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Home My WebLink About2014-1-14Minutes for January 14, 2014, adopted Mar. 19, 2014 Town of Nantucket is Audit Committee www.nantucket- ma.eov RECEIVED MINUTES N19 101 10 20 Tuesday January 14, 2014 ;�AP1TUCKETTOWNCLERK 4 Fairgrounds Road, Training Room — 10:30 a.m. Staff: Libby Gibson, Town Manager; Debbie Dilworth, Interim Finance Director; Deb Weiner, Treasurer; Bob Dickinson, Assistant Town Accountant; Elizabeth Brown, Tax Collector; Martin Anguelov, Budget Analyst; Terry Norton Town Minutes Taker Attending Members: Rick Atherton, Bruce Miller, Matt Mulcahy Absent Members: None Public: Michael Cozort, Superintendent of Schools; Craig Spery, Finance Committee; William Pittman, Police Chief; Tom Rafter, Airport Manager; Ashley Christ, Airport Business; Dan Drake, Airport Commission Chairman Auditor: Anthony Roselli & Chad Clark, Roselli, Clark & Associates (RC &A) Documents used: PowerPoint® I. CALL 1 ORDER 10:36 p.m. APPROVAL OF 1. None PUBLIC 1 1 I. None Roselli — Explained how the Management Letter is broken up: economic trends, bond ratings, informational items, and findings and recommendations. Explained the purposes for having an audit. Atherton — Asked that a PDF copy of the Official Disclosure from the most recent bond issuance be sent to the committee members. Roselli — Explained that this is not a forensic audit, which would catch acts of fraud. Stated the audit did not identify any material deficiencies or significant weaknesses. The controls are in place for the Town to continue to improve. Economic trends: Financial trends are excellent. Reserve ratio for Nantucket General Fund is close to 20 %; 10% is considered the goal, and the state average is under 7 %. This is not to he confused with the Finance Committee Reserve Fund. The Enterprise Funds are solvent, except for Our Island Home which has some inconsistencies. Suggested involving RC &A during the next Credit Rating Assessment; since they have been through that a number of times. Bond ratings: Discussion about how well Nantucket should do in the next bond rating evaluation. Suggested diverting anything above 10% to a stabilization reserve and increase funding to Other Postemployment Benefits (OPEB); evaluators like to see that. Explained the benefits of increasing for OPEB liability. Informational items: Unfunded OPEB liability is about $88M. Pursuant the Health Care Reform Act, the state requires an annual audit of the health insurance subscriber data base. Weiner — The health enrollment audit is being done. Page 1 of 3 Minutes for January 14, 2014, adopted Mar. 19, 2014 Roselli — Numerous communities are going to the Comprehensive Annual Financial Report; suggested that Nantucket make it a goal. In the initial year, creating the report takes about 3 -weeks of extra work; after that it takes about 40 -hours a year to update. This provides more transparencies of the reporting process for investors as well as the residents. Weiner — Right now, the Trust Fund is in a regular bank account. Roselli — Findings and Recommendations, Airport: The Airport has gotten significantly better and there were no procurement issues identified. Need to work on accounts receivable, there are three documents that should either agree or identify why they don't. Stated that RC &A would like to see the Airport document reconciled to the Town MUNIS document before submission to the Department of Revenue (DOR). Explained how to make that happen. Drake — Agreed that these items should have come to the forefront long ago. A major issue in the past was the situation with the Capital Accounts; he assumes by RC &A's silence that those are in order. Roselli — Yes, Capital Accounts and Revenue are reconciled. Only receivables do not reconcile. Reviewed some of the hurdles faced during this first audit and how they have been removed making the next audit move more smoothly. Clark — Findings and Recommendations, Payroll: The main concern was that the payroll warrant was less than the gross wages being paid; explained how that happened and how to rectify that so that the warrant equals the gross payroll and then there would be a reconciliation of the gross payroll to the cash report. Stated that all timesheet formats need to meet a level of detail that allows Payroll to allot time into the proper category. Gibson — In FY2015, there is a request for funds to purchase software for doing timesheets and submittals to payroll. Roselli — Suggested getting a professional involved in the IRS Garnishment issue. Clark — Findings and Recommendations, Water and Sewer Receipts: Initially revenue from all three were deposited into Wannacomet with `Sconset and Sewers labeled liabilities; revenue was transferred to the other Enterprise Fonds at a later date. That has been rectified; revenue goes to the appropriate fund. Pointed out that Wannacomet is extremely progressive in the way they do billing and payments; that would benefit other departments. Roselli — Findings and Recommendations, Health Insurance Trust Payments: Nantucket has to maintain records on a GAAP basis; explained how Finance makes payments on a two -month delay. Some cities are looking at `opt out" when a family member might have better insurance. Capital Assets have significantly improved. The Town and County have in total close to $1 B in assets. That has all been moved into one software program at the Finance Department. When an Enterprise Fund makes a change, they need to notify Finance so the change can be made in their database. Purchase Orders will increase the limit to $1000. There are still purchase orders showing up after the invoice date. Findings and Recommendations, Limited Internal Audit Process: recommends that the town to establish an internal auditor position for internal control purposes. As part of the audit, RC &A has been asked to do Fraud Risk Assessments on two to three departments a year; a proposal for that will be submitted. Said that was done with the Airport this year as part of the audit. Findings and Recommendations, Cash Reconciliations: Clean up of a multitude of small reconciling items. The Town needs to match up the bank accounts to the funds; RC &A has done that for this year. Suggested the Town consolidate bank accounts; presently there are over 100 accounts. Explained how multiple escrow accounts can be consolidated under one management account. Findings and Recommendations, Student Activity Accounts: This had never been audited in the past and MGL requires it be done once every three years; this falls under the jurisdiction of the school committee. The Schools and Finance need to establisheded proper procedures for reimbursing checking accounts at the individual schools. Cited examples where large payments were made to an individual rather than paying a bill. Page 2 of 3 Minutes for January 14, 2014, adopted Mar. 19, 2014 Cozort — Stated it was a shock to hear the Student Activity Account had never been audited; changes are being made to correct that. Atherton — At next meeting will review the Management Letter and responses at the same time. Roselli — Waiting for a response from Glenn Field, Chief Financial Officer, on the single audit. Roselli — As soon as they receive the School End -of -Year Report, everything will be ready to go. Spery — Asked about the unfunded liability triggering a different SAS 15. Roselli — No. Explained what would trigger that. Discussion about how Barnstable County Retirement System (BCRS) calculates the Town's annual assessment and calculating the unfunded liability. BCRS Director will do a presentation on Island February 12, 2014. Atherton - Explained the letter to the auditor from the town. Encouraged all to read it Wednesday, March 19, 2014, 9:00 a.m. Motion to Adjourn: 12:13 Submitted by: Terry L. Norton Page 3 of 3