Quorum = 3

Agenda Audit

Tuesday, April 28, 2020, 12:30 p.m. DART Conference Room C – 1st Floor 1401 Pacific Ave., Dallas, Texas 75202

Due to the COVID-19 virus DART Board Meeting rooms are closed to the

public. All meetings will take place by videoconference and will be available at https://www.dart.org/about/board/boardvideo.asp

1. Roll Call 2. Approval of Minutes: March 24, 2020 3. Approval of Corporate Card and Business Travel Audit

(Jonathan R. Kelly/Chris Koloc) 4. *Briefing on Status of Fiscal Year 2020 Internal Audit Budget

(Jonathan R. Kelly/Chris Koloc) 5. *Briefing on Status of Fiscal Year 2020 Internal Audit Plans

(Jonathan R. Kelly/Chris Koloc) 6. *Briefing on Status of Management Action Plans

(Jonathan R. Kelly/Chris Koloc) 7. *Mid-Year Review of FY 2020 Goals and Performance Measures: Director

of Internal Audit (Jonathan R. Kelly/Chris Koloc) 8. Identification of Future Agenda Items 9. Adjournment

*This Is A Briefing Item Only The Audit Committee may go into Closed Session under the Texas Open Meetings Act, Section 551.071, Consultation with Attorney, for any legal issues, or under Section 551.074 for Personnel Matters arising or regarding any item listed on this Agenda.

Chair – Jonathan R. Kelly Vice Chair – Ray Jackson

Members – Gary Slagel, Rick Stopfer and Dominique P. Torres Staff Liaison – Chris Koloc

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MINUTES DALLAS AREA RAPID TRANSIT AUDIT COMMITTEE MEETING

March 24, 2020

AGENDA ITEM NO. 2

Due to the COVID-19 virus, DART Board meeting rooms were closed to the public. All meetings took place by teleconference and are available by audio at b ttps :/ /www .dart.org/a bout/boa rd/boa rd video.asp.

The Dallas Area Rapid Transit Audit Committee meeting came to order at 2:01 p.m. , Tuesday, March 24, 2020, via teleconference, at DART Headquarters, 1401 Pacific Avenue, Dallas, Texas, with Chair Kelly presiding.

The following Committee Members were present: Jonathan R. Kelly, Ray Jackson, Gary Slagel, and Dominique P. Torres.

Other Board members present: Robert C. Dye, Amanda Moreno, and Michele Wong Krause.

Others present: Gary Thomas, Chris Koloc, Gene Gamez, Nancy Johnson, and Josefina Chavira. Rick Reynolds, James Duff, and Kevin W. Smith, Partner at Crowe, LLP, were also present via teleconference.

1.

2.

Roll Call

Chair Kelly took Roll Call, officially confirming a quorum was present.

Chair Kelly stated the Committee would conduct the actions of the meeting by Roll Call vote. He then provided voting instructions prior to continuing with the agenda items.

Approval of Minutes: February 25, 2020

Hearing no objection, Chair Kelly stated the approval to accept the February 25, 2020, Audit Committee Meeting Minutes to be entered into record, as written.

Chair Kelly recused himself at 2:07 p.m., transferring the presiding officer's responsibilities to Vice-Chair Jackson.

3. Approval of FY 2019 Defined Benefit Retirement Plan Audit

Mr. Chris Koloc, Director of Internal Audit, introduced Mr. Kevin W. Smith, Partner, at Crowe, LLP, who briefed the Committee (handouts on file with the Office of Board Support) as follows: ·

• FY 2019 Defined Benefit Retirement Plan Audited Financial Statements (Memo)

Ms. Moreno pointed out, that as a non-committee member, she did not receive the informational red envelope of this committee. She noted, Ms. Nancy Johnson, Director of Board Support, had informed her that only the Audit Committee members received the information contained in the red envelope prior to the meeting and once the meeting concluded, the final documents were released to the full Board. Vice-Chair Jackson responded he would discuss this with the Chair of the Committee to see if this could be placed as a future agenda item.

Vice-Chair Jackson then called for the motion, and second.

Mr. Slagel motioned to accept this item for receipt, and recommendation, for the DART Board's review, as presented.

2020-03-24 Audit Minutes.docx 4/10/2020: 8:00 A.M.

Mr. Stopfer seconded.

Vice-Chair Jackson took a Roll Call vote, and the motion was approved unanimously.

Vice-Chair Jackson requested Ms. Johnson contact Chair Kelly to return to the meeting. Ms. Johnson confirmed she sent a text to Chair Kelly notifying him to return to the call.

Chair Kelly reentered the meeting at 2:14 p.m., resuming the presiding officer's responsibilities. He then verified a quorum by calling a roll call.

4.

5.

Approval of Audit of Accounts Pavable Process

Mr. Koloc briefed the Committee (handouts on file with the Office of Board Support) as follows:

• Audit of Accounts Payable Process ij20F20

Ms. Moreno requested a follow up briefing on a financial issue that was previously covered in an Audit Committee on this item. Chair Kelly replied that issue was covered and he would have Mr. Koloc send her the information on that discussion.

Chair Kelly called for the motion, and second.

Mr. Jackson motioned to accept this item for receipt, and recommendation, for the DART Board's review, as presented.

Mr. Slagel seconded.

Chair Kelly took a Roll Call vote, and the motion was approved unanimously.

Approval of Substance Abuse Program Audit

Mr. Rick Reynolds, Contract/Construction Audit Manager, briefed the Committee (handouts on file with the Office of Board Support) as follows:

• Substance Abuse Program Audit #20F 12

Ms. Moreno questioned how often the random tests are conducted. Mr. James Duff, Assistant Vice President of Risk Management, responded the tests are conducted randomly on safety sensitive employees.

After some discussion, Ms. Moreno requested a briefing implementing the testing for all upper management and above, regardless if their position is, or is not, a safety sensitive position.

Ms. Wong Krause stated she too would like to hear a briefing on this topic.

Chair Kelly clarified this item would need to be considered for discussion at the Administration Committee. Mr. Gary Thomas, President/Executive Director, interjected, while this discussion has been presented to the Board on several occasions, he would have staff brief the Administration Committee regarding her request.

Hearing no additional comments on this item, Chair Kelly called for the motion, and second.

Mr. Slagel motioned to accept this item for receipt, and recommendation, for the DART Board's review, as presented.

Mr. Jackson seconded.

Chair Kelly took a Roll Call vote, and the motion was approved unanimously.

2020-03-24 Audit Minu1es.docx 2 4/1012020: 8:00 A.M.

6. Identification of Future Agenda Items

Chair Kelly stated ifthere were any future agenda items identified for this committee, other than the ones mentioned earlier in the committee, they should be directed to Ms. Johnson or to him for consideration.

7. Adjournment

There being no further business to discuss, the meeting adjourned at 2:32 p.m.

Josefina Chavira, CAP Board Committee Secretary

/jc

+ Same Night Item * Briefing Item

2020-03-24 Audit Minutes.docx 3 4/ 10/2020: 8:00 AM.

Agenda Report

DATE:    April 28, 2020 SUBJECT:    Approval of Corporate Card and Business Travel Audit

RECOMMENDATION

Recommend forwarding final audit report to the Board of Directors.

BUSINESS PURPOSE

• The DART Corporate Card and Business Travel policies provide guidelines for DART’scorporate card purchases and business travel expenses. The policies apply to all DARTCorporate Cardholders and Approving Officials.

• The objective of the audit was to determine compliance with the DART policies and procedures.Our audit covered corporate card transactions during fiscal years 2018 and 2019. The scope ofour audit included review of reasonableness of the transactions, proper supportingdocumentation, and timely reviews and approvals of expenses.

• A review of corporate card transactions identified some purchases which exceed corporate cardtransaction limit of $2,500. Internal Audit identified purchases which were made at the samevendor location at the same time. However, the purchases were made with two separate creditcards. A similar issue was identified in a previous audit report where certain cardholders weremaking purchases which exceeded the $2,500 limit by splitting the purchases into two separatetransactions by the same cardholder.

• The audit was performed through interviews with appropriate personnel, examination of relevantdocumentation, and tests of controls and procedures as considered necessary. We performed theaudit in accordance with the standards of the Institute of Internal Auditors.

AGENDA ITEM NO. 3

Corporate Card and Business Travel Audit 4/17/2020 9:01:11 AM1

Agenda Report

DATE:    April 28, 2020 SUBJECT:    Briefing on Status of Fiscal Year 2020 Internal Audit Budget

RECOMMENDATION

This is a briefing item only.

BUSINESS PURPOSE

• DART Audit Committee Charter establishes an oversight process to administer the Agency’sinternal audit function. It includes review and approval of the annual Internal Audit Departmentbudget, which is then incorporated into the Agency’s total budget for submission to the Boardfor approval.

• The Director of Internal Audit will, on a regular basis throughout the year, update and appriseCommittee members of the status and progress of the Internal Audit Department Annual Budget.

• This agenda item is to update the Audit Committee of the status of Fiscal Year 2020 InternalAudit Budget.

AGENDA ITEM NO. 4

Status of Fiscal Year 2020 Internal Audit Budget 4/17/2020 10:27:02 AM1

Agenda Report

DATE:    April 28, 2020 SUBJECT:    Briefing on Status of Fiscal Year 2020 Internal Audit Plans

RECOMMENDATION

This is a briefing item only.

BUSINESS PURPOSE

• DART Audit Committee Charter establishes an oversight process to administer the Agency’sinternal audit function. The Charter provides for the Director of Internal Audit to submit annualaudit plans, using appropriate risk-based methodology, for review and approval to the AuditCommittee.

• The Director of Internal Audit will, on a regular basis throughout the year, apprise Committeemembers of the status and progress of the annual audit plans.

• This agenda item is to update the Audit Committee of Fiscal Year 2020 Financial/Operational,and IT Audit Plans.

AGENDA ITEM NO. 5

Status of Fiscal Year 2020 Internal Audit Plans 4/17/2020 10:31:15 AM1

Agenda Report

DATE:    April 28, 2020 SUBJECT:    Briefing on Status of Management Action Plans

RECOMMENDATION

This is a briefing item only.

BUSINESS PURPOSE

• DART Internal Audit Department Charter provides for the Director of Internal Audit to reportaudit results, management action plans, and target completion to the Audit Committee. Theinternal audit process includes continuous follow up of prior audit recommendations based onthe target completion date.

• This agenda item is to apprise the Audit Committee of the quarterly follow up status of the prioraudit recommendations to ensure they are resolved.

AGENDA ITEM NO. 6

Status of Management Action Plans 4/17/2020 10:19:16 AM1

FY20 Mid-Year-Dir IA.docx 1 4/23/2020 10:26 AM

Agenda Report

DATE: April 28, 2020

SUBJECT: Mid-Year Review of FY 2020 Goals and Performance Measures: Director of

Internal Audit

BOARD ACTION

This is a briefing item. No action is required at this time.

PURPOSE

⋅ DART has consistently used a system of establishing goals and tracking performance measures

to provide a focus for strategic and operational improvement, create an analytical basis for

decision making, and provide focus on the priorities set by the Board.

⋅ On April 28, 2015 (Resolution No. 150046), the Board established the following Strategic

Priorities for FY 2016 – FY 2020:

1. Continually improve service and safety experiences and perceptions for customers and

the public

2. Optimize and preserve (state of good repair) the existing transit system

3. Optimize DART's influence in regional transportation planning

4. Expand DART's transportation system to serve cities inside and outside the current

service area

5. Pursue excellence through employee engagement, development and well-being

6. Innovate to improve levels of service, business processes and funding

⋅ In order to move the agency in the direction described in the Strategic Priorities, the Board

establishes annual goals and performance measures for the Director of Internal Audit.

⋅ On September 17, 2019 (Resolution No. 190108), the Board approved the FY 2020 goals and

performance measures for the Director of Internal Audit.

⋅ The purpose of this item is to provide an update to the Committee on the status of the FY 2020

goals and performance measures for the Director of Internal Audit.

Agenda Item 7

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