HomeMy WebLinkAboutAudit Committee Minutes 11 05 2008_201402041938562248
Town of Nantucket
Audit Committee Meeting
Minutes – Audit Committee Meeting November 5th, 2008
Approved December 10, 2008
Present: Ms. Elizabeth Gibson, Mr. Jim Kelly, Mr. Michael Kopko, Ms. Patricia
Roggeveen, Ms. Connie Voges, Mr. Bob Dickinson, and Mr. Malachy Rice
Absent: None.
Also present: Mr. Whiting Willauer, and Mr. Craig Abernathy
Call to Order:
Ms. Roggeveen called the meeting to order at 9:00 AM.
Announcements and Updates:
Ms. Roggeveen congratulated Tim Madden on his electoral victory.
Approval of Minutes:
Mr. Kopko made a motion to approve the minutes from the meeting of October
8th, 2008. The motion was seconded by Mr. Kelly.
Status of Phase I & II Abrahams Group Recommendations Implementation:
Ms. Gibson stated that on October 2nd and 3rd the Abrahams Group was on the
Island to speak with various individuals in the Finance Department in order to draft
implementation plans for the Abrahams Group recommendations. She noted that there
were three outstanding issues; tasks to achieve, target dates for completion of tasks,
and identifying who would be responsible for achieving the tasks. Ms. Gibson asked Ms.
Voges to elaborate. Ms. Voges said that the meetings identified which
recommendations would take priority for implementation and that in subsequent
conversations she had reached agreement with the Abrahams Group on delaying or
modifying schedules for implementation.
Minutes – Audit Committee
November 5th, 2008 Page 2 of 6
Ms. Gibson suggested that the Committee take the recommendations one by
one. Mr. Kelly asked about Task 4B, Finance Director authorizes IT Director to remove
MUNIS permissions for all posting from Collector and Assessor staff. Ms. Voges said that
this task would not be completed in November due to a timing issue, but that it will be
implemented at a later date.
Ms. Voges then directed the Committee to Task 17C, MUNIS abatement reports
will serve as documentation instead of manual logs. She explained that this task relates
to manual logs that are kept in addition to the electronic records kept in MUNIS, and
that the Assessor’s office finds it easier to use the manual log. Additionally, she stated
that the log was also valued for its historical significance. Mr. Kelly asked if Task 17C
was assigned based upon a perceived duplication of efforts, and not because of internal
control issues. He added that if that were the case it would be within the Finance
Director’s discretion to make a management decision to keep the log based upon its
historical value. Ms. Voges answered that this was her position as well as the position of
the Assessor.
In regard to Task 18 D, when bank statement deliveries are moved to the 5th of
the month the Finance Department should present its cash reconciliation to the Audit
Committee by the 20th of the month, Ms. Voges stated that she had reviewed the timing
of statements receipt with the Abrahams Group. She said that after discussing some of
the challenges in receiving timely statements, all parties agreed to set the date for
presenting reconciliations as the last day of the month.
Mr. Kopko noted two of tasks on the implementation plan; Task 26 A, access has
been provided to various bank accounts to Airport and Wannacomet Water, and Task 6
A, School department will provide School Lunch and Community School evidence of
sales with turnovers. He asked if the same system for documenting cash transactions
recommended for the School would be implemented at the Airport and Wannacomet
Water. Ms. Voges answered that Wannacomet’s receipts come without supporting
details, but all of Wannacomet’s receipts have receivable records that will be reviewed
by the Finance Department. She added that cash receipts at the Airport was still an
issue, and that School Lunch receipts had recently been received but the method of
reporting would need to be addressed.
Ms. Roggeveen asked if enterprise funds are responsible for doing there own
cash reconciliations. Ms. Voges responded that Wannacomet Water and the Airport
have evolved into independent entities that perform many tasks separate from the
Finance Department, but that cash reconciliations are still the Treasurer’s responsibility.
She added that it is difficult for the Treasurer to perform this duty without the necessary
information.
In regard to the Nantucket Regional Transit Authority (NRTA), Ms. Roggeveen
asked how its cash deposits and reconciliations were handled. Ms. Voges responded
Minutes – Audit Committee
November 5th, 2008 Page 3 of 6
that NRTA is a State agency. Ms. Roggeveen asked if Ms. Voges views the financial
records of NRTA, to which Ms. Voges responded that she only signs checks for NRTA.
Mr. Kopko inquired about the Solid Waste Enterprise Fund’s methods for
handling cash deposits. Ms. Voges responded that those deposits are handled by
Dianne Holdgate. Mr. Kopko then asked if the Finance Department backs up these
deposits with a review, to which Ms. Voges responded that this was not something she
has looked at. Mr. Kopko asked if it was something that should be considered. Mr. Kelly
replied that he feels that there are good controls already in place.
Ms. Voges commented that reporting form Wannacomet Water is excellent, but
in the case of the Airport the Finance Department is not yet receiving the information it
needs. Mr. Kopko asked how the Board of Selectmen could assist in expediting the
delivery of the Airport’s financial records. Ms. Gibson said that she is working on many
of the Abrahams Group recommendations, and that she has met with the Airport and
they have indicated a willingness to provide timely documentation of their finances.
Ms. Voges added that she has not received any negative feedback from the Airport, but
noted that the Finance Department has recently received information that was not
current. Ms. Gibson stated that she felt it would be better to work on this issue a bit
more before involving the Board. Mr. Kopko asserted that he has seen the Airport’s
past performance, and he perceives this problem as an ongoing issue. In light of that
continuing situation, he said that he feels it is appropriate to sit down with the Airport
and discuss the matter. Ms. Gibson said that she feels it is important to identify specific
issues before convening to discuss the matter with the Airport. Ms. Roggeveen asked if
the Airport will be providing a record of sales as part of new protocols. Ms. Voges
answered that the Airport should provide as much data as possible in order to support
its cash receipts. Ms. Roggeveen then asked how the Airport handles cash deposits, to
which Ms. Voges responded that the Airport handles all of its own deposits and then
provides documentation to the Treasurer. Ms. Roggeveen indicated a desire to develop
a protocol for handling cash.
Review of 10/31/08 letter to DOR:
Ms. Voges reminded the Committee that the Finance Department began
submitting bi‐monthly letters to the Department of Revenue (DOR) on April 30, 2008.
She noted two attachments detailing accomplishments, and stated that due to some
problems with the Landfill Budget the Tax Recap would be delayed due to necessary
changes. Ms. Voges directed the Committee to the Audit work plan and highlighted
some of the tasks that have been moved to November. She added that the Finance
Department has also been working on the Special Town Meeting warrant and providing
a draft of the new Tax Recap to DOR, but the Finance Department is in a better position
to accomplish its goals than it has ever been before.
Minutes – Audit Committee
November 5th, 2008 Page 4 of 6
In relation to the review process, Mr. Kelly inquired about teacher’s accruals in
School payroll. Specifically, he asked about the deadline listed as October 31, 2008, in
regard to whether the deadline represented a completion date or a submission date.
Ms. Voges responded that the deadline represents a date that documents are submitted
for review. Mr. Dickinson added that he receives information from the School regarding
salaries which he scans and attaches to the corresponding payroll warrant, and then
provides the information to auditors when requested.
Status of FY 2008 Audit:
Regarding multiple tasks facing the Finance Department, Ms. Roggeveen stated
that she knows November will be a busy month. Ms. Voges commented that the month
will be difficult but her department is in a better position to deal with challenges than it
was in previous years. Ms. Gibson added that the Abrahams Group will be assisting in
preparation of financial reporting necessary for the audit.
Status of Cash Reconciliations for FY 2009 as of 9/30/08:
Timely reconciliation of cash was viewed with utmost importance in the
Abrahams Group study, and Mr. Dickinson noted that his department has completed
cash reconciliations for August and almost all of September. He added that the project
is valuable for identifying issues with the process, and that as these issues are identified
and addressed the reconciliation process becomes easier. Mr. Kopko asked if there is
usually one person in each office that handles cash transactions, to which Mr. Dickinson
replied that there is usually one person and one set of posting codes. He added that a
new procedure for creating posting codes would soon be implemented.
Review of Powers & Sullivan Interim FY 2009 Audit:
Powers and Sullivan sent correspondence regarding a September 30, 2008, audit
of the cash reconciliation process. Ms. Voges provided a brief summary of the audit
performed by Renée Davis.
• Creating procedures for voided checks, reissued checks and interest earnings.
• Making transactions to keep payroll and vendor accounts at a zero balance.
• Addressing transaction issues with new accounts, i.e. the bank cleared checks
through the wrong account.
• Following up on old accounts.
• Changing trust fund account statements to monthly issuance.
• Making adjustments to the general ledger on a timely basis.
• Addressing the issue of reconciling activity but not balances. (Ms. Voges noted
that this was the method Powers and Sullivan asked the Finance Department to
use.)
• Researching outstanding checks on the old payroll and vendor accounts.
Minutes – Audit Committee
November 5th, 2008 Page 5 of 6
• Making use of reconciliation process from the bank.
Ms. Voges said that the transition has been difficult but all of her staff worked hard to
ensure that the changes were effectively implemented. She noted that in the last
paragraph of the letter Ms. Davis stated that the Finance Department had done a good
job in implementing the recommendations. Ms. Gibson noted that the Audit Committee
might want to consider expense when commissioning another audit, as this two day
audit cost in excess of $4,000.
In regard to a comment in the letter about $2.6 million not being reconciled to
the banks, Mr. Kopko asked for further explanation. Ms. Voges stated that she has not
looked at the detail on this issue, but typically these are year end accounts payable
items. Mr. Kopko asked if this is a “timing issue or a rooting out issue.” Ms. Voges said
that if it is an accounts payable issue it is related to timing and if it is a transfer issue the
cause will need to be “rooted out.” She noted that the new process will address this
issue and that this problem is related to the old process.
Mr. Kelly asked if anyone felt that any of the findings were “material,” to which
Ms. Voges responded that she did not. Mr. Kelly stated that he felt it would not be
necessary to continue these audits in the future. Ms. Gibson added that Mark
Abrahams, Abrahams Group consultant felt that the summary was good and indicated
that the Finance Department was taking corrective action.
New Business:
In light of the large amount of transition and change facing the Finance
Department, Mr. Kelly asked Ms. Voges to elaborate on how the process is going. Ms.
Voges said that many in the Finance Department are feeling the stress of increased
demands on their performance, and that the month of November will be a challenge.
She noted that the Special Town Meeting added another dimension to the complexity of
tasks facing the Department, but it has been important for the Department to maintain
its schedule for completion of the FY 2008 audit. Mr. Kopko noted that there are “three
sets of eyes” on the audit timeline: Mark Abrahams, Powers and Sullivan, and DOR. Ms.
Voges said that in terms of priority she ranked completing the Tax Recap and securing
borrowing first, and completion of the audit second. She commented that current
staffing levels are appropriate for normal times, but the conditions within the
department are currently not normal.
Other Business:
None.
7. Date of Next Meeting:
Minutes – Audit Committee
November 5th, 2008 Page 6 of 6
Ms. Roggeveen proposed that the next meeting should take place on
Wednesday, December 10th, 2008, at 9:00 AM.
8. Adjournment
Ms. Roggeveen asked for a motion to adjourn which was “so moved” by Mr.
Kopko. The meeting was adjourned at 9:46 AM.
Prepared by Craig Abernathy