STATE BOARD OF EDUCATION – TOPIC SUMMARY

Topic: Audit Committee

Date: August 24, 2012

Staff/Office: Jan McComb, Board Staff

Action Requested: Informational Only Adoption Later Adoption Adoption/Consent Agenda

ISSUE BEFORE THE BOARD: Ratify existing Audit Committee membership.

BACKGROUND: Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. (OAR 125-700-0015).

State rule directs that large[1] state agencies employ an internal auditor. The Oregon Department of Education had such an auditor until that position was eliminated from the budget in 2009. The 2011 Legislature funded an internal auditor position in the ODE budget to be shared between ODE and CCWD, beginning January 2012. Due to the state hiring freeze, the position was not filled until June 2012. Jim Scott, recently from the Secretary of State’s Audits Division, is the new ODE auditor.

Despite lacking an Internal Auditor, ODE maintained its Audit Committee. This committee was formed by Deputy Director Ed Dennis. His goal was to have more members that were external to the agency than internal, in order to enhance the committee’s objectivity. This goal was achieved.

Now, unlike the prior Internal Auditor, Mr. Scott reports directly to the State Board of Education, not ODE and CCWD management. (In most cases, the Internal Auditor reports to the agency head or designee, and functionally to the audit committee as per OAR 125-700-0150.) Because of this shift, the Internal Audit Committee recommends that the board ratify the current membership. Because the scope has expanded to include CCWD, a representative from CCWD has been added (Kyleen Stone). Two members have recently departed; both were external auditors. The committee is interested in adding members from the K-12 and community college sectors for those perspectives.

Audit Committee Membership:

1.  Sue MacGlashan, ODE

2.  Kyleen Stone, CCWD

3.  Jan McComb, Board representative

4.  Ozzie Rose, external stakeholder

5.  John Radford, external auditor, formerly with the Dept. of Administrative Services

6.  Steve March, external auditor, Multnomah County Auditor

7.  Pam Stroebel, external auditor, Dept. of Administrative Services (tentative)

STAFF RECOMMENDATION: Ratify existing membership; replace board member representative.

1

[1] Total biennial expenditures exceed $100 million; number of full-time equivalent employees exceeds 400; or dollar value of cash and cash equivalent items received and processed annually exceeds $10 million.