Audit committee adopts government auditing standard, instructs new internal auditor to draft charter

The Grand County Audit Committee voted unanimously July 7 to direct internal auditor Julian Metcalfe to draft an audit committee charter under Generally Accepted Government Auditing Standards (GAGAS) and to move forward with initial audit work focused on accounting and controls for restricted Transient Room Tax (TRT) funds.

The decision followed a presentation by Julian Metcalfe of GPP Analytics, who recommended using a government-specific standard to enhance credibility and independence. Metcalfe said, "I think it's important to consider this if you haven't looked at audit standards before because it adds to the credibility of the work." Committee members agreed and approved a motion to have Metcalfe prepare a charter for adoption at the next meeting. The motion passed unanimously.

Committee members said they want the internal audit function to identify risks and strengthen controls before problems surface. Metcalfe described a two-phase approach: a listening and information-gathering phase followed by focused, evidence-based testing. He proposed starting an enterprise risk assessment when he visits in person in August and using that assessment to prioritize audit engagements.

Members spent substantial time on TRT accounting in fund 23 (reserve TRT) and fund 47 (GCAP). Commissioner Martinez described uncertainty about how restricted TRT dollars are tracked inside the county's ledgers and noted that House Bill 456, effective July 1, imposes new restrictions and a 50% reserve limit on TRT balances. Martinez said the county needs clearer accounting so commissioners and staff can see how much is available for promotion, recreation/film/convention and mitigation at any time.

County staff and consultants explained the likely source of the confusion: TRT receipts appear to be routed into multiple funds rather than maintained in separate special revenue funds or subaccounts, which complicates reconciliation. A consultant observed that the usual governmental accounting solution is to post restricted revenues to dedicated special revenue funds so that revenues, expenditures and ending fund balances align without manual "bucketing" after the fact.

The committee also approved a motion, seconded and passed unanimously, instructing staff to request read-only access for the internal auditor to the county's financial software (Cassell/Clarity) to permit remote review of records as Metcalfe begins work. The committee scheduled an in-person kick-off meeting for Aug. 4 at 10:30 a.m. to interview staff and start the enterprise risk assessment.

Committee discussion included implementing quarterly budget-versus-actual reporting to reduce end-of-year surprises and better track revenue projections. Metcalfe offered to draft an audit committee charter consistent with GAGAS and provide it for committee review before the August meeting.

Actions taken at the July 7 meeting included a unanimous vote to adopt the government auditing standard approach and a unanimous vote to request read-only access for the internal auditor. Commissioners and staff agreed to use the Aug. 4 meeting to advance the enterprise risk assessment and to refine the scope based on interviews with department staff.

The committee paused any formal audit engagement work until the charter is drafted and adopted, and until Metcalfe completes initial interviews and remote system review. The charter is due to be presented at the next audit committee meeting in August.