Sent:

To: NELSON Kerri; IAAC; 'jokranch@hotmail.com'

Cc: HOATSON Scott; ROYS Jim; LAWRENCE Richard; MASON Palmer

Subject: RE: Internal Audit Update and Voting

Importance: Normal

Hi,

The reasons for auditing these topics is to establish an auditing program and a baseline similar to what we did with SPOTS. It would provide an independent rather than a DEQ-centric evaluation of the strengths and weaknesses.

My favorite would have been to audit how we engage the public with a spotlight on how effectively/efficiently we use and maintain GovDelivery.

From: NELSON Kerri

Sent: Thursday, September 27, 2012 11:03 AM

To: VANDEHEY Maggie; IAAC; 'jokranch@hotmail.com'

Cc: HOATSON Scott; ROYS Jim; LAWRENCE Richard; MASON Palmer

Subject: RE: Internal Audit Update and Voting

Maggie,

Thanks for the synopsis below.

Regarding your question on #4, given the breakthroughs on permitting and inspection and the problem-solving about to begin on Health and Safety, I do not believe it would be a prudent investment of DEQ dollars to conduct a risk assessment on these.

Were there other options to potentially consider?

Kerri

From: VANDEHEY Maggie

Sent: Wednesday, September 26, 2012 12:11 PM

To: IAAC; 'jokranch@hotmail.com'

Cc: HOATSON Scott; ROYS Jim; LAWRENCE Richard; MASON Palmer

Subject: FW: Internal Audit Update and Voting

Hi,

Here is an update on our internal audit activities. TKW will be attending our October and December meetings to talk about the risk assessments and audits. Item 4 needs an immediate response.

1. Contract

Statewide Internal Audits will not be entering into a master contract with internal auditing firms. They are looking for alternatives that may include legislation. Though our current contract will address some of our FY 2013 requirements, we will experience a break in contract continuity when the current TKW contract expires on Dec. 31, 2012. At our October meeting, we will discuss the following options for accomplishing internal auditing services:

1. Reassign existing staff with this skill set

2. RFP/contract Internal Auditing Services

3. Recruit/hire an Internal Auditor

4. Wait for statewide internal audits to decide what direction they are going

5. Hire a temporary internal auditor

2. Peer Review See attached Peer Review 2012

Agencies required to have an internal audit function are required to have a peer review every three years. TKW, acting as our internal audit function, had its peer review evidenced by the attached letter from Read & Bose, PC, Certified Public Accountants. The review is pending acceptance by the Peer Review Committee of the Oregon Society of CPAs.

3. 2012 Risk Assessment See attached 2012 Risk Assessment.

The purpose of a risk assessment is to identify and schedule future internal audits. IAAC decided to align the risk assessment with our core processes. Since this is DEQ’s first agency-wide risk assessment, it was performed at a high level to determine the various risks associated with each of our core process as it impacts the entire agency.

TKW completed the agency-wide risk assessment using the approach attached to my 2/2/2012 email. They shared the results with our core process owners and made some adjustments based on feedback. This will be one of the topics at out October or December meeting.

4. FY 2013 DEQ Internal Audit Plan See attached FY 2013 DEQ Internal Audit Plan

The attached FY 2013 DEQ Internal Audit Plan suggests 3 risk-based audits and a schedule for accomplishing them. There is time/money left on the TKW for us to complete a risk-based audit before the end of the contract on 12/31/12. The attached plan discusses the objective, approach, timeframe, and how the audit would benefit DEQ. I need your approval to proceed. An email response would work best.

a. Do you agree with adding these to the audits listed below into our audit plan?

b. Do you agree to a TKW audit of the permitting system?

5. Solid Waste Tipping Fee Audit

TKW has completed the initial audit of Solid Waste tipping fees and draft report. Wendy is sending the draft report out to the regional folks and the scope of the audit may expand as a result.

6. 2013 SPOTS audit See attached 2013 DEQ SPOTS Audit Program.

The 2013 audit of DEQ’s Small Purchase Order Transaction System (SPOTS) program is underway. If you’ll recall, this is a mandatory annual audit. The programmatic part is done, testing transactions is almost done and the report should be complete by our October meeting.

7. Annual Report to DAS

This information will be included in our annual report to DAS. To meet our annual mandatory performance review, I will referencing the risk assessment and the work we have done on outcome-based management. I will send it out for your approval once it is done.

Thank you for your feedback.

Maggie Vandehey | Sr. Operations and Policy Analyst

Department of Environmental Quality

811 SW Sixth Ave., Portland,, OR 97204-1390 | vandehey.maggie@deq.state.or.us

( 503.229-6878 | In OR: 800.452-4011 | 6 503.229.6730