HomeMy WebLinkAbout2122-12 Treasurer Transition 2022 (Final 3-3-23)Treasurer Transition report #21/22-12 March 2023
Treasurer Transition
2022
To request this information in an alternate format, please call (541) 330-4674 or send email to internal.audit@deschutes.org
Deschutes County,
Oregon
Audit committee:
Daryl Parrish, Chair - Public member
Jodi Burch – Public member
Joe Healy – Public member
Scott Reich - Public member
Summer Sears – Public member
Stan Turel - Public member
Patti Adair, County Commissioner
Charles Fadeley, Justice of the Peace
Lee Randall, Facilities Director Take a survey
by clicking HERE
The Office of County Internal Audit
David Givans, CPA, CIA – County Internal Auditor
Aaron Kay – Performance Auditor
internal.audit@deschutes.org
Recommendations
7
Treasurer Transition report #21/22-12 March 2023
TABLE OF
CONTENTS:
HIGHLIGHTS
1. INTRODUCTION
1.1. Background on Audit …………..……………………………………………………..…….. 1
1.2. Background on Deschutes County Treasurer ………….………………….…. 1-5
2. FINDINGS and OBSERVATIONS
2.1. Elected County Treasurer ………………………………………………………………. 5-9
2.2. Selected Oregon Statutory Treasurer Obligations ….……..............….. 9-12
• Oregon Constitution
• Oregon Statutes
2.3. Deschutes County Investment Policy (F-10) ………….…………..……..… 12-17
2.4. Other inquiries .……………………………………………………………..……………….. 17
3. MANAGEMENT RESPONSES
County Treasurer ………………………………………………………………….………… 18-19
Prior Treasurer/CFO …………………………………………………………..………………… 19
County Administrator ……..………………………………………………………………. 20-21
County Chief Financial Officer …………………………..…………………………….. 21-23
Human Resources Director ……………………………………………………..…………… 23
APPENDICES
A. Objectives, Scope, and Methodology ……………………………………….... 24-25
B. Selected Oregon Statutes with some relation to
County Treasurer ………………………………………………………………………. 26-28
Treasurer Transition report #21/22-12 March 2023
HIGHLIGHTS
Why this audit was
performed:
To review the elected
Treasurer transition.
What was
recommended:
Recommendations
include:
• collaborating and
clarifying how duties
will be addressed;
• documenting duties
and responsibilities of
the Treasurer;
• evaluating
compensation of
Treasurer; appointing
investment officer(s);
• documenting the
internal control system
over investing;
• utilizing a simple
trading document to
capture investment
policy adherence; and
• performing annual
review (of
broker/dealers and
investment advisers).
Treasurer Transition 2022
The County Treasurer position transitioned due to the March 2022 departure of the
County’s Treasurer/Chief Financial Officer. Internal audits are often performed when
elected positions transition.
What was found
The County and elected Treasurer will need to continue to collaboratively work to assign,
delegate, and clarify responsibilities to assure statutory Treasurer responsibilities are met.
This should include looking to maintain efficiencies with how duties are being currently
performed. When completed, there should be documentation of the Treasurer duties and
responsibilities to better understand whether the position is being adequately
compensated on its own.
The review of selected areas within the County investment policy (F10) indicated a couple of
areas to strengthen, including:
• The Board of County Commissioners will need to appoint investment officer(s).
• Written systems of internal control over investments should be developed.
• Competitive bids or offers are to be obtained, however there is currently no
documentation expectations established to assure this is addressed and retained.
• It was not clear the prior Treasurer had continued the annual review of
broker/dealers, and investment advisors. Factors to consider in this review would
include: pending investigations by securities regulators, significant changes in net
capital, pending customer arbitration cases, and regulatory enforcement actions.
Deschutes County Internal Audit
Treasurer Transition report #21/22-12 March 2023
Page 1
1.
Introduction
1.1 BACKGROUND ON AUDIT
Audit Authority:
The Deschutes County Audit Committee authorized the review of the Treasurer’s transition in the
amended Internal Audit Program Work Plan for 2022 2023. Internal audit has had a practice of
reviewing operations for elected officials on transition in their office. Treasurer, Greg Munn submitted
his notice of resignation on March 18, 2022, and his last day as Treasurer/Chief Financial Officer (CFO)
was April 1, 2022. He had been the elected Treasurer since January 2021.
1.2 BACKGROUND ON DESCHUTES COUNTY TREASURER
“The Treasury function is managed by the elected County Treasurer. The Treasury function involves
the acceptance and deposit of County funds from customers, citizens, and other government agencies
that support County operations. In addition, the Treasury function is responsible for the management
of cash, all banking relationships and the investment of County funds. Investments are governed by
Oregon Revised Statutes and the County’s investment policy.“ County website
Elected Treasurer duties
The areas that Oregon statute highlight for the Treasurer were written some time ago and do not
address modern fiscal practices and/or language. The key statutory Treasurer areas seem to include:
• receiving of monies;
• disbursement of monies;
• arranging and keeping accounting in distinct funds;
• reporting and sharing information on monies and accounting;
• crediting of interest earned to associated funds;
• disbursing of State taxes in a timely manner; and
• disbursing of property taxes collected in a timely manner.
See Appendix B - for limited details on some of the applicable statutes.
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Page 2
Elected county treasurers seem to have varying duties depending on the County and County
management structure.
Elected Treasurer transition
Since 1997, Deschutes County has operated with one person handling the elected Treasurer and CFO
duties of the County. The CFO received a small stipend for their work as Treasurer. With the
resignation of the prior Treasurer, the position was required to be included in the November 2022
general election.
On the departure of the prior Treasurer, the previous Treasurer, Wayne Lowry, stepped in as a senior
advisor in order to provide a smoother transition until the CFO recruitment was completed.
On March 30, 2022, Nick Lelack (County Administrator) was appointed by the Board of County
Commissioners to fill the vacant Treasurer’s position until the election occurred. The County
Administrator did not take any payment for this appointment. The County Administrator delegated the
Treasurer duties to Wayne Lowry.
On September 26, 2022, the CFO recruitment was completed. Robert Tintle was the successful
applicant and came to the County from Lane County where he had similar responsibilities. Since Mr.
Tintle had not been a Deschutes County resident for over a year (a requirement of the Treasurer’s
role), he was unable to seek election to the Treasurer’s position. He was tasked with all of the
Treasurer duties until the election was completed.
The November 8, 2022 election concluded with Bill Kuhn, being elected as County Treasurer with 63%
of the vote. Mr. Kuhn took the oath of office on January 3, 2023. Mr. Kuhn recently retired as Bend
Market President for First Interstate Bank. He had a 36-year career in banking and has resided in
Deschutes County for the last 31 years. Mr. Kuhn has worked with the County through his involvement
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Chart I
Trend in pooled
cash by fiscal year
(2018-2022) and
12/2022.
(Inflation adjusted
CPI-U)
with the Deschutes County Fair and Expo Board and EDCO. Mr. Kuhn is working with County
management to assess the extent of duties to be performed as Treasurer.
County Investments
The following is some limited information on investments as this has been handled previously by the
Treasurer/CFO and investing was considered one of the Treasurer’s roles.
The county pools all cash resources from all County funds and funds held in trust.
As of 12/31/2022, there were $327.1 million of cash resources managed and invested by the County.
As indicated above, the County’s resources continue to grow over time. The County investment policy;
State statute; and Investment Advisory Committee help control the nature and types of investments
made. The County investment policy (F-10) follows state guidelines for ensuring preservation of capital,
liquidity, and return.
The County’s overall weighted effective yield on investments (at book value) was 2.13% as of December
2022. Each investment type may have many investments with some yielding above or below the
average.
Treasurer Transition report #21/22-12 March 2023
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Chart II
Composition of
investments with
estimated yields to
maturity (YTM) by
investment
category as of
12/31/2022
Chart III
Composition of
investment
maturities as of
12/31/22
The Local Government Investment Pool (LGIP) is operated by the Oregon Treasury. It acts a bit like a
money market fund where local governments have near immediate access to funds. This fund is part
of the Oregon Short Term Fund (OSTF). Interest rates are periodically changed. The investment in LGIP
is limited to $56.8 million as of 12/31/2022. The FIB monies match the LGIP rate by contract, but that
rate is only paid on a portion of the amount held there. These two funds represent over 10.6% of the
invested funds as of 12/31/2022 and are very liquid. Total investment earnings for the first six months
of FY 2023 were $2.0 million.
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As indicated above, the investment portfolio is very liquid. The weighted average days to maturity is
503 days (1.38 years). Sixty-nine percent (69%) of investments will mature within two years. The
investment policy allows investments to be made for up to five years.
2. Findings
and
Observations
The audit included procedures to assess whether the Treasurer operations follow established laws
and policies. Audit findings result from incidents of non-compliance with stated procedures and/or
departures from prudent operation. The findings are, by nature, subjective. The audit disclosed
certain policies, procedures and practices that could be improved. The audit was neither designed nor
intended to be a detailed study of every relevant system, procedure or transaction. Accordingly, the
opportunities for improvement presented in the report may not be all-inclusive of areas where
improvement may be needed and does not replace efforts needed to design an effective system of
internal control.
A significant deficiency is defined as an internal control deficiency that could adversely affect the
entity’s ability to initiate, record, process, and report financial data consistent with the assertions of
management in the financial statements. The findings noted were not considered significant
deficiencies.
2.1 ELECTED COUNTY TREASURER
Separation of Treasurer duties may take time and collaboration.
Since 1997, Deschutes County has operated with the CFO (or Finance Director) and Treasurer roles
handled by one person. Over this time, the County has implemented modern business and accounting
systems that have changed the underlying responsibilities.
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With the November 2022 election, the County now has an elected Treasurer (Bill Kuhn) who is
independent from the County’s current CFO, Robert Tintle. The current CFO was hired for their
knowledge and skills in handling the possibility of both roles.
TREASURER DUTIES AND RESPONSIBILITIES
County Treasurers have a number of duties and responsibilities written into Oregon Statute.
The areas highlighted in Oregon statute (for the Treasurer) were written in a way that doesn’t
acknowledge the impacts of modern accounting systems and automated processes (which
include approvals at various levels in the organization and ready accessibility to most users).
Nor do the statutes consider how to effectively marry duties of the Treasurer with other
positions that have fiscal responsibilities. The key statutory areas are included in Appendix B.
A review of other counties shows many different paths for an elected Treasurer. The role can be
like the County’s prior one (combined with the CFO) or it can be a separate entire office
performing a wide range of roles including treasury, investing, banking, tax collection, and
disbursement of funds. Treasurers can relinquish or delegate some or all of their duties to
appropriate staff. Some of these decisions on roles are made by the organization.
Many of the statutory Treasurer duties are currently handled by County departments and
finance staff through routine operation of the accounting systems and staff assignments. The
CFO directs the operations of the County Finance Department and is responsible for assuring
the County’s financial health. The CFO also oversees many of the Treasurer activities.
Through collaboration and mutual agreement, the Treasurer and fiscal management can work
to build a model for assigning, delegating, and clarifying how statutory responsibilities are met.
These duties can keep in mind maintaining current efficiencies. It should be possible to identify
how distinct statutory duties for the Treasurer are covered as well as addressing any additional
responsibilities being taken on by the elected Treasurer.
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Some of these Treasurer statutory responsibilities, if not timely performed, could result in fiscal
penalties to the Treasurer and/or result in loss of office.
It is recommended the County and Treasurer continue to collaborate and clarify the Treasurer
assignments, duties, and responsibilities taken to address the associated statutory
responsibilities.
COMPENSATION OF ELECTED TREASURER
As noted above, the Treasurer’s duties can vary widely based on the collaborative discussions
and how responsibilities are shared to best utilize the Treasurer position.
For compensation of the Treasurer, the County (in association with the compensation
committee for elected officials) landed on 10% of the highest step of the CFO position equaling
$1,441 per month. The 10% came from an estimate of a prior CFO/Treasurer in association with
determining their stipend for Treasurer duties. Treasurer duties enumerated (at that time)
included:
• investing,
• managing cash flows, and
• overseeing tax collection.
The compensation committee for elected officials, a subcommittee of public members of the
budget committee, evaluates and decides on compensation levels for elected officials based on
compensation analyses performed by the Human Resources Department.
The County does not have job descriptions for elected positions (such as the Treasurer
position). The more recent CFO job description incorporated the duties of the Treasurer. The
CFO serves as the appointed Tax Collector. The County utilizes various methods to document
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roles including County Code, job descriptions, and recruitments. In addition, salaries are largely
determined on the position’s responsibilities and requisite knowledge, skills, and abilities.
Having documented roles and responsibilities will help define, segregate, and coordinate duties
and responsibilities between the current CFO and elected Treasurer. It might also provide
greater clarity for the compensation for elected Treasurer duties.
In the absence of mutually agreed upon duties, it will not be clear how to properly coordinate
activities and assess compensation. These roles and responsibilities, as configured for
Deschutes County, may be different than other counties. Decisions made to clarify and assign
duties and responsibilities could influence how future elections for this position are received.
It is recommended for the County to document the elected Treasurer’s duties and
responsibilities.
It is recommended for the County to evaluate whether the compensation for the elected
Treasurer is commensurate with the duties and responsibilities assigned.
INVESTMENT OFFICER APPOINTMENT
The County Investment Policy F-10 allows the investment officer to be the Treasurer and/or
CFO. In coordination with the assignment of duties above, there will need to be clarification if
one or both could be the investment officer.
It would be appropriate for the Board of County Commissioners to document the appointment
of the investment officer(s) going forward. If the County desires to have both involved they
should identify a primary and secondary officer.
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Documenting appointment(s) will aide communications with the associated institutions and
brokers working with the County on our investment needs.
In the absence of appointments, it may not be clear who has authority to be making those
investment decisions.
It is recommended the Board of County Commissioners document appointment of investment
officer(s).
2.2 SELECTED OREGON STATUTORY TREASURER OBLIGATIONS
OREGON CONSTITUTION – Oath of Office
“Every person elected or appointed to any office under this Constitution, shall, before entering
on the duties thereof, take an oath or affirmation to support the Constitution of the United
States, and of this State, and also an oath of office.” (Constitution Article XV - Miscellaneous Section 3)
Observations
In transition, the County Administrator (Nick Lelack) was appointed as Treasurer by the Board of
County Commissioners on March 30, 2022. The Oath of Office was performed on March 30,
2022 and effective April 2, 2022.
The recently elected Treasurer, Bill Kuhn won the election in the November 8, 2022 election and
took the oath of office on January 3, 2023.
OREGON STATUTES, selected areas
The following areas were identified for following up on. For a more detailed list of statutes with some
applicability to the role of County Treasurer see Appendix B.
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A. Monthly financial statements
“The county treasurer of each county shall, on or before the 10th day of each calendar month, file
with the county court a statement in writing showing, as of the first of the then calendar month:
(1) The amount of cash on hand in the custody of the county treasurer as county treasurer;
(2) The banks in which such funds are deposited, with the amounts so deposited in each bank;
(3) The security furnished the county by each bank to cover such deposits, and the interest rates
paid on such deposits; and
(4) A statement of the amount of outstanding warrant indebtedness of the county and the date
up to which the county’s warrant indebtedness has been redeemed” ORS 208.090
Observation
The Chief Financial Officer has been providing monthly statements to the Board of County
Commissioners and County Administrator through email. The content appears to cover the above
items.
B. Delivery of property to successor
“The County Treasurer shall, at the expiration of the term of the county treasurer, deliver to the
successor of the county treasurer all public money, books and papers in the possession of the
county treasurer.” ORS 208.150
Observation
The departing elected Treasurer turned over all monies, books, and records to the County. These
have been managed by the CFO and are being made available to the successor elected Treasurer.
C. Recipient of resignation
“(1) Resignation shall be made as follows: … (b) By all officers who hold their offices by election, to
the officer authorized by law to order a special election to fill the resulting vacancy.” ORS 236.320
Observation
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The departing Treasurer/Chief Financial Officer made their resignation to the County Administrator
and copied the County Clerk.
D. Investment maturity dates
“(a) The custodial officer may make investments having a maturity longer than 18 months when the
governing body of the county, municipality, school district or other political subdivision to which
the funds belong has adopted a written investment policy that, prior to adoption, was submitted to
the Oregon Short Term Fund Board for review and comment to the governing body, that includes
guidelines concerning maximum investment maturity dates and that provides by its terms for re-
adoption not less than annually;…” ORS 294.135
Observation
The County has extended investment maturities beyond the 18 months to five years. This was
reviewed by the Oregon Short Term Fund Board and the Board of County Commissioners annually
reviews and ratifies the County’s investment policy that provides for these investment maturities.
E. Local and tribal governments authorized to place limited funds in pool - (LGIP Maximum)
“… a local government official or tribal government official may place in the aggregate up to $30
million of the funds of the local government or tribal government in the investment pool… The $30
million limitation in this section does not apply either to funds of a governing body that are placed
in the investment pool on a pass-through basis or to funds invested on behalf of another
government unit. Local governments must remove pass-through funds that result in an account
balance in the pool in excess of $30 million within 10 business days. County governments and
tribal governments must remove such excess funds within 20 business days.” ORS 294.810
Observation
The LGIP investment maximum of $30 million has been increased by inflation to $56.8 million as of
12/31/22. As of 12/31/22, the County’s LGIP balance was within these limits.
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The County has in the past sometimes exceeded the LGIP limit. The County will generally be able to
reduce within the limits within 20 days. There do not appear to be any direct limits placed on County
investments in the LGIP or advisories to reduce investments when they exceed the maximum. It is also
not clear there is any penalty for exceeding the state limit.
2.3 DESCHUTES COUNTY INVESTMENT POLICY (F10) - selected areas
The County
investment policy
conforms to the
“Sample Investment
Policy” template
developed by the
Oregon State
Treasury.
The investment policy (F10) of the County provides a significant amount of guidance for the
handling of investments by the Treasurer and/or CFO as investment officers. Much of this policy is
based on statute and on best practices. The investment policy conforms to the “Sample Investment
Policy” template developed by the Oregon State Treasury. The following are observations around
compliance with selected areas of the investment policy.
A. Conflicts of Interest
“Employees and investment officials shall disclose any material interests in financial institutions
with which they conduct business. Disclosure shall be made to the governing body. They shall
further disclose any personal financial/investment positions that could be related to the
performance of the investment portfolio. Employees and officers shall refrain from undertaking
personal investment transactions with the same individual with whom business is conducted on
behalf of the County. Officers and employees shall, at all times, comply with the State of Oregon
Government Standards and Practices code of ethics set forth in ORS Chapter 244.” County investment
policy F-10
Currently, the County does not actively require completion of a conflict of interest disclosure form
covering the above requirements. The Ethics Commission generally wants these disclosures (at a
minimum) to occur when public officials are met with a conflict as these conflicts may carry
personal liability.
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The prior Treasurer provided an annual Statement of Economic Interest (SEI) to the Oregon Ethics
Commission and provides information for bonding. There was nothing significant disclosed in the
2022 disclosure. However, these disclosures do not appear to be sufficient to cover the disclosure
requirement. The SEI is a disclosure to the state and not to the County governing body. ORS
244.130 requires notices of actual or potential conflicts of interest be made with the public body
the public official serves (i.e. the Board of County Commissioners).
Observation
If a future conflict of interest disclosure is required under this policy, the disclosure should be
made to the County.
B. System of controls over investments
The investment officer is responsible for establishing and maintaining an adequate internal control
structure designed to reasonably assure that invested funds are invested within the parameters of
this investment policy and protected from loss, theft, or misuse. Specifics for the internal controls
shall be documented in writing. The established control structure shall be reviewed and updated
periodically by the investment officer.
The policy stipulates the following internal controls shall be addressed at a minimum:
a. compliance with investment policy;
b. control of collusion.
c. separation of transaction authority from accounting and record keeping;
d. custodial safekeeping;
e. avoidance of physical delivery of securities whenever possible and address control
requirements for physical delivery where necessary; {All securities held by custodial bank.}
f. clear delegation of authority to subordinate staff members;
g. confirmation of transactions for investments and wire transfers in written or digitally
verifiable electronic form;
h. dual authorizations of wire and automated clearing house (ACH) transfers;
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i. staff training; and
j. review, maintenance, and monitoring of security procedures both manual and automated.
The written internal control system over investments could be improved upon through further
documentation and additional procedures.
The prior Treasurer/CFO as investment officer has not been able to complete written procedures
that were a recommendation from the prior Treasurer transition audit.
Recommendation (Prior repeated):
It is recommended the investment officer develop a written system of internal control over the
investments covering the investment policy requirements.
C. Third-party Safekeeper
“Securities will be held by an independent third-party safekeeping institution selected by the
County.” Under Delegation of Authority - “The Board of County Commissioners will retain ultimate
fiduciary responsibility for invested funds.” County investment policy F-10
The Treasurer and/or CFO are delegated the authority to manage investments and operate the
investment program within the scope of the policy.
A new third-party custodian was selected and engaged by the prior Treasurer in April 2020. There
is nothing that indicates the third-party safekeeper has not performed as expected.
D. Competitive Transactions
“The Investment Officer shall obtain and document competitive bid information on all investments
purchased or sold in the secondary market. Competitive bids or offers should be obtained, when
possible, from at least three separate brokers/financial institutions or through the use of a
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Page 15
nationally recognized trading platform.” County investment policy F-10
The prior Treasurer retained purchase information supportive for purchases, however, it was not
always clear how competitive bids were being handled. The limited documentation retained
(exclusively in email format) included only minimal data on additional information at hand during
the investments. Sometimes, the notes indicated information on selecting the most advantageous
instrument for the yield, instrument type, and maturity. There typically wasn’t information on what
other investments were contemplated and whether other investment offers or pricing from other
brokers were obtained for the specific security. Investment inventory can vary from broker to
broker, and the like security may not be available from the other brokers, but there is no
documentation of the effort being made to assure the pricing is reasonable.
This issue of competitive bidding was raised in the prior Treasurer transition audit. The Investment
Advisory Committee provided some guidance on the matter and indicated that an effort should be
made to obtain bids.
In the absence of the process of obtaining competitive quotes, it is possible purchases and sales
are occurring at less than favorable terms.
Recommendation
It is recommended for the investment officer (in coordination with the Investment Advisory
Committee) develop and utilize a simple trading document to capture their adherence to policy
on investment purchases.
This form should include:
a. the intended goals of the investment by investment type(diversification), maturity, security
rating, yield to maturity (YTM), and include reasoning;
b. investments being considered and any reasoning;
c. efforts to find competitive offers/pricing on the security; and
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d. why the investment selected with a specific broker was chosen.
{Note: This recommendation was developed through discussions with a couple of the members of the
Investment Advisory committee}
E. Guideline compliance
There are a number of investment types with stated maximums. Those include limiting investment
to a maximum of 25% for corporate investments and limiting LGIP limited to the $52.7 million
maximum.
Observation
No investments maximums were noted as being exceeded as of 12/31/22.
F. Compliance reporting
The policy calls out the requirement for monthly reports to the Board of County Commissioners
that should include a number of parameters.
Observation
The current monthly reporting (as of 12/31/22) being performed appears adequate.
G. Broker/Dealers (and associated investment Advisers)
The policy outlines a required annual review of authorized broker/dealers and investment advisers.
The annual review determines their continued eligibility within the portfolio guidelines.
Factors to consider would be:
• Pending investigations by securities regulators.
• Significant changes in net capital.
• Pending customer arbitration cases.
• Regulatory enforcement actions.
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The prior Treasurer does not appear to have performed this annual review.
Recommendation
It is recommended the investment officer assure the annual review (of broker/dealers and
investment advisers) occurs and is documented.
2.4 OTHER INQUIRIES
A. Computerized systems access
Inquired as to suspension of the prior Treasurer’s authorizations and access to critical
investment and County systems.
Observation
The prior Treasurer’s access has been discontinued.
B. Banking contract
The County’s primary bank is First Interstate Bank.
The County recently requested proposals for banking services in January 2022. The contract
entered into was for five years with one two-year extension. The new contract continued
banking services with First Interstate Bank.
C. Banking and investment access
Inquired as to banking access.
Observation
Banking access for the prior Treasurer has been discontinued.
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3. Management responses
Elected County
Treasurer,
Bill Kuhn
Date: February 22, 2023
To: David Givans, County Internal Auditor
From: Bill Kuhn, County Treasurer
Re: Treasurer response to Audit Report #21/22-12
Thank you for the internal audit of the Treasurer Transition that is currently underway. I appreciate your effort
in this timely Audit to assist in this transition and provide perspective in key control functions.
Below are responses to the internal audit recommendations.
1) Recommendation: The County and Treasurer continue to collaborate and clarify the Treasurer
assignments, duties and responsibilities taken to address the associated statutory responsibilities.
Agree. The County administration, CFO and Treasurer will work toward mutual agreement in segregation of
duties between the Treasurer and CFO, within the framework of the statutory requirements of the
Treasurer position.
2) Recommendation: The County to document the elected Treasurer’s duties and responsibilities.
Agree. This will be completed once agreement has been met as outlined in Finding #1 listed above. It is
recognized the importance of this step in ensuring how future open elections for this position are received.
3) Recommendation: The County to evaluate whether the compensation for the elected Treasurer is
commensurate with the duties and responsibilities assigned.
Agree. This finding should be addressed through input received from Human Resources, the current elected
Treasurer and the Elected Officials Compensation Committee.
Treasurer Transition report #21/22-12 March 2023
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Elected County
Treasurer,
continued
Prior Elected
Treasurer/CFO,
Greg Munn
4) Recommendation: The Board of County Commissioners document appointment of investment
officer(s).
Agree. The CFO and Treasurer will jointly develop a recommendation to present to the Board of County
Commissioners, appointing a primary and secondary investment officer. Expected completion date by June
30, 2023.
5) Recommendation: The investment officer(s) develop a written system of internal control over the
investments covering the investment policy requirements.
Agree. The Treasurer and CFO will work to enhance the current system already in place supporting
appropriate oversight over investment activity. Expected completion date by June 30, 2023.
6) Recommendation: The investment officer(s) in coordination with the Investment Advisory
Committee to develop and utilize a simple trading document to capture their adherence to policy on
investment purchases.
Agree. The Treasurer will jointly work with the CFO, with input from the Investment Advisory Committee
(IAC) to develop an appropriate document to validate adherence to policy on investment purchases. With bi-
annual IAC meetings, expected completion date by December 31, 2023.
7) Recommendation: The investment officer (s) assure the annual review of broker/dealers and
investment advisors occurs and is documented.
Agree. The Treasurer and CFO will begin the process of an annual review of approved broker/dealers and
investment advisors and ensure that this process is completed by June 30,2023.
The prior elected Treasurer and CFO was given a similar opportunity to provide written comments for this
report and did not respond.
Treasurer Transition report #21/22-12 March 2023
Page 20
County
Administrator,
Nick Lelack
Date: February 22, 2023
To: David Givans, County Internal Auditor
From: Nick Lelack, County Administrator
Re: Response to Audit Report #21/22-12
Thank you for your thorough review of the County’s Treasurer transition. We appreciate the time and energy
you devoted to this important topic. We look forward to working closely with our Treasurer, Chief Financial
Officer and Human Resources on implementation of these audit recommendations.
Below are responses to the internal audit recommendations.
1) Recommendation: The County and Treasurer continue to collaborate and clarify the Treasurer
assignments, duties, and responsibilities taken to address the associated statutory responsibilities.
Agree. We will work collaboratively with the Treasurer, Finance and Human Resources to clarify the
Treasurer’s responsibilities and duties.
2) Recommendation: The County to document the elected Treasurer’s duties and responsibilities.
Agree.
3) Recommendation: The County to evaluate whether the compensation for the elected Treasurer is
commensurate with the duties and responsibilities assigned.
The Treasurer’s compensation will be determined by the Elected Official’s Compensation Committee.
4) Recommendation: The Board of County Commissioners document appointment of investment
officer(s).
Treasurer Transition report #21/22-12 March 2023
Page 21
County
Administrator,
continued
County Chief
Financial
Officer,
Robert Tintle
Agree. The CFO will work with the County Treasurer to develop a recommendation for the Board of County
Commissioners to appoint a primary and secondary investment officer.
5) Recommendation: The investment officer develop a written system of internal control over the
investments covering the investment policy requirements.
Agree. The CFO will work with the County Treasurer to document the currently utilized system of internal
control over investments.
6) Recommendation: The investment officer (in coordination with the Investment Advisory Committee)
develop and utilize a simple trading document to capture their adherence to policy on investment
purchases.
Agree. The CFO will work with the County Treasurer, as necessary, on developing a trading document.
7) Recommendation: The investment officer assure the annual review (of broker/dealers and
investment advisers) occurs and is documented.
Agree. The CFO will work with the County Treasurer, as needed, on the annual broker/de aler authorization
process.
Date: February 21, 2023
To: David Givans, County Internal Auditor
From: Robert Tintle, Chief Financial Officer
Re: CFO Response to Audit Report #21/22-12
Treasurer Transition report #21/22-12 March 2023
Page 22
County Chief
Financial
Officer,
continued
Thank you for the internal audit of the County Treasurer transition due to the March 2022 departure of the
former County’s Treasurer/Chief Financial Officer, the September 2022 arrival of the new CFO, and the January
2023 swearing in of the new County Treasurer. I appreciate your effort in this area as we work together to
address the results of the audit.
Below are responses to the internal audit recommendations.
1) Recommendation: The County and Treasurer continue to collaborate and clarify the Treasurer
assignments, duties, and responsibilities taken to address the associated statutory responsibilities.
Agree. The CFO, County Administration, and the Treasurer, will collaborate and mutually agree on a model
assigning, delegating, and clarifying how Treasurer statutory responsibilities are met.
2) Recommendation: The County to document the elected Treasurer’s duties and responsibilities.
Agree. Once recommendation #1 related to clarifying the Treasurer’s assignments, duties and
responsibilities is completed, these will be documented.
3) Recommendation: The County to evaluate whether the compensation for the elected Treasurer is
commensurate with the duties and responsibilities assigned.
The CFO defers this item to Human Resources.
4) Recommendation: The Board of County Commissioners document appointment of investment
officer(s).
Agree. The CFO will work with the County Treasurer to develop a recommendation for the Board of County
Commissioners to appoint a primary and secondary investment officer. Anticipated completion date of June
2023.
5) Recommendation: The investment officer develop a written system of internal control over the
investments covering the investment policy requirements.
Agree. The CFO will work with the County Treasurer to document the currently utilized system of internal
control over investments. Anticipated completion date of June 2023.
Treasurer Transition report #21/22-12 March 2023
Page 23
County Chief
Financial
Officer,
continued
Human
Resources
Director,
Kathleen
Hinman
6) Recommendation: The investment officer (in coordination with the Investment Advisory Committee)
develop and utilize a simple trading document to capture their adherence to policy on investment
purchases.
Agree. The CFO will work with the County Treasurer, as necessary, on developing a trading document. Given
the Investment Advisory Committee meets twice per year, the anticipated completion date is December
2023.
7) Recommendation: The investment officer assure the annual review (of broker/dealers and
investment advisers) occurs and is documented.
Agree. The CFO will work with the County Treasurer, as needed, on the annual broker/dealer authorization
process. The next review is scheduled to begin in April 2023 with an updated list of approved broker/dealers
effective July 1, 2023.
I have now reviewed both the Finance and Administration response to the audit and HR agrees with their
response and HR will support these efforts.
Treasurer Transition report #21/22-12 March 2023
Page 24
APPENDICES APPENDIX A - OBJECTIVES, SCOPE, AND METHODOLOGY
1.1 OBJECTIVES and SCOPE
“Audit
objectives” define
the goals of the
audit.
Objectives included:
1. Investments and recent investment transactions were consistent with investment policy (F-10) of
the Board of County Commissioners that “defines the parameters within which funds are to be
invested by Deschutes County;”
2. Provide additional information on statutory duties and collaboration of work between the
Treasurer and Finance (in general law counties) to aide in discussions on establishing duties with
the elected independent Treasurer; and
3. Be aware of any issues with compliance with County policy, federal and state regulations and
requirements, as may be applicable for these objectives.
Scope and timing:
The audit commenced in April 2022 and continued into February 2023. The focus was on
investments as of March 31, 2022 and December 31, 2022. The scope doesn’t include all of the ORS
stipulated requirements for County Treasurers (as this was recently addressed in the prior
transition audit).
1.2 METHODOLOGY
“Audit
procedures are
created to address
Audit procedures included:
• Interviewed staff on practices and procedures;
• Reviewed Oregon statutes regarding County Treasurers;
• Analyzed investment information;
• Review investments against investment policy parameters;
• Reviewed a selection of investments for documentation of purchase;
• Reviewed investment committee activities;
Treasurer Transition report #21/22-12 March 2023
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the audit
objectives.”
• Compared custodian bank investments to accounting;
• Reviewed handling of interest income;
• Reviewed investment policy;
• Reviewed Treasurer roles for some other counties;
• Reviewed the status of open recommendations from the prior transition audit; and
• Inquired of discontinuation of access privileges.
We conducted this performance audit in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
(2018 Revision of Government Auditing Standards, issued by the Comptroller General of the United States.)
The County Internal Auditor was created by the Deschutes County Code as an independent office
conducting performance audits to provide information and recommendations for improvement.
Treasurer Transition report #21/22-12 March 2023
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APPENDIX B – Selected Oregon Statutes with some relation to County Treasurer
Oregon
Revised
Statute Description (paraphrased)
Statute
applicability
County Clerks
205.365 Clerk fees paid to the Treasurer to separate account for use by Clerk. Clerk
205.370 Clerk trial fees paid to the Treasurer to separate account for use by Clerk Clerk
Sheriffs
206.120 On vacancy of Sheriff, duplicate receipts to Treasurer Sheriff
County Treasurers
208.010 Treasurer shall receive all monies due and accruing to the County and disburse on orders. Treasurer
208.020 Treasurer shall pay all orders when presented. Treasurer
208.070 Arrange and keep books (amounts received and paid out) of the Treasurer by distinct funds. Treasurer
208.080 Treasurer books subject to inspection and examination. Treasurer
208.090 Treasurer shall by the 10th of the month share with the County Commissioners a statement
as of the first of the month the following: amount of cash on hand in custody of the
Treasurer; the amounts and the banks where such funds are deposited; security furnished
to cover bank deposits and interest rates paid; and statement of outstanding warrant
indebtedness (and dates).
Treasurer
208.110 Treasurer shall: credit all monies received to proper funds; keep trust funds; pay out trust
funds upon order; and receive any checks from any county officers.
Treasurer
208.140 Treasurer shall annually settle with the County Commissioners. Treasurer
208.150 Treasurer at end of term shall transfer all books and monies. Treasurer
208.170 Treasurer can administer oaths necessary for duties of office. Treasurer
Treasurer Transition report #21/22-12 March 2023
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Oregon
Revised
Statute Description (paraphrased)
Statute
applicability
Local Financial Administration
294.004 Custodial officer is any officer with custody of funds. Public
Finance
294.035 Custodial officer may invest funds after obtaining Board of County Commissioner written
order. Provides details of possible investments and limits.
Public
Finance
294.053 Treasurer may invest surplus funds in master warrants of the County under ORS 287A.482
to 287A.488
Treasurer
294.080 Treasures shall credit interest to specific funds from which investment was made. Treasurer
294.187 County Treasurer shall pay over County Assessment and Taxation Fund (CATF) monies for
ORS 311.508; 205.323(4)b(c); and 205.323 4(c) within 10 days of quarter. Failure to pay
timely results in interest and penalties under ORS 311.375 (4)a/b.
Treasurer
Collection of Property Taxes
311.345 Damages and interest for failure to pay over monies from taxes assessed. Tax collector s pay
a penalty if not timely paid to the Treasurer. Treasurer pays a penalty if not distributed
properly under 311.395.
Property tax
collection
311.370 Tax collector shall deposit with the County Treasurer all money collected by the tax collector
under subsection (1) of this section. The County Treasurer shall issue to the tax collector
duplicate receipts for the money and shall hold it in a special account in the name of the tax
collector.
Property tax
collection
311.375 County Treasurer shall pay over to the State Treasurer state taxes charged to the county.
Failure to pay results in penalties and if after 30 days could result in loss of office.
Treasurer
Treasurer Transition report #21/22-12 March 2023
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Oregon
Revised
Statute Description (paraphrased)
Statute
applicability
311.385 Except as provided in ORS 311.370, 311.484 and 311.508, the County Treasurer shall deposit
all property tax moneys to an account in the records of the County Treasurer designated as
the unsegregated tax collections account.
Treasurer
311.395 The County Treasurer shall credit the total amount of moneys set out in the statements
prepared under subsections (1) and (2) of this section, to the several funds for which the
moneys were respectively received in accordance with the schedule provided in ORS
311.390. The County Treasurer shall keep the moneys and warrants received from the tax
collector in their respective funds. Treasurer shall distribute statement monies and
associated interest earned on monies in a timely manner.
Treasurer
311.465 The Treasurer, on tax court order, refund taxes within 3 days. Treasurer
311.484 Treasurer shall handle property tax bankruptcy account allowing appropriate
reimbursements and allowing for distributions.
Treasurer
311.508 Disposition of interest on late payments will be deposited and credited by the Treasurer to
CATF.
Treasurer
311.694 On property foreclosures, Treasurer shall pay DOR the unpaid taxes and notify tax collector
amount paid for the property deeded to the County.
Treasurer
311.807 The County Treasurer can maintain a refund reserve account. Excesses will be distributed. Treasurer
Treasurer Transition report #21/22-12 March 2023
Page 29
{End of Report}
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