Harford News

Harford County Audit Advisory Board met Sept. 25.

Here is the minutes provided by the board:

Board Members: Darla Garrett, Brian Rowe, Richard Slutzky, Mike Perrone, Kim Spence, Chrystal Brooks

Other Attendees: Brad DeLauder, Charles Skinner

The meeting began at approximately 4:30 pm in the County Council Conference Room Board Meeting Minutes – April 24, 2018 (prior meeting date)

With no changes, Members approved meeting notes via email prior to this meeting. Status of FY2018 Audit Plan

 Mr. DeLauder updated the Board on the status of the FY2018 audit plan. All but two of the 23 audits included in the audit plan are complete; those audits are expected to be completed in October.

Status of FY2019 Audit Plan

 Mr. DeLauder updated the Board on the status of the FY2019 audit plan. There are 17 audits included in the audit plan, including the Peer Review of the Office of the County Auditor: two audits are complete, five are in progress, nine are not started, and the Peer Review has been scheduled for the week of October 15th.

 Mr. DeLauder further noted that since both the audit of Safety Compliance and Risk Management Practices and the audit of Training and Professional Development require individual meetings with the same personnel from every County department, those meetings should be combined and the audits would run concurrently. Consequently, the report date for the audit of Safety Compliance and Risk Management Practices has been pushed back, coinciding with that of the audit of Training and Professional Development.

Audit Reports

 Employee Benefits Administration agreed Upon Procedures – This audit was performed by Hamilton Enterprises on behalf of the Office of the County Auditor. Senior Auditor, Charles Skinner of Hamilton, reviewed the results of the project for the Board. Mr. Skinner explained that while the audit disclosed four findings, generally, procedures were acceptable to ensure that employees pay for and receive the correct benefit packages. Mr. Skinner elaborated that the audit found there were no written policies and procedures developed for the administration of employee benefits by the County and as a result there were no written succession plans for key roles related to the administration of employee benefits. The other two findings were timing‐related and were ultimately addressed by information provided during the audit. Board Members were satisfied with the results.

 Audit of Fixed Assets and Inventory Controls – Mr. DeLauder explained the audit was performed as a consulting engagement because multiple departments were working through fixed asset and inventory procedural changes so a complete audit wouldn’t have been productive. During the engagement management was provided with informal recommendations. While no opinion was issued, the auditors updated the annual Risk Assessment. Board Members were satisfied with the results.

 Audit of Cash Receipt Controls – Mr. DeLauder explained the audit found the controls in place are adequate to ensure that payments are applied accurately and cash is deposited completely. The audit did not disclose any findings. Board Members were satisfied with the results.

 Audits of Petty Cash Funds – Mr. DeLauder explained that four audit reports were issued for the eight petty cash funds audited. There were no findings reported. Board Members were satisfied with the results.

 Audit of Financial and Ethics Disclosures and Related Processes – Mr. DeLauder explained that the audit disclosed two new findings, re‐opened another, and closed a previously open finding. The audit found that some financial disclosure forms and lobbyist filings were not completed in conformity with Ethics Code requirements, Human Resources had not prepared an annual training report required by the County Code and documentation provided did not demonstrate Board of Ethics approval of 2015 disclosures. Board Members were satisfied with the results.

 Audit of Real Property Tax Billing and Collection Controls – Mr. DeLauder explained that the audit found property tax bills are calculated correctly and penalties and interest are charged correctly for late payments. Additionally, adjustments to accounts were supported. The audit did not disclose any findings. Board Members were satisfied with the results.

 Status of Prior Audit Findings – Mr. DeLauder explained that of the 46 open findings (including three added during the audit), 25 findings were closed, 1 of which was dropped because management disagreed with the finding and accepted the risk of no action. 21 issues remain open following the project, 5 of those are budget recommendations and will be addressed during the OCA’s annual budget analysis. The Board did not have additional comments on the results.

Other Items

 Mr. Rowe inquired if auditor access remains an issue. Ms. Brooks indicted that there has been improvement, particularly due to Kim Spence’s involvement in the process. However, the overall communication process remains slow and management remains present in any interaction with staff. The Board generally expressed that the OCA must have direct access to staff. Mr. Rowe inquired if delays caused by restrictions are factored into the OCA’s budget. Ms. Brooks confirmed that management delays are factored into the OCA’s annual planning and budget and that sharing this calculations and the OCA’s internal budget analysis with the next County Council may persuade them to take additional action to help improve cooperation.

 Prior to the meeting, Mr. Rowe advised that he prefers management responses to be on management’s letterhead. Ms. Brooks explained that management is provided audit reports in draft form with a designated area for management responses; she asked if other Board members had a preference on this matter. Ms. Garrett inquired if a template is used for management’s responses. Ms. Brooks confirmed that management receives the report with space available for responses.

 With the Council term ending in December, Ms. Brooks requested Board members inform her of their intentions to remain on or leave the Board. Mr. Rowe inquired about the eligibility of at‐large members who have served four years. Ms. Brooks stated at‐large members may serve two consecutive terms but was unsure of the term length or time allowed before reappointment. Mr. Rowe noted that he had recently reviewed the law, finding that a four‐year break is required. He also mentioned that a four‐year hiatus may disincentivize former members from returning to serve on the Board and inquired about the mechanism to reduce the break to one or two years. Ms. Brooks indicated a change to the County Code might be appropriate. Shortening the appointment term from four to two was also discussed. Note: County Code § 9‐20 indicates “The term of the County Council member shall be for 2 years. At‐large members shall be for 4 years and shall be coterminus with the term of the County Council. At‐large members who serve for 2 consecutive terms may not be reappointed for 4 years after completion of those terms.”

 Ms. Brooks inquired of the Board regarding any thoughts they would like to pass on to new Board members or new County Council members. Ms. Garrett mentioned continuing to focus on management’s cooperation with the OCA. The Board concurred. Mr. Rowe encouraged requesting additional staff and expressed that the internal audit function of Harford County is understaffed relative to similar‐sized or adjacent counties. Mr. Rowe further inquired about the OCA’s FY2020 budget, specifically, whether it included increases for additional staff. Ms. Brooks plans to request additional staff as has been done in previous years.

 Mr. Rowe inquired if Ms. Brooks has considered implementing data analysis tools like ACL or IDEA. Ms. Brooks responded that she continues to assess their viability. Currently, major factors impacting a decision are the ongoing ERP implementation, and licensing and training costs.

The meeting was adjourned at 5:15pm. The next meeting is scheduled for January 29, 2019.

https://www.harfordcountymd.gov/AgendaCenter/ViewFile/Minutes/_09252018-798