HomeMy WebLinkAboutAudit Committee Minutes 06 25 2008_201402041939433970
Town of Nantucket
Audit Committee Meeting
Minutes – Audit Committee Meeting June 25, 2008
Present: Mr. James Kelly, Ms. Patricia Roggeveen, Ms. Connie Voges, Ms. Libby Gibson,
and Mr. Malachy Rice
Absent: Mr. Michael Kopko
Also present: Mr. Mark Abrahams, Mr. Whiting Willauer, Mr. Rick Atherton, Ms. Irene
Larivee, and Mr. Craig Abernathy
1. Call to Order;
Ms. Roggeveen motioned to call the meeting to order. Mr. Kelly seconded the motion.
2. Announcements and Updates:
Craig Abernathy was introduced to the Audit Committee as the new Executive Assistant
to the Finance Director.
3. Progress Report on Fiscal Year 2006 and 2007 Audits:
The status of the 2006 audit remains unchanged. There have been some responses to
the draft audit. Ms. Voges reports that her primary focus is on the 2007 audit. At this
time there is no draft audit for 2007. The manager for the audit from Powers and
Sullivan will be on vacation until July 7, 2008. Ms. Voges indicated that she will follow
up in a phone call to determine if anyone will be working on the audit during that time.
The expectation is that there will be little if any progress on the audit during the time
that the manager is out of the office. Ms. Roggeveen asked about impacts on the
timetable and Ms. Voges advised that she is unable to predict accurately the timetable
for work performed by the auditors. Ms. Roggeveen proposed that a paper trail be
created showing that the auditors are currently not meeting the proposed timeline.
This paper trail would be valuable when creating a new contract with the auditors. Ms.
Roggeveen indicated that she thinks it is very important for the Finance Department to
continue to “audit their audit.”
Ms. Voges reported that the responsibility for not meeting the timeline lies with both
the Finance Department and Powers and Sullivan. Ms. Roggeveen hopes to improve the
definition of timetables once the “dust settles on 2006.” Mr. Kelly spoke about his
Minutes – Finance Committee
June 28, 2007 Page 2 of 3
hopes to clarify the timeline and clarify expectations by both parties. He said the time
to agree on a new timetable would be when negotiating a new contract. In respect to
the 2006 and 2007 audits, Mr. Kelly does not believe that the Town can do much to
expedite the process. He believes that the Town can better manage the auditors by
creating very specific milestones when discussing future timelines and expectations.
Mr. Rice highlighted today’s phone call with Powers and Sullivan, scheduled for 4 PM.
The purpose of the phone call is to find out “where we are.” During the phone call there
will be a discussion of deadlines for drafts and submissions. He suggested that Powers
and Sullivan put into writing their deadlines, given the importance of the situation.
4. Response to Department of Revenue Letter:
Mr. Rice introduced the draft response to the Department of Revenue (DOR) letter. He
said that today he hoped to finalize a couple of items for the letter. These were the
dates for submission of the 2007 audit and milestones for moving forward in 2009.
Specifically, the letter focuses on how the management letter issued in 2005 will be
addressed. Other issues discussed in the letter are staffing, implementing the
recommendations of Powers and Sullivan, and the Abrahams Group Internal Control and
Organizational Study. The goal is to start 2009 clean, and begin the implementation of
the recommendations of Powers and Sullivan in July and August. Other goals included
developing a work plan for the 2008 audit, managing timelines, and monitoring
improvements.
Mr. Kelly offered advice on how to improve the response. That advice included naming
the vacancies that have been filled, and then linking that action to the
recommendations previously put forward. He advised that the language of the letter
should be more precise, reflecting action. Mr. Kelly said that he would like the letter to
create a tone or atmosphere of improvement. He also requested that the letter
demonstrate the Town’s effort in regard to the banking changes; direct deposit and cash
reconciliation. Ms. Gibson agreed that a higher level of detail would be preferred.
Mr. Atherton asked who would be signing the letter, and Ms. Gibson replied that she
would be signing. After discussion, it was decided that the Chairman of the Board of
Selectmen (BOS) should sign the letter. The goal of this approach is to build confidence
in the process, as it reflects approval at all levels, i.e. Audit Committee approval, Board
of Selectmen (BOS) unanimous approval. This would allow for a Board of Selectmen
approach to the response. There was some concern about the timeliness of this
development, but it was decided that a draft would be provided for tonight’s meeting.
The letter would show approval by the Audit Committee, be signed by Michael Kopko,
and go out to DOR on Friday, June 27th. The draft schedule will be included as an
attachment to the letter, per Barbara Dakin’s instructions.
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June 28, 2007 Page 3 of 3
5. Discussion of Organizational Study and Review of Internal Controls:
Mr. Abrahams highlighted the goals of the Organizational Study and Review of Internal
Controls. Twenty employees from the Finance Department will be involved in the study.
The study will be composed of two phases. A meeting today will explain the scope of
the study. A major goal of the study will be to determine who does what to get things
done. Cash is to be reconciled and quarterly cash reconciliation reports are to be
submitted to the bureau. The timely submission of Schedule A and the combined
balance sheet are also milestones for the department to meet.
There will be a start up meeting today. Review of material will begin almost
immediately. Interviews of each department member will begin next week. Interviews
with Airport, Water, Department of Revenue, Powers and Sullivan, and the Board of
Selectmen will also take place.
A new cash reconciliation procedure will go into effect on July 1st, 2008. New
requirements will also result in more timely postings to the General Ledger. Improved
postings to the Treasurer’s Cashbook and the General Ledger will eliminate what Mr.
Abrahams and Powers and Sullivan consider to be 80 to 85 percent of the “problems.”
Powers and Sullivan will also conduct interim reviews. One proposed interim review will
focus on the implementation of the new cash reconciliation procedure.
Assessing the organization and operations of financial functions is at the heart of
the study from an organizational point of view. This study will focus on the
functional integrity of the organization, the staffing of the organization, internal
and external communications, and controls. Draft findings and
recommendations will come from the Abrahams Group. A final report will be
brought forth by August 29th, 2008.
Mr. Kelly expressed concern that the employee interview process could result in
negative venting, and advised that a system should be in place to address this issue. The
union president and a Human Resources representative will be present at the meeting.
Ms. Voges asked Mr. Abrahams about plans to compare the size of the Town of
Nantucket with other municipalities, and he said that such a comparison is one resource
he plans to use in the evaluation process.
The scope of work document and the Job Assessment Questionnaire will be available at
the Board of Selectmen meeting tonight.
6. Date of Next Meeting:
Representatives from Powers and Sullivan as well as the Abrahams Group have been
invited to participate in the next meeting being held on Wednesday, July 9th, 2008 at
9:00 AM in the Town Hall Conference Room.
7. Adjournment
Ms. Roggeveen made a motion to adjourn which was “so moved” by Mr. Kelly.