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HomeMy WebLinkAbout2021-02-10 Audit Ad Hoc Committee MinutesOrange County Sanitation District Minutes for the AUDIT AD HOC COMMITTEE Wednesday, February 10, 2021 4:00 PM Board Room Administration Building 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 CALL TO ORDER A special meeting of the Audit Ad Hoc Committee was called to order by Committee Chair Glenn Parker on Wednesday, February 10, 2021 at 4:05 p.m. in the Administration Building of the Orange County Sanitation District. Chair Parker stated that the meeting was being held telephonically and via audio/video teleconferencing in accordance with the Governor's Executive Order No. N-29-20, due to the Coronavirus Pandemic (COVID-19). Chair Parker announced the teleconference meeting guidelines. ROLL CALL AND DECLARATION OF QUORUM: Roll call was taken and a quorum was declared present, as follows: PRESENT:Glenn Parker, Marshall Goodman, Patrick Harper and Anthony Kuo ABSENT:None STAFF PRESENT: Kelly Lore, Clerk of the Board and Mortimer Caparas were present in the Board Room. Jim Herberg, General Manager; Rob Thompson, Assistant General Manager; Lorenzo Tyner, Assistant General Manager; Celia Chandler, Director of Human Resources; Kathy Millea, Director of Engineering; Lan Wiborg, Director of Environmental Services; Jennifer Cabral; Tina Knapp; Joshua Martinez; Rob Michaels; Wally Ritchie; and Thomas Vu were in attendance telephonically. OTHERS PRESENT: Audrey Donovan, David Rowan, and Roger Alfaro from Eide Bailly were in attendance telephonically. PUBLIC COMMENTS: None. NON-CONSENT: 1.INTERNAL AUDIT UPDATE 2021-1465 Originator: Lorenzo Tyner Assistant General Manager Lorenzo Tyner welcomed the new Committee members and opened the meeting with a brief description of the role of the Audit Ad Hoc Committee; and the firm engaged by the Sanitation District to conduct periodic internal audits approved by the Committee. Mr. Tyner discussed the two previous year's audit topics; one which was not feasible to complete due to COVID-19. He stated the audit then focused on the Internal Control Page 1 of 3 AUDIT AD HOC COMMITTEE Minutes February 10, 2021 Policies and Procedures over Information Technology (Cyber Security). Auditors Audrey Donovan and David Rowan from Eide Bailey provided progress of the audit engagement, data gathering and testing phase. Mr. Rowan stated that the internal review had taken place, and a follow up request was sent to OC San for additional data gathering. The auditors anticipate this audit engagement wrapping up in late March/early April of this year. The Committee then considered various new audit topics for this year, including the following: 1) Construction Contract Compliance - Audit contracts related to four (more or less) construction projects to determine if they were executed successfully in several areas, including project cost and timeliness, accuracy of invoice payments, retention release, and administrative requirements such as insurance and bonding. Validate that appropriate checks and balances exist between Engineering and Contracts staff to ensure proper payment to correct vendors for completed work. 2) Sole Source Contracts - Review the Sanitation District’s purchasing policies and procedures as they relate to the procurement of sole source products and services, including a walkthrough to determine that the proper procedures were being followed as designed to ensure that sole source contracts are properly authorized and appropriate. Select sole source contracts and test projects for key internal controls related to the authorization of sole source contracts, including approvals for sole source request forms, minutes, and justification letters. Test that the Sanitation District has established valid justification for selecting sole source vendors in accordance with the purchasing policies and procedures in addition to reviewing sole source vendor service agreements and invoices. 3) General Manager Approved Purchases - The General Manager has the authority to approve purchases over $50,000. These purchases are reported to the Board on a quarterly basis through a report to the Administration Committee. Review purchasing process to ensure that appropriate documentation is completed, and protocols are followed. After discussion, the Committee recommended that as time and budget allowed, to focus on the provided potential audits. Mr. Tyner stated that the auditors will develop a scope of work and timeline to complete and he will report back to this Committee on the outcome. The item was received and filed as an: Information Item. OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: None. Page 2 of 3