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Home My WebLink About2017-5-3Minutes for May 3, 2017, adopted Apr. 5, 2018 Town of Nantucket Audit Committee www.nantucket-ma.gov MINUTES Wednesday, May 3, 2017 4 Fairgrounds Road, Community Room —10:30 a.m. Staff: Libby Gibson, Town Manager; Brian Turbitt, Finance Director; Julia Lindpff, F. Analyst; Bob Dickinson, Assistant Town Accountant; Terry Norton TownlitinutgMer Attending Members: Dawn Hill Holdgate, Board of Selectmen (BOS) Chair; Jim Kelly, BOS `F'o Absent Members: David Worth, Finance Committee Chair � Auditor: Anthony Roselli, Roselli, Clark & Associates (RC&A) a' i Documents used: Copy April 6, 2016 minutes; FY2016 Management Letter and PowerPoint prestioplo !"- 1. CALL • ORDER & ELECTIONOF OFFICERS Called to Order at 10:30 a.m. by Jim Kelly Ms Hill Holdgate nominated Mr. Kelly as Chair. Adopted by unanimous consent Mr. Kelly nominate Ms Hill Holdgate as Vice Chair. Adopted by unanimous consent DISCUSSION11. • OF 1. April 6, 2016: Adopted by unanimous consent DISCUSSION111. OF 1 Turbitt — Introduced Anthony Roselli. Roselli — Reviewed the status per the FY2016 Management Letter. The Town is in a strong position and is building its reserve balances. The reserve ratio exceeds the high-end credit rating floor of 15%; the reserve ratio is total reserve divided by expenses. The Town has been awarded a positive credit overview of AA+ and Aa1; suggestions were presented on how to move up to the next level. The landfill and nursing home are presented as Enterprise Funds but are handled as General Fund; recommended switching them over to General Fund because the OPEB is creating the deficit. Turbitt — It makes sense to do that; they don't meet the threshold for being Enterprise Funds. Rosella — Did a pro forma as if the enterprise funds weren't in the general fund; will discuss that with Moody with the hope of getting some feedback to provide in deliberations going forward. Kelly — He believes the Town put Our Island Home in enterprise fund because we didn't have confidence. It does make sense to put it in General Fund. Turbitt — Could consider eliminating the Enterprise Funds and rolling them back in the General Fund but let them continue operating as enterprise funds; the audit would be presented differently to the state. Motion to have Mr. Turbitt change OIH and Solid Waste to General Fund. (made by: Hill Holdgate) (seconded by: Kelly) carried 2-0. Roselli — Informational items: Municipal Modernization Act (MMA); new OPEB liability standard; single audit changes. Turbitt — The aspects of the MMA pertinent to Nantucket were adopted at Annual Town Meeting. Adopted the revised language for OPEB Trust. Betterment Reserve Account we have already; for state reporting purposes, we need one overlay account. Also adopted language for the revolving fund. In regards to OPEB, we are talking to Barnstable County; the likelihood of adopting the standard is now FY2018. Currently we pay a pm rata share the purchase made by Barnstable County; we have discussed internally about the firm that Barnstable County uses; it doesn't give us credit for the OPEB Trust Fund. If we go on our own, we can get credit for it. Implementation date is predicted FY2018. Roselli — The Actuaries who do this work might be willing to come to Nantucket to explain the process and benefits of separating from Barnstable County. Page 1 of 3 Minutes for May 3, 2017, adopted Apr. 5, 2018 Turbitt — orking on review internal control framework and talking to RC&A about the implementation and to be ready for the deadline. Roselli —There was some turn over in Finance Department resulting in errors that forced deficiencies to be labeled significant. These could have an impact on FY2017. HE is working with Mr. Turbitt on fixing them. Turbitt — He has implemented a closing process to prevent errors in the future. He has looked at duties and are is wor ' g on cross training so more than one person knows how to do the closing process. Last year, because of the Bond Offerings, we were put under a severe time crunch that caused the closing process to be delayed. H 's reviewing the balance sheet and meets with the Assistant Accountant twice a week. Believes FY2017 wi I be better with no significant deficiencies. Roselli — Looking at the five-year process, the Town is improving; however he would like to see the deficiencies disappear. Kelly — Uoking back to FY2014, FY2015, and FY2016 comments, asked if this is the first year with significant deficiencies and whether or not there is some trend developing. Roselli — I liete were a lot of errors this year. The biggest area is the budget entry; 90% of the problems were in the budt Yet area. When you are doing budget, always do a cash recap; the budget is imbedded in that. Suggested creating a Capital Projects Fund. A significant deficiency arose with the IRS from an employee not submitting the payment for Federal Withholding on time, resulting in notices from the IRS and leading to significant enalties; that has been corrected. Turbitt —17xplained how the problem was resolved and the process implemented to prevent late payments from happening again. He believes it is now fixed. Hill Hol ate — Asked if there would be any savings to outsourcing payroll. Turbitt — That is a long standing item he and the Human Resources Director are reviewing different platforms. t would potentially remove this problem. Kelly — As ed if this was part of the operational overview. Turbitt — s happened after that. The outstanding item for the operational review is outsourcing payroll- If we outsour e payroll, there would still be a lot of work to be done by his staff; the only change would be who issues the c eck. Roselli — The payroll reconciliation should be issued but it isn't necessary. The withholding was not in balance anc should be reconciled monthly. Turbitt — s is in reference to the deficit in the Federal Tax withholding. In the audit of the 2012 & 2013 931s, they I icked up people we believed were contractors and we had to pay federal taxes. We booked that to the liability iccount from which it was paid. Inadvertently, it was not expensed at the end of the year. Roselli — T he Ambulance Receivable process should be formalized and cleaned up once a year. Kelly — Ast ed whose responsibility that is. Roselli — Tie BOS; the fire chief can make a recommendation. Turbitt —As we move forward, it will be a more in-depth review. He'd like to do it every six months; it would cover all de artments. Roselli — T here are four unresolved problems from the prior year: outstanding receivables, cash reconciliation process, pa roll and Public Works reviews, and stagnant Special Revenue Accounts. Turbitt — he receivables are mostly uncollected excise taxes dating back to 2006; working on clearing those off the boo . Lynell Vollens is working to make the tax reconciliation process more efficient; explained the petty cash r conciliation process. The payroll review is almost complete; the Public Works fixes are slower but he is wor g with the new director to correct them. He has an updated Special Revenue Account list; the majority are from Federal Grants to Nantucket Public Schools that are probably closed out; he will go through the list to determine whether or not any gifts were used and disposition of they weren't; some will be cleaned up before June 30, 2017; to prevent further stagnation, he has implemented a quarterly review of the Special Rev nue Accounts. Discussion about how to trace and collect outstanding boat excise taxes through the Harbor Master. Kelly — Ask d when the town received the Management Letter. Turbitt — In March after the Nantucket Public School audit was completed. Can work on getting it out in a more timely fashion. Page 2 of 3 Minutes for May 3, 2017, adopted Apr. 5, 2018 Roselli — Started the audit on Monday, May 1 to be able to address Management Letter findings and give the Town time to rectify them before the end of the fiscal year. They will come back the end of September to have Financial statements by the middle of October. Turbitt — Moody's Financial Rating Report will be back toward the end of October. There will be a couple of policy wording changes to make them stronger. TBA Adjourned by unanimous consent at 11:26 a.m. Submitted by: Terry L. Norton Page 3 of 3