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Compliance Matters and Other Topics

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1 Compliance Matters and Other Topics
School Board Audit Committee Training Module 8 Compliance Matters and Other Topics

2 Session objectives After completing this session you will:
Understand the Audit Committee’s duties related to compliance matters Understand timelines and topics for audit committee meetings Have knowledge of the recommendations from the Operational Review Process Understand recommendations from the Interim Financial Reporting Committee (IFRC) Know how to stay up to date

3 Audit Committee’s Duties Related to Compliance Matters [ON Regulation 361/10 9(5)]
To review the effectiveness of the School Board’s system for monitoring compliance with legislative requirements and with the Board’s policies and procedures and follow up on any non-compliance To review any significant findings of regulatory entities, and any observations of the internal or external auditor related to those findings To review the School Board’s processes for communicating any applicable codes of conduct and for administering those codes of conduct To obtain regular updates from management and legal counsel regarding compliance matters To obtain confirmation from the Director of Education and supervisory officers that all statutory requirements have been met

4 Sign-off on Compliance Matters
A best practice followed by many organizations is a management sign-off indicating that the organization is in compliance with specific regulatory/legislative requirements For a School Board, this sign-off could confirm the School Board’s compliance within areas such as: A compliance sign-off could be provided to the Audit Committee on an agreed upon basis (i.e. semi annual) Other matters communicated could include areas such as material litigations not fully insured and other financial risk areas. Fulfillment of all wage payments, including vacation pay and any severance Remittance of all required employee deductions Remittance of all required HST amounts Compliance with pay equity legislation Compliance with relevant sections of the Education Act (specify key requirements)

5 Audit Committee should be established
Suggested 2011 audit committee time-table/agenda items1 Review year end external audit plan and scope Discuss fraud risks with external auditor Conduct a self-assessment of the Audit Committee’s performance Review the annual report from internal audit Audit Committee should be established March 31 November 30 January 31 1st Meeting of the new Audit Committee shall be held Elect a chair and secretary Prepare a work plan 2 Review and approve the internal audit plan September 30 Review draft audited financial statements with management and external auditors Review a summary of internal audit findings, make recommendations to address any concerns Evaluate the effectiveness of internal audit Report to the Board of Trustees on the performance of the Audit Committee 1 See revisions to suggested time-table /agenda depending on date of completion of Risk Assessment (Tool kit) 2 Work plan should address compliance oversight including how and when monitored

6 Operational Review of District School Boards
Strengthening Management Capacity Goals: Ministry Operational Review of all Ontario District School Boards over a 3 Year period will: Increase public confidence and support for the public education system by: Strengthening management capacity in business processes across the sector through recommending improvements in non-academic operations; Highlighting to the sector and the school board communities existing successful business practices currently being utilized by boards; and Leveraging best practices across the sector. Provide support and assistance to ensure that all boards are financially healthy, well managed and positioned to direct optimum level of resources to support student success. Provide the Ministry with input into DSB capacity/capabilities for consideration in the on- going development of policy.

7 Operational Review of District School Boards
Strengthening Management Capacity Focus of Operational Reviews: Governance and School Board Administration Human Resource Management and School Staffing/Allocation: Organization Human Resource Management School Staffing / Allocation Financial Management: Budget Planning and Development; Financial Reporting & Analysis Treasury Management Non-Grant revenue Management Procurement. School Operations and Facilities Management: Custodial and Maintenance Operations Energy Management Health, Safety and Security Capital Plans, Policies and Procedures Construction Management

8 Operational Review Approach
2 .Analyze Board Background Data 5. Issue Data Request to DSB 6. Gather & Submit Required Data 1. Develop Board background Profile 7. Analyze Data & Submit to Database 8. Conduct Fieldwork with DSB 10. Assist & Participate in Fieldwork 11. Develop Draft Report 12. Review Draft Report 13. Review Draft Report 14. Issue Final Report 15. Accept & Approve Final Report 16. Communicate Final Report Ministry Operational Review Team DSB 3. Plan Fieldwork & Communicate to DSB 4. Commit to Fieldwork Plan Pre-Fieldwork Fieldwork Reporting 9. Participate in Fieldwork Follow-up 17. Follow-up Review

9 Formal Recommendations from Operational Reviews, to date, relate to the following areas:
Establishment of strategic direction and development and reporting of annual board improvement plans Attendance management Interim financial reporting Audit function Participation in buying consortia Multi-year maintenance and renewal plan Energy management Clear delineation between the roles and responsibilities of the School Board’s Trustees and Director of Education Formal succession plans for senior management and implementation of supporting initiatives Performance management for all employee groups Compliance audit of benefit carriers Procurement policies and procedures Source: Summary Report of Operational Reviews

10 Interim Financial Reporting
An Interim Financial Reporting Committee (IFRC) was established as a result of one of the improvement opportunities identified in the Operational Reviews. Key recommendations of the IFRC were as follows: Establish a reporting cycle at the beginning of the year, sharing the proposed cycle with Trustees in September; Provide a minimum of 3 in-year reports in a consistent format with each report containing the same performance indicators; Include non-financial performance indicators in the report (i.e. enrolment and staffing); and Explain key variances and form a conclusion Source: 2009: SB38

11 Interim Financial Reporting
The IFRC recommended that the interim financial reports align with reporting dates of existing Ministry reports, based on October 31, March 31 and a discretionary month-end close date between June 30 and August 31 Supporting revenue and expense schedules would also be included in the reports, providing a more detailed break-down with two key assessments: Budget assessment that compares the year-end forecast to the budget, providing an explanation for all key variances; and Risk assessment that compares prior year results to the current year actual. Boards are encouraged, but not mandated to adopt these recommendations There is a growing trend in government and government organizations to prepare quarterly financial reporting for stakeholders Source: 2009: SB38

12 Exercise Discuss the benefits and challenges of interim financial reporting amongst your table groups

13 How to Stay Up To Date

14 How to Stay Up To Date

15 How to Stay Up To Date

16 How to Stay Up To Date

17 How to Stay Up To Date The Ministry of Education website is a good source for information - The Institute of Internal Auditors is a good source of information relating to Internal Audit – The CICA website is a good source for new developments relating to Audit Committees - The PSAB website is a good source for upcoming changes in accounting standards -

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