FROM: Amy McInerny, Chief Financial Officer
SUBJECT: Internal Audit Workplan
RECOMMENDATION:
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Recommend that the Board approve and adopt the Internal Audit Workplan for the fiscal year ending June 30, 2025.
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BACKGROUND:
The existing Internal Audit Charter requires that the Audit Committee (Committee) review and the Board of Retirement (Board) annually approve the workplan and its progress for the internal audit function at SBCERA.
Based on the continued assessed risk and SBCERA process changes and improvements, staff proposes two areas as the workplan for the fiscal year ending June 30, 2024.
Both recommended areas are performed by SBCERA staff; therefore, staff recommends that both areas 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 Audit Committee for selection.
Retiree Benefit Payments (and Refunds) - In July 2024, SBCERA revised the process by which continuing benefits and refunds are issued. The counseling and document collection are still performed by the Member Services and Disability Unit teams. New to the process, the Fiscal Services team sets up and reviews all new benefits. A new payment process and schedule remits payments every two weeks to incorporate all refunds and newly set up benefit payments. A new payment process is also done once per month to pay all continuing benefits. The new process was designed to increase efficiency, reduce the time between retirement and first payment date, and increase internal control. An AUP engagement should be performed to ensure that the process is well designed, especially as it pertains to internal control, and is operating as designed.
Investment Program - SBCERA Investment Policy No. 001 (Investment Plan, Policy and Guidelines) is approved by the Board with the purpose of establishing sufficient flexibility in the management oversight process while setting forth reasonable parameters to ensure prudence and care in the execution of the investment program. As part of this policy, the Board delegates specific authority to Staff to assist the Investment Committee and Board in implementing the investment program. An AUP engagement should be performed to ensure that the policy is being adhered to by Staff, assets are adequately safeguarded, and the Investment Program is operating as designed.
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.