FROM: Blaise DeFazio, Legislative Analys1 .p Office of Legislative Oversight
Audit Committee #1, #2, & #3 September 28, 2017
Briefing
SUBJECT: FY16 Montgomery County Union Employee Deferred Compensation Plan Audit Status & Updates from the Office of the Inspector General and the Office of Internal Audit
On September 28th, the Audit Committee will receive a status update on the FY 16 Montgomery County Union Employee Deferred Compensation Plan Audit and briefings from the Office of the Inspector General and the Office of Internal Audit about their ongoing activities and reports. The participants expected to attend the worksession and the location of the supporting materials for each item are listed below.
• William Broglie, Manager, Office of Internal Audit
Item #1: FY16 Montgomery County Union Employee Deferred Compensation Plan Audit Status
At the March 16th Audit Committee meeting, it was noted that the audit of the financial statements of the Montgomery County Union Employee Deferred Compensation Plan (MCUEDCP) was not complete yet because work cannot begin on the audit until after it closes it books annually on December 31 st
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Traditionally, this last remaining audit is issued in the early summer. However, it has not been issued yet this year because CliftonLarsonAllen (CLA) found a significant deficiency in which "the general ledger accounts were not analyzed and reconciled with subsidiary information on a monthly or even quarterly basis." CLA has finished the audit work and a draft audit report that currently is being reviewed by Walter Bader, Chair of the MCUEDCP. After the MCUEDCP issues a response to the audit finding, CLA will issue the audit report and OLO will forward the findings to the Audit Committee with an explanatory cover memo.
• The OIG issued eight reports and three preliminary inquiry memorandums (PIM) in FY2017: o Communication of Building Permit Information to SDA T o Montgomery County Information Systems Security o Lawrence Court Halfway House Meal Provision to Residents (PIM) o Healthcare Billing Practices o Follow-up Review: Managing Alcohol Inspections o Administration of Contracts Awarded to Maryland Treatment Centers o Follow-Up Review: Preventative Maintenance and Compressed Natural Gas Tank
Inspections of Ride-On Buses o 2016 People of Distinction Humanitarian Awards (PIM) o Oversight of the Montgomery College President's Expenses o Yellow Signal Timing (PIM) o Improper Procurement of Gateway Signage by the Wheaton Urban District (released in June)
• The OIG is currently working on 20 cases, including outstanding referrals.
• In FY18 the department is completing reviews of the County Disability Retirement Program, reviews related to the Department of Correction and Rehabilitation, and reviewing cash handling procedures.
• In the next four years, the OIG will focus on two broad areas: effectiveness of governance structure and resulting internal control systems and information technology security.
• No reports have been released since they were last before the Audit Committee in June 2017.
• In FY 18 the Office of Internal Audit will continue to work on the two ongoing reviews from FY 17 (DLC Store Operations and Fleet Maintenance Inventory Management). For these two reviews, the fieldwork is complete and the report of findings and recommendations is under development. Other reviews for FYI 8 will be determined based on the remaining 32 high risk areas identified in the 2016 County-wide risk assessment.
Inspector General Update to Council Audit Committee - September 2017
FY 2017 Work Plan
The Work Plan identified two priorities:
1. Promptly review each complaint and respond to the complainant.
Outcome: We have done this by addressing each complaint and initiating action within five business days 97% of the time.
2. Follow-up on prior audit recommendations.
Outcome: We did this through the issuance of two follow-up reports in FY 2017.
~ Managing Alcohol Inspections
~ Preventative Maintenance and Compressed Natural Gas Inspections of Ride On Buses
Specific Planned Reviews:
Five of the eight specific planned reviews identified in the work plan have been completed. The remaining projects are either in progress or have been deferred in favor of work we considered more urgent.
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Inspector General Update to Council Audit Committee - September 2017
Current OIG Activity • Issued OIG Report 18-001 Improper Procurement of Gateway Signage by
the Wheaton Urban District
• Ongoing work includes: 20 cases (including outstanding referrals)
• Reviews of the County Disability Retirement Program, reviews related to the Department of Correction and Rehabilitation, and reviews of cash handling procedures
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Inspector General Update to Council Audit Committee - September 2017
Future Directions Our work plan for the next four years will likely focus on a few broad topics:
• We will place an increased emphasis on the effectiveness of governance structures and resulting internal control systems. We believe that, given the breadth of County activities and limited audit resources, internal controls and ethics are the only lasting safeguards against nefarious activities.
• We see continued and likely growing risk in the area of information technology security. We realize our skills in this area are moderate at best. We hope to team with other auditors (perhaps federal or those of independent County agencies) or contract with subject matter experts to fill gaps as needed.
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Office of the County Executive Office of Internal Audit Status Report to the Audit Committee
September 2017
Audit Reports Issued Since Last Appearance before the Audit Committee on June 22, 2017:
None
All issued reports are on: http://www.montgomerycountymd.gov/exec/internal audit.html
Ongoing Reviews (2)
1. DLC Retail Store Operations. The objective of this program assessment is to conduct an internal control review of a sample ( 4 locations: Montrose, Wheaton, Seneca Meadows, and Clarksburg Village) of DLC retail store operations. The assessment will focus on the existing internal control environment and the effectiveness of existing controls; to identify existing risks and opportunities for improvements to strengthen management of retail stores - both those reviewed under this sample review and potentially across DLC retail stores generally. The scope of the review will include the following: Cash operations (payment receipt, cash handling, recording, deposits, reconciliations, and reporting) ; Timekeeping; Scheduling and adherence; Leave practices; Store staffing and coverage; Store inventory ( ordering, receiving, periodic counts, safeguarding, loss management); and Store security camera functionality. Current Status: Fieldwork is completed. Report of findings and recommendations is under development.
2. Fleet Maintenance Inventory Management. The objective of this internal control review is to assess the existing internal control environment and the effectiveness of existing inventory management system and controls. The assessment will focus on existing risks and opportunities for improvements to strengthen management of inventory operations at each of the four fleet management locations: Equipment Maintenance & Transit Operation Center (EMTOC); Brookville Maintenance Facility (BMF); Nicholson Court Small Transit Shop (STS); and Automotive Equipment Section/Seven Locks Facility. Current Status: Fieldwork is completed. Report of findings and recommendations is under development.
