Audit Buzz Newsletter Summer 2019

As the summer comes to an end and students return to schools, OAG is preparing to begin executing its FY 2020 Audit Plan. The plan, which was approved in July, is the result of an independent risk assessment conducted by OAG, which considers financial, operational and reputational risks faced by FCPS.  During the risk assessment process, OAG first identifies potential audit topics, then prioritizes these topics based on qualitative and quantitative risk factors.  Finally, OAG determines the preliminary audit topics, preliminary objectives, and proposed timing of audit engagements in the form of the Audit Plan.  This plan is then presented to the audit committee for discussion and subsequently to the School Board for approval. 

In this issue of Audit Buzz, we summarize key takeaways from the recently completed performance audit of payroll oversight and process.  OAG also completed a performance audit on safety and security compliance; however, due to the confidential nature of the report and exemption from the Freedom of Information Act requirements, the details of the report were not made available to the public.  We also highlight OAG's FY 2019 Annual Report, and provide a look into the FY 2020 Risk Assessment and Audit Plan. 

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 Payroll Oversight and Process

In accordance with the FY 2019 audit plan, OAG completed a performance audit of payroll oversight and process in May 2019. 

Payroll expenditures represent the largest portion of the School Operating Fund expenditures. At FCPS, total employee compensation, which includes total salaries (contracted pay, non-contracted pay, salary supplements, etc.) and employee benefits (retirement, insurance, social security taxes, etc.), makes up approximately 89% of operating expenditures each year. The Payroll Office is responsible for all wage payments and deductions for all employees; manages pay and leave-related data, tax-related data, direct deposit information, and time and attendance data from across all work locations with FCPS; and processes payments to all vendors providing benefits or services on behalf of FCPS employees through payroll deductions.

The primary objectives of the audit were to perform the following: 

• Determine whether payroll practices were in compliance with applicable federal and state requirements, established FCPS policies, regulations and procedures.
• Determine whether these practices and relevant internal controls effectively reduce the risk of potential payroll irregularities.

While no findings were identified during this audit, OAG noted the following two observations:

• Insufficient Evidence of Healthcare Invoice Review (Observation 1)

• Documentation of Operating Guidelines (Observation 2)

The full details of the payroll oversight and process audit are available in the report: 

https://go.boarddocs.com/vsba/fairfax/Board.nsf/files/BCWJDJ4B6EA2/$file/3.2%20Payroll%20Oversight%20and%20Process%20Audit%20Report_Clean.pdf

Performance Audit of Safety and Security Compliance

In accordance with the FY 2019 audit plan, carried over into the FY 2020, OAG completed a performance audit of safety and security compliance in July 2019. 

The primary objectives of the audit were to perform the following:

• Assess whether FCPS follows the Code of Virginia (22.1-279.8) and the relevant requirements, including compliance with the school safety reporting requirements of the Virginia Center for School and Campus Safety (VCSCS) Department of Criminal Justice Services (DCJS).
• Evaluate if FCPS’ policies and regulations adequately address the Code of Virginia (22.1-279.8) and DCJS reporting requirements.

The Code of Virginia mandates each local school board to require all schools under its supervisory control to annually conduct school safety audits. This process is managed within FCPS by the Office of Safety and Security (OSS), an office within the Department of Facilities and Transportation Services (FTS).

In accordance with Code of Virginia § 2.2-3705.2. Exclusions to application of chapter; records relating to public safety, Part 4, the details of this report were not made available to the public.

FY 2019 Annual Report

OAG presented its inaugural Annual Report to the Audit Committee in June 2019.  The purpose of this report was to raise awareness of OAG’s mission and accomplishments, highlight the internal audit process within Fairfax County Public Schools (FCPS), and summarize the results of audits of other projects completed in FY 2019.

OAG's FY 2019 Annual Report can be found here:

https://go.boarddocs.com/vsba/fairfax/Board.nsf/files/BDPUPM6B482F/$file/FY19%20OAG%20Annual%20Audit%20Report.pdf

FY 2020 Risk Assessment and Audit Plan

During FY 2019, OAG performed a division-wide, independent risk assessment where we assessed financial, operational and reputational risks faced by FCPS.  During the risk assessment process, OAG staff examined available financial and benchmarking data, interviewed Leadership Team and other FCPS staff members, as well as solicited feedback from School Board members, in order to prioritize audit topics.  A brief summary of the OAG risk assessment process is included in the graphic below:

As a result of the FY 2020 Risk Assessment, OAG presented, and the School Board subsequently approved, the following FY 2020 Audit Plan, including the following audit priorities:

1. Business Process Audits (BPA) for Schools, Departments and Offices
2. Performance Audit of Construction Contract Management
3. Performance Audit of Grants Administration, Accounting, and Monitoring 
4. Local School Activity Funds Audit for Year ending June 30, 2019 (carried over from FY 2019) 
5. Local School Activity Funds Audit for Year ending June 30, 2020
6. Performance Audit of Procurement and Contract Management 
7. Performance Audit of Safety and Security Compliance (carried over from FY 2019) – completed July 2019
8. Performance Audit of Time and Attendance
9. Other OAG Duties, including an analysis of FY 2019 trades of non-position monies to staff positions

The full FY 2020 Audit Plan can be found here on the OAG website.

Current Work

• FY 2019 LSAF Audit - OAG is currently performing the financial audit of FCPS local school activity funds (LSAF) for the year ended June 30, 2019.  The purpose of this audit is to express an opinion on the fair and proper presentation of the LSAF financial statement.  OAG expects to present the results of this audit in October 2019.
• Other OAG Duties - While no performance audits are currently in progress, OAG stayed busy during the summer on other tasks other than the FY 2019 LSAF audit, including:
  • Revising internal processes and procedures as a result of revisions to the Yellow Book, or the Generally Accepted Government Auditing Standard (GAGAS).  According to the US Government Accountability Office (GAO), the Yellow Book provides auditors of government entities a framework for conducting high-quality audits with competence, integrity, objectivity, and independence.
  • During FY 2019, OAG utilized data analytic procedures to implement continuous monitoring procedures at the school level.  Over the summer, OAG explored various non-school based risk factors, with the goal of developing continuous monitoring procedures for certain non-school based processes.  OAG will continue to enhance the continuous monitoring process as FY 2020 progresses.

Upcoming OAG Projects

• Performance Audit of Grants Administration, Accounting, and Monitoring - The preliminary objectives are to determine if there is an adequate management control framework in place with respect to governance and internal control to effectively support grant related activities; review and assess proper use and allocation of grant funds, and review compliance with the related grant terms and conditions. This performance audit is expected to begin in September 2019.
• Performance Audit of Time and Attendance - The preliminary audit objectives are to review the existing control framework of time and attendance, including policies, regulations, and legislation (such as the Fair Labor Standards Act); determine whether the systems and practices are adequate to detect and deter non-compliance; obtain and review report of the Statement on Standards for Attestation Engagements (SSAE) No. 16, Reporting on Controls at a Service Organization of the MyTime service provider; assess the overall operating effectiveness of MyTime and identify areas of improvement for time and attendance management. This performance audit is expected to begin in October 2019.

Fraud, Waste & Abuse Hotline:
(571) 423-1333 (anonymous voicemail)
InternalAudit@fcps.edu (email is not anonymous)

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