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Home My WebLink About2013-5-21i Minutes for May 21, 2013, adopted June 25 %pHi KFr*i@ Town of Nantucket Audit Committee www nanmcket -ma. eov 9PpNAtEO Tuesday May 21, 2013 16 Broad Street, Conference Room - 9:00 a.m. Staff: Libby Gibson, Town Manager; Irene Larivee, Finance Dirororegg Tivnan., Assistant Town Manager; Elizabeth Brown, Tax Collector; eligeiner, Treasurer; Bob Dickinson, Assistant Town Accountant; Martin Anguefov, Budg?,,4nalyst; Tom Rafter, Manager Nantucket Memorial Airport; Ashley Chris, Ai&rt Elismess Manager; Kara Buzanowski, Director DPW; Pat Parris, Hurn* Resources; Terry Norton Town Minutes Taker 3 rn Attending Members:Rick Atherton, Bruce Miller, Matt Mulcahy z r o Absent Members: None r Public: Dan Drake, Airport Commission Chairman z N Auditor: Tony Roselli, Managing Partner Roselli, Clark & Associates to FIVAtllfII]a 11. APPROVAL OF MINUTES 1. July 31, 2012 - adopted without objection 2. December 4, 2012 - adopted without objection as amended 3. January 22, 2013 adopted without objection 4. February 20, 2013 adopted without objection 5. March 19, 2013 adopted without objection 6. March 27, 2013 - adopted without objection 1. Dan Drake — As a private citizen, over the past 1'h year, stated he has followed Airport and Town finances closely. Expressed particular concern about how complete the work of the prior auditor was in terms of procedure, process and information. Stated his hope that the new auditor will stay on top of things and hold both the Airport and Town accountable. Discussion about formalizing a process by which complaints and concerns expressed Town and Enterprise Fund finances would be addressed. Larivee - Memo dated January 10, 2013, "Update on Abrahams Report Implementation." Recommendations in Progress Finding 10, Appropriate Written authority and understanding of collective bargaining agreements and other non - routine payments: A draft process has not yet been adopted. Finding 13, Budget control at line -item level: Still looking at that. We can set up alerts by line item; but the question is, do we need to manage at the line item level? Roselli suggested that trying to manage at the line- item level would bog down both finance and department heads. Gibson said there has been a lot of discussion about line -item control. In the past it had been the practice, which was a finding in other audits, that if one line item is exhausted, money could come from another line item; but that skewed what actually happened. However, it would be better to categorize line items such as utilities. Finding 15, Decentralize time and attendance entry: pushed data entry back out at the department level. Instead, looking at doing an electronic data upload; that will take time set up. Page 1 of 3 Minutes for May 21, 2013, adopted June 25 Finding 21, Establish and maintain one accounting and financial reporting system: Specialized systems geared to specific enterprise funds are in place. There is a reconciliation process in place. This finding is pretty much completed. Finding 24, timely Submittal of reimbursements for loan drawdowns: The only remaining issue surrounds the timeliness of requesting 3C Transportation Grant reimbursements from the state. The Assistant Town Accountant is working directly with the Transportation Planner to resolve this item. Finding 30, Restructure school chart of accounts: This still is being worked on with the school business office manager. Explained that originally the data was mis- coded; that is being corrected. The goal is to complete by June 30, 2013. Recommendations to Reconsider Finding 8, Transfer entry of Mums Personnel actions to Human Resources (HR) to assure sound segregation of duties: HR will create a profile of an employee; that profile will be transferred to payroll. Roselli stated that he had looked at the daily risk assessment and that it is not imperative to move forward with this comment, the current system is sufficient. Finding 19, Report all balances on Municipal Lien Certificates (MLC): Only water and sewer bills are not part of MLCs handled by the Tax Collector's office; this is something that the Town needs to move forward on. Ms Brown stated that if the town adopts the use of MLCs that would allow for collection of bills after property is sold because a MLC follows the property. However, if something is listed as paid on an MLC when in fact it has not, the Town loses the right to collect that bill. Discussion about how bills can be collected. Finding 32, Remove accounts payable and payroll processing activities from the Treasurer and reassign to the controller: The Town doesn't have a controller. Have removed the accounts payable person from this and left payroll where it is. This is complete. Larivee— We are in the process of developing a "Whistleblower Policy" to provide an avenue for reporting. The policy explains how fraud would be reviewed, reported and information disseminated to the media. Discussion about how someone, who might be concerned about retribution from the delineated chain of command, might be comfortable about making a report and the option of hiring a 3r° party to manage that. Rosella suggested being careful about using a standard policy that might violate collective bargaining provisions; labor counsel should review it. Discussion about promoting the philosophy among Town employees and how the policy could help protect the Town. Corrections are to be made to policy and the final will come back for approval at the next meeting. 1 1' Larivee — Assessment to be done 3 -times a year. Departments are broken down into three types: small, medium and large based upon personnel and dollar value. Town Administration and Finance selected the first three; asked if the Audit Committee would like to choose the next three. Committee chose to leave the choice up to Ms Gibson and Ms Larivee. Reviewed first risk assessments and how corrections are implemented. Findings are based upon the 2012 Audit Management Letter and other reports with the numbers based on blocks, not subjective. DPW: total score 33; medium risk. HR: total score 18; medium risk, one point away from low risk. Airport: total score 58, high risk. Miller expressed concern that account balances are counted toward the risk assessments; every high- budget department would automatically be high risk. Discussion about possibly revising the assessment report format before the next meeting. Larivee — There are very few items left outstanding. Airport capital project funds: The last piece needed is to rescind balances; that was done at Town Meeting. Page 2 of 3 Minutes for May 21, 2013, adopted June 25 Unspent bond proceeds: Mr. Dickinson is in the process of updating the worksheet. The biggest issue is arbitrage if money isn't spent within a specific time period. Gibson stated there are a couple of items, such as the Bulk Fuel Study, for which money was borrowed and has not yet been spent and have passed two years. Discussion about how to avoid this in the future. Reconcile general ledger activities with deparhnents: That goes back to the rotating type audit. Present process of reconciling every single line item seems extreme and would be a full -time job for one person. Roselli suggested getting a monthly sign -off from department head stating that they have reviewed activity. Gibson said that could still be time consuming and would like to look at how other municipalities do this. Unidentified cash adjustments: There was $165K for the Town and $69K used to correct ghost accounts going back 15 years. Have cleaned that up, so presently looking at $421 in unidentified cash adjustments. Roselli pointed out that the variances were positive and the Town did not lose money. The Town did the right thing in this area. 30B and purchase orders: Still working on this and might be a finding again in the 2013 management letter. Other matters Off -duty police and fire details: Last year got the sum down to about $4,000. Discussed adopting a policy of 100 percent deposits from one -time clients to pay police; this is a state -wide problem. Administration will look into. Insurance withholding deficit: Will be resolved by June 15. Bond proceeds: One -time even for Hummock Pond Road bike path. Purchase order (PO) dates: POs being submitted with dates that are after date of the invoice; this is still unresolved. Rosella stated the other communities put the onus on the vendor to not provide services without a legitimate PO; also stated that most communities set a limit so that anything below a certain amount doesn't require a PO. Documenting indirect charges for the 3C Transportation Grant: The goal is to complete by June 30. Unsupported liability balances: This pertained to one item in the balance sheet for Airport and one item in Wannacomet balance sheet carried over in the 1990s. This is resolved. Nantucket County and the payroll process for the Land Bank: there was a system error that wasn't posting all the activity for that on both the Land Bank side and the County General Ledger to show the amount was due to the county. That has been corrected. VIII. DATE OF NEXT MEETING Tuesday, Jane 25, 2013 Motion to Adjourn: 10:25 a.m. Submitted by: Terry L. Norton Page 3 of 3