Texas State Library and Archives Commission

Audit Committee

Monday, May 24, 2004

Minutes

The Texas State Library and Archives Commission (TSLAC) Audit Committee was scheduled to meet on Monday, May 24, 2004, at 11:30 a.m., at the State Records Center on Shoal Creek in Austin, TX.



Audit Committee Present:

Elizabeth Sanders, Audit Chairman

Sandra G. Holland

Cruz G. Hernandez

Commissioners Present:

Sandra J. Pickett

Diana Rae Hester Cox

Martha Doty Freeman

Commissioners Absent:

Chris A. Brisack



Staff Present:

Peggy D. Rudd, director and librarian

Edward Seidenberg, assistant state librarian

Michael Heskett, director, State and Local Records Management

Ava Smith, director, Talking Book Program

Deborah Littrell, director, Library Development

Donna Osborne, director, Administrative Services

Chris LaPlante, director, Archives and Information Services

Russlene Waukechon, database coordinator, Library Resource Sharing

Erica McKewen, communications officer

Liz DeMoss, executive assistant



Guests Present:

Joel Desmarais, internal auditor, Jefferson Wells, Inc.

Scott Beilke, Jefferson Wells, Inc.

Wade Patton, Legislative Budget Board

Hayden Childs, Legislative Budget Board

Natasha Rosofsky, Legislative Budget Board

Kathryn Sturtz, coordinator, Alamo Area Library System

Jerry Tucker, Office of the Governor

A quorum being present, Audit Chairman Sanders convened the meeting at 11:45 a.m.

1. DISCUSS AND APPROVE THE INTERNAL AUDIT OF INDIRECT AND DIRECT ADMINISTRATIVE COST CHARGED TO FISCAL YEAR 2003 GRANTS.

Joel Desmarais introduced himself and distributed additional information to the commissioners.

Mr. Desmarais summarized the results of the audit for the commissioners. Seven of the nine systems, hosted by a city, received services that are a good value when compared with the cost of services that might be received from an external source. Two of the nine systems hosted by a city have indirect costs that are considerably higher when compared with the other systems.

Mr. Desmarais went on to say that under federal and state grants guidelines, TSLAC has the authority to limit indirect cost rates within the grant contract by restricting indirect cost, as well as, the authority to negotiate a separate special rate with each of the cities.

The benefits of reorganization as a non-profit organization, as the North Texas Regional Library System has done, were evaluated. After review of the comparative, Mr. Desmarais found it did not appear to save costs by reorganizing as a non-profit organization.

The audit also compared direct administrative costs among the systems in order to analyze the cost of providing services to the systems. Mr. Desmarais determined that the highest cost to systems is salary allocation for salary expense among the programs, however, there is a lack of uniform interpretation among the systems, and so it is difficult to determine the accuracy of this statistic.

Audit Committee chairman Sanders thanked Mr. Desmarais for his presentation and opened the floor for questions. Commissioner Holland moved that the committee approve the Internal Audit of Indirect and Direct Administrative Cost Charged to Fiscal Year 2003 Grants. Audit Committee chairman Sanders seconded. Motion passed.

2. DISCUSS OPTIONS FOR CONTRACTING FOR INTERNAL AUDIT SERVICES FOR FY05.

Donna Osborne gave a brief history of the internal audit services of the commission. TSLAC does not have an internal auditor on staff and is required by law to perform internal audits. The internal auditor is selected by and reports directly to the commission. The services contracted for FY05 will be based on an internal audit plan that will be prepared by the current internal auditor Jefferson Wells, Inc

Commissioner Holland moved to recommend to the full commission that they extend the contract with Jefferson Wells, Inc. for another year. Audit Committee chairman Sanders seconded. Motion passed.

There being no further business, Audit Chairman Sanders adjourned the meeting at 12:35 p.m.

Respectfully submitted,

Peggy D. Rudd

Director and Librarian

PDR:ecd



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