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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. Page 1 of 3 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. Page 2 of 3 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 . Page 3 of 3