HomeMy WebLinkAbout09. Adopt new BP 039 - Internal Audit Function Page 1 of 4
Item 9.
CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
MEETING DATE: MAY 2, 2019
SUBJECT: ADOPT NEW BOARD POLICY NO. BP 039 - INTERNALAUDIT FUNCTION
SUBMITTED BY: INITIATING DEPARTMENT:
ERICA BROOKS PETERS, SENIOR INTERNAL ADMINISTRATION-FINANCE
AUDITOR
REVIEWED BY: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
Roger S. Bailey
General Manager
ISSUE
Central San's Internal 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 clarity for staff, the Board,
and the public about Central San'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.
May 2, 2019 Regular Board Meeting Agenda Packet- Page 72 of 194
Page 2 of 4
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 I nternal Audit function recommend having a charter for the
function that specifies the type of matters as are indicated in this proposed draft policy.
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 with several wording changes which have been incorporated in the
attached proposed policy.
RECOMMENDED BOARD ACTION
Adopt new Board Policy No. B P 039 - Internal Audit Function.
Strategic Plan re-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
May 2, 2019 Regular Board Meeting Agenda Packet- Page 73 of 194
Page 3 of 4
Number: BP 039
Related Admin. Procedure AP 039
Authority: Board of Directors
Effective: ----
Revised:
Reviewed: CENTRALSAN
Initiating Dept./Div.: Administration/Internal Audit
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.
1. Authority
The Internal Audit function shall report administratively to the General Manager and
functionally to the Board of Directors.
2. 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 by Internal Audit to the Board.
3. Responsibility
The Internal Audit function shall
• Present an annual 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.
May 2, 2019 Regular Board Meeting Agenda Packet- Page 74 of 194
Page 4 of 4
Number: BP 039
TITLE
Page 2 of 2
4. 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]
May 2, 2019 Regular Board Meeting Agenda Packet- Page 75 of 194