Texas State Library and Archives Commission


Audit Committee


Friday, January 30, 2004


Minutes

The Texas State Library and Archives Commission (TSLAC) Audit Committee was scheduled to meet on Friday, January 30, 2004, at 11:30 a.m. at the Wells Branch Community Library in Austin, Texas.

Audit Committee Present:


Elizabeth Sanders, Audit Chairman


Sandra G. Holland


Chris A. Brisack





Commissioners Present:


Sandra J. Pickett


Diana Rae Hester Cox


Cruz G. Hernandez


Martha Doty Freeman

Commissioners Absent:


None





Staff Present:


Peggy D. Rudd, director and librarian


Edward Seidenberg, assistant state librarian


Manuel Alvarez, director, Information Resources Technologies


Ava Smith, director, Talking Book Program


Deborah Littrell, director, Library Development


Donna Osborne, director, Administrative Services


Chris LaPlante, director, Archives and Information Services


Ann Mason, TexShare Coordinator, Library Resource Sharing


Erica McKewen, communications officer


Regina Miles, executive assistant





Guests Present:


Gwen Land, internal auditor, Jefferson-Wells, Inc.


Scott Beilke, Jefferson Wells, Inc.


Peggy Gibson, Central Texas Library System Advisory Council


Michelle Panes, WBC FOC


Dianne Koehler, president, Wells Branch Community Library Board of


Trustees


Dave Richards, retiree, Texas State Library and Archives Commission

A quorum being present, Audit Chairman Sanders convened the meeting at 11:37 a.m. Before moving to agenda item one (1), Dianne Koehler welcomed the commission and visitors to the Wells Branch Community Library, and invited all to take a tour of the library after the meeting or during breaks. Ms. Sanders thanked Ms. Koehler and the Wells Branch Community Library for their hospitality.

1. DISCUSS AND APPROVE THE INTERNAL AUDIT OF THE TSLAC GRANTS MADE TO THE TEXAS PANHANDLE LIBRARY SYSTEM.

Gwen Land addressed the Audit Committee, summarized results of the audit, and answered questions from the Committee.

Ms. Land reported that the Texas Panhandle Library System (TPLS) had achieved the following at the time of the audit:

§ TPLS had an effective and efficient purchasing system.


§ TPLS had appropriate budgeting and budget monitoring systems for TSLAC grants in place.


§ TPLS has completed their USRs and quarterly FSRs in a timely manner.


§ TPLS has appropriate controls over their capital expenditures and physical inventory.

The following areas were identified as needing improvement:

§ The review of the third and fourth quarter 2003 Financial Status Reports (FSRs) identified an error with the carry-over amounts reported on the System FSRs. Both TPLS and TSLAC's Grant Management/Accounting Systems and Controls had established review procedures, but neither organization detected the error during review.


§ The TPLS method of compiling statistics for the nineteen reportable measures is inefficient. Their current process is time-consuming and prone to mathematical errors.


§ Comparative analysis of USRs from two Systems reviewed in SFY2003 identified inconsistencies with statistical definitions used and methods of statistical calculations.

Commissioner Cox noted that she resides in the TPLS region and recently attended a system meeting. At that meeting, she got the impression that those problems had been or were being addressed by the system. Ms. Land concurred that the system was indeed working to correct identified problems.

Deborah Littrell briefly summarized management's response to audit recommendations, including:

§ TSLAC has hired a Grant Accountant who should be able to effectively perform the FSR review process.


§ TSLAC has compiled uniform definitions and methods of calculation for System and TANG statistical reporting. This information will be shared with the system coordinators at the February 2004 meeting.

The Audit Committee moved directly to agenda item 2 and voted on both agenda items 1 and 2 after addressing agenda item 2.

2. DISCUSS AND APPROVE THE INTERNAL AUDIT OF THE TSLAC GRANTS MADE TO THE WEST TEXAS LIBRARY SYSTEM.

Gwen Land addressed the Audit Committee, summarized results of the audit, and answered questions from the Committee.

Ms. Land reported that the following areas were identified as needing improvement:

§ The auditor's review of the third and fourth quarter 2003 FSRs identified inaccurately reported figures and mathematical errors on each report. WTLS does not perform an internal review of FSRs prior to submission to TSLAC, and TSLAC's Grants Management/Accounting Systems and Controls FSR review process was ineffective at identifying and correcting the errors.


§ Review of the Final 2003 Request for Reimbursement (Form 270) identified requested reimbursement amounts for the System and ILL grants that do not agree with reported outlays listed on the final System and ILL FSRs.


§ Review of the System, ILL, and TANG Monthly USRs for the third and fourth quarters of 2003 identified errors with cumulative totals on each report. Also, on one USR, a statistical figure was transcribed incorrectly on the worksheet.


§ Review of Key Performance Target Reports for the third and fourth quarters of 2003 identified inaccurately reported figures for Target Two (2) on each System Report.


§ Comparative analysis of USRs from two Systems reviewed in SFY2003 identified inconsistencies with the statistical definitions used and methods of statistical calculations.

Ms. Land reported that the West Texas Library System (WTLS) had achieved the following at the time of the audit:

§ An effective and efficient purchasing system with adequate internal controls.


§ Submission of USRs and quarterly FSRs on a timely basis. Additionally, Request for Reimbursement forms are submitted quarterly to TSLAC in a timely manner.


§ All capitol equipment/property is adequately maintained and physical inventory is reconciled every two years according to grant guidelines.

Deborah Littrell briefly summarized management's response to audit recommendations, noting the similarities between management's response to the WTLS and TPLS audit recommendations.

Audit Chairman Sanders thanked Ms. Land and Jefferson Wells Inc. for the audit report. Ms. Land informed the Audit Committee that she will be moving to Jefferson Wells' Dallas office, and that Scott Beilke would be replacing her in the Austin office. The Chairman Pickett and members of the Audit Committee welcomed Mr. Beilke and also expressed their appreciation for the work Ms. Land had done as internal auditor.

Commissioner Holland moved to approve the following internal audits: 1. Internal Audit of the TSLAC Grants Made to the Texas Panhandle Library System; 2. Internal Audit of the TSLAC Grants Made to the West Texas Library System. Audit Chairman Sanders seconded. Motion passed.

3. REPORT ON THE POST-PAYMENT AUDIT CONDUCTED BY THE TEXAS COMPTROLLER OF PUBLIC ACCOUNTS.

Donna Osborne addressed the Audit Committee, summarized the report on the Post-Payment audit conducted by the Texas Comptroller of Public Accounts (CPA), and answered questions from the Committee. This audit (of certain payroll, purchase, travel and grant transactions of TSLAC) covered the period of May 1, 2002, through April 30, 2003. The CPA issued the Post-Payment audit report on December 5, 2003. A Corrective Action Schedule, completed by TSLAC management and signed by TSLAC's internal audit director, was submitted to the CPA on January 2, 2004.

Chairman Pickett expressed confusion over the state law that requires interest to be paid to a vendor even when the vendor declines charging interest. Osborne responded that, while agencies may refuse interest, they may only do so under applicable state authorized allowances. So, [as stated in the Corrective Action Schedule] "where vendors have requested to refuse prompt payment interest, Accounting Staff will process payments according to state requirements. Any refund of prompt payment interest by the vendor will be processed internally as a credit to the prompt payment comptroller object code on the following invoice/statement for the index from which the interest payment was made. The only exception to this will be where the interest refusal is part of an executed contract."

4. REPORT ON THE PROGRAM REVIEW CONDUCTED BY THE LIBRARY OF CONGRESS NATIONAL LIBRARY SERVICE FOR THE BLIND AND PHYSICALLY HANDICAPPED.

Ava Smith addressed the commission and provided background information on the process of preparing for and completing the report.

Commissioner Freeman raised concerns about the report's recommendation to increase the travel budget for outreach projects. Ms. Smith summarized the Talking Book Program's response to this recommendation. In short, agency staff will continue to seek ways to fund more travel for outreach but will also continue to explore cost-effective alternatives to travel.





Commissioner Freeman asked a question about the educational qualifications of consultants; Ms. Smith responded. Ms. Smith and Peggy Rudd responded to questions from the Commission regarding building safety issues that were raised in the report.

With no further business, Audit Chairman Sanders adjourned the meeting at 12:20 p.m.

Respectfully submitted,

Peggy D. Rudd


Director and Librarian

PDR:rmm

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