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Audit Buzz Newsletter
Spring 2019
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Spring is in the air and the audit bees are buzzing! OAG is currently busy wrapping up the remainder of its FY 2019 Audit Plan while also thinking ahead to what's in store for FY 2020.
In this issue of Audit Buzz, we summarize key takeaways from recently completed performance audits, including the use trades and staffing reserve and Medicaid reimbursement program. We also highlight OAG's meeting with the Guangdong Audit Office, Fairfax County School Board's recognition of Internal Audit Awareness Month, the 31st annual ALGA conference and peer review conducted by the Auditor General, and a look into current and future OAG work.
As always, we appreciate the cooperation and courtesies extended to our staff by FCPS management and staff during all past, current, and future audit engagements.
Recently Completed Audits and Other Updates
Performance Audit of Use of Trades and Staffing Reserve
In accordance with the FY 2019 audit plan, OAG completed a performance audit of the use trades and staffing reserve of in March 2019.
Baseline budgeting is used to identify resources needed to maintain the existing level of services. Baseline budgets for schools and centers are determined by formulas approved by the School Board and applied by the Office of Budget Services (OBS). These formulas are driven primarily by enrollment and determine the administrative, instructional, and support personnel in each school and center. Formulas are also used to allocate funding for textbooks, instructional supplies, and postage.
Trades and staffing reserve are two discrete ways in which flexibility is provided to FCPS in managing the allocated resources based upon the actual needs. Both trades and staffing reserve are overseen by OBS and Talent Acquisition and Management (TAM).
As a result of the audit, OAG identified two moderate risk findings related to:
- Effectiveness of the current staffing methods (Finding 1)
- Efficiencies of the trade request and authorization process (Finding 2)
OAG also identified one low risk finding and one observation related to:
- Clarity of FCPS regulation (Finding 3)
- Trading across position and nonposition funds (Observation 1)
The full Use of Trades and Staffing Reserve audit report is available here:
https://www.boarddocs.com/vsba/fairfax/Board.nsf/files/BAU6T36A32A7/$file/March%202019%20Use%20of%20Trades%20and%20Staffing%20Reserve%20Audit.pdf
Performance Audit of Medicaid Reimbursement Program
In accordance with the FY 2019 audit plan, OAG completed a performance audit of the FCPS Medicaid reimbursement program in April 2019.
The Individuals with Disabilities Education Act (IDEA) requires local education agencies, such as FCPS, to provide students with disabilities a free appropriate public education, including special education and related services according to each student’s Individualized Education Program (IEP). While FCPS is financially responsible for educational services provided to special education students, related services identified in a Medicaid eligible student’s IEP may be eligible for reimbursement from Virginia Department of Medical Assistance Service (DMAS), whom Centers for Medicare and Medicaid Services (CMS) has authorized to reimburse for services.
The FCPS Medicaid reimbursement team has made considerable progress in increasing reimbursements for each year during the past four fiscal years and continues to explore new areas for growth.
While no instances of non-compliance with Medicaid program requirements were identified during testing, OAG identified several areas for improvement, including:
- Timeliness of required documentation (Finding 1)
- Vendor compensation (Observation 1)
- Training participation (Observation 2)
The full Medicaid Reimbursement Program audit report is available here:
https://go.boarddocs.com/vsba/fairfax/Board.nsf/files/BBXLX45386B1/$file/3.2%20Medicaid%20Reimbursement%20Program%20Audit%20Report.pdf
Business Process Turnover Audits (BPTA)
At the April 24, 2019 Audit Committee meeting, OAG presented the results of BPTAs performed at three schools. During the performance of these BPTAs, OAG identified two low risk findings and five moderate risk findings. Findings related to the following were noted (risk rating italicized in parenthesis):
- Pre-approval of purchases (one low; one moderate)
- Timeliness and completion of reconciliations (one low; two moderate)
- Safeguarding of assets (two moderate)
Moderate risk findings are identified when "compliance with subject FCPS policies and established procedures is inadequate; and controls were not consistently applied which increased the severity of the risk." OAG obtains a management response for all moderate (and high) risk BPTA findings.
April 2019 BPTA reports are available here on the OAG website.
OAG Meeting with Guangdong Audit Office
On March 28, 2019, OAG welcomed 12 audit leaders from the Guangdong Audit Office (Southern China Region) to FCPS. The two audit teams discussed topics such as independence, how to use big data to better inform audit topics and objectives, and tips to conduct a successful performance audit. This exchange provided a great opportunity to discuss best audit practices as well as common audit challenges.
Internal Audit Awareness Month Recognition
On May 9, 2019, OAG was recognized for its contributions to FCPS during the School Board Regular Meeting at Luther Jackson MS. After the recognition, presented by Audit Committee Chairman, Megan McLaughlin, OAG friends and family were invited on stage for a picture with the Fairfax County School Board and the Superintendent.
OAG would like to thank the Fairfax County School Board and members of the Audit Committee for their continued support as well as FCPS Superintendent and Leadership Team for fostering a collaborative work environment that promotes Fairfax County Public Schools achievement of its strategic goals.
Association of Local Government Auditors (ALGA) Conference and External Peer Review
In May 2019, the Auditor General presented a session of “Fraud Risk Assessment" at the 31st Annual ALGA Conference held in Kansas City, Missouri. Over 100 audit professionals participated in the session. Esther Ko, FCPS Auditor General, also facilitated an investigation round table at the conference where best practices were shared and discussed
Separately, in May 2019, the Auditor General served as the peer reviewer in an ALGA organized peer review of a local government internal audit department based in Pennsylvania. During this endeavor, the Auditor General assessed the compliance with relevant audit requirements of this Pennsylvania-based internal audit department, and brought insight to further strengthen OAG audit processes
Current Work
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Payroll Oversight and Process - The preliminary objective of this audit is to determine whether payroll practices were in compliance with applicable federal and state requirements, established FCPS policies, regulations and procedures, and whether these practices and relevant internal controls effectively reduce the risk of potential payroll irregularities. This performance audit began in February 2019 and is expected to be presented to the Audit Committee in May 2019.
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FY 2020 Risk Assessment and Audit Plan - OAG has conducted the annual risk assessment to evaluate areas against a variety of risk factors including financial implication, likelihood of errors, and frequency of audits, prior audit issues, complexity, and turnover. The results of this risk assessment will be presented to the Audit Committee in May 2019 in the form of a proposed FY 2020 Audit Plan.
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Safety and Security Compliance - The preliminary objectives of this audit are to validate whether FCPS follows the Code of Virginia (22.1-279.8) and the relevant requirements, and meets the school safety reporting requirements of the Virginia Department of Education. This performance audit began in March 2019 and is expected to be presented to the Audit Committee in July 2019.
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Business Process Turnover Audits - These audits are performed on an ad-hoc basis throughout the year, depending upon key school employee turnover. OAG is currently in the process of completing six FY 2019 BPTA's.
Upcoming OAG Projects
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FY 2019 OAG Annual Report - OAG is currently preparing its FY 2019 Annual Report to the Fairfax County School Board.
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FY 2019 LSAF Audit - OAG will perform the audit of FCPS local school activity funds (LSAF) for the year ended June 30, 2019.
Welcome Recent and New OAG Hires
LaTonya Holloway - Auditor II - LaTonya joined OAG as an Auditor II in March 2019. LaTonya previously served as an Auditor II with Anne Arundel County Public Schools.
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Fraud, Waste & Abuse Hotline:
(571) 423-1333 (anonymous voicemail)
InternalAudit@fcps.edu (email is not anonymous)
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