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HomeMy WebLinkAbout03. Review Board Policy No. BP 013 - Standing Committee Protocols, Guidelines and Charters re Internal Audit and Risk Management Page 1 of 10 Item 3. Central Contra Costa Sanitary District March 1, 2018 TO: HONORABLE BOARD OF DIRECTORS FROM: PHILIP R. LEIBER, DIRECTOR OF FINANCEAND ADMINISTRATION REVIEWED BY: ANN SASAKI, DEPUTY GENERAL MANAGER ROGER S. BAILEY, GENERAL MANAGER SUBJECT: REVIEW BOARD POLICY NO. BP 013 - STANDING COMMITTEE PROTOCOLS, GUIDELINES AND CHARTERS IN RELATION TO THE FOLLOWING POLICYAREAS: INTERNAL AUDIT AND RISK MANAGEMENT Board Policy No. BP 013 - Standing Committee Protocols, Guidelines and Charters was last revised on July 6, 2017, as a result of the Board's discussion at the February 2017 Board Self-Evaluation Workshop. In addition to establishing protocols and guidelines, the charters themselves were revised and/or clarified, including the list of policy areas unique to each committee. Two issues have been raised recently regarding which Board Committee should be responsible for the following policy areas/functions: Internal Audit and Risk Management. Internal Audit On December 21, 2017, staff gave a presentation to the Board on establishing an internal audit function for Central San. One topic raised at that time was to which Board Committee this function should report. Several alternatives were presented and discussed briefly by the Board, however no decision was needed, or made, at that time. The internal audit function has continued to progress, and an initial audit report has been completed. By the start of the next fiscal year, staff will present for Committee and Board approval an internal audit plan for Fiscal Year 2018-19. Risk Management At the January 23, 2018 Finance Committee meeting, the issue of which Board Committee should review risk management issues, including the Loss Control Report, was raised. One committee member expressed the view that since the Finance Committee was reviewing and recommending expenditures for approval, including claim expenses and settlements, that it would be more appropriate for that Committee to cover risk related issues, rather than the Administration Committee. Since adoption of the Committee Charters in 2014, all risk management matters have been brought before the Administration Committee, and the current BP 013 indicates Risk Management as one of the policy areas under that Committee's jurisdiction. March 1, 2018 Special Board Meeting Agenda Packet- Page 13 of 22 Page 2 of 10 If the Board wishes to change which Committee is responsible for reviewing Risk Management matters, BP 013 should be amended to reflect that change. Considerations/Alternatives It is appropriate at this time to further discuss and resolve these Committee assignment issues. The current scopes of the Administration Committee and Finance Committees are provided in Attachment 1 (BP 013). The Administration Committee's current scope includes "Risk Management." The Finance Committee's scope currently includes "Appropriate Levels of Internal Controls, Financial Reporting, and Fiscal Regulatory Compliance." As such, the internal audit function could reasonably report to either Committee, as it would regularly address risk related matters, internal controls, and fiscal compliance matters. Another option would be to have a stand-alone Audit Committee that would include internal audit matters as well as related issues such as selection of the external financial audit, internal controls and, potentially, risk related matters. A fourth option would be to keep the current structure but to have each internal audit report presented to the most relevant committee as assigned by the General Manager. With this option, the annual internal audit work plan could be presented to an existing Board Committee, or directly to the full Board. Staff believes that any of these approaches to hearing the internal audit issues is potentially viable, and that the approach selected depends on how the Board wishes to weigh the following factors: 1. Limiting the overall number of committees. 2. The workload of the existing committees (Finance and Administration). 3. Interests of individual Board Members about the topics of internal audit and risk matters. 4. The benefits of routing all internal audit reports through a single committee versus potentially routing them through the most relevant committee based on the subject matter of the internal audit report. I n conjunction with, or after a decision on where the internal audit matters are heard, the issue of revisiting which committee hears risk management matters should be considered. Historically, risk management matters have focused on claims, insurance, security, emergency management, etc. Future risk management topics are likely to also include discussion of an agency-wide risk inventory, how that risk inventory is used in focusing internal audit resources, and overall agency responses to addressing those risks. Accordingly, locating risk related matters (as broadly defined) in the same committee that hears internal audit related matters, is sensible. Staff will be prepared to facilitate additional discussion on this topic at the March 1, 2018 workshop. Strategic Plan Tie-In GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility Strategy 2- Manage Costs GOAL FOUR: Develop and retain a highly trained and innovative workforce Strategy 3- Meet or Exceed Industry Safety Standards GOAL FIVE: Maintain a Reliable Infrastructure Strategy 3- Protect District Personnel andAssets from Threats and Emergencies March 1, 2018 Special Board Meeting Agenda Packet- Page 14 of 22 Page 3 of 10 GOAL SIX.Embrace Technology, Innovation and Environmental Sustainability Strategy 2- Evaluate Business Processes and Optimize Business Operations ATTACHMENTS: 1. BP 013 - Standing Committee Protocols, Guidelines and Charters March 1, 2018 Special Board Meeting Agenda Packet- Page 15 of 22 Page 4 of 10 Central Contra Costa Number: BP 013 Sanitary District Authority: Board of Directors Effective: March 6, 2014 Revised: July 6, 2017 _==-= Reviewed: Initiating Dept./Div.: Administration BOARD POLICY STANDING COMMITTEE PROTOCOLS, GUIDELINES AND CHARTERS PURPOSE To adopt the protocols, guidelines and charters for the Central San's Standing Committees. POLICY The Board has determined that it is beneficial to adopt protocols and guidelines and adopt charters for each of the District's Standing Committees below: Administration Finance Engineering & Operations Real Estate, Environmental & Planning The Committees shall operate within the General Committee Protocols and Guidelines for Standing Committees set forth below, which define the role of and provide a framework within which the Committee Members and staff can operate. The Standing Committee Charters define the mission and goals of each Committee and set forth the Committee scope with an emphasis on policy rather than operational matters. General Committee Protocols and Guidelines for Standing Committees The General Committee Protocols and Guidelines for Standing Committees are set forth on pages 2 through 3. Standing Committee Charters The Standing Committee Charters are set forth on pages 4 through 7. [Original Retained by the Secretary of the District] March 1, 2018 Special Board Meeting Agenda Packet- Page 16 of 22 Page 5 of 10 Number: BP 013 STANDING COMMITTEE CHARTERS Page 2 of 7 GENERAL COMMITTEE PROTOCOLS AND GUIDELINES FOR STANDING COMMITTEES 1. Role: The role of the Committees is advisory to the Board — Committees make recommendations to the full Board. They cannot direct staff outside of their Committee Charters or expend public resources. 2. Agendas: The General Manager and staff generate the agendas. The General Manager will determine to which Committee items are assigned as they arise. In cases where certain topics may span two Committees, he/she may confer with the Board President for guidance. 3. Staff Recommendations on Agendas: Staff will specify on Committee agendas what is needed from the Committee for each agenda item (e.g. Committee recommendation for Board approval; receive the report/update, provide input to staff, etc.). 4. Committee Action: For those items for which a Committee recommendation to the Board is requested, staff will proceed as follows, depending on the Committee vote: a. Committee recommendation of Board approval: • Routine items will generally be put on the Board Consent Calendar. • Non-routine items will be agendized for a presentation and Board discussion. b. Split Committee vote: The item will proceed to the full Board (not on Consent Calendar), and the reason for the split vote will be reflected in both the Committee minutes and the position paper. For purposes of efficiency within the Committee process, should the two Committee Members find themselves at early impasse regarding their position on any committee matter, it is the policy of this Board to bring that matter to the full Board as early in the process as possible. C. Committee votes against approval— The item will generally proceed to the full Board (not on Consent Calendar), and the Committee's position will be reflected in both the Committee minutes and the position paper. 5. Committee Requests for Information: When a Committee Member requests information, the Committee must vote on whether to proceed with the request. If the request does not receive Committee approval, staff generally will not proceed with the request. 6. Staff Responses to Committee Requests for Information: If the response is in writing, it will generally be made part of the next Committee packet. If the response is provided by staff verbally or via email to Committee Members outside of a convened meeting, staff will provide a brief announcement at the next Committee meeting. March 1, 2018 Special Board Meeting Agenda Packet- Page 17 of 22 Page 6 of 10 Number: BP 013 STANDING COMMITTEE CHARTERS Page 3 of 7 7. Informational Reports: The General Manager will determine which informational reports (e.g. NPDES annual report, HHW annual report, Sanitary Sewer Overflow annual report, mentorship presentations, etc.) that do not require Committee recommendation or input will go directly to the Board, and which will be scheduled for Committee review first. 8. Standing Items: The use of standing items on Committee agendas is generally discouraged due to potential Brown Act issues. 9. Scheduling, Rescheduling and Cancellation of Committee Meetings: Committee meetings may be scheduled, rescheduled or cancelled at the request of a Committee Member or staff. The Committee Chair will be consulted prior to the cancellation of any Committee meeting. 10. Appointment of Alternates: Use of alternates for Committee meetings is generally discouraged due to potential Brown Act issues; however, when necessary, the Board President may appoint an alternate based on Board Member availability. March 1, 2018 Special Board Meeting Agenda Packet- Page 18 of 22 Page 7 of 10 Number: BP 013 STANDING COMMITTEE CHARTERS Page 4 of 7 CHARTER ADMINISTRATION COMMITTEE Members Chair, Member Meeting Schedule Monthly, or as needed (subject to rescheduling or cancellation) Mission Provide input and recommendations to the Board regarding the policy areas listed below that support the District's Mission, Vision and Values and Strategic Plan. Policy Areas Policy development and review • Strategic Plan • Safety and security matters • Public outreach • Human Resources • Information Technology • Risk Management • Legislative matters as may be requested by Board Scope Review and address staff recommendations. May direct the General Manager to conduct additional research on policy issues within the Committee's Mission. The Committee is tasked to: • Develop new, or review and revise existing, District policies for Board consideration • Review and monitor compliance with Strategic Plan • Review and make recommendations on policy-related safety and security matters • Ensure adequate public outreach of policy-related District services and programs (outreach for specific programs may be referred to the appropriate Committee by the General Manager) • Review and make recommendations on relevant Human Resources matters • Review Information Technology policy matters • Oversee Risk Management and associated legal matters • Review specific legislation if requested to do so by the Board Revised by Board March 6, 2014; July 23, 2015, February 18, 2016, July 6, 2017 March 1, 2018 Special Board Meeting Agenda Packet- Page 19 of 22 Page 8 of 10 Number: BP 013 STANDING COMMITTEE CHARTERS Page 5 of 7 CHARTER ENGINEERING & OPERATIONS COMMITTEE Members Chair, Member Meeting Schedule Monthly, or as needed (subject to rescheduling or cancellation) Mission Provide input and recommendations to the Board regarding the policy areas listed below that support the District's Mission, Vision and Values and Strategic Plan. Policy Areas . Reliable infrastructure • Bidding for construction contracts • Consultant selection process for capital improvement program • Capital Improvement Budget (CIB) • Ten-Year Capital Improvement Plan (CIP) • Operational effectiveness Scope Review and address staff recommendations. May direct the General Manager to conduct additional research on policy issues within the Committee's Mission. The Committee is tasked to: • Review the CIB for planning, design and construction of projects, including funding • Review construction project awards • Review the CIP for future projects, regulatory compliance, and long- range financial planning • Review Engineering, Plant Operations, Maintenance and Collection Systems and Recycled Water as determined by the General Manager • Review Asset Management Program • Ensure adequate public outreach of certain program-related matters within the scope of the Committee, as referred by the General Manager Revised by Board March 6, 2014, July 23, 2015, February 18, 2016, July 6, 2017 March 1, 2018 Special Board Meeting Agenda Packet- Page 20 of 22 Page 9 of 10 Number: BP 013 STANDING COMMITTEE CHARTERS Page 6 of 7 CHARTER FINANCE COMMITTEE Members Chair, Member Meeting Schedule Monthly, or as needed (subject to rescheduling or cancellation) Mission Provide input and recommendations to the Board regarding the policy areas listed below that support the District's Mission, Vision and Values and Strategic Plan. Policy Areas Fiscal sustainability • Fiscal regulatory compliance • Appropriate levels of internal controls • Investment reserves • Financial reporting and budget documents Scope Review and address staff recommendations. May direct the General Manager to conduct additional research on policy issues within the Committee's Mission. The Committee is tasked to: • Oversee proper use of financial resources • Ensure regulatory compliance with federal, state and public financing requirements • Review financial reports for completeness, accuracy and clarity • Review development, implementation and oversight of investment policies and practices • Provide recommendations related to the annual budget, its implementation and future projections • Review expenditures • Ensure adequate public outreach of certain program-related matters within the scope of the Committee, as referred by the General Manager Revised by Board March 6, 2014, July 23, 2015, February 18, 2016, July 6, 2017 March 1, 2018 Special Board Meeting Agenda Packet- Page 21 of 22 Page 10 of 10 Number: BP 013 STANDING COMMITTEE CHARTERS Page 7 of 7 CHARTER REAL ESTATE, ENVIRONMENTAL & PLANNING COMMITTEE Members Chair, Member Meeting Schedule Monthly, or as needed (subject to cancellation or rescheduling) Mission Provide input and recommendations to the Board regarding the policy areas listed below that support the District's Mission, Vision and Values and Strategic Plan. Policy Areas . Long-range planning • Environmental regulatory compliance • Cost-effective resource recovery and recycling • Use of District real property and facilities Scope Review and address staff recommendations. May direct the General Manager to conduct additional research on policy issues within the Committee's Mission. The Committee is tasked to: • Review long-range planning documents including master plans • Oversee the District's environmental regulatory compliance • Oversee resource recovery programs and recycling • Oversee appropriate use of real property and facilities in accordance with District policies • Review year-end annual reports for Household Hazardous Waste, Pollution Prevention, and Recycled Water, as necessary • Ensure adequate public outreach of certain program-related matters within the scope of the Committee, as referred by the General Manager Revised by Board March 6, 2014, July 23, 2015, February 18, 2016, July 6, 2017 March 1, 2018 Special Board Meeting Agenda Packet- Page 22 of 22