HomeMy WebLinkAbout2014-3-19Minutes for March 19, 2014, adopted May 27
Town of Nantucket
Audit Committee
www.namucket- ma.eov
MINUTES
Tuesday March 19,2014
4 Fairgrounds Road, Training Room — 9:00 a.m.
RECEIVED
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Staff: Libby Gibson, Town Manager; Deb Weiner, Treasurer; Bob Dickinson, Assistant
Town Accountant; Elizabeth Brown, Tax Collector; Matt Mannino, Accounting Clerk;
Terry Norton Town Minutes Taker, Michael Cozort, Superintendent of Schools; Glenn
Field, School Business Manager
Attending Members: Rick Atherton, Bruce Miller, Matt Mulcahy
Absent Members: None
Public: None
Auditor: Anthony Roselli and Chad Clark, Partners Roselli, Clark & Associates (RC &A) via
Skype
Documents used: Copy of minutes listed below, FY2013 Audit Management Letter.
1. CALL ORDER
1. December 3, 2013 —Motion to Approve. (made by; Mulcahy) (seconded by: Miller)
Carried unanimously
2. January 14, 2014 — Motion to Approve. (made by; Mulcahy) (seconded by: Miller)
Carried unanimous)
PL41LIC COMMENTS
Nonc
Gibson 1Leviewed an outline of a response and action plan to the Management Letter.
Cozort Walk through of action plan for School items based upon template used by Ms Gibson: six
general findings and each of three schools. Summarized what has been done and whose
responsibility and time frame for response.
General finding one: policy & procedures to include financial policies. Student activity accounts
are being brought into line with some recommendations of the auditor. Finding two: request of
funds from savings accounts. Explained the mechanism for requesting is fixed and copies of
disbursements are in place. Finding three: lack of policies regarding cash handling. Not
practical to have a fidelity bond for every person in school district who might handle money.
Have taken care of primary cash handlers.
Roselli Suggested an umbrella policy to cover everyone. Seems each primary cash handler was bonded
but there might be an inexpensive umbrella to cover the others. The Town has a similar type
Program.
Gibson There are certain positions that must be named and the Town does have an umbrella policy that
covers the possibility of other users.
Atherton Asked why that can't cover the school as well.
Dickinson Stated that as far as he knows it does cover the schools and other entities as welt.
Field Pointed out that the Student Activity Account is made up of private funds. He will look into it.
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Minutes for March 19, 2014, adopted May 27
Cozort Finding four: Reconciliation among school ledger, Town ledger, and bank; will follow the
recommendation to perform that reconciliation quarterly; School Committee upon approval will
direct the treasurer to transfer balances between cash accounts to equal the school ledgers and
then distribute the excess proportionally to the three schools. To get to the bottom of that, with
the lack of an audit in the past, would be almost impossible. Finding five: no annual approval
from School Committee on various student activity accounts: Working with the principals and
school administrators to determine which accounts will remain active. That list will be
presented to the School Committee for its approval, and that will be done annually each fall.
Finding six: stated that he sees this as a recommendation as opposed to a finding; With the
turnover of the three principals and three administrative assistants it is hard to keep track of who
has/hasn't been rained; he is looking into hiring a dedicated Student Activity Accounts
Administrator, which might be a part -time position; or, possibly incorporated into an existing
position.
Roselli An advantage for Nantucket is that the schools are close to each other; it makes sense to have
one person keeping rack of the Student Activity Accounts for the three schools. Each of the
secretaries is overwhelmed with general school work so managing the accounts has become a
2 "a priority.
Cozort The down side to a single Student Activity Administrator is that we rely on one person and
cross training needs to be done in the event that person is out. The Activity account is $20,000
for the Middle School and about $200,000 for the High School. NHS has too many accounts
that are inactive and should be closed; there are maybe 150 accounts, which can be reduced
down to 80 or 90. The Middle School might have 20 accounts.
Miller Asked why every activity needs a separate account.
Cozort By law, the funds and purpose of the funds have to be made specific.
Roselli This is a fund account requirement.
Field The Town sees three accounts; each of the buildings has an agency account. These are sub -
ledger entities; there are 200 of those in the principals' checking ledger. There is no co-
mingling.
Roselli That is not a separate bank account, just a separate general ledger account. There is close to
$300,000 which flowed through the account in FY2013.
Cozort On inactive accounts, one suggestion is that once accounts have reached a threshold of time, the
funds go into an education trust. Finding seven: lost books; took care of that; there is a revolver
and at least one or two of the schools was putting it into the Student Activity Account. Finding
eight: Cash handling: requiring pre - numbered receipts to allow for a better reconciliation
process. Finding nine: cash disbursement was a particular problem found in culinary arts and
language classes: it is hard to distinguish funds used for curriculum and what is for the club;
have talked to teachers to clear that up. There does have to be a mechanism for working with
airlines, which don't take purchase orders. Finding ten: disposition of class accounts; a senior
class will be told to use the money or make a gift rather than holding onto the money after they
graduate. Finding 11: 1099 reporting: working with the Town treasurer on that. The Middle and
Elementary Schools findings are similar to the NHS findings.
Gibson Mr. Cozort's report will be posted to the Town website.
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Minutes for March 19, 2014, adopted May 27
Gibson Reviewed the FY2013 Audit Management Letter.
Roselli Reviewed some of his recommendations that were included in the letter.
Gibson First section, Airport: Airport sent something around with their comments. First item accounts
receivable processing: did a brief description of the finding, identified who's responsible for
overseeing the correction, and what is intended to be done to correct it and when. Departments
should report back directly to the Audit Committee. Credit card transaction, this item is still a
work in progress.
Atherton Suggested having the Airport come to the next meeting to review their section of the letter.
Gibson The only time issue might be that we want to get the Town response issued (posted to the
website and mentioned at a Board meeting) so that it can be made available to the public.
Gibson While the committee is waiting to hear from the airport and if it is satisfied with the responses, a
draft of the letter can be posted to the website.
Consensus is to have Tom Rafter explain the Airport responses to Audit Committee.
Atherton Amount didn't total to the transfer.
Weiner Explained what this finding was, been working on digging out numbers within units. Do have
an incident report through MUNIS as to why those numbers are not in the report.
Atherton Do other Towns have similar issues.
Clark Nantucket is unique. There are between 100 to 200 different holding accounts that have to be
set up individually and have to be individually programmed.
Atherton Our fist challenge might be limiting all accounts.
Weiner Stated that depending upon what she gets back from Tyler Technology in regards to this
particular report, will try to get Randy Murphy to come help with MUNIS.
Gibson The next item is Department Payroll Transmittal Sheets, which need to be modified to include
employee pay rates.
Weiner The Finance Department purposely suppresses the rates; but schools want the rates.
Gibson That item is accomplished.
We are looking at the scope of services for a third party looking at operations: ways to improve.
A lot of things are manual and departments could take care of those. Payroll withholding item
would also be included in operational review to identify ways to improve that.
The IRS garnishment issue, a recommendation is to hire a tax attorney to look at this. We will
need report from the treasurer to identify exactly what the issue is in order to get this resolved.
The dollar amount is $300,000 or $400,000. Withholding accounts deficit, this item is almost
complete.
Weiner Explained what is being done to rectify the deficit and to determine what happened.
Miller Asked about teacher health insurance withholding arrangements during summer.
Weiner All the teachers have a choice of 22 weeks withholding to pay health insurance for the full year
so they are covered for the summer.
Clark Based upon what's put in MUNIS, the program does all the calculations.
Weiner MUNIS breaks that down by percentage and puts that percentage where needs to be posted.
Gibson There are four findings under sewer and water receipts; will have to work with Bob Gardner in
regards to his responses, which are included in a memo.
Item 1, posting of water receipts methodology: that has been done but needs to be followed up.
Item 2 is complete.
Dickinson Will talk to Heidi Holdgate, Wannacomet Water Company, about Item 3.
Gibson Item 4, e- billing: this wasn't a finding just a point of information.
Health Insurance Trust Payment needs to be worked on but we will have a report put together.
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Minutes for Mareb 19, 2014, adopted May 27
Limited Internal Audit Process, This was a recommendation; we are holding off until a new
finance director has been hired. Have talked with Mr. Roselli about internal audits.
Capital Assets Inventory is in here as a recognition of improvements; it is currently updated.
Cash reconciliation aged reconciling items is done.
Discussion about how to annotate in the Management Letter that an item is done.
Gibson Health Insurance Trust Bank Account, adjustments needed to be completed.
Wiener To get the bank account to match the general ledger, she stated she has been posting through
that to find where it went out of balance; it should be done by end of May.
Gibson Bank Account Consolidation, again a suggestion for operation. Some have been closed.
Purchase Order System, the dollar amount requiring a purchase order (PO) had a very low
threshold; now it is more reasonable.
Dickinson Have met with the Department of Public Works to review the entire process: how we do
procurement, get a contract, put contact in MUNIS, how items are actually paid for, and who
needs sign off on the PO. Haven't turned off the requisition part and made everything a written
PO.
Gibson In an effort to establish internal controls, there are so many steps that departments are frustrated
with how long it takes to submit a requisition and a PO. We are trying to streamline the process
but maintain internal controls.
Will post the draft Management Letter to the website with a notation that it will be updated as
work proceeds. The Management Letter is already posted to the Town website.
April 29, 2014, 9:00 a.m.; 4 Fairgrounds Road, Training Room
Motion to Adjourn: 9:52 a.m.
Submitted by:
Terry L. Norton
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