001This May 11th, 2026 regular meeting of the Fairfax County School Board Audit Committee will now come to order. Mr. Dannon has submitted a request to attend this uh afternoon's meeting remotely due to medical conflict and is in Fairfax, Virginia. I have performed an initial review of Mr. Dannon's request and having found it to be in compliance with the School Board's remote participation resolution, I have approved the request. Mr. Dannon, please check your audio and visual. Good afternoon. Great. I now ask board members who are physically present to vote on the following. All those in favor of confirming the chair's approval of Mr. Dannon's request. Oh, just a minute. Okay. Okay. So, that's um Mr. Moon, Ms. Marcia St. John Cunning, and Mr. McElveen. Um Nays? None. No abstain. And Nanette voted. Okay. Okay. Yeah. Okay.
002Moving right along. Yeah. We'll now approve the meeting minutes from the March 2, 2026 Audit Committee meeting. Do I have a motion? Okay. By moved by Nanette that the Audit Committee approve the minutes from the March 2nd, 2026 meeting with leave for the clerk to correct any formatting, technical, grammatical errors. Do I have a second? Mr. Moon. All those in favor? It's unanimous of those in the room. Mr. Dannon, how do you vote? Uh can I abstain? Just not having been there, I just want to Okay. Mr. um Dannon is abstaining. Anyone opposed? No opposed. Okay, on to item 1.03, Office of Auditor General Mid-Year Report. I call on uh General Coe and Daniel Moore for item 1.03 Office of Auditor General mid-year report. Um good afternoon everyone. So, thank you for this opportunity to
003come to share this one item today. Um so, this is um a briefing that we would like to do now and many uh at the request I think from the audit committee two times ago that uh we when we presented the fiscal year 25 Office of Auditor General annual report and we um make a comment that because that report will be shared with the full school board uh in June July. So, there will be a time gap between what my office have done and versus at the time when the annual report was presented at the board. So, the purpose of this mid-year briefing is to bridge the two. So, when we go to speak with the board uh in June July to approve for the fiscal year 27 audit topics and risk assessment, they can
004also know what we have done in the previous month. So, this is what it is and I think it's also a good opportunity because we have a new audit committee member. So, uh welcome Tom to the audit committee and then we can also talk about what uh the office has accomplished in the past few months. So, with that if we can go to the um second slide. Um so, the first bullet is about the why we are here today and then the second bullet highlight what we have done since we issued last year annual report. Um my office has been busy and today we kind of have three members here only. So, it's kind of like a little bit uh different than normal because we have only this public item. Um but with my whole
005team member, we are a um audit office of seven auditors including myself. And we have accomplished two performance audits uh and seven business process audits. We keep uh following up with management until we get a satisfactory response on audit recommendations. And we also maintain the fraud, waste, and abuse hotline. Currently, the data here, the 71 received was actually as of I want to say early this month. And as of today, we got actually closer to 80 claims total. So, we have got a lot of like authentic situations that give us insight about what to look at. So, we really appreciate again for management support, and also the school board members and community members to help us to spread the word about the fraud, waste, and abuse reporting. And then we would also have completed the
006fiscal year 27, meaning the next fiscal year proposed risk assessment and audit plan as well. And the following slides show us at a big picture about all the approved and key engagements by the committee, and then by the school board about where we are. So, I'm very proud to report that we are on schedule for all of them. And then about these nine items, Dannelle will walk us through the specific details about each one of them. But I would like to say that we have completed three of the audits that are reported here, and many of the other audits have actually started planning and execution, and is in the reporting phase well. So, with that I would like to transition into Dannelle. Thank you, Esther. Our first set of audits are our business process audits,
007which we actually call BPAs for short. So, during these audits, we evaluate the effectiveness of processes, make sure that internal controls are adequate, and determine if transactions are reasonable. And we typically select schools, and we each year we try to do one department, looking at non-appropriated and appropriated funding. Um for this particular report as of right now, we have conducted BPAs at seven schools, which resulted in one high risk, four moderate, and 11 low risk findings. Um and as you can see, these are the results of kind of breaking down by finding theme. Um we plan to report the remaining BPAs in our June audit committee meeting. The next audit is the healthcare claims management audit. Um the objective was to evaluate the effectiveness and efficiency of the monitoring framework by the office of benefit
008services. Um this audit was exempt from disclosure under the Virginia code, um but we did discuss this with the audit committee in a closed session. Our third um audit is our hourly employee structure and stipends audit. This current This audit is currently in our field work stage. Um the objective is evaluating whether there are appropriate controls um around the hourly um structure. Um and making sure that all stipends are properly authorized and utilized across FCPS. We plan to present this at the June audit committee meeting. Our fourth audit is the local school activity funds audit for year ending June 30th, 2026. The objectives include determining whether cash balances are fairly stated. And when we talk about cash balances, we mean cash and cash equivalents. Also, we're assessing compliance with regulations and determining if internal controls
009are adequate. Uh we plan to report this out in our November 2026 audit committee meeting. Our fifth audit is school and office safety. The objectives include evaluating FCPS safety and security requirements, um evaluating whether FCPS sites are um, have adequate building security and measures and access controls. And we also selected a sample of contracts to review um, vendor compliance. This audit also was exempt from disclosure under the Virginia code, but we did um, discuss with the audit committee in a closed session. Our sixth audit is specific contracts vendor management. Um, for this particular audit we selected instructional services department and the department of special services to kind of look at their vendor performance for their contracts under their office. We are sched- This is currently in process. We're scheduled to present this at our September
010audit committee meeting. The seventh item is continuous monitoring. And this is done for We do this on a quarterly basis um, looking at schools non-appropriated and also appropriated funding. Um, and we kind of analyze pan patterns and transactions to and select transactions to test. Um, also for through continuous monitoring we do unannounced cash counts um, our gate receipts at athletic events and performing art performing arts events. We also have reviewed a transactions related to the career and technical education program. And I believe we are scheduled to present on quarter one and quarter two if I'm not mistaken continuous monitoring in June. Okay, item number eight is related to our system of quality management and external peer review. Um, so this is system of quality management is kind of ongoing work that we do all throughout
011the year. And this year was a particularly special because the government generally accepted government auditing standards our yellow book framework was updated. So we had to update our system of internal of quality management as well to align with GAGAS. Um also, back in January of 2026, I'm proud to announce announce that we had a external peer review done. That's when we have other auditors come and audit our work to make sure that we have an appropriate system of quality management. And [snorts] we received a pass rating, which is the highest rating that you could can receive. So, we're happy about that and that's our second time receiving that pass rating. Okay, number nine, another number nine, which is our audit recommendation follow-up. This is done on a quarterly basis and we follow up on all
012open audit recommendations. I will say as of January 31st, which I believe was our last reporting period that we reported to the audit committee, um 16 recommendations from the current and prior years were outstanding. Um and this is related to the food and nutritional services audit, the procurement process audit, critical process review, hiring audit, and construction and renovation contracting process audit. So, we will continue to follow up on these open items on a quarterly basis and report out to the audit committee. And I believe our next report out will be in June as well. And I will hand it over to Esther for fraud, waste, and abuse. Thank you. So, um we just spent a lot of time talk about the bread and butter for us, which is internal audit. And at the same time,
013we also spend a lot of resources on the fraud, waste, and abuse concern reporting. So, um on here is a little bit of a busy schedule, but it has a table that shows kind of the types of concerns that we received, including such as conflict of interest, documentation, procurement, residency, use of asset, and vendor contractual execution, etc. It also show kind of like the trend from fiscal year 22 for about 5 years now and um we can see that that that we have the reportable cases for example in FY26, fiscal year 26 we have nine and we are always like on an increasing slope for these shares of reportable situation and we define what reportable means in the bottom of the slide that mean either it has credibility of fraud waste and abuse or situation
014that may involve you know senior members the third the third situations are if we highlight anything found from the concerns that can impact our controls and then to provide you know significant improvements we are reporting all this situations to the audit committee. And many times upon the audit committee recommendations they are also referred to the full school board for discussion. So this is what we have right now like I mentioned earlier on we have over 70 concerns for this fiscal year. We definitely have been keeping my team busy but I really appreciate all of you to promote this way to for community members or for employees to report because see something say something is our slogan. Many of you know that that audits could not really identify fraud is really for the stakeholders who are
015inside who see and report is the most effective way. So we really appreciate the collaboration on that. So with that then I also have the last slide it talk All right, can I can you just expand a little bit on the increase in the use of assets calls? Was there any one particular thing or was it just a lot of different things going on there? Sure thank you thank you Ninette. So for the use of assets the themes of what coming could be use of time like is our employees kind of working their full contracted hours. Sometimes may not be there may be concerns not, so we have to review and also to look at the my time like our internal time reporting system and see how that is being recorded. And then the other
016situation is the use of resources such as like the use of photo copying machines or use of you know space and you know buildings etc. That will fall under use of assets. Right, but that was that was up quite a bit this this year. So is there any [clears throat] Was there anything in particular that that drove that? Um My understanding is like likely more because of the active promotion about the use of the hotline and we really focusing on the use of time like the time aspect. So we got a lot more tips to come into us that we can kind of look at that further. So to me is more about the promotion about the hotline that people can use instead of something, you know, if in your mind thinking like something wrong
017is happening. I do not believe so. It's more about the active, you know, promotion. Um okay. Any Oh, maybe I can finish the last few slide and then we can open for questions. Um the next slide share what kind of the audit committee has reviewed in the last meeting about our proposed work plan for fiscal year 2017. So we proposed some of the new audits and then some of the carryover audits and then some of the annual audits that we will continue to do. Um you may be wondering why we have specific contracts in as both new audits and carryover audits. It is because we know that that this is a um high-risk area, so to speak, like about how the um individual stakeholders, the individual uh offices, they are managing their contracts. So, we
018have that like that now mentioned for fiscal year 26, we are looking at how Department of Special Services and then also um Instructional Services Department, how they manage contracts. And in fiscal year 27, we propose to include Department of Information Technology, how they are managing their contracts uh so that we would like to look at that in this in the upcoming fiscal year. And then these topics will be proposed to the school board for review and approval in July. And this is the last page um is the other duties um like I mentioned earlier on, even though we have done a lot of audit work or fraud, waste, and abuse, but if we do not share the information, then our stakeholders won't know about it. So, outreach is something very important for OAG. And uh
019for this fiscal year, we have done 17 presentations and almost 2,000 personnels have received the training um in the different presentation, and I especially would like to give a shout-out to our Financial Services Team because they really give us the opportunity to train the finance technician and also the uh finance professional for central offices. And I also appreciate Dr. Reed to allowed allowed me to be able to speak with the school-based administrators during the leadership kickoff um because those are really precious moments that we can, you know, share what we do and encourage people to work closer with OAG together. Um we also maintain and host a auditor group uh with the neighboring jurisdiction in the DMV area that we meet uh quarterly uh so that we can exchange insights and share information about what
020to audit and what are the hot topics that we can look into. Um so with that I also want to promote the audit bus here. We now have over 3,000 subscribers with your help. So if you don't mind to if you can put it in your newsletters to encourage more to sign up that we will be very happy about that. And in 2 days on May 13th, maybe I can ask a trivia question here. What is special about May? May is actually our internal audit awareness month. So um OAG will be having a um a booth uh or like a celebration uh at Gatehouse right outside of the uh cafeteria area on Wednesday and uh it is from 11:30 to 1:00 and I I would encourage you all to stop by to find out and
021learn more about OAG. So with that, that's the end. I would like to hand the time back to Ryan. Well, thank you so much for that uh tour tour de force uh through your work uh this year. Um can we uh if board members have any questions or comments, please raise your plaques. So I see Ms. St. John Cunning. Um so thank you for that. Um on on slide five, when we go into uh what's happening there and we look at the the highest uh >> [sighs] >> areas of finding are fund account uses, purchasing process, and sufficient documentation. So my question with that again, and you know you and I have talked about finance assistance the the work of finance assistance and stuff. So I have a couple of questions. Is this like does
022this indicate that we need to have like a system-wide retraining for our finance technicians or are the policies complex to follow or when I look at the fund account fund account usage, I know like do we have too many different accounts cuz I know that there are gray areas and where it gets put? Um is there a way that you think that we can solve some of this? Not just, you know, to make it less likely for these errors to occur, but also to make it easier for our finance technicians. And thank you, Marcia, for the question. It's a great one and I also want to defer, you know, to the controller. Seema, maybe you have some thought about that, too. From my perspective, I think uh training definitely is one because the more that
023the school-based staff members can kind of hear from us about what is the way that we requested to do, that would be great. But um at the same time, I for example, I know that that there must be some reason, right, from central office why we required the details accounts because if you don't have that, you may from central, you may not be able to do certain analysis that may be required of. But I think it would be great to retake a look at what is necessary which is a must versus good to have, right, if I hear your questions correctly. Um I don't know if Seema, you have any thoughts to add. Okay, so for fund account usage, so we have the chart of accounts. So we have to keep certain accounts for differentiating
024the revenue, differentiating the expenditures. We can look at it to make sure that there's no ex- excess in the number of accounts that may be confusing people. So that's something we can definitely look into because having too many can definitely confuse the issue, but then we try to keep those only for tracking purposes. So, the we have one system. So, if one So, for example, if the high school wants to have a code, it's for the whole system. And then that may complicate things because not everyone will use that code, but we'll look into We are looking at um we use Great Plains, which is the system um that we have, which actually will no longer be able to be used in 2 years. So, with that enhancement, we can look at maybe having a
025system that can give us a more robust chart of accounts that may differ a little bit for elementary versus high school and can block certain codes to make things a lot easier. So, we'll definitely look at that one. And then for sufficient documentation, I think honestly it's a training issue. We give trainings. We we we even took the school finance handbook and put it into an electronic format, so they could Google search, you know, do a search and get right to what they're looking at to find things. But I I just I'm thinking they just have a lot to do. And then that's where the documentation may be failing sometimes. So, do you guys ever and this is just kind of my thinking, do you guys ever get recommendations or suggestions from people that are
026actually using this because I think sometimes bottom up is important and I think sometimes even just having clearly defined, you know, this is comes from the Title 1 office and this has to go here or this is, you know, school funds versus this uh because I've sat in offices where where we that conversation has occurred and the finance technician is asking the principal and they're having to do all this digging and maybe even just having even just very clearly defined this is where it goes cuz I know I think that there might be some places that well, it could go here or it could go there and that may be good for some flexibility, but then it also may be causing issues. I've also seen where it's caused issues at the end of the year
027like, oh, we thought we had this much money, but we had put it in the wrong account. >> Right. So I'm just looking at a way and look, math is not my thing. So that's why I get really nervous about this like, is it clearly defined? Can we put it in the right place? Can we Can we help our technicians and our principals and everybody know just have clearer direction or, you know, something because I I've seen it cause so much heartache. Okay. [laughter] At the ground level. So So what we we can do is I can go back and look at the training to make sure that if there's a concrete answer that we just give that and then that way maybe it'll eliminate some confusion. So we'll go back and look at that.
028>> I just this is just like one of those things that I've really seen in action. Okay, Mr. Moon. I have a different question. Uh um >> [clears throat] >> A general quorum might not be surprised for me to ask you something like this. Uh but on page number nine for fraud, waste, and abuse, is there a way for your office to quantify in terms of a dollar figures uh ex- of, let's say, allegations of probation abuse in how many cases? 313? Whether we are talking about 10 billion dollars, 1 billion dollars, the how much time your office is actually spending, or have involved all the staff members to spend time for investigations. I just want to see whether we are spending this much of a time to get this much of a resource. Sure.
029Thank you, Mr. Moon. I think this is a great um perspective about how to look at it differently, right? I can certainly explore that to see if we can uh include a dollar figures. Um I do want to say this, right? For those situations that are reportable, we try to quantify it every time. And those information is provided to the audit committee likely in the closed meetings because when many time when it is reportable, there's always an exemptions um component attached to it. So, I just need to be cognizant about what could be, for example, shared here in a public meeting. What is the total? Because the total also coming from some information that may not be um available to be discussed publicly. I mean, that's understood. That's understood. You know, from my perspective as
030audit committee member and scrubber the member, whether we are spending way too much of our staff's time, which are financial resources, to investigate in the matter that may not be resulting in savings or helping school systems to Not all these can be quantified, but I get that. >> Yes. Whatever Whatever the case, they can be quantifiable. I just wanted to see. Yeah. We can definitely explore that and the The only other consideration I would like to ask the audit committee to think about is maybe the reputational risk too, right? Because dollar definitely is one thing, but if we have something like let's say dollar-wise is very small, but happens in a school and it may create a big impact to the community. Um and that may not be able to measure just by the number,
031right? And I totally understand. I mean, Mr. Moon, you're not You're not referring to that, but is one consideration with a dollar amount that we can see how much resources that we should spend on them um to get, you know, a more balanced results. I understand. You know, sometimes You know, a lot of times reputation may be more important than dollar figures. But at the same time, I also want to know. Yeah. extent Yes. of the allegations in terms of dollar figures. Thank you, Mr. Moon. I have one question. So, when we have all these fraud, waste, and abuse claims, how do you parse those out among your staff? How do folks look into this? >> Great question, Chair. So, um many times I I am kind of like the one who kind of reviewed
032and then to assess what is the risk and to think about how much work we likely need to do as a data collection. Um and then if it takes kind of like a more extensive review, then I have to assign to a staff person. Um and also seeing the the the extent of the exposure too, right? If we get some situation that I believe that it may have a huge reputational impact potentially to FCPS, we may even delay some of the audit work and then to kind of jump right into it. And we also circle back with the claimants because we want to make sure that we treat every concern very seriously. So we will respond back to the claimant and to let them know is it something that OAG can look into or we
033have to refer to the appropriate office. So to answer your question Ryan, I would first take a look at the information provided and then to kind of estimate how much time it may take and then to see kind of the exposure potential, the impact to the FCPS, then I may assign staff accordingly. But I am sort of the go-to person as the auditor general and also as the kind of forensic auditor on many of them. Great. Thank you so much. Okay, seeing nothing further, I will move to move to convene closed meeting. So that committee will now make a motion on May 11th, 2026 to go into closed meeting to one discuss personnel matters pursuant to section 2.2-3711A1 of the Code of Virginia and two consult with legal counsel regarding specific matters requiring the provision
034of legal advice by such counsel pursuant to section 2.2-3711A 7 and 8 8 of the Code of Virginia specifically personnel matters. Do I have a motion? Move by a Miss St. John St. John Canning. Second by Miss Henderson. All those in favor? That is unanimous for those here including Mr. Danon online. So this public meeting is now recessed at 4:36 and the board will now meet in closed session and that is a record. 31 minute 31 minutes. So Can you can you quantify the savings?