The County Board would appoint the two County Board members and the FAAC member of the Audit Committee at the beginning of each calendar year.

Transcription

1 COUNTY MANAGER S REPORT ON INTERNAL AUDIT March 2015 In furtherance of both the County Manager and the County Board s commitment to strengthening County operations and ensuring that public funds are utilized in a responsible, efficient and transparent manner, the County Manager proposes a dual office approach that reflects complementary functions in both core financial audits and program / operational audits. Audit Committee & County Auditor Overseen by an Audit Committee, the County Auditor (a new position) would perform program and operational audits of County programs and operations, focused on program efficiency and effectiveness often with the accompanying goal of increasing revenue or reducing expenditures. Internal Audit within DMF this group would continue its focus on systematic core financial and compliance audits and internal controls reviews. It will continue to proactively work with departments to improve business processes. Additional details on each proposed function follow. Audit Committee & County Auditor: Mission: To enhance the efficiency, effectiveness and transparency of County services and operations by conducting performance and operational audits. Audit Committee Membership: Two County Board members County Manager or Deputy County Manager Director, Department of Management & Finance ( DMF Director ) One member of Fiscal Affairs Advisory Commission The County Board would appoint the two County Board members and the FAAC member of the Audit Committee at the beginning of each calendar year. Staffing & Hiring Processes: The Audit Committee will be staffed primarily by the creation of a new position to be established in the FY 2016 budget, the County Auditor. This position will be responsible for execution of the workplan established by the Audit Committee. Additional staff support to the County Auditor may be provided by DMF or CMO as well as external contracting support with funds appropriated by the County Board. An initial budget allocation of $200,000 is recommended to fund the new position and associated costs; in future years, savings identified by the program could fund County Auditor program costs.

2 The County Auditor will serve at the pleasure of the County Board; annual performance reviews will be conducted by the full County Board with written input from the County Manager. Compensation will be consistent with existing County pay scales. Day-to-day direction on administrative matters will be provided by the DMF Director. This structure is consistent with the recommendations of the Institute for Internal Auditors (IIA), an international organization dedicated solely to the advancement of the internal auditing profession, as discussed in one of the attachments. Additionally, a recent report released by the federal Department of Transportation on the structure of the internal audit office at MWAA is also attached; this report provides a good overview of the benefits of the dual reporting structure that is being proposed. A new position description for the County Auditor would be developed and posted for recruitment within thirty days of approval by the County Board. The DMF Director and County Manager would develop the description and do initial screening of candidates, with the final hiring decision to be made by the County Board. The recruitment will have natural synergies with the recruitment of the Internal Audit position within DMF. Work Plan: The County Auditor will prepare a proposed annual audit workplan with input from all members of the Audit Committee. The Audit Committee will formally approve the annual workplan and in the future, may consider the development of a multi-year workplan. In general, primary areas of focus will include: Performance and operational audits and / or reviews of County programs and operations to ensure program effectiveness and efficiency Areas of management or policy concern Areas identified by FAAC as part of their annual budget review; additional requests may be provided by other commissions and advisory groups Reviews that make recommendations for service delivery alternatives such as contracting out or partnerships For reference, a recent report of the Fairfax County Auditor to the Board is attached which briefly outlines its workplan and status of ongoing audit work. The Audit Committee will meet on a quarterly basis and will establish its own internal procedures. The County Auditor will follow the professional standards laid out by the Institute of Internal Auditors, including its International Professional Practices Framework. The County Auditor will also follow other government auditing standards, such as those promulgated by the General Accountability Office and the American Institute of Certified Public Accountants, among others. If there are

3 conflicts in the standards of the various audit organizations, the County Auditor may determine the appropriate standard in consultation with the Audit Committee as needed. Results of audits and reviews will be made public in accordance with all state and federal statutes and regulations. The creation of the Audit Committee is not intended to materially alter the responsibility and authority of either the County Board or the County Manager. Internal Audit: Mission: To strengthen County operations and minimize risk and fraud through systematic evaluation of operations and internal controls, focused on financial audits. Staffing & Hiring Processes: The Internal Audit group within DMF will continue to be staffed by 1.5 FTEs and $200,000 in consulting support unless additional funding is requested by the County Manager and approved by the County Board. The Internal Audit staff will continue to report to the Deputy Director of DMF. Work Plan: The objective of the Internal Audit s workplan is: To assist senior management and departments to effectively and efficiently implement County programs in compliance with financial, accounting and other County policies by conducting objective internal audits and reviews To test internal controls to provide reasonable assurance that resources are safeguarded against waste and abuse The Internal Audit group will continue to develop an annual audit workplan that is approved by the County Manager. The core workplan includes basic internal control and process reviews including but not limited to purchase card reviews; contract compliance and payment reviews; financial process reviews procure to pay, budget or payroll; inventory control reviews; and grant compliance. A key feature of the workplan is its systematic nature the objective is that every department that reports to the County Manager will be the subject of an internal audit review over a three year period. There will be collaboration with affected departments to revise policies and procedures and provide training where needed; additionally, the Internal Audit group will provide follow-up for every audit within 12 months of audit completion.

4 The Internal Audit group follows the professional standards laid out by the Institute of Internal Auditors, including its International Professional Practices Framework. The Internal Audit Group also follows other government auditing standards, such as those promulgated by the General Accountability Office and the American Institute of Certified Public Accountants, among others. If there are conflicts in the standards of the various audit organizations, the Internal Audit group will determine the appropriate standard. Results of audits and reviews will be made public in accordance with all state and federal statutes and regulations. Attachments: 1. County auditor legislation 2. Summary of audit functions in metropolitan Washington D.C. 3. Fairfax County Auditor to the Board report 4. Institute of Internal Auditors Practice Advisory on Organizational Independence 5. MWAA review of Internal Audit function and rationale for dual reporting structure

5 County auditor legislation recently signed by Governor McAuliffe That the Code of Virginia is amended by adding a section numbered as follows: County auditor. The board may appoint a county auditor for the audit and review of county agencies and countyfunded functions. The county auditor shall have the power to make performance reviews of operations of county agencies or county-funded programs to ascertain that sums appropriated are expended for the purposes for which such appropriations were made and to evaluate the effectiveness of those agencies and programs. The county auditor shall make such special studies and reports as the board directs. The board may provide staff assistance to the county auditor that may be independent of the administrative staff of the county. The county auditor and any such staff shall be hired on the basis of merit and shall be paid in conformity with existing pay scales. The county auditor shall serve at the pleasure of the board, and if removed, such removal shall not be subject to review by any other employee, agency, board, or commission of the county or under the grievance procedure adopted pursuant to

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7 SELECTED INTERNAL AUDIT FUNCTIONS IN METROPOLITAN DC REGION IN-HOUSE OR STAFF JURISDICTION TITLE OF OFFICE REPORTS TO? OUTSOURCED? SIZE BUDGET COMMENTS Alexandria Internal Audit Deputy City Manager / Chief of Staff In-house 5.0 FTEs $514k Also have Office of Performance Management; expanded by 3 positions in 13 Fairfax County Internal Audit County Executive Largely in-house 14.0 FTEs $1.3 mm Loudoun County Auditor to the Board Board of Supervisors Audit Committee In-house 3.0 FTEs $347k Internal Audit Reports to Director of Division of Financial and Management Services Outsourced 0 $80k Includes 4 information system auditors Initial appropriation of $80k provided in FY 2013; no audits conducted prior Prince William Internal Audit Board of Supervisors Audit Committee Outsourced Outsourced on Montgomery Co. Internal Audit County Executive Largely outsourced 1.0 FTE $399K Inspector General County Council Largely inhouse 4.8 FTEs $687K

8 C o u n t y o f F a i r f a x, V i r g i n i a To protect and enrich the quality of life for the people, neighborhoods and diverse communities of Fairfax County MEMORANDUM DATE: February 24, 2015 TO: FROM: Board of Supervisors Audit Committee Jim L. Shelton Auditor of the Board SUBJECT: Quarterly Report on Operations February 2015 Executive Summary I assumed the position of Auditor of the Board on Monday (27 th October 2014), whereby my charge was to oversee studies approved by the Board of Supervisors of the County of Fairfax, VA (the County). The approved Audit Committee Work Plan as of September 2014 includes the following studies: Overlapping/Duplicative County Functions IT Disaster Recovery Plan Office of Public Private Partnerships Dulles Metrorail Project Artificial Turf Fields Capital Construction Project Costs Studies may extend over several quarters based on the availability of information and resources. Libraries Departmental Gift Fund Review Background During the Tuesday (2 nd December 2014) Board of Supervisors (BOS) meeting, the BOS approved a review of the Fairfax County Libraries Departmental Gift Fund. The review was presented as a Board Matter and included the following directive to the Auditor of the Board: Review the fiscal reporting practices and expenditures of the Friends of the Library groups as well as the Departmental Gift Fund. This review should include an examination of the revenue generated by the sale of donated books, the monetary donations the groups receive, and any other financial transactions carried out by the Friends groups and the Departmental Gift Fund. Page 1

9 Status as of February 2015 In response to the Board Matter, we coordinated with the Fairfax County management and Board staff to develop and distribute Control Self-Assessment (CSA) forms for the Fairfax County Public Library (FCPL) and the Friends of the Libraries (FOL). The CSAs were designed to be a collaborative self-reporting approach to gathering information needed to complete the review. The forms were sent to the relevant parties on Tuesday, (13 th January 2015). Instructions included a response date of Monday (16 th February 2015). On Friday (9 th January 2015) the BOS Chairman met with the Fairfax Library Advocates and other interested parties to discuss the approved Board Matter and other related issues, e.g. the Memorandum of Understanding (MOU) between the FOLs and the Fairfax County Public Library Board of Trustees and the intent of the Federation of Citizens Association audit request. On Wednesday (21 st January 2015) we and the Deputy County Executive with management oversight of the FCPL met with a representative from the Fairfax Library Advocates (Mr. Dennis Hays), FOL members, and their pro bono attorney. The purpose of the meeting was to answer questions regarding how to complete the CSAs. On Thursday (29 th January 2015) we reconfirmed with the Library Administration their need to complete the CSA. The Library Director agreed to have it completed by the close of business (COB) Friday (16 th February 2015). The Board Matter remains approved. A review and analysis of the CSA responses will be performed upon receipt. An update will be provided at the next scheduled Audit Committee Meeting. Overlapping/Duplicative County Functions Background The Audit Committee requested an informational review of similar functions and activities that are performed by two or more county departments or agencies. To facilitate this review, we analyzed the fiscal year (FY) 2015 Adopted Budget Fund Statements and surveyed department and agency heads. The surveys were used to identify functions performed by Management Analysts and Business Analysts. This study will be performed in two phases. Phase 1 was a review of authorized funded positions that perform similar functions to those of the central service departments. Phase 2 of the study will be a review of the FY 2015 Adopted Budget Fund Statements and surveys completed by the department and agency heads for the identification of duplications in service delivery to constituents. Three meetings were held with officials from the Department of Management and Budget, Department of Human Resources, and a representative from the County Executive s Office to discuss this approach. We also met with selected department heads to obtain background on the administrative functions performed by their staff. Page 2

10 The county has established several central services departments and agencies. This phase of the review focused on the Department of Human Resources, Department of Purchasing and Supply Management, Office of Public Affairs, and the Department of Information Technology. Status as of February 2015 We compiled and summarized information from the FY 2015 Adopted Budget Fund Statements and survey responses from the department and agency heads. The purpose of this analysis was to identify authorized funded positions with functions similar to those of the central service departments but are located in other departments and agencies. The surveys for Phases 1 and 2 are presented as an attachment to this memo. An update will be provided at the next scheduled Audit Committee Meeting. IT Disaster Recovery Plan Background The Audit Committee requested a follow-up to our May 2013 report on the Department of Information Technology s (DIT) IT Disaster Recovery Plan. At the time of our May 2013 review, DIT provided a document titled COOP & DR Plan which described DIT s disaster recovery strategies for the Mainframe and Enterprise (open) systems hosted in the County s main data center. Although the COOP & DR Plan contained many of the recommended elements of an information technology disaster recovery plan, a complete and consolidated approach for the open systems environment, including the County s enterprise resource planning system (FOCUS), was not in-place. 1 At the time of our May 2013 review, backup tapes were the primary disaster recovery method for the County s mission-critical systems (including FOCUS). According to the National Institute of Standards and Technology (NIST), real-time replication (mirroring) is the preferred disaster recovery method for mission-critical systems. 2 DIT established limited replication and failover capability for a portion of the enterprise data center system at the Public Safety and Transportation Operations Center (PSTOC). However, PSTOC is located approximately one mile from the Government Center and lacks the equipment and capacity necessary to provide effective failover capability for all of the County s mission-critical systems. 1 FOCUS (Fairfax County Unified System) is the County s enterprise resource planning system that included financial, payroll, and human resources. The County implemented FOCUS in November The costs associated with implementing FOCUS totaled at least $60 million, not including staff time and other ongoing internal costs. At the time of our May 2013 review, a specific disaster recovery plan for FOCUS was not yet finalized. 2 National Institute of Standards and Technology (NIST), Special Publication , a guideline for Federal agencies. Page 3

11 Status as of February 2015 In December 2014, DIT provided us with an updated copy of the COOP & DR Plan. The updated COOP & DR Plan reflects DIT s transition to a high availability disaster recovery environment for the County s mission-critical enterprise systems. DIT contracted with a commercial co-location data center to provide replicated information technology disaster recovery services at an alternate site located approximately 60 miles from the Government Center, which is outside of the D.C. region blast zone. We toured the facility in January 2015 with DIT managers and staff. The facility is categorized as a Tier 3, the second highest ranking for data centers as established by the data center industry. Tier 3 data centers are typically used by large corporations and Federal agencies that require a high-availability environment for their information technology systems and infrastructure (e.g. high capacity/high speed data lines, back-up power, fire suppression, temperature regulation, and building security). The new co-location data center is high-availability environment and is designed to provide continuity of computer center operations. The following table provides a summary of DIT s disaster recovery planning strategies for the Mainframe and Enterprise (open) systems. 3 3 Agency-controlled applications were not included in the scope of our review. Page 4

12 Fairfax County Department of Information Technology Disaster Recovery Plan Summary As of February 2015 Systems/Applications Mainframe Personal and Property Tax Budget System (Fairfax County Public Schools) Enterprise Systems (FOCUS) FOCUS Financial System Module (FILO) FOCUS Payroll/Human Resources Module (HRM) Enterprise Systems (Non-FOCUS) Various systems and applications: LDSnet, FIDO, PARKNet, Yardi (Housing), Outlook ( ), etc. FOCUS support systems Backup Method/Recovery Strategy Disaster Recovery methodology Backup Tapes: Available off-site recovery facility. Legacy disaster recovery site. High Availability Environment: Real-time replication/mirroring at an off-site facility. 3rd Party Tier 3 Data Center. High Availability Environment: Real-time replication/mirroring at an off-site facility. 3rd Party Tier 3 Data Center. Contract Number # # # Disaster Recovery Plan Testing DIT s stated goal at least once every18 months. The last test was conducted in September Phase 1: First test - February/March 2015 Source: Department of Information Technology (DIT) COOP & DR Plan dated November 14, Phase 2: First test - April/May 2015 The transition to a high availability disaster recovery environment is divided into two core phases: Phase 1 will include FOCUS and the FOCUS support systems and Phase 2 will include non-focus enterprise applications. DIT s COOP & DR plan also includes two additional potential phases (Phase 3 and Phase 4) for future fiscal years. DIT continues to contract with IBM to provide disaster recovery services for systems and applications that are hosted on the Mainframe. According to the COOP & DR Plan, testing for Phase 1 and Phase 2 is scheduled through May According to DIT officials, FOCUS disaster recovery implementation will be finalized after Phase 1 and Phase 2 testing is complete. DIT s disaster recovery plan for the Mainframe indicates that testing will continue to be conducted at least once every 18 months, until the mainframe is retired. Page 5

13 Office of Public Private Partnerships Background The Audit Committee requested information regarding the performance of the Office of Public Private Partnerships (OP3). OP3 s mission is to facilitate public private partnerships to encourage civic involvement, corporate responsibility, and community engagement to address Fairfax County priorities and community needs. OP3 s goal is to serve as a point of contact, providing ideas and connections for businesses, nonprofit organizations and educational institutions, County employees, and others that want to partner to contribute time and resources in Fairfax County. OP3 is part of the County Executive s Office and is funded by the General Fund. The following table shows OP3 s actual General Fund expenditures and staffing levels for fiscal years 2010 through Fairfax County Office of Public Private Partnerships General Fund Expenditures and Staffing Levels Fiscal Years Fiscal Year Actual General Fund Expenditures 2014 (Revised Budget) $801,281 $761,488 $780,999 $747,997 $751,848 Staff Positions Source: Actual expenditures reported in the Fairfax County Adopted Budgets. OP3 Performance Measures OP3 reports seven performance measures in the County s budget and tracks five other indicators on their agency dashboard. These measures track the number of new partnerships established and contacts actively engaged to leverage resources each year, as well as metrics related to county employees use of volunteer leave (V-16), contacts with potential partners and customer survey results. A new measure in FY 2015 will report on the number of individuals registered in the county-wide Volunteer Management System (VMS). OP3 reported that it met or exceeded its performance measures for FY Page 6

14 OP3 provided the following performance measure results for FY 2014: OP3 Performance Measure Number of contacts with potential partners. Number of contacts actively engaged to leverage new resources per OP3 staff Number of new partnerships created that support county/community needs. Percent of key stakeholders that report that OP3 provides quality information and timely assistance. Number of hours contributed by county employees through volunteer leave program (V-16). Number of times employees used V- 16. New Measure for FY2015- Number of individuals registered in the countywide Volunteer Management System (VMS). New Measure for FY 2015-Number of request for assistance from OP3. Agency Dashboard - Number of visits to the OP3 Grants Research and Training Center (GRTC). Fiscal Year 2014 Result OP3 reported that it establishes 425 new contacts a year that learn more about Fairfax County and are introduced to ways to give and get involved. In FY 2014, OP3 reported that it identified 545 new contacts. Through these contacts, volunteers, financial contributions, pro bono expertise and in-kind resources are secured that benefit county programs, nonprofit organizations, and those they serve. In FY 2014, OP3 reported that staff members exceeded the individual goal of 48, with an average of 68 actively engaged contacts. In FY 2014, OP3 reported that it facilitated 6 new partnerships, and helped to sustain 10 ongoing partnerships. OP3 partnership developers help sustain and grow partnerships by facilitating ongoing communication, introducing new partners, securing resources, evaluating and reporting outcomes, and problem solving. In FY 2014, 96% of key stakeholders reported that OP3 provides quality information and timely assistance. OP3 conducts a customer survey once every three years. Feedback is also collected after presentations made through the Grants Center, to county agency partnership and volunteer liaisons, and through chambers of commerce. OP3 promotes the V-16 leave policy and seasonal ways to volunteer through articles in Newslink, presentations to county agencies, and in response to requests. In FY 2014, county employees donated 23,872 hours through V- 16. In FY 2014, county employees used volunteer leave 4,351 times. Working with the Department of Information Technology (DIT) and county agency volunteer managers, OP3 launched VMS in 2014 to recruit, track, and manage volunteer activities county-wide. Since the launch in April 2014, 7,214 volunteers have registered. According to OP3, VMS fosters coordination among volunteer managers, increases the number of registered volunteers and the ways and hours they contribute, and improves reporting of the value of volunteer contributions to the county. OP3 receives requests for assistance from county agencies and board members, businesses, nonprofits, and community organizations for technical assistance on partnership development, sustainability planning, opportunities to contribute and cross-sector linkages. In FY 2014, OP3 reported that staff responded to 89 requests for assistance. The GRTC provides training and technical assistance to county agencies and nonprofit organizations on finding and applying for grants, board and proposal development, and reporting outcomes. In FY 2014, there were a total of 270 visits to the GRTC by nonprofits and county agency staff and the GRTC delivered six training workshops. Source: Information provided by the Office of Public Private Partnerships (OP3) and Fairfax County Adopted Budgets. Page 7

15 Comparative Information We surveyed other local jurisdictions to determine if they have established comparable offices to OP3. Only one of the four local jurisdictions that we contacted has a similar office (Montgomery County - Office of Community Partnerships). The Fairfax County Public Schools (FCPS) - Office of Business and Community Partnerships performs similar functions to those of OP3 and often collaborates with OP3 on various partnerships and projects. Local Jurisdiction Fairfax County and Fairfax County Public Schools Montgomery County Loudoun County Prince William County OP3 or Comparable Office Yes Yes No No City of Alexandria Source: Interviews and correspondence with officials from the local jurisdictions noted in the table. No The following table provides comparative information on the organizational structure, annual budget, staffing level, and performance measures for OP3, the Fairfax County Public Schools - Office of Business and Community Partnerships, and the Montgomery County Office of Community Partnerships. The three comparable offices are primarily government supported with annual budgets that range from $197,768 (Fairfax County Public Schools) to over $1 million (Montgomery County). Page 8

16 Fairfax County Fairfax County Public Schools Montgomery County Name Office of Public Private Partnerships (OP3) Office of Business and Community Partnerships Office of Community Partnerships (OCP) Established Organizational Structure Government (Local) Government (Schools) Government (Local) Reports To Deputy County Executive (County Executive's Office) Executive Director II (Superintendent's Office) County Executive Funding Source Government Supported (General Fund) Government Supported (Schools) Private (ExxonMobil) Government Supported (private funding for events) Annual Budget (FY 2015) $748,535 $197,768 $1 million for OCP and Volunteer Center; $314,000 for Gilchrist Center Number of Staff 8 1 Regular Staff 1 Hourly Employee (Pay Band 5) 1 Specialist (Privately Funded $70K by Exon Mobile) 12 Mission/Goal OP3 facilitates public private partnerships to encourage civic involvement, corporate responsibility and community engagement to address Fairfax County priorities and community needs. OP3 serves as a point of contact, providing ideas and connections for businesses, nonprofit organizations and educational institutions, County employees, and others that want to partner to contribute time and resources in Fairfax County. By promoting corporate responsibility and opportunities to partner with county agencies and nonprofit organizations, OP3 increases awareness of community needs, facilitates collaboration on community outreach, and leverages new resources for Fairfax County. Business and Community Partnerships (B&CP) oversees the recruitment and registration of partners who work with individual schools and the school division as a whole; manages the marketing, communications and events associated with partnerships; oversees the Expanding Visions partnerships; coordinates the efforts of the FCPS donations portal team and manages the other category in that portal. The office also serves as liaison to the Superintendent s Roundtable of Business and Community Leaders Luncheon Series; helps lead the Collect for Kids school supply effort; supports the merchant discount program Savings for Staff; leads communication for the biannual school construction bond referendum program; and serves as liaison to all area Chambers of Commerce and other business and community associations and groups. The mission of the Office of Community Partnerships (OCP) is to strengthen relationships between the Montgomery County government and the residents it serves, with special focus on underserved and emerging communities and our neighbors in need. The OCP serves as a bridge builder between the County government and community organizations serving the residents of Montgomery County, working across the barriers of race, ethnicity, income, and religion that too often diminish communities. OCP's mission is to carry out the County Executive's commitment to build a larger policy table with participation by a more diverse range and greater number of residents as we work to become America s most welcoming community. Performance Measures: 1 Number of contacts with potential partners. Establish and maintain collaborative partnerships to advance the mission and goals of FCPS assuring appropriate input and ongoing, two-way, strategic, and meaningful dialog between the district and its diverse stakeholders. 2 Number of hours contributed by County employees through Volunteer Leave (V-16) Efficiency Measure: Number of business and community partnerships for each school and divisionwide. Overall satisfaction with the Office of Community Partnerships provision of information, access and support to ethnic, multilingual and multicultural communities, nonprofits, and faith-based organizations (scale of 1-5) Gilchrist Center: Overall participant satisfaction with their experience at the Gilchrist Center (scale of 1-5) 3 Number of contacts with potential partners. N/A Gilchrist Center: Overall satisfaction of participants in Gilchrist classes (scale of 1-5) 4 Number of new partnerships created that support County/community needs N/A N/A 5 Number of contacts actively engaged to leverage new resources per OP3 staff. N/A N/A 6 Number of individuals registered in the county-wide Volunteer Management System (VMS) N/A N/A 7 Number of requests for assistance from OP3 N/A N/A 8 Number of times employees used V-16. N/A N/A 9 Percent of key stakeholders report that OP3 provides quality information and timely assistance. N/A N/A Other Pertinent Information Since it began in 2008, OP 3 has facilitated more than FCPS schools out of 196 (or 75.5 percent) have a N/A public private partnerships leveraging new resources, partnership with one or more businesses or community improved efficiencies, and greater collaboration in the organizations. 10 departments or offices have a arts, education, environment, human services, and public partnership with one or more businesses or community safety. OP 3 training and tools offered by the Grants organizations. During the monitoring report timeframe Research and Training Center, through 8 Chambers of the Office of Business and Community Partnerships Commerce, and in the County Partnership Liaison and established 29 new official partnerships and 2 Foundation Directors Network, has developed the reaffirmed official partnerships, developed or capacity of county agencies, nonprofit organizations, supported 6 partnerships with direct monetary and foundations to work together and to leverage new donations, managed 5 sponsorships, and supported resources. OP donation submissions totaling 2,749 items via the has received national and local awards FCPS Donations Portal. and recognition for innovative approaches to developing and sustaining effective cross-sector partnerships. Page 9

17 Dulles Metrorail Project Status Background The Dulles Metrorail Project is a 23-mile extension of the Metrorail system through the Dulles Corridor. The project is divided into two phases. Phase 1 of the project includes five new stations as well as improvements to the West Falls Church rail yard. Phase 2 of the project will include six new stations as well as a maintenance and storage facility at Dulles International Airport. The Metropolitan Washington Airports Authority (MWAA) is responsible for managing the Dulles Metrorail Project through the substantial completion of each phase, at which point the project will be turned over to the Washington Metropolitan Area Transit Authority (WMATA). The total combined budget for Phase 1 and Phase 2 is currently $6.47 billion ($3.34 billion for Phase 1 and $3.13 billion for Phase 2). Funding for the project is provided through a combination of federal, state, and local sources. Fairfax County s baseline funding obligation for the project is 16.1% of the actual project construction costs, notwithstanding construction costs related to parking garages. Fairfax County s project funding obligation does not include MWAA s finance costs. Project Budget As shown in the table below, total baseline construction expenditures for Phase 1 were $2.7 billion as of December 2014, which represents 94% of the total $2.9 billion Phase 1 project construction budget. Total Phase 1 expenditures (including finance costs incurred by MWAA) were $2.9 billion as of December 2014, which represents 88% of the total $3.3 billion budget. 4-5 Phase 1 of the Project is currently in closeout status and some activities are continuing past the opening date (July 26, 2014). Final closeout for Phase 1 will continue through PHASE 1 Dulles Metrorail Project Phase 1 Budget and Actual Expenditures As of December 2014 Budget (a) Expenditures/Savings (b) Remaining (a) - (b) % of Budget Spent (b) / (a) Baseline Construction 2,443,450,279 2,283,737, ,712,500 93% Contingency 462,245, ,844,419 10,400,595 98% Total Phase 1 Project Construction $ 2,905,695,293 $ 2,735,582,198 $ 170,113,095 94% Project Finance Costs (MWAA) 438,184, ,614, ,570,005 45% Total Phase 1 $ 3,343,879,864 $ 2,932,196,764 $ 411,683,100 88% Source: Phase 1 budget and expenditures reported in MWAA s Monthly Progress Reports for December 2014 (issued in February 2015) and the Monthly Cost and Schedule Update as of December 31, 2014, presented to MWAA s Board of Directors on February 18, Fairfax County separately funded the costs associated with the Wiehle Avenue parking garage. 5 The total $462 million contingency budget for Phase 1 includes a $150 million budget increase, which was approved by the MWAA Board in June Page 10

18 MWAA is currently reporting that the projected final cost for Phase 1 is expected to remain within the total budget. However, the Federal Transit Administration s Project Management Oversight Contractor (PMOC) has noted that there are a number of construction change orders that remain under evaluation by MWAA and a large number of potential change orders that are pending evaluation. The PMOC recommended that MWAA evaluate the sufficiency of the remaining Phase 1 contingency in light of the potential change orders that are pending evaluation. As shown in the table below, total project construction expenditures for Phase 2 were $380 million as of December 2014, which represents 14% of the total $2.8 billion Phase 2 project construction budget. 6 PHASE 2 Dulles Metrorail Project Phase 2 Budget and Actual Expenditures As of December 2014 Budget (a) Expenditures (b) Remaining (a) - (b) % of Budget Spent (b) / (a) Baseline Construction 2,226,784, ,313,681 1,862,470,704 16% Contingency 551,451,179 16,036, ,414,525 3% Total Phase 2 Project Construction $ 2,778,235,564 $ 380,350,335 $ 2,397,885,229 14% Parking Garages (Fairfax and Loudoun) 348,215,194 See footnote. See footnote. See footnote. Total Phase 2 $ 3,126,450,758 $ 380,350,335 $ 2,746,100,423 12% Source: Phase 2 budget and expenditures reported in MWAA s Monthly Progress Report for December 2014 (issued in February 2015) and the Monthly Cost and Schedule Update as of December 31, presented to MWAA s Board of Directors on February 18, Project Construction Although Phase 1 of the Project opened to the public in July 2014, the Phase 1 prime contractor (Dulles Transit Partners) continues to work on a punch list of required tasks that were not completed during the primary construction phase of the Project. MWAA is currently working with the prime contractor and other stakeholders to closeout Phase 1 of the project. The prime contractor for Phase 2 is Capital Rail Constructors (CRC). Construction on the foundations, columns, and pier caps for the Phase 2 aerial guideway continued at Dulles International Airport and utility relocation is underway. 6 Fairfax and Loudoun counties are responsible for designing and building parking garages with funding sources that are outside of the Project funding agreement. The $348 million budget for the Phase 2 parking garages includes $315 million for design and construction and a $33 million contingency. Fairfax County is responsible for two parking garages: one at the Herndon Station and one at the Innovation Center Station. The Fairfax County Department of Public Works and Environmental Services is the lead county agency for the design and construction of both garages. Loudoun County is responsible for three parking garages: one at the Route 606 Station and two at the Route 772 Station. In December 2014, Fairfax and Loudoun counties finalized the agreements for federal Transportation Infrastructure and Finance Innovation Act (TIFIA) loans to help offset their respective project costs (costs associated with the parking garages will be funded through other sources). Fairfax County received a $403 million TIFIA loan and Loudoun County received a $193 million TIFIA loan. Page 11

19 Project Schedule Two critical dates for the Project are the Scheduled Substantial Completion Date (SSCD) and Revenue Operations Date (ROD). The substantial completion date represents the point at which MWAA is ready to turn over the project to WMATA. The Revenue Operations Date is the point at which the Dulles Metrorail is ready for passenger service and is open to the public. Phase 1 opened to the public on July 26, 2014, seven months after the original target date for Revenue Operations (December 4, 2013). According to the contract, the scheduled substantial completion date for Phase 2 is expected to occur in However, subsequent contract modifications and new regulations related to stormwater management will most likely result in changes to the project schedule. Artificial Turf Fields Status The Audit Committee requested a comparative review of the per field cost of artificial turf fields procured by the Fairfax County Park Authority and the Fairfax County Public Schools. The Fairfax County Park Authority provided cost information for their respective artificial turf fields within the requested timeframe. We received cost information from the Fairfax County Public Schools after the requested timeframe. As a result, we did not have adequate time to analyze and verify the information provided. We will report the results of our review at the next scheduled Audit Committee meeting. Capital Construction Project Costs Status The Audit Committee requested general information regarding capital construction project costs as well as best practices in capital construction cost mitigation. The Audit Committee expressed a specific interest in information related to the cost per square foot for selected capital renovation projects managed by the Fairfax County Department of Public Works and Environmental Services (DPWES) and the Fairfax County Public Schools (FCPS). The DPWES Capital Facilities business area is responsible for managing capital construction projects for the majority of county-owned facilities. The FCPS Office of Design and Construction is responsible for managing capital construction projects for school-owned facilities. We will report the results of our review at the next scheduled Audit Committee meeting. Page 12

20 ATTACHMENT PHASE 1 SURVEY [January 2015] From: Shelton, Jim Sent: Tuesday, January 13, :56 AM To: FAIRFAX COUNTY-SMT Subject: Administrative Services Questionnaire / Document Attached for Ease of Completion Administrative Services Questionnaire As part of a study which has been approved by the Board of Supervisors included in the Audit Committee s Work Plan, I am requesting the following information to complete the review. Please provide descriptions and counts of the positions in the box provided below for your agencies or departments. Agency / Department Name: Positions Counts Functions Performed Human Resources Manager or Analyst Finance & Accounting Position Public Information Officer Information Technology Staff Management Analyst Business Analyst Budget Analyst Procurement Staff Please respond to this query by close of business (COB) Friday (23 rd January 2015). If you have any questions or need further assistance please contact me, my information is provided below. Thank you for your assistance with this process. Best regards, Jim L. Shelton, MBA, CRP Auditor of the Board Jim.shelton@fairfaxcounty.gov Direct: Mobile: Page 13

21 PHASE 2 SURVEY [March 2015] County & Constituent Services Questionnaire As part of a study which has been approved by the Board of Supervisors included in the Audit Committee s Work Plan, I am requesting the following information to complete the review. Please provide list and describe of the Top 5 Internal County Services Provided If any, Top 5 Constituent Services Provided If any, and the Appropriated Funding Source for delivering these services in the box provided below for your department/agency. Department/Agency Name: Please List Top 5 Internal County Services Provided If Any: If None State N/A In 1 st Row. Please Provide Funding Source: e.g. General Fund Budget Appropriation, State Funding, Federal Funding, any Combination, or etc. Please List Top 5 Constituent Services Provided If Any: If None State N/A In 1 st Row. Please Provide Funding Source: e.g. General Fund Budget Appropriation, State Funding, Federal Funding, any Combination, or etc. Please respond to this query by close of business (COB) Tuesday (24 th March 2015). If you have any questions or need further assistance please contact me, my information is provided below. Page 14

22 Practice Advisory : Organizational Independence Primary Related Standard 1110 Organizational Independence The chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The chief audit executive must confirm to the board, at least annually, the organizational independence of the internal audit activity. Interpretation: Organizational independence is effectively achieved when the chief audit executive reports functionally to the board. Examples of functional reporting to the board involve the board: Approving the internal audit charter; Approving the risk-based internal audit plan; Approving the internal audit budget and resource plan; Receiving communications from the chief audit executive on the internal audit activity s performance relative to its plan and other matters; Approving decisions regarding the appointment and removal of the chief audit executive; Approving the remuneration of the chief audit executive; and Making appropriate inquiries of management and the chief audit executive to determine whether there are inappropriate scope or resource limitations. 1. Support from senior management and the board assists the internal audit activity in gaining the cooperation of engagement clients and performing their work free from interference. 2. The chief audit executive (CAE), reporting functionally to the board and administratively to the organization s chief executive officer, facilitates organizational independence. At a minimum the CAE needs to report to an individual in the organization with sufficient authority to promote independence and to ensure broad audit coverage, adequate consideration of engagement communications, and appropriate action on engagement recommendations. 3. Functional reporting to the board typically involves the board: Approving the internal audit activity s overall charter. Approving the internal audit risk assessment and related audit plan. Receiving communications from the CAE on the results of the internal audit activities or other matters that the CAE determines are necessary, including private meetings with the CAE without management present, as well as annual confirmation of the internal audit activity s organizational independence. Approving all decisions regarding the performance evaluation, appointment, or removal of the CAE. Approving the annual compensation and salary adjustment of the CAE. Making appropriate inquiries of management and the CAE to determine whether there is audit scope or budgetary limitations that impede the ability of the internal audit activity to execute its responsibilities. Copyright 2013 by The Institute of Internal Auditors Inc. (IIA)

23 4. Administrative reporting is the reporting relationship within the organization s management structure that facilitates the day-to-day operations of the internal audit activity. Administrative reporting typically includes: Budgeting and management accounting. Human resource administration, including personnel evaluations and compensation. Internal communications and information flows. Administration of the internal audit activity s policies and procedures. Issued: January 2009 *** Copyright 2013 by The Institute of Internal Auditors Inc. (IIA)

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