The Audit Board of the City of Orlando met on Friday, January 20, 2006 in conference Room R on the second

Accesspoint Lab Image

Informations

• Publié par: Ucte
• Nombre de lectures: 12
• Langue: English

Extrait

The Audit Board of the City of Orlando met on Wednesday, August 27, 2008 in Conference RoomRon the second floor of Orlando City Hall. B OARD M EMBERS :  JudithK. Welch, ChairPresent [5/0]  KennethScearce, Vice ChairPresent [5/0]  GregoryA. TateAbsent [5/2]  W.Neal CarrisPresent [4/0]  LyndaM. DennisPresent [3/0] O THERS P RESENT :  RebeccaW. Sutton, Chief Financial Officer  MayanneDowns, City Attorney  DeborahD. Girard, Deputy Chief Administrative Officer  RaymondM. Elwell, Deputy Chief Financial Officer  ConradC. Cross, Chief Information Officer  BerylH. Davis, Director, Office of Audit Services & Management Support  WilliamMummert, Controller  MichaelPattillo, Audit Partner, Ernst & Young  MichelleMcCrimmon, Senior Manager, Ernst & Young  AnnetteMadden, Recording Secretary 1. O PENING R EMARKS Chair Judith Welch called the meeting to order at 1:05 p.m. 2. A PPROVAL OF M INUTES Ms. Welch requested comments or questions on the minutes of the June 26, 2008 meeting. Motion was made by Ms. Dennis and seconded by Mr. Carris to approve the minutes as written. The motion was approved. 3.R EPORTING S TRUCTURE FOR THE O FFICE OF A UDIT S ERVICES &M ANAGEMENT S UPPORT –M AYANNE D OWNS ,C ITY A TTORNEY Ms. Downs stated that the Office of Audit Services & Management Support was previously under the Chief of Staff in the Mayor’s Office. She stated that as a part of the process of reviewing where certain operations were aligned within the City, it was determined that there was a natural affinity for Audit in theCity Attorney’s Office. Ms. Downs stated that Ms. Davis continues to head the Office of Audit Services and Management Support and that the relationship of the Office to the Audit Board will not change. She stated that it is important to note that the Board’s relationship with the external auditors also would not change. Ms. Downs stated that she was pleased to have had the opportunity to learn more about what the Office does and of the integrity Ms. Davis and her staff bring to bear when they perform their work and the deep pride they have in the independence and the caliber of work. Ms. Downs explained the effect that budget challenges have had on the City. She stated that a combination of trends over the past years, together with the amendments most recently passed affected the City adversely. She explained that the budget being presented to the City Council during the next two meetings is one that if passed, is a blend of cuts, efficiencies, management of attrition, together with a modification of the tax burden.

Page 2

Ms. Downs stated that the City is attempting to ensure that it receives the maximum value for its expenditures and in that regard determined the need for an increased focus on revenue enhancing activities in the Office of Audit Services and Management Support. In addition to this increased focus on revenue enhancement, the Office will also focus on studying the way the City administers its contracts in order to develop a formal process to ensure that the City is positioned to secure opportunities and is protected from liability. Discussion ensued and the Board posed several questions. Ms. Dennis asked about Economic Development Qualified Targeted Incentives, specifically employment incentives, and whether this area is audited. Ms. Girard stated she would research her questions and report to the Board at its next meeting. Mr. Carris asked about how the external auditor viewsAudit’s reporting to the City Attorney’s Office. Mr. Pattillo stated thatin government there is typically a dotted line for an internal audit function to some administrative arm. He stated that it does not strike him as problematic and there may a benefit. Mr. Pattillo stated that it is important thatAudit’s reporting is unfettered to the Mayor and ultimately to the Council. Ms. Davis stated that City Policies & Procedures state that the Office reports to the Mayor. Ms. Downs stated that one of the things the City needs to do in the next year is to review its policies and ensure they are clearly stated. Ms. Sutton entered the meeting at 1:30 p.m. Ms. Dennis stated that the increased focus internally on controlling costs and generating revenues could cause a heightened risk for fraud. She asked Mr. Pattillo, Audit Partner, if he was aware of the effect these changes could have on the audit risk and he said yes. Ms. Downs left the meeting at 1:40 p.m. 4.C ONTROLS A FFECTING M AJOR A PPLICATIONS –C ONRAD C ROSS ,C HIEF I NFORMATION O FFICER Mr. Cross distributed an update of the Audit of Information Systems General Controls report, which outlines the progress Technology Management (TM) has made as a result of the audit by LBL Technologies and the timetable for implementing the recommendations. Mr. Cross stated that the report lists the concerns from the audit report sorted by priority. Mr. Cross stated that the recommendation of highest priority related to the Employee Termination Notification Policy. He stated that TM now receives a report from Human Resources when someone is dismissed so that their access is terminated timely. TM is working with Human Resources to develop a policy related to this issue. Ms. Welch requested that Mr. Cross address what TM’s plans are with respect to intrusion detection or network vulnerability testing. Mr. Cross stated that TM has contacted vendors and is in the process of receiving information from them.Ms. Welch asked how the budget would affect TM’s ability to complete this work and Mr. Cross stated that the City is currently discussing costs with the vendors. Ms. Sutton stated that this would seem to be high on the priority list and that if this could not be covered by the amount set aside in the current budget, the City may have to phase the project in over a number of years. Ms. Welch said that the report states that TM concurs with 23 of the 26 recommendations. At Ms. Welch’s request,Mr. Cross reviewed the three recommendations with which TM did

Page 3

not concur and explained that they were related to areas TM did not believe to be of high risk or where implementation was not feasible or justified. Discussion ensued regarding the LBL recommendation that vendors with City access be required to submit SAS-70 reporting. Mr. Cross stated that the City does not typically outsource, and therefore in the past this was not required. He stated that in the future, TM will request that Purchasing include this requirement when they solicit bids for outsourced services. There was discussion about LBL’s ranking of the City of Orlando as being above the “average government.” Mr. Cross stated he felt good aboutthat ranking. He explained that an organization moves further up the scale based on its documentation of processes. Ms. Welch asked Mr. Cross about his reaction to the report. Mr. Cross stated that he believes the report was fair and the process included healthy discussions between TM and the auditors. Mr. Cross stated that he would be happy to answer additional questions the Board has and encouraged them to email him. 5.B UDGET U PDATE P RESENTATION –R AY E LWELL ,D EPUTY C HIEF F INANCIAL O FFICER Mr. Elwell distributed copies of the FY 2007/08 Fund Status Report as of July 31, 2008 and updated the Board. He reported that to date the City spent approximately 80% of the General Fund budget while the year-to-date target is 83%. Mr. Elwell stated that based on current numbers the City will be under budget for the General Fund as a whole. Mr. Elwell stated that half the General Fund budget is allocated to the two major departments, Police and Fire. He stated that the report for the Orlando Fire Department indicates they are slightly above their spending target. Mr. Elwell stated the Fire Chief has taken steps to curtail any unnecessary spending in order to stay within the budget for the year. Mr. Elwell stated that the budget for the Orlando Police Department is a little below the target and based on their expenditures, they will be very close to budget. Overall, staff is projecting that on the expenditure side, the General Fund will be under budget for the year. Mr. Elwell stated that the City has almost fully collected property taxes for the year and has essentially received all of its anticipated tax revenue for the year. He referenced the interest on delinquent taxes and noted that this is a good economic indicator. The City has collected double the amount of interest on late property taxes than was anticipated, which is a reflection of individuals not paying on time requiring them to pay a penalty on their property taxes. Mr. Elwell stated that the City is concerned with trends in State revenue sharing and State sales tax.He stated that the City’scollections in both categories are lower than budget estimates. On the positive side, the City is exceeding its estimates for income on investments, helping to offset the decline in sales tax. He stated that the City will succeed in reaching the General Fund revenue goal. Discussion ensued regarding the planned increase in the millage rate for the City of Orlando, and howthe City’srevenues would be affected. Mr. Elwell asked the Board to email him with any additional questions. He stated he would be happy to provide explanations to any items in the monthly reports. The Board took a break at 2:25 and the meeting reconvened at 2:30 p.m.

Page 4

6.O VERVIEW OF R ECENT A CCOUNTING P RINCIPLES –R AY E LWELL Mr. Elwell stated that Ernst & Young would address the issue of Accounting Principles and he would incorporate comments along with Ernst & Young’s presentation.Mr. Pattillo stated that Ernst & Young meets regularly with City Accounting staff regarding accounting issues. Hestated that most of the current accounting issues would be addressed during his presentation, however, unanswered questions would be responded to by E&Y and City staff. 7.R EVIEW E XTERNAL A UDIT P LAN –M IKE P ATTILLO ,A UDIT P ARTNER ,E RNST & Y OUNG Mr. Pattillo distributedBoardMatters Quarterlyto the Board, a publication for audit committees,and drew the Board’s attention tothe cover article:Uncertain times–Areas of concern for the Audit Committeewhich he thought would be of particular interest to the Audit Board. Mr. Pattillo reviewed Ernst & Young’s City of Orlando 2008 Audit Plan.He explained the scope of the audit and stated that when E&Y meets with the Board at the conclusion of the audit he would like to review the listing of deliverables to illustrate where E&Y has delivered the required element. He stated that E&Y would express opinions on the basic financial statements of the City, meeting the requirements of Florida Statutes and the Rules of the Auditor General. He noted that they would also issue opinions on the financial statements of the City’s three pension funds.He stated that the audit is conducted under Generally Accepted Government Auditing Standards and noted that certain reports must be issued on compliance and internal control because of these standards. Mr. Pattillo highlighted other major areas of the audit. Mr. Pattillo stated that the engagement team is the same core executive team who worked on the City’s audit forthe last couple of years, providing continuity. He stated that the timeline remains essentially the same as in past years. Mr. Pattillo provided an overview of E&Y’s audit methodology, noting the important matters for consideration in planning the audit. He stated that E&Y studied the business and industry risk considerations, including general economic conditions and property tax reform as well as large projects underway in the City, notably, the venues. He stated E&Y is reviewing the tri-party agreements and has had discussions with City management to ensure understanding. Mr. Pattillo reported on accounting and audit developments, highlighting those which affect the City of Orlando this year. He stated that he is comfortable that the City has plans in place to implement GASB 43-45, related to other post employment benefits. He reported that GASB Statement No. 48, related to sales and pledges of receivables and future revenues and intra-entity transfers of assets and future revenues, does not have significant impact on the City and that the City has already disclosed most of the required information. Mr. Pattillo reported that GASB Statement No. 49 is scheduled for FY 09 implementation and concerns pollution remediation obligations. He stated that E&Y is not aware of anything of significance in this area and noted that E&Y discussed this with City management who is working with legal and operating departments to ensure that they determine any of these potential obligating events. Ms. Sutton left the meeting at 3:00 p.m.

Page 5

Mr. Pattillo addressed the required communication under Government Auditing Standards, which is unchanged from the prior year. 8.A UDIT S ERVICES &M ANAGEMENT S UPPORT U PDATE –B ERRI D AVIS ,D IRECTOR , O FFICE OF A UDIT S ERVICES &M ANAGEMENT S UPPORT Ms. Davis reported on the summary ofPast Due Recommendations.She referred to those that have scheduled dates for implementation in November or December. Ms. Davis also reported that in some of the cases, processes have been established, but policies have not yet been updated to indicate full implementation. She stated the Office is comfortable that the internal controls are in place, however, the official documentation in City Policy is not yet complete. Ms. Davis stated that overall, the Office does not believe there is any significant risk to the City in having these recommendations outstanding. Ms. Davis stated that the open“hotline”item relates to an allegation of possible wasteful purchases in the Wastewater Division.She stated that the Office conducted an investigation analyzing the Procard purchases and concluded that no fraud has occurred, however, a number of internal control issues were identified relating to purchases. Ms. Davis reported on completed projects, stating that four reports were issued. She provided details for the Follow-up–Streets Maintenance and Construction; Code Enforcement Management Study; Follow-up-Parking Division–Event Parking; and Follow- up–Payments to Law Firms. Ms. Davis reported that approximately $300,000 in revenues has been collected to date through theOffice’srevenue auditing function. She reported that this satisfies the Office goal, however, Ms. Davis stated that an audit of Progress Energy is still in progress and once issues are resolved should bring the revenue collections above the annual goal. Ms. Davis reported on Projects in Progress or Not Started for the fiscal year providing details on each. Ms. Davis stated that the FY09 Operations Plan illustrates that the Office will focus heavily on revenue enhancement opportunities. She stated that the Office developed a preliminary list of the different types of revenue opportunities that may be available and she highlighted some examples.Ms. Davis stated that the Office will continue to perform utility tax and roll-off audits. She reported that the Office will conduct a revenue analysis of existing contracts to ensure that the City collects revenues due when appropriate. Other highlights of the FY 09 Operations Plan were discussed. Mr. Elwell left the meeting at 3:20 p.m. Ms. Welch asked how much additional revenue the City wants the Office to find and Ms. Davis answered that in the past, the Office calculated its revenue goal based on three times the cost of staff salaries and benefits dedicated to revenue activities. She stated that the Office has not yet determined the new goal. She pointed out that FY 09 projects include engagements to enhance revenue opportunities. However, anychanges to the City’s fee structures will take time and thus any new revenue collections will probably come to fruition a year or two in the future. Mr. Pattillo and Ms. McCrimmon left the meeting at 3:25 p.m.

Page 6

9.R EVIEW S ELF -E VALUATION OF A UDIT B OARD –J UDY W ELCH Ms. Welch stated that at the last meeting Ms. Dennis agreed tomodify the Board’s Self- Assessment Questionnaire for next year, tailoring it to the actual responsibilities and activities of the Board. Discussion ensued on specific questions and possible alterations and whether some responsibilities might be outside the Board’s scope. Ms. Girard stated that with the creation of the City’s Finance Committee,she believes that certain areas may now fall under the responsibility of the Finance Committee. Discussion ensued and Ms. Girard stated she would discuss this with the City Attorney and the Chief Financial Officer and report back to the Board. Ms. Welch explained that Ms. Dennis is going to revise the self assessment questionnaire for next year so it will be more pertinent to the Audit Board. Ms. Girard asked Ms. Dennis what the timeframe for completing this project was and Ms. Dennis replied that Ms. Girard could report back on her conversations within the next six months. Further discussion and comment continued to assist Ms. Dennis in her task. 10.D ISCUSS A NNUAL A GENDA /M EETING D ATES –J UDITH W ELCH Ms. Welch stated that the Board discussed attaching the Audit Board’scalendar to the final minutes of the fiscal year to show its planned activities for the next fiscal year. Ms. Welch suggested the title to the Audit Board checklist be revised as follows:“Planned Calendar for October 1, 2008–September 30, 2009.”Discussion followed. The Board agreed to change the calendar to reflect individual meetings as follows: City Attorney–November, and Chief Financial Officer–January. The next meeting of the Audit Board is scheduled as follows:  Monday,November 24, 20081:00 p.m.Conference Room R There being no other business, the meeting adjourned at 3:55 p.m. Respectfully submitted, Judith WelchAnnette Madden Chair RecordingSecretary