meeting agenda audit and finance committee agenda …

Meeting Agenda

AUDIT AND FINANCE COMMITTEE AGENDA 2018-06-13.PDF

Meeting Notes And Materials

AUDIT AND FINANCE COMMITTEE MATERIALS 2018-06-13.PDFAUDIT AND FINANCE COMMITTEE NOTES 2018-06-13.PDF

1.

Documents:

1.I.

Documents:

http://va-chesterfieldcounty.civicplus.com/23c4d7c1-b275-43e9-9ae2-75efe3c7d132

Audit and Finance Committee Meeting Agenda

DATE: June 13, 2018 Time: 10:30 am Location: Room 502

Attendees: Steve Elswick Chris Winslow John Erbach Dr. Javaid Siddiqi Dr. Joe Casey

Rusty Fairheart Matt Harris Allan Carmody Mary Martin-Selby Greg Akers

Meghan Coates Christina Berta Nita Mensia-Joseph

ITEMS TO BE DISCUSSED: Item Person

Responsible Outcome

1. External Audit Required Communications Patsy Brown

2. Employee Healthcare Benefits Mary Martin-Selby

3. FY2018 Year End Projections/ Reserves Meghan Coates/ Christina Berta

4. Internal Audit Periodic Reports a. Volunteer Fire and Rescue Organization Audit

Reports b. FY2017 Comparative Report of Local

Government Revenues and Expenditures Analysis

c. Virginia’s Office of Children’s Services Audit of Chesterfield/Colonial Heights Comprehensive Services Act (CSA) Program

d. FY2018 Audit Plan and Hotline Activity Update e. Proposed FY2019 Work Plan f. Internal Audit Policies

Greg Akers/ Steve Sanderson

5. Update on Procurement Policies Keith Gagnon

6. Closed Session for: 1) pursuant to Section 2.2-3711.A.1., Code of Virginia, 1950, as amended, relating to the performance of a specific County employee; 2) pursuant to Section 2.2-3711.A.1., Code of Virginia, 1950, as amended, relating to the performance of departments where such evaluation will necessarily involve discussion of specific individuals.

Dr. Casey

MEETING NOTES

AFC MEETING MATERIALS 06-13-18

Audit and Finance Committee

ITEMS TO BE DISCUSSED: Item Person

Responsible Materials

1. External Audit Required Communications Patsy Brown 2. Employee Healthcare Benefits Mary Martin-Selby

3. FY2018 Year End Projections/Reserves Meghan Coates/Christina Berta

4. Internal Audit Periodic Reportsa. Volunteer Fire and Rescue Organization

Audit Reportsb. FY2017 Comparative Report of Local

Government Revenues and ExpendituresAnalysis

c. Virginia’s Office of Children’s Services Auditof Chesterfield/Colonial HeightsComprehensive Services Act (CSA)Program

d. FY2018 Audit Plan and Hotline ActivityUpdate

e. Proposed FY2019 Work Planf. Internal Audit Policies

Greg Akers/Steve Sanderson

5. Update on Procurement Policies Keith Gagnon

6. Closed Session for: 1) pursuant to Section 2.2-3711.A.1., Code of Virginia, 1950, as amended,relating to the performance of a specific Countyemployee; 2) pursuant to Section 2.2-3711.A.1.,Code of Virginia, 1950, as amended, relating to theperformance of departments where such evaluationwill necessarily involve discussion of specificindividuals.

Allan Carmody

Date: June 13, 2018 Time: 10:30 am Location: Room 502

Cherry Bekaert AFC Presentation

USI 2019 Health/Dental Renewal Review

2018 School and General Operating Fund Updates

Internal Audit Update

Procurement Update for AFC

No Handouts

FY18 Audit Plan and Hotline Activity Update

Proposed FY19 Work Plan

Internal Audit Policies

6-13-18 AFC Meeting Materials

Presentation to

The Audit and Finance Committee of the County of Chesterfield, Virginia June 13, 2018


2

Table of Contents

Engagement Team Auditor’s Responsibility Engagement Services Audit Planning Considerations:

Planned Timing of the Audit Audit Methodology Significant Audit Areas

New Accounting and Reporting Changes


Engagement Team


4

Engagement Team Leadership

Rob ChurchmanEngagement Partner

Krista EdoffConcurring Review Partner

Greg MillerAudit Senior Manager (Authorities and SAF)

Audit Staff

Matt CareyAudit Senior Manager (County and ARGS)

Rebecca GeorgeAudit Senior

Audit Staff

John GilbertoTechnical Resource Partner

Scott McKayRisk Advisory Partner

Neal BegganIT Audit Principal

Christina MaldonadoAdvisory Senior


Auditor’s Responsibility


Auditor’s Responsibility

Required Guidance

Generally Accepted Auditing

Standards (GAAS)

Specifications for Audits of Authorities, Boards and

Commissions

Government Auditing

Standards (GAS)

Specifications for Audits of Counties, Cities and

Towns

Title 2 U.S. Code of Federal

Regulations Part 200 (Uniform

Guidance)

6


Cherry Bekaert’s Responsibility Under Required Guidance

Consider internal control to the extent necessary to design an effective and efficient audit approach, not for the purpose of providing assurance on internal control (e.g. GAAS, GAS, UG)

Perform tests of compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts (e.g. GAS, Commonwealth)

Perform tests of compliance with the types of compliance requirements which could have a direct and material effect on the County’s major Federal financial assistance programs (e.g. UG)

Design and implement audit procedures based on our understanding of the County to gain reasonable, not absolute, assurance as to the absence of material misstatements in the financial statements (e.g. GAAS)

Opine on the financial statements based on our audit (e.g. GAAS)

7


Engagement Services


9

Engagement Services

Audit of the financial statements as of and for the fiscal year ended June 30, 2018:• County, including the

Schools and StudentActivity Funds *

• Economic DevelopmentAuthority of the County ofChesterfield

• Watkins CentreCommunity DevelopmentAuthority

• Chippenham PlaceCommunity DevelopmentAuthority

Audit of the County’s major federal programs required by the Uniform Grant Guidance

Audit of the compliance with the Auditor of Public Accounts’ (APA)• Specifications for Auditsof Counties, Cities andTowns (Specifications)

• Specifications for Auditsof Authorities, Boards,and Commissions(Specifications)

Procedures required by the Commonwealth related to:• Comparative Report

Transmittal Forms(Uniform FinancialReporting Manual)

• Sheriff Office’s internalcontrol (Virginia Sheriffs'Accounting Manual) *

• Compliance with theFinancial AssuranceRegulations of Solid WasteDisposal Facilities

• Virginia Retirement Systemcensus data testing

* Note ‐ Internal Audit will assist our team in the performance of this work


Audit Planning Considerations


Adherence to Your Timeline

Planning:May

Internal Controls and Risk Assessments, Interim Fieldwork:

May ‐ July

Final Fieldwork: August ‐ October

Review of Draft Reportswith Management:

September and October

Issuance of Reports:September and October


12

Audit Methodology

Cherry Bekaert utilizes a top-down, risk based, integrated audit approach delivered in three phases:

Plan

• Perform risk assessment procedures to determine the significant audit areas and reporting and compliance requirements

Execute

• Select and perform appropriate substantive and analytical procedures, including tests of internal controls, where appropriate

Complete

• Evaluate results, communicate with management, and issue the required reports


• Identify major federal grant programs and their respective compliancerequirements based upon a risk-based analysis

Plan

• Test internal controls over general and grant specific requirements• Test for conformance with compliance requirements (e.g., allowable costs,

reporting)

Execute

• Summarize audit results, report any compliance and/or internal controlfinding(s) to management and assist in preparation of corrective action plan(s)

• Prepare required reports and the Schedule of Findings and Questioned Costs

Complete

13

Audit Methodology – Single Audit

Cherry Bekaert employs an efficient, effective, compliant and time-tested Single Audit process based on three phases:


Cherry Bekaert specialists are fully integrated members of our audit team purposed with assessing the County’s information technology environment and its impact on the audit procedures and financial statement reports

We will evaluate the impact of key automated controls and systems utilized within the financial reporting process such as: Entity-wide security program planning and

management controls

Access controls

System development and program change controls

System software controls

Segregation-of-duty controls

Service continuity controls

Audit Methodology ‐ IT

14


Significant Audit Areas

15


16

Significant Audit Areas

• Update our understanding of controls in place and test accordingly• Recalculate property taxes, confirm balances with grantors and analytically test

revenues (e.g., budget vs. actual)• Test the collectability of receivables and revenue cut-off

Revenues and Receivables:

• Update our understanding of controls in place and test accordingly• Analytically test payroll expense and related liabilities• Test underlying data utilized in actuarial calculations and review actuarial assumptions

Payroll and Related Liabilities:

• Update our understanding of controls in place and test accordingly• Test underlying data utilized in actuarial calculations and review actuarial assumptions• Analytically review cost trends

Self-insurance Liabilities:

Based on our preliminary risk assessment, we have identified the following significant audit areas and our audit test work will include the following example procedures:


17

Significant Audit Areas (continued)

• Update our understanding of controls in place and test accordingly• Confirm selected balances with external parties and review related

reconciliations

Cash and Investments:

• Test internal controls over major program operation• Test compliance with applicable compliance requirements (e.g., allowable costs,)• Current planned programs – Child Nutrition, Special Education

Single Audit and APA Compliance:

• Review journal entries to ensure Net Position and Fund Balance are properlypresented

• Review account groupings and disclosures for the financial statements• Review new GASB requirements for applicability and proper implementation

Financial Reporting:


19


GASB statements effective for FY 2018: GASB Statements No. 74 and 75 – OPEB Reporting Requirements

Similar to pension standards implemented in 2014 and 2015 Requires recognition of the fair value of the net liability for other postemployment

benefits (e.g., health, dental, life)

Effective for FY 2017 (#74 – Plan) and 2018 (#75 - Employer)

GASB Statement No. 85 – Omnibus 2017 Address practice issues that have been identified during implementation and

application of certain GASB Statements. This Statement addresses a variety of topics including issues related to:

• Blending component units

• Goodwill

• Fair value measurement and application

• Postemployment benefits (pensions and other postemployment benefits [OPEB]).


20


GASB statements effective for FY 2018: GASB Statement No. 86 – Certain Debt Extinguishment Issues

Objective to improve consistency in accounting and financial reporting:

• in-substance defeasance of debt

• prepaid insurance on debt that is extinguished

• notes to financial statements for debt that is defeased in substance


21


GASB statements effective for FY 2019: GASB Statement No. 83 – Certain Asset Retirement Obligations

Establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for asset retirement obligations

GASB Statement No. 88 - Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements Defines debt for the purpose of disclosure in notes to the financial statements

Establishes additional note disclosures, including direct borrowings (e.g., a government entering into a loan agreement with a lender) and direct placements (e.g., a government issuing a debt security directly to an investor)

Direct borrowings and direct placements have terms negotiated directly with the investor or lender and are not offered for public sale


22


GASB statements effective for FY 2020: GASB Statement No. 84 – Fiduciary Activities

Establishes criteria for identifying fiduciary activities of all state and localgovernments. The focus of the criteria generally is on:

• (1) whether a government is controlling the assets of the fiduciary activity, and

• (2) the beneficiaries with whom a fiduciary relationship exists.

Separate criteria are included to identify fiduciary component units andpostemployment benefit arrangements that are fiduciary activity

GASB statements effective for FY 2021: GASB Statement No. 87 – Leases

Establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset

Requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract


Your Guide Forward

Rob ChurchmanPartner

[email protected]

Matt CareySenior [email protected]

23


www.usi.com

2019 HEALTH/DENTAL RENEWAL REVIEW

June 13, 2018

Claire H. Harlin, CEBS

© 2018 USI Insurance Services. All rights reserved.

CHESTERFIELD COUNTY AND CHESTERFIELD COUNTY PUBLIC SCHOOLS


| 1

2019 Health Plan Review

Anthem 2019 Medical/Prescription Drug Renewal

▪ The recommended renewal increase for the 2019 calendar year is 3.0%. This increase will

fund expected claims, fixed fees, the C-Fit program, and includes a margin for claim fluctuations and plan reserve funding.

▪ Total projected expense for calendar year 2019 is $123.9 million.

▪ Fixed fees are in line with the agreements negotiated during the 2017 RFP.

▪ Guaranteed pharmacy formulary rebates for 2019 are expected to exceed $5 million. Chesterfield received credit in 2017 for over $3 million in rebates.

▪ The increase assumes no plan design changes.

▪ Rates were increased 8.8% at the last renewal and the increase was shared equally by the County, Schools, and employees.


| 2

▪ In January 2018, plan design changes were made to the benefit plans that increased the cost share to employees. Employees now pay15% of the total medical and pharmacy claims expense in out-of-pocket copays, deductibles, and coinsurance. When combined with the employee portion of the premiums, employees are paying approximately 32% of the cost of the health care program while the County and Schools are paying the remaining two-thirds.

▪ Adjusted claims paid during the renewal review period ending April 30, 2018 decreased 4.5% per member per year compared to the last renewal period. Reasons for this improved claims experience include the following factors:

– More enrollment in the HSA plan which now has 20% of the total enrollment,

– A 47% increase in employees taking advantage of the wellness incentive program in 2017 which

indicates an increase in employee engagement in their health, and

– More employees utilizing the EMC for well visits (up 20% from the prior year).



| 3

▪ Overall cost per member per year is $5,379. By benefit plan, this cost is:

– POS Plan = $6,037

– HSA Plan = $3,734 (this amount includes Chesterfield’s contribution to the HSA on behalf of enrolled

employees)

– Enrollees in the HSA plan cost Chesterfield 38% less than POS enrollees. The HSA plan has been in

effect for 5 years. Of employees enrolled, 6.6% have a zero HSA balance while 24% have an HSA

balance of $4,000 or more.

▪ Current budget includes an increase of 8% for the health plan for FY19. It is recommended that the difference in dollars associated with a 8% increase versus a 3% increase for the employer portion of the cost be put into the health plan fund to increase plan reserves to industry-accepted levels.

▪ Following is a rates and contribution scenario that illustrates implementing a 3% increase to total premiums and sharing that increase equally with employees;



| 4

▪ Contribution Scenario – 3% increase; spread evenly


POS Total County Employee Total County Employee $ Change Total Schools Employee Total Schools Employee $ Change

Employee 630.00$ 565.00$ 65.00$ 649.00$ 582.00$ 67.00$ 2.00$ 630.00$ 565.00$ 65.00$ 649.00$ 582.00$ 67.00$ 2.00$

EE + Child 1,010.00$ 718.00$ 292.00$ 1,040.00$ 740.00$ 300.00$ 8.00$ 1,010.00$ 718.00$ 292.00$ 1,040.00$ 740.00$ 300.00$ 8.00$

EE + Children 1,232.00$ 789.00$ 443.00$ 1,269.00$ 813.00$ 456.00$ 13.00$ 1,232.00$ 789.00$ 443.00$ 1,269.00$ 813.00$ 456.00$ 13.00$

EE + Spouse 1,232.00$ 789.00$ 443.00$ 1,269.00$ 813.00$ 456.00$ 13.00$ 1,232.00$ 789.00$ 443.00$ 1,269.00$ 813.00$ 456.00$ 13.00$

Family 1,862.00$ 1,197.00$ 665.00$ 1,918.00$ 1,233.00$ 685.00$ 20.00$ 1,862.00$ 1,197.00$ 665.00$ 1,918.00$ 1,233.00$ 685.00$ 20.00$

36,037,920$ 26,952,744$ 9,085,176$ 37,121,028$ 27,766,932$ 9,354,096$ 58,490,016$ 44,064,624$ 14,425,392$ 60,248,292$ 45,395,316$ 14,852,976$

Lumenos

Employee 578.00$ 556.00$ 22.00$ 595.00$ 573.00$ 22.00$ -$ 578.00$ 556.00$ 22.00$ 595.00$ 573.00$ 22.00$ -$

EE + Child 924.00$ 718.00$ 206.00$ 952.00$ 740.00$ 212.00$ 6.00$ 924.00$ 718.00$ 206.00$ 952.00$ 740.00$ 212.00$ 6.00$

EE + Children 1,127.00$ 789.00$ 338.00$ 1,161.00$ 813.00$ 348.00$ 10.00$ 1,127.00$ 789.00$ 338.00$ 1,161.00$ 813.00$ 348.00$ 10.00$

EE + Spouse 1,127.00$ 789.00$ 338.00$ 1,161.00$ 813.00$ 348.00$ 10.00$ 1,127.00$ 789.00$ 338.00$ 1,161.00$ 813.00$ 348.00$ 10.00$

Family 1,703.00$ 1,197.00$ 506.00$ 1,754.00$ 1,233.00$ 521.00$ 15.00$ 1,703.00$ 1,197.00$ 506.00$ 1,754.00$ 1,233.00$ 521.00$ 15.00$

4,969,776$ 4,020,696$ 949,080$ 5,117,844$ 4,142,892$ 974,952$ 17,539,536$ 14,242,968$ 3,296,568$ 18,062,448$ 14,676,240$ 3,386,208$

PPO

Employee 813.00$ 565.00$ 248.00$ 837.00$ 582.00$ 255.00$ 7.00$ 813.00$ 565.00$ 248.00$ 837.00$ 582.00$ 255.00$ 7.00$

EE + Child 1,301.00$ 718.00$ 583.00$ 1,340.00$ 740.00$ 600.00$ 17.00$ 1,301.00$ 718.00$ 583.00$ 1,340.00$ 740.00$ 600.00$ 17.00$

EE + Children 1,587.00$ 789.00$ 798.00$ 1,635.00$ 813.00$ 822.00$ 24.00$ 1,587.00$ 789.00$ 798.00$ 1,635.00$ 813.00$ 822.00$ 24.00$

EE + Spouse 1,587.00$ 789.00$ 798.00$ 1,635.00$ 813.00$ 822.00$ 24.00$ 1,587.00$ 789.00$ 798.00$ 1,635.00$ 813.00$ 822.00$ 24.00$

Family 2,400.00$ 1,197.00$ 1,203.00$ 2,472.00$ 1,233.00$ 1,239.00$ 36.00$ 2,400.00$ 1,197.00$ 1,203.00$ 2,472.00$ 1,233.00$ 1,239.00$ 36.00$

193,248$ 113,580$ 79,668$ 199,008$ 117,000$ 82,008$ 359,568.00$ 238,584$ 120,984$ 370,224$ 245,772$ 124,452$

Total 41,200,944$ 31,087,020$ 10,113,924$ 42,437,880$ 32,026,824$ 10,411,056$ 76,389,120$ 58,546,176$ 17,842,944$ 78,680,964$ 60,317,328$ 18,363,636$

939,804$ 297,132$ 1,771,152$ 520,692$

3.0% 3.0% 2.9% 3.0% 3.0% 2.9%

COUNTY SCHOOLS2019 Rates @3.0% Increase; spread evenly across the

board

2019 Rates @3.0% Increase; spread evenly across

the board2018 Rates 2018 Rates

Total County/Schools Employee Total County/Schools Employee

Grand Total 117,590,064$ 89,633,196$ 27,956,868$ 121,118,844$ 92,344,152$ 28,774,692$

Additional Dollars 2,710,956$ 817,824$

% Change 3.0% 3.0% 2.9%

CURRENT 2018 PROPOSED 2019


| 5

2019 Dental Plan Review

Delta Dental Renewal

▪ Chesterfield County will begin the fourth year of the current contract with Delta Dental on

January 1, 2019.

▪ Rates will increase 1.7% with the upcoming renewal. This is the first rate increase since 2015 and is line with the negotiated contract.

▪ The County and Schools recommend continuing to contribute $10 per employee per month towards the cost of coverage.

▪ Employees will absorb the increase ($134,000); however, their cost is still lower than what

they were paying in 2015.

▪ Total enrollment in the three plans is 13,549.

▪ Chesterfield continues to offer the Comprehensive and Basic plans. The Comprehensive plan has 7,611 enrolled (56%) while the Basic plan has 4,948 (37%).

▪ Chesterfield eliminated the Delta Care DHMO in 2018 and replaced it with a dental EPO that has the same copay schedule but a significantly larger network of dental providers. Enrollment in this option is 990 (7%) which is significantly larger than the DHMO enrollment indicating is an attractive option for employees.


www.usi.com

THANK YOU.


| 7

Disclaimer The information contained in this report is for general information purposes only. The information is provided by USI Insurance Services and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the report or the information, products, services, or related graphics contained in the report for any purpose. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this report. In this report you may view information which is not under the control of USI Insurance Services. We have no control over the nature, content and availability of that information. The inclusion of information does not necessarily imply a recommendation or endorse the views expressed within them.

Commissions and Fees As a licensed insurance producer, USI is authorized to confer with or advise our clients and prospective clients concerning substantive benefits, terms or conditions of insurance contracts, to sell insurance and to obtain insurance coverages for our clients. Our compensation for placement of insurance coverage, unless otherwise specifically negotiated and agreed to with our client, is customarily based on commission calculated as a percentage of the premium collected by the insurer and is paid to us by the insurer. We may also receive from insurers and insurance intermediaries (which may include USI affiliated companies) additional compensation (monetary and non-monetary) based in whole or in part on the insurance contract we sell, which is contingent on volume of business and/or profitability of insurance contracts we supply to them and/or other factors pursuant to agreements we may have with them relating to all or part of the business we place with those insurers or through those intermediaries. Some of these agreements with insurers and/or intermediaries include financial incentives for USI to grow its business or otherwise strengthen the distribution relationship with the insurer or intermediary. Such agreements may be in effect with one or more of the insurers with whom your insurance is placed, or with the insurance intermediary we use to place your insurance. You may obtain information about the nature and source of such compensation expected to be received by us, and, if applicable, compensation expected to be received on any alternative quotes pertinent to your placement upon your request. USI values your feedback regarding compliance with our disclosure policy. You may contact the toll-free USI Compliance Hotline (866-657-0861) at any time, and your call will be referred to applicable company management for further investigation.

USI Insurance Services Copyright The contents of this USI Insurance Services report are protected by applicable copyright laws. No permission is granted to copy, distribute, modify, post or frame any text, graphics, data, content, design or logos.


FY2018 School Operating Fund Projections

Audit and Finance – June 13, 2018

Projections Overview - Expenditures

• Expenditures as of April 30, 2018 are projected to be approximately 1.4% under the revised budgetat year end

• Division currently has vacancies that may impact the projection if a significant

number of the vacancies are filled

• Projected savings in fuel based on current fuel prices

Expenditures Revised Budget Projection Variance

Instruction $454,434,131 $449,470,677 $4,963,454

Administration / Attendance

& Health 20,792,279 20,097,406 694,873

Transportation 38,615,894 36,552,883 2,063,011

Operations & Maintenance 69,641,889 68,610,419 1,031,470

Technology 16,398,135 15,931,430 466,705

Debt 50,293,500 50,293,500 -

Total projected available $649,740,064 $640,520,556 $9,219,508

Projections Overview - Revenue

• Revenue side -$1.5M

o Student enrollment as of 9/30/2017 was 282 students over budgeted enrollment

▪ At this time we are estimating average daily membership to be 60,080 or 332 abovebudgeted ADM

▪ Sales Tax projected to meet budget: Trend is showing favorable results through the endof the fiscal year

Revenues Revised Budget Projection Variance

Local $9,208,992 $8,754,314 $(454,679)

State Sales Tax 63,219,400 63,507,804 288,404

State SOQ 238,544,300 241,866,628 3,322,328

State Incentive 2,836,600 1,634,414 (1,202,186)

State Lottery 21,406,120 20,724,088 (682,032)

State Categorical 1,449,180 1,725,929 276,749

Medicaid 1,400,000 1,400,000 -

State Other 272,683 257,532 (15,151)

Federal 413,424 413,424 -

Transfers 290,146,698 290,106,293 (40,405)

Total projected available $628,897,397 $630,390,426 $1,493,029

Planned set-asides: ● $1.9M debt reserve, $2M additional SRP payment based on Plan Document

Requirements, $2.3M for future year budgets, $1M for school bus replacement plan,$3.5M for FY2019 SRP projected payment gap6-13-18 AFC Meeting Materials

FY2018 General Fund Budget Projections Audit and Finance – June 13, 2018

- Unrestricted contribution to fund balance estimated to be $5.7 (0.76% of adopted budget total), predominately the result of strong revenue performance.

- Additional (unbudgeted) restricted revenues, described below, estimated at $7.4M - Expenses coming in right on the mark, the primary variable pushing the bottom line is the statewide tax

settlement, $3.76M, as discussed back in September. Some expenses have direct revenue offsets (Social Services, WARR…) Additional revenues required to balance expenditures (on reverse) $2.1M.

Next steps: the June 27th BOS meeting will include a typical year-end item that makes adjustments among departments/appropriation categories and details any reserve requests; the projected results below are prior to any of these adjustments.

Revenues Revised Budget Projected Variance Notes

Administration of Justice 5,599,000 5,650,400 51,400 Generally tracking on budget.

Community Development 1,161,100 1,353,400 192,300

Excess revenue ($241k) from sale of land in airpark to be reserved for future economic development uses within the airport industrial park.

Debt Service 577,300 554,700 (22,600) Generally tracking on budget.

General Government 6,086,700 6,741,000 654,300 Excess primarily due to delinquent fees on personal

property taxes.

Human Services 13,365,400 15,144,600 1,779,200 Social Services (1.5M) revenue offsets additional expenses - shown on reverse - results in approx. 677k savings to the general fund.

Property Taxes, Consumer and Non-Departmental Revenues

686,779,500 697,726,800 10,947,300

Personal Property (+2M), local sales tax (+760k), BPOL (2.7M) and Powhite Reimbursement (1.2M) to be set aside for future economic development or transportation needs.

Parks and Libraries 2,242,900 2,316,600 73,700

Library fines trending low (-118k), offset by additional revenues in Parks and Recreation; above budget tournament revenue at River City to be reserved for future site improvements (67k).

Public Safety 21,270,500 22,615,300 1,344,800 Permit fees in BI have maintained upward trend (+535k), consistent with new home sales data. Additional state revenue anticipated in Sheriff (+639k).

Public Works 5,385,700 5,614,600 288,900 Gate fees at convenience centers (+174k); Environmental Engineering development review fees up (134k); other areas generally on target.

Total 742,468,100 757,717,400 15,249,300

Committed, Restricted, or Assigned Revenues to be Reserved for Future Use Sale of land at airport – $241,000, BPOL above budget – $2,733,000, River City – $86,000, PEG funds – $970,000, Powhite Reimbursement for future transportation initiatives – $1,246,800, Centerpointe - $900,000, Contribution to RFCIP – $709,400, Occupancy taxes restricted for tourism uses – $500,000 6-13-18 AFC Meeting Materials

Expenses Revised Budget Projected Variance Notes

Admin of Justice 9,429,900 9,760,200 (330,300) Lower than budgeted turnover, legal services contracts.

Community Development 21,429,100 21,937,100 (508,000) Lower than budgeted turnover.

Debt Service 24,282,700 22,782,700 1,500,000 Lower interest expense than what was modeled.

General Government 57,495,100 58,580,200 (1,085,100) Expected savings in centrally budgeted workers comp account will partially offset Chesterfield’s portion of a statewide tax settlement (3.76M).

Human Services 29,288,300 30,847,400 (1,559,100)

Tax relief for the elderly and disabled and Access Transportation maintain brisk inclines (890k and 110k over), FY19 includes structural adjustments to correct both; Lower than budgeted turnover in Social Services, with offsetting outside revenue (1.5M); somewhat offset by savings in other human service areas.

Parks and Libraries 21,711,600 21,654,400 57,200 Collectively tracking right on budget, savings in Parks and Recreation covering Libraries.

Public Safety 175,484,900 175,234,500 250,400

Fuel savings in Police; Average Daily Population (ADP) at Riverside Regional Jail (RRJA) maintaining downward trend since February; Workers Comp lower than originally expected in most agencies.

Public Works 18,759,500 19,648,700 (889,200)

Convenience centers over 200k related to maintenance and repair of facilities, offset by additional gate fees. Environmental Engineering 336k from overages in salaries, little turnover, some of expenses related to equipment purchases will be offset by use of reserves.

Reserves/Contingency 239,100 50,000 189,100 Savings from completed projects, grants; to be reserved for future capital.

Transfers: to Other Funds to Schools

139,282,700 348,265,300

138,741,700 348,553,700

541,000 (288,400)

$541k to be returned to RFCIP; Excess state sales tax for education (288k) included in transfer to schools.

Total 845,668,200 847,749,300 (2,122,400)

General Government: Accounting, Board of Supervisors, Budget and Management, Clerk to the Board, Commissioner of the Revenue, Communications and Media, County Administration, County Attorney, Employee Benefits, General Services Administration, Human Resources, Intergovernmental Relations, Internal Audit, Information Technology, License Inspection, Document Services, Purchasing, Real Estate Assessor, Registrar, Learning and Performance Center, Treasurer

Administration of Justice: Clerk of Circuit Court, Commonwealth’s Attorney, Courts, Law Library, Magistrate Public Safety: Animal Services, Building Inspection, Community Corrections, Fire and EMS, Juvenile Detention Home, Juvenile

Probation, Police, Riverside Regional Jail, Sheriff Public Works: Facility Management, Environmental Engineering, Right-of-Way, Streetlights, Waste and Resource Recovery Health and Welfare: Access Transportation Program, Senior Advocate, Health, Mental Health, Social Services, Tax Relief, Citizen

Information and Resources Parks, Recreation and Cultural: Community Contracts (donations), District Improvement Funds, Library, Parks and Recreation Community Development: Economic Development (and related activities), Cooperative Extension, Planning, Transportation Transfers to grants, mental health, schools, airport, comprehensive services, capital projects


Chesterfield County, Virginia Internal Audit

9901 Lori Road, Room 142 – P.O. Box 40 – Chesterfield, VA 23832 Phone: (804) 748-1240 – Fax: (804) 768-9346 – Internet: chesterfield.gov

DATE: June 7, 2018

TO: Audit and Finance Committee (AFC): The Honorable Steve Elswick, Matoaca District Supervisor The Honorable Christopher Winslow, Clover Hill District Supervisor The Honorable John M. Erbach, Chair, Dale District School Board Member The Honorable Javaid E. Siddiqi, Midlothian District School Board Member

Joseph P. Casey, PhD., County Administrator Donald R. Fairheart, Interim School Superintendent

FROM: Greg L. Akers, Director of Internal Audit

SUBJECT: Internal Audit Update - Reports Issued April 5, 2018 – June 7, 2018

Reports are issued to the Board of Supervisors, School Board, County Administrator, and the School Superintendent, with copy to the covered division or department. Internal Audit meets with the County Administrator and the Superintendent periodically to consider audit results. The following projects completed this period will be covered in the June 13, 2018 AFC meeting:

• Volunteer Fire and Rescue Organization Audit Reports• FY2017 Comparative Report of Local Government Revenues and Expenditures Analysis

We also monitor reports from other auditors for Chesterfield operations. A recent Virginia’s Office of Children’s Services report is included for your reference:

• Audit of Chesterfield/Colonial Heights Comprehensive Services Act (CSA) Program

Full audit reports are placed on Internal Audits website following the AFC meeting. If there are any questions about reports, please contact the County Administrator, School Superintendent, or the Director of Internal Audit and we can provide you with further information.

Thank you for your continued support of the Internal Audit Department.

Copy: The Honorable Dorothy Jaeckle, Chair, Bermuda District Supervisor The Honorable James “Jim” Holland, Dale District Supervisor The Honorable Leslie Haley, Vice Chair, Midlothian District Supervisor The Honorable Carrie E. Coyner, Bermuda District School Board Member The Honorable Dianne H. Smith, Clover Hill District School Board Member The Honorable Robert W. Thompson, Vice Chair, Matoaca District School Board Member Christina Berta, Chief Finance Officer, Schools Nita Mensia-Joseph, Chief Operations Officer, Schools Allan Carmody, Finance Director Mary Martin Selby, Director of Human Resources Matt Harris, Deputy County Administrator for Finance and Administration

Attachments


http://www.chesterfield.gov/content.aspx?id=8590136480



GREGORY L. AKERS Director

DATE: May 18, 2018

TO: Joseph P. Casey, Ph.D. County Administrator

FROM: Greg L. Akers Director of Internal Audit

SUBJECT: Volunteer Fire and Rescue Organization Audit Reports

The Department of Fire and EMS’s (Fire & EMS) budget includes $4,000 and $20,000 in annual operating expense reimbursements for each organized volunteer fire department and volunteer rescue squad, respectively. Release of funding is contingent upon these organizations complying with Fire & EMS’s Finance Procedure #01 – Annual Financial Audit Report for Volunteer Fire & EMS Departments, which requires them to provide an annual audit report within 9 months of their fiscal year end. As stated in Finance Procedure #01: “The Fire and EMS Department will monitor the volunteer fire department and rescue squad’s compliance with this policy. Chesterfield County Internal Audit Department will provide technical expertise with understanding and evaluating the audit reports received by Fire & EMS from the volunteer organizations.” Attached is a list of organizations that submitted annual audit reports during calendar year 2017 and that Fire & EMS provided to us for evaluation.

We performed a technical evaluation of these organizations’ audited financial statements. Our evaluation included consideration of the audit opinion, reported findings, and disclosures to identify potential concerns. An independent auditor’s opinion regarding the financial statements as a whole may be either unmodified or modified. An unmodified opinion indicates the financial statements present fairly, in all material respects, the financial position in accordance with generally accepted accounting principles (or other comprehensive basis of accounting, as applicable and disclosed in the auditor’s report). There are three types of modified opinions: qualified, adverse, and disclaimer of opinion. In each case, the reason for such a modification is described in the auditor’s report. We understand management is using this information as general reference for their financial monitoring of these organizations.

Summary: In calendar year 2017, there were 9 financial reports submitted by 8 volunteer fire and rescue organizations, which Fire & EMS provided to us for evaluation. A CPA gave an unmodified opinion on 8 of the 9 reports. We noted the provided report was not


for the most recently completed fiscal year for 3 organizations. For one of these, the CPA rendered a modified opinion on the financial statements due to lack of accounting controls over cash receipts. We also noted one organization made their last submission of audited financial statements, as they were dissolved January 1, 2016 with assets transferred to another volunteer organization. Additional details are provided on pages 3 and 4.

We believe our analysis provides an objective summary of financial reports provided to Internal Audit for evaluation. However, as required by Government Auditing Standards (2011 Revision) section 2.12 issued by the U.S. Government Accountability Office, we must communicate this evaluation does not constitute an audit conducted in accordance with generally accepted government auditing standards (GAGAS). Should you have any questions, or if we can be of further assistance, please call Lora Holland or me at extension 1240.

Copy: Edward “Loy” Senter, Jr., Fire Chief James E. Fitch, II, Assistant Fire Chief Sherry Dunbar, Financial Manager James F. Lane, Ed.D., School Superintendent Audit and Finance Committee


No. Organization Name

Financial Statement

Period

Unmodified Audit Opinion

by CPA [Y/N]

Audit Findings (financial

report page no.) [Y/N]

Potential Concerns/ Further Details

VOLUNTEER FIRE DEPARTMENTS: 1 Bon Air 6/30/2016 Y N

2 Midlothian 12/31/2015 Y N This organization is no longer in existence as of January 1, 2016; we

did evaluate their final, FY15 report that was submitted. Note 3 to the financial statements (p. 7) disclosed that Midlothian Volunteer Fire Department, Inc. (MVFD) was dissolved effective January 1, 2016. "Fixed assets of the entity are being transferred to Chesterfield County, and the remaining liquid assets of the corporation are being transferred to the Forest View Volunteer Rescue Squad, Inc. ("FVRS"), also a nonprofit organization that engages in activities substantially similar to those of MVFD."

3 Phillips 12/31/2015 N (Modified Opinion)

N Required FY16 report was not provided; we did evaluate the FY15 report that was submitted. Just as in prior years, the CPA rendered a modified opinion due to the following: "No accounting controls are exercised over cash receipts prior to the initial entry in the accounting records. Accordingly, it was not practicable for us to audit cash receipts."

4

Wagstaff Circle 12/31/2015 &

12/31/2016

Y N Required FY15 report was not provided timely. Two audited financial statement reports (FY15 and FY16) were submitted and evaluated during calendar year 2016.


No. Organization Name

Financial Statement

Period

Unmodified Audit Opinion

by CPA [Y/N]

Audit Findings (financial

report page no.) [Y/N]

Potential Concerns/ Further Details

VOLUNTEER RESCUE SQUADS: 1 Bensley Bermuda 12/31/2015 Y N Required FY16 report was not provided1; we did evaluate the FY15

report that was submitted. 2 Ettrick-Matoaca 12/31/2016 Y N

3 Forest View 12/31/2016 Y N

4 Manchester 12/31/2015 Y N Required FY16 report was not provided1; we did evaluate the FY15 report that was submitted.

Footnote(s): 1FY16 report was provided subsequent to December 31, 2017.




DATE: June 6, 2018

TO: Joseph P. Casey, Ph.D. Chesterfield County County Administrator Board of Supervisors Donald R. Fairheart Chesterfield County Interim School Superintendent School Board

FROM: Greg L. Akers, Director of Internal Audit

SUBJECT: Fiscal Year 2017 Comparative Report of Local Government Revenues and Expenditures Analysis

All Virginia counties, cities, and certain towns are required to provide financial information to the Virginia Auditor of Public Accounts (APA) annually for preparation of the Comparative Report of Local Government Revenues and Expenditures, in accordance with Section 15.2-2510 of the Code of Virginia.

The Internal Audit Department annually evaluates and summarizes selected financial data reported in the APA’s Comparative Report. Our analysis compares key revenue, cost, and demographic factors reported for localities with a population over 100,000. We share this analysis with County and School management for reference and continued analysis of possible improvement opportunities.

We believe our analysis provides an objective summary of information from the APA’s report. However, as required by Government Auditing Standards (2011 Revision) section 2.12 issued by the U.S. Government Accountability Office, we must communicate this evaluation does not constitute an audit conducted in accordance with generally accepted government auditing standards (GAGAS). Please contact us if you have any questions or recommendations to improve our analysis.

Copy: Matt Harris, Deputy County Administrator for Finance and Administration Sarah Snead, Deputy County Administrator for Human Services William Dupler, Deputy County Administrator for Community Development Scott Zaremba, Deputy County Administrator Alan Carmody, Finance Director Patsy Brown, Director of Accounting Christina Berta, Chief Finance Officer, Schools Nita Mensia-Joseph, Chief Operations Officer, Schools


FY2017 ANALYSIS SUMMARY

The APA’s FY2017 Comparative Report, available on the APA’s website, provides comparative information for Virginia localities through the following exhibits:

• General Government (Exhibit A) • Local Revenue (Exhibit B, with detail at B-1 and B-2) • Maintenance and Operation Expenditures (Exhibit C, with detail at C-1 through C-8) • Capital Projects (Exhibit D) • Debt Service (Exhibit E) • Enterprise Activities (Exhibit F) • Outstanding Debt (Exhibit G) • Demographic and Tax Data (Exhibit H)

We compared certain revenue, cost, and demographic factors for the 17 localities with populations over 100,000. Chesterfield’s Rankings The schedule below lists Chesterfield’s rankings for fiscal years 2017 and 2016 among the localities with populations over 100,000. A lower comparative cost results in a lower rank (i.e. 1). Chesterfield has stayed the same in most categories with few small changes in rankings. Chesterfield continues to maintain comparatively low cost (i.e. ranked among the 3 lowest cost localities in both years) for the categories highlighted in yellow below.

CATEGORY

RANKING 2017 20161

1. LOCAL REVENUE PER CAPITA 1 1 2. OPERATING COST PER CAPITA 1 1 a. GENERAL GOVERNMENT ADMINISTRATION COST PER CAPITA 2 2

b. JUDICIAL COST PER CAPITA 9 9 c. PUBLIC SAFETY COST PER CAPITA 6 6 d. PUBLIC WORKS COST PER CAPITA 2 2 e. HEALTH & WELFARE COST PER CAPITA 7 7 f. EDUCATION COST PER CAPITA 8 7 g. EDUCATION COST PER STUDENT 1 1 h. PARKS & RECREATION COST PER CAPITA 2 1 i. COMMUNITY DEVELOPMENT COST PER CAPITA 4 3

3. OPERATING COST PER CAPITA WITHOUT SCHOOLS 3 3 4. GENERAL GOVERNMENT CAPITAL PROJECTS COST PER CAPITA 9 5 5. GENERAL GOVERNMENT DEBT SERVICE COST PER CAPITA 3 4 6. BALANCE OF NET DEBT PER CAPITA 3 3

1The 2016 Comparative Report analyzed last year only had financial data for 16 localities with populations over 100,000, as the City of Richmond did not meet the reporting deadline.


http://www.apa.virginia.gov/APA_Reports/LG_ComparativeReports.aspx

As the APA notes, their “report provides a uniform presentation of fiscal information; however, we caution users not to base conclusions solely on this report's data.” As with any rankings of local governments that simply take numerators and denominators to create a ratio, there should not be an over-reliance on any ranking as an indicator of efficiency or performance without also knowing the comparability and scope of services amongst those entities being ranked. While the APA attempts to provide an overall and consistent manner by which to compare all Virginia localities, there is no narrative analysis from the APA. For example, while per capita costs rankings appear to illustrate positive results, some of these are the result of our high population in the denominator or services that our County does not provide that are performed by some other localities (e.g., road construction and maintenance). There also is not an absolute correlation between low per capita costs and low tax burden for residents or businesses, as the impact of the commercial tax base or grant-funded programs also can vary amongst localities. Therefore, while it is important for us to review and utilize the APA and other such rankings to gauge where the County stands on certain attributes, it is more important for us to further analyze the variability amongst those we compare ourselves to and most importantly to ensure that we strive to provide our own defined services at a low cost and low tax burden.

COMPARATIVE CHARTS BY CATEGORY Revenue and Expenditure Data: The charts below were derived from revenue and expenditure data per the APA’s 2017 and 2016 Comparative Reports' Exhibits and illustrate Chesterfield’s relative position among the localities with populations over 100,000. Chesterfield is highlighted in red for easy identification.

General Government Local Revenues including: General Property Taxes, Other Local Taxes, Permits, Privilege Fees, and Regulatory Licenses, Fines and Forfeitures, Charges for Services, Revenue from Use of Money and Property, and Miscellaneous.


General Government Maintenance and Operations Expenditures including: General Government Administration, Judicial Administration, Public Safety, Public Works, Health and Welfare, Education, Parks, Recreation, and Cultural, Community Development. Individual charts follow for each of these categories.

General Government Administration Expenditures including: Legislative, General and Financial Administration, and Board of Elections.


Judicial Administration Expenditures including: Courts and Commonwealth's Attorney.

Public Safety Expenditures including: Law Enforcement and Traffic Control, Fire and Rescue Services, Correction and Detention, Inspections, and Other Protection.


Public Works Expenditures including: Maintenance of Highways, Streets, Bridges, and Sidewalks, Sanitation and Waste Removal, and Maintenance of General Buildings and Grounds.

Health and Welfare Expenditures including: Health, Mental Health and Mental Retardation, and Welfare/Social Services.


Education Expenditures including: Elementary, Secondary, Other Education, and Contributions to Community Colleges.

Education Expenditures, including Elementary, Secondary, Other Education, and Contributions to Community Colleges, averaged on student membership data.


Parks, Recreation, and Cultural Expenditures including: Parks and Recreation, Cultural Enrichment, and Public Libraries.

Community Development Expenditures including: Planning and Community Development, Environmental Management, and Cooperative Extension Program.


General Government Maintenance and Operations Expenditures including: General Government Administration, Judicial Administration, Public Safety, Public Works, Health and Welfare, Parks, Recreation, and Cultural, Community Development.

Transfers to General Government Capital Projects.


Transfers to General Government Debt Service.

2No data reported for this category by the locality. For internal comparative purposes, we estimated using other Comparative Report data. This note only applies to FY2016 for Norfolk.

The total gross debt less the funds restricted (for payment of indebtedness) at the end of the reported fiscal year. This represents the amount required to fund the outstanding balance of indebtedness of the reporting government.


Demographic and Tax Data: The charts below were derived from demographic and tax data per the APA’s Comparative Report Exhibit H and illustrate Chesterfield’s relative position among the localities with populations over 100,000. Notes to the Comparative Report and inquiry of the APA provided the source information listed below each chart.

Source: University of Virginia’s Weldon Cooper Center for Public Service’s July 1st provisional estimates.

Source: U.S. Census Bureau, 2010 Census.


Population divided by land area.

Source: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics.

Source: Virginia Department of Education provided this data to the APA


Source: Virginia Local Tax Rates, prepared by the University of Virginia's Weldon Cooper Center for Public Service. Current year data is for tax year 2016 or fiscal year 2017 (whichever is reported).

Source: Department of Taxation's Annual Report.


ALLEGATIONS RECEIVED There have been 36 allegations received between the start of Fiscal Year 2018 and June 13, 2018, and 1 allegation carried over from Fiscal Year 2017.

April 10th Activity Since Prior Update

June 13th New Completed Investigations 7 - - 7 Referrals 17 - 5 22 Open/Pending Items 8 5 (5) 8 Total 32 5 - 37

INVESTIGATIONS SUMMARY There have been 7 completed investigations (4 substantiated) previously reported to the Audit and Finance Committee in Fiscal Year 2018. This includes 2 Special Project Reports issued with internal control improvements. There are no additional investigation results to report for this period.


Chesterfield County, VirginiaInternal Audit Fraud, Waste, and Abuse Hotline Update

Completed • Accounting, Countywide Payroll and HR Benefits • General Registrar's Office Special Project• Accounting, Petty Cash/Change Funds County Wide • Internal Audit Fiscal Year 2017 Report Card• APA Comparative Report (FY2016) • Peer Review• APA Comparative Report (FY2017)1 • Police Benefit Fund• Building Inspections, Code Compliance • School Activity Funds• CDBG/HOME Program Organization Audit Reports • School Administration, Adm. Support Staffing• Chesterfield Emergency Planning Committee • School Business and Finance, Expenditures• Community Organizations Applying for Donations • School Employee Benefits - SRP• External Audit Support • School Instruction, Admin. Support Staffing• Electronic Monitoring Contract Procurement Special

Project• School Retirement Contribution Timeliness

Special Project• Volunteer Fire and Rescue Organization Audit

Reports1• Sheriff, Jail Canteen and Inmate Trust Funds

• Fraud, Waste, and Abuse Hotline Program, FY 2017Report

Note 1-Covered during 6.13.18 AFC meeting

In Progress • Accounting, Enterprise System SecurityT

• CDBG Program Compliance• County/School Special Projects• Financial Analysis (1)• FY2018 Audit Follow-up• HR, Benefits Administration• MHSS, Medicaid• Monitor 3rd Party Audit Results• Planning, Proffers and ConditionsT

• Police Animal Services• Real Estate, AssessorT (on hold)• Schools, Custodial Services• Schools, Food Service• School Payroll & HR Classification and Compensation• School Temporary Work Assignments

Remaining • Emergency Communications CenterT

• General Services, Security Program• IST, Application Security ControlsT

• Parks & Recreation, Concessions, and Leases• Police, Training• Risk Management, Claims Administration and Workers Compensation• Social Services, General Relief• Treasurer Tax Billing, Payment Procedures and BalancesT

• Utilities, Customer Information SystemT

Note T – Technology Focused


Chesterfield County, VirginiaInternal Audit FY18 Audit Plan Update

TABLE OF CONTENTS

TRANSMITTAL LETTER 1 ANALYSIS OF PROPOSED PLAN

Coverage by Risk Level 2 Coverage by Entity 3 Technology Focus Coverage 4

PROPOSED FY19 AUDIT PLAN 5 AUDIT UNIVERSE STATISTICS 6

Providing a FIRST CHOICE

Community through

Excellence in Public Service

Chesterfield County

Internal Audit

Department

Greg L. Akers, Director

Steve Sanderson, Audit Manager

Sandra Fuentes, Staff Auditor

Lora Holland, Senior Auditor

Khara Lounsbury, Senior Auditor

Christopher Meade, Senior Auditor

Terry Parker, Senior Auditor

Annette Stinson, Administrative Analyst

Christian Wingfield, Staff Auditor

Internal Audit Proposed FY19 Audit Plan

June 13, 2018


AFC 6.13.18 Meeting



DATE: June 13, 2018 TO: Audit and Finance Committee Joseph P. Casey, PhD. Chesterfield County. County Administrator Board of Supervisors Donald R. Fairheart Chesterfield County Interim School Superintendent School Board FROM: Greg L. Akers Director of Internal Audit SUBJECT: Internal Audit Proposed FY19 Audit Plan Policy requires Internal Audit (IA) provide a proposed audit plan for Audit and Finance Committee (AFC) input and approval. IA uses a risk-based plan to recommend potential audit units and considers prior audit history and input received from the County and School Administration, Department Heads, and others. Updates are provided to AFC periodically, and the plan may be amended based on operational needs. During audit plan development, IA considered coverage by risk level and entity. For FY19, we also identified units requiring a technology focus. Included charts compare audit plan coverage to the universe for these categories. Work plan includes carryover for projects in progress and remaining from the FY18 plan with additions for FY19. We thank you for your continued support and value your input for proposed projects.


2 AFC 6.13.18 Meeting IA Proposed FY19 Audit Plan

COVERAGE BY RISK LEVEL We rate our auditable units as low, medium, or high risk. As illustrated below, the plan includes a greater proportion for high risk units.

Low28%

Medium68%

High4%

Audit Universe – Risk Units

Low19%

Medium68%

High13%

FY19 Audit Plan – Risk Units

Risk Units Percentage Units PercentageHigh 11 4% 4 13%Medium 184 68% 21 68%Low 75 28% 6 19%

Total 270 100% 31 100%

FY19 Audit Plan Audit Universe



COVERAGE BY ENTITY Proposed coverage by entity is proportionate to audit universe.

Schools17%

County83%

Audit Universe - County/Schools

School19%

County81%

FY19 Audit Plan - County/Schools

Type Units Percentage Units PercentageSchool 45 17% 6 19% High Risk 3 7% 2 33% Medium Risk 40 89% 4 67% Low Risk 2 4% - 0%County 225 83% 25 81% High Risk 8 4% 2 8% Medium Risk 144 64% 17 68% Low Risk 73 32% 6 24%

Total 270 100% 31 100%

Audit Universe FY19 Audit Plan



TECHNOLOGY FOCUS COVERAGE We evalutated the universe and identified 10% of units that require a technology focus. The Proposed FY19 Plan includes 8 (26%) technology focused projects. Technology is a growing risk for Chesterfield County, and Internal Audit is reallocating resources to create a technology audit team. We have staff pursuing technology audit training and certifications, and we are actively recruiting for technology experience.

TechnologyFocused

10%

All Others90%

Audit Universe – Technology Focused Units

TechnologyFocused

26%

All Others74%

FY19 Audit Plan – Technology Focused Units

Type Units Percentage Units PercentageTechnology Focused 26 10% 8 26% High Risk 5 19% 2 25% Medium Risk 19 73% 6 75% Low Risk 2 8% - 0%All Others 244 90% 23 74%

Total 270 100% 31 100%

Audit Universe FY19 Audit Plan



CHESTERFIELD COUNTY PROPOSED FY2019 AUDIT PLAN DRAFT 6/13/18

FY19 Carry Over: In Progress: • Accounting, Enterprise System SecurityT • CDBG Program Compliance • County/School Special Projects • Financial Analysis:

o Nursing Home Financial Monitoring

• HR, Benefits Administration • MHSS, Medicaid • Planning, Proffers and Conditions

TrackingT

• Real Estate Assessor, Assessment Processes & Systems and ExpendituresT (on hold)

• Police, Animal ServicesB • Schools, Custodial ServicesA • Schools, Food Service/VendorsB • Schools, Payroll & HR Classification and

Compensation • Schools, Temporary Work Assignments

Note A – Draft report issued 4.9.18, management response pending Note B – Exit held week of 6.4.18, draft report in development

Remaining: • Emergency Communications Center,

Training, Operations, and ExpendituresT • General Services, Security Program • IST, Application Security ControlsT • Parks & Recreation, Concessions Stands

Leases and Leases (Softball, etc.) • Police, Training

• Risk Management, Claims Administration and Workers Compensation

• Social Services, General Relief • Treasurer Tax Billing, Payment

Procedures and BalancesT • Utilities, Customer Information SystemT

Proposed FY19 Projects: • Accounting, Revenue Collection Points • Accounting, Quarterly Expenditure

Analysis • Economic Development, Revitalization • Schools, School Activity Funds • Schools, School IT Risk AssessmentT • Sheriff, Jail Canteen & Inmate Trust Fund • Audit Risk and Work Plan • Internal Audit Systems Maintenance • Peer Review • Monitor 3rd Party Audit Results • Special Projects/Hotline

• County Wide Affiliated Entities/ERM • External Audit • Financial Anlaysis:

o APA Comparative Report Analysis

o CDBG & HOME Program Organizations

o Community Organizations Applying for $10,000 or More

o Volunteer Fire & Rescue Organizations

• Sheriff, Jail Canteen & Inmate Trust Fund • Quality Assurance Review

Note T – Technology Focused



Carry-over

FY19 Proposed

FY19 Total (1)

ADMINISTRATION AND FINANCE 550 450 1,000 ACCOUNTING*- Accounts Payable/Vendor Address M - - - 2010, 2012- Accounts Receivable/Debt Collection M - - - 2011- Payroll/Benefits - County Wide M - - - 2009, 2013, 2015, 2018- Fixed Assets M - - - 0- Debt Mgmt. - Pmt. Proc. M - - - 0- General Accounting M - - - 0

- Enterprise System Security (T) M 210 - 210 0

- County P.Cards & Credit Cards M - - - 2008, 2013- P. Cash/Change Funds County Wide H - - - 2017, 2018- Revenues L - - - 0- Revenue Collection Points H - 200 200 0- Expenditures L - - - 0- Quarterly Expenditure Analysis L - 250 250 0- Convention Center Fiscal Agent L - - - 0R.E. ASSESSOR*- Assessment Processes & Systems (T) M 250 - 250 2008, 2011

- Expenditures L 50 - 50 2011PURCHASING*- Contract Admin (Service Cont.) M - - - 2015- Procurement - County Wide M - - - 2015- Expenditures L - - - 2015- Surplus Property & Auctions M - - - 2015REGISTRAR- Expenditures L - - - 0- Program Goals & Results M - - - 0BUDGET & MANAGEMENT* - Expenditures L - - - 2015- Cost Monitoring & YE Closing M - - - 0- Cash Proffers M - - - 2015- Revenue Estimates/Appropriations M - - - 0- Debt Management M - - - 0- CIP Process M - - - 2015- Operating Budget & Development M - - - 0- CDBG Program Compliance M 40 - 40 2010, 2016LEARNING & PERFORMANCE CENTER (LPC)- Tuition Assistance M - - - 2009- Expenditures L - - - 2014COMMUNICATIONS & MEDIA- Expenditures M - - - 0COUNTY MANAGEMENTCOUNTY ADMINISTRATOR- Expenditures L - - - 2012, 2016- CARES L - - - 0CLERK OF THE BOARD- Board Agenda/Minutes L - - - 0- Expenditures L - - - 2013

MANAGEMENT SERVICES 900 - 900 GENERAL SERVICES- Construction Management M - - - 2014- County Garage/Fleet/Radio Shop M - - - 2011- Support Center/Print Shop M - - - 0- Building & Grounds Maintenance M - - - 2013- Convenience Centers M - - - 2016- Surplus Property M - - - 2008- Records Management L - - - 0- Expenditures L - - - 2014- Energy Mgt. Recycling M - - - 0- Custodial L - - - 0- Security Program M 300 - 300 0- Environmental Management Program M - - - 0

CHESTERFIELD COUNTY AUDIT UNIVERSE FY2019 DRAFT 6/13/18

FY Rpt. Issued (Zero if last audit > 10yrs or

not audited, & NA)

Estimated Hours

RISK (2)AUDIT PROJECT NAME(3)



Carry-over

FY19 Proposed

FY19 Total (1)

AIRPORT- Leases/FBO M - - - 2008, 2012- Expenditures L - - - 2012- Grants Management M - - - 2012- Consultants/Contracts L - - - 0I.S.T.ADMINISTRATION- IT Governance (T) M - - - 0

- Expenditures (T) L - - - 2013

- Billing - Phone, Computer Support, Project Mgmt. (T) L - - - 2010

- Bus. Continuity & Disaster Recovery (T) M - - - 2012

- TIP & TIP Project Management (T) M - - - 2009

INFRASTRUCTURE SVCS. - Infrastructure Life Cycle Mgmt. (T) M - - - 0

- Infrastructure IT Svcs. Delivery & Support (T) M - - - 0

- Infrastructure Protection of Assets (T) H - - - 2008, 2014

APPLICATION & WEB SVCS.- Applications Security/Controls (T) M 300 - 300 2011

RISK MANAGEMENT- Claims Administration & W. Comp M 300 - 300 2008- Financial (Funds, Bonds & Insur. Billings, Subro) M - - - 2013- Loss Prevention/Safety M - - - 2013

- RMIS (T) M - - - 2013

- Expenditures L - - - 2013EXTENSION SERVICE- Expenditures L - - - 0- Program Goals & Results L - - - 0HUMAN SERVICES 905 - 905 PARKS & RECREATION- Revenues/Registrations M - - - 2011- Parks/Recs. Programs L - - - 0- CIP M - - - 2010, 2013- Expenditures M - - - 2008, 2013- Concession Stands Leases L 115 - 115 0- Maintenance & Repair M - - - 2011- Leases (Softball, etc) L 115 - 115 2013 SP- Historic Property Operation (Historical Society) L - - - 2015NURSING HOME- Financial Monitoring M 75 - 75 AnnualLIBRARIES- Accounts Receivables (Fines/Dues) L - - - 2010, 2013- Expenditures L - - - 2010, 2013- Automated System L - - - 2013- Central Administration/Branches L - - - 2013YOUTH PLANNING & DEV.- Expenditures L - - - 0YOUTH GROUP HOME- Program Results & Goals M - - - 0- Expenditures L - - - 0MHSS- AR Receipts & Revenue & System (T) M - - - 2014

- Expenditures M - - - 2013- Medicaid M 325 - 325 2012- Pharmacy M - - - 2008- Chesterfield Employee Services M - - - 2009


AUDIT PROJECT NAME(3) RISK (2)

Estimated Hours FY Rpt. Issued (Zero if last audit > 10yrs or

not audited, & NA)



Carry-over

FY19 Proposed

FY19 Total (1)

- Group Homes/Non Profits M - - - 2008SOCIAL SERVICES- Food Stamp Program M - - - 0- Expenditures M - - - 2015- Child Day Care M - - - 2010- General Relief M 275 - 275 0- Revenues L - - - 0- Housing Programs M - - - 0- Medicaid M - - - 2012- Emergency Intake M - - - 2008- Special Welfare Funds M - - - 2017HEALTH- Expenditures L - - - 0JUVENILE DETENTION HOME- Program Goals & Results M - - - 2012- Expenditures L - - - 2012- Grants Management M - - - 2012- Inmate Funds M - - - 2012INTERAGENCY SERVICES- Comprehensive Services Act & Controls M - - - 2009, 2013- Expenditures M - - - 2009, 2013COMMUNITY CORRECTIONS- Domestic Violence Resource Center M - - - 2012- Local Probation - Drug Court M - - - 2012- Pretrial Diversion M - - - 2012- Treatment Services - Day Reporting Center M - - - 2012- Probation Services M - - - 2012- Expenditures L - - - 0JUVENILE PROBATION- Expenditures L - - - 2010SENIOR ADVOCATE- Expenditures L - - - 0JUVENILE DRUG COURT- Expenditures L - - - 0CITIZEN INFORMATION AND RESOURCES- Expenditures L - - - 0- Access Chesterfield L - - - 0COUNTY MANAGEMENT 60 - 60 COUNTY ATTORNEY- Expenditures L - - - 2009, 2013INTERGOVERNMENTAL RELATIONS- Expenditures L - - - 2013MANAGEMENT SERVICES DEPT.- Expenditures L - - - 2012, 2016HUMAN SERVICES DEPT.- Expenditures L - - - 2012, 2016- Access Chesterfield L - - - 2013COMMUNITY DEVELOPMENT DEPT.- Expenditures L - - - 2012, 2016H.R.M.- Recruitment/Selection/App. Tracking M - - - 2013- Expenditures L - - - 2013- Benefits Administration M 60 - 60 0- Background Testing M - - - 0- Compensation/Class. IFAS M - - - 2009, 2013, 2015- Employee Relations/Drug & Alcohol Testing M - - - 0- Employee Medical Center M - - - 2010- EEO Reporting M - - - 0PUBLIC SAFETY 625 - 625 POLICE- Animal Control M 25 - 25 2010




not audited, & NA)



Carry-over

FY19 Proposed

FY19 Total (1)

- Expenditures M - - - 2011- Police Benefit Fund M - - - 2009, 2011, 2013, 2018

- Planning & Information Services (T) H - - - 2009, 2014

- Police HR/Administrative Services M - - - 0- Police Property M - - - 2014- Training M 300 - 300 0- Asset Forfeiture M - - - 2010- Office of Professional Standards M - - - 0- Grant Management M - - - 0- Support Services M - - - 0FIRE- Expenditures M - - - 2012

- Emergency Operations (T) M - - - 2014

- Maintenance & Logistics M - - - 2013- Training & Safety M - - - 2012- Volunteers M - - - 0- Fire & Life Safety M - - - 2010- Revenue Recovery M - - - 2014- Chesterfield Emergency Planning Committee M - - - 2011, 2012, 2013, 2014, 2018- EMS Division M - - - 0- Emergency Management M - - - 2015EMERGENCY COMM. 911 CENT.- Expenditures L 50 - 50 2009

- Operations (T) M 200 - 200 2009

- Training M 50 - 50 2009COMMUNITY DEVELOPMENT 360 - 660 BUILDING INSPECTION- Plan Review M - - - 0- Expenditures L - - - 2008, 2011, 2018

- Inspections/Code Compliance (T) M - - - 2011, 2018

- Administration/Records/Revenues M - - - 2013- Complaint Tracking/Citizen Asst. L - - - 0ECONOMIC DEVELOPMENT- Program Goals & Results M - - - 0- Expenditures L - - - 2012- Economic Dev. Authorities. (CDA's) M - - - 2010, 2014- Revitalization M - - 300 0ENVIRONMENTAL ENGINEERING- Plan Review/Drainage M - - - 0- Inspections M - - - 2013- Signs L - - - 0- Drainage District Revenue L - - - 2014- Expenditures L - - - 2010- Street Lights L - - - 0- Capital Projects L - - - 2011- Erosion Control Deposits M - - - 2014- Water Quality M - - - 2017- Stormwater Program H - - - 0TRANSPORTATION- Expenditures L - - - 2008, 2012, 2016- Plans Review M - - - 0- Capital Projects M - - - 2008, 2012, 2016- Right of Way Payments M - - - 2008, 2012, 2016PLANNING- Plan Review Process (Resid) M - - - 0- Plan Review Process (Comm & Indust) H - - - 0- Automated System H - - - 0- Expenditures L - - - 2010, 2015




not audited, & NA)



Carry-over

FY19 Proposed

FY19 Total (1)

- Cash Receipts/Revenue M - - - 2010, 2015- Zoning M - - - 0- Code Enforcement (Prop. Maint.) M - - - 2011

- Proffers & Conditions Tracking (T) H 160 - 160 0

- Comprehensive Planning M - - - 0UTILITIES- CIP - Utilities M - - - 2009, 2013

- Customer Info System (T) M 200 - 200 2005

- Finance & Admin. M - - - 2010, 2011, 2014- Operations & Maintenance M - - - 2012- Expenditures M - - - 2010, 2014- Plans Review M - - - 0- Right of Way M - - - 2017

- MIS (T) M - - - 0

- Internal Services Charges L - - - 2014COMMUNITY ENHANCEMENTLICENSE INSPECTOR- Business Licenses M - - - 0- Vehicle Registrations M - - - 0- Expenditures L - - - 2014SCHOOL BOARD 725 875 1,600 BUSINESS AND FINANCE- Expenditures (non-payroll) M - - - 2018- Payroll M 300 - 300 2008, 2012, 2014- School Activity Funds H - 125 125 Annual- Federal Grants M - - - 0- Textbooks M - - - 2014- Food Service/Vendors M 25 - 25 2008, 2009, 2010, 2011, 2012OPERATIONS- Facilities Construction - CIP M - - - 2009, 2012, 2015, 2016- Transportation M - - - 2009, 2013- Planning M - - - 0- Observations M - - - Annual since FY2011ADMIN. SERVICES- Facilities Custodial M - - - 2010, 2018- Facility Rentals M - - - 0- Structural/Maintenance M - - - 0- Environmental Health And Safety M - - - 2010- Mail Processing M - - - 0- Expenditures (non payroll, direct reports) M - - - 2009, 2013HUMAN RELATIONSHUMAN RESOURCES- Recruitment/Selection M - - - 0, 2010- Classification/Compensation M 100 - 100 2008, 2012, 2014- Systems/Subfinder L - - - 0- Benefits Administration M - - - 2018- EEO Reporting M - - - 0- Certification M - - - 0- Expenditures (non payroll) M - - - 2012, 2013- Performance Evaluations M - - - 2008- Staff Development M - - - 0- Temporary Work Assignements M 300 - 300 0- Administrative Support M - - - 2018- Community Relations M - - - 0- Communities in Schools M - - - 0- Special Projects/Hotline N/A - 450 450 various- Student Conduct M - - - 0




not audited, & NA)



Carry-over

FY19 Proposed

FY19 Total (1)

SCHOOL LEADERSHIP AND SUPPORT SERVICES- Student Services & Registration M - - - 2011

- MIS - Technology Security (T) M - - - 2009, 2012

- PCI Compliance (T) H - - - 0

- Privacy of Information (T) M - - - 0

- School IT Risk Assessment (T) H - 300 300 0

STUDENT LEARNING AND ORGANIZATIONAL DEVELOPMENTINSTRUCT. & STDT. SUPT. SERV.- Administration M - - - 2013, 2018- Special Education M - - - 0- General & On-line Education M - - - 2015- State Grants L - - - 0- Summer School M - - - 2015- Adult Education M - - - 2010, 2015- Federal Grants M - - - 0- Homebound Instruction M - - - 2012- Expenditures (non payroll) M - - - 0- Vocational Ed M - - - 0CONSTITUTIONAL OFFICERS 325 325 650 TREASURER- Deposit Prep. & Bank Reconciliation M - - - 2013

- Tax Billing, Payment Proc & Balance (T) M 325 - 325 0

- Refund Activity M - - 2010- Investment Activity M - - - 2011- Expenditures L - - - 2015- Bank Account Review L - - - 2013COMMISSIONER OF REVENUE- Expenditures L - - - 2015SHERIFF- Jail Canteen & Inmate Trust L - 325 325 annual - Expenditures L - - - 2010, 2015- Inmate Phone Commissions M - - - annual - RRJA - Financial Activities - Billings M - - - 2017COMM. ATTORNEY- Grants L - - - 2012- Expenditures L - - - 2012, 2016CIRCUIT COURT CLERK- Expenditures L - - - 2015VICTIM/WITNESS- Expenditures L - - - 2014County Wide Issues: - 200 200 - Strategic Plan Performance Measures M - - - 0- Phone & Internet Customer Service L - - - 2008- Phone/Internet Utilization M - - - 2008

- HIPPA/Private Information Security (T) M - - - 0

- Travel & Training County/School Wide M - - - 2010, 2014- Wireless Devices M - - - 2009- Vehicle Utilization/Gas Usage Analysis M - - - 2013, 2017- Span of Control M - - - 0- Department Efficiency Reviews M - - - 2008, 2009- Travel - Direct Reports L - - - 2013, 2016




not audited, & NA)



Carry-over

FY19 Proposed

FY19 Total (1)

- Affiliated Entities/ERM N/A - 200 200 annualOTHER: - 4,000 4,000 - External Auditors N/A - 300 300 annual- Special Projects/Hotline N/A - 1,800 1,800 various

- Audit Follow-Up N/A - 200 200 annual- Financial Analysis: N/A - - - annual

- APA Comparitive Report N/A - 75 75 annual

- CDBG & HOME Program Organizations N/A - 75 75 annual

- Community Organizations Applying for $10,000 or More N/A - 75 75 annual

- Volunteer Fire & Rescue Organizations N/A - 75 75 annual

- Quality Assurance Review N/A - 100 100 NA- Audit Risk and Work Plan N/A - 800 800 NA- Internal Audit Systems Maintenance N/A - 200 200 NA- Peer review N/A - 100 100 annual- Monitor 3rd party audit results N/A - 200 200 annualTotal 4,450 5,850 10,600

* Denotes departments that report through Finance Director

Note (1) - Hours are bolded for carryover projects, or required items already in progress.Note (2) - Risk assessments of high, medium or low are assigned based on ten strategic and operational factors.Note (3) - (T) superscript denotes units requiring a technology focus.




not audited, & NA)



Chesterfield County Mission Statement Providing a FIRST CHOICE Community Through Excellence in Public Service


of 5

CHESTERFIELD COUNTY ADMINISTRATIVE POLICIES AND PROCEDURES

Department: Internal Audit Policy Number: 8-1 Subject: Introduction Supersedes:

Date Issued: 11/15/17 DRAFT

I. INTRODUCTION

The County of Chesterfield, Office of Internal Audit (O.I.A) was established as an independent review and evaluation service function to conduct and evaluate financial, and performance audits of programs, functions, and activities as a service to County and School management. The Internal Audit Director (Auditor) reports to the County Administrator, School Superintendent, and the Audit and Finance Committee (AFC). The Auditor also provides periodic internal audit reports and updates to the Board of Supervisors and School Board through the AFC. The four member AFC consists of two members of the Board of Supervisors and two members of the School Board appointed by their respective Chairs. Annual performance review feedback for the Auditor is provided from elected officials via their representatives on the Audit and Finance Committee, and through the County Administrator and School Superintendent. Independence – To be independent in fact and appearance, auditors must be free from conflicts of interest and free from interference in how the work is conducted and reported. The Auditor will comply with Government Auditing Standards to identify, safeguard against, or report threats to independence. The Audit Director has no direct authority over other persons in the organization whose work he/she reviews. Such authority is vested in the Department head. Further, his review and evaluations do not in any way relieve other persons in the organization of the responsibilities and accountability for duties assigned to them. Complete objectivity is essential to the audit function. The Auditor, therefore, should not develop and/or install procedures, prepare records, or engage in any activity, which he/she would normally expect to review. Management Support – The organizational status of the Auditor and the support of his function by County and School Management provides the benchmark for the success of the internal audit program. The Auditor must have access to management at all levels to ensure adequate consideration and satisfactory resolution to all comments, recommendations and findings.

Unique Creation and Update Process for Internal Audit Administrative Policy and Procedure – County Administrative Policy (CAP) 09-01, County Administration – Administrative Policies and Procedures establish guidelines for creating, updating, and rescinding County Administrative Policies and Procedures. Based on Internal Audit’s organizational placement, Internal Audit administrative policy and procedure creation or updates use an alternate approval process to CAP 09-01. Internal Audit policies will be evaluated at least annually for potential update during the AFC’s first calendar year meeting. Internal Audit will provide recommended administrative procedure creation or update to the County Administrator and School Superintendent, and present to the AFC for approval.

II. OBJECTIVES AND SCOPE The Auditor shall have responsibility to conduct audits of all County and School departments, agencies, and activities as stipulated by County Code Chapter 6.12 to independently and objectively determine whether:


of 5

A. Activities and programs being implemented have been authorized by either the Board of Supervisors, School Board, County Administrator, School Superintendent, state or federal law or regulations and are being conducted and funds expended in compliance with applicable laws;

B. The department, office, or agency is acquiring, managing, protecting, and using its resources, including public funds, personnel, property, equipment, and space, economically, efficiently, equitably, and effectively and in a manner consistent with the objectives intended by the authorizing entity or enabling legislation;

C. The entity, programs, activities, functions, or policies are effective, including the identification of any causes of inefficiencies or uneconomical practices;

D. The desired result or benefits are being achieved; E. Financial and other reports are being provided that disclose fairly, accurately, and fully all

information required by law, to ascertain the nature and scope of programs and activities, and to establish a proper basis for evaluating the programs and activities including the collection of, accounting for, and depositing of any funds, revenues, and other resources;

F. Management has established adequate operating and administrative procedures and practices, systems or accounting internal control systems and internal management controls; and,

G. During the course of audit work, there are no indications of fraud, waste, abuse or illegal acts.

III. ANNUAL AUDIT PLAN A. At the beginning of each fiscal year, the Auditor shall submit a revised annual audit plan to the

County Administrator and School Superintendent for review and approval. This audit plan is also approved by the AFC. The plan shall include the departments, offices, boards, activities and agencies scheduled for audit during the year. This plan may be amended during the year after review with the County Administrator/School Superintendent. Additionally, the Auditor may initiate and conduct any other audit deemed necessary to undertake.

B. In the selection of audit areas, the determination of audit scope and the timing of audit work, the auditor may consult with the County’s external auditors, Deputy County Administrators, School Division Chiefs and Department Heads so that desirable audit coverage is provided and audit effort may be properly coordinated. Proposed audit plan will allocate resources between County and School projects proportionate to the auditable unit population.

C. Risk Assessment – Internal Audit in developing or revising its Annual Audit Plan shall conduct a County-wide risk assessment. This allows Internal Audit to systematically evaluate risks related to auditable units. It also provides for an audit frequency for each auditable unit based upon a calculated risk score and other relevant factors. Auditable units and the assessed risk levels are subject to change over time.

D. Audit Follow-up – On an annual basis, the Auditor will furnish the County Administrator, School Superintendent and AFC with a summary of all material unresolved comments, recommendations and management responses.

IV. SPECIAL EXAMINATION The AFC, County Administrator, School Superintendent, Deputy County Administrator, School Division Chief or Department Head may request the Auditor to perform special examinations or unplanned audits that are not included in the annual audit plan. The Auditor will determine the performance of requested items based on audit plan priorities, professional standards, available staff, and resources.


of 5

V. AUDIT PROCESS A. The Office of Internal Audit will make every effort to inform the auditee about an upcoming audit

and be flexible in scheduling. Factors such as auditee’s seasonal workload, or other issues, will be taken into consideration when scheduling audits and developing the timetable for completion. This notification will take the form of an Entrance Conference Memorandum that will outline the general scope, objectives of the audit, a proposed timetable for completion, request for general information, and the responsibility of the Auditor and Department Head. This memorandum will be sent to the Department Head at least two weeks in advance of the Entrance Conference.

B. At the Entrance Conference, the auditee and the auditor will discuss approaches and expectations about the way the audit will be conducted. The Auditor will also determine whom management designates to receive Point Sheets. The Auditor will then conduct a Survey, which enables the Auditor to gain a working understanding of the mission, operations and functions of the entity or function being audited.

C. The Fieldwork will commence after completion of the survey. The fieldwork stage involves testing of transactions, vouching of account balances, and evaluation of administrative and internal policies and procedures and other audit procedures deemed necessary. The fieldwork is conducted generally within the general framework of generally accepted government auditing standards.

D. Upon completion of any function or activity during fieldwork, the In-charge Auditor will prepare Point Sheets. Point Sheets are written documents which list: Criteria, Condition, Cause, Effect and Recommendation(s) for each audit finding. These point sheets will be provided as drafts to management and discussed. The auditor will document point sheet discussion with management, noting if there was agreement and describing any disagreements. Based on supporting information from management, the In-Charge Auditor may revise the draft findings and/or perform additional testing. The evaluation of the Point Sheets by management and concurrence by the In-Charge Auditor only represents acknowledgement that the issues were discussed. It does not indicate approval or any final commitment.

E. An Exit Conference will be scheduled by the Auditor. At the Exit Conference, the auditee and the Audit Director will discuss each comment and recommendation. This conference provides an opportunity for the auditee to produce evidence that may result in changes due to material inconsistencies, omissions, and/or errors in the point sheets. It also provides for a sound evaluation of the recommendations in terms of cost/benefit, timetables for implementation, or other resources that the audit process may not have identified. The Exit Conference takes place after the issuance of all point sheets and discussion with management.

F. Based upon the results of the Exit Conference, the Auditor will provide the auditee with a DRAFT REPORT, which will include revised comments and recommendations. The department must return the Draft Report with responses within 21 days from the draft report date. The Audit Director and auditee will then discuss this Draft with the appropriate Deputy County Administrator or School Division Chief when necessary. If material disagreement remains after this meeting, the Audit Director must document points of disagreement and will be responsible for mutually scheduling a meeting with the Auditee, County Administrator or School Superintendent, and /or appropriate Deputy County Administrator or School Division Chief to resolve the issues.

G. The last stage will result in the issuance of a Final Audit Report. The report will include: 1. An Executive Summary to summarize the audit for top management and an Auditor’s

Opinion (if necessary),


of 5

2. A precise statement of the objectives and scope encompassed by the audit, as well as, some background information,

3. A statement that the audit was performed in accordance with generally accepted government auditing standards,

4. A statement of material and immaterial audit findings, including a statement of the underlying cause and evaluative effects,

5. A statement that internal control systems were examined and report of any material weaknesses found in the internal control systems,

6. Statements of response submitted by the audited department or agency relevant to the audit findings,

7. A concise statement of corrective actions taken or contemplated as a result of the audit findings and a time table for their accomplishments,

8. Recommendations for additional necessary or desirable action and follow-up procedures, 9. A statement disclosing we are a department within Chesterfield County/Schools.

VI. REPORT OF IRREGULARITIES/FRAUD If the auditor suspects violations of law or malfeasance, misfeasance, nonfeasance, or dereliction of duty by an officer or employee, the Auditor shall report such irregularities to the County Administrator or School Superintendent. If the irregularity is criminal in nature, the Auditor shall immediately notify the County Administrator or School Superintendent and the Commonwealth Attorney or Police in addition to those previously cited.

VII. CONTRACT AUDITORS, CONSULTANTS, AND EXPERTS An audit that is performed by contract must be conducted by persons who have no financial interests in the affairs of the governmental units or its officers. The Auditor will coordinate and monitor auditing performed by public accounting or other organizations employed under contract by the County to assist with audit related activities. Contracting for external audits will be awarded in accordance with established procurement procedures.

VIII. ACCESS TO RECORDS AND PROPERTY (COUNTY CODE CHAPTER 6.12) All officers and employees of the County and School system as designated by the County and School Attorney shall furnish (within legal constraints) the Auditor with requested information and records within their custody regarding powers, duties, activities, organization, property, financial transactions and methods of business required to conduct an audit or otherwise perform audit duties. In addition, they shall provide access for the Auditor to inspect all property, equipment, and facilities within their custody. If such officers or employees fail to produce the aforementioned information, then the Auditor, subject to County Administrator’s or School Superintendent’s approval, may request a search to be made and exhibits to be taken from any book, paper or record of any such official or employee, excepting personal information, and every office having the custody of such records shall make a search and forward such requested information to the Auditor. The Auditor shall retain in accordance with “the Commonwealth of Virginia Records Retention and Disposition Schedules” all audit reports, including examinations, investigations and reviews made. Audit work papers and other supportive material directly pertaining to the audit report will be retained for 8 years.


of 5

IX. AUDIT REPORT DISTRIBUTION A. Point Sheets – Limited between In-Charge auditor and the auditee Management Designee. B. Draft Report – After Exit Conference, distribution will include Department Head, Assistant

Department Head, and Audit Director. C. Final Audit Report – Distribution to the AFC, Department Head, appropriate Deputy County

Administrator, School Division Chief, and County Administrator or School Superintendent. Audit Director may send courtesy copies of appropriate sections to the Director of Accounting, Budget and Management, Human Resources, Information System Technology (IST) and other departments, if situations warrant Department Head will be notified before release.

X. PEER REVIEW The Internal Audit activities of the Auditor’s office shall be subject to peer review at least once every three years by a professional, nonpartisan objective group utilizing guidelines endorsed by the Association of Local Government Auditors. A copy of the written report of this independent review shall be furnished to the County Administrator, School Superintendent and the AFC. The peer review will use generally accepted government auditing standards to evaluate the quality of audit effort and reporting. Specific peer review areas shall include staff qualifications, preparation and evidence, and the adequacy of systems for reviewing internal controls, fraud, waste and abuse, program compliance, and automated systems. The peer review will also assess the form, distribution, timeliness, content, staff qualifications, independence, due professional care, quality control, fieldwork, (♦ planning ◆ evidence ♦ internal control ♦ supervision ♦ legal and regulatory requirements) reporting, and presentation of Internal Audit reports.


Procurement Update for Audit and Finance Committee

June13, 2018Keith Gagnon

Procurement Director6-13-18 AFC Meeting Materials

Procurement Policy Updates

• Workgroup has been reviewing/rewriting procurement policy manual• Update for compliance with changes to law and best practices• Add policy section specific to e-procurement• Add policy section specific to procurement with grant funds• Revise surplus property authority to streamline process for CCPS• Consolidate definitions into one definition section for consistency• Update department delegations and thresholds


Purchase Delegation/Thresholds

Delegation/Threshold Current Law permits (VPPA) Proposed

Delegation to Departments $5,000 N/A – does not restrict $10,000

Single Quote limit1 Up to $10,000

Up to$30,000

Up to$10,000 - No change*

Informal Competition Limit2

(RFQ, Informal RFP)Up to $50,000

Up to$100,000($80K professional services**)

Up to$100,000($80K professional services)

Formal Competition3

Threshold (IFB, RFP)>$50,000 >$100,000

($80K professional services)>$100,000($80K professional services)

*Certain contract compliance requirements and mandatory terms and conditions are required for purchases above $10,000. Procurement expertise is needed for these.

**VPPA limit changes from $60K to $80K on July 1, 2018 – HB97

1 Departments should seek quote from Chesterfield/Diversity Vendor, if available, for all single quote purchases.

2 Procurement will solicit a minimum of 1 Chesterfield Business and a minimum of 1 Diversity Vendor, if available.

3 Procurement will solicit a minimum of 1 Chesterfield Business and a minimum of 2 Diversity Vendors, if available.


Audit and Finance Committee (AFC) Meeting Notes June 13, 2018, 10:30am

Supervisors in Attendance: Staff in Attendance: Mr. Stephen A. Elswick Greg Akers Mr. Christopher M. Winslow Allan Carmody Dr. Joseph Casey, County Administrator Mary Martin-Selby Scott Zaremba Matt Harris Meghan Coates School Board Members in Attendance: Christa Berta Mr. John Erbach, Chairman Steve Sanderson Donald Fairheart, Interim School Superintendent Sarah Snead Karen Reilly-Jones James Fitch Keith Gagnon Call to Order: Mr. Elswick called the meeting to order at 10:30 am. Opening Remarks Mr. Elswick congratulated Mr. Fairheart on his appointment as Interim Superintendent and on the successful graduations ceremonies held earlier this month. Mr. Erbach noted Dr. Siddiqi was unexpectedly unable to attend today’s meeting. 1. External Audit Required Communications: Patsy Brown, Director of Accounting

Ms. Brown introduced the external auditor from Cherry Bekaert, Mr. Rob Churchman. Mr. Churchman reviewed Cherry Bekaert’s Presentation to the Audit and Finance Committee handout* that covers external audit required communications and clarified points brought up by the Committee.

2. Employee Healthcare Benefits: Mary Martin-Selby, Director of Human Resources

Mary Martin Selby introduced topic to bring proposed health care plan renewal and rates to the AFC prior to presenting to both boards in August. She turned over the presentation to USI Insurance Services consultant, Claire Harlin, CEBS. Ms. Harlin reviewed the 2019 Health/Dental Plans Renewal Review handout*. In response to Committee questions, Ms. Harlin clarified our benefits and employee cost are better than the average private sector offerings, and comparable to our governmental peers.

3. FY2018 Year End Projections/Reserves: Meghan Coates, Budget Director / Christina Berta, CFO CCPS Ms. Berta reviewed the FY2018 School Year End Projections handout*, including proposed year end reserves. Mr. Winslow and Mr. Erbach commented favorably on the planned set-asides. Ms. Coates reviewed the FY2018 General Fund Budget Projections handout* and noted there would be usual year-end related budget actions at the next Board meeting.

Audit and Finance Committee Meeting Notes June 13, 2018

2

4. Internal Audit Periodic Reports: Greg Akers, Director and Steve Sanderson, Audit

Manager Mr. Akers introduced new Audit Manager Steve Sanderson. Mr. Akers noted certain report highlights from Internal Audit Update - Reports issued through June7, 2018 handout*. In response to Mr. Elswick’s public works cost question, Dr. Casey asked that Internal Audit’s future APA Comparative Report analysis note which localities were responsible for road maintenance (i.e. vs. covered by the State). Mr. Sanderson reviewed the FY2018 Internal Audit Plan Update handout*, summarizing Hotline activities and the status of projects completed, in-process and remaining. Mr. Sanderson next discussed highlights from the Internal Audit Proposed FY19 Audit Plan handout*. Mr. Sanderson described we want to allow additional time for consideration and input, and that we will not request the Committee’s approval until the next AFC meeting. For improved reference, the proposed workplan and audit universe detail was placed in report style document with coverage analysis. Mr. Akers explained plans to strengthen technology audit resources and thanked the Boards and Administrations for their support. Mr. Winslow departed the meeting at 11:30am. Mr. Akers transitioned to covering the Internal Audit Policy 8-1 update handout*, describing that Policies 8-1 and 8-2 were updated through AFC and approved by both Boards late last year. Future policy updates can be approved by the AFC. Mr. Akers noted that best practices include having an agreed upon schedule for ongoing policy review and update. We are recommending revising policy 8-1 to time such review with AFC’s first calendar meeting, to align with each Boards’ calendar year committee assignments. Proposed edits are marked on policy 8-1 handout page 1. Dr. Casey added this was consistent with Committee’s intent from last year’s discussion to periodically revisit policy requirements. Mr. Elswick requested delaying approval action until next AFC meeting, to consider recommended change and allow time for input.

5. Update on Procurement Policies: Keith Gagnon, Director of Purchasing

Mr. Gagnon used the Purchasing Update handout* to describe policy updates and changes to purchase delegation dollar thresholds. Dr. Casey added that these changes were administrative, and while sharing for any input that Board approval was not required. In response to Mr. Elswick noting single quote limit of $10,000 was under State code allowable $30,000, Mr. Gagnon described goal was to avoid an additional policy category while complying with the lower $10,000 threshold applicable to certain grant purchases. Mr. Gagnon also noted that the $10,000 threshold is a common limit for other public bodies as it provides a balance between competitive principles and administrative efficiency.

Audit and Finance Committee Meeting Notes June 13, 2018

3

6. Closed Session for: Dr. Joe Casey, County Administrator

Mr. Casey and Mr. Elswick requested delaying planned closed sessions for the External Auditor and Internal Auditor to a future meeting due to the potential lack of a quorum after Mr. Winslow’s departure.

7. Closing Remarks: Mr. Elswick closed the meeting at 11:50am. *All June 13, 2018 meeting handout materials noted above are available on the Chesterfield.Gov Audit and Finance Committee webpage.

http://www.chesterfield.gov/smartdata.aspx?id=8590136733