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HomeMy WebLinkAbout2009-08-26 MinutesMinutes of the August 26, 2009 Audit Committee Meeting The following audit committee members were present: Tony Uth, Jr. Judy Jacobs Alan Bryant Bobby Ferrell, Alderman The following City staff were present: Paul Becker, Finance and Internal Services Director Marsha Hertweck, Accounting Director Vicki Deaton, Internal Auditor Terry Gulley, Transportation Services Director 1) The minutes from the June 10, 2009 Audit Committee Meeting were approved by all audit committee members. Draft and final minutes are forwarded to the City Council each quarter to keep them informed of committee proceedings. 2) The Internal Auditor reported to the committee on a new control procedure recently implemented in an effort to address an auditor comment. BKD, LLP, the City of Fayetteville's external auditor, includes communication concerning internal control over financial reporting in the Mayor, Council, and Audit Committee Letter incorporated with each year's audit. With the audit of the 2007 and 2008 financial statements, one matter noted as a control deficiency in the letter related to the receiving of supplies within the City. Purchase and receipt of supplies is decentralized. Purchased goods are received in the various divisions, many times by the individual who authorized the purchase. This could result in the misappropriation of goods received by City personnel. Even though there are compensating controls in place to prevent the misappropriation of received goods, City administration has implemented a new procedure in which 2 employee signatures are required on documentation for the purchase of tangible items. The plan was discussed with the external auditors, and they feel the new procedure will satisfy the control deficiency. The procedure was introduced at a training session for financial staff on 8/18/09. The Internal Auditor clarified with the committee that the new procedure is applicable throughout the City, and applies to tangible items that you can "touch and feel." Many times these are small purchases for materials and supplies made with a City purchasing card (p -card). There was some discussion on authorization of transactions based on levels of authority. The Internal Auditor explained that there is an authority hierarchy that accounting uses to verify transactions. There were also several questions related to how p -cards work and how many employees have p -cards. Each card has a small amount of discretionary funds available, but requests must be made and approved for each purchase. The p -card single transaction limit amount is $2,500 unless the Finance Director approves a larger amount. Paul explained that there are advantages, such as a reduced transaction cost and the p -card rebate, to using the p - card for some larger purchases. Currently the City receives a I% rebate on annual p -card purchases. 3) Terry Gulley, Transportation Services Director, was introduced to the committee. Terry explained that he is responsible for 4 divisions: Parking and Telecommunications division, Fleet division, Airport division, and the Transportation division. He gave a description of the duties and services performed by each group. Parking and Telecommunications division (6 FTEs) City parking and enforcement, coordination of special events which require street closure, telecommunications throughout the City, Dickson St. and Square trash pick up Fleet division (19 FTEs) Manage and repair City's vehicles and equipment, purchase City vehicles, manage insurance company claims, charge out vehicle and equipment expenses to the various user divisions Airport division (6 FTEs) Maintenance of the airport facility, leasing of terminal, hangar, and other airport space, management of FBO (fixed base operator), management of grants for airport repair and maintenance Transportation division (65 FTEs and 15 to 20 temps) Right of way maintenance, street maintenance (street overlay program with equipment and supplies funded through the Sales Tax Capital Fund budget), drainage construction and maintenance, sidewalk installation and maintenance, traffic control and signage (there are about 95 traffic signals in the City), trail construction Terry and Paul told the committee that the Council is being asked to approve a resolution for a transfer of $600,000 from the Sales Tax Capital Fund to the General Fund. The transfer is needed for General Fund operations due to a decline in 2009 revenue. Sales Tax Capital Funds are available for transfer because transportation personnel were diverted from the street overlay program to debris removal during the 2009 ice storm disaster. The full amount budgeted for the street overlay program is not required in fiscal 2009. Bobby complemented Terry and the Transportation division for their hard work after the ice storm. Terry gave an update on the recent work performed by the Transportation division on College Avenue. He said this was a large long-term project for his group. They usually focus on street milling and pavings which are smaller, short -tern projects. There are approximately 450 miles of streets in the city limits. About 75 miles of those are state highways. The City must get a permit from the state highway department before any tie in or work can be done on a state highway. The Transportation division inventories the condition of City streets, and keeps a prioritized listing of work that needs to be done. Terry said streets are on a 15 year schedule for possible work— some may last longer and some may not last 15 years. The list is reevaluated and prioritized annually, then presented to the street committee for their approval. The list approved by the street committee (which consists of 4 council members) is taken to the City Council for their approval each year. The street overlay program is currently funded for about $2.1 M annually. Depending on the price of asphalt purchased for the program, the crew may pave between 12 and 20 miles of City streets each year. The committee asked if the City was awarded any of the federal stimulus money for highway work. Paul told the committee that the City submitted an extensive list requesting funding for not only street projects, but water and sewer, airport, and police. The City did not receive any funding. There was some discussion about airport operations. Tony said that he has heard good reports of the FBO at the airport. The airport relies on lease revenue for operations and grant funding for capital projects. Terry explained that the City's trail system is designed by a Trails Coordinator in the Engineering division, but his crew constructs the trail. The crew is currently working on the Lake Fayetteville trail. There was some discussion about future trails, connectivity between trails, and the bond issue for trails. Terry reported that trail usage has been substantial since the opening of Scull Creek Trail. The committee will meet again before the end of 2009, probably around the beginning of December. City Attorney Kit Williams will attend the meeting and talk with the committee about his duties as City Attorney and the status of the Local Police and Fire Pension Funds.