7-1950: Internal Audit Oversight

Purpose

The County of Sacramento is publicly accountable for the proper utilization of resources entrusted to it by the taxpayers and constituents. This fiscal accountability is demonstrated through strong internal control, budgetary compliance, adherence to policies and procedures, sound business practices, accurate and timely financial reporting, regular review and auditing with follow-up on issues of compliance.

The purpose of the County of Sacramento Audit Committee (Committee) is to provide the County Executive with leadership in audits, financial practices, reporting, and to further demonstrate good stewardship of public resources. The Committee will assist the County Executive in fulfilling its oversight responsibilities and fiscal accountability. Additionally, the Committee serves as an important communication link between external auditors, internal auditors and operating management. The County recognizes that strong internal controls are a key component of safeguarding public resources, and hold each department accountable for internal controls within their various programs.​

Authority

The Committee has authority through the County Executive to conduct or direct investigations and review into any matters within its Scope of Responsibility. It is empowered to assist the Director of Finance in the appointment and oversight for the selection of the outside auditor to perform the annual audit, and obtain other services as needed. In addition, the Committee will work to resolve disagreements between management and internal or external auditors regarding any audit findings or recommendations and work through timelines while using complete reporting and monitoring compliance with laws and regulations applicable ethical standards including fraud policies.

Scope

The Committee will consist of at least four individuals with basic understanding of governmental financial reporting and auditing. Members may include the Assistant County Executive, Deputy County Executives, the Director of Finance and/or the Assistant Auditor-Controller. The Committee shall act in an independent collective capacity. Independent in this context is a key part and the members of the Committee should avoid any potential conflict of interest.

​The Committee shall meet at least four times each fiscal year (monthly when possible). The Committee is to meet at least annually with the independent auditors, and at other times when considered appropriate. Meeting agendas will be prepared and provided in advance to Committee members, along with appropriate briefing materials. Minutes will be prepared, reviewed and approved by the Committee.

Policy

Procedures

The Committee is charged with the following responsibilities:

County Financial Statements

a. Review significant accounting and financial reporting issues that affect the County financial statements, including recent state laws, professional and regulatory pronouncements.

b. Review the effectiveness of the County financial reporting system including the system of internal controls.

c. Review the selection of external audits, in accordance with state laws and auditing standards, including the timing and scope.

d. Meet with the independent auditors, as needed.

e. Review the scope, timing and results of the annual financial audit and Single Audit.

f. Monitor the resolution of internal and external audit findings and recommendations; follow-up with department heads as necessary.

External Audits

The Committee will review the results and follow-up on audits conducted by any external auditors or regulatory auditors on any County programs or departments. The Committee will monitor the resolution of external audit findings and recommendations and follow-up with department heads as necessary.

​Internal Control and Internal Auditin

a. Review the results of the County-wide risk assessment and audit plan, including potential for fraud, and consider the effectiveness of the internal control system to mitigate the identified risks. Determine that all internal control weaknesses are quantified, reviewed, and addressed.

b. Review the scope and effectiveness of annual internal audit plan and annual activity with the Director of Finance.

c. Receive and review the internal audit reports.

• Review the reports of the internal audit team for all audits completed since the prior audit committee meeting.
  • Review and discuss the findings for each audit completed since the prior meeting, and management's response to the report.
    • Monitor the resolution of internal audit findings and recommendations and ensure appropriate actions are taken to resolve any findings including follow up directly with department head as necessary.
      • Monitor the reviews or investigations of reported potential fraud against the County, including fraud hotline reporting.

d. Discuss the internal audit's compliance with applicable standards, including the requirement for a peer review once every three years.

Relief of Accountability

The Relief of Accountability requests will be submitted to the Committee for review before the requests are ratified by the Board of Supervisors.

a.   Review the cause of the loss and stolen assets

b.   Review prevention measures that have been or will be in place that should prevent any future loss of assets and thefts

c.   Meet with the department head as related to above Items a and b.

Distribution of Reports

After the Committee reviews, except for confidential reports, internal audit reports are uploaded to the Department of Finance website and the Sacramento County Open Data.

External audit reports are posted to above websites when they are received by the Department of Finance.

Reporting to the County Executive

Report of the Committee's activities and actions to the County Executive will be provided at least annually.​

Review

Review the Committee's charter annually, reassess the adequacy of the charter, and recommend any proposed changes to the County Executive. Include any required changes that are necessary as a result of new laws, regulations, or accounting and auditing standards, including but not limited to Government Auditing Standards (Yellow Book) issued by the Comptroller General of the United States.