FY25 Audit Committee Organizational Meeting   5/19/2025

unable to join us.

So I, Shenandra Usher, will stand in as chairperson as his delegated designee for the week.

So I'll be conducting today's meeting.

So now I'll call the meeting to order.

It is 2.03 p.m. and I would like to call to order today, Monday, May 19, 2025, the meeting of the audit committee.

The information about this meeting is posted on the county's website.

under the Audit Committee homepage.

The committee members who are present at this meeting are Board of Supervisors Representative Jim Andrews, School Board Representative Ellen Osborne, the Superintendent-designee Rosalyn Schmitt,

our auditors, Addison Roeschley and Megan Argenbright.

Missing committee members at this time are CFO, Jacob Sumner, County Executive, Jeff Richardson, and Board of Supervisor, Representative, Ned Gallaway.

Other attendees at this meeting are Jan Lynn, our controller for the county,

and Valerie Smith, our Policy and Process Analyst in the Office of the CFO.

Later, Lara Andrake will be joining us, our Chief of Shared Services in Enterprise Risk Management and Analytics.

The purpose of today's meeting is to review the Fiscal Year 25 Audit Work Plan and to prevent the fraud, waste and abuse update.

Are there any changes to this agenda or any questions by any member before we get started?

Awesome, thank you.

Seeing none, I move that we approve the agenda.

Can I get someone to second that?

Thank you.

So the first item on the agenda today is for adoption of the all virtual meeting policy of the Audit Committee and the reelection of a chairperson.

So the audit committee for spring meeting will always be a virtual meeting.

Awesome, thank you.

And up for reelection, would anyone like to nominate someone to be chairperson of the audit committee for fiscal year 25's audit going into fiscal year 26?

I'd like to re-nominate Jacob Sumner as chairperson

of the Audit Committee.

Great.

All opposed?

Great.

Thank you.

Thank you, Shenandra.

I'm Megan Argenbright.

I'm the partner on the county's audit.

This is our third year working with you guys.

So I'm going to go over the planning communication letter and then Addison is going to go over to the rest of it.

But if you have any questions at any point.

jump in and ask either of us.

We're happy to answer them as they come to mind.

And the planning communication letter, Jacob emailed out last week.

It is pretty standard.

It's required communication.

It talks about what is an audit and what is management's responsibility?

What are the auditor's responsibility?

There are a couple of points I'm gonna make in relation to this letter.

The first one is that it does have a list of questions related to fraud.

This is not because we have any concerns about fraud.

It's because we are required to open the doors and open that pathway of communication with the school board and the board of supervisors.

We make this communication with all of our clients.

We also do perform inquiries related to fraud with several employees of the county and the schools in performing our regular audit procedures.

But we do want to make sure that we're asking you all as well.

And if you have any concerns, you can come directly to Addison or I.

But if you don't have any, then you do not need to come to us.

The other part of this letter that is worth noting that that changes year to year is that we do identify risks when performing our audit.

And this year we have three risks.

The first one is management override.

This is a standard risk.

We're always going to have this risk.

It will never go away.

But management override, and we perform some procedures in relation to each of these risks.

The second one is capital assets.

We did have some management letter comments last year, so we're keeping it as a risk this year.

We are aware that some of your processes have changed.

There's turnover in that position, so we do know that's happening, which is all the more reason for us to kind of look at it a little bit more closely.

And the last one

Not a shock to you all probably is that you had an accounting system update and therefore we are going to perform some procedures around that update to make sure that the numbers and the outcomes in that software are what they should be.

So those three areas are things that we have discussed internally and we'll do specific procedures related to them.

I'll try and share my screen real quick.

So first, I'll just share kind of a soft calendar for us.

And it looks like it's up there.

So we will be on site at the end of June for preliminary field work.

We do a lot of APA procedures here.

We do some VRS testing.

We look at internal controls.

We'll have some members or some meetings with members of management

Usually on site for four or five days that week.

It's usually nothing too intense for anybody that we're working with.

Then in July, we've got time where we do school activity funds for the most part.

So we work with the schools on that one, not much with the county employees.

Then we start single audit in August.

So this is usually working with very specific programs, usually Medicaid, child nutrition.

Sometimes accounting members are getting their hands

involved helping us out with certain stuff.

But these are federal programs that were required to audit once a year, once every three years, depending on spending.

And then October is really when everybody becomes pretty familiar with us.

That's when we'll be on site.

So we'll be on site kind of that last week of September into October.

And then we do a lot of remote field work while we're not there.

We come back on site, do some more remote field work.

And then we start report prep, which we're going to be preparing the FY 25 financial statements this year again for the county.

So that carries October through November.

And then in December is when we aim to have a finalized report ready for review in front of everybody at the board meeting.

So that's kind of just a quick summary of it.

For anybody who had been looking at our schedule from the past few years,

Nothing about this is really too different other than a couple date changes here or there.

But that is the soft schedule on that one.

I'll go ahead and take the schedule away.

Any questions on that while I'm getting my little settings back?

And then the last thing that Megan and I wanted to cover today, I think the county is probably mostly familiar at this point with us, with our audit procedures.

Certainly, as you said, with the new accounting system this year, there will be some changes and differences.

I think an understanding as we develop how we're going to respond to that.

But with you guys switching to Tyler, that's nothing that we haven't been exposed to with any of our other audits.

So we're pretty familiar with it.

Big change, moderate change, if you will, from an accounting standpoint, with a GASB 101, a new accounting standard for this year, is with compensated absences.

So we wanted to take just a few minutes to kind of go over what that is, what it's going to involve this year.

The good news is, is GASB

When they came out with the IV 101, which is compensated absences, they didn't want to make it a huge burden on localities and they kind of wrote in their implementation as they're doing this.

So for the most part, it's looking at accrued leave balances, sick leave, vacation time,

There's all sorts of various leave policies, military leave, family leave, that could end up falling into consideration with this policy.

But over the past 20 or 30 years, they

We're starting to notice that a lot of localities were accounting for leave differently.

Leave policies were becoming much more nuanced.

There's a lot more that employers were willing to offer employees just to be able to bring them in and meet needs.

And so they wanted to kind of make a more unified accounting method for this if they could.

The largest impact that it's gonna have is on the government-wide statements for the county and for the schools

relating to long-term and short-term liabilities for sick leave and vacation leave.

The estimate that gets done to do that is a little bit more involved, and it doesn't look at only what is going to be paid out to employees at termination, but also is there leave that they have earned in the course of their employment that might be paid out in the course of their employment.

So sick leave is the biggest one for this one.

Usually a lot of localities were just

recording a liability for the leave they expected to pay out when an employee left their employment.

Now, you also kind of have to make an estimate of what could you have to pay out as general leave if that employee takes sick leave one or two weeks a year.

And so the method of estimating that is a little bit more sophisticated, if you will, and it relies on localities using

information available to them through HR reporting or through payroll reporting, just kind of looking at the historical leave of those balances.

It will generally increase that liability itself, but again it's a government-wide entry, so it will not impact any of the fund level statements, the general fund,

the school's operating fund, any of that.

It won't have any specific balance that gets included there that would require any difficulties for things like budgets or anything like that.

It stays entirely away from that and it only would impact the government-wide statements.

So that is kind of the one fortunate thing of it is I'm sure the budget department's going to like it because it's a lot, you know, they're just used to paying out and budgeting for salaries and everything like that.

So there is no change on that instance.

You know, it's not as complicated as the previous standards with leases or speedos or pension balances or anything like that.

So we have started working with the county a little bit on kind of assisting and developing that estimate and what that may look like.

However, as it relates to the audit committee and the board of supervisors, I do not expect that you guys would be all too familiar with the reporting of it just based on it being a government-wide balance that for the most part is only going to impact a couple of people who are helping prepare the estimates.

Megan, if there's anything in there that you wanted to chime in on, feel free to do so.

Yeah, I don't have anything to add other than

We are gonna have a lot more conversations about this at preliminary as well because it's a estimated liability.

And we already note it as an estimate of sorts, but it will note it in a couple of different places.

Cause now it's gonna be more of an estimate.

So yay.

But yeah, we'll be trying to have those conversations earlier because it can be done earlier on the methodology and whatnot.

It's not something that we need to be doing in October.

I'd be happy to take questions on that one.

There are none.

Megan and I don't have anything else prepared.

We're excited for another year with the audit.

If there are no questions, thank you, Megan.

Thank you, Addison.

Good afternoon.

I'm Laura Andrake.

I'm the chief of enterprise risk management here at the county.

And so each audit committee meeting, I provide to you a report of any activities that have come up since the last meeting.

And so I do have a few items to review with you.

There's one item that's a carryover that I reported last fall.

That item is still open with investigation, which was a check fraud claim that we had.

There's a new check fraud claim that is almost resolved.

And so that one was under $1,000.

So that one we're gonna report to you in the fall once it's completely resolved.

There's also

One active investigation of a cyber fraud.

There's not much information I can give you about that until that investigation is complete since our police department is in an active investigation on that one.

And there is one fraud, waste, and abuse report that came through our

anonymous website that when we did fully investigate with the team, I did determine that was an unfounded fraudulent activity report.

But in the process, we did improve some processes and incorporated a new approval process for one of our credit processes.

and so although it was not fraudulent, it was inefficient and so we've improved that process.

I'm hoping in the fall that I can give you some dollar amounts for the amount of these active investigations, but currently we'll keep that confidential until those investigations are complete.

Did you have any questions for me?

that I can answer.

Well, thank you very much.

Thank you, Laura.

For the recording and the meeting notes, I'd like to update the attendance.

County Executive Jeff Richardson has joined us for the meeting notes.

He's in attendance as a board member today.

Now I'll make up if there are any other questions about anything that's been discussed today in today's audit committee meeting.

The meeting is adjourned.

Thank you all for your time.