HomeMy WebLinkAboutAudit Committee Minutes 10 04 2011_201402041938557561Minutes for October 4, 2011, adopted Nov. 15
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Town of Nantucket
Audit Committee
www.nantucket-ma.gov
MINUTES Tuesday October 4, 2011 16 Broad Street, Conference Room – 8:30 a.m.
All or a portion of this meeting is being recorded. If you plan to record this meeting yourself, please check with the chairman of the board before you begin.
Attending Members: Matt Mulcahy, Rick Atherton
Absent Members: Michael Kopko
Staff: Debbie Weiner, Treasurer; Gregg Tivnan, Assistant Town Manager; Libby Gibson, Town Manager;
Irene Larivee, Finance Director; Bob Dickinson, Controller; Debbie Dilworth, Assessor; Elizabeth Brown, Town Collector; Terry Norton, Town Minutes Taker
Public: Whitey Willauer
I. CALL TO ORDER
Mulcahy called to order at 8:33 a.m.
II. PUBLIC COMMENTS
None
III. APPROVAL OF MINUTES – August 30, 2011 Motion to Approve Aug 30 with Kelly correct name. Adopted unanimously (should be Mulcahy)
IV. UPDATE FROM FINANCIAL ADVISORY ASSOCIATES INC.
Mike Daley, Financial Advisory Associates – Currently performing various financial services for the Town,
reported that cash is reconciled for FY2011. Over the past year there has been a variance of $40 across 12 months, which is pretty good. First quarter of FY2012, restate charges of accounts to include new fund
structure under July 1 Uniform Massachusetts Accounting System known as UMAS. The Stabilization Fund
is now a Special Revenue Fund known as “Fund 250”. Nantucket is his only client to make that move as early
in this fiscal year. FY2012 activities as of Sept 30 include cleaning up cash and funds to put funds at trial
balance. Finance Department will find more equity now than previously. Bank accounts and trial balance will start to reflect same amount. The Stabilization Fund needs liquidity more so than permanent trust funds.
V. UPDATE FROM POWERS & SULLIVAN ON 2011 AUDIT PROGRESS
Renee Davis, Powers and Sullivan – Preliminary audit work occurred in July, with a deadline for the
submittal of preliminary audit documents set for Sept 30 which was met. One open issue is the Actuarial Report for OPEB, which is currently out of the Town’s control and is being finalized by an actuarial firm.
Final field work will be done the week before and week after Thanksgiving. During the July visit the
preliminary audit work included testing of transactions and review of town policies and procedures.
At a previous Audit Committee meeting, information was requested regarding what was tested; and review of
policies, including which are adequate, well documented and approved for both the Town and County. What was tested at that point was from the General Ledger as it existed in July back to supporting documentation.
Revenue was tested back to supporting documentation to prove it got into the bank and was charged to the
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proper account. Payroll testing goes back to the approval of the proper pay rates making sure they are charged
to the right budget line; found no errors. Journal entries have some testing left and the auditors do not yet have final ledgers. Typically, 30 Town and 10 County expenditures and 30 Town and 10 County payroll
transactions are tested for the current year being audited. Pursuant to the Single Audit Act, federal
expenditures also require testing, including federal grant expenditures. One common mistake is charging
items to the wrong place. Part of FY2011 is the clean up discussed as a result of FY2010, so the auditors
anticipated seeing a lot of correcting journal entries, which they did. Larivee – In the past the Town paid $11,000 for the OPEB actuarial study and this year a new vendor is being
used at a cost of $5,000. Journal entries are closed for FY2011 and should not be occurring without the
Finance Director’s specific approval.
VI. REVIEW AUDIT TESTING PROTOCOLS FOR AIRPORT Davis – Auditors have not seen the Attorney General’s report relating to Airport procurement issues. The
Airport expenditures and compliance was tested as recently as July 2011 with regard to prevailing wages and
the monitoring system. The auditors have received all the requested records from Jacobs Engineering, Inc for
the Airport terminal project. There were approximately 40 vendors in connection with the terminal
construction project. Ten were tested and were all in compliance. Errors in processes can only be caught if those expenditures are selected for testing. Fraud is not usually detected during the financial audit process, but
through internal policy reviews. The Town does have policies in place to ensure compliance with procurement
laws, which the auditors have seen working. The auditors are unsure where things broke down in this
instance. Atherton – There are instances where policies are not being followed, how is that detected? Would like to see a list of Airport transactions that were tested.
VII. UPDATE FROM ABRAHAMS GROUP: RECOMMENDATIONS IMPLEMENTATION
Mark Abrahams, Abrahams Group – Reviewed the Financial Management report issued in September of
2008 with 36 recommendations. In September 2009 Abrahams Group conducted an interim report on the status of the recommendations. In today’s packet, there is a spreadsheet showing the status of those
recommendations. 21 are fully implemented, 10 partially and 5 deferred. Yesterday (Oct. 3) Abrahams Group
started a review of where these 5 are. The hope is to have a second interim report complete in about a month.
Getting cash reconciled is of primary importance.
VIII. AUDIT COMMITTEE SCORECARD Larivee – The Treasury Performance Ledger for period 1 of FY2012 is 100 percent reconciled. Further:
• 284 Accounts Payable checks went through the same period. County cash and Accounts Payable
activity is little to nothing with the sheriff under the state.
• Account performance measures, 57 Town accounts are 100 percent reconciled. 13 County accounts are
reconciled.
• Accounts Receivables have not been done for July and August due to staff resource issues.
• 36 Inter fund transfers are 100 percent reconciled.
• The system is being used for more than just journal entries. The goal is to get down to 100 or less
journal entries by a more systematic approach to eliminate errors that need to be corrected by journal
entries.
• For Collectors Performance Measures look at what the percent of collections are for commitments
each year. Nantucket is at about 96 percent. People are generally making good-faith payments.
• For Assessment Performance Measures, the tax rate certification is still pending from the state
Department of Revenue (DOR). This is the first time in recent memory the Town submitted its balance sheet to the DOR on time.
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• Of the FY2010 other audit items, 13 have been resolved. Chapter 90 is resolved. Dental withholding legacy is resolved going back to September of 2010; prior to that is still an issue with $48,000 not yet
identified.
• Federal and state grants, on July 1 made new accounts and new funds for grants for education and
town. Waiting on September 30 final balance to transfer into new accounts; then shut down all old accounts.
• Fraud Risk Assessment (FRA) is done internally and involves developing the document and who will
perform it and how often it is to be done. This has not occurred yet.
• Abrahams Group Recommendations, 21 are in place, 10 are in progress, and one being closed. Two big items are decentralizing payroll which will take up to 6 months and introducing Budgetary Line
Item Control, which need focused time and training with departments.
Davis – There is difficulty identifying state funds and federal funds. Daley – If a department is not robust in monitoring receivables it can get in trouble. IX. DATE OF NEXT MEETING Tuesday, October 25, 2011 at 8:30 a.m. Audit progress and scorecard & testing for exceptions.
Motion to Adjourn: 9:50 a.m. Submitted by:
Terry L. Norton