COUNTY MANAGER’S REPORT ON INTERNAL...

COUNTY MANAGER’S REPORT ON INTERNAL AUDIT March 2015 In furtherance of both the County Manager and the County Board’s commitment to strengthening County operations and ensuring that public funds are utilized in a responsible, efficient and transparent manner, the County Manager proposes a dual office approach that reflects complementary functions in both core financial audits and program / operational audits.

Audit Committee & County Auditor – Overseen by an Audit Committee, the County Auditor (a new position) would perform program and operational audits of County programs and operations, focused on program efficiency and effectiveness often with the accompanying goal of increasing revenue or reducing expenditures.

Internal Audit within DMF—this group would continue its focus on systematic core financial and compliance audits and internal controls reviews. It will continue to proactively work with departments to improve business processes.

Additional details on each proposed function follow. Audit Committee & County Auditor: Mission: To enhance the efficiency, effectiveness and transparency of County services and operations by conducting performance and operational audits. Audit Committee Membership: Two County Board members County Manager or Deputy County Manager Director, Department of Management & Finance (“DMF Director”) One member of Fiscal Affairs Advisory Commission The County Board would appoint the two County Board members and the FAAC member of the Audit Committee at the beginning of each calendar year. Staffing & Hiring Processes: The Audit Committee will be staffed primarily by the creation of a new position to be established in the FY 2016 budget, the County Auditor. This position will be responsible for execution of the workplan established by the Audit Committee. Additional staff support to the County Auditor may be provided by DMF or CMO as well as external contracting support with funds appropriated by the County Board. An initial budget allocation of $200,000 is recommended to fund the new position and associated costs; in future years, savings identified by the program could fund County Auditor program costs.

The County Auditor will serve at the pleasure of the County Board; annual performance reviews will be conducted by the full County Board with written input from the County Manager. Compensation will be consistent with existing County pay scales. Day-to-day direction on administrative matters will be provided by the DMF Director. This structure is consistent with the recommendations of the Institute for Internal Auditors (IIA), an international organization dedicated solely to the advancement of the internal auditing profession, as discussed in one of the attachments. Additionally, a recent report released by the federal Department of Transportation on the structure of the internal audit office at MWAA is also attached; this report provides a good overview of the benefits of the dual reporting structure that is being proposed. A new position description for the County Auditor would be developed and posted for recruitment within thirty days of approval by the County Board. The DMF Director and County Manager would develop the description and do initial screening of candidates, with the final hiring decision to be made by the County Board. The recruitment will have natural synergies with the recruitment of the Internal Audit position within DMF. Work Plan: The County Auditor will prepare a proposed annual audit workplan with input from all members of the Audit Committee. The Audit Committee will formally approve the annual workplan and in the future, may consider the development of a multi-year workplan. In general, primary areas of focus will include:

Performance and operational audits and / or reviews of County programs and operations to ensure program effectiveness and efficiency

Areas of management or policy concern Areas identified by FAAC as part of their annual budget review; additional

requests may be provided by other commissions and advisory groups Reviews that make recommendations for service delivery alternatives

such as contracting out or partnerships For reference, a recent report of the Fairfax County Auditor to the Board is attached which briefly outlines its workplan and status of ongoing audit work. The Audit Committee will meet on a quarterly basis and will establish its own internal procedures. The County Auditor will follow the professional standards laid out by the Institute of Internal Auditors, including its “International Professional Practices Framework.” The County Auditor will also follow other government auditing standards, such as those promulgated by the General Accountability Office and the American Institute of Certified Public Accountants, among others. If there are

conflicts in the standards of the various audit organizations, the County Auditor may determine the appropriate standard in consultation with the Audit Committee as needed. Results of audits and reviews will be made public in accordance with all state and federal statutes and regulations. The creation of the Audit Committee is not intended to materially alter the responsibility and authority of either the County Board or the County Manager. Internal Audit: Mission: To strengthen County operations and minimize risk and fraud through systematic evaluation of operations and internal controls, focused on financial audits. Staffing & Hiring Processes: The Internal Audit group within DMF will continue to be staffed by 1.5 FTEs and $200,000 in consulting support unless additional funding is requested by the County Manager and approved by the County Board. The Internal Audit staff will continue to report to the Deputy Director of DMF. Work Plan: The objective of the Internal Audit’s workplan is:

To assist senior management and departments to effectively and efficiently implement County programs in compliance with financial, accounting and other County policies by conducting objective internal audits and reviews

To test internal controls to provide reasonable assurance that resources are safeguarded against waste and abuse

The Internal Audit group will continue to develop an annual audit workplan that is approved by the County Manager. The core workplan includes basic internal control and process reviews including but not limited to purchase card reviews; contract compliance and payment reviews; financial process reviews – procure to pay, budget or payroll; inventory control reviews; and grant compliance. A key feature of the workplan is its systematic nature – the objective is that every department that reports to the County Manager will be the subject of an internal audit review over a three year period. There will be collaboration with affected departments to revise policies and procedures and provide training where needed; additionally, the Internal Audit group will provide follow-up for every audit within 12 months of audit completion.

The Internal Audit group follows the professional standards laid out by the Institute of Internal Auditors, including its “International Professional Practices Framework.” The Internal Audit Group also follows other government auditing standards, such as those promulgated by the General Accountability Office and the American Institute of Certified Public Accountants, among others. If there are conflicts in the standards of the various audit organizations, the Internal Audit group will determine the appropriate standard. Results of audits and reviews will be made public in accordance with all state and federal statutes and regulations. Attachments:

1. County auditor legislation 2. Summary of audit functions in metropolitan Washington D.C. 3. Fairfax County Auditor to the Board report 4. Institute of Internal Auditors Practice Advisory on Organizational

Independence 5. MWAA review of Internal Audit function and rationale for dual reporting

structure

County auditor legislation recently signed by Governor McAuliffe

That the Code of Virginia is amended by adding a section numbered 15.2-709.2 as follows:

§15.2-709.2. County auditor.

The board may appoint a county auditor for the audit and review of county agencies and county-funded functions. The county auditor shall have the power to make performance reviews of operations of county agencies or county-funded programs to ascertain that sums appropriated are expended for the purposes for which such appropriations were made and to evaluate the effectiveness of those agencies and programs. The county auditor shall make such special studies and reports as the board directs.

The board may provide staff assistance to the county auditor that may be independent of the administrative staff of the county. The county auditor and any such staff shall be hired on the basis of merit and shall be paid in conformity with existing pay scales. The county auditor shall serve at the pleasure of the board, and if removed, such removal shall not be subject to review by any other employee, agency, board, or commission of the county or under the grievance procedure adopted pursuant to §15.2-1506.

SELECTED INTERNAL AUDIT FUNCTIONS IN METROPOLITAN DC REGION

IN-HOUSE OR STAFFJURISDICTION TITLE OF OFFICE REPORTS TO? OUTSOURCED? SIZE BUDGET COMMENTS

Alexandria Internal Audit Deputy City Manager / Chief of Staff In-house 5.0 FTEs $514kAlso have Office of Performance Management; expanded by 3 positions in 13

Fairfax County Internal Audit County Executive Largely in-house 14.0 FTEs $1.3 mmIncludes 4 information system auditors

Auditor to the Board Board of Supervisors Audit Committee In-house 3.0 FTEs $347k

Loudoun County Internal AuditReports to Director of Division of Financial

and Management ServicesOutsourced 0 $80k

Initial appropriation of $80k provided in FY 2013; no audits conducted prior

Prince William Internal Audit Board of Supervisors Audit Committee Outsourced Outsourced on 11.28.12Montgomery Co. Internal Audit County Executive Largely outsourced 1.0 FTE $399K

Inspector General County Council Largely inhouse 4.8 FTEs $687K

DATE: February 24, 2015

TO: Board of Supervisors – Audit Committee

FROM: Jim L. Shelton

Auditor of the Board

SUBJECT: Quarterly Report on Operations – February 2015

Executive Summary

I assumed the position of Auditor of the Board on Monday (27th

October 2014), whereby my

charge was to oversee studies approved by the Board of Supervisors of the County of Fairfax,

VA (the County). The approved Audit Committee Work Plan as of September 2014 includes

the following studies:

Overlapping/Duplicative County Functions

IT Disaster Recovery Plan

Office of Public Private Partnerships

Dulles Metrorail Project

Artificial Turf Fields

Capital Construction Project Costs

Studies may extend over several quarters based on the availability of information and

resources.

Libraries Departmental Gift Fund Review

Background

During the Tuesday (2nd

December 2014) Board of Supervisors’ (BOS) meeting, the BOS

approved a review of the Fairfax County Libraries’ Departmental Gift Fund. The review was

presented as a Board Matter and included the following directive to the Auditor of the Board:

Review the fiscal reporting practices and expenditures of the Friends of the

Library groups as well as the Departmental Gift Fund. This review should

include an examination of the revenue generated by the sale of donated

books, the monetary donations the groups receive, and any other financial

transactions carried out by the Friends groups and the Departmental Gift

Fund.

C o u n t y o f F a i r f a x , V i r g i n i a

To protect and enrich the quality of life for the people, neighborhoods and diverse communities of Fairfax County

MEMORANDUM

Status as of February 2015

In response to the Board Matter, we coordinated with the Fairfax County management and

Board staff to develop and distribute Control Self-Assessment (CSA) forms for the Fairfax

County Public Library (FCPL) and the Friends of the Libraries (FOL). The CSAs were

designed to be a collaborative self-reporting approach to gathering information needed to

complete the review. The forms were sent to the relevant parties on Tuesday, (13th

January

2015). Instructions included a response date of Monday (16th

February 2015). On Friday (9th

January 2015) the BOS Chairman met with the Fairfax Library Advocates and other interested

parties to discuss the approved Board Matter and other related issues, e.g. the Memorandum of

Understanding (MOU) between the FOLs and the Fairfax County Public Library Board of

Trustees and the intent of the Federation of Citizens Association audit request.

On Wednesday (21st January 2015) we and the Deputy County Executive with management

oversight of the FCPL met with a representative from the Fairfax Library Advocates (Mr.

Dennis Hays), FOL members, and their pro bono attorney. The purpose of the meeting was to

answer questions regarding how to complete the CSAs.

On Thursday (29th

January 2015) we reconfirmed with the Library Administration their need to

complete the CSA. The Library Director agreed to have it completed by the close of business

(COB) Friday (16th

February 2015).

The Board Matter remains approved. A review and analysis of the CSA responses will be

performed upon receipt. An update will be provided at the next scheduled Audit Committee

Meeting.

Overlapping/Duplicative County Functions

Background

The Audit Committee requested an informational review of similar functions and activities that

are performed by two or more county departments or agencies. To facilitate this review, we

analyzed the fiscal year (FY) 2015 Adopted Budget Fund Statements and surveyed department

and agency heads. The surveys were used to identify functions performed by Management

Analysts and Business Analysts.

This study will be performed in two phases. Phase 1 was a review of authorized funded

positions that perform similar functions to those of the central service departments. Phase 2 of

the study will be a review of the FY 2015 Adopted Budget Fund Statements and surveys

completed by the department and agency heads for the identification of duplications in service

delivery to constituents.

Three meetings were held with officials from the Department of Management and Budget,

Department of Human Resources, and a representative from the County Executive’s Office to

discuss this approach. We also met with selected department heads to obtain background on

the administrative functions performed by their staff.

The county has established several central services departments and agencies. This phase of

the review focused on the Department of Human Resources, Department of Purchasing and

Supply Management, Office of Public Affairs, and the Department of Information Technology.

Status as of February 2015

We compiled and summarized information from the FY 2015 Adopted Budget Fund

Statements and survey responses from the department and agency heads. The purpose of this

analysis was to identify authorized funded positions with functions similar to those of the

central service departments but are located in other departments and agencies.

The surveys for Phases 1 and 2 are presented as an attachment to this memo. An update will be

provided at the next scheduled Audit Committee Meeting.

IT Disaster Recovery Plan

Background

The Audit Committee requested a follow-up to our May 2013 report on the Department of

Information Technology’s (DIT) IT Disaster Recovery Plan. At the time of our May 2013

review, DIT provided a document titled “COOP & DR Plan” which described DIT’s disaster

recovery strategies for the Mainframe and Enterprise (open) systems hosted in the County’s

main data center. Although the COOP & DR Plan contained many of the recommended

elements of an information technology disaster recovery plan, a complete and consolidated

approach for the open systems environment, including the County’s enterprise resource

planning system (FOCUS), was not in-place. 1

At the time of our May 2013 review, backup tapes were the primary disaster recovery method

for the County’s mission-critical systems (including FOCUS). According to the National

Institute of Standards and Technology (NIST), real-time replication (mirroring) is the preferred

disaster recovery method for mission-critical systems.2 DIT established limited replication and

failover capability for a portion of the enterprise data center system at the Public Safety and

Transportation Operations Center (PSTOC). However, PSTOC is located approximately one

mile from the Government Center and lacks the equipment and capacity necessary to provide

effective failover capability for all of the County’s mission-critical systems.

1FOCUS (Fairfax County Unified System) is the County’s enterprise resource planning system that included

financial, payroll, and human resources. The County implemented FOCUS in November 2011. The costs

associated with implementing FOCUS totaled at least $60 million, not including staff time and other ongoing

internal costs. At the time of our May 2013 review, a specific disaster recovery plan for FOCUS was not yet

finalized. 2 National Institute of Standards and Technology (NIST), Special Publication 800-34, a guideline for Federal

agencies.

Status as of February 2015 In December 2014, DIT provided us with an updated copy of the “COOP & DR Plan.” The

updated COOP & DR Plan reflects DIT’s transition to a high availability disaster recovery

environment for the County’s mission-critical enterprise systems. DIT contracted with a

commercial co-location data center to provide replicated information technology disaster

recovery services at an alternate site located approximately 60 miles from the Government

Center, which is outside of the D.C. region blast zone. We toured the facility in January 2015

with DIT managers and staff. The facility is categorized as a Tier 3, the second highest

ranking for data centers as established by the data center industry. Tier 3 data centers are

typically used by large corporations and Federal agencies that require a high-availability

environment for their information technology systems and infrastructure (e.g. high

capacity/high speed data lines, back-up power, fire suppression, temperature regulation, and

building security). The new co-location data center is high-availability environment and is

designed to provide continuity of computer center operations.

The following table provides a summary of DIT’s disaster recovery planning strategies for the

Mainframe and Enterprise (open) systems.3

3 Agency-controlled applications were not included in the scope of our review.

Fairfax County Department of Information Technology

Disaster Recovery Plan Summary

As of February 2015

Mainframe Enterprise Systems

(FOCUS)

Enterprise Systems

(Non-FOCUS)

Systems/Applications Personal and

Property Tax

Budget System

(Fairfax County

Public Schools)

FOCUS Financial

System Module (FILO)

FOCUS

Payroll/Human

Resources Module

(HRM)

FOCUS support

systems

Various systems and

applications: LDSnet,

FIDO, PARKNet, Yardi

(Housing), Outlook

(email), etc.

Backup

Method/Recovery

Strategy

Backup Tapes:

Available off-site

recovery facility.

High Availability

Environment: Real-time

replication/mirroring at an

off-site facility.

High Availability

Environment: Real-time

replication/mirroring at

an off-site facility.

Disaster Recovery

methodology

Legacy disaster

recovery site.

3rd Party Tier 3 Data

Center.

3rd Party Tier 3 Data

Center.

Contract Number #4400000802 #4400003913 #4400003913

Disaster Recovery

Plan Testing

DIT’s stated goal – at

least once every18

months. The last test

was conducted in

September 2014.

Phase 1:

First test -

February/March 2015

Phase 2:

First test -

April/May 2015

Source: Department of Information Technology (DIT) “COOP & DR Plan” dated November 14, 2014.

The transition to a high availability disaster recovery environment is divided into two core

phases: Phase 1 will include FOCUS and the FOCUS support systems and Phase 2 will

include non-FOCUS enterprise applications. DIT’s COOP & DR plan also includes two

additional potential phases (Phase 3 and Phase 4) for future fiscal years. DIT continues to

contract with IBM to provide disaster recovery services for systems and applications that are

hosted on the Mainframe.

According to the COOP & DR Plan, testing for Phase 1 and Phase 2 is scheduled through May

2015. According to DIT officials, FOCUS disaster recovery implementation will be finalized

after Phase 1 and Phase 2 testing is complete. DIT’s disaster recovery plan for the Mainframe

indicates that testing will continue to be conducted at least once every 18 months, until the

mainframe is retired.

Office of Public Private Partnerships

Background

The Audit Committee requested information regarding the performance of the Office of Public

Private Partnerships (OP3). OP3’s mission is to facilitate public private partnerships to

encourage civic involvement, corporate responsibility, and community engagement to address

Fairfax County priorities and community needs. OP3’s goal is to serve as a point of contact,

providing ideas and connections for businesses, nonprofit organizations and educational

institutions, County employees, and others that want to partner to contribute time and resources

in Fairfax County.

OP3 is part of the County Executive’s Office and is funded by the General Fund. The

following table shows OP3’s actual General Fund expenditures and staffing levels for fiscal

years 2010 through 2014.

Fairfax County Office of Public Private Partnerships

General Fund Expenditures and Staffing Levels

Fiscal Years 2010 - 2014

Fiscal Year 2010 2011 2012 2013

2014

(Revised

Budget)

Actual General Fund

Expenditures $801,281 $761,488 $780,999 $747,997 $751,848

Staff Positions 8 8 8 8 8

Source: Actual expenditures reported in the Fairfax County Adopted Budgets.

OP3 Performance Measures

OP3 reports seven performance measures in the County’s budget and tracks five other

indicators on their agency dashboard. These measures track the number of new partnerships

established and contacts actively engaged to leverage resources each year, as well as metrics

related to county employees’ use of volunteer leave (V-16), contacts with potential partners

and customer survey results. A new measure in FY 2015 will report on the number of

individuals registered in the county-wide Volunteer Management System (VMS). OP3

reported that it met or exceeded its performance measures for FY 2014.

OP3 provided the following performance measure results for FY 2014:

OP3 Performance Measure Fiscal Year 2014 Result

Number of contacts with potential

partners.

OP3 reported that it establishes 425 new contacts a year that learn more

about Fairfax County and are introduced to ways to give and get involved.

In FY 2014, OP3 reported that it identified 545 new contacts.

Number of contacts actively engaged

to leverage new resources per OP3

staff

Through these contacts, volunteers, financial contributions, pro bono

expertise and in-kind resources are secured that benefit county programs,

nonprofit organizations, and those they serve. In FY 2014, OP3 reported that

staff members exceeded the individual goal of 48, with an average of 68

actively engaged contacts.

Number of new partnerships created

that support county/community needs.

In FY 2014, OP3 reported that it facilitated 6 new partnerships, and helped

to sustain 10 ongoing partnerships. OP3 partnership developers help sustain

and grow partnerships by facilitating ongoing communication, introducing

new partners, securing resources, evaluating and reporting outcomes, and

problem solving.

Percent of key stakeholders that report

that OP3 provides quality information

and timely assistance.

In FY 2014, 96% of key stakeholders reported that OP3 provides quality

information and timely assistance. OP3 conducts a customer survey once

every three years. Feedback is also collected after presentations made

through the Grants Center, to county agency partnership and volunteer

liaisons, and through chambers of commerce.

Number of hours contributed by

county employees through volunteer

leave program (V-16).

OP3 promotes the V-16 leave policy and seasonal ways to volunteer through

articles in Newslink, presentations to county agencies, and in response to

requests. In FY 2014, county employees donated 23,872 hours through V-

16.

Number of times employees used V-

16.

In FY 2014, county employees used volunteer leave 4,351 times.

New Measure for FY2015- Number of

individuals registered in the county-

wide Volunteer Management System

(VMS).

Working with the Department of Information Technology (DIT) and county

agency volunteer managers, OP3 launched VMS in 2014 to recruit, track,

and manage volunteer activities county-wide. Since the launch in April

2014, 7,214 volunteers have registered. According to OP3, VMS fosters

coordination among volunteer managers, increases the number of registered

volunteers and the ways and hours they contribute, and improves reporting

of the value of volunteer contributions to the county.

New Measure for FY 2015-Number of

request for assistance from OP3.

OP3 receives requests for assistance from county agencies and board

members, businesses, nonprofits, and community organizations for technical

assistance on partnership development, sustainability planning, opportunities

to contribute and cross-sector linkages. In FY 2014, OP3 reported that staff

responded to 89 requests for assistance.

Agency Dashboard - Number of visits

to the OP3 Grants Research and

Training Center (GRTC).

The GRTC provides training and technical assistance to county agencies and

nonprofit organizations on finding and applying for grants, board and

proposal development, and reporting outcomes. In FY 2014, there were a

total of 270 visits to the GRTC by nonprofits and county agency staff and

the GRTC delivered six training workshops. Source: Information provided by the Office of Public Private Partnerships (OP3) and Fairfax County Adopted Budgets.

Comparative Information

We surveyed other local jurisdictions to determine if they have established comparable offices

to OP3. Only one of the four local jurisdictions that we contacted has a similar office

(Montgomery County - Office of Community Partnerships). The Fairfax County Public

Schools (FCPS) - Office of Business and Community Partnerships performs similar functions

to those of OP3 and often collaborates with OP3 on various partnerships and projects.

Local Jurisdiction OP3 or Comparable Office

Fairfax County and

Fairfax County Public Schools Yes

Montgomery County Yes

Loudoun County No

Prince William County No

City of Alexandria No

Source: Interviews and correspondence with officials from the local jurisdictions noted in the table.

The following table provides comparative information on the organizational structure, annual

budget, staffing level, and performance measures for OP3, the Fairfax County Public Schools -

Office of Business and Community Partnerships, and the Montgomery County Office of

Community Partnerships. The three comparable offices are primarily government supported

with annual budgets that range from $197,768 (Fairfax County Public Schools) to over $1

million (Montgomery County).

Fairfax County Fairfax County Public Schools Montgomery County

Name Office of Public Private Partnerships (OP3) Office of Business and Community Partnerships Office of Community Partnerships (OCP)

Established 2008 1985 2007

Organizational Structure Government (Local) Government (Schools) Government (Local)

Reports ToDeputy County Executive

(County Executive's Office)

Executive Director II

(Superintendent's Office)County Executive

Funding Source Government Supported (General Fund)Government Supported (Schools)

Private (ExxonMobil)Government Supported (private funding for events)

Annual Budget (FY 2015) $748,535 $197,768$1 million for OCP and Volunteer Center;

$314,000 for Gilchrist Center

Number of Staff 8

1 Regular Staff

1 Hourly Employee (Pay Band 5)

1 Specialist (Privately Funded $70K by Exon Mobile)12

Mission/Goal

OP3 facilitates public private partnerships to encourage

civic involvement, corporate responsibility and community

engagement to address Fairfax County priorities and

community needs. OP3 serves as a point of contact,

providing ideas and connections for businesses, nonprofit

organizations and educational institutions, County

employees, and others that want to partner to contribute

time and resources in Fairfax County. By promoting

corporate responsibility and opportunities to partner with

county agencies and nonprofit organizations, OP3

increases awareness of community needs, facilitates

collaboration on community outreach, and leverages new

resources for Fairfax County.

Business and Community Partnerships (B&CP) oversees

the recruitment and registration of partners who work

with individual schools and the school division as a

whole; manages the marketing, communications and

events associated with partnerships; oversees the

Expanding Visions partnerships; coordinates the efforts

of the FCPS donations portal team and manages the

“other” category in that portal. The office also serves as

liaison to the Superintendent’s Roundtable of Business

and Community Leaders Luncheon Series; helps lead the

Collect for Kids school supply effort; supports the

merchant discount program Savings for Staff; leads

communication for the biannual school construction

bond referendum program; and serves as liaison to all

area Chambers of Commerce and other business and

community associations and groups.

The mission of the Office of Community Partnerships

(OCP) is to strengthen relationships between the

Montgomery County government and the residents it

serves, with special focus on underserved and emerging

communities and our neighbors in need. The OCP serves

as a bridge builder between the County government and

community organizations serving the residents of

Montgomery County, working across the barriers of

race, ethnicity, income, and religion that too often

diminish communities. OCP's mission is to carry out the

County Executive's commitment to build a larger policy

table with participation by a more diverse range and

greater number of residents as we work to become

America’s most welcoming community.

Performance Measures:

1 Number of contacts with potential partners. Establish and maintain collaborative partnerships to

advance the mission and goals of FCPS assuring

appropriate input and ongoing, two-way, strategic, and

meaningful dialog between the district and its diverse

stakeholders.

Overall satisfaction with the Office of Community

Partnerships’ provision of information, access and

support to ethnic, multilingual and multicultural

communities, nonprofits, and faith-based organizations

(scale of 1-5)

2 Number of hours contributed by County employees

through Volunteer Leave (V-16) Efficiency Measure: Number of business and community

partnerships for each school and divisionwide.

Gilchrist Center: Overall participant satisfaction with

their experience at the Gilchrist Center (scale of 1-5)

3 Number of contacts with potential partners. N/A Gilchrist Center: Overall satisfaction of participants in

Gilchrist classes (scale of 1-5)

4 Number of new partnerships created that support

County/community needs

N/A N/A

5 Number of contacts actively engaged to leverage new

resources per OP3 staff.

N/A N/A

6 Number of individuals registered in the county-wide

Volunteer Management System (VMS)

N/A N/A

7 Number of requests for assistance from OP3 N/A N/A

8 Number of times employees used V-16. N/A N/A

9 Percent of key stakeholders report that OP3 provides

quality information and timely assistance.

N/A N/A

Other Pertinent Information

Since it began in 2008, OP3 has facilitated more than 40

public private partnerships leveraging new resources,

improved efficiencies, and greater collaboration in the

arts, education, environment, human services, and public

safety. OP3 training and tools offered by the Grants

Research and Training Center, through 8 Chambers of

Commerce, and in the County Partnership Liaison and

Foundation Directors Network, has developed the

capacity of county agencies, nonprofit organizations,

and foundations to work together and to leverage new

resources. OP3 has received national and local awards

and recognition for innovative approaches to developing

and sustaining effective cross-sector partnerships.

149 FCPS schools out of 196 (or 75.5 percent) have a

partnership with one or more businesses or community

organizations. 10 departments or offices have a

partnership with one or more businesses or community

organizations. During the monitoring report timeframe

the Office of Business and Community Partnerships

established 29 new official partnerships and 2

reaffirmed official partnerships, developed or

supported 6 partnerships with direct monetary

donations, managed 5 sponsorships, and supported

139 donation submissions totaling 2,749 items via the

FCPS Donations Portal.

N/A

PHASE 1Budget

(a)

Expenditures/Savings

(b)

Remaining

(a) - (b)

% of Budget Spent

(b) / (a)

Baseline Construction 2,443,450,279 2,283,737,779 159,712,500 93%

Contingency 462,245,014 451,844,419 10,400,595 98%

Total Phase 1 Project Construction 2,905,695,293$ 2,735,582,198$ 170,113,095$ 94%

Project Finance Costs (MWAA) 438,184,571 196,614,566 241,570,005 45%

Total Phase 1 3,343,879,864$ 2,932,196,764$ 411,683,100$ 88%

Dulles Metrorail Project Status

Background

The Dulles Metrorail Project is a 23-mile extension of the Metrorail system through the Dulles

Corridor. The project is divided into two phases. Phase 1 of the project includes five new

stations as well as improvements to the West Falls Church rail yard. Phase 2 of the project will

include six new stations as well as a maintenance and storage facility at Dulles International

Airport. The Metropolitan Washington Airports Authority (MWAA) is responsible for

managing the Dulles Metrorail Project through the substantial completion of each phase, at

which point the project will be turned over to the Washington Metropolitan Area Transit

Authority (WMATA).

The total combined budget for Phase 1 and Phase 2 is currently $6.47 billion ($3.34 billion for

Phase 1 and $3.13 billion for Phase 2). Funding for the project is provided through a

combination of federal, state, and local sources. Fairfax County’s baseline funding obligation

for the project is 16.1% of the actual project construction costs, notwithstanding construction

costs related to parking garages. Fairfax County’s project funding obligation does not include

MWAA’s finance costs.

Project Budget

As shown in the table below, total baseline construction expenditures for Phase 1 were $2.7

billion as of December 2014, which represents 94% of the total $2.9 billion Phase 1 project

construction budget. Total Phase 1 expenditures (including finance costs incurred by MWAA)

were $2.9 billion as of December 2014, which represents 88% of the total $3.3 billion

budget.4-5

Phase 1 of the Project is currently in closeout status and some activities are continuing past the

opening date (July 26, 2014). Final closeout for Phase 1 will continue through 2015.

Dulles Metrorail Project Phase 1

Budget and Actual Expenditures

As of December 2014

Source: Phase 1 budget and expenditures reported in MWAA’s Monthly Progress Reports for December 2014 (issued in February

2015) and the Monthly Cost and Schedule Update as of December 31, 2014, presented to MWAA’s Board of Directors on

February 18, 2015.

4 Fairfax County separately funded the costs associated with the Wiehle Avenue parking garage. 5 The total $462 million contingency budget for Phase 1 includes a $150 million budget increase, which was approved by the

MWAA Board in June 2012.

PHASE 2Budget

(a)

Expenditures

(b)

Remaining

(a) - (b)

% of Budget Spent

(b) / (a)

Baseline Construction 2,226,784,385 364,313,681 1,862,470,704 16%

Contingency 551,451,179 16,036,654 535,414,525 3%

Total Phase 2 Project Construction 2,778,235,564$ 380,350,335$ 2,397,885,229$ 14%

Parking Garages (Fairfax and Loudoun) 348,215,194 See footnote. See footnote. See footnote.

Total Phase 2 3,126,450,758$ 380,350,335$ 2,746,100,423$ 12%

MWAA is currently reporting that the projected final cost for Phase 1 is expected to remain

within the total budget. However, the Federal Transit Administration’s Project Management

Oversight Contractor (PMOC) has noted that there are a number of construction change orders

that remain under evaluation by MWAA and a large number of potential change orders that are

pending evaluation. The PMOC recommended that MWAA evaluate the sufficiency of the

remaining Phase 1 contingency in light of the potential change orders that are pending

evaluation.

As shown in the table below, total project construction expenditures for Phase 2 were $380

million as of December 2014, which represents 14% of the total $2.8 billion Phase 2 project

construction budget.6

Dulles Metrorail Project Phase 2

Budget and Actual Expenditures

As of December 2014

Source: Phase 2 budget and expenditures reported in MWAA’s Monthly Progress Report for December 2014 (issued in February 2015)

and the Monthly Cost and Schedule Update as of December 31, 2014 - presented to MWAA’s Board of Directors on February 18, 2015.

Project Construction

Although Phase 1 of the Project opened to the public in July 2014, the Phase 1 prime

contractor (Dulles Transit Partners) continues to work on a “punch list” of required tasks that

were not completed during the primary construction phase of the Project. MWAA is currently

working with the prime contractor and other stakeholders to closeout Phase 1 of the project.

The prime contractor for Phase 2 is Capital Rail Constructors (CRC). Construction on the

foundations, columns, and pier caps for the Phase 2 aerial guideway continued at Dulles

International Airport and utility relocation is underway.

6 Fairfax and Loudoun counties are responsible for designing and building parking garages with funding sources that are

outside of the Project funding agreement. The $348 million budget for the Phase 2 parking garages includes $315 million for

design and construction and a $33 million contingency. Fairfax County is responsible for two parking garages: one at the

Herndon Station and one at the Innovation Center Station. The Fairfax County Department of Public Works and

Environmental Services is the lead county agency for the design and construction of both garages. Loudoun County is

responsible for three parking garages: one at the Route 606 Station and two at the Route 772 Station. In December 2014,

Fairfax and Loudoun counties finalized the agreements for federal Transportation Infrastructure and Finance Innovation Act

(TIFIA) loans to help offset their respective project costs (costs associated with the parking garages will be funded through

other sources). Fairfax County received a $403 million TIFIA loan and Loudoun County received a $193 million TIFIA loan.

Project Schedule

Two critical dates for the Project are the Scheduled Substantial Completion Date (SSCD) and

Revenue Operations Date (ROD). The substantial completion date represents the point at

which MWAA is ready to turn over the project to WMATA. The Revenue Operations Date is

the point at which the Dulles Metrorail is ready for passenger service and is open to the public.

Phase 1 opened to the public on July 26, 2014, seven months after the original target date for

Revenue Operations (December 4, 2013). According to the contract, the scheduled substantial

completion date for Phase 2 is expected to occur in 2018. However, subsequent contract

modifications and new regulations related to stormwater management will most likely result in

changes to the project schedule.

Artificial Turf Fields

Status

The Audit Committee requested a comparative review of the “per field” cost of artificial turf

fields procured by the Fairfax County Park Authority and the Fairfax County Public Schools.

The Fairfax County Park Authority provided cost information for their respective artificial turf

fields within the requested timeframe. We received cost information from the Fairfax County

Public Schools after the requested timeframe. As a result, we did not have adequate time to

analyze and verify the information provided. We will report the results of our review at the

next scheduled Audit Committee meeting.

Capital Construction Project Costs

Status

The Audit Committee requested general information regarding capital construction project

costs as well as best practices in capital construction cost mitigation. The Audit Committee

expressed a specific interest in information related to the cost per square foot for selected

capital renovation projects managed by the Fairfax County Department of Public Works and

Environmental Services (DPWES) and the Fairfax County Public Schools (FCPS). The

DPWES Capital Facilities business area is responsible for managing capital construction

projects for the majority of county-owned facilities. The FCPS Office of Design and

Construction is responsible for managing capital construction projects for school-owned

facilities. We will report the results of our review at the next scheduled Audit Committee

meeting.

ATTACHMENT

PHASE 1 SURVEY [January 2015]

From: Shelton, Jim Sent: Tuesday, January 13, 2015 11:56 AM

To: FAIRFAX COUNTY-SMT Subject: Administrative Services Questionnaire / Document Attached for Ease of Completion

Administrative Services Questionnaire

As part of a study which has been approved by the Board of Supervisors included in the Audit

Committee’s Work Plan, I am requesting the following information to complete the review.

Please provide descriptions and counts of the positions in the box provided below for your

agencies or departments.

Agency / Department Name:

Positions Counts Functions Performed

Human Resources Manager or Analyst

Finance & Accounting Position

Public Information Officer

Information Technology Staff

Management Analyst

Business Analyst

Budget Analyst

Procurement Staff

Please respond to this query by close of business (COB) Friday (23rd

January 2015).

If you have any questions or need further assistance please contact me, my information is

provided below.

Thank you for your assistance with this process.

Best regards,

Jim L. Shelton, MBA, CRP

Auditor of the Board

[email protected]

Direct: 703.324.4005

Mobile: 703.478.4447

mailto:[email protected]

PHASE 2 SURVEY [March 2015]

County & Constituent Services Questionnaire

As part of a study which has been approved by the Board of Supervisors included in the Audit Committee’s Work Plan, I am requesting the following information to complete the review. Please provide list and describe of the Top 5 Internal County Services Provided – If any, Top 5 Constituent Services Provided – If any, and the Appropriated Funding Source for delivering these services in the box provided below for your department/agency.

Department/Agency Name:

Please List Top 5 Internal County Services Provided If Any: If None State N/A In 1st Row.

Please Provide Funding Source: e.g. General Fund Budget Appropriation, State Funding, Federal Funding, any Combination, or etc.

Please List Top 5 Constituent Services Provided If Any: If None State N/A In 1st Row.

Please Provide Funding Source: e.g. General Fund Budget Appropriation, State Funding, Federal Funding, any Combination, or etc.

Please respond to this query by close of business (COB) Tuesday (24th March 2015). If you have any questions or need further assistance please contact me, my information is provided below.

Practice Advisory 1110-1:

Organizational Independence

Primary Related Standard

1110 – Organizational Independence The chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The chief audit executive must confirm to the board, at least annually, the organizational independence of the internal audit activity. Interpretation: Organizational independence is effectively achieved when the chief audit executive reports functionally to the board. Examples of functional reporting to the board involve the board:

Approving the internal audit charter;

Approving the risk-based internal audit plan;

Approving the internal audit budget and resource plan;

Receiving communications from the chief audit executive on the internal audit activity’s performance relative to its plan and other matters;

Approving decisions regarding the appointment and removal of the chief audit executive;

Approving the remuneration of the chief audit executive; and

Making appropriate inquiries of management and the chief audit executive to determine whether there are inappropriate scope or resource limitations.

1. Support from senior management and the board assists the internal audit activity in gaining

the cooperation of engagement clients and performing their work free from interference. 2. The chief audit executive (CAE), reporting functionally to the board and administratively to

the organization’s chief executive officer, facilitates organizational independence. At a minimum the CAE needs to report to an individual in the organization with sufficient authority to promote independence and to ensure broad audit coverage, adequate consideration of engagement communications, and appropriate action on engagement recommendations.

3. Functional reporting to the board typically involves the board:

Approving the internal audit activity’s overall charter. Approving the internal audit risk assessment and related audit plan. Receiving communications from the CAE on the results of the internal audit activities or

other matters that the CAE determines are necessary, including private meetings with the CAE without management present, as well as annual confirmation of the internal audit activity’s organizational independence.

Approving all decisions regarding the performance evaluation, appointment, or removal of the CAE.

Approving the annual compensation and salary adjustment of the CAE. Making appropriate inquiries of management and the CAE to determine whether there is

audit scope or budgetary limitations that impede the ability of the internal audit activity to execute its responsibilities.

Copyright © 2013 by The Institute of Internal Auditors Inc. (IIA)

4. Administrative reporting is the reporting relationship within the organization’s management structure that facilitates the day-to-day operations of the internal audit activity. Administrative reporting typically includes:

Budgeting and management accounting. Human resource administration, including personnel evaluations and compensation. Internal communications and information flows. Administration of the internal audit activity’s policies and procedures.

Issued: January 2009

***

Copyright © 2013 by The Institute of Internal Auditors Inc. (IIA)

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