banker for over 20 years and the recipient of numerous "Women of Achievement" awards. She serves in multiple charitable organizations to make a positive impact on Brevard County. Audit Committee member for 2 years.

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Reporting Structure

School Board of Brevard County

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Citizens of Brevard County

Superintendent

School Board

Management & Staff

Audit

Committee

Internal &

External

Audit

School Board

Attorney



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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 with four optional one-year extensions. The Audit Committee has a key role in extension recommendations. The initial term of the contract will end December 31, 2017. Execution of the four one-year options would extend the contract to December 31, 2021. In 2015, the Audit Committee recommended to the Board to exercise the first one-year option, so that the Auditor General could work in concert with the External Auditor for a streamlined audit process.

In October 2016, Moore Stephens Lovelace, P.A. provided the District an unqualified [highest level] audit opinion for the 2015 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; last AG Audit FY2016 , the next AG audit will be in FY2019.



Internal Auditors In 2007, the Audit Committee’s recommendation to the School

Board for RSM US LLP (formerly McGladrey LLP) to be selected as the District’s internal auditor was the culmination of an extensive RFP process.

A three year contract was awarded with two optional one-year extensions based on recommendation by the Audit Committee. The initial term of the contract ended June 30, 2014. The optional extensions have been exercised and an engagement letter for services through December 31, 2017 was approved by the Board on May 24, 2016. Internal Audit firm selection is a 2017 priority.

Fiscal year 2016-17 budget was Board approved at $199,500. Internal Auditors have 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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Internal Audit Implementation

Functions with High Exposure and High Priority are included in the auditplan – these are areas that “keep senior leadership and the Board awakeat night”.

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Moderate

Exposure

High Exposure

Low Exposure Moderate

Exposure

Risk

Im

pac

t

Likelihood of Occurrence

Risk Coverage

Self-assessment/rotational

Risk Coverage

High priority

Risk Coverage

Periodic

Risk Coverage

Monitoring only



Internal Audit Universe

See handout

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Internal Audit Focus

• Follow-up Audits

• District-Wide Audits

• Individual Function Audits

• Cycle Audits

• Additional Internal Audit Projects

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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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District-Wide Audits1. 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.



Individual Function Audits

1. Individual Function audits focus on unique scenarios or processes within a specific department.

For example: A Purchasing Card audit of Food Services would focus on the risks and controls for transactions related only to Food Services.

2. Individual Function audits may also focus on unique scenarios or processes within several departments (but not target all departments in the District).

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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. For example:

- Full-Time Equivalent (FTE)- Property Control, etc.

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.

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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, the 2014 audit of the WHI Pharmacy Claims was done by special request.

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FY 2016 Internal Audits Completed

Follow-up, including Property Control

District-Wide:Purchasing Cards

Educational Technology – Internal and External Security Follow-up

Individual:Communications – Advertising

Revenue

Cycle Audits:Full-Time Equivalent Student

Membership

Property Control

Additional Audit Projects:Self Insurance

Before and After School Care

Internal Accounts – FY 2015

Fraud Awareness

Completed

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2017 Internal Audit Plan

District-Wide:

Business Continuity Planning

ERP Software Implementation

Individual:

Half Cent Sales Surtax- June 30, 2016

Half Cent Sales Surtax-November 30, 2016

Cycle Audits: Property Control

Additional Audit Projects: Self Insurance Claims Before and After School Care Internal Accounts – FY 2016

Transportation- Inventory, Fuel and Purchasing Card Procedures

Fraud Awareness

Completed■ In progress

Not yet started

Follow-up



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145 audits completed since inception of Audit Committee in FY2000:- 34 Cycle Audits- 33 Entity-Wide Audits- 59 Individual Audits covering significant High Risk Areas including

internal accounts- 19 Special Requests

Follow-up procedures are conducted and reported to the Audit Committee.

362 total corrective actions have been reported since the inception of Audit Committee.

94% 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.

Corrective Actions & Remediation Status



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Audit Committee Goals & Highlights Annual half day off-site workshop and training was conducted

September 2016 . The next off-site training is scheduled for September 22, 2017.

Process developed for Annual Evaluations of the Internal Auditors and External Auditors.

Documentation of Audit RFP process completed in late 2014.

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.

100% completion of Goals & Objectives.



Questions

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Documents

FY2015-16 ANNUAL & FY2016-17 MID-TERM REPORT Audit ...eagendatoc.brevardschools.org/03-08-2017 Joint... · 3/8/2017 · The School Board of Brevard County, Florida FY2015-16 ANNUAL