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Home My WebLink About2013-6-25Minutes for June 25, 2013, adopted July 30 Town of Nantucket Audit Committee www nantucket- ma.¢oy j I. CALL TO ORDER 1. May 21, 2013 — adopted by unanimous consent 2. Discussion of follow -up items in regards to the last meeting. III. PUBLIC COMMENTS Larivee — In prior years, indirect cost was charged back to Enterprise Funds. This documents the procedure and added other areas to which indirect costs are to be applied: Information Technology and ISGIS who provide services to Enterprise Funds. Police and Fire charge back for the Airport; and Police are charged directly each month to the airport and the Airport pays the invoice. Mulcahy — Asked if that will show up in operating budget. Also asked now that the Nantucket Islands Land Bank and Nantucket Regional Transit Authority (NRTA) are included if those will show up. Larivee — Yes to both. Mulcahy — Asked if this will take guess work out of negotiations with Enterprise Funds. Larivee — Yes. The next step would be to send a draft to those respective areas to make sure everyone is in agreement, then forward the policy to the Board of Selectmen (BOS). Gibson — The County, NRTA and Land Bank don't know they are going to get indirectly charged. Will have to ensure the money is in the budget. Asked if Mr. Roselli reviewed the policy. Roselli — Yes, stated he reviewed the policy. In general, had discussion with Department of Revenue last week; they are performing random audits of Enterprise Funds across the State. Any community with indirect costs more than 15% of the budget will get a mini audit. Looked through indirect costs and Nantucket is conservative, well below the 15% threshold; stated that in fact the percentage is close to the low end of the range. Asked if the Town has considered having a professional rate -study person do an independent report that charges the cost back to the Enterprise Fund. This could provide more credibility. Page 1 of 3 MINUTES c m Tuesday June 25, 2013 ,� n m 16 Broad Street, Conference Room - 9:00 a.m. M ro rn Staff: 0 9 � Libby Gibson, Town Manager; Irene Larivee, Finance Diryotor�--:Robackinson, Assistant Town Accountant; Deb Weiner, Treasurer; Martk% elov, Budget Analyst; Terry Norton Town Minutes Taker m Attending Members: rN-+ Rick Atherton, Matt Mulcahy Absent Members: Bruce Miller Public: None Auditor: Tony Roselli, Managing Partner Roselli, Clark & Associates by conference call j I. CALL TO ORDER 1. May 21, 2013 — adopted by unanimous consent 2. Discussion of follow -up items in regards to the last meeting. III. PUBLIC COMMENTS Larivee — In prior years, indirect cost was charged back to Enterprise Funds. This documents the procedure and added other areas to which indirect costs are to be applied: Information Technology and ISGIS who provide services to Enterprise Funds. Police and Fire charge back for the Airport; and Police are charged directly each month to the airport and the Airport pays the invoice. Mulcahy — Asked if that will show up in operating budget. Also asked now that the Nantucket Islands Land Bank and Nantucket Regional Transit Authority (NRTA) are included if those will show up. Larivee — Yes to both. Mulcahy — Asked if this will take guess work out of negotiations with Enterprise Funds. Larivee — Yes. The next step would be to send a draft to those respective areas to make sure everyone is in agreement, then forward the policy to the Board of Selectmen (BOS). Gibson — The County, NRTA and Land Bank don't know they are going to get indirectly charged. Will have to ensure the money is in the budget. Asked if Mr. Roselli reviewed the policy. Roselli — Yes, stated he reviewed the policy. In general, had discussion with Department of Revenue last week; they are performing random audits of Enterprise Funds across the State. Any community with indirect costs more than 15% of the budget will get a mini audit. Looked through indirect costs and Nantucket is conservative, well below the 15% threshold; stated that in fact the percentage is close to the low end of the range. Asked if the Town has considered having a professional rate -study person do an independent report that charges the cost back to the Enterprise Fund. This could provide more credibility. Page 1 of 3 Minutes for June 25, 2013, adopted July 30 Atherton — If we want to get more "aggressive ", that might be a way to how; however if we are comfortable with where we are, we want to document the process. Gibson — Would be a good idea to have a workshop with the Enterprise Fonds to let them know we are on the low end and we are not getting worked up about it. Larivee — Regarding Indirect costs, the only question was in regards to fire and police charges to the Airport. Roselli — Stated his opinion that is an appropriate course of action. assessments his company has done. We have received those samples and will send them out. Roselli — Stated the sample assessments might be what you're looking for. Atherton — There are two different documents: the Fraud Policy was in the packet; the other was a Departmental Risk Assessment in each department. Might want to review alternative methodologies first and come back to this at a future date. Gibson — Agreed as that would allow the committee time to review the information. Mr. Roselli and Labor Counsel have looked at both. Read the advice from Town Counsel. If the Audit Committee is okay, can endorse it then the Town Manager will send it off to the BOS; if they are okay with it, they will adopt it. Atherton — The sequence is to go that route rather than dealing with the Union up front. Gibson — Yes. Only the mandatory reporting requirement is subject to the Union. Motion to Endorse the policy as drafted and recommend it be taken to the BOS. Made , seconded and carried. 1 1 1 " 1 Larivee — Update on the Abrahams Report Implementation. Update on 2012 Management Letter items: Broke up into structure material weakness first and other matters second. Reviewed the status. Atherton — Asked about Unspent Bond Proceeds in regards to the Airport borrowing money to work on their Administrative Building. Gibson — Suggested having a representative do a presentation either to the Capital Program Committee or the Audit Committee. Discussion about paying back the bond in full without penalty at this time. Roselli — Asked if Ms Larivee has worked with Bond Counsel to keep them in the loop. Suggested that arbitrage problems might have been created. Larivee — Yes, have been in touch with Bond Counsel since the Airport issue came up over a year ago. They provided a grace period to clean up legacy issues. They will start enforcing within our next cycle. We have about three months to continue the clean up and go forward. Atherton — Asked if there are any other amounts pending as significant as this. Larivee — The Bulk Fuel Study is the only other one re- appropriated as far as Bond Counsel is concerned. There is a small one in regards to sewer mapping. Mulcahy — Asked about the bulk fuel payback will be spent. Larivee — About half of it will be spent; the other half would need to be re- appropriated. That is long term and goes back to 2007. Failure to Comply with Procurement Laws has a chance of showing up again in this year's management letter. There is one area in schools where the contract was received after the payment was done. Roselli — Stated that he will look into areas of concern of Ms Larivee during his next visit. The trend is improving. The goal is to get it in control by fiscal year 2014. Page 2 of 3 Minutes for June 25, 2013, adopted July 30 Larivee — Other items are pretty much complete except for off -duty police and fire details. Suggested holding for Chief Pittman to address the committee at the July meeting. VIL REVIEW OF 3C CRAN I POLICY Larivee — One of the Management Letter findings: to ensure charge backs and cross allocation documented. This was documented last yew but is still in draft format and has not yet been adopted by the Audit Committee. It is an internal process but want the committee to adopt it. Atherton — Saw a spread sheet on this. Larivee — Last year, Mr. Dickinson met with Mike Burns, Andrew Vorce, a State representative and a Federal representative for Grants. They have all looked at this policy and me fine with it. Roselli — Have not yet read the policy; will take a look at it. Atherton — This verbalize what has been done mechanically. Motion to Adopt the 3C Grant Policy as presented. Made, seconded and carried. Larivee — Pertains to the off -duty detail findings for the Management Letter. Reviewed the proposed policy. Roselli — Stated he has not yet seen the proposed Third Party Detail Policy and asked that it be sent to him. Pointed out that there are no standard policies for this that can be used as a template. Atherton — Defer this discussion to a future meeting. OTHER: Roselli — Stated he was on Island for a week about a month ago; he reviewed his findings with Ms Gibson and Finance. Rather than waiting for end of year and getting the Management Letter, as we come up with things, we let staff know so they can begin corrective actions that will be reflected in the Management Letter. IN. DATE OF NEX I'MEETING Tuesday, July 30, 2013, 4 Fairgrounds Road, Training Room Motion to Adjourn: 9:24 a.m. Submitted by: Terry L. Norton Page 3 of 3