Salaries and Compensation Audit
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1 Salaries and Compensation Audit Action Plan Progress Report Audit Committee | September 24, 2021 Compensation Audit Action Plan • Comprehensively responds to recommendations identified in the Salaries and Compensation Compliance Audit • Incorporates input from the Board of Directors, Audit Committee, and Independent Performance Auditor • Includes 27 actions to be completed by June 2022 • Approved by the Audit Committee and Board of Directors in November 2020 2 1 2 Item 6A
Transcript of Salaries and Compensation Audit
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Salaries and Compensation AuditAction Plan Progress Report
Audit Committee | September 24, 2021
Compensation Audit Action Plan
• Comprehensively responds to recommendations identified in theSalaries and Compensation Compliance Audit
• Incorporates input from the Board of Directors, Audit Committee,and Independent Performance Auditor
• Includes 27 actions to be completed by June 2022
• Approved by the Audit Committee and Board of Directors inNovember 2020
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Item 6A
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Action Plan Progress
• 11 items completed by June 30, 2021
• 4 actions related to Board review and approval of revisions tothe SANDAG Bylaws and Board Policies
• 6 actions related to preparation, documentation, andcommunication of salaries and benefits information to the Board
• Market Salary Range Study
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Action Plan Progress
• SANDAG Bylaws and Board Policies
• Actions I.1, I.2, II.2, and III.3
• SANDAG Bylaws and Board Policy No. 017 – direction andclarification regarding Executive Director’s responsibilitiesfor administration of the personnel system
• Board Policy No. 001 – process for Board Leadership toaddress time sensitive matters
• Board ratification of the employment decisions that werethe subject of the audit
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Action Plan Progress
• Communication of Salaries and Benefits Information
• Actions IV.1, IV.2, IV.3, IV.4, IV.6, and VI.1
• Enhanced written and verbal communication of staffing,salaries, and benefits components of FY 2022 budget
• Documentation of personnel budget development
• Policy and procedure guide for Salary Range and SpecialCompensation tables, and acknowledgement process
• Board approval of a Special Compensation Policy
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Action Plan Progress
• Market Salary Range Study
• Action VIII.4
• Conducted the SANDAG compensation consultant
• Compared existing salary ranges for 42 benchmarkpositions to data from public and private sectororganizations
• Board approved recommended changes as part of theFY 2022 budget
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Next Steps
• By September 30
• Two actions due related to preparation and award ofemployee compensation adjustments
• Progress update to Audit Committee in November
• By December 31
• Eleven actions due related to financial policies andprocedures, compensation program administration, andrecruitment practices
• Progress update to Audit Committee in early 2022
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Salaries and Compensation AuditAction Plan Progress Report
Audit Committee | September 24, 2021
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SANDAGRequired Communications
September 24, 2021
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Agenda
Engagement Objectives
Required Deliverables
Planned Scope and Timing
Other Required Communications
Questions?
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Item 7
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Engagement Objectives
• The objective of an audit of financial statements is toexpress an opinion that the financial statements are inaccordance with accounting principles generally acceptedin the United States.
• The audit of financial statements will be performed inaccordance with auditing standards generally accepted inthe United States (GAAS) and generally acceptedGovernment Auditing Standards (GAGAS).
• Those standards require that we plan and perform theaudit to obtain reasonable, rather than absolute,assurance about whether the financial statements arefree of material misstatement whether caused by error orfraud.
• Our audit includes consideration of internal controls overfinancial reporting, but we do not express an opinion onthe effectiveness of such internal controls. Management isresponsible for the design and the effectiveness ofinternal controls.
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Required Deliverables – Financial Audits
Service Deliverable(s)
Audit of the SANDAG Annual Comprehensive Financial Report
Independent Auditor’s Report
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Audit of the San Diego County Regional Transportation Commission (Commission)
Independent Auditor’s Report
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Certification of the Commission Schedule of Cash Flows
Independent Auditor’s Report on Supplementary Information
Audit of South Bay Expressway Independent Auditor’s Report
Audit of ARJIS Independent Auditor’s Report
Audit of SourcePoint Independent Auditor’s Report
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Required Deliverables – Compliance and Other
Service Deliverable(s)
SANDAG Single Audit Report Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; And Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
Schedule of Findings and Questioned Costs
Certification of National Transit Database Report
Independent Accountant’s Report on Applying Agreed-Upon Procedures
Audit of Coronado Bridge Toll Revenues
Independent Accountant’s Report on Applying Agreed-Upon Procedures
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Required Deliverables – TDA Claimants
Service Deliverable(s)
TDA Fiscal and Compliance Audits Independent Auditor’s Report
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
TDA Fiscal and Compliance Audits
• Chula Vista• Coronado• El Cajon• Escondido• FACT• La Mesa• Lemon Grove• National City• Oceanside
• Poway• City of San Diego• County of San Diego
- LTF, STAF, MTS STAF• SANDAG Agreed-Upon
Procedures• Santee• Solana Beach
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Planned Scope
Crowe’s risk-based audit approach includes the following phases:
Audit • Understand your:• Entity and environment• Organizational objectives • Performance metrics
• Define audit objectives• Coordinate audit timeline• Audit strategy map• Identify key accounts, disclosures
• Accumulate significant risks and planned audit response
• Entity-level controls• IT general and application controls
• Account-level controls• Walkthrough of processes for key accounts
• Evaluate design and implementation
• Test operating effectiveness of certain key controls
• Evaluate results of control testing
• Perform substantive audit testing of account balances
• Review financial statements• Prepare year-end auditor communications such as management letters
• Resolve accounting issues
• Complete financial statement review and Crowe internal quality review
• Discuss draft with management and key stakeholders
• Issue completed financial statements based on agreed-upon audit delivery timeline.
1. Planning 2. InterimProcedures
3. Year EndProcedures 4. Reporting
Audit QualityThe Crowe Assurance Professional Practice team is consulted on significant accounting matters
throughout the audit process to help avoid any possible surprises.
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Materiality
• In planning the audit, overall materiality is viewed asthe maximum aggregate amount of misstatements,which if detected and not corrected, would cause usto modify our opinion on the financial statementsand/or internal control over financial reporting. Overallmateriality is an allowance not only for misstatementsthat will be detected and not corrected but also formisstatements that may not be detected by the audit.
• Our assessment of materiality throughout the auditwill be based on both quantitative and qualitativeconsiderations.
• At the end of the audit, we will inform you of allindividual unrecorded misstatements aggregated byus in connection with our evaluation of our audit testresults.
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Significant Risks
• Definition: An identified and assessed risk ofmaterial misstatement that, in the auditor'sprofessional judgment, requires special auditconsideration.
• Significant Risk:
o Auditing standards require a presumed risk ofmanagement override of internal controls.Management is primarily responsible for thedesign, implementation and maintenance ofinternal controls.
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Planned Timing
October -NovemberYear-end audit procedures
August - DecemberTransportation Development Act recipient audits
January - FebruaryCompletion of single audit and agreed-upon procedures
May - JuneAudit planning;Interim audit procedures;Begin single audit testing
DecemberIssuance of financial statements
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Other Required Communications
Effective two-way communication between Crowe and the Audit Committee is important to understanding matters related to the audit and in developing a constructive working relationship. Your insights will assist us in understanding SANDAG and its environment, in identifying appropriate sources of audit evidence, and in providing information about specific transactions or events. Please communicate to us any of the following matters that you consider relevant to the audit:
Weaknesses in internal control
activities
Inappropriate tone regarding fraudulent
activity
Known, alleged, or suspected fraud
Oversight activities that do not mitigate
risks of fraud
Tips or complaints regarding financial
reporting
Actual or possible violations of laws or
regulations that might affect the
audit
Matters warranting particular attention
during the audit
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Questions?
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Thank YouKatherine V. Lai, Partner
Phone +1 714 668 [email protected]
Jennifer Richards, Partner
Phone +1 818 325 [email protected]
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