At this past Tuesday’s meeting of the School Board Audit Committee, the City Municipal Auditor Drew Harmon recommended that Brown Edwards & Co., LLC be selected as the schools’ new independent auditors. If the School Board concurs, they will replace KPMG for the 2010-2011 school year.
Brown Edwards & Co., LLC has an office in Roanoke on McClanahan Street. Having a local presence weighed in their favor, and City auditor Dawn Mullins remarked that “they were easy to talk to.” Their successful bid came in at $30,000 for a single audit and $15,500 for school activity fund audits. This was less then KPMG had charged for the current year.
Other clients of Brown Edwards & Co., LLC include the cities of Lynchburg, Salem, Bedford and Blacksburg.
Harmon cautioned the committee to keep in mind that the schools’ audits need to be completed before the city audits. The city is still using KPMG and having separate, independent auditors may require some adjustment.
Separately, Pete Ragone of KPMG briefed the committee on the 2009 Comprehensive Annual Financial Report (CAFR). Internal controls that are in need of improvement were identified.
As a high-risk auditee, 50% of federal fund expenditures were audited.
There was a delay in completion of the audit, primarily related to the implementation of the new financial system that became operational July 1, 2008. Historical data prior to this date is still available on the old system. The schools’ new system started with a blank slate.
The system vendor Harris School Solutions has servers located in Canada, and a trainer available in Texas. The software solution is called Aptafund and covers human resources, purchasing and payroll.
Ragone emphasized that Harris had no audit (SAS70) reports for KPMG to review and Mullins interjected that they would not commit to implementing the audits. The vendor “was surprised by the request” since no other clients had requested SAS70 documentation.
Harris, being a third party vendor who is providing a critical service, gave Ragone pause. “If you cannot rely on their control [then] what compensating control is there,” remarked Ragone. Harmon thought that for the type of service provided, the cost to the vendor would be minimal. Audits of computer access controls, physical security and continuity plans were still needed.
Deputy Superintendent Curt Baker maintains “super user” control authority in the new system. Ragone made a case for removal of the authority by comparing the same access for a CEO or CFO of a corporation, saying “They don’t have the authority.” Baker replied that his access was warranted in case of an emergency. He could then respond quickly with the assistance of Harris. School Board member Susan Moore said, “they were comfortable with it.”
Prompt bank reconciliation, separation of duties, cross-training, and accidental data corruption in excel spreadsheets were also discussed. Baker concluded that all the audit issues had been addressed. According to Mullins, the audit report will be available online soon.
By Valerie Garner [email protected]