HomeMy WebLinkAbout03.c. Review draft Position Paper to consider adopting new Board Policy No. BP 039 - Internal Audit Function Page 1 of 4
Item 3.c.
Algi CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
DRAFT
MEETING DATE: APRIL 16, 2019
SUBJECT: REVIEW DRAFT POSITION PAPER TO CONSIDER ADOPTING NEW
BOARD POLICY NO. BP 039 - INTERNAL AUDIT FUNCTION
SUBMITTED BY: INITIATING DEPARTMENT:
ERICABROOKS PETERS, SENIOR INTERNAL ADMINISTRATION-FINANCE
AUDITOR
REVIEWED BY: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ISSUE
Central San's I nternal Audit function has developed a proposed Board policy governing the operational,
governance and reporting aspects of the Internal Audit function.
BACKGROUND
As part of Central San's objective to implement an Internal Audit function, the Board policy formally
defines the function's purpose, authority and responsibility. The policy provides clarify for staff, the Board,
and the public about the District's commitment to an internal audit function. The policy is brief and covers
the essentials such as the reporting relationship of the internal audit function, independence of the internal
auditor, and the planning and reporting process.
Having an established internal audit policy, or charter, is a recommended practice by the Institute of
Internal Auditors, the body overseeing the internal auditing profession.
Additional procedures regarding the operation of the internal audit function will be developed as an
internally maintained administrative procedure.
ALTERNATIVES/CONSIDERATIONS
The Board could choose not to establish a policy related to the Internal Audit function. However, good
practice and professional bodies governing the internal audit function recommend having a charter for the
function that specifies the type of matters as are indicated in this proposed draft policy.
April 16, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 24 of 348
Page 2 of 4
FINANCIAL IMPACTS
There are no direct financial impacts from adopting the policy. The level of investment in the internal audit
function will continue to be a Board and management decision, through the adoption of an annual internal
audit work plan specifying the extent of internal audit work to be conducted.
COMMITTEE RECOMMENDATION
The Administration Committee reviewed this proposed new Board Policy at its meeting on April 16, 2019
and recommended Board approval.
RECOMMENDED BOARD ACTION
Adopt new Board Policy No. BP 039 - Internal Audit Function.
Strategic Plan Tie-In
GOAL TWO: Strive to Meet Regulatory Requirements
Strategy 3- Comply with all federal, state, and local regulations related to District administration
ATTACHMENTS:
1. Proposed BP 039 - Internal Audit Function
April 16, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 25 of 348
Page 3 of 4
Number: BP 039
Related Admin. Procedure AP 03X
Authority: Board of Directors
Effective: CENTRALSAN
Revised:
Reviewed: CENTRALSAN.ORG
Initiating Dept./Div.: Internal Audit DRAFT
BOARD POLICY
INTERNAL AUDIT FUNCTION
PURPOSE
The purpose of this policy is to establish an Internal Audit function within Central San as
part of the framework for monitoring the ongoing effectiveness of internal controls.
POLICY
The Board of Directors supports establishment and maintenance of an Internal Audit
function to assist management in fulfilling its mission.
I. Authority
The Internal Audit function shall report administratively to the General Manager (with
the Director of Finance and Administration providing day to day guidance as
needed) and functionally to the Board of Directors.
II. Independence and Objectivity
Internal auditors will have no direct operational responsibility or authority over any
activities audited, nor engage in activities that may impair their judgement. Any
impairment in fact or appearance will be disclosed to the board.
III. Responsibility
The internal audit function shall
• present annually an audit plan to the Board of Directors.
• present each internal audit report to the Board Committee having jurisdiction over
the subject matter of the audit, and subsequently to the Board.
April 16, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 26 of 348
Page 4 of 4
Number: BP 039
TITLE
Page 2 of 2
IV. Review and Approval of the Internal Audit Board Policy
This policy will be reviewed at least every two years and revised as needed.
[Original retained by the Secretary of the District]
April 16, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 27 of 348