Dec 03, 2019 Audit Committee Meeting

[1. Certification of Notice Posted for the Meeting]

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>> I CALL TO ORDER THE MEETING OF THE BOARD OF TRUSTEES.

TONE IT DOWN, PLEASE. >> CHAIR D. FLORES: QUIET.

>> THIS OPEN MEETING OF THE BOARD OF TRUSTEES IS AUTHORIZED IN ACCORDANCE WITH TEXAS GOVERNMENT CODE 551.001 THROUGH 551.146. AND BEING BROADCAST OVER THE INTERNET AS REQUIRED BY LAW. IT'S IMPORTANT TO UNDERSTAND THE BOARD MAY NOT TAKE FORMAL ACTION ON MATTERS THAT ARE NOT PART OF THE MEETING AGENDA. OPPORTUNITY FOR PUBLIC COMMENT IN ACCORDANCE WITH TEXAS GOVERNMENT CODE.

SPEAKERS CAN PRESENT THEIR PRESENTATIONS TO THE BOARD AS A

[3A. Committee Presentations Comprehensive Annual Financial Report for the District and Richland Collegiate High School and Single Audit Report of Federal and State Awards together with Reports of Independent Auditors, for the Fiscal Years Ended August 31, 2019 and 2018 Presenter: Ben Kohnle, Grant Thornton]

THE MEETING? >> I CERTIFY THAT A COPY OF THIS NOTICE WAS POSTED PURSUANT TO

GOVERNMENT CODE 551.054. >> PERSONS TO ADDRESS THE BOARD, I DON'T SEE ANY CARDS? OKAY.

LET'S GO AHEAD AND GET STARTED. >> GOOD AFTERNOON, EVERYONE.

>> CHAIR D. FLORES: GOOD AFTERNOON.

>> HOPE EVERYONE HAD A GREAT THANKSGIVING.

I REALIZE THE MATERIALS ARE STILL BEING PASSED OUT.

YOU RECEIVED THE CONFERENCE FINANCIAL REPORT AND OTHER THINGS IN ADVANCE. THIS PRESENTATION IS ONE YOU ARE FAMILIAR WITH THAT I'VE KIND OF DONE BEFORE.

THE AUDIT RESULTS FOR THE RECENTLY COMPLETED 2019 AUDIT.

BUT I START OFF IN THE SPIRIT OF THANKSGIVING BY SAYING THANKS TO EVERYONE. WITHOUT EVERYONE'S ACTIVE INVOLVEMENT, THIS PROCESS WOULDN'T HAVE GONE AS SMOOTH AS IT DID. I WANT TO THANK THE BOARD, CHANCELLOR, I TALKED TO HIM PERSONALLY.

THE AUDIT COMMITTEE FOR THEIR INVOLVEMENT AND INTEREST IN THIS PROCESS. SO CERTAINLY TODAY I'LL GO THROUGH PRESENTATION MATERIALS. HAPPY TO ANSWER ANY QUESTIONS YOU MIGHT HAVE. BUT WANT TO START WITH THANKS TO CERTAINLY THIS GROUP AND OVERSIGHT.

WHAT YOU DO FOR THE DISTRICT AND THE COMMUNITY.

THANK YOU FOR WHAT YOU DO. OBVIOUSLY, I WANT TO THANK JOHN AND PAT AND THEIR TEAM. ANOTHER SUPER EFFORT, ESPECIALLY PAT GIVEN HER MEDICAL LEAVE FOR A LITTLE BIT.

AND I WANT TO THANK DIANE TOO, WHO WAS ABLE TO HIT THE GROUND RUNNING AND HELP THE TEAM THROUGH THE AUDIT.

I WANT O THANK PAUL AND HIS TEAM.

INTERNAL AUDIT, AS YOU NOW, THEY PERFORM SINGLE AUDIT.

PERFORMING TESTING ASSOCIATED WITH THE FEDERAL AND STATE GRANT AUDIT IN TERMS OF CONTROLS AND COMPLIANCE.

I WANT TO THANK PAUL AND HIS TEAM IN SUPPORT OF OUR EFFORT.

ESPECIALLY THIS YEAR, I DON'T KNOW IF ANY OF YOU FOLLOW THE ISSUANCE OF THE COMPLIANCE SUPPLEMENT, THE WORK PROGRAM FOR FEDERAL AND STATE PROGRAMS. THIS YEAR UNPRECEDENTED NEVER HAPPENED BEFORE, THEY HAD TO REISSUE THE COMPLIANCE SUPPLEMENT. ALWAYS THE NEXT TUESDAY.

IT'S ALWAYS COMING ABOUT. TWO MONTHS LATER IT FINALLY SHOWED UP. THAT KIND OF ACCELERATED THE TIMEFRAME AND WHAT AUL AND HIS TEAM NEEDED TO DO IN SUPPORT OF US. THANKSINCREMENTALLY.

AND THEN WE HAD THE MINORITY SUBCONTRACTORS.

JULIET WILLIAMS, DECIDED SHE WOULD PREFER TO START HER OWN FIRM WHICH SHE DID. OBVIOUSLY THIS AS A HUGE NEED.

I OBVIOUSLY SUPPORTED HER THROUGH THESE EFFORTS.

SHE'S WORKING WITH JJ WILLIAMS P.C.

SHE HAD A CONFLICT. BUT YOU REMEMBER JULIET.

I WANT TO THANK HER AND MARY ELENS WITH ELENS AND THERMEN.

SHE WAS INVOLVED WITH THE AUDIT. AND I WANT TO THANK MY TEAM, EMILY, ALISE, JACOB AND MCKENZIE PERFORMED ON BEHALF OF MY TEAM.

AND THEY WERE RESPONSIBLE FOR REVIEWING THE WORK HAT WAS INCURRED BY PAUL AND HIS TEAM OR MINORITY SUBCONTRACTORS.

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PAGE ONE. VALUES ARE CLEAR.

WE HADN'T CHANGED OUR VALUES. WE STILL HAVE SOME.

WE THINK MOST ARE APPROPRIATE. THE IMPORTANCE OF THAT TO YOU IS THAT WE SERVE ALL OF OUR CLIENTS WITH THESE VALUES IN MIND.

WE'RE BETTER AT MATH THAN SPELLING.

BUT WE THINK BOTH OF THOSE R'S ARE IMPORTANT.

RESPECT AND RESPONSIBILITY. WE COULDN'T FIGURE OUT A WAY TO SPELL IT OUT AND GET THE IMPORTANCE ACROSS.

I'M NOT GOING TO GO HROUGH IN DETAIL OF THE RESPONSIBILITIES ON THE NEXT PAGES. GRANT THORNTON AND THE REST 06 MY TEAM ARE SUMMARIZED ON PAGE TWO.

WE PERFORMED THE AUDIT. WE REPORT THE RESULTS TODAY.

THE NEXT PAGE, , ACTUALLY HAS TWO SETS OF RESPONSIBILITIES.

ON THE LEFT IS THOSE CHARGED WITH GOVERNANCE.

THAT'S THIS COMMITTEE, THIS BOARD.

TTHE SECOND ONE ON THE RIGHT-HAD COLUMN IS MANAGEMENT RESPONSIBILITIES. THEY ARE RESPONSIBLE FOR DOING THE LION SHARE OF RECORD KEEPING, ACCOUNTING, FINANCIAL REPORTING AND EVERYTHING ELSE. AND OBVIOUSLY THEY MAKE REPRESENTATIONS TO US, FORMALIZE AS PART OF THE AUDIT.

THAT IS BASICALLY THE ONCLUSION OF RESPONSIBILITY SAID.

WE HAVE TO WORK TOGETHER TO ALLOW IT TO HAPPEN.

THAT WAS THE CASE THIS YEAR. PAGE 4 IS THE AUDIT TIMELINE.

THIS IS A HIGH LEVEL CHART. BUT IT TELLS YOU THIS PROCESS STARTS BACK IN THE MID-SUMMERTIME FRAME THROUGH CLIENT CONTINUOUS, GOING THROUGH THE PROCESS.

EVERYTHING IS BASICALLY INDICATED ON THE RIGHT OF THE PROCEDURES WE DO DURING THAT TIME OF THE YEAR.

CERTAINLY ON THE FRONT END WE'RE LOOKING AT PLANNING AND INTERIM THINGS. AS WE ACTUALLY GET INTO THE OCTOBER TIMEFRAME, WE'RE INTO THE FIELD WORK AND PERFORMING ALL THE FINAL TESTING ASSOCIATED WITH THE FINANCIAL STATEMENTS AS WELL AS THE AUDIT AND FEDERAL AND STATE GRANT COMPLIANCE AUDIT. PRESENT THE RESULTS TO THE AUDIT COMMITTEE BOARD, ON PAGE 4, WHICH IS WHAT I'M DOING TODAY.

I MENTIONED ONE OF THE KEY THINGS WE DO IS ENSURE THE FINANCIAL STATEMENTS ARE NOT MATERIALLY MISSTATED.

YOU MAY SAY, REMIND WHAT IS MATERIALITY? LOOK AT IT FROM A NUMBER OF DIFFERENT PERSPECTIVES.

WE LOOK AT THE FINANCIAL STATEMENT AUDIT INDEPENDENT OF THE CONTROLS AND COMPLIANCE AUDIT RELATED TO YOUR FEDERAL AND STATE GRANT PROGRAMS. FINANCIAL STATEMENTS WHEN YOU LOOK T THOSE, YOU CAN LOOK AT REVENUES, TOTAL EXPENDITURES, TOTAL ASSETS. WE BELIEVE TOTAL ASSETS IS STABLE. PERFORMANCE, MATERIALITY, IS ABOUT 70% OF THAT NUMBER. AND THEN WE HAVE WHAT WE CONSIDER DUMINMOUS AT ABOUT 5% OF MATERIALITY.

IN TERMS OF GRANT AND COMPLIANCE AUDIT WE'RE LOOKING AT FEDERAL AND STATE GRANT EXPENDITURES. OBVIOUSLY, WE BELIEVE EXPENDITURE IS THE PROMOTE BENCHMARK FOR THAT.

SIMILAR METHODOLOGY, YOU TAKE A SMALL PERCENTAGE THAT BECOMES MATERIALITY, LESS THAN THAT TESTING.

NONPERFORMANCE MATERIALITY AND DUMINMOUS.

SERGE THAT'S THE QUANTITATIVE MEASURES.

WE HAVE PUT A SENTENCE IN HERE THAT TALK ABOUT THINGS WE CONSIDER. PARTY TRANSACTIONS, IN TERMS OF QUALITATIVE IN ADDITION TO QUANTITATIVE MEASUREMENTS I MENTIONED. THE NEXT PAGE IS 6.

THE USE OF THE WORK OF OTHERS. OBVIOUSLY, THERE IS A NUMBER OF SPECIALISTS INVOLVED IN THE ENGAGEMENT.

YOU HAVE PRETTY SUBSTANTIAL AND SIGNIFICANT LIABILITIES ON YOUR FINANCIAL STATEMENTS OTHER THAN DEBT, REALLY PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS. A LOT OF ACTS WE'RE THINGS DETERMINING THE LIABILITIES. THAT LOOK T THE REASONABLENESS OF THOSE ASSUMPTIONS AND AND CONCLUDED THEY ARE NOT UNREASONABLE. INTERNAL AUDIT.

PAUL AND HIS TEAM PERFORM THE MAJORITY OF THE WORK IN THE FEDERAL AND STATE CONTROLS AND COMPLIANCE AREA.

WE HAVE A REPERFORMANCE REQUIREMENT.

OUR FIRM REQUIRES US OR THE PROFESSION TO REPERFORM 10% OF THE TESTING. WHEN PAUL AND HIS TEAM SAMPLE 40, WE HAVE TO VERIFY LOOK AT THE SAME INFORMATION WE WOULD DRAW THE SAME CONCLUSION, AND WE DID THAT REPERFORMANCE THROUGH THE THE SCOPE OF TESTING AND FEDERAL AND STATE COMPLIANCE AUDIT AREAS. OTHER PERSONNEL OR HIRD

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IN THE TUITION AND FEE REVENUE, OTHER REVENUE AND SINGLE AUDIT AREAS. JULIET DID MUCH OF THE WORK ON BEHALF OF ORWORK AND OUR TEAM REVIEWED THAT WORK.

THE NEXT PAGE IS REALLY THE AREAS OF AUDIT FOCUS.

AND THAT'S ON PAGE 7. CLEARLY, IT TELLS YOU IF IT'S FINANCIALLY SIGNIFICANT QUANTITIVELY, WE'RE GOING TO BE LOOKING AT IT. A HIGH VOLUME OF TRANSACTIONS, WE'RE GOING TO LOOK AT IT. THE GOOD NEWS IS WE PERFORMED THE PROCEDURES WE FELT WERE IMPORTANT TO RENDER OUR OPINION ON THE FINANCIAL STATEMENTS. I DO NOT BELIEVE THE FINANCIAL STATEMENTS AS PROVIDED TO YOU FOR YOUR REVIEW ARE, WE BELIEVE MATERIALLY CORRECT AND NOT MATERIALLY MISSTATED.

PAGE 8, IF YOU HAVEN'T LISTENED YET, YOU WANT TO PAY ATTENTION TO ONE PAGE, THIS IS THE ONE. WHERE WE SUMMARIZE THE RESULTS OF THE AUDIT. WE'RE RENDERING UNMODIFIED OR CLEAN OPINIONS ON THE DISTRICT'S STUDY, AND THE GRANT AND COMPLIANCE WORK WE DID WITH THE FEDERAL AND STATE PROGRAMS. UNMODIFIED FOR THOSE OF YOU WHO HAVE BEEN DOING THIS FOR A WHILE, WE USED THE WORD UNCLASSIFIED.

WE WENT THROUGH A CLARITY, I DON'T KNOW IF UNQUALIFIED MAKES THE OST SENSE IN TERMS OF EXPLAINING AN OPINION.

YOU HAVE UNMODIFIED OR MODIFIED OPINIONS WITH CERTAIN LIMITATIONS. WE'RE RENDERING CLEAN OPINIONS ON THE FINANCIAL STATEMENTS AND SINGLE AUDIT.

NO LIMITATIONS. YOUR TEAM COOPERATED WITH MY TEAM IN A SIGNIFICANT AND PROFITABLE WAY.

THERE WERE NO LIMITATIONS PLACED ON US.

YES, MA'AM? >> CHAIR D. FLORES: WHAT IF INTERNAL AUDIT DID NOT COOPERATE, WHAT PROCEDURES WOULD

YOU FOLLOW? >> WE WOULD PERFORM THE PROCEDURES THEY WERE SUPPOSED TO PERFORM.

WE WOULD DO IT. WE WOULD HAVE TO DO THE 40, WE COULDN'T JUST REPERFORM. THE BENEFIT TO THE DISTRICT IS BY DOING THAT WORK THEY CAN REDUCE THE AUDIT FEES.

>> CHAIR D. FLORES: I CAN'T IMAGINE A SCENARIO WHERE THAT WOULD HAPPEN. I WAS CURIOUS.

>> WE WOULD HAVE TO DO THE WORK. >> CHAIR D. FLORES: A LOT OF THINGS THAT USED TO BE NORMAL, AREN'T ANYMORE.

THANKFULLY, NO SO MUCH HERE. DO YOU REPORT THAT?

>> WE WOULD REPORT THAT TO THIS COMMITTEE AND THE BOARD.

IF WE HAD LACK OF COOPERATION FROM ANYBODY INVOLVED ON THE TEAM. I'M HAPPY TO REPORT WE DON'T.

NOT VERY OFTEN. NORMALLY WHEN WE GO THROUGH A PROCESS, IT'S A VERY INTENSIVE PROCESS TO EVALUATE CREDENTIALS, AND FRANKLY WORKING STYLES TO ENSURE THEY ARE CONSIST WITH OUR CLIENT. IN YOUR CASE WITH INTERNAL AUDIT, THEY ARE EMPLOYEES OF THE DISTRICT, STILL INDEPENDENT WITH RESPECT TO THE WORK WE DO. I'M NOT AWARE OF ANYTHING I WORKED ON, I ONLY HEARD OF ONE SITUATION WHERE WE FELT THE NEED TO AT LEAST W WITHIN OUR OFFICEO COMPLETE AN.

IT WAS MORE WORKING STYLES THAN LACK OF COMPETENCY OR SKILL SET.

HAPPY TO REPORT WE'RE PROVIDING THE FINANCIAL STATEMENTS, CAFR, FINANCIAL REPORT FOR YOUR REVIEW.

THERE AREN'T ISSUES UPON APPROVAL BY COMMITTEE AND BOARD.

ULTIMATELY, WE'RE IN A POSITION PREPARED TO ISSUE THOSE FINANCIAL STATEMENTS. ALSO, VERY HAPPY TO REPORT NO AUDIT ADJUSTMENTS. AND SO OBVIOUSLY, THERE IS A LOT OF NUMBERS IN THE FINANCIAL STATEMENTS.

I DO MENTION AND DEFINE MATERIALITY PREVIOUSLY.

NOT THAT WE LOOK AT EVERY TRANSACTION.

THAT BEING SAID, SELDOM DO WE PERFORM AUDITS WHERE WE DON'T HAVE SOME IF NOT MADE ADJUSTMENTS, PAST ADJUSTMENTS IN THIS CASE, WE HAD NONE. MY COMPLIMENTS TO YOUR FINANCE AND ACCOUNTING TEAM FOR THAT. OPEN AND EFFECTIVE COMMUNICATION WITH MANAGEMENT. AS I MENTION EARLIER, THE AUDIT CAN'T BE DONE IN AN EFFECTIVE AND OPTIMAL WAY WITHOUT COOPERATION. WE HAVE WEEKLY STATUS THROUGHOUT THE COURSE OF THE AUDIT TO STAY PLUGGED IN.

I APPRECIATE THE DILIGENCE IN EVERYONE ATTENDING THOSE AND MAKING SURE EVERYTHING STAYED ON TRACK THROUGHOUT THE COURSE OF

THE AUDITS. >> D. ZIMMERMANN: THE VETERANS

ADMINISTRATION? >> YES, N FACT I'LL MAKE A COMMENT ABOUT THAT. BUT YES, VERY MUCH SO.

AS YOU RECALL, HAT WAS PROBABLY THE MOST SIGNIFICANT PLANNING LAST YEAR. AND YOU KNOW, AS I WOULD SAY, TYPICALLY AS YOU MAKE RECOMMENDATIONS WHEN YOU SIT IN

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THAT'S EXACTLY WHAT HAPPENED. I'M GOING TO MENTION A FEW MORE THINGS ABOUT THAT IN A SECOND. ON PAGE 9 IS HE SUMMARY, WHEN I MENTIONED MAJOR PROGRAMS, AGAIN, WE DON'T TEST EVERY PROGRAM.

THERE IS A FOUR-STEP RISK BASED APPROACH TO DETERMINE WHICH PROGRAMS ARE SELECTED FOR TESTING BY THE INDEPENDENT ACCOUNTING FIRM ON A ANNUAL BASIS.

BASED ON THAT PROCESS, THESE WERAL DETERMINED TO BE MAJOR PROGRAMS. IF YOU LOOK AT THE FAR RIGHT, IT SAYS WHETHER OR NOT WE HAD FINDINGS OF NONCOMPLIANCE NOTED.

I'M TALKING ABOUT AS DEFINED BY THE FEDS, A MATERIAL WEAKNESS OR DEFICIENCY. THE ONLY ONE WE HAD WAS THE FINDING ON PAGE 10, AND ACTUALLY WE HAD THE COMMENT LAST YEAR.

BUT AND I KNOW PAUL IS HERE AND HIS TEAM DID A GREAT JOB IN FOLLOWING UP ON THIS. WE DID HAVE 11 INCIDENTS OF NONCOMPLIANCE THIS YEAR. OF THE 40 WE JUDGMENTALLY SELECTED FOR TESTING IN THAT PARTICULAR CASE.

THE GOOD NEWS IS, WELL, THERE IS KIND OF TWO THICK THINGS AT WORK. WE DO THE AUDIT SUBSEQUENT TO YEAR END. WHEN YOU DO THAT AND FIND THINGS, OBVIOUSLY, YOU CAN'T FIX THEM KIND OF RETO ACTIVELY. IN ESSENCE, HAT HAPPENS, THE FEDS DON'T LIKE REPEAT FINDINGS. YOU HAVE TO BE SENSITIVE TO THAT. WHAT WE DID WORKING WITH PAUL AND HIS TEAM, ON THE 11 INSTANCES DID THEY HAPPEN IN ADVANCE OF THE TIMELINE WHERE THIS WAS COMMUNICATED LAST YEAR AND REMEDIED. THE GOOD NEWS IS 11 OF THE 40 INCIDENTS OF NONCOMPLIANCE HAPPENED AFTER THE NOTIFICATION AND BEFORE THE ISTRICT'S NOT THAT WE TAKE THE EYES OFF- THE BALL, WE HAVE TO STAY FOCUSED.

BY THE SAME TOKEN, I WOULD SAY POSITIVE NEWS WITH RESPECT TO TAKING THAT COMMENT SERIOUSLY. THE ONLY THING I WOULD SAY, AND THIS ISN'T EVEN REQUIRED TO BE REPORTED TO THE FEDS, BUT FROM A DISTRICT TRANSPARENCY PERSPECTIVE, THIS CONTROL DEFICIENCY WE IDENTIFIED, IT'S GOT THREE CATEGORIES.

SIGNIFICANT DEFICIENCY AND MATERIAL WITNESS.

AGAIN, DOING THINGS ON A SAMPLE BASIS, SEEMS YOU WILL SEE APPROVALS NOT OCCURRING IN A TIMELY BASIS.

WE IDENTIFIED TIMELY AS A PROFESSION BEFORE YOU SEEK REIMBURSEMENT. THAT'S MORE OF A CONTINUOUS IMPROVEMENT KIND OF A THING, NOT A COMMUNICATION TO THE FEDERAL GOVERNMENT KIND OF THING. BUT BY THE AME TOKEN, BE MORE DILIGENT ABOUT ENSURING THINGS GET APPROVED OFFICIALLY FOR GRANT OR SOFT REIMBURSEMENT. AND THOSE ARE THE TWO THINGS WE SAW THIS YEAR THAT I THINK ARE GOING TO REQUIRE ONTINUOUS IMPROVEMENT INITIATIVES FOR THE DISTRICT O STAY ON TOP OF THOSE. INTERNAL ONTROL MATTERS, I BASICALLY EXPLAINED THE THREE DEFINITIONS.

WE DON'T REPORT CONTROLS BUT WE DO EVALUATE CONTROLS IN TERMS OF DETERMINING OUR TESTING WE PERFORM.

PROVIDE ANY LEGAL DETERMINATION ON CONTROLS BUT WE HAVE TO EVALUATE CONTROLS AND TEST CONTROLS IN THE FEDERAL AND STATE. BUT WE DO FROM A CONTROLS PERSPECTIVE WITH RESPECT TO FEDERAL AND STATE GRANT PROGRAMS. OTHER REQUIRED COMMUNICATIONS ON PAGES 12 AND 13, I WOULD TELL YOU IF WE EVER HAD ISSUES IN THESE AREAS THAT WERE SIGNIFICANT WE WOULD HAVE ADVANCED COMMUNICATIONS AND DISCUSSIONS WITH HE AUDIT COMMITTEE AND BOARD. THAT WAS NOT THE CASE.

IN EVERY ONE OF THESE MATTERS ARE REQUIRED COMMUNICATIONS AUDIT FIRMS TO EVALUATE IN TERMS OF THE CTUAL AUDITS CONDUCTED IN ACCORDANCE WITH THOSE STANDARDS.

AND COMMUNICATE WITH BOARDS AND/OR AUDIT COMMITTEES IN CONNECTION WITH ANY PARTICULAR CONCERNS ABOUT ANY OF THESE.

FOR THE NEXT TWO PAGES, THERE WEREN'T ANYTHING NEGATIVE TO REPORT. EXCELLENT COOPERATION, NO DIFFICULTIES IN CONNECTION WHERE THE AUDIT, ET CETERA, ET CETERA.

I WON'T GO TWOHROUGH EACH ONE. I THINK IT'S IMPORTANT WE PUT THIS IN WRITING THAT WE HAD NO ISSUES WITH RESPECT TO REQUIRED COMMUNICATIONS. AND THEN THE LAST PAGE IS PAGE 14, WHICH IS THE QUALITY OF ACCOUNTING PRACTICES WE'RE

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I THINK THE FIRST ONE IS THAT WE HAVE TO EVALUATE ACCOUNTING POLICIES TO ENSURE THEY ARE IN ACCORDANCE WITH ACCOUNTING PRINCIPLES. WE BELIEVE THE SIGNIFICANT ONES THEY ARE. ACCOUNTING ESTIMATES IRRESPECTIVE, ACCRUALS, SIGNIFICANT ONES ARE THE ONES REFERRED TO EARLIER ON PENSIONS AND OTHER BENEFITS IN TERMS OF CALCULATING LIABILITIES. WE HAVE ACTUARIES THAT EVALUATE THOSE AND CONCLUDE THE METHODS ARE APPROPRIATE.

DISCLOSURES. IF YOU READ THROUGH THIS, THERE IS QUITE A FEW IN THERE. THOSE ARE REQUIRED.

SO THE GOVERNMENT FINANCE OFFICERS ASSOCIATION HAS A CERTIFICATE OF EXCELLENCE, GFOA. THAT IS IT'S ASPIRED TO AND MOST TRY TO HAVE THE FINANCIAL STATEMENTS SUBJECTED TO THAT REVIEW. THERE IS A LOT OF THINGS TO DO TO MEET THE REQUIREMENTS. THE DISTRICT RECEIVED THE CERTIFICATE LAST YEAR. WE BELIEVE THINGS ARE IN LINE TO DO SO AGAIN THIS YEAR UPON SUBMISSION OF APPROVAL.

OTHER RELATED MATTERS UPON READING OF THE INFORMATION...

AND HAT, HAPPY TO OPEN IT UP FOR QUESTIONS.

THE ONLY OTHER THING WE DID THIS YEAR IS I TALKED WITH JOHN.

HE THOUGHT IT WOULD BE A GOOD IDEA TO GO AHEAD AND PROVIDE DRAFT OPINIONS. AND NOT THAT THESE ARE -- THERE IS A LOT OF FLEXIBILITY IN TERMS OF WORDING.

IN TERMS OF WHAT YOU SAY. BY THE SAME TOKEN, THE DISTRICT IS GOING THROUGH IMPACKAGEINATING THE REPORT.

UNMODIFIED, WE ACTUALLY HAVE REFERENCES TO PAGE NUMBERS IN THERE THAT MAY CHANGE JUST BASED ON THE PACKAGEINATION OF THE DOCUMENT. THIS IS THE WORDING OF THE OPINION. WE GO THROUGH A LOT OF WORDS BUT IN ESSENCE IT'S A CLEAN UNMODIFIED OPINION.

IT COMPLIANCE WITH THE WORDING. WITH THAT, MY SINCERE THANKS AND APPRECIATION TO THE DISTRICT. HAPPY TO ANSWER ANY QUESTIONS?

YES, SIR? >> ON PAGE 10, YOU TOUCHED ON THE PROGRAMS NOT BEING AN ISSUE, CAN YOU BE MORE SPECIFIC WHY THE TIMING IS NOT THAT BIG OF A DEAL?

>> THE TIMING OF THE REVIEW IS TO ENSURE, PAYROLL INSTANCE, IT HAS TO BE APPROVED BEFORE REIMBURSED.

IN A LOT OF CASES IT'S MONTHLY, PERFUNCTORY.

WHATEVER YOU ARE SUPPOSED TO DO, YOU SHOULD DO EVERY TIME.

IN THIS CASE, LET'S SAY THEY DID IT IN SIX WEEKS OR TWO MONTHS OR AFTER THE FACTS, WE'RE NOT AWARE.

NOTHING WE IDENTIFIED WORKING WITH PAUL AND HIS TEAM, NOTHING IDENTIFIED, JUST APPROVED A LITTLE BIT WHAT WE THOUGHT, BEYOND A REASONABLE IMEFRAME. AND ALL WE'RE SAYING IS CONSIDER THE ACCELERATION OF THAT. AND IF POSSIBLE, THEN I TRY TO DO IT BEFORE THE GRANT FUNDS ARE ULTIMATELY REIMBURSEMENT IS SOUGHT FOR THOSE EXPENDITURES. THAT'S ALL.

IT'S ALL IMPORTANT. I DON'T PUT THAT INTO THE SIGNIFICANT DEFICIENCY MATERIAL WEAKNESS CATEGORY.

MORE CONTINUOUS IMPROVEMENT. I THINK THE FEDS WOULD SAY EVERY THEY PUT OUT IN RULES IS IMPORTANT.

IN MY MIND, THIS IS IN THE LOWER CATEGORY BUT REQUIRES ATTENTION BECAUSE YOU COULD HAVE SEVERITY. I THINK IT WOULD BE A BIG PROBLEM, WE NOTICED IN CERTAIN CIRCUMSTANCES.

WE THINK IT'S AN -- GREAT QUESTION.

OTHER QUESTIONS? YES, MA'AM?

>> CHAIR D. FLORES: FIVE PAGES IN ON THIS DOCUMENT, YOU CLOSED WITH THE INTENDED PURPOSE AND YOU SAY THE PURPOSE IS NOT TO PROVIDE AN OPINION ON THE EFFECTIVENESS OF CONTROL OR

COMPLIANCE. >> RIGHT.

>> CHAIR D. FLORES: DR. MAY, IF WE HAVE A SIGNIFICANT ISSUES WITH THE EFFECTIVENESS OF OUR INTERNAL COMPLIANCE, ONE, HOW IS THAT IDENTIFIED? TWO, HOW IS IT ADDRESSED?

>> CHANCELLOR MAY: THAT'S PART OF THE INTERNAL AUDITORS ROLE TO LOOK AT THE COMPLIANCE ASPECT OF IT, ARE WE IN FACT SOMETIMES FOLLOWING OUR OWN POLICY. AN EXAMPLE WOULD BE THE ADMINISTRATORS TEACHING DURING DAYTIME HOURS.

[00:25:01]

FUNDS IN THE PROCESS. >> CHAIR D. FLORES: ON THE OUTSIDE CHANCE WE HAD REAL DEFICIENCIES IN THE TENDER -- INTERNAL AUDIT, HOW WOULD IT BE ADDRESSED?

OUR CFO? >> CHANCELLOR MAY: A QUESTION TO YOU ON THAT. THAT'S PART OF THE PARTNERSHIP.

YOU ARE NOT REALLY AUDITING THE WORK OF THE AUDITOR BUT YOU KIND OF DO WHEN YOU FIND SOME THINGS IN THAT PROCESS, ENSURING THEY ARE DOING IT THE RIGHT WAY. I MEAN, IT'S NOT IN A ORMAL, WRITTEN SENSE THAT YOU TAKE A LOOK AT THAT.

BUT YOU HAVE TO GO BACK AND DOUBLE CHECK AND DO OTHER THINGS

IF THERE ARE DISCREPANCIES. >> HOW THIS WORKS IS I MENTIONED THAT FOUR-STEP RISK BASED APPROACH.

OBVIOUSLY, THERE IS MORE FEDERAL AND STATE GRANT PROGRAMS, THAT'S WHY YOU CAN'T ISSUE AN OPINION, WE DON'T TEST VERY PROGRAM, CONTROL OR 100% OF ANY SAMPLE SIZE.

THOSE PROCEDURES RE IDENTIFIED TO DETERMINE WHICH PROGRAMS ARE LARGER DOLLAR AND/OR HIGHER RISK.

AND SOMETIMES THE FEDERAL GOVERNMENT OR STATE OF TEXAS WILL DESIGN THINGS THAT SAY THIS PROGRAM IS HE RISK BECAUSE OF ELIGIBILITY. WE HAVE TO CONSIDER THAT AS PART OF THE RISK ASSESSMENT. WHEN IT GETS TO THE EXECUTION OF THE AUDIT, YOU DO THINGS THAT ARE LIMITED TO DRAW LESS THAN 100% CONCLUSION. IN MOST CASES IF YOU TAKE AISM IS AAIS A SAMPLE SIZE OF 40, ANU FIND MORE THAN FOUOBABLY A CHAL.

YOU HAVE TO USE JUDGMENT BUT IN A LOT OF CASES COMMONSENSE.

WHAT I ALWAYS RECOMMEND OUR CLIENTS CONSIDER IS THAT WE GO THROUGH OUR RISK BASED APPROACH FROM AN -- WE USE THE INTERNAL AUDIT TO PERFORM LOT OF TESTING.

I'M SAYING IT'S PRUDENT TO HAVE PAUL AND HIS TEAM EVALUATE OTHER PROGRAMS THAT AREN'T THE ONES THAT GET TESTED ANNUALLY AS PART OF THIS PROCESS, IF NOT ANNUALLY, CLOSE TO VERY YEAR.

BUT THOSE BE CONSIDERED IN TERMS OF THEIR ROTATION FROM INTERNAL AUDIT PERSPECTIVE TO MAKE SURE ALL PROGRAMS ARE GETTING COVERAGE. NOT THAT ANYONE WOULD DO ANYTHING INTENTIONALLY WRONG. IF I THINK IF THEY KNOW WE'RE COMING IN, THEY WILL DO THINGS RIGHT.

IF THE LEMENT OF SURPRISE IS OUT THERE, THEY MAYBE INCLINED TO FOLLOW THE RULES. IN TERMS OF PRACTICAL, OF WHAT YOU ARE SAYING, IT'S A TEAM EFFORT.

IT'S THE FINANCE AND ACCOUNTING PEOPLE, THE GRANT ADMINISTRATORS, THE PEOPLE INVOLVED ARE WORKING TOGETHER.

BUT EVEN INTERNAL AUDIT CAN'T TEST 100% OF EVERY PROGRAM EVERY

YEAR. >> CHANCELLOR MAY: TO REITERATE OF THE HINGS YOU LOOK AT, YOU ARE GOING TO PULL 10% OF THE

WORK OF THE INTERNAL AUDIT? >> THAT'S RIGHTS.

REPERFORM 10% OF WHAT THEY DO. >> CHAIR D. FLORES: THERE WAS SIGNIFICANT ISSUES THAT WOULD INDICATE WE HAD --

>> THAT'S RIGHT. >> CHAIR D. FLORES: THAT WAS SURFACE OUT OF THAT, YOU WOULD IMAGINE?

>> THIS WAS NOT THE CASE. USED FOR AN EXAMPLE.

THEY SELECTED 40. AND SAID, NO PROBLEMS. WE REPERFORMED FOUR, 10% AND FOUND PROBLEMS WITH EVERY ONE OF THOSE FOUR. THERE WAS PROBLEM A PROBLEM WITH WHAT THEY WERE DOING. THAT'S JUST AN EXAMPLE.

THAT'S WHY THE REPERFORMANCE HAS TO OCCUR.

>> CHAIR D. FLORES: I WANT TO MAKE URE WHAT WE HAVE SET UP IS SOLID. I THINK IT IS BECAUSE WE NEVER COME BACK WITH SIGNIFICANT ISSUES ONCE WE'VE GONE THROUGH THE AUDIT PROCESS. I WANT TO MAKE SURE IF THERE ARE

ISSUES. >> CHANCELLOR MAY: THE ONE AREA WE TALKED ABOUT WITH THE NEW AUDIT, CHIEF AUDITOR TO ADD TO THAT PERFORMANCE AUDITS. RIGHT NOW WE HISTORICALLY HAVE ONLY DONE FINANCIAL BASICALLY. AND WE GOT INTO PERFORMANCE A LITTLE BIT BUT NOT AT THE LEVEL WE'RE ENSURING COMPLIANCE.

>> THAT'S IMPORTANT, CHANCELLOR. ONCE YOU LOOK AT IT, YOU WANT TO MAKE SURE YOU ARE COMPLIANT WITH THE RULES AND REGULATIONS AND USING TAXPAYER'S DOLLARS WISELY. WHEN YOU OPTIMIZE IS MORE TO THE PERFORMANCE THAN THE COMPLIANCE AUDIT.

EVEN THOUGH THEY BOTH HAVE A ROLE.

THAT'S HOW YOU BALANCE THAT. IN SOME CASES HAVE THE FUNCTION

PAPER OVER TIME. >> CHANCELLOR MAY: HISTORICALLY

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ITEMS. >> THAT'S RIGHT.

GREAT QUESTIONS. OTHER QUESTIONS?

>> THANK YOU VERY MUCH. >> GOOD TO SEE EVERYBODY.

THANK YOU. >> CHANCELLOR MAY: MEMBERS, AS A REMINDER, THIS WILL BE ON HE BOARD AGENDA FOR CONSIDERATION.

>> MR. CHAIR, IT IS IMPORTANT THE AUDIT COMMITTEE HAVING HEARD THE RECOMMENDATIONS OF THE EXTERNAL AUDITOR THE AUDIT COMMITTEE VOTE TO MOVE THIS FORWARD.

IT'S AN AGENDA ITEM LATER. IF THERE ARE NO QUESTIONS, IF THE AUDIT OMMITTEE FEELS IT APPROVAL BY THE BOARD, WE SHOULD

DO SO IN THIS MEETING. >> CHANCELLOR MAY: WE NEED A MOTION AND THEN A SECOND AND A VOTE.

>> MOTION. >> D. ZIMMERMANN: YEAH, ON THE

AUDIT COMMITTEE. >> M. BRAVO: WHO IS ON THE AUDIT

[3B. 4th Quarter Report from Internal Audit for Quarter Ended August 31, 2019 Presenter: Paul Styrvoky]

>> D. ZIMMERMANN: I DON'T THINK ONE IS A QUORUM.

SECONDED. >> YOU MADE THE MOTION.

YOU CAN SECOND IT. >> SECOND. ALL IN FAVOR, SAY, "AYE." OPPOSED?

>> IT'S ON THE AGENDA. >> D. ZIMMERMANN: DONE.

>>> GOOD AFTERNOON. AND IF I COULD HAVE MY TEAM STAND AND INTRODUCE THEMSELVES. AMANDA.

>> HI, AMANDA VINCEN.

>> WELCOME. >> APRIL FULLER IS HERE, SHE'LL BE BACK A LITTLE BIT. AND WELCOME, I HOPE YOU ALL HAD A NICE HOLIDAY. IT'S GOOD TO BE HERE.

AND WE HAVE TWO QUARTERS TO GO THROUGH.

AND WE AGAIN, PLEASED TO BE ABLE TO SERVE GRANT THORNTON AND DO QUALITY WORK AND GET IT DONE ON TIME.

PLEASED WITH THAT. >> S. WILLIAMS: AUGUST 31ST,

2019, AND NOVEMBER 30TH, 2019. >> VERY GOOD.

YOU SHOULD RECEIVED THE DETAILED AUDIT REPORTS FOR EVERYTHING REFERENCED IN THE STATUS REPORTS.

HER SUGGESTIONS OF THE AUDIT COMMITTEE, WE HAVE ADDED THREE DIFFERENT KINDS OF DISCLAIMERS AFTER THE AUDIT REPORTS THAT WE'RE SUMMARIZING. BASICALLY, THE FIRST ONE IS WHERE WE DID NOT IDENTIFY A SIGNIFICANT MATERIAL ISSUES.

OTHER THAN NORMAL AND WOULD NOT REQUIRE ANY FOLLOW-UP MONITORING BY US. THE SECOND ONE, RICHLAND ND COLLEGIATE HIGH SCHOOL IDENTIFIED SEVERAL MATERIAL ISSUES THAT COULD CAUSE COMPLIANCE ISSUES WITH T.E.A.

WE HAVE BEEN WORKING CLOSELY WITH RICHLAND OVER THE FALL. WE HAVE SEEN THEIR NEW PROCESS AND DONE SOME LIMITED TESTING.

WITH SENIOR LEADERSHIP, THEY ARE ON TRACK TO GET IT RESOLVED.

WE'RE GOING O START THE NEXT AUDIT IN JANUARY OF THIS AREA.

AND WE DON'T ANTICIPATE A REOCCURRENCE OF THE ISSUES.

THEY WORKED CLOSELY WITH REGION 10 AND T.E.A.

AND HEN ON PHYSICAL ASSETS INVENTORY, THE DISTRICT CONTINUES TO IMPLEMENT THE NEW RADIANT SYSTEM THAT WILL GREATLY ENHANCE THE PROCESS BY WHICH INVENTORY ITEMS ARE LOCATED AND RESOLVED ON A TIMELY BASIS. AGAIN, WE DID NOT FIND ANY SIGNIFICANT OR MATERIAL ISSUES REQUIRING FOLLOW-UP IN ADVANCE OF NEXT YEAR'S AUDIT. WE DID TAKE A LOOK AT ALL OF THE ITEMS THAT WERE WRITTEN OFF FROM A CAPITAL AND EXPENSE ITEM.

I HAVE A DETAILED LIST HERE. WHEN I LOOK THROUGH IT IT'S MOSTLY OLD COMPUTERS, OLD FURNITURE, SERVERS, THINGS THAT TYPICALLY HAVE A SHORT LIFE OF 3-5 YEARS.

VERY NORMAL TYPICAL AUDIT IN INVENTORY THIS YEAR.

>> I HAVE A QUESTION. ON THE OLD COMPUTERS O YOU WIPE

THE HARD DRIVES >> I YES, WE HAVE A VENDOR THAT SPECIFICALLY DOES THAT, I BELIEVE E RECYCLER.

>> WE DONATE THEM? >> THERE IS A DISPOSAL PROCESS THAT IS WORKED THROUGH THE AUCTIONEER.

THEY ARE AN APPROVED AUCTIONEER. >> S. WILLIAMS: 10 CENTS ON THE

DOLLAR? >> THERE IS MONEY WE GET BACK.

>> S. WILLIAMS: WILL YOU FIND OUT AND LET'S KNOW?

>> WE WILL. DURING THE --

[00:35:02]

>> CHANCELLOR MAY: I EXPECT MOST ARE SALVAGED NOT REUSED IN SOME

FASHION. >> THERE IS VALUE IN THE METAL AND SO FORTH AND COMPONENTS. WE STARTED OUR WORK LATE SUMMER WITH GRANT THORNTON. AND WE HAD SEVERAL AUDITSES, AS YOU CAN SEE HERE. THE TRAVEL EXPENSES, THE AUTOMOTIVE PROGRAM AND INVESTMENTS IN PROGRESS ND CARRIED FORWARD INTO THE FIRST QUARTER AS WELL.

IN AUGUST WE PRESENTED TO YOU OUR PLAN.

YOU APPROVED IT. AND SEARCH FOR CHIEF AUDITOR CONTINUES UTILIZING A SEARCH FROM WHAT I UNDERSTAND, INTERVIEWING AND SELECTION WILL HAPPEN IN THE FIRST QUARTER OF

NEXT YEAR. >> D. ZIMMERMANN: YOU ARE IN THE

RUNNING, RIGHT? >> I AM NOT.

THE OB SPECIFICATION WAS REVISED.

AND I DO NOT HOLD A CPA OR MASTERS.

I DO HOLD ONE OF THE CERTIFICATIONS, A CISA, HOWEVER, THAT'S A PREFERRED QUALIFIED CREDENTIAL.

SO I DO NOT MEET THE MINIMUMS. >> CHAIR D. FLORES: PLUS, WE ALSO HAVE A PRACTICE AT CERTAIN LEVELS THE NTERIM IS NOT APPOINTED TO THE POSITION. I WOULD IMAGINE IF THE INTERIM WERE TO BE CONSIDERED FOR THE PERMANENT, WE WOULD DECLARE

THAT. >> CHANCELLOR MAY: I DON'T KNOW THAT WAS A CONVERSATION ON THIS PARTICULAR POSITION.

>> CHAIR D. FLORES: I THINK WE NEED CLARITY ON THAT.

BECAUSE IT'S A CONSISTENCY AND FAIRNESS ISSUE.

SO ANYWAY, THAT CAN BE A DISCUSSION FOR ANOTHER MEETING.

>> IRRESPECTIVE OF THAT, I'M HAPPY TO SERVE AS THE INTERIM AUDITOR. I'M PROUD TO REPRESENT US, THE PUBLIC, STUDENTS AND EMPLOYEES. IT'S AN HONOR I TAKE VERY SERIOUSLY. AND MY TEAM WENT TO THE

[3C. 1st Quarter Report from Internal Audit for Quarter Ended November 30, 2019 Presenter: Paul Styrvoky]

BACK BEST PRACTICES. >> CONGRATULATIONS TO YOU AND YOUR TEAM FOR A STELLAR REVIEW BY GRANT THORNTON AND THE WORK YOU AND YOUR TEAM DO. APPRECIATE THAT.

>> THE FIRST QUARTER, I'M SORRY, I MISSED -- GO AHEAD.

>> EXCUSE ME, TRUSTEE RITTER, YOU HAVE A QUESTION?

>> P. RITTER: I CAN AIT. >> THE FIRST QUARTER WE ISSUED THE EMPLOYEE TRAVEL EXPENSES. THIS IS A REGULAR AUDIT.

WE DID NOT FIND SIGNIFICANT MATERIAL ISSUES.

WE GOT RESOLUTION FROM ALL COLLEGES IN TERMS OF RECEIPTS THAT NEEDED CLARIFICATION. IT'S LOW DOLLARS BUT THE OPPORTUNITY FOR MISAPPROPRIATION OF FUNDS DOES OCCUR IN THIS AIR.

WE DID NOT FIND ANYTHING SIGNIFICANT.

>> D. ZIMMERMANN: IEST SURPRISED WE HAVE TO PUT IN FOR OUR TAX EXEMPT AT THE HOTELS -- I WAS. THAT TO ME, I MEAN, IF YOU ARE THERE WITH DALLAS COUNTY COMMUNITY COLLEGE DISTRICT, THAT SHOULD BE-- YOU NEED PAPERWORK FOR THAT?

>> YES, YOU DO. >>

>> IT'S A HOTEL REQUIREMENT FOR THEIR PAPERWORK THEY DON'T CHARGE US. IT'S ONLY STATE SALES' TAX WE'RE

EXEMPT FROM, NOT THE LOCAL. >> D. ZIMMERMANN: THE LOCAL IS

THE BIG ONE. >> CHANCELLOR MAY: THEY GOT TO DOCUMENT AND PROVE IN FACT THAT WE WERE A TAX-EXEMPT ENTITY.

THE ISSUE IS NOT FOR OUR BENEFIT DIRECTLY.

IT'S WHAT WE BENEFIT FROM. >> THE OTHER THING WE DID N THE FIRST QUARTER AND THIS IS ALONG THE LINES OF WHAT THE CHANCELLOR AND OTHER SENIOR MANAGEMENT AS EXPRESSED AN INTEREST IN GOING FORWARD IS PROGRAMMATIC AUDITS. BECAUSE THE INITIATIVE IS SO NEW, WE DID EXTENSIVE WORK IN PREPLANNING FOR DALLAS COUNTY PROMISE. MET WITH FOUNDATION PERSONNEL AND COMMIT PEOPLE AND WE ALSO AS PART OF THIS AND SO MANY PEOPLE WERE HELPFUL, BUT WE OBSERVED AND I WANTED TO HIGHLIGHT BEST PRACTICES AT RICHLAND COLLEGE. KATHY ROBINSON AND PAULA DO AN OUTSTANDING JOB. AT MOUNTAIN VIEW, AND THE WHOLE TEAM AT NORTH LAKE. THIS TEAM WORKS CLOSELY BOTH AT INSTITUTIONS AND ACROSS THE DISTRICT.

DALLAS COUNTY PROMISE IS TAKING OFF.

LATER NEXT YEAR WE'RE GOING TO TAKE A PROGRAMMATIC LOOK IN TERMS OF EFFECTIVENESS OF RECRUITING. AND THAT'S ALL I HAVE. I'M OPEN FOR ANY QUESTIONS.

>> S. WILLIAMS: QUESTIONS FOR PAUL?

>> HAVE WE EVER AUDITED OUR TITLE NINE COMPLIANCE?

[00:40:03]

>> THAT WOULD BE THE CLEARY ACT. >> P. RITTER: RELATING TO MISCONDUCT AND THAT TYPE OF THING.

IT'S BEEN VERY MUCH IN THE NEWS. I'M WONDERING THE LAST TIME WE LOOKED AT OUR PROCESS AND POLICIES.

AND THE IMPLEMENTATION OF THOSE POLICIES.

>> I THINK THAT'S A VERY IMPORTANT AREA OF POTENTIAL ISK AND SOMETHING WE SHOULD FACTOR INTO THE ANNUAL AUDIT PLAN.

ONE THING I WANTED TO COVER AND THE CHANCELLOR AND PAUL HAS TOUCHED ON IT ARE THE PROGRAMMATIC COMPLIANCE AUDITS, WE'VE FOCUSED MORE ON THE FINANCIAL ASPECTS OF THE DISTRICT BY INTENTION BECAUSE TO HAVE THE STAFF THAT INTERNAL AUDIT HAS. THEY CAN ONLY DEVOTE SO MANY PERSONNEL HOURS TO THE VARIOUS HOURS.

AND THE NTERNAL CONTROLS OF FINANCIAL MATTERS ARE IMPORTANT TO A DISTRICT THAT OPERATES WITH A BUDGET THE SIZE OF OURS.

I THINK WITH RESPECT TO TITLE NINE, THERE WAS A SIGNIFICANT CHANGE IN THE TITLE NINE LEGISLATION WITHIN THE LAST TWO YEARS WHICH CAUSED US TO DO A COMPLETE ASSESSMENT OF THE TITLE NINE DELIVERY. IT WASN'T AN INTERNAL AUDIT BUT A FUNCTION OF THE DISTRICT LOOKING AT TITLE NINE ELIVERY, THE PEOPLE THAT WERE IN A POSITION TO DEAL WITH THOSE ISSUES AND TO ENSURE COMPLIANCE WITH THE REQUIREMENTS OF THAT.

I THINK IT'S PROBABLY AN APPROPRIATE AREA FOR US TO TAKE A SIGNIFICANT LOOK AT. I WAS GOING TO ADD THIS BOARD APPROVED TWO POSITIONS IN THIS AUDIT.

WE HAVE NOT FILLED THOSE BECAUSE WE HAVE NOT IDENTIFIED THE CHIEF INTERNAL AUDITOR. AND WE THOUGHT T FAIR TO ALLOW THEM TO MAKE THE DECISION HOW TO STAFF THAT DEPARTMENT.

IT'S TAKEN LONGER THAN WE HOPED. I WANT TO THANK PAUL, AMANDA, ANTOINETTE AND APRIL. THEY PERFORMED ADMERABLY AND BEYOND THE CALL TO HAVE DUTY. AS A SMALL DEPARTMENT TO DO THE ASSISTANCE IN CONNECTION WITH THE AUDIT YOU HEARD ABOUT.

MY HATS OFF TO THEM. THEY CONSUMED THE VAST MAJORITY OF THE TIME THIS QUARTER. THE NEXT QUARTER, HOPEFULLY FILL THE POSITIONS, BRING A CHIEF INTERNAL AUDIT TO RUN THE DEPARTMENT AND FOCUS ON THE AREAS THAT REQUIRE HE TYPE OF AUDIT THAT YOU MENTION HERE. TITLE NINE WOULD BE AN APPROPRIATE AREA TO AUDIT. I AGREE.

>> CHANCELLOR MAY: AND OTHER AREAS, I AGAIN, WE LIMITED OURSELVES TO FINANCIAL ITEMS IN THE PAST.

AND BUT THIS IS IMPORTANT PERFORMANCE AREA WE HAD --

>> I AGREE WITH THE ASSESSMENT. THE TITLE INE COMPLIANCE IS ONE OF THE GREATEST AREAS AT RISK FOR OUR INSTITUTION.

WE OUGHT TO BE PROACTIVE IN LOOKING AT THAT.

GIVEN THE CHANGE IN LEGISLATION AND WHAT IS GOING ON IN THE WORLD, CONSIDER BRINGING OUTSIDE EXPERTISE TO GIVE US PERSPECTIVE ON THAT SOONER RATHER THAN LATER.

>> WE DID AND I THANK YOU FOR REMINDING ME.

WE ACTUALLY BROUGHT IN A CONSULTANT TO ASSIST IN IN TERMS OF TRAINING PEOPLE AND PUTTING PEOPLE IN THE POSITION TO MEET THE REQUIREMENTS UNDER THE TITLE.

I THINK IT'S AN APPROPRIATE TIME TO ADD THAT TO A FUTURE AUDIT TO MAKE SURE WE'RE DOING IT TO THE EXPECTATION.

>> WE DID A COMPLETE RESTRUCTURING?

>> WE DID. WE WERE MUCH MORE --

>> I THINK IT WAS THREE YEARS AGO.

WE WERE MUCH MORE DECENTRALIZED IN THE APPROACH TO TITLE NINE THREE YEARS AGO. MUCH MORE CAMPUS SPECIFIC.

AND WE BROUGHT THAT UNDER THE OFFICE OF COMPLIANCE, WHICH RECEIVES THAT GRANT IN THAT ROLE OVERSEES THE DEPLOYMENT OF THE SERVICES AND WORKS WITH THE CAMPUS SPECIFIC FOLKS.

WE WORKED WITH A CONSULTANT TO HELP US.

>> WE HAVE FLEXIBLE WITH THOSE TWO POSITIONS TO ADD A REVIEW OF TITLE NINE INTO OUR PROGRAM. GOING THIS YEAR.

>> A PERSON IS STEPPING FORWARD AND MAKING THOSE KNOWN OR --

>> IT'S INTERESTING. I'M NOT AWARE WE'VE HEARD CONCERNS ABOUT OUR COMPLIANCE. WE DID TAKE A MUCH MORE -- AND PAUL HAS BEEN INSTRUMENTAL IN IMPLEMENTING A RISK BASED ASSESSMENT PROCESS FOR OUR ANNUAL AUDIT.

THAT WAS NOT IDENTIFIED TO MY KNOWLEDGE, THIS YEAR AS BEING AN AREA OF RISK BROUGHT TO THE ATTENTION OF INTERNAL AUDIT.

I THINK IT WILL BE NOW THAT WE HEARD THIS EXPRESSION.

[4. Items for Review]

[00:45:01]

YEAR, CERTAINLY IN THE FUTURE. >> S. WILLIAMS: ANYTHING ELSE OF PAUL? PAUL, THANK YOU TO YOU TEAM AND YOU. APPRECIATE YOU.

>> THANK YOU VERY MUCH. AND YOU ALL HAVE A NICE HOLIDAY.

>> CHAIR D. FLORES: THANK YOU. >> S. WILLIAMS: AFTER THAT, WE HAVE REVIEW OF THE CHANCELLOR TRAVEL REPORT.

>> CHANCELLOR MAY: QUARTERLY, I THINK.

>> S. WILLIAMS: ANYBODY ELSE HAVE A QUESTION?

>> BEFORE YOU AVEL, CHAIR, I WAS GOING TO PUT MY HAND UNDER THERE. THAT WOULDN'T HAVE BEEN WISE.

PAUL AND THE CHANCELLOR TOUCHED ON IT.

WE'RE IN THE MIDST OF FILLING THE ROLE OF CHIEF INTERNAL AUDITOR. THAT SEARCH IS CONTINUING.

WE'VE HAD IT OPEN FOR SOME TIME. NOT A ROBUST RESPONSE ON THAT.

WE CREATED A BIT OF UNINTENDED CONSEQUENCE BY HAVING A REQUIREMENT FOR A ASTER'S DEGREE AND PROFESSIONAL CERTIFICATIONS. PAUL SPOKE TO THE ONE HE HAS.

WE BENCHMARKED AGAINST OTHER INSTITUTIONS, IT'S IMPORTANT TO HAVE A CPA OR CIA, CERTIFIED INDEPENDENT AUDITOR CERTIFICATION. THOSE ARE REQUIREMENTS.

WE HAD A MASTER'S DEGREE REQUIREMENT.

AND FINDING THE LACK OF ROBUST RESPONSE TO THE POSTING MAY BE DUE DO THE ACT WE'RE REQUIRING A MASTERS AND THE TWO PROFESSIONAL CERTIFICATIONS. WE'LL CONSIDER FOLKS BUT THE RESPONSE HAS BEEN LESS THAN ROBUST, WE BELIEVE AND THE SEARCH CONSULTANT THINKS THIS IS AN EMBEDMENT.

WE REMOVED THE MASTER'S DEGREE REQUIREMENT.

>> IS IN THERE A CREDENTIAL, A CERTIFICATE FOR GOVERNMENT OF FINANCIAL AS OPPOSED TO A CPA, ONE THAT DEALS WITH GOVERNMENTAL

ACCOUNTING? >> THERE COULD BE.

THERE IS AN ALPHABETICAL SOUP OF CERTIFIED FRAUD EXAMINER.

AND PROBABLY MY FRIENDS TO MY LEFT COULD AS WELL.

THERE ARE A NUMBER OF DIFFERENT CERTIFICATIONS.

WE WERE INFORMED AND BELIEVE THAT FOR A POSITION OF CHIEF INTERNAL AUDIT, YOU SHOULD HAVE A CPA OR IA.

AND THAT WAS CONSIST ACROSS THE OTHER INSTITUTIONS WE OOKED AT.

THAT'S A REQUIREMENT FOR THIS POSITION.

THE OTHERS ARE CERTAINLY CERTIFICATIONS IF A PERSON HAS THOUGH, THEY ARE OF BENEFIT AND ARE IMPORTANT.

AND THEY MAYBE PREFERRED BUT THEY ARE NOT AN ABSOLUTE

REQUIREMENT FOR THE POSITION. >> CHANCELLOR MAY: SOME ARE DEPENDENT ON THE CAREER PATH, WHETHER OR NOT THEY GO THAT

ROUTE. >> S. WILLIAMS: WE'LL SAY FROM A PARTIAL STANDPOINT, I'M DISAPPOINTED WE CAN'T CONSIDER

PAUL. >> I APPRECIATE THAT.

AND PAUL HAS DEDICATED HIMSELF SELFLESSLY TO THE ROLE FOR NOW, GOODNESS, A YEAR AS THE INTERIM. AND WE APPRECIATE HIS ROLE.

HE'S A VALUED MEMBER OF THE TEAM.

PAUL KNOWS HAT. THE STANDARDS ADHERED TO GO TO CHAIR FLORES' QUESTION, HOW DO YOU KNOW IF INTERNAL AUDIT IS DOING WHAT THEY ARE SUPPOSED TO? THEY ANSWERED THAT QUESTION WHAT THEY DO. BUT THE STANDARDS WE NOW, THE INTERNAL AUDIT DEPARTMENT ADHERE TO ARE FAR MORE THOROUGH COMPREHENSIVE THAN EVER BEFORE IN THIS DISTRICT.

THAT'S A COMPLIMENT TO PAUL AND HIS TEAM.

AND WE ENCOURAGE PROFESSIONAL DEVELOPMENT AND TRAINING FOR ADDITIONAL CERTIFICATIONS THAT WILL ALLOW THEM TO BE BETTER SK

* This transcript was compiled from uncorrected Closed Captioning.