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HomeMy WebLinkAbout2011-12-06 MinutesMinutes of the December 6, 2011 Audit Committee Meeting The following audit committee members were present: Tony Uth, Jr. Judy Jacobs Adam Motherwell Alderwoman Adella Gray The following City staff members were present: Don Marr, Chief of Staff Connie Edmonston, Parks and Recreation Director Marsha Hertweck, Accounting Director Vicki Deaton, Internal Auditor Approval of Minutes: The minutes of the September 9, 2011 Audit Committee Meeting were approved by all audit committee members. Draft minutes from this meeting and the September 9, 2011 final minutes will be forwarded to the City Council to keep them informed of committee proceedings. Recognition of Audit Committee Members Don Marr presented each audit committee member with a certificate signed by the Mayor and City Clerk thanking them for their service to the citizens of the City. The 3 year committee term currently filled by Judy Jacobs expires on 12/31/11. Judy has reapplied for another term. The nominating committee will recommend candidates to be approved by the full City Council at their meeting on 12/20/11. The City Council recently passed an ordinance to amend the rules of conduct for all City boards, commissions, and committees. The ordinance sets eligibility and attendance requirements. (A copy of the ordinance will be forwarded to the audit committee members.) Internal Audit Update: FEMA declared disaster — The City of Fayetteville is eligible for public assistance related to FEMA 1975 -DR -Arkansas. The disaster was declared due to severe storms during the spring of this year. I have assisted in the coordination of project record keeping and project budgeting. The City has completed and signed all claims for reimbursement from FEMA, the State of Arkansas, the Federal Highway Administration, and our insurance carrier for a total project cost of $743,000. Expected reimbursement is $653,000, of which approximately $125,000 has been received. Some of the work has been completed, but a lot of the permanent work is scheduled to be completed in the spring and summer of 2012. FEMA's deadline to complete the work is late fall 2012. • The Lean Government pilot project that focuses on the Billing and Collections division processes of new service accounts, service transfers, and service disconnects is in the implementation phase. Some improvements have already been implemented and some are in process. ■ Consulting project— Water and Sewer Operations Hansen inventory implementation with barcoding capabilities is ongoing. Inventory transactions are being entered into both the current software, New World, and into the proposed software, Hansen, on a test basis. We are working with IT to ensure that the new software provides all the information necessary to record the inventory transactions in the general ledger. We expect to go live in the Hansen inventory module early next year. The Recreational Trails Program (Mud Creek Ext.) Grant Review report was issued on 10/20/11. This was a federal grant that was used for in-house trail construction. Two internal procedural items were identified for improvement. We believe we have already made progress in addressing these. Assisting with the Department of Finance and Administration (DFA) audit of Construction Craft Surcharges — the DFA audited the City's remittance of these fees over the past 3 years. The Construction Craft Surcharge is a $0.50 fee collected per each $1,000 of construction on any nonresidential construction permit issued by the City. The surcharge goes to support the Arkansas Construction Industry Craft Training Program. The surcharge was enacted many years ago. The state had never audited remittances, but decided to perform audits state-wide after receiving an internal DFA legal opinion clarifying the definition of nonresidential construction. The City was assessed $1,740 in past fees and $705 in interest. Per state law, interest was charged at a rate of 10% annually, and was compounded from when the surcharge was due until the present. There was discussion about the DFA's legal opinion and the City's position and rights to appeal. Annual Physical Inventory Counts — all 2011 counts are complete except the Water and Sewer Department physical inventory count. Presentation: Presentation by Connie Edmonston, Parks and Recreation Director Connie presented a financial profile of the Parks and Recreation Department for 2011. There are currently 70 City parks on 3,100 acres. The department employs 53.25 full- time equivalent employees. Connie talked about the monies received from the City's Hotel, Motel, and Restaurant (HMR) Tax. It is a $.02 tax with 1 penny going to the Parks and Recreation Department and 1 penny going to the Advertising and Promotion Commission. The Parks HMR revenue must be used for the development, construction, and maintenance of City parks. About $2.2 M is expected in Park's HMR revenue for 2011. This is up about 4.3% from last year. Approximately $1.7 M of the HMR revenues are being used for operations. The department's total operational budget for 2011 is about $3.4 M. Park programs produced about $400,000 revenue in 2011. The revenues are comprised of recreational league fees, lake and pool revenues, and concession revenues. Some programs are administered by the Parks Department, some are outsourced to entities like the Boys and Girls Club, and some may be administered by volunteers. There is an effort to limit duplication of services. The department has implemented several cost savings measures, such as modifying the mowing schedule and reducing the swimming pool season. The Parks and Recreation Department's capital budget is about $930,000. Approximately $580,000 of this amount is from HMR revenues. The remaining capital funds come from park land dedication funds, sales tax capital funds, and tree escrow funds. Land, or cash in lieu of land, must be donated by developers (based on a formula) to satisfy the park land dedication ordinance. This is intended to provide park land in all areas of the City. Over 100 acres of land have been received from developers since the park land dedication ordinance was passed. Tree escrow funds allow for replacing the tree canopy lost during development. There was some discussion about this year's and next year's capital improvement projects, large capital improvement projects, and funding for construction and maintenance of large capital projects. Other Business: The 2012 audit plan is currently being drafted. The final draft will be presented for approval by the committee at next quarter's meeting, which will be in February, 2012. There will be some follow up and reoccurring work on the audit plan, and also some new projects. Several projects were mentioned specifically — a Fleet Follow Up Audit, an update of the City's Cost Allocation Model, and follow up of the work performed on Solid Waste hauler fees.