FY26 Audit Committee Organizational Meeting   5/19/2026

I'll talk about this shortly.

Good afternoon, everyone.

It is shortly after 1 o'clock, 1.03 on Tuesday, May 19th, 2026.

We'll go ahead and convene the Lamar County Audit Committee that is scheduled for today.

I'm going to start with a roll call so we know have our attendance documented, and then we'll go through the next items on the agenda, which are re-election of a chairperson or election of a chairperson.

although it was Mr. Richardson, I waited a few minutes and we could have nominated him, but that's okay.

And then we'll go through our conversations with the auditors and then wrap up with the fraud, waste and abuse hotline update.

All right, so let's do a committee member attendees.

From the school's representation, Ms. Ellen Osborne.

Hi.

Good afternoon.

Ms. Rosalyn Schmitt, Austin Schools.

Also representing the county, Fred Missel.

Here.

Sorry, I was on mute.

Also representing the county, Jeff Richardson.

Here.

And myself, Jacob Sumner.

All right.

All accounted for.

All right, so the first item we have is to elect.

It says re-elect, but it says elect a chairperson.

Historically, for those that have not been on the Audit Committee in the past, the CFO has been historically nominated as chair to oversee this committee.

As CFO, I'd be willing to do that again, but if someone else would feel strongly otherwise, I'll be glad to take different nominations.

I nominate Jacob Sumner.

We have a motion and a second.

All in favor?

Aye.

Motion carries.

Thank you so much.

I feel honored and privileged again to be the chair of this audit committee.

I know Ms. Osborne and Ms. Schmidt and I were having a conversation earlier about this is one of their favorite committees.

So I'm privileged to be the chair of this committee again.

You guys need to reevaluate your life priorities, I think.

That may show up in my performance evaluation with Mr. Richardson later.

Well, I'm happy to welcome our auditors today with us from Brown & Edwards & Company, Megan Argenbright, and Addison Roeschley.

They're going to walk us through the next part of the agenda, which is the review of the planning and the communication letter for the upcoming FY26 audit and go through the work plan.

Thank you.

I'm going to get us started.

Do the easy part.

And then obviously, as we all know, Addison always has the harder parts.

So the first thing is the planning communication letter.

This is our communication to you guys.

And it's very standard year to year.

It talks about what an audit is, what materiality is, but it does ask, it includes, you guys don't have it yet.

Let me start by saying that you will be getting this planning communication letter.

It's ready on our end.

We just like to have this meeting first and then we'll send it to Jacob to distribute to the whole board, the school board and the board of supervisors.

And so you don't have it yet, but you will be receiving it.

It does have a part of the letter that does ask some fraud inquiries.

This is standard communication.

We are required to communicate with you and then open lines of communication that if throughout the audit process or really anytime throughout the year, if you want to reach out to us, it has my contact information in there and you're able to do so.

The letter also includes some risks because the way that we plan audits

is we evaluate, we're reading your minutes, we're looking at prior audit work papers, prior audit findings, and we're determining are there any risks associated with this engagement?

And if there are, then we plan our audit procedures accordingly so that we are taking those into consideration.

There are two risks in the planning communication letter this year.

The first one is management override of controls.

This is a standard across the board risk.

It's going to be a risk in every single audit ever.

And it means that like your controls can be great.

They can be planned and in place.

But then if somebody circumvents those controls, now they've gone away.

And so management override is a risk and it always will be.

The second risk in the letter is capital asset and CIP reporting.

And so this is getting better, but we don't feel, we're not quite there.

There's a lot of nuances in capital assets.

It's a very heavy lift and it's a very difficult area.

And even without findings, it's an area where a lot of times we have a risk because there's a lot of capital projects and now it includes leases and speed is, and there's a lot to capital asset reporting.

And though the county has made significant strides

in the last several years.

We are keeping it as a risk just to keep a closer eye on it.

There was a risk last year for having a new system.

We removed that one.

So honestly, that system implementation, very impressive.

And I'm sure we said this when we met with you guys back in the fall, but that's a standard risk when a client implements a new software, but we're not continuing it in year two, which is

That doesn't always happen, that's what we'll say.

I will say, sort of related to this risk conversation, there were some changes to the single audit, the federal compliance guidelines.

The county is a not low, that's the official term, not low risk, oddity.

And that's based on, there's like 10 different factors, but one of which is if you've had

findings or material weakness in the last two years.

So you didn't have any last year.

So this will be your two.

So the goal is to get to being a low risk auditee.

And what that means is if you're a low risk auditee, when we're doing your federal compliance audit, we need to test 20% of your federal awards.

Whereas when you're not low, we have to test 40%.

That difference there,

There are also other requirements where we have to test any grants over a million dollars.

That threshold just increased this year.

It was 750,000.

Now it's a million.

We have to test those every three years, no matter what, right?

So we're still continuing to test the big grants on a rotating schedule.

This year, we're testing Title I, SPED, and adoption.

And like I said, those are on a rotating schedule anyway.

that we would have to test them.

So not a concern just sharing that the federal compliance, the OMB Office of Management and Budget really was like, hey everybody, we're increasing the threshold to a million dollars from 750.

And what we're finding is it's not actually impacting many of our clients very significantly.

There's a very small population where that actually impacts their testing.

and the county is kind of too big for that to really impact what we're covering.

Thank you.

So I'll just go over quickly the audit schedule.

I know that there's some people in this call that this might be their first time sitting on the audit committee.

So we will be out the week of June 15th for preliminary work.

Our prelim work largely is VRS work, state procedures that we're required to do through the APA overlooking at census information, eligibility information, and just ensuring that HR and payroll are processing VRS work in the accurate process.

Outside of that, we look at internal controls.

We look at some other APA procedures that they outline for us.

Some of that involves working with social services.

Some of that is different year to year.

So one that we'll have to do this year is looking at compliance with state code over debt issuances and just ensuring that the county has followed all state requirements there.

So that'll be prelim.

If there's any federal programs, I know Megan had mentioned the three that we'll be testing for sure.

If there's any of that work that we can pull up into prelim, we will try to do that in advance of kind of the end of the year audit work.

There may be other federal programs as well that we would need to test.

It really depends on what final end of the year expenditures are looking like.

but those are three programs for sure that we know next year they have to be tested based on testing cycles and everything like that.

Starting then in July we'll be doing some school activity fund work.

I know that's separate from this audit but that's where a lot of our time through July and a little bit into August is focused is working with a lot of the principals and the bookkeepers over at all the schools and doing some testing over their school activity funds.

In August and September, that's going to start being a little bit more time if we can do it for single audit work.

And then right at that last week in September, September 28th, that's when we do our first week of onsite final fieldwork.

That's a pretty heavy week.

Usually we have a team of about four or five people on site.

We'll come back the week of September 16th, I believe, I'm sorry, October 16th and complete another week on site, wrap up as much as possible.

And then we start report preparation the week after that so that we can be ready to have everything, some drafts, management letter drafts for

the fall audit committee meeting.

Outside of that, in that timeline, there are two new accounting standards this year through GASB.

However, maybe a little bit thankfully this year, they're not as significant as in years past.

They're not changing methods of accounting or creating new balances to go onto the balance sheet.

The first one is GASB 103.

That largely is going to focus on management's discussion and analysis, which is going to be the section kind of at the beginning of the act where the county gets to go over any of the significant events that might have had an impact on the financial year.

some of the plans or initiatives that would be geared for us over the next couple of years after and just providing some insight over the financial statements themselves.

The goal that GASB is looking at with 103 is that an uninformed citizen, maybe even one not from the locality or in the general area could read through the MD&A and have an understanding of that year, not only as far as the economic events that had happened

but also the impact it had on the financial statements.

That reader would be one who maybe would not even have a lot of accounting knowledge or government accounting knowledge and would still be able to have a pretty strong understanding of how that year had looked.

Outside of the MD&A, it does involve a little bit of restructuring of some of the statements and the budget to actual statements.

We've been working with Jan and Dennis on preparing for that and ensuring that those steps are ready so that when we have, you know, we're through final field work and doing report prep, there's not a lot of hold up there.

Again, on the budget to actual, it's just explaining a little bit more detail sometimes on not only if there is a difference between the ending budget to the actual balances that were actually incurred, but also the beginning budget to the ending budget, if there's any budget amendments throughout the year that were rather significant.

And just ensuring that there's a little bit of accountability placed on the budgeting process and that a citizen who's opening the act for would be able to have an understanding of those changes that had occurred.

The other new standard would be GASB 104.

I don't want to call that one insignificant, but it is one that largely looks at the reporting of capital assets on the financial statement notes.

A lot of those changes are already being done in the current ACFR or were already reported that way.

However, GASB had seen after a few years of implementing the lease standard and the speed of standard,

that not all entities were reporting those in the way that they had intended or in a way that was consistent from one locality to the next.

So that standard is just having a clarified process on the note disclosure.

But again, a lot of that has already been done in years past, so it's really not a significant change.

Both of those standards by GASB, the first one they kind of outlined 103,

would have a moderate impact to localities and 104 would have a relatively small impact.

Whereas some of the previous standards, GASB 87 with leases or GASB 96 with SPEDA's, they both had classified those as significant impacts to the financial statements.

Not only the statements themselves, but also then the work needed to prepare for that.

We have been talking with Jane and Dennis on how to prepare for these, specifically with GASB 103,

There's a plan in place by prelim fieldwork that they would have rewritten the FY25 management's discussion and analysis to conform with FY25 balances but conform to GASB 103 just to help make sure that if there are any gaps in understanding or if we need to look at anything further in detail, there's plenty of time to do so before the end of the year when there's a little bit less time to gather the understanding of what needs to change there.

Megan, feel free to chime in if I didn't skip over anything.

The audit process this year, I think, is going to look a lot more similar to what we all want a normal audit to look like, which is not a lot of new accounting standards.

Excellent.

Thanks, Addison.

Thanks, Megan.

All right, Shenandra, I want to thank you for being on the call with us today.

I know you help oversee the controller's office and in conjunction with Jen Lynn, our controller, and Dennis Click, our deputy controller.

They're very much in the throes of working through the audit plan and audit engagement with the full support of the controller's office and the staff that are there.

So thank you.

All right, moving along.

The third item on our agenda today is an update, a regular update that we have from Ms. Laura Andrake regarding the fraud, waste, and abuse program.

Thank you very much.

Good afternoon, everyone.

So we have had two anonymous reports to our fraud, waste and abuse website.

One of those was for schools and was forwarded on to the superintendent.

And the other was an anonymous community report that we wrote back and recommended that they contact the police.

So very quiet on that front.

So we're happy for that.

The second item that I have to discuss, we had four cases of attempted check fraud since our last audit report.

And it was four checks for a grand total of about $230,000.

But our fraud detection mechanisms did catch those before the funds were released.

So we're excited that those mechanisms that have been put in place are catching those.

Of course.

So we do have a website that is a public spacing website that anyone in the community can report any fraud, waste, or abuse.

This could be a citizen, a resident, a traveler passing through, and it really is for any suspicion of fraudulent activity by either a county employee

like I mentioned there were some reports from the community talking about public public fraud so we report forwarded those to the police so we do have a anonymous hotline that someone can call we have an anonymous email and then we also have a website and so the way we interact with folks on that website is the person can choose to log in and they can identify themselves or not

We write a response to whatever we find in the investigation and then the person can choose to log back in to see what the results are.

So we never actually know who that person is, which is a good safe mechanism for reporting.

Thank you, Laura.

I appreciate that.

I will add that there are signs distributed throughout the county buildings that advertise the fraud, waste, and abuse reporting elements to staff.

So that's there as well.

Jacob, I've got a question, but it may not be for Laura.

It could be for you or one of your staff.

And that is that specific to the four cases of attempted check fraud,

Can you say something about our efforts to get as many of our vendors and our customers online as possible to where we're not cutting and distributing live checks?

How is that going?

And I'm underlining the

Yeah, that's right.

So a lot of the check fraud attempts are because those are physical checks that are out in circulation and have been intercepted in the delivery process along the way.

And so one of the great things about the new financial system is we have a vendor portal that now our vendors are able to log into.

They're able to see the status of not just their invoice that they've submitted, whether they've been paid on check, but also it gives them the ability to sign up for electronic payments.

So we have a back end process with that portal where we verify and validate their banking information that they've entered.

And then once they've gone through that approval process, instead of cutting alive checks to them, we will issue an ACH to them and we'll pay them directly, which bypasses a lot of the risk that we have when checks are floating out there in the mail.

We can pull some statistics on that.

I don't have that off the top of my head.

But if before we end today, if we're able to get our hands on that, we'll add the number of vendors that have signed up for electronic payments.

I will say my organization did that and it was a very easy process.

Very helpful.

County people got right back to me.

That's great feedback.

Thank you very much for saying that, Board Member Osborne.

I appreciate that.

Probably an offline conversation.

Never mind.

I see Shenandra's hand is up.

I was just going to give some statistical information regarding those ACH vendors.

We have approximately 130 vendors that are enrolled in our program currently.

Shenandra, a dumb question.

When you say we have 130 vendors that are signed up, would that be local government and schools combined?

It's all, yes, of all vendors, yes.

And what I got ready to say a few minutes ago, and I said maybe this is offline, but it would be really with this new system up and running and with our, with, you know, board member Osborne saying, man, it was an easy process.

And we verified that, you know,

Autopay is amazing.

What would be best practices, and it's a future discussion, but what would be best practices in terms of the percentage of vendors that we would hope to get on automated pay?

Again, the effort is to work continuously to try to minimize the number of live checks that are going out.

And I hope my line of thinking is in line with what you want it to be.

Yeah, I don't have a specific percentage of our vendors.

I think our goal is to continue to increase.

And what we are seeing in those 130 that Shenandra just mentioned are our new vendors.

When we went from the old system to the new system, we brought over those vendor records that were already engaging with the county.

But we always add new vendors as we have new folks that want to work with us.

We've seen a much higher acceptance of the electronic payments for those that are new.

So when they're joining, that's how they become a vendor is they go through the portal and they see that there's an opportunity to get electronic payment.

And I believe that prompts them more.

or prompts them and it gives them an opportunity to join.

We've done several outreach campaigns when we went live with the vendor portal and the electronic payment component.

We sent out communications to our vendor community.

We've also have taken the opportunity to reach out to some of our nonprofits that are funded through the human services funding process.

and from our cultural agency process to let them know about this is also another opportunity because those payments are usually either annual or quarterly payments.

Great questions.

Any other questions?

All right, Laura, thank you for that update.

We really appreciate it.

Alright, so that's everything we have on our agenda.

I think we've moved through this agenda at a quick pace.

We're right at 1.30.

The next meeting of the Audit Committee is not on your calendars yet.

We will be looking to find times to advertise and to put this on the calendar towards the end of November.

beginning December as we get towards the end of the audit season and before the presentation to the Board of Supervisors of the audited financial results.

And so I'll be on the lookout for that.

We'll be working on coordinating the agenda and the time for that fall slash early winter meeting.

Thank you.

Awesome.

Well, with that, thank you all for your participation.

Really appreciate it.

And we'll adjourn the Spring Audit Committee meeting.

Great.

Thanks.