HomeMy WebLinkAbout2013-7-30Minutes for July 30, 2013, adopted Aug. 27
Town of Nantucket
Audit Committee
www.nantucket- ma.gov RECEIVED
- a -)n11 AOr -n om 8 20
MINUTES
Tuesday July 30, 2013 NANTUCKET TOWN CLERK
4 Fairground Road, Training Room — 9:00 a.m.
Staff:
Libby Gibson, Town Manager; Irene Larivee, Finance Director; Deb Weiner,
Treasurer; Bob Dickinson, Assistant Town Accountant; Elizabeth Brown, Tax
Collector; Deb Dilworth, Assessor; Martin Anguelov, Budget Analyst; William
Pittman, Chief of Police; Terry Norton Town Minutes Taker
Attending Members:
Rick Atherton, Matt Mulcahy
Absent Members:
Bruce Miller
Public:
None
Auditor:
Anthony Roselli, Roselli, Clark & Associates (RC &A) by remote call
Documents used:
Copy June 25, 2013 minutes; Town of Nantucket Audit Information Checklist dated
July 25, 2013; Report on Applying Agreed -upon Procedures Council on Aging
Business Operations Review July 2012; Roselli, Clark & Associates Independent
Accountant's report on Applying Agreed -upon Procedures; Sample Report on
Applying Agreed -upon Procedures; Nantucket Police Department Written Directive,
Third -Party Details dated July 14, 2011.
1. CALL 1 ORDER
9:07 a.m.
j. June 25. 3013 — Motion to Approve as amended. (made by: Mulcahy) Carried 2 -0
111. PUBLIC COMMENTS
"oni
Larivee — Update on the status of audit: about a week ahead on the schedule, system was closed on time;
so, no additional entries can be made outside specific Finance staff. Final information scheduled to go
to the auditor by September 1. The County audit information is completed and submitted to the
Auditor. All Enterprise Funds are reconciled.
Roselli — Affirmed that the information represented as having been submitted, has been submitted. The
plan is to review all schedules and start doing procedures in the office to have a better understanding
before the next visit.
Roselli — Reviewed his firm's methodology for fraud risk assessments.
Mulcahy — Asked about one of the samples provided pertaining to a Council on Aging.
Roselli — Cited an example in which a "Friends of the Council on Aging ", which is for fund raising to
supplement the funding, began to receive donations for the Town and circumvented MGL ch. 30B and
expenses did not go through the warrant process. This has happened in similar situations in other
towns. The Town still needs to approve all expenses, go through the warrant process, and follow 30B.
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Minutes for July 30, 2013, adopted Aug. 27
Atherton — Stated he found the sample assessments helpful; and asked about the "applying agreed -upon
procedures" approach.
Roselli — Explained that they would meet with various committees or departments and review procedures
to come to a consensus of steps that lead to greater transparency. Also it allows the committee to direct
the process more.
Larivee — Stated the agreements are like mini- management letters for each department.
Roselli — Said that is a good way to describe the reports; it helps a department guide toward improvements.
Atherton — Stated he is encouraged by this approach resolving problems with unbilled accounts.
Roselli — Said that a number of issues do pop up in these "mini- audits" because they have a chance to
conduct detailed reviews with departments.
Atherton — Asked if the engagement letter includes these assessments.
Roselli — Said no, there are up to six of these as part of the original proposal, but that got eliminated
because Mr. Daley was doing a number of them. Stated that right now it is not part of the engagement
letter but can be added as an addendum.
Gibson — Could be to develop an addendum to the contract with RC &A and cancel the Daley contract, if
the Committee so desires. Stated that the RC &A Fraud Risk Assessment looks very comprehensive.
Larivee — Management Letter findings since 2005 have cited third -party detail payments and collection
issues. Noted there has been review of the idea of 100% payment up front for individuals requesting
third -party details.
Atherton — Asked Chief Pittman what the major issue is about up -front payment.
Pittman — Stated that up -front payments are not as clean as they seem. For some details the length of time
is unknown. Payments are for 4 -hour blocks; if the client pays for 4 hours up front then goes over,
there is a concern that collection of the balance will be very difficult. Presently the department has
only $12,000 in unpaid bills over 120 days old, some of which date back several years. In FY2013, the
largest one is $3,200. In FY2013, brought in $550,000 worth of invoices; over half of that has been
paid; there is still $47,000 outstanding a large part of which was billed at the end of June and expect
payments in the next 30 days. Also collect over $50,000 in associated admin fees and $8,000 in
Medicare fees. Suggested reallocating some of the admin money at Town Meeting back into a fund to
non - payment.
Larivee — Explained that the admin fee goes into the general fund, currently.
Pittman — Present billing and collection practice is the department sends the bill and the collector's office
receives the money.
Gibson — Agrees with the chief in that it is an accounting problem. Asked Mr. Roselli's opinion as every
town has 3rd -party detail and this problem and feels it shouldn't be a Management Letter finding.
Roselli — If there is a deficit at the end of year, Finance should look at July & August receipts related to
that deficit; the DOR gives credit for items related to that deficit and won't penalize the Town. Stated
his main concern is whether or not there are a lot of write offs from customers who never come back
and decide not to pay; that might be the risk the prior auditor was hying to correct.
Larivee — As of now, nothing is written off at this time, although a draft wrtg =off policy is in progress.
Noted that Jeri Erichsen has worked hard through small- claims court to collect.
Pittman — The outstanding over 120 days is $11,950; that includes: Nantucket Cottage Hospital for $3,000,
Wise -up Marketing for $1,600 and VFW post for $1,000.
Roselli — The Committee needs to decide whether or not it is acceptable to have a small loss every year on
this operation that would have to be funded from the General Fund or to do this pre -paid.
Atherton — Stated that at one time, it seemed the number related to bad debts was much larger. The
question is what to do. The concern was that the Town got way behind; if Finance is in agreement with
a reasonable approach, it might not be cost effective to chase down payment.
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Minutes for July 30, 2013, adopted Aug. 27
Roselh — Some towns assume there will be a loss and at Town Meeting vote an automatic transfer from the
General Fund to subsidize the process. Suggested looking at the history over the past couple of years
to assess the average loss and have an article at Town Meeting to take care of that.
Mulcahy — Asked if there is money left over at the end of the fiscal year in that fund, does it role over or
go to General fund.
Roselli — It will roll over. Said that if the money will eventually be collected, don't move money around.
Suggested considering for smaller ones, that will never be collected, do a transfer out of free cash.
Short discussion about the success of quarterly- billing from the Collector's point of view.
Motion to Adjourn: 9:46 a.m.
Submitted by:
Terry L. Norton
.
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