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HomeMy WebLinkAbout2009-07-10 MinutesMinutes of the June 10, 2009 Audit Committee Meeting The following audit committee members were present: Tony Uth, Jr. Judy Jacobs Absent were: 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 The following BKD staff were present: David Coleman, Audit Manager Joel Haaser, Audit Supervisor 1) The minutes from the March 4, 2009 Audit Committee Meeting were approved by the audit committee members present. 2) A draft of the City's Comprehensive Annual Financial Report (CAFR) was given to all present. David discussed the 4 opinions that the auditors will give on the CAFR. The first — or prime opinion — issued is the Independent Accountant's Report on Financial Statements and Supplementary Information. It is based on the auditor's assessment of the fairness of the financial statements. The opinion issued will be unqualified — a clean opinion. The second opinion issued is the GAGAS opinion - Independent Accountant's Report on Compliance and Internal Control Over Financial Reporting Based on an Audit of the Financial Statements in Accordance With Government Auditing Standards. The opinion issued will be unqualified. No GAGAS findings will be reported in the CAFR. The third opinion issued is the A-133 Single Audit opinion - Independent Accountant's Report on Compliance and Internal Control Over Compliance with Requirements Applicable to Major Federal Awards Programs. The major program tested for 2008 was the Community Development Block Grant (CDBG) program. No findings will be reported in the CAFR. The fourth opinion issued is the attestation opinion — Independent Accountant's Report on Compliance with Certain State Acts. There was one issue discovered with the reconciliation of police tickets at the court, but David does not believe it will meet the conditions that would require it to be reported in the CAFR. They are looking into this further. David went through the information contained in the CAFR to highlight certain items. He called attention to the Management's Discussion and Analysis (MD&A). This is the City's overview to the financial statements. He briefly explained the Government -wide Financial Statements and the basis of accounting on which they are prepared. He also explained that these statements include the City's two component units — the Public Library and the Advertising and Promotion Commission. David mentioned that BKD audits the Public Library's financial statements, so the opinion issued will cover those statements too. The Advertising and Promotion Commission is not currently audited separately. David described the next statements in the CAFR, which are the Fund Financial Statements. The fund statements tell how the City budgets and gives current financial information. David told the committee that some funds are considered major and some are not. There is a calculation that determines this classification. Financial information is presented separately for major funds in this section of the CAFR. David also described the differences in reporting between governmental funds and proprietary funds. Tony asked questions about the capital contribution of wastewater assets to the water and sewer fund during 2008. Marsha described how this was recorded in the financial statements and how these assets will be depreciated in the future. The final fund statements presented in the CAFR are for the Fiduciary Funds. This is the old fire and police pension plans — Policemen's Pension and Relief Fund and Firemen's Pension and Relief Fund. There is currently a $9.3 M actuarial liability associated with these funds. The plans are funded by a portion of a statewide 2.5% tax on insurance premiums of out-of-state insurance companies and a 0.8 .mill property tax levy. City officials take the legal position that the pension liability is not the responsibility of the City. There will be a note disclosure in the CAFR explaining the City's position. David called attention to the Other Post Employment Benefit (OPEB) note disclosure which relates to retiree health insurance benefits. Retirees pay the entire cost of monthly health insurance premiums at the same rate as active employees and receive a benefit from the blended premium rate from all of the employees participating in the City's health insurance plan. The City funds the plan on a pay-as-you-go financing method. There is currently a $2.7 M actuarial liability associated with the provision of this benefit. David also mentioned the contingent liabilities and subsequent events in the Notes to the Basic Financial Statements. Tony asked about BKD's letter for the Mayor, Council, and Audit Committee that will be included with the audit report. David said that the letter is not complete, but he thinks there will only be a couple of comments related to the unfunded pension obligations and separating the ordering and receiving functions for supplies. He reported that there were a few passed adjustments but no adjustments that were material. David reported to the committee that the City's accounting staff was very helpful and worked well with the auditors. There were few changes that needed to be made to the CAFR. The audit work went smoothly and BKD expects to issue their opinions next week. Tony Uth, the chair of the audit committee, will present the CAFR to the City Council at an agenda session after completion of the report. David said that he would attend also.