HomeMy WebLinkAboutAudit Committee Minutes 04 29 2009_201402041939423658
Town of Nantucket
Audit Committee
Minutes – Audit Committee Meeting, held April 29th, 2009
Approved May 13th, 2009
A duly noticed meeting of the Audit Committee was held in the conference room at 16 Broad
Street on Wednesday, April 29th, 2009, commencing at 8:30 AM.
Present: Chairman Patty Roggeveen, Jim Kelly and Michael Kopko
Absent: None.
Also present: C. Elizabeth Gibson, Malachy Rice, Constance Voges and Craig Abernathy.
Call to Order:
Ms. Roggeveen called the meeting to order at 8:34 AM.
Announcements/Updates:
None.
Discussion of Appointment of Audit Firm:
Mr. Kopko reminded those in attendance that at the last meeting there was a large
amount of discussion regarding where the responsibility for appointing a firm for auditing
services lies. He stated that he hopes the background information distributed during the past
week has helped to clarify the issue. Ms. Roggeveen asked if the audit committee has held
these types of discussions before. Ms. Voges answered that the last time the Audit Committee
addressed the issue of appointing a firm for audit services was in 2006.
Ms. Roggeveen asserted her desire to hear staff recommendations regarding the re‐
appointment of Powers and Sullivan. She added that she remembers hearing concerns from
staff over a lack of responsiveness from the accounting firm. Ms. Voges stated that Powers and
Sullivan has been responsive, but added that there were times during the FY 2005 audit when
she asked the Town Manager’s office for assistance in communication with the firm. She noted
Minutes – Audit Committee
April 29th, 2009 Page 2 of 4
that the FY 2008 audit was performed in an expeditious manner. Ms. Roggeveen asked for
greater clarification over her concerns about response times; to which Ms. Voges responded
that this concern is no longer an issue.
Referring to recent improvements made to the Town’s Finance Department, Ms.
Roggeveen stated that perhaps the Abrahams Group can provide recommendations in terms of
audits and firms to supply auditing services. Ms. Gibson responded that her office has spoken
with Mr. Abrahams in regard to the Powers and Sullivan proposal and he is favorable to
retaining the firm. She added that Mr. Abrahams shares many of the same concerns as Powers
and Sullivan regarding organization and internal controls within the Finance Department.
Ms. Gibson stated that her office has obtained information on the fees being charged by
other towns and that her office has spoken with Powers and Sullivan regarding a phased
increase of fees. Mr. Rice recommended making a counterproposal to Powers and Sullivan and
advocated for requesting an increase more in keeping with percentages being experienced in
other towns. Ms. Roggeveen asked if there is any justification for the increase; to which Mr.
Kopko responded that he believes the increase is due to the fact that Powers and Sullivan has
spent a lot of extra time working on the Town’s financial statements.
Speaking to the fact that Powers and Sullivan’s audit service proposal contains an
increase in the amount of 15.4 percent for the Town and County audits, Ms. Roggeveen stated
that she believes an increase of this magnitude is excessive. She commented that in the past
the condition of the Town’s financial reporting was troubled but now the reporting is up to date.
Ms. Voges advised the Committee that she believes the Airport and Water Company will
still want to receive separate audit reports and that she does not believe that the costs of the
reports is listed in the Powers and Sullivan proposal. Ms. Gibson stated that the Audit
Committee may need to become involved in assisting the implementation of a single audit. She
suggested that the Audit Committee could direct these entities to pay for any separate audits.
Mr. Kelly arrived at 8:52 AM.
Mr. Kopko asked if the Airport and Water Company would need to seek approval from
the Board of Selectmen prior to commissioning separate audit reports. Ms. Gibson answered
that this has not been the case in the past but perhaps the Board could make a statement
reflecting his concern and support the statement with the recommendations of the Abrahams
Group. Ms. Voges added that senior management at the Water Company has agreed to use
Powers and Sullivan, but pointed out that they want to know the cost and they will require a
separate report. She stated that senior management at the Airport has requested cost
information for the sake of making a price comparison prior to any agreement. Mr. Kopko
commented that senior management could make the decision to continue to have separate
audits but governing commissions would need to justify these actions to the Board of
Selectmen.
Minutes – Audit Committee
April 29th, 2009 Page 3 of 4
Mr. Kopko asked why the Airport and Water Company audits are listed as separate
amounts. Ms. Voges explained that these entities continued to retain the firm Burke and Lamb
even after the Town notified them that the Town would be using Powers and Sullivan for
auditing services. She noted that because of this relationship it was necessary to assess these
funds as a separate audit amount.
Ms. Roggeveen noted that while Mr. Kopko is pleased with Powers and Sullivan’s
proposal she feels the cost increase is a bit high. She added that she supports working on ideas
for reducing these costs. Mr. Kelly asserted his philosophy that it is best to ask for a better price
any time a new contract is negotiated.
Ms. Roggeveen asked if the contract has been reviewed by Mark Abrahams; to which
Ms. Gibson responded in the negative. She commented that the contract is fairly standard. Mr.
Kelly asked if there are any new rules and regulations that must be included in the contract. Ms.
Voges answered that these instructions would come from the Department of Revenue (DOR)
and that the DOR has yet to make any such recommendation regarding contracts for auditing
services.
Mr. Kelly then asked if the Town has any “deliverables” that it would like to be included
in the contract. Ms. Gibson answered that she would like a few things broken out more clearly
for the County. She added that Reneé Davis has agreed to provide this service at no cost. Mr.
Kelly asked if Powers and Sullivan has asked for any assurances from the Town. Ms. Gibson
answered that the expectation is to keep to past “deliverables” in regard to timelines. Mr. Kelly
asked if the Town will meet deadlines for submission of its audit to DOR for FY 2009. Ms. Voges
answered in the affirmative and stated that there will be a clear understanding of this
expectation.
Mr. Kelly inquired about the Committee’s willingness to take action on the matter. Mr.
Kopko voiced his belief that it is important to agree on what the Committee wants in terms of
the contract. Mr. Kelly stated that he feels the best course of action is to authorize the Town
Manager to enter into a new agreement with Powers and Sullivan. Ms. Gibson asked if the
Committee wants to attempt to negotiate lower costs. Mr. Kelly responded, asking if a
reduction in costs is a realistic possibility. Ms. Gibson stated that a more aggressive approach
may yield better results. Mr. Rice proposed suggesting a price increase in keeping with the one
assessed on Bedford by Powers and Sullivan.
Ms. Roggeveen stated that she is committed to retaining Powers and Sullivan. Mr.
Kopko agreed, adding his belief that the firm played a large part in improving the state of the
Town’s financial reporting. Mr. Kelly voiced his opinion that the Audit Committee has a
responsibility to retain Powers and Sullivan while obtaining the best price. Ms. Roggeveen
commented that Powers and Sullivan should have the expectation that the Town will come back
with another number during the negotiation process.
Minutes – Audit Committee
April 29th, 2009 Page 4 of 4
Mr. Kelly made a motion to authorize Town Administration to negotiate a three‐year
agreement with Powers and Sullivan at rates not to exceed the current proposal made by the
accounting firm, $85,000 per year. Mr. Kopko asked if Mr. Kelly wishes to authorize the Town
Manager to sign a contract for this service. Mr. Kelly asked that the contract be approved by the
Audit Committee prior to being signed. Ms. Gibson stated that the contract would also need to
be approved by the Board of Selectmen. Mr. Kopko seconded the motion. So voted
unanimously.
New Business:
Mr. Kelly asked if there have been any more developments regarding independent
interviews with Powers and Sullivan. Mr. Kopko asked that this item be included in the agenda
for the next meeting.
Old Business:
None.
Date of Next Meeting:
The date of the next meeting was scheduled for May 13th, 2009, at 8:30 AM in the
conference room at 16 Broad Street.
Adjournment:
Ms. Roggeveen asked for a motion to adjourn that was “so moved” by Mr. Kopko. The
meeting was adjourned at 9:21 AM.
Prepared by Craig Abernathy