FROM: Amy McInerny, Chief Financial Officer
SUBJECT: Internal Audit Workplan
RECOMMENDATION:
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Approve and adopt the Internal Audit Workplan for the fiscal year ending June 30, 2027.
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BACKGROUND:
The existing Internal Audit Charter requires that the Audit Committee review and the Board of Retirement (Board) annually approve the Internal Audit Workplan (workplan) and its progress for the internal audit function at SBCERA.
Based on the continued assessed risk and SBCERA process changes and improvements, staff proposed three areas as the workplan for the fiscal year ending June 30, 2027. After discussion at the Audit Committee, the Committee recommended including the following two areas in the workplan and deferring one to a future year.
All recommended areas are performed by SBCERA staff; therefore, staff recommend they be addressed through Agreed Upon Procedures (AUP) performed by independent, external auditing firms. SBCERA will issue an RFP for each area and bring recommendations to the Board for selection.
Cash Management - This area was tested as part of the workplan in 2021 and there were no findings identified. New General Ledger software was implemented after the engagement; the area is considered high-risk and is performed by staff. For these reasons, an AUP engagement should be performed to ensure the process is well designed, especially as it pertains to internal control, and is operating as designed.
Wire Transfer Process - This area was tested as part of the Internal Audit Workplan in 2021 and no findings were identified. Wire transfers are utilized to fund capital calls, pay management fees, transfer funds for benefit payment, and SBCERA payroll. The area is considered medium risk but is performed by SBCERA staff across two departments. For these reasons, it is prudent to include this area. An AUP engagement should be performed to ensure the process is operating as designed.
COMMITTEE REVIEW:
This item was reviewed by the Audit Committee at its June 18, 2026 meeting, and recommends Board approval with a 4-0 vote, as amended. The committee recommended the Board approve Cash Management and Wire Transfer Process as part of the workplan and to defer the Death Benefit Process to a future year.
BUDGET IMPACT:
Costs for this item are included in the current year administrative budget.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Amy McInerny
ATTACHMENTS:
None.