Loading...
HomeMy WebLinkAbout2008-09-04 MinutesMinutes of the September 4, 2008 Audit Committee Meeting The following audit committee members were present: Bill Golbuff, Chairman Tony Uth, Jr. Alan Bryant Bobby Ferrell, Alderman The following City staff were present: Paul A. Becker, Finance Director Marsha Hertweck, Accounting Director Trish Leach, Accounting Manager Vicki Deaton, Internal Auditor 1) Approval of 2nd quarter 2008 audit committee minutes The minutes from the June 13, 2008 audit committee meeting were approved by the four audit committee members present. 2) Uniform and Protective Wear Review update and question follow up Information was presented from the audit finding database which is being developed by the Internal Auditor. For each audit performed, all findings are listed in the database, with the recommendations and the status of the recommendations also listed. Each finding, recommendation, and status for the uniform review was presented by the Internal Auditor. There was discussion related to the finding that some terminated employees have retained their City uniforms for everyday wear. The Internal Auditor was questioned about where this occurred and relayed that an employee from the Transportation division revealed during an exit interview that he had been allowed to purchase some uniform items. This led to a discussion of exit interviews. Members of the committee asked if all terminating employees go through an exit interview process. If all terminating employees do not have exit interviews, the Audit Committee would like to recommend and encourage the Human Resources (HR) division to hold exit interviews with all terminating employees. The Internal Auditor will make some inquiries in HR and try to determine the current exit interview procedures. There were questions about the rental of uniforms and the Finance Director communicated that the uniform vendor is selected by the bid process. The City recently requested bids and selected a new uniform vendor. Divisions are in the process of making the switch to the new vendor. In the long run, the City will save money with the vendor, but the first year costs will not show a savings. The Internal Auditor provided some information to the Committee related to the use of uniforms in the City of Fort Smith, Arkansas. 3) Travel and Training audit discussion Trish Leach, Accounting Manager, was introduced to the committee. Trish oversees the travel and training function in the Accounting division. Trish discussed some of the items implemented from both the 2006 and the 2008 Travel and Training Reviews. Trish recently conducted training for employees throughout the City on the travel and training policy and procedures. 22 employees attended and the Cable division recorded the training for future viewing. Trish was pleased that there was a good representation from throughout the City. The training included discussion of the policy and how the Travel and Training Packet (an electronic workbook kept on the CityNet) works. Trish explained to the committee that the policy is available on the CityNet, and employees are always encouraged to ask questions and seek help regarding the procedures. There were questions about travel and training for elected officials. Trish explained that elected officials currently follow the same procedures that all employees follow. There was discussion about the travel and training initial authorization process — prior to the travel/training, and the process of reconciliation upon the employee's return. There was talk about the approval of cost overages greater than $200. The procedures for travel and training advances were described. The Internal Auditor emphasized that the City's procedures meet the IRS requirements for an accountable plan. It was noted that the Police and Fire Departments comprise a large portion of the 2007 travel and training expenditures of approximately $350,000. There was discussion about the need for training in order to receive or maintain various types of certification. The Internal Auditor called attention to the 2008 Travel and Training audit report, which stated that 37% of the travel and training transactions tested were necessary for certification. 4) Discussion of controls for purchasing goods One of the management letter comments this year concerned the receipt of goods. These types of purchases are normally made using a City procurement card (p -card). The Internal Auditor provided a narrative process flow for p -card purchases so that the committee could get a better understanding of the compensating controls over purchases and receipt of goods. The Internal Auditor described how each card has a small amount of discretionary funds available at all times, but requests for funds must always be made so that money is added to the card to pay for purchases. The Finance Director explained that p -cards have a single transaction limit of $2,500, but City policy has recently been revised to allow purchases over this limit in certain approved circumstances. The City receives a rebate which is based on the total annual dollar amount of p -card purchases. If processing can be simplified and a rebate earned, the Purchasing division is pursuing use of the p -card. For example, the Accounting division is working on a procedure to pay Ozark Electric utilities by p -card. There were questions about retrieving p -cards from terminating employees. There are procedures an employee should follow and they are informed of these in p -card training. Also, with each payroll, the Accounting division sends out a listing of terminated employees. This listing is forwarded to the Purchasing division, and they use the information to monitor p -cards. The Purchasing Manager has the ability to disable a p - card at any time. There were questions about the percentage and dollar amount of purchases by p -card, and the annual rebate amounts. The Internal Auditor will gather this information during the P -Card Follow-up Review that will be performed later this year. 5) New business The Internal Auditor informed the committee that the external auditors, BKD, receive all City of Fayetteville internal audit reports. The Committee Chairman brought up the OPEB liability, which was discussed at the 2'd quarter audit committee meeting. The City is required to disclose a liability for retiree healthcare and amortize the liability for 30 years. The Chairman also questioned if the City might benefit from having an independent insurance consultant look at City health insurance premiums. It was indicated that the current contract with Stephens Insurance, LLC, may already provide this function. The Internal Auditor will review the existing consulting and brokerage contract with Stephens Insurance, LLC, to determine what services they are currently providing. There was some discussion of another 2007 management letter comment - the unfunded pension obligations of the original fire and police defined benefit pension plans. The committee asked if a representative from HR would attend the 4th quarter audit committee meeting to speak about both new employee orientation and the exit process for terminating employees. They specifically would like to know how exit interview feedback is used for hiring and retention.