Audit Committee Meeting Notes
Date:
September 16, 2015
Time:
4:00-5:30pm
Attendees:
Steven Peterson, Committee Member (GB Member)
J. Carl Blake, Committee Member (volunteer)
Katie Thomas, Committee Member (volunteer)
Eugene Park, Auditor Heinfield & Meech
Ken Alexander, Director, Audit Services
Bobette Sylvester-McCarroll, Assistant Superintendent Business & Support Services
Dr. Michael Cowan, Superintendent
Recording:
Jami Hovet, Director, Financial Services
Welcome from Ken Alexander
Overview of why Audit Committee was created from Steven Peterson: Jennifer from H&M had visited w/
Mr. Peterson and he mentioned that the Board had not ever seen anything about the districts audits but
the CAFR, Comprehensive Annual Financial Report, so Steven felt it was important for this committee to
be established.
Agenda Items:
1. External Auditor Update – Eugene Park, H&M
a. H&M audits about 70% of ADM for AZ school districts
b. Their Audit consists of USFR Compliance Questionnaire overview
i. AG officer updates the questionnaire every August based on the procedural
manual
ii. Average school districts get 15-20 findings, Mesa ranges from 4-10 findings
iii. Mesa hasn’t ever gotten a non-compliance letter
c. 3 Trips from H&M/year for auditing
i. May – 1st prelim for USFR compliance questionnaire
1. Audit Student & Purchasing
ii. August – 2nd prelim for USFR compliance questionnaire
1. Audit Student Activities, Auxiliary, Travel Reimbursements, Federal
Grants (rotation of all projects, Title I,II Food & Nut every couple years)
and General Ledger
iii. November – review/create Financial Statements
1. When analytical test work is done, review revenues, and bank accounts
2. Districts are required to operate on a cash basis, will take the trial
balance and modify it to the modified and full accrual method.
iv. Draft copy is sent back to Mesa and a review is done before the final copies are
printed
v. CAFR is submitted to the GFOA and AASBO International for review and they do
to have an award program
vi. Goes to the Federal Clearing House and the Single audit does too
vii. CAFR is due by December 31st
1. H&M Drafts the whole package and Jennifer delivers right after the
holidays
d. Overall School District Concerns from H&M perspective
i. Auditor Generals Office is concentrating on IT controls. We need to pay
attention to this access, this will be in all systems, not just financial (network
security, disaster recovery, student systems) and make sure processes are
documented/practiced.
ii. Decentralized processes and Cash Handling processes at offsite departments
1. PTO’s and/or Boosters
a. 3-5 Trainings every year, collecting information (Financial
Statements) from the schools and PTO’s contact information so
we can give updates and get that information.
b. Request copies of the 990, or 990 EZ
i. Largest balance $50K
ii. Normally 501c3 but not all, based on the leaders
c. Action Item - Mesa Foundation of Excellence – own foundation
– how is this handled?
e. Any Mesa Concerns?
i. Visions conversion – #’s coming from old system to new system
ii. No major concerns at this time; controls seem to be in place
f. GASB 68 –very large hit on districts Statement of Net Position
i. Liability added due to ASRS (AZ State Retirement System) - Mesa’s hit will be
$513m
1. Additional 10-15 pages of footnotes added to the FS
ii. According to GASB it’s to clarify the financial statements more accurately
iii. H&M feels that as it’s the state retirements liability and not necessarily the
districts – pension requirement for government financial statements
1. Could this affect bond ratings?
a. Hopefully they will look at the Fund Financials vs Net Position
iv. Question regarding will Government entities shift to Defined Benefit like Private
sector?
g. From Mr. Peterson: Anything that the Governing Board should be aware of?
i. Visions conversion
ii. MPS has been very responsive to any inquiries from H&M
iii. Decentralized Processes - bookstore, cash receipts, PTO’s
2. Internal Auditor Update – Ken Alexander
a. PTO meetings
i. 3 trainings sessions coming up
1. Cash controls, setting up the organizations
ii. Attending meetings as school as started up, Volunteering their time to assist
b. Bookstores – assist schools, managers (Kino JH), learning the system (InTouch) to
broaden the audit area
c. Student Store – Mountain View
d. Mission Statement – “performing value added services”
e. Current Project List:
i. Infinite Visions Implementation – determine user access/security (for 800
people)
1. Mesa created an Implementation team
2. Security within the new system will be adjusted according to their
duties and driven by Active Directory
a. From Mr. Blake: Critical to document the setup processes
ii. External Audit Liaison
iii. Impact Aid Application
iv. Upcoming Performance Audit from AG office – spending more time w/ all
Directors for the audit and ensuring controls are in place
v. Student Device Deployment – part of that team, working at the bookstore,
developing procedures/manuals
vi. ECA - prepare state tax credit report due Jan-Feb 2016
f. From Mr. Peterson: Would like to see Ken doing more internal audit vs internal
operations
i. Go to 5 PTO’s due to the decentralized processes recommendation from H&M
ii. Would prefer for Audit Svcs not to have control of security permanently as they
should be auditing it
1. i.e Future audit of terminations and did security get turn off
g. From Mr. Blake: Focus on Procurement and Purchasing from the auditors – do more
audits in the areas of concerns
h. From Bobette: Ken lay out his next game plan of auditing schedules
1. Create audit plan
2. Where is the greatest risk?
i. From Audit Committee as whole: Ken still the facilitator of external audits – liaison
1. He needs resources to do the other audits
2. Concerned w/ Booster Clubs
3. Representation of MPS – we need to look, but no enforcement
4. Mr. Peterson: Listing of all Decentralized Processes – who are they?
a. Do Risk Assessment
b. What is our liability
c. Bylaws
d. Who’s the greatest risk – then do 1 or 2 audits
ii. From Katie: Ancillary audits can’t be his “focus”
1. Need to focus on student dollars
3. Discussion on Audit Committee Guidelines
a. From Katie: Are we reviewing and approving the financials?
i. Decision: Committee comes in and reviews w/ Audit Services/Bobette/George
and then an informal opinion/approval will come from Audit Committee
1. Early December
2. To Do: Give the committee members access to the H&M portal
4. Updates from Committee Members/Superintendent
a. N/A
b. Minutes to Board at Oct 27th meeting
5. Calendar Review
a. Next Meeting = Wednesday January 13, 2016 at 4pm
6. Thank You’s
a. From Mr. Peterson - We think Ken’s job is very important
b. From Dr. Cowan - Thank you for volunteering and helping MPS be transparent
7. Adjourn @ 5:33pm