001Okay, great. Um, since we're we have quorum, we're going to go ahead and get started. So, this April 28th, 2025 regular meeting of the Fairfax County School Board audit committee will now come to order. So, first order of business is to approve minutes of the March 17, 2025 meeting of the audit committee. I move for adoption. Mr. Chairman, do is there a second? Okay. Oh, yeah. We It's a public meeting, so we need to keep It has to be open. Yeah. Has to be open. Thank you. Okay. So, seeing a second from or mo motion from Mr. Moon and a second from Miss St. John Cunning. All those in favor, raise your hand. Okay. Unanimous for those board members at the table. Um you Okay. Now, we will move on to uh 1.03, which is
002the FY25 business process audits. over to Miss Moore. Thank you. Good afternoon everyone. I will be presenting the results of our FY25 business process audits. Um just as an overview um these business process audits are performed either due to a change in management which could be a change in principal or finance tech or program manager. Um, and we also look at this based on results of our continuous moni continuous monitoring audit procedures. And we also get um requests from from our regional uh assistant superintendent and also principles to perform some of these audits. And and just to let you know, our business process audits, these are our ad hoc audits, and these are more detailed audits on specific schools or sites um that we conduct. Um and and so we go we this is a
003all day visit that we go to the schools of the sites and we conduct um a review of the non-appropriated and appropriated transactions at at those particular sites. And the objective of the of the business process audit is to evaluate the effectiveness of processes and compliance with the applicable regulations and policies as well as determine if internal controls are adequate and functioning as intended and determine if if transactions are reasonable and do not appear fraudulent. So this particular reporting period we completed five business process audits that included four school audits and one office audit. From the five visits, there were a total of 13 low-risk findings and four moderate risk findings for a total of 17. So just to break it down, we had four lowrisk findings for Daniel Run, Daniel's Run and Elementary, one
004lowrisk finding at Westfield's West Springfield Elementary, one moderate and three lowrisk findings for Great Falls Elementary, and one moderate low-risk findings for Mount Vernon High School. We also had two moderate and one low-risisk findings for the office of uh for the warehouse operations which was our our department and office that we also selected to conduct. So I wanted to kind of go into what those moderate risk findings that we had. So for Great Falls Elementary, we had one moderate planning which was due to the FMR the financial management report which we call the FMR reports. The on online FMR reconciliations for September, October and November were not reconciled until January 15, 2025 and approved January 21st, 2025 for each of those months. The completion date set by U financial services was actually set for September,
005October and November were actually October 31st, November 26 and December 31st. So they were not completed timely. Additionally, for the non-appropriated procurement card statement for December 2024, it was not reconciled and approved in a timely basis. For Mount Vernon High School, there was one moderate risk finding also due to the um FMR reconciliation not being reconciled and approved time in a timely manner in the online application for August, October, and November of 2024. We also had that the November hard copy hard copy of the FMR was not reconciled and approved until January 9th for the FMR position report and FMR expenditure report at the school. It wasn't approved until January 13th and the uh the due date set by financial services was December 31st of 2025. There was also some non-appropriated procurement card statements for
006one of the three months that we sampled that were not signed by the finance technician as it should should have been. So for the warehouse, we had one moderate risk finding which was due to some sample procurement card transactions that related to that were made outside of the proper purchasing process totaling $16,000. And these purchases in particular were related to the freight management, which is a centralized process that allows FCPS to manage all the freight costs um that are occurring at all schools via UPS and via FedEx. And so this was a new process that was just um put under the warehouse operations when um the when they moved under the um the chief operating office. Um and so the the these particular freight costs are occurring at the schools. Um and they are related
007to those purchases directly with the vendor. Um but there is a central account where the schools can purchase the shipping costs um sent on on a central basis and have those items shipped directly to the schools. And what was happening there was no one to reconcile that these things that these shipments were being that were that were received by the schools um by the warehouse since this was something that was happening more so at the school level. Also, we noted that the the school p these purchasing cards were um kept on file for one of for one of the vendors. I believe it was UPS. The the vendor card was kept on file. So the payment was made prior to any reconciliation being done by the warehouse office. The second moderate finding related to the
008the uh warehouse office was um the uh 2024 FMR for November 2024 was not approved in online application or on the physical physical copy within a timely manner. And so OA made a recommendation that that is to use the there's an online um cover sheet to use to make sure that that is done in a timely manner and completed. So as we relate to these moderate findings, we have asked management to provide a response and we will follow up with them on a quarterly basis um which I believe will start in our our next followup and which which will be around our June meeting. So I will hand it back to Ryan see if there are any questions as it relates to these business process audits. Great. I think Mr. Moon over to you. Okay.
009actually a warehouse operations. I think you're going to have to go a little slower because I was getting a little confused. So, correct me if I understood you wrong. Uh so, schools would place place [Music] orders and shipments would come to schools. But will our make a payments on shipments without checking? Shipments have arrived. Is that so correct? My understanding is the school the school places the sh the order the shipment is put into a centrally based account which the pecard for that account is managed by the warehouse operations. So not at all does the warehouse operations receive the shipment. The schools receive those shipments and then the warehouse has to reconcile the pecard that makes the that pays the payment on account for those particular shipments that this each individual school makes. So warehouse
010needs to make sure the shipments arrived before they make the payments. And what you're saying is they did not confirm the receipt of a shipments before making payments. So I believe the schools are recur are confirming receipts but there's a a disconnect because the warehouse has owns the pecar and not the schools. So while the schools are re confirming receipt at the school they are not there's no communication between the warehouse and the school that these shipments are being made or not and before the pecard is being reconciled the warehouse there's so many schools making purchases the warehouse it' be impossible for them to reach out to each school to see that that shipment was made. Who's whose responsibility is that? Is the schools supposed to inform warehouses they receive the shipments so that warehouses
011could make a payments or warehouses have to reach out to schoolers to verify that they receive the shipments. Great question. Accountability for that right. So from our understanding Mr. Moon that the credit card, the procurement card is with warehouse operations and I saw that we have our controller and also you know um the chief for um operating officer here as well. So our understanding is that the department who maintained the card should be responsible you make sure everything is correct before you paid. Right. So that's a warehouses in this case. Right. Right. That will be my understanding, but I don't know if management has any additional thoughts to add or maybe um Dr. Reid or Marty. Okay. Sure. I'll uh I know we discussed this and I know Mr. Smith did as well. So, Mr.
012Smith, do you want to respond to that? So, yes. And so, what uh uh Miss Co is saying is correct. So, that the warehouse should uh be reconciling because they own the pecard. And I do know that procurement is working with the COO and and rectifying this. Uh but again with the individual schools making the deliveries using the same PECARD account, those individual schools were uh confirming receipt but they weren't closing the loop with the uh warehouse on that. So again, so so accountability, where does that go to? Is that does that go to both schools and warehouses or it goes who has to verify the receipt of a shipments? So with our PC cards, the owner of the PCARD should be the one verifying. So in this case it was a warehouse because they
013had PC cards. Yes. The the warehouse belonged to the PCard. So the the warehouse should have been verifying and yet with the number of shipments and without the ability to verify who was using the link for the pecard uh there was an inability to track that with those individual schools. You know this particular example cited uh picked my interest because we were you know deciding schoolboard was taking an action upon purchase of baser textbooks resources and and we'll be having a lot of shipments. I don't know where they go whether they come to a warehouses or they go to our individual schools directly and then who's going to make I mean it's it's a 15 to $70 million worth of textbooks. So uh that's what I got on this one. Okay. Any other questions on
014this? Um St. John. Okay. So I think I'm with Mr. Moon in terms of confusion. The warehouse, the school purchases looks like books and that the purchase of the cost of the books comes out of the school account, but the freight cost comes out of is it. So for one invoice, there's two payments. One is for the books. I could see that coming out of school count, but then the freight. Yes. And so if you would just I mean I just understanding is confusing so I can understand like if all these schools are ordering and as far as they're concerned they received the books they paid for the books but freight is separate. Correct. Freight is separate. So when we audited the warehouse operations all we could see was the freight cost. We couldn't even
015see the amount of the books that was purchased because that was like you said at the school level. All we could see was the C the central manager account those transactions for the particular freight cost related to the the shipment of the books. I mean so I'm going to ask a very basic question and I don't know if anyone can answer like is that best practice or is that common practice? Which practice are we talking about? the one group ordering the books and the other group owning the I think they're probably I think we could improve that practice um with some checks and balances and staff are working on that right now. Um it's like having two people in a checking account that never gets reconciled, right? That doesn't usually end well. So, we want
016to make sure that we that all parties are aware of um the receipt and the um oh the expenditures and the receipt uh on both sides. And I I think there's some simple fixes that uh staff were going to be working on uh to address that. And then can you explain to me why those costs are bifurcated? Like why the warehouse would pay shipping and then the school would pay for the books like the fact that the shipping is handled at the warehouse level but the overall billing is handled at the you know purchaser at that overall level. So the headquarters will be handling the overall orders but then the shipping probably is handling at the warehouse level because they are the ones who are going to be finally delivering it and they will probably
017decide that that's one industry practice that can be there but I cannot answer specifically on this uh question. My understanding is the problem is that the order is delivered to the school because they paid for it but then the freight so it was not delivered to the warehouse. It wasn't like the warehouse delivered it. Okay. I think um Sema has a point. Yes. So I wanted to add that's a wonderful question. And so the centralization of the shipping, the UPS and the FedEx charges is basically we're getting better costs um and centralizing it rather than the decentralized model. And that's why it was done that way. But we are actually going to do a review to see what's the best way to reconcile this because it's either you decentralize it and make the schools responsible
018for the entire charge which is the shipping and the books that come to them or you have to get some type of better communication going where the schools once they receive the product notify central warehouse so that they can perform the reconciliation centrally. So, one or the other has to occur and we're going to be looking at what's probably the best way to do this. Okay. And I would understand a school like if they don't have to because their budgets are limited. So, if that rate cost doesn't come out of their budget, I could see the advantage, but then I can see what's causing a problem. Okay. Yeah. And right now it is centrally budgeted. Um, so with warehouse, so that's why they get the freight and the shipping. So the schools don't have that
019charge. Okay. Okay. Any further questions on this? Okay. Great. Uh thank you, Miss Moore. Um so next we'll be moving on to uh 1.04 FY25 quarter 1 and two continuous monitoring. Back to you. Thank you Ryan. Okay. So now I will be providing you with the results of our FY25 continuous monitoring procedures. This is for quarter 1 and quarter 2. So as it relates to our continuous monitoring proced procedures, these are our more technology- based audits. We analyze patterns and trends and select transactions and and select and test transactions. Um the methods uh will enable the office to further understand risk and identify exceptions in a timely manner. We also use continuous continuous monitoring as a sample for our local school activities funds audit. So these these results will be included in our FY25 local
020school activities funds audit that will be reported later this year which I believe is October 2025. And so what we do is each quarter we select a sample of transactions. And so for quarter one what we actually did this year is that we did an analysis of quarter 1 transactions just to see where those high-risk are areas are for our transactions. And so we can determine for quarter two what sites to select that we want to visit visit. So in quarter two we visited a sample of um a selected trans a sample of selected sites where we visited where we um asked for um supporting documentation for non-appropriated and appropriated funds transactions and we also looked at um the our procurement card reconciliations if I'm not mistaken. Then we also selected a sample of transactions
021where we asked the schools just to provide us the supporting documentation for those transactions which we call more so a desk audit. And so any exceptions noted as I mentioned will be included for non-appropriated funds, excuse me, will be included in the local school activities funds audit. We also look at look at continuous monitoring to determine if there are any business process audits that need to be conducted at that time. And so what we noted for quarter 1 we we we conducted that analysis and we visit a uh conducted site visits at 18 schools. Subsequently we select subsequently we selected 158 transactions for 60 sites in quarter 2. Out of 78 sites 36 sites had no exceptions noted. 26 28 sites had exceptions noted in three or few areas and 14 sites did not have
022any transactions appear in the sample of transactions. And just to reme just to note a site may have more than one exception in an area or in an area more than in in more than one area, excuse me. So just to get to the detail of what those observation areas are, we had 10 sites with non-bank reconciliation exceptions. So these exceptions are related to and this is a normal area that we always have. These exceptions are are usually around PECAR statements not being signed and dated by the principal of the finance tech or also what we call the administrative assistance or the PECAR statements not being reconciled timely. We also had six exceptions within under the bank reconciliations area. These exceptions are uh where the either the bank reconciliations were not signed and dated by
023the finance tech and principal not completed timely or the adjusted book balance does not match the ending cash balance on the on the summary trial balance. We have four purchasing process exceptions which are which is also a common area and these exceptions are usually due to procurement contract procurement card transactions not receive not receiving an pre-approval per prior to purchase or purchases exceeding the approval purchase order amount by more than 4% which is in the regulation that is noted. We also noted that there um a purchase of computer uh product computer monitors um that were purchased either from Best Buy instead of purchasing through focus which I think is prohibited. We had four timely deposit exceptions um identified. This exception was identified when funds were given to the finance office and the funds were not
024deposited timely. Um during this uh continuous monitoring review, we did some gate activity procedures um and we noted that the site we did site visits at these particular um areas that the last fiscal year. The exceptions include gate receipts um sales not adequately or accurately being recorded in EIX um or documented with by physical tickets and required forms and patriots being granted free entry without verification. and that gate sales receipts not being properly reconciled. We had three in exceptions for incorrect account charge an incorrect account charge being noted. Um, and this is when the exception noted is identified when PECART transactions were made using the incorrect fund account. And I think this was more so happening when the the school was supposed to use the E ECA accounts, which I believe is the educational contingent
025contingency account um for like things like for refreshments or staff development and they were using the wrong accounts. We also had three exception notice for safeguarding our assets where we identified check stock not being secured in a locked drawer or a safe. Pec cards were not in the on hand at the time of the audit um or they were not properly checked out when we were there for the audit. We also had two exceptions identified for competitive bidding. Um, this is identified when purchases exceed $10,000 without competition and they were they were used for non um FCPS contracted vendors. Um, we also noted two exceptions were identified for sufficient documentation. This is it. This is an exception when our key backup documentation like purchase order, invoice or receipt was not maintained on file or or
026were missing or that the school finance deposit slips were not accurately um completed. And finally, we had um identified one timely payment exception. This is when an invoice is not paid timely. However, we know that there was no late fee attached to that, but the these invoices were not paid as as noted on on those invoices from from particular vendors. So, as it relates to these, as I mentioned, these are nonappropriated transactions will be included as a part of our local school activity funds. So, there's no additional action that were required at this time, but we just wanted to provide you on an update on the two quarters that we have completed. And I will turn it back over to R. Great. Thank you. Any questions or comments on this? Uh so uh the competitive
027bidding two instances the bottom of page two. Excuse me. What is the question? Yeah. Yeah. I'm just directing your attention to uh Okay. Yeah. Yeah. comparative beating a two instances. So they are in violation of regulations. Correct. Correct. I mean are these all violations of the regulations? Um they would could be a violation of regulations or just internal control practices that are not being followed. And so when you are selecting sites, how do you how do you come to determine which one which site to audit? Yeah, thank you for that question. And so typically we look at when the timing from the last last time we've conducted a continuous monitoring visit. And it's my understanding and Nora and K please correct me if I'm wrong during our continuous monitoring for the entire year. We try
028to visit at least the site at least once during the four quarters. And so we will look at when the last time that site was visited, if there's been a business process audit completed, um looking at the risk level of the transactions at this particular site. Um and that's kind of more so how we determine which site we're going to v visit for each particular quarter. Am I missing anything K or Norah that I that you need to add? Okay. So so that's based upon your prior review of their processes that you determine which one to visit is so for each quarter. So we take it quarter by quarter. So one quart we don't want to visit a site in more than one quarter un unless we have unless we see an issue or a
029high-risisk area. So for one quarter we're going to visit let's say 10 sites. The quarter two we want to make sure that we visit another set of schools. We won't visit those same schools that we visit for quarter 1. So we kind of want to make sure we at least hit all of those schools within the four quarters either through site visit or through requesting documentation from that school. So when you say a so two columns under number three number of sites audited and then you have a sites visited. So you want to have all 200 scores basically come under number of sites audited. Correct. Then you divide that up basically in the four quarters and do that and then amongst those audited if you feel that the visits uh uh need it then you
030decide to visit then do we decide to visit it's visit correct and if I may just supplement a quick point is during those visits if we see some you know like situations that would require a deeper dive audit Then we will do the business uh business process audit like the first item that we go through and that is a deep dive in that particular school. So when you select number of site once you select the number of sites visited sites to site I'm sorry sites to audit what do you normally ask them to provide you with and so what we'll do is we'll look at all the transactions across all the transactions across all the schools. We'll look at the amount like if it's over $10,000 because we know that hey over $10,000 that that's
031supposed to be under a contract right? So, we'll look at those those particular transactions over $10,000 or we'll look at the type of vendor that it is. Is it Best Buy? Is it Amazon? You know, that would be more so consider some of our high high-risisk areas because we know we have particular regulations and and requirements as it relates to buying for from certain certain types of vendors. So we will look at that as well to see and then we will look at you know what are our in prior year what are what are some of the um exceptions that we noted for that school in the prior year to see you know are they are these some of the similar things that we've noted before and do we need to do another visit there.
032So do do you just you know audit take a look at the transactions over certain amount or you look at everything? Initially we'll look at everything then we'll try to pull out certain parameters to kind of hone in on some of those sites individually. So if you're looking at the entire quarters worth of transactions for high schools it could be quite a lot. It could, but we will break it down by is it by cash receipts, cash cash dispersements, PECAR um PCAR transactions. So we kind of break them down into individual into, you know, individual buckets and so we can kind of look at it a little bit more, you know, at a at an eye level and to see what what we're working with, what type of transactions they are, and then also looking
033at the types of vendors um there are and and the amount also. Yeah, if I may just compliment a little bit is that we looked at the entire population and you are correct Mr. Moon. There's no way that we can looked at or examine each transaction, right? Because then that would be the only thing we do throughout the whole year. So what we do is put them into different bucket like Dell said, we develop something called scripts. So like um like for example she mentioned about 10,000 or we have a few other ones too and as as a as different bucket and when there are um transactions that kind of like exceptions from those bucket they may be totally correct and act like authentic but it may raise the question right so then we will
034reach out to the school we will still do it as a desk audit at that time meaning we are not there yet but we will hey school a can you provide me more supporting documentation about this particular transactions and then we will review um offsite and then when we found oh wow it may not be the right way to do then we will coordinate for site visit for those particular transactions and after the site visit if we see something like really not good happening then we will say oh we need to do deeper dive into your other school transactions as well and then we call for a BPA business process audit and I do want to add that we do do like random OM sampling. So some of those will be rand a random sample
035but there are some that we are judgmentally sampling as well just looking at the amount and the type of vendor. So if you did you know first and second quarters put together about 78 78 sites you should have 120 to go for the third and fourth. You need to use the microphone to capture your voice. We already started on the third quarter review and we have about 50 schools that we are working on right now. Okay. Third quarter review. The third quarter review is done in the fourth quarter. Is that okay? Got it. Thank you. Great. Thank you. Uh Miss St. John Penny. Um, so it do you just because I do know in I do know that in some situations it's been difficult to keep Binance tax. Um, and there's been so looking at
036the totals and so 28 sites out of 78 don't have any exceptions. So that's a third. So twothirds do have exceptions. And so I I think what would be important and you may or may not have this data is where those exceptions are occurring like an elementary, middle or high school because of how the structure is in terms of you know a specific finance tech or an AA that's also a finance tech. And then the other information I think that would be helpful for us is of all the of the finance texts, how many of them like the ones that have 28 no exceptions, are those experienced finance texts versus new finance texts? So if we could retain finance text, are we going to see a reduction of exceptions, you know, or is it just
037random all across the board? I I just think that data might be important. Yeah. and and definitely and we can looked at you know by school by level I think it's pretty you know because we have those data set with us MSIA so we can analyze those but in terms of the um whether those are experienced finance tag or are they like having like a lot of turnover I would need to defer to um Simon to respond so we actually try to tackle it the other way where we're trying to help the schools right so when We look at it. We look at what are the new and vacant positions across the board. And right now, for example, there's a 28% new and vacant rate across the board. And if you look at the deep
038dive, that's 56 new and vacant positions. New meaning they are on the job nine months or less. But if you take a deeper dive on the new, there's 37 at the elementary school, five at the middle school, and eight at the high school. So there's a large number at the elementary school which are the AAS. So a lot of what happens in the continuous monitoring or the business process audits is these findings come about when there's vacancies, there's new positions because the learning curve it takes a good year and you can see at the elementary level there's a lot of turnover where there's a lot of new positions and we try to tackle it on the other end where we want to keep them out of the audit. So, we have multiple efforts where we're
039trying to counter it with mandatory AA and FT trainings so that we can get them trained. We have a two-year mandatory training. We've upped our video library because when we've listened to them and they said, "Hey, look, we go to your trainings, but we go back and we need refreshers." So we have now 30 videos and scenario-based trainings that they can go to at any time that they feel that they need. I'm also trying to put in automation where like a lot of what you've heard today is FMR reconciliations is one of the big things and PECARD in particular. We're trying to make it where it's an online requirement. So they have to upload those things and then we can see did they do it? if they're not doing it, we can reach out, try
040to help them, see if they need training, see if they need support. And we're trying to automate the school finance handbook so that it's not just paper book, it's actually a living document, but we're trying to tackle it in multiple ways. Okay, seeing no further questions, comments, we're going to move on to item uh 1.05 FY26, risk assessment and proposed audit plan. I will call on Miss Co. Thank you, Mr. Mleen. So, um today is an exciting day and I think this is one of the most important documents uh generated by our office. Um if I may plug in also, next month also is an important month for internal audits. Uh some of you may know about it already. It is the internal audit awareness month. So I think we um timed it the good
041time that we are sharing it here. And I also want to introduce um like uh my uh like our hourly auditor MTA here. He has spent a lot of time working on it. Um he's one of the new face here. Uh in addition to my my team uh we are small but mighty team. So very proud for each one of you. So with that um like Ryan mentioned today we're going to share with the audit committee kind of the result from the uh risk assessment and I think I have conversation with many of you about the why we picked this um audit topics. So but if you have any questions feel free to uh let me know and let us know and then we can have a conversation. So um the contents of the um
042presentation is basically we would like to outline the objective which is under slide three. um as you know to to get into this uh whole uh exercise is to achieve our mission right our mission many people think is like the numbers only um actually it's not just numbers only we are looking at on the um ongoing processes for the school uh system to ensure that it is efficient effective and be fully accountable and then the second um objective is to really link what we are doing with the FCP PS strategic goals specifically under like the accountability uh pillar. And then the last is why we are here today with the audit committee is per the policy 1105 that we shall submit annually to the audit committee award plan and thank you for the clerk to
043highlight that um for the upcoming fiscal year um so that you all can take a look at it and once you concur with it we can proceed with the schoolboard discussion. Um so with that going on to uh slide four and here are the how the sausage is being made. I mean all the different you know steps that we take and I will try to get on it at a high level. Um first we have to identify what is the audit topics. When you think about it for such a a big system like us there are many many things that we can consider to audit. Um so after we identify the potential audit topics, we really need to prioritize them. Um as a result of um process number one, we identify 47 topics. So we
044try to work with this 47 and you saw all my team members here and there's no way that we can do all the 47 topics in a year. So we developed this approach um that we looked at 21 internal audit departments that include mainly school districts and we also looked at Fairfax County government as well because we are in the neighborhood. We want to understand what do they audit and it was interesting that when we do this um research we sometimes we found out that the um audit plan for the other organization look exactly like us. Then we found out that they actually relied on our structure on how we are doing it and copy for themsel. So I think it's a good story to tell over there. And then after we conduct the benchmarking
045we also solicit feedback. So I'm also very proud to report that um that and also thank to all of you. I was able to get 14 out of 14 feedback. And you may wonder why 14 is 12 from the schoolboard members and also two from our community members who are here with us. So thank you so much for your feedback on it. And then uh at the same time we will also like to solicit feedback from our employees because they are the eyes and ears. They know what need to be worked on. So we uh conducted this uh interview and survey and I would like to explain a little bit because you may find it a little bit odd. Why 59? Why not 60? Why 78? It's so precise, right? So, um how we come
046up with why don't I talk about the surface first. Um so our strategy is that we want to adopt different ways um to kind of collect feedback. So we develop a questionnaire. We develop a questionnaire. We send it to all employees uh who are senior managers and above except for leadership team members. So we sent out roughly 200 s we sent out roughly 300 surveys let's put it like that and out of this 300 surveys 78 um ser like um participants responded so we got a rate of roughly 30% of respond weight rate rate and then out of those who did not respond to us we looked at kind of what they do in the organization we reach out to them and request for an interview so if they have already respond. We don't need
047to interview them. But we looked at those who did not respond and it happens that maybe some of the topics that we would like to explore further is their area of expertise. Then we will ask for an interview with them. And in addition, we also interview um all the leadership team members. So thank you very much for Dr. Reid and her team willing to spend time with us to talk about what what are what are the things that that will be helpful for them. Um we also talk to the principal associations for all the three levels. We we also reach out uh to some of the association like let's say the director of student uh services association to get their thoughts about what will be value added to audit. So that's how the 59 and
048the 78 coming from. And then after we got all the data then we looked at what the dollar amount the financial impact reputational impact meaning that if we are not doing well over certain area even though the financial the price tag attached is not huge that may have a significant impact to FCPS we would like to identify those topics to be looked at and then we also re evaluate based upon what's happening in our county what's kind of discussed at the school board meetings, what is kind of like important for the school school districts to consider. Then we will re-evaluate everything and then as a result our products will be number three and then we can determine what to be looked at next year. Secondary meaning in the next three years meaning from fiscal year
04927 through 29 long term are those priorities that which is good but can wait for a few more years down the road. So with that, I may need some drum roll for the next slide. Here is the result of what we get uh from the schoolboard and audit committee responses. Um and we try to make this graph easy to read. So I hope that it makes sense to you. We try to rate um kind of the the most uh the the highest um audit topic of highest interest audit topics. The one that is shaded yellowish is um the one that with a count of eight or more because the total is 14 counts for schoolboard and audit committee members. So um primary meaning those that we suggest to audit in fiscal year 26. So um
050we have specific contracts, we have healthcare claims management, we have safety, we have hourly employee structure and then we notice that for stipens is actually number five and we would really want to include that as part of next year uh audit topic as well. So you will see in a little bit that we incorporate stipen into the hourly employee structure meaning we called it hourly employee structure and stipens both are human resources focused. Um and I would like to touch upon the athletic program. I will talk about that in a little bit too. Uh we notice that this is a very important topic and has a lot of interest. uh since we know that currently we have a external review going on on athletic programs. So we um prefer like not to look at it
051this year but instead stipen is a part of it right as you all know. So that we will be including the stipens component and we will also continue to do to do those unannounced gate receipt check and like um Danell mentioned earlier on so that part of the athletic programs is covered but we would like to wait until the external uh review is done in order to um convene a maybe more compre comprehensive review and for career and technical education program we also know that this is a important topic and we should look at that further too. Uh so instead of looking at it from a process standpoint, looking at it from instructional services department standpoint, we are including it, we proposed to including it in the business process audit so that we can select
052school that have academy or school that have CTE programs then we will be specifically looking at those financial transaction for them. So we try to include those topics that have high interest in one way u or others um even though that we may not be able to include the full audit. So with that uh slide six um is the key outcome um and is like what we talked about when you looked at it we our goal is really to develop a holistic plan. So we would like to be able to look at something that maybe human resources are working on something that safety team is working on for specific contracts. Number four we we will we are proposed to pick uh two departments. One is instructional services department and we also want to pick the
053uh specific uh sorry the uh special education special services department as well as the focus. And then at the bottom you see we also have this annual engagement that we will continue to do year after year. Um as we have a very uh robust discussion before about continuous monitoring for me as the auditor general I just think that it is very essential that we have a tool that we can look that the universe of all transaction of schools because that's what we what we do here at FCPS. So with that um slide seven are more um data about the key metrics about the four um process audits that we would like to select. So you can see who will be our major uh stakeholders um have they been confirmed by benchmarking? What are the financial
054indicators as well? How much are we talking about? FCPS employees column meaning those employees who suggest those topics as primary topics and for the last column you can actually reference it back to slide five. These are the statistics that we got uh from schoolboard and audit committee to say they should be listed as primary primary audit. And then uh moving on and um we talked about it already that stipens we uh proposed to include it together with the hourly employee structure and um and some of the topics the four topics listed here. They also got very high interest but uh we are not going to include like I said the comprehensive re audit of that in fiscal year 26 and I put down some my team put down some um reasoning behind why not um
055so and I think I touch upon athletic programs and I talk about CTE. Um IT governance is also something very important especially now we are moving a lot of the things electronically. Um since right now we have a few IT related audits, we are still in the process of doing management response for recommendations. So we would like to wait a little bit more as well as HR operations as well. Um if I can do a um uh um to to say to give a little bit more details about the hiring audit. We know that this is an important topic. We are auditing it right now and the audit committee should hear the report from us uh in the month of June. So we are co trying to cover everything um in one way or the
056other. And slide nine is the uh timetable is the timetable of when we are going to do different things. Um for example uh local school activity fund you must have heard about it many time during the audit committee. we have to carry it over is only because we have to audit the year-end balance as of June 30th. So we are like we discussed before we hope to present it back in October and then it also have the timing for the other audits that we proposed. So moving on um I think we have even more um exciting things coming up is a lot of the details behind which of the audits as I know that we can all read from the slide so I don't want to read the slide to you slide 10 is about
057local school activity fund audit is something that we have been doing um because it's required by the code of Virginia and we are going to looked at the cash balance and cash here refer to cash and cash equivalents so meaning including checks um including banks as well. So I just want to highlight that. And moving on uh to we have extensive discussion about business process audit. So I'm going to skip that um since we already talk a lot about BPA and of course we would like to continue to do that. Healthcare claims management. Um we can focus on the scope of work. This is a relatively shorter time audit. So as you can see under schedule, we expect that it will only take four to five months to complete. The intention of this audit is
058not for my team to do claims audit because we don't have that expertise to go to signal to pull up the claims to review actuary or um those who really are in the insurance area can do that. Our focus is we would like to understand how the office of benefit services manage the claims amount right. Have we done enough prevention to if we see a pattern of increasing in certain you know um uh spending in certain buckets? What do we do about it? How do we monitor um signa specifically signa and also atna dentto? And then um we will also see if they have performed any external audit of them. If they do is the timing aligned with the contract timing when we have those contract active so that we can make more powerful changes
059in case if the auditors find anything that is not right. So that's that and then moving on is the hourly employee and stipens. And I think I talked um quite a bit about that already. But if you looked at the objective, you can see what we are going to audit is to evaluate whether there are appropriate checks and balances uh to ensure the hourly structure and stipens are properly authorized and are they have the fidelity of implementation across FCPS. And then uh moving on five, we have already talked about local school activity fund, but this will be for the next fiscal year, June 30th of 2026. And then moving on is the uh school and office safety. Um and as you can see that uh that this remain as kind of like the focus I
060know for management and for our community members as well. Um so um and then we also benchmark with a lot of our neighboring district. This is a topic that uh often come up in the benchmarking and we also want to acknowledge that we understand FCPS has conducted an external review on it in fiscal year 23. So we see this as a continuation of that. Um and we also have multiple conversation with the chief of safety and security office so to ensure that we are not duplicating work that have already been done. So moving along specific contracts um and this is the um the champion if I may say of the entire risk assessment process which get the highest number of support from the school board and also audit committee members. So we will continue to
061look at it. Um the focus of it will be on like I said instructional services department and also the special services department contracts. Um and we will focusing on those contracts and how as the user departments are monitoring them. Our focus will not be on procurement services because we literally just audited them. Um but we included them as the internal stakeholders because we may need to get some data points some contracts from them. So moving on we are almost done. So maybe two more minutes. Um continuous monitoring we already uh share the result and we would like to continue in next fiscal year and maybe moving on on slide 18. Um and this is some of the thing that we usually put it under all other duties but we do want to extract them to
062highlight them is because this year we have some updates from the government auditing standard. So this is the standard that o comply with so we have to really update our menu update our work program to ensure that we are in line. We also want to call for the external peer review here. Someone may ask so who is auditing OA ag? So by government auditing standard every three years we have to have an external uh review come reviewer come to audit us. So it happens to be the next fiscal year. So I would like to highlight that here. So moving on under 10 are some of the other OAG duties. Just want to highlight one thing if I may. the outreach and education as of today for this school year over a thousand um employees have
063been trained by our office. So again I really appreciate Dr. to give us a lot of opportunity, you know, to present to our employee so that they can see something, say something. Uh they come to us uh so that we also can talk to the schoolbased administrator to present to them as well as the finance technician and AA administrative assistant at school. And then here is my last page um next step. So today will be the first time we discuss it with the audit committee. We also put May 12 here just in case if there are any questions from this uh committee from today that I need to take it back and amend the plan. Um and then uh the work session with the school board will be on June 17th and on that day
064we also will present to the board for our last fiscal year annual report as well. fiscal year 24 OAG annual report which we had already presented with you all back in December. So it it will be a time for the board to hear about that and then final approval will be on July 10th. And then the last slide is the bonus slide where we have a lot of hyperlink. So if you were like hey after E after your presentation today I really want to find out more about the different things and here are the hyperlinks. So with that, wonderful. Thank you so much. And so as um General Co mentioned, we will be discussing this today. Um if we dispense with everything and all discussion today, we will be able to cancel our May audit
065committee meeting. Um so uh please raise any issues now. Um and we'll take consensus at the end if we can move ahead uh without our May meeting. Um, so please, uh, I'll start with, uh, Miss Ley. I'm I'm so disappointed they will be cancelceled again. Just a question about the the stipens. Um, I assume those are sort of athletic and um, performing arts. What what's the approach of the audit? So I think first of all, we have to come from the policy and regulation first, right? to see what they say and then in reality are we doing that consistently across the district. So that's number one. Number two and again I'm just brainstorming now with you Robin. Number two is to look at the completeness of those list too because based upon my understanding um
066we may have some it and may not have some other potential um job duties that may qualify for extra pay. I don't know. I so we have also need to take a fresh look at what makes sense to make to the list and then to see if they are consistently apply across the district. Okay. And the reason I asked the question is having been someone who receives stipens throughout my career and having employees who I supervise receive stipens. One thought is could it be possible that the audit include the possibility of instead of making these individual payments that they become part of a of the employees salary because then it impacts their retirement. And I bring that up because I do believe there are other jurisdictions in the state of Virginia who do make it
067part of their salary. And so I don't think it's a state law. And absolutely in places like Pennsylvania, New York, it's part of their salary because if I coach three sports, while each individual check might not be large, ultimately that could be an extra $8,000 on my salary for that given year. Um, I also would argue that, and again, I don't know if part of the audit is whether or not the stipen is appropriate based on the hours because the other thing I was going to say when it comes to something like performing arts, you know, I know at Chantilly, we did a lot of shows and I know at some schools they do a spring and a fall, right? So, I'm not sure what that looks like in terms of, you know, are you
068doing children's shows? How many people like what's the breakdown hourly? Um and I do believe that you know what mostly what's happening I think you know similar it could be a number of concerts that you have maybe in choir I don't know I just am not sure what it looks like but one of my questions is about the stipen and the other one would be that in that same vein that when people work in online campus they're technically from my perspective given a stipen for that because it's not part of their salary. Now, I'm not sure if it's paid off like in so many payments over the course of a year. Um, but t people who teach summer school, it's the same thing. It's a it's not part of their salary. And for the same
069reasons, I would argue it being part of their salary for other folks, they're going above and beyond. They're doing more work. It should be part of their salary because, as we know, your your top three years is what your retirement's based on. Um, so I wouldn't limit it. I understand you're probably not looking at online campus or summer school right now, but technically those are stipens. Thanks. Thank you, uh, Robin. So, I I think it's great considerations. We definitely will consider the kind of what you mentioned. We also very intentionally to keep the objective very broad right now. So we can certainly include certain aspect that can help us is after we do the planning then we can see oh if what Robin you just mentioned is that systematically happening and we would also be
070very cognizant because we know that we now have the collective bargaining agreements. So just in case for any recommendations that we make we will be in close contact with the uh employee relations because when you talk about um salary and then com combination into that I don't know what is the uh ramifications about that so we can definitely talk more. Thank you because I think historically the rebuttal I got was that our HR technology couldn't manage to do a shift like that but we just invested a lot of money in a brand new system that should be up able to capture all these things and it then it should be able to be done from my from a from a from a technical perspective. Thank you. Great Mr. Amen. So s out of curiosity I
071you know you know from the senior managers who responded to a survey request and also talk to you uh did many of them volunteer their offices to be audited. I would like to say I would uh remain the name um you know not disclose here in a public meeting. Yes. Yes. Wow. And some of them I I I feel like that to us is a long-term that we work very closely with the school board and the audit committee that we can build a trust you know that they know that that we will take it very seriously just like like our fraud ways and abuse hotline that's some of them they really come forward um and then we receive some you know authentic you know situation that really worth to look at. So without disclosing a
072a any identity uh what would be some of the reasons for someone to have auditor come in to audit his or her own work? So I think there the intention right I because I do not read the mind of the people so I don't know exactly why they let me know but I think a couple of them right is definitely generally they they really see if the processes can be improved our students right will be able to benefit more I saw a lot of that right and then we sometimes they may see you know there may be redundant like meaning extra checks and balances and it's really delay delay the process. So they will let me know too. Sometimes I need to be candid is maybe some of the offices may be looking for more
073financial support like budgetwise they will say hey Esther we really like underst staff and but then we really see the risk um not mediated maybe through an audit maybe I'm saying because I do I'm very cognizant about the tight in the budget that that maybe there are other ways that we can innovate right be able to solve the issue without putting a lot of money investment into it. So, so we got this different types of people or staff members who generally is trusting us with those information and see what we can do with that. Those are really good pieces of information. Thank you. uh Ninette. So, athletic programs is a really big bucket of stuff and some of it you've already picked out like the the gate monitoring. Um but I don't know what the
074scope is of the external audit. So, how did you look at the whole bucket of everything that's involved with athletic and say, "Okay, we're not going to do anything except these these two things we've picked out already." Is it because everything else is covered under the external audit or are there some things you just don't think there's any any risk there? Great question, Nette. Um I believe that the external review is a privileged document. So I am not sure if the um objective of that review is you know uh being discussed in the public domain. Um but what I suggest Nette is this. I would like to take a look at the result of that external review after it's being done and then to see what are the remaining areas that we have to focus
075on. Um my understanding and and I don't know if Dr. R would like to comment on that about the scope of work for the external review um is that it cover pretty comprehensively. Um, in the meantime, my office could pick up those financial focus areas like the athletic athletic stipens that we were just talking about it and as well as the gate receipts because we know that um I don't know if you have uh go to some of our um games, right? The controls there can be further improved. So, we are just picking those items and then we can continue to do that. But I don't know if Dr. Reed has additional points. Sure. Thanks, Esther. Actually, Esther and I talked about this one because it's one that I thought we ought to take care
076of sooner than later, honestly. Um, but a couple things came up. One, uh, VHSL just instituted 19 new rules directing topics of this nature that weren't in place before. So, Esther has talked about you need to audit against the rule. So, it sort of became a that became an interesting conversation. And secondly, uh, some of the external investigations likely to look at the auditor's work because Esther investigated several of the topics last summer. So, it's one of these, uh, so I think in thinking about it, the idea to wait till that's done makes sense and I agreed, you know, with Esther about that. Great. Thanks, Nette. Um, yes, over to you, General Co. Just very briefly to Nette, if in any case that something, you know, earthshattering is being uncovered from this external review, we
077can always I can always come back to the audit committee to request an adjustment to the audit plan. So it doesn't need to wait until fiscal year 27th. So sorry. U Miss Lady, did you have something else? Okay. So seeing uh Oh, Miss St. John. Yeah. So just based on what Miss Lady talked about in terms of stipens, um when you start looking at that, I think it would be important to collect the data of how much a person generally gets in stipens in terms of how it would impact and and I I don't know that it's a and I don't know, correct me if this wrong if this would be a collective bargaining or an HR issue whether it's put as salary. So if you're working and it becomes salary then I don't understand
078how that would go into collective bargaining. So and good afternoon everyone as it relates to collective bargaining. anything that uh would would um cover wages or salary or compensation is the purview of the unions for that discussion uh with the superintendent the and her team uh who then would share that with the the school board. So, uh, we wouldn't want to create a situation where the school board through the OAG was making recommendations on salary and compensation without, uh, engaging with the the unions. Okay. Thank you. But just to know because I think that's an important point. If other jurisdictions, do you add the stipens to the salary? No, we do not. They don't. No. Are you coaching stipens? Well, any kind paid on top of a salary, but then like summer school stipens, you
079know, after school club activities, like the impact that that can have on someone's retirement in terms of salary would be significant. I don't think it it doesn't. Stipens don't impact retirement generally. Sorry, I don't I'll have Miss Lady explain. I I know it doesn't at present here, but in your former systems, it never did. It did not. Okay. because there are systems where it is. So that's why I bring the question. Well, it didn't in our the state I came from. Um just as certain like if you got mileage monthly or whatever, it doesn't affect your retirement. It's not considered salary or benefits. Yeah. Because one of my thoughts on online campus is I don't like the way it it the pay is structured. I think we're overpaying too many people. Um but I think
080that and I think they would admit that because they have to me off the record. Um but but I think that if it was rolled into salary, they would accept a different pay because the outcome goal benefits them in the long run. It's possible, but again, that would be a collective bargaining item because it's connect it's connected to wages and benefits. Okay. So, but I'm now more curious than ever to explore the salary structure and I think we'll make a note to make sure we do that. Great. Anything further? Okay. So, seeing nothing further, um I'm going to ask for my colleagues consensus that um seeing as we've covered uh this uh plan today that we um dispense with our May 17th meeting or sorry, May 12th, May 12th meeting. Um all those in favor?
081Okay, that's unanimous. Consensus has been reached. Um, so we agree to move the FY26 risk assessment and proposed audit plan forward to the full board. Um, okay. So with that, uh, the April 28, 2025 meeting of the Fairfax County School Board audit committee is adjourned at 5:42. The next meeting of our audit committee will be held in June on June 16, 2025 at 4:30 p.m. See you all then. Yes. Yeah. Thank you.