Texas State Library and Archives Commission


Audit Committee


Monday, August 2, 2004


Minutes

The Texas State Library and Archives Commission (TSLAC) Audit Committee met at 9:00 a.m., Monday, August 2, 2004 at the State Capitol Extension, Room E1.012, 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


Chris A. Brisack

Commissioners Absent:


none





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


Beverley Shirley, director, Library Resource Sharing


Manuel Alvarez, director, Information Resource Technologies


Margaret Whitehead, library systems administrator, Library Development


Erica McKewen, communications officer


Neal Chapman, records center services manager, State and Local Records Management


Liz DeMoss, executive assistant





Guests Present:


Joel Desmarais, internal auditor, Jefferson Wells, Inc.


Kathryn Sturtz, coordinator, Alamo Area Library System


Bill Bonham, Texas Building and Procurement Commission


Steve Huber, Texas Building and Procurement Commission


Gloria Meraz, director of communications, Texas Library Association


Irene Lambert, North Texas Regional Library System


Larry Lambert, Wichita Falls Public Library


Barbara Chayer, North Texas Regional Library System


Eugene Stockton, North Texas Regional Library System


Suzette Shaeffer, Saginaw Public Library


Randolph B. Shaeffer, North Texas Regional Library System


Cathy Dean, Library Friends, Trustees, and Advocates Roundtable of Texas Library Associations


David Price, Burnet County Library


Tom Moran, Austin Public Library


Ann Crockett, Houston Area Library System


Bill Crockett, Houston Area Library System





A quorum being present, Audit Chairman Sanders convened the meeting at 9:00 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, Central Texas Library System and Big Country Library System, 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.

3. RECEIVE INFORMATION REGARDING A FRAUD PREVENTION INITIATIVE.

Edward Seidenberg, reported that a work group on fraud prevention had met, concluded, and submitted tier information to the governor. A fraud prevention program must be in place by October 1. TSLAC will form a group to complete fraud prevention materials and present them to the commission at their September 20, 2004 meeting.




There being no further business, Audit Chairman Sanders adjourned the meeting at 9: 14 a.m.

Respectfully submitted,

Peggy D. Rudd


Director and Librarian

PDR:ecd





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