Audit Committee Activities at The School Board of Brevard County, Florida

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida FY 2021-2022 MID-TERM REPORT Audit Committee Activities Art Edwards Audit Committee Chairman April 27, 2022 1

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida FY 2021-22 MID-TERM REPORT SBBC Financial Oversight Audit Committee Members Reporting Structure External Auditors Internal Auditors Internal Audit Implementation Internal Audit Universe Internal Audit Focus 2021 Highlights - Internal Audits Completed 2022 Internal Audit Objectives Corrective Actions & Remediation Status Audit Committee Goals & Highlights 2

schoolbd.gif (10287 bytes) schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida AUDIT COMMITTEE EXTERNAL AUDITORS INTERNAL AUDITORS DISTRICT STAFF SBBC Financial Oversight working together to maintain and increase public confidence with the fiscal and administrative responsibilities of the School Board of Brevard County. 3

schoolbd.gif (10287 bytes) schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida Audit Committee Members Art Edwards, Chair Vicki Mace Nicole Colbert, Vice-Chair Don Lusk Jim Slate District 1 District 2 District 3 District 4 District 5 FY 2021-22 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. 2 4

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida Audit Committee Members Art Edwards, Chairman RetiredAerospace 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. Committee member for over 13 years. Don Lusk RetiredCounty 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. Committee member for 8 years. Nicole Colbert, Vice Chairman Controllerwith 15+ years of experience in public/private industry accounting. Working in construction and development, 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. Committee member for 4 years. Vicki Mace Retired educator with over 30 years of experience with BPS. Extensive experience with charter school law, evaluation and oversight as well as leadership, strategic planning, and operations expertise. Serves as a consultant to other school districts on charter school processes. Committee member since April 2020. Jim Slate Accounting/Finance professional with 40 years experience, including Internal Audit and Compliance. Certified Public Accountant in the State of Florida. Committee member since December 2019. 5

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida Reporting Structure Citizens of Brevard County School Board of Brevard County Audit Committee School Board Attorney Superintendent District Cabinet Internal & External Audit 6

schoolbd.gif (10287 bytes) schoolbd.gif (10287 bytes) 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, (MSL) P.A. to be selected as the District s external auditor was the culmination of an extensive RFP process. MSL performed superbly on the base three-year contract and as a results MSL was awarded four optional one-year extensions. The Florida Auditor General (AG) is responsible for performing an external audit every three years. The most recent AG audit was for FY2019. Based on a 2016 recommendation from the Audit Committee, the BPS Board has exercised one-year options to engage MSL to work with the Auditor General in conjunction with the AG 3-year Audits. This arrangement has proven to be beneficial to both BPS and the Auditor General. External Audits have been thorough and timely. MSL provided the District with an unqualified ( clean ) audit opinion for the 2021 fiscal year. Audit Committee members completed a fraud awareness questionnaire as part of the Internal Audit process. 7

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida Internal Auditors In 2018, the Audit Committee 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 the recommendation of the Audit Committee. Because of RSM s sustained outstanding performance, in July 2021 the Audit Committee recommended execution of the first year of the three one-year options (of the 2018 contract). The Internal Audit services contract for Fiscal year 2021-22 was approved by the BPS Board for $199,500. The Internal Accounts services contract was approved for $116,625.00. 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

schoolbd.gif (10287 bytes) 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 Moderate Exposure Exposure High Exposure High Exposure Risk Impact Risk Impact Risk Coverage Risk Coverage Periodic Risk Coverage Risk Coverage High priority Low Exposure Low Exposure Moderate Moderate Exposure Exposure Risk Coverage Risk Coverage Self-assessment/ rotational Risk Coverage Risk Coverage Monitoring only Likelihood of Occurrence Likelihood of Occurrence 9

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida As an internal audit function develops and matures, the various types of audits performed will move through a lifecycle of As an internal audit function develops and matures, the various types of audits performed will move through a lifecycle of the control environment in order to not only strengthen and enhance processes and controls, but also to facilitate the control environment in order to not only strengthen and enhance processes and controls, but also to facilitate strategy, decision strategy, decision- -making and long making and long- -term planning. The various types of audits that are proposed have included a hybrid term planning. The various types of audits that are proposed have included a hybrid mix of audit types, as shown below. mix of audit types, as shown below. 10

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida Internal Audit Universe See handout 11

schoolbd.gif (10287 bytes) 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

schoolbd.gif (10287 bytes) 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

schoolbd.gif (10287 bytes) 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

schoolbd.gif (10287 bytes) 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

schoolbd.gif (10287 bytes) 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

schoolbd.gif (10287 bytes) 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: 2011 Maintenance Department Allegations; 2019 Legacy Academy Closeout; 2020 Health Care & Wellness Analysis; 2020 Adult & Community Education Operations 17

schoolbd.gif (10287 bytes) schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida FY 2020-21 Internal Audits Completed Follow-Up Overall Follow-Up District-Wide: Timekeeping Cycle Audit Information Technology Security Adult Education Individual: Half Cent Sales Surtax Round 10 Half Cent Sales Surtax Round 11 Additional Audit Projects: Internal Accounts FY 2021 Completed In progress Not yet started 18

schoolbd.gif (10287 bytes) schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida FY 2021-22 Internal Audits Completed Follow-Up Overall Follow-Up District-Wide: Timekeeping Cycle Audit Information Technology Security Stimulus Funds Individual: Half Cent Sales Surtax Round 12 Half Cent Sales Surtax Round 13 Additional Audit Projects: Internal Accounts FY 2022 Completed In progress Not yet started 19

schoolbd.gif (10287 bytes) schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida Corrective Actions & Remediation Status 193 audits completed since inception of Audit Committee in FY2000: - 37 Cycle Audits - 44 District-Wide Audits - 79 Individual Audits covering significant High-Risk Areas including Internal Accounts - 33 Additional Audit Projects Follow-up procedures are conducted and reported to the Audit Committee. 391 total corrective actions have been reported since the inception of Audit Committee. 97% 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. 20

schoolbd.gif (10287 bytes) schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida The School Board of Brevard County, Florida Audit Committee Goals & Highlights Annual half day workshop and training was conducted September 23, 2021. next training is scheduled for Fall 2022. Annual Internal Auditor Performance and External Auditor Annual Performance Evaluations are performed at the Annual Workshop. The Audit Committee is currently revisiting the Annual Evaluation Process The External Audit RFP Process & Internal Audit RFP Process were both completed in late 2018 for new 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 . 100% completion of 2020-21 Goals & Objectives. The Audit Committee is making plans to revisit the Audit Committee Charter for Improvement Recommendations 21

schoolbd.gif (10287 bytes) The School Board of Brevard County, Florida Questions ? 22