TEACHERS’ RETIREMENT BOARD
AUDITS AND RISK MANAGEMENT COMMITTEE
Item Number:
7
SUBJECT: Fiscal Year 2017-18 Work Plan Input
ATTACHMENT(S): 1
CONSENT:
ACTION:
INFORMATION:
DATE OF MEETING: April 5, 2017/ 10 mins
X
PRESENTER(S): Larry Jensen, Robin Madsen, & Brian Bartow
PURPOSE
The purpose of this item is to solicit input from the committee for its Fiscal Year (FY) 2017-18
work plan, with the final work plan presented for approval at the June board meeting.
COMMITTEE RESPONSIBILITIES
The Audits and Risk Management (ARM) Committee performs a vital role in the organization by
assisting the Teachers’ Retirement Board to fulfill its fiduciary oversight responsibilities. As
outlined in the ARM Committee Charter, the committee has the following key responsibilities:
•
Oversee the reporting and integrity of all financial information reporting.
•
Review and recommend to the board changes to enterprise-wide risk management processes,
governance, and related policies or infrastructure.
•
Ensure management maintains an effective system of internal controls when necessary and
provide the mechanisms for periodic assessment of the system of internal controls.
•
Oversee the assessment of internal administrative and accounting controls by both the external
independent financial statement auditor and internal auditors.
•
Oversee the work of Audit Services.
•
Oversee the design and implementation of the Enterprise Compliance Program.
•
Oversee the work of the independent certified public accounting firm employed by
CalSTRS to audit the financial statements.
•
Serve as the primary liaison and provide the appropriate forum for handling all matters related
to audits, examinations, investigations, or inquiries of the California State Auditor and other
appropriate State or Federal agencies.
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Audit and Risk Management Committee – Item 7
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DISCUSSION
Based upon the current ARM Committee Charter and a review of previous ARM Committee work
plans, staff recommends including the following items in the FY 2017-18 proposed work plan:
July 2017
There is no committee meeting scheduled in July 2017 as the committee transitions to the
proposed schedule. If the proposed schedule is approved, the committee will hold annual
meetings in July, November, February, and May.
November 2017
•
Presentation and Adoption of the External Auditor’s Report on the June 30, 2017
Financial Statements, Report on Internal Control over Financial Statements, and the
External Financial Auditors Report to the ARM Committee (three items)
Purpose: This item provides an in depth discussion of the results of the external audit of
CalSTRS’ June 30, 2017 financial statements. It assists the committee in fulfilling its oversight
of CalSTRS management’s responsibilities for internal control and financial reporting. It also
assists the committee in its oversight of the external auditors’ work quality, independence, and
performance.
Item Type: Action – In accordance with the ARM Committee Charter, this item requires the
committee to adopt the external financial auditor’s reports. [Estimated 1.5 hours.]
Proposed Meeting: November 2017
•
Audit Services Annual Risk Assessment
Purpose: This item presents for discussion the methodology and results of the Audit Services
annual risk assessment. The risk assessment process allows Audit Services to systematically
rank internal CalSTRS business operations and employers based upon potential risks and
utilize the results in the development/updating of the annual Audit Services Audit Plan.
Item Type: Information – This item assists the committee in its oversight of Audit Services by
considering Audit Services’ conformance with International Standards for the Professional
Practice of Internal Auditing (IIA Standards), which require the development of a risk based
audit plan, and evaluates how effectively Audit Services allocates resources to value-added
audit activities that monitor the highest risks. [Estimated 15 min.]
Proposed Meeting: November 2017
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Audit and Risk Management Committee – Item 7
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•
Audit Plan Results for FY 2016-17
Purpose: This item provides the committee an update on the FY 2016-17 Audit Plan.
Item Type: Information – This item assists the committee in its oversight of the work of Audit
Services. In addition, it assists the committee in its oversight of CalSTRS systems of internal
control and the accuracy of employer reporting. [Estimated 15 min.]
Proposed Meetings: November 2017
•
2018 Audit Plan
Purpose: This item provides discussion and review of Audit Services’ proposed 2018 Audit
Plan (January through December 2018) for internal and employer audits. The audit plan is
based upon a risk assessment conducted by Audit Services.
Item Type: Information – This item assists the committee in its oversight of the work of Audit
Services. In addition, it assists the committee in its oversight of CalSTRS systems of internal
control and the accuracy of employer reporting. [Estimated 15 min.]
Proposed Meeting: November 2017
•
Progress on Implementation of the Enterprise Compliance Program
Purpose: This item provides for discussion and input on the progress towards implementation
of the enterprise compliance program.
Item Type: Information – This item assists the committee in its oversight of the development
and implementation of the Enterprise Compliance Program. [Estimated 15 min.]
Proposed Meeting: November 2017
•
Code of Ethics and Business Conduct
Purpose: This item provides an overview of CalSTRS Code of Ethics and Business Conduct
policies and procedures.
Item Type: Action – This item seeks approval from the committee of the CalSTRS Code of
Ethics and Business Conduct. [Estimated 15 min.]
Proposed Meeting: November 2017
•
Compliance Governance Council
Purpose: This item provides for discussion and input for creating a Compliance Governance
Council along with review of a charter outlining proposed roles and responsibilities of the
Council.
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Audit and Risk Management Committee – Item 7
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Item Type: Information – This item assists the committee in its oversight of the development
and implementation of the Enterprise Compliance Program. [Estimated 15 min.]
Proposed Meeting: November 2017
February 2018
•
Committee Education
Purpose: This item provides the committee with continuing education on topics relevant to
financial reporting, compliance, audits, risk management, and CalSTRS programs.
Item Type: Information – This item assists the committee in fulfilling its fiduciary oversight
responsibilities. [Estimated 60 min.]
Proposed Meeting: February 2018
•
Progress on the External Auditor’s Report on Internal Control / Management Letter –
Corrective Action Plan Progress
Purpose: This item provides semi-annual updates on the actions taken by CalSTRS
management to address the internal control deficiencies noted by the independent financial
statement auditor’s Report on Internal Control and/or Management Letter for the FY 2016-17
financial statement audit.
Item Type: Consent/Information – This item assists the committee in its oversight of
CalSTRS systems of internal control and financial reporting by monitoring corrective actions
taken by CalSTRS management. [Estimated 15 min.]
Proposed Meeting: February 2018
•
FY 2018-19 Financial Statement Audit Plan
Purpose: This item presents for discussion the external auditor’s annual plan for auditing
CalSTRS financial statements. The external auditor is responsible for planning and performing
the audit to obtain reasonable assurance that the financial statements are fairly stated in all
material respects.
Item Type: Information – This item assists the committee in its oversight of the external audit
of the financial statements. [Estimated 30 min.]
Proposed Meeting: February 2018
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Audit and Risk Management Committee – Item 7
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•
2017 Interim Audit Plan Results
Purpose: This item provides the committee an update on the 2017 Interim Audit Plan.
Item Type: Information – This item assists the committee in its oversight of the work of Audit
Services. In addition, it assists the committee in its oversight of CalSTRS systems of internal
control and the accuracy of employer reporting. [Estimated 15 min.]
Proposed Meeting: February 2018
•
Compliance Training Plan
Purpose: This item provides an overview and discussion of an enterprise-wide training plan to
increase awareness of the importance of compliance and ethics while assisting members and
conducting business.
Item Type: Information – This item assists the committee in its oversight of the development
and implementation of the Enterprise Compliance Program. [Estimated 15 min.]
Proposed Meeting: November 2017
May 2018
•
Committee FY 2018-19 Work Plan
Purpose: This item solicits the committee’s input for its FY 2018-19 work plan activities that
will assist in fulfilling its Charter responsibilities.
Item Type: Information – This is an information item for the ARM Committee meeting.
[Estimated 30 min.]
Proposed Meeting: May 2018
•
External Auditor’s Independence and Evaluation
Purpose: This item provides the committee with input from management for maintaining
external auditor’s independence and performance evaluation.
Item Type: Information – This item assists the committee in fulfilling its fiduciary oversight
responsibilities. [Estimated 15 min.]
Proposed Meeting: May 2018
•
Results of the 2017 Internal Quality Assessment Review (QAR)
Purpose: This item presents the results of the 2017 Internal QAR. The purpose of an annual
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Internal QAR is to assess Audit Services’ adherence to the IIA Standards as well as policies
and procedures of the office.
Item Type: Information – This item assists the committee in its oversight of Audit Services by
monitoring the level of quality in the Audit Services’ work products and audit processes.
[Estimated 20 min.]
Proposed Meeting: May 2018
•
Compliance Program Assessment
Purpose: This item presents for discussion the results of an assessment on the status of
implementing the enterprise compliance program.
Item Type: Information – This item assists the committee in its oversight of the development
and implementation of the Enterprise Compliance Program. [Estimated 15 min.]
Proposed Meeting: November 2017
•
Review of Compliance Policies, Standards, and Procedures
Purpose: This item presents for discussion the policies, standards, and procedures that the
enterprise compliance program will assess, monitor and provide reports to the committee.
Item Type: Information – This item assists the committee in its oversight of the development
and implementation of the Enterprise Compliance Program. [Estimated 15 min.]
Proposed Meeting: November 2017
CONCLUSION
A proposed FY 2017-18 draft work plan is Attachment 1 of this agenda item. Staff seeks input
from the ARM Committee on continuing education topics, transition to calendar year audit plan,
development and implementation of the compliance program and/or the inclusion of additional
agenda items for the coming year that will assist the committee in fulfilling the responsibilities in
its charter. A final work plan based on the committee’s input will be presented for approval at the
June 2017 board meeting.
ARM 73
Attachment 1
Audits and Risk Management Committee - Item 7
April 5, 2017
AUDITS AND RISK MANAGEMENT COMMITTEE
Proposed 2017-18 Meeting Work Plan
July
Governance
November
May
Committee Education: (I)
Committee FY 2018-19 work plan
(I)
Report on Internal Control over
Financial Statements by External
Financial Auditors (A)
Progress on External Financial
Auditor’s Report on Internal Control Corrective Actions (I)
External Auditor’s Independence and
Evaluation (I)
Presentation of Required Reports by
the External Financial Statement
Auditors (A)
FY 2018-19 Financial Statement
Audit Plan (I)
No meeting scheduled for July 2017
Risk
Management
Reporting &
Oversight
February
Audit Services Annual Risk
Assessment (I)
Implementation of the Enterprise
Compliance Program (I)
Compliance
Reporting
and
Oversight
Compliance Training Plan (I)
Compliance Program Assessment (I)
Review of Compliance Policies,
Standards, and Procedures (I)
Code of Ethics and Business Conduct
(A)
Compliance Governance Council (I)
Presentation and Adoption of the
External Auditor’s Report on the
FY 2016-17 Financial Statements (A)
Audit
Reporting &
Oversight
FY 2016-17Internal Audit Plan
Results (I)
2018 Internal Audit Plan (A)
(I)
=
ARM 74
Information
(A)
=
Action
2017 Interim Internal Audit Plan
Results (I)
Results of the 2017 Internal Quality
Assessment Review (I)