Hello, everyone.

I would like to call the audit committee meeting to order.

Um, can I have a roll call, please?

Chair Shuddy.

Here.

Vice Chair Lambin.

Member Duke.

Here.

Member Scalia.

Here.

Member Stack.

We have Corman.

Awesome.

Thank you.

Uh, next on the agenda, public comments and discussion.

The public is invited at this time to provide comment on any topic that relates to a matter over which this public body has supervision, control, jurisdiction, or advisory power, including any such matter that is not specifically included on the agenda at as an action item.

And no action may be taken on a matter raised during this period for public comment.

Thanks for being here, Sherry.

Um, so is there any public comment?

All right.

And as a reminder, as long as you've read the minutes, you can vote.

You don't have to abstain if you were absent as long as you read the minutes.

I would move that we approve the minutes from last meeting.

And second and second.

All in favor.

Aye.

Aye.

Anyone opposed?

Okay.

The motion passes unanimously.

Next meeting item 5A for possible action discussion and possible action regarding a report prepared by the Carson City Internal Auditor Id Bailey, LLP for the fiscal year 2026 audit work program concerning the Carson City Asset Management Review, including findings and recommendations.

Sherry, take it away.

Thank you.

I am going to pass this to Audrey Donovan, the manager on the engagement.

She may pass it off to the person who did the engagement, but we'll see what happens.

Hi, thank you.

Thank you, Audit Committee.

Hi, hi, audit committee chair and audit committee members.

It's a pleasure to be here with you again today.

We do have an audit to read out to you today.

The asset management review is noted.

And this was approved on the fiscal year 26 audit plan.

And mainly in part because of inherent risk that relate to the capital asset accounting, such as ineffective internal controls that could occur that may cause failure or prevent errors from being identified.

There could be misclassification of assets.

There could be inconsistent application of capitalization thresholds, improper unsupported entries, and potentially delays in capitalizing assets in a timely manner.

So the engagement will be read out today by Christine Homack.

She's a senior manager with the firm, also part of internal audit.

And the team that conducted the engagement is Doug Schleich, manager, and Zach TellingHuson, senior associate.

They will not be in attendance today, but Christine's Christine is tapped in.

Her video is not working, but she should be able to have audio.

Christine, are you able to go off mute?

Yes, good afternoon, and thank you for having us.

I'm going to attempt to share my screen, and if it doesn't work, I will just walk you through the report itself.

And thank you.

Let me okay, it is not letting me share.

All right.

Well, um, I will just go ahead, Audrey.

Is there an ability on your end to share?

It doesn't look like their screen is showing for that.

Okay.

I would have the ability to, I may be able to.

Are you guys able to see screens when we share?

We haven't been able to in the past.

They we all have the reports in front of us, so I'm not sure that's necessary.

I mean, they were attached to the item if you were listening in.

Okay, so I will just walk through and we'll start on the objectives and the scope.

As Audrey mentioned, this risk was identified in the risk assessment for 2026.

The objectives were to evaluate the effectiveness of the current asset management practices across the full life cycle of the city-owned assets, including assessing accuracy, completeness, and reliability of those inventory records and identified risks associated with manual tracking methods, evaluating the current asset management practices, including acquisitions, utilization maintenance, disposal, and encompassing capital assets, and identifying opportunities to strengthen your internal controls.

The scope of the engagement was from July 1, 2024 to June 30th.

And our methodology in this process is to understand the policies and procedures, looking at the encompassing framework you have by conducting walkthroughs and interviews with management, looking through your policies and procedures for completeness and accuracy.

We analyze a sample of transactions for key control attributes, and in testing those, we look at additions, disposals, reviewing supporting invoices, approvals, categorization, capitalization thresholds, all in alignment with your policies that they're operating as designed with the controls within the policies and procedures, and it supports the proper approval within those policies.

As part of that process, we review your control around analyzing any differences, reconciling those differences, any duplicate records, the data quality, and how you reconcile those and look at those for reasonableness and accuracy.

We verified reconciliation and your monitoring activities, including performing physical verification of a limited sample of selected assets, confirming existence, your tag accuracy, condition, and location, and we trace those back to your Tyler Munis system to validate completeness and accuracy.

We also assess the annual inventory and reconciliation process, including examining the timeliness and documentation of any discrepancies, departmental follow-up, and finance oversight.

We noted that all the internal audit objectives were met, and the results demonstrate that the city's asset management core processes and controls are well established, and support asset tracking and reporting and oversight are operating as intended.

As part of the asset management internal control audit, we identified one finding and one observation, which we've included in the last two slides and details.

While these don't indicate a widespread control failure, they highlight opportunities for those improvements.

So in our finding, we noted that Carson City's capital asset policy requires disposals be presented to the board of supervisors, and that this step was intended to provide transparent transparency and ensure governing oversight.

However, due to a during the most recent board meeting, this presentation did not occur.

As a result of this process, the disposals for 30 year were not formally reviewed by the board.

Um, creating a gap in compliance with the established written policy.

Um we recommend that management implement procedures to ensure compliance with that policy, and management has agreed with our finding and has established that at the next meeting they will be in April.

That will be provided in transparency and formality, so that that's the most appropriate meeting to present it at.

Any questions?

I would like to give a shout out to the staff of Carson City and the staff in my office who add this stuff that all the procedures they did to test the actual assets didn't come out with a finding.

So we did do a lot right here.

Um I'm sorry, the one finding that they did have, um, I will take full responsibility for.

Um, typically we present the disposals at the end of the audit, which to me is weird.

You don't know what to do with it at that point in time.

So I kind of made a um executive decision to bring it to you guys before the capital improvement plan or to the board before the capital improvement plan so they could see what we disposed of last year and what we're looking at buying for 2027.

It just seemed to be a better symmetry looking at assets that way.

So I did not update the policy for my little decision.

I was going to see if it worked first, um, if it was received well, and then um update the policy.

So uh we'll definitely work on getting this updated.

All right.

Are there any and I just wanted to add um thank you to the team.

They did an amazing job helping our team out.

There was a lot of data and a lot of information, and they have very um detailed records that we worked through, and they helped us facilitate that on-site verification amongst their daily duties and other deadlines that they had, and they worked very closely with us and were very responsive, and we really appreciate that.

Well, thank you.

That's great to hear.

Do any of the members have a question of Christine Homek?

No.

All right.

Um, I just want to say, you know, I I appreciate this report and the detail uh that was included.

And it's just great to to read through this in terms of what the checks and balances are and making sure that assets are properly um recorded and disposed of.

And uh in terms of the the response, thank you, Sherry, on for explaining that.

And I agree at when you wrote at the same time our capital improvement plan discussion happens, it will make more sense and and it aligns better.

So I I agree.

So thank you on that.

Okay, then if there are no other comments, um do we have a motion to accept the report or I move that we accept the report as it stands?

And I would second.

Right.

Uh everyone in favor say aye.

Aye.

Opposed.

Okay.

It's uh we approve the report.

Thank you.

Next agenda item 5B for possible action, discussion and possible action regarding the monitoring, review, and closure of previous internal audit findings and or recommendations included in the audit finding tracking report and a recommendation to the Board of Supervisors to close completed findings and/or recommendations.

Sherry.

Thank you.

So I do have three findings to um recommend closing on the community development internal audit.

It's page 20 of your packet.

Um the first finding uh is about um Energov and the client portal, and they did have that live January 2026.

Um press release is going or already went out the first week of February.

So that finding is complete, and I am recommending closure.

Um finding um number three, um, the city decided decided to bring in a building divided, the building division in-house and use the hybrid approach going forward.

Um, so that was the um crux of that finding was to a decision point as to what we were gonna do with the building division to continue using um Charles Abbott or bring it in-house.

Um, and so that um I'm also recommending closure.

And then um item number four.

Uh this one also um actually doesn't really apply anymore because um because that we um uh terminated our contract with Charles Abbott on February 13th, 2026.

Um so I'm recommending closure on this as well.

Do we have any questions concerning the recommendation?

Oh, I'm if if there's nothing on the I do have another update for you if there's no other questions.

Well, I I just had a quick question.

So under the new, you know, now that um this is back within the city's purview.

I would imagine that the permit transaction reports um will still be reviewed, and so everything that we were looking for from Charles Abbott, we will be following just to confirm that on the record.

Yes, yes, the the performance metrics and things like that.

Yes.

Um there are some reports that came from Charles Abbott that we use to pay their bills that obviously we're not paying their bills, so that's not part of it anymore, but um, but the performance metrics and those types of things we will be able to monitor in-house.

There are employees, it'll be a lot easier.

Great.

Thank you.

If there's no other questions, I wanted to go to the payroll real quick.

That's page 25 of your packet.

We were due to be done finding number one today, and unfortunately, um it's still in the review process.

So we just got a little busy with budget and did not get that done.

So I did move that date to 4 30 2026.

Hopefully, we'll be able to close it at the next meeting.

Okay.

So are there any questions, comments, thoughts, opinions?

Anything for the good of the order on this.

All right.

Then if we can have someone make a motion, please.

I can okay.

I move to uh recommend to the board of supervisors closing the items discussed based on the corrections and recommendations included in the audit finding trackers report.

Thank you.

Is there a second?

I can second that.

Thank you.

All in favor, say aye.

Aye.

Anyone opposed?

All right.

The motion passes unanimously.

Next on the agenda, um discussion regarding fiscal year 2026 audit work program update and fraud waste and abuse hotline activity.

Take it away.

Yep, I'm gonna turn this right over to Audrey for the update and the um fraud waste and abuse hotline update.

Thanks.

Thank you.

Thank you, Sherry.

Thank you again.

Um so as you know, the audit plan consists of three audits this year.

We just delivered one, the capital asset accounting.

We delivered the credit card payment security and compliance review at the last audit committee meeting.

And we have recently kicked off the public guardian asset management review.

We actually met with the public guardian, the assistant public guardian yesterday and walked through their processes yesterday as it relates to asset management and the protected parties or the wards under their care.

We also kicked off the annual risk assessment update.

We sent out emails to a number of the directors and set up meeting makers with a number of directors as well as the city manager, the mayor, um public works, Darren, um, IT individuals that we know we need to speak with directly.

So we've set those up, and we have been monitoring the fraud, waste and abuse hotline, of which we noted one case came through, or one um I don't know what we call it, incident report that came through.

And this is related to HR.

Um, it's an employee um complaint about an individual at the front office location of public works that has been presenting a hostile work environment.

So we have dovetailed this into the risk assessment process as we're going to be speaking with Darren at the head of public works and Jeff, who is the director of HR to understand the magnitude if this is even a case that needs to move forward and investigate that further.

So that'll be um included within our risk assessment.

And in fact, we um prioritize those interviews, those are going to be going first so that we can address that incident um immediately.

The other activity is follow-up, which is Sherry just presented, and what whatever budget we don't use there, that rolls into the fraud waste and abuse hotline monitoring or the risk assessment update, annual update.

I'm pleased to say that we are on track and on budget for all of these engagements that we have delivered, and we will not be going over the allotted budget of 110,000 for this fiscal year.

Um we will be on track to deliver the public guardian at the next audit committee meeting.

And I know that that's going to be the next agenda item, so I'll table that for now.

Um, but we do know that the risk assessment process likely takes an iterative process where we'll be sharing with you the results of the update and then identifying and getting your approval on the results of that update through the proposed internal audit plan.

So we'll want to be mindful of when we'll meet for that next meeting.

And that concludes the update on the fiscal year 26 internal audit related activities.

Any questions?

Thank you, Audrey.

Do we have any questions?

No.

I can provide an update.

I did speak with Darren about this incident, and it was the fraud waste and abuse incident.

It was I think early November, right at right during around our last meeting, which is why you know it wasn't brought to Audrey's attention.

We only meet every three months.

So this was an older incident.

And uh from my knowledge, um, Darren told me it has been resolved.

Okay.

So but Audrey, feel free to speak with him and find out what happened and um yeah.

So great.

Thank you.

Well, and thank you for um great news about the budget.

Much obliged.

Okay.

Then our last item 5D for discussion only, consideration of dates for the next meeting of the Carson City Audit Committee.

Audrey, do you want to recommend a date?

I'm assuming the end of March or maybe early April.

We were actually thinking May, and then having another one in June, so that we could deliver the update to the risk assessment in May, and then have the audit committee opine on the proposed audits, the areas of risk, and then meet again in June to deliver the public guardian asset management and the full report, the risk assessment report.

Does that work for everyone?

Um I'm sorry.

I'm gone most of May, so we guys don't have to have me show us up.

I'll be in here.

Oh good for you.

And I'm pretty well committed for the second half as well.

Okay.

Um actually as am I.

So can everyone else make the May make a May meeting to ensure we have a quorum?

All right, so let's look at dates for May.

Does either the 12th or the 19th?

They both work for us.

Okay, thank you.

Do you have a preference?

Anyone?

So the 12th, or I'm throwing it out there if you're asking.

I'm asking.

I'm asking.

I like the 12th too.

Okay.

Then let's make the the 12th at 1.30.

Great.

Okay.

And then June.

Would the 9th work?

Is that too soon?

That would be great.

I think that would work.

Okay.

Does that work for everyone else?

Yeah.

Okay.

Then June 9th at 1.30.

All right.

I will make it so.

Thank you.

Okay.

I think then last on the agenda is the opportunity for the public.

Maybe we have a public.

Oh.

Okay.

Public comment.

The public is invited at this time to provide comment on any topic that relates to a matter over which this public body has supervision control jurisdiction or advisory power, including any such matter that has not specifically included on the agenda as an action item.

And no action may be taken.

So is there any public comment?

Okay.

Then without further delay, Audrey, thank you.

And Christine, thank you.

We appreciate your work.

And um thank you.

Here's two uh good days ahead, and and we'll see you in May.

Thank you, auditor.

Or sorry, audit committee to audit committee members.

You guys have a great rest of your day.

Thank you, you too.

All right, bye-bye.

Bye.