Committee on Audit - Regular Meeting

All right, welcome everyone. It is the County Board's Committee on Audit for October. You can tell it's budget season for September 14th. This meeting will be held in room 203R per section 1.01D of the Milwaukee County Code of General Ordinances. It is also being conducted remotely via Microsoft Teams. This meeting is being live streamed on the County Legislative Information Center Click, the link for which is at the top of today's agenda. To committee members who are appearing virtually today, please keep your camera on at all times to ensure a quorum and keep your microphones muted until I call on you. If you wish to speak, please use the raise your hand feature. To members of the public and departmental representatives that are appearing virtually today, please keep your cameras turned off and your microphones muted until I call on you. When I call on you, you will need to turn on your camera and unmute your microphone. When members of the public are done speaking, you may depart from the team's meeting and follow the remainder of today's meeting on click. For any members of the public wishing to make a public statement here or to speak on the business, there are blue cards in the back that you can hand to committee staff. Please maintain a sense of decorum and direct all comments and questions to me as the committee chairperson. And with that, Madam Clerk, will you please call the roll?

Supervisors Logsdon. Present. Alexander.

Excused.

Rowland.

Here.

Gomez-Thom.

Here.

Capriolo. Here. Mr. Chairman.

Present. Yes, we can hear you, Supervisor Capriolo.

There are five members present. We have a quorum.

Awesome. Will you please read item one into the record?

Item one, from the Director of Audits, Office of the Comptroller, Audit Services Division, providing an informational packet of reports from the 2025 countywide audit services performed by the county's external auditors. This file is informational only unless otherwise directed by the committee.

Good afternoon, Chairman. Can everyone hear me online? Okay. Jennifer Folliard, Comptroller's Director of Audits. The item before you today is our 2025 Countywide Audit Report Packet. Our office holds the contract for the countywide audit with the external audit firm of Baker Tilly, and they currently have a subcontract with the CPA firm of Coleman and Williams to complete a portion of the services. You will see on page two of our transmittal memo a chart summarizing the reports that are before you today and a brief description of what each item is. As indicated in the memo, the single audit report will be submitted separately in the December cycle. Our external auditors have joined me today and will present this report. With the chair's permission, I will now pass the mic to Paul Franz from Baker Tilly, and I will vacate my seat so Michelle can hop up if she wants, and they can give you their report.

That sounds great. Thanks, Jennifer. Thanks, Mr. Chairman. Again, Paul Franz with Baker Tilly. With me here is Michelle Walter, and happy to be with you to share the audit results for the December 31st, 2025 audit. Included in your packet are a number of reports that we'll use just a few minutes to summarize. THE FIRST BEING THE ANNUAL COMPREHENSIVE FINANCIAL REPORT THAT IS WITHIN THERE INCLUDES OUR AUDIT OPINION AND WE'VE ISSUED AN UNMODIFIED OPINION ALSO KNOWN AS A CLEAN BILL OF HEALTH ON THAT AUDIT. WHAT THAT OPINION TELLS YOU IS THAT THAT financial statement document is free of material misstatements, that all necessary disclosures have been included within that document, that all necessary accounting principles have been adopted and applied consistently year over year. And so when you hire an external auditor, this is the level of assurance that you're hoping to receive when you hire an external auditor. So again, highest level assurance that we can give you. Included in there also are two other reports agreed upon procedures around passenger facility charges and the transit system specific to the federal transit administration requirements. Nothing of significance to note in either report. All work was done as expected with no noted issues within there. The last report that we issued is an audit results letter. This document includes necessary communications that we need to have with you as the governing body, lays out our audit plan, lays out the significant risks that we identified during the course of the audit. Happy to note that our original plan in the assessment of risks, in addition to evaluating The significant transaction cycles of the county did not lead to any unexpected risks, and therefore we did not head down a path where we added procedures that we hadn't planned to complete. We did not identify any material weaknesses or significant deficiencies for the second year in a row. AS I MENTIONED, I BELIEVE LAST YEAR WHEN WE WERE WITH YOU, WE'VE CONTINUED TO SEE SIGNIFICANT IMPROVEMENT IN THE COMPTROLLER'S OFFICE IN LAYING OUT A TIMELINE AND WORKING TO EXECUTE TO ULTIMATELY MAKE SURE THE AUTO PROCESS IS SMOOTH, BUT MOST IMPORTANTLY THAT THERE'S GOOD FINANCIAL INFORMATION AT THE FINGERTIPS OF THE DECISION MAKERS. AND SO THERE WAS CERTAINLY NOTHING THAT CAME ACROSS DURING OUR AUTO PROCESS THAT LED US TO A PATH THAT WE NEEDED TO BRING THAT TO YOUR ATTENTION LIKE WE HAD A COUPLE YEARS AGO. Continuing in that letter, there are some required communications that we need to have with you as the governing body. Lay out if there were any new accounting principles that took effect last year. Nothing of significance to note, but that's called out in there. We lay out the accounting estimates that we evaluated during the course of the audit. Happy to say that they're all clear, neutral, and non-biased, so in plain English, in that financial report that I mentioned. ANY ESTIMATES IN THERE ARE APPROPRIATE TO BE WITHIN THAT DOCUMENT AND WERE CALCULATED BY MANAGEMENT OR A THIRD PARTY IN A CLEAR MANNER. AND LASTLY IN THAT DOCUMENT, THERE'S A SECTION ABOUT INFORMATIONAL POINTS, THINGS THAT WE'RE WORKING ON WITH MANAGEMENT RELATED TO NEW STANDARDS THAT ARE COMING DOWN THE LINE. AND SO NOTHING OF SIGNIFICANCE TO NOTE. THERE WILL BE A LITTLE BIT OF CHANGE IN SOME FINANCIAL REPORTING ASPECTS WITHIN THAT FINANCIAL STATEMENT DOCUMENT NEXT YEAR, BUT NOTHING THAT CHANGES THE DAY-TO-DAY ACTIVITIES OF HOW THE CITIES MANAGE, OR SORRY, COUNTIES MANAGED. WITH THAT, I'M GOING TO TRANSITION AND LET MICHELLE CONTINUE ON IN THE CONVERSATION.

THANK YOU, MR. CHAIR, MEMBERS OF THE COMMITTEE. I'M MICHELLE WALTER, SENIOR MANAGER WITH BAKER TILLEY. AND ONE OF THE OTHER DOCUMENTS THAT IS BOUND IS CALLED THE COMMUNICATION TO THOSE CHARGED WITH GOVERNANCE AND MANAGEMENT. AND THIS IS KIND OF PIGGYBACKING OFF OF THAT REPORTING AND INSIGHTS DOCUMENT AS KIND OF MORE DETAILS ON ANY COMMENTS OR RECOMMENDATIONS THAT WE HAVE FOR MANAGEMENT OR FOR THE BOARD. AND WITHIN THIS DOCUMENT, IT HAS EVOLVED OVER SEVERAL YEARS. IF THERE'S SOMETHING THAT POPS UP, WE COMMUNICATE IT IN HERE, AND WE WORK WITH MANAGEMENT. THE ONE COMMENT THAT I WILL NOTE THAT WE HAVE IN HERE IS RELATED TO EXPEDITING THE FINANCIAL CLOSE AND REPORTING PROCESS. AND THIS COMMENT HAS ACTUALLY KIND OF STARTED A FEW YEARS AGO WHEN THERE WAS A CHANGE IN THE COMTROLLER, AND THERE'S BEEN SIGNIFICANT PROGRESS, AS PAUL HAD MENTIONED, ABOUT the closing process and the journal entries that have come after year end. Happy to report that we still have this comment because we're still kind of chasing a July 31st deadline. But for the first time in many years, we've been able to issue prior to July 31st this year. So we issued on July 27th. And I know Comptroller's Office is very focused on moving that deadline up. and changing procedures and closed to be able to do that closer to the end of June. So significant progress has been made over the past couple of years with this comment, and so it's in good standing. We also have some informational points in here about THE SCOPE OF OUR WORK RELATED TO I.T., AND WE DO A VERY BROAD I.T. ASSESSMENT TO HELP US GET COMFORTABLE WITH THE SYSTEMS THAT ARE INCLUDED IN THE FINANCIAL REPORTING FRAMEWORK. SO ONE OF THE ITEMS IN THIS REPORT IS ALSO THE STATUS OF PRIOR YEAR COMMENTS, WHERE IN THE PAST WE MIGHT HAVE HAD COMMENTS RELATED TO CASH RECONCILIATIONS AT CCAP, ANY INFORMATIONAL POINTS ON future GASBs or IT comments, those have all been cleared. So the only comment that is in this report is related to that financial close process. And then as Paul alluded to before, there's also some future accounting standards that are coming down the line that we have also communicated in here that, once again, we've been in communication with management and we'll continue to set them up in a good spot. SO OVERALL, THE AUDIT WENT VERY WELL, AND WE GOT FULL COOPERATION FROM THE COMPTROLLER'S OFFICE AND ALL DEPARTMENTS. THINGS RAN VERY SMOOTHLY AND VERY POSITIVE ON THE AUDIT FRONT THIS YEAR. As Jennifer mentioned before, the single audit report is another report that gets issued on the compliance with federal and state grants. And that is in the process of being finalized, hopefully this week. So that will be coming at a future meeting, I believe in the December time frame. But overall, things are looking very positive on that front as well. So with that, we'd be happy to answer any questions the committee might have.

Supervisor Logsdon.

Thank you, Chairman. I do have a question. You both mentioned there's changes in the standard accounting procedures. Are these big changes, because you both mentioned it, that are going to affect the county? And I'm wondering how, if this will help maybe clarify some of the problems we've had in the past.

Specific to the standards that we're mentioning, they're more at the financial reporting level within that big annual comprehensive financial report in there, clarifying some aspects of how things are reported in there. And so it'll provide more detail in some areas where in the past it hasn't, but I don't know that from a day-to-day aspect that it's going to have a direct effect in anything that you might be relating to.

So it's basically the standard accounting procedures. Correct. Got it. Yes. Okay.

Yeah, the stuff that us accountants live by. All right. Thank you.

Other members of the committee?

Supervisor Gomez-Thom. Thank you, Mr. Chair. I don't have a question, more just a comment. Thank you for this thorough report. And anytime you have a wellness exam that ends in no news is good news. I love to hear it. So great work to everyone involved and glad to see that we're continuing to make that progress with changes. Thank you.

Thank you.

Anyone else who's here in person? Supervisor Alexander?

Thank you, Mr. Chairman. I apologize for my tardiness. I will attribute that to the lovely freeway system that we have going on here. So just asking to be counted in attendance. Thank you.

So ordered. Any supervisor joining us remotely have a question? No? Okay, I have just a few. I'd love to just understand a little bit more about the audit with MCTS and what that covered, if you could give us a little bit of an idea of what that actually covered when you audited it.

Yeah, so there are compliance steps that are required by the Federal Transit Administration. And within that report, it lays out the individual steps that we go through and assess as part of that process. No significant financial dollar numbers in that agreed upon procedure report that I was talking about. But as far as the financial audit and our opinion within the annual comprehensive financial report, we do perform financial data substantive testing over the transit system, both on the balance sheet and the income statement side.

Okay, and I am struggling to find the place within the file, so I apologize, but I believe part of that process is going back and tracing source documents that the FTA requires them to keep for, I believe, it's three years? Correct. Yep. Okay, great. Glad I'm at least on track. Our current MCTS leadership has been doing a great job in reforming a lot of those processes. In your opinion, do they have the necessary processes in place to maintain that documentation per FTA requirements?

We did not come across any concerns that led to something to communicate along that would lead you to a different conclusion than that.

Okay. Thank you. If there are no other questions, thank you very much for the Clean Bill of Health. Thanks for having us. Madam Clerk, I think we can move on to Item 2.

Item two, from the Director of Audits, Office of the Comptroller Audit Services Division, an informational report on the status of recommendations contained in the cash handling manual audit report. This file is informational only unless otherwise directed by the committee.

Okay, Mr. Chairman and committee members, Jen Folliard again, Comptroller's Director of Audits. This file is our second follow-up report on County Cash Handling Manual Audit we released in August of 2025 and presented to this committee a year ago. Our audit focused on determining if cash handling county departments had current written cash handling policies and procedures that align with best practices. In doing our work, we focused on nine areas that regularly handle customer transactions. We found that no area had a complete set of documents that fulfilled the Government Finance Officers Association, or GFOA, recommended elements, so every department did have documents that incorporated some of the elements. On the positive side, all employees handling cash did have background checks and all received cashier training as recommended by GFOA. During our field work, we noticed that the last time the county's overall cash handling policy had been updated was in 2000. We also found that each department in our sample used a standalone third-party vendor to process payments, and in many cases they were several different vendors. There were some issues with the agreements, and also generally efficiencies can likely be gained by consolidating systems when possible. We made five recommendations to help fully implement best practices in this area. And as you can see in the attached report and status update grid, three of the five recommendations have been closed and two remain open. Recommendation three related to specific updates needed in our sample departments. With the exception of the treasurer's office, all departments updated their written cash handling procedures. The treasurer's office anticipates completion of their P&Ps by the end of Q1 of 2027. Efforts to implement Recommendation 5 related to an evaluation of third-party vendor payment contract efficiencies will continue. So we will plan on bringing the status of those back to this committee in the March meeting cycle. Answer any questions if you have any.

Any questions for members of the committee? No, we've been over this item a couple times. All right. Thank you very much. With that, we'll move on to item number three.

Item three, from the Director of Audits, Office of the Comptroller, Audit Services Division, an informational report on the Audit Services Division's Open Audit Recommendations OAR Dashboard. This file is informational only unless otherwise directed by the committee.

OK, Mr. Chairman and Supervisors, Jen Folliard, Comptroller's Director of Audits. And I'm joined by a lead auditor in our office and the mastermind of our new dashboard, Arzea Garcia-Morton. So he's going to pull up the PowerPoint for us. OK, fantastic. I think we can go to the next slide, maybe? Awesome. Okay. So at the first audit committee of this new term, we received questions and feedback from you all suggesting that a dashboard with open audit recommendations would be helpful. So we began researching this. I say we. But it was Isaiah began researching this and seeing what other audit shops did. Use this information to design a dashboard from Milwaukee County. And I'm pleased to report that the open audit recommendations for OR dashboard is now live on our website. So we'll walk you through the various features of the new dashboard. Next slide, please. So the Open Reports tab filters the data to audit reports that still have open audit recommendations and creates a chart that shows you the kind of open-closed ratio, recommendation ratio for various reports with open recommendations. You can access the legislative file, which contains the original audit as well as a link for the latest follow-up report if there has been one. So transit right now. We presented that this summer. We haven't had our first follow-up, so those are all open. And then the cases of the other audits, you see sort of a mixture of open and closed. Next slide, please. The Recommendations tab will get you the detailed text of open recommendations. You can filter by report, latest update, auditee, and recommendation status to get at this data. Next slide, please. OK, and similar to the last one, the recommendations with latest comments tabs will get you those recommendations, but also includes management's latest comments regarding the progress they've made in implementing the recommendation. Finally, we uploaded reports and recommendations going back to 2012. So if you're interested in looking at an older report, you can use the CLOBES Reports tab to find that information. You can filter this information by audit report publication date or auditee. So in sum, a lot of different ways to look at this data. We also have a frequently asked questions section that answers questions about the contents of the dashboard as well as the overall follow-up process. We update the dashboard every time we issue a new follow-up report, and each report with open recommendations is generally followed up on every six months or so. Most county board cycles will have at least one follow-up report before you all, so this The dashboard will be updated frequently. Okay, so thank you. It's fun what the kids can do these days. I thought this was going to take us forever, and Isaiah whipped it out really quickly. So I just wanted to make sure he could come and get to present his work. And thank you all for the good idea. Hopefully you find this helpful.

100%. Supervisor Gomez-Tom?

Thank you, Mr. Chair. I don't know if this really makes me a huge nerd. I am so excited for this. So thank you so much for hearing our request and putting this together, Isaiah. Great work. I'm super excited to go through all of them and just, essentially it's going to help me catch up since I'm a newer member of the Audit Committee. And so I'm just really excited to be able to dig in and see what's available. But also, you know, this is another level of transparency that we can now provide the public. Very excited. Thank you for your work.

Absolutely. They're all public reports, but they're separate on click. So this is great to pull it all together and you get an overall picture. So thank you.

Supervisor Logsdon.

Thank you, Chairman. I'm also very excited to see this and knowing that it's up and running. If we want to do some interaction, we have questions while we're going through it, what procedures do we use to do that?

You can just reach out to me, and if it's something I can try to help you navigate, and if it's too techie, I can just connect you with Isaiah, who's now our guru on the dashboard, whether he wants to be or not. But I'm excited, too. When we had our meeting and he showed me, I was like, really? You came up with this that quickly? That's amazing. So really good stuff.

Thank you.

Supervisor Capriola.

THANK YOU, MR. CHAIR. I JUST WANT TO SAY KUDOS ON HOW QUICKLY THIS WENT. I FEEL LIKE WE NEED TO CLONE ISAIAH AND MAYBE PUT HIM IN SEVERAL OTHER DEPARTMENTS ON PROJECTS. I'M SO USED TO THINGS GOING AT SUCH A SLOWER PACE, SO THIS IS REALLY EXCITING. AND I JUST WANT TO VERIFY, THIS IS SOMETHING THAT'S OPEN TO THE PUBLIC AS WELL. THEY CAN GO ON THIS WEBSITE AND SEE EVERYTHING WE CAN SEE?

YES. 100% OPEN TO THE PUBLIC.

AWESOME. THANK YOU. ANYONE ELSE HAVE A QUESTION OR COMMENT?

And I will just say, I think looking back historically is also a really huge value proposition here. And going back to 2012 is really great news. The visual geeks me out, which I really enjoy, but also the fact that we can dig into the precedent of a lot of these audits has been, it's going to be huge, I think. So thank you so much for your work.

Item 4, from the Director of Audits, Office of the Comptroller Audit Services Division, submitting a request for authorization to enter into a five-year contract for annual countywide audit services, annual ACFR assistance, and other assistance services for the calendar years ending 2026 through 2030. plus a one-year renewal option at the county's discretion. This file was referred to the Committee on Audit for informational purposes. Only for Section 59.52, Sub 31, Sub D, Wisconsin State Statutes, and is referred to the Committee on Finance.

Jen Follier, Comptroller's Director of Audits, and I'm joined by Paul Grant, who's the Audit Compliance Manager. He manages our countywide audit process and also handled the RFP overall, coordinated that process. So the county's countywide financial audit contract, which our office managed, expires at the end of this year. We worked with procurement to conduct an RFP process this summer, an experienced independent panel comprised of individuals Familiar with the countywide auditing process and the general ledger, performed an independent evaluation of six proposals based on specific criteria established in the RFP. As a result of this work, the firm Baker Tilly U.S. LLP received the highest score, and Baker Tilly is the incumbent firm. The deliverable product provided through this contract, countywide audit packet, was presented to you today. The county is required to obtain annual independent audit services to comply with applicable state financial reporting requirements and federal audit requirements associated with the county's receipt of federal funding, including funding for transit and airport operations, but not limited to that funding. We are recommending moving forward with a new five-year agreement with an optional six-year. The rates agreed to in the RFP are also listed in the transmittal memo. While the services that will be performed under this contract do differ slightly just because of the changes in the county, Then those that were solicited under the last RFP in 2020, the total maximum fee of just over $2 million for the countywide audit work during the period 2026 to 2031, they are over $200,000 lower than the total quoted maximum fee for similar services for the previous six-year period. We are combining the countywide audit contract with a separate ACFER assistant contract that we also manage, and that's help the comptroller's office has with pulling together the ACFER and submitting some of the filing with various places they need to be submitted, Federal Clearinghouse and other places. So that combined total for both of those which used to be separate and are now together is $2,389,770, inclusive of the optional plus one year. So that's the six-year total, not an annual total. While OEI established a TBE goal of 0% for the services sought under this agreement, Baker Tilly's proposal included a commitment of dedicating 20% of contract fees for TBE participation. This one is before you all as an informational report and before Finance for Action this cycle, but we're happy to answer any questions you may have.

Members of the committee? Supervisor Capriola.

Hi, thank you, Chair. Just trying to understand the contract a little bit better and the 20% TBE sounds great. I know we had a 0% goal and so this is going to be a 20% goal and I think that's wonderful. I am curious, I see that the firm is out of Chicago and I know Baker Tilly is headquartered, I think, in Chicago, but also has a Milwaukee office if I'm researching correctly. Are there any firms that were considered in Milwaukee or do we try not to use firms that are in Milwaukee because of some kind of conflict? I'm just curious how we came upon or how Baker Tilly came upon choosing the firm that they did for the TBE work.

Mr. Chairman, I think Baker Tilly is best to answer that question since they submitted their proposal. There's nothing on our end that kind of, apart from the bonus points awarded for TBU participation that OEI added as part of the RFP, there's not anything that we do. So I think they can talk about their choice.

Thanks, Jennifer. Thank you, Mr. Chair. Thanks for the question and the opportunity.

Do you mind reintroducing yourself briefly?

Oh, I'm sorry, of course. Paul France, principal with Baker Tilly in Milwaukee. Thanks for the question. Thanks for the opportunity to be considered. We looked very, very hard inward on how we could look as an incumbent to ensure that we are bringing a fresh perspective to the county's audit. And we've had a long-lasting relationship with Coleman and Williams and truthfully had conversations about having them included in the proposal. The firm in Chicago that's referenced is a firm that we work with on a number of Chicago-based engagements and have been very impressed with the level of work that's been received in that. And so when I looked at the risk profile, I really hung the hat on presenting the opportunity to reboot how we've used the subcontractor in the engagement. to ultimately our benefit and the county's benefit in a fresh perspective. All right.

So were there any Milwaukee companies that were considered?

Thank you. The only firm that's qualified in the area is Coleman and Williams.

Okay. Thank you.

Any other questions from the committee? A couple of clarifications from me, then, just really briefly, and some of these questions I would not have thought of before January of this year. This is not an amended contract. This is a new contract.

Thank you. This will be a new contract. So every time we do an RFP, we'll enter into a new contract, even if it's the same vendor. We will include all the county's updated required contract things, and we work with procurement to help us negotiate and make sure that we include all those aspects.

Yes.

And am I correct that there are aspects of federal law that require us to have a third-party auditor?

They require an independent audit be done, yes, from a CPA firm, and there's not in-house resources for this. This is a very common practice, performance audit in-house and then external audit handling the financial. It's pretty common across governments.

Seems like a good law. Seems like a good law.

But, yes, the reports that they do, they are required. This is required work.

And then my last question is, I noticed a five-year contract, and in the background it said that in December of 2001, the county approved a policy of seeking new proposals every five years. So is it actually a county statute that dictates five years?

I'll look back to Paul because I was not here in 2001, but I believe it was a resolution that was passed. AND I THINK BEST PRACTICE TYPE THING THAT WE HAVE ALWAYS KIND OF FOLLOWED FIVE YEAR. WE DO FIVE PLUS ONE BECAUSE IT GIVES US FLEXIBILITY, AND ACTUALLY, WE CONSIDERED WHETHER WE SHOULD GO OUT FOR BED LAST SUMMER OR THIS SUMMER, BUT WITH THE NEWER COMPTROLLER AND SOME OF THE CHANGES THAT THEY WERE WANTING TO MAKE, WE HAD APPROVAL TO KEEP IT, AND WE DECIDED TO DO IT THIS YEAR. WE DIDN'T WANT TO UPSET THE APPLE CART OF ALL THE PROGRESS THAT WAS BEING MADE. because it's right hot on the heels of the audit wrapping up that we were putting it out to bid. And so we wanted to do that. And so that kind of, depending on what the future looks like, allows a little bit of flexibility for us. But if things look good, we probably would plan on RFPing at the five-year mark.

Okay, thank you.

Paul Grant, Audit Compliance Manager, the Comptroller's Audit Services Division. I would just echo what Director Folliart had said, and I would say, make one other comment, is if you look at it from the perspective of external audit, external CPA firms, typically it doesn't make a lot of sense for them to come in and do an audit for one year and then kind of switch midstream and get another one because they're just, you know, Baker Tilly's case, they've been around for a while and working with Milwaukee County so they know the environment and all of the the nuances of the county, but if you were to change auditors over less than a five-year period, it gets to be a little disruptive, and there's a big learning curve for every firm that comes in.

Thank you. Thank you so much for that explanation. If there are no other questions from other members of the committee, I think we can move on to what I believe is our final item.

Item 5, e-comments submitted to the Committee on Audit via the County Legislative Information Center click.

And I don't believe there were any comments at the beginning of the meeting. If that is the case, then we will adjourn and the next regular meeting of the Committee on Audit will be Monday, November 30th, 2026 at 3 p.m. Thank you very much, everybody.