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HomeMy WebLinkAbout2010-09-15 MinutesMinutes of the September 15, 2010 Audit Committee Meeting The following audit committee members were present: Tony Uth, Jr. Judy Jacobs Adam Motherwell The following City staff members were present: Paul Becker, Finance and Internal Services Director Marsha Hertweck, Accounting Director Vicki Deaton, Internal Auditor Peggy Vice, Purchasing Manager Others present: Adella Gray, City Council The minutes of the June 15, 2010 Audit Committee Meeting were approved by all committee members present. Draft minutes from this meeting and the June 15, 2010 final minutes will be forwarded to the City Council to keep them informed of committee proceedings. Judy asked about the presentation of the 2009 CAFR to the City Council on August 10, 2010. Tony Uth, chairman of the committee, presented the CAFR at the agenda session on that day. There were no questions from the Council. Council member Bobby Ferrell has served on the audit committee for the last 3 years. According to the Audit Committee Charter, his term is limited to his time in office or 3 years, whichever is shorter. The Mayor has appointed Council member Adella Gray to serve on the committee. Her official term will begin in October. The committee and staff expressed thanks to Council member Ferrell for his service and welcomed Council member Gray to the committee. The Internal Auditor gave an update of recent projects: The City-wide IT Assessment is currently being performed by Plante & Moran, PLLC. Three consultants from Plante & Moran have been on-site conducting meetings this week with City Staff and elected officials. Internal Audit has provided information to the consultants and assisted them with their on-site visit. The preliminary report is expected in October. The implementation of the Time and Attendance Software is in the early stages. The implementation team, which includes Paul Becker, Marsha Hertweck, and Vicki Deaton, as well as other financial staff of the City, is meeting weekly. Paul told the committee that he expects full implementation in all City departments to take about a year. He also said that the City hopes for efficiencies and time savings in the conversion from a labor intensive manual process to electronic time -keeping. • The Solid Waste Hauler Vendor audits are not yet complete. The Utilities Director and Internal Auditor are waiting on follow up from several of the haulers to resolve issues with franchise fees paid to the City. • The Human Resources division is continuing their work on a job classification self -audit. The Internal Auditor is reviewing the results of the self -audit. This is ongoing and will continue throughout 2010. • The Retirement Savings Plan Reconciliation audit report was issued in June, 2010. The audit tested City and employee contribution amounts, employee eligibility requirements, and the bank's obligation of timely investing of funds received. • The Solid Waste Grant Recycling audit report was issued in August. A grant audit is performed each year as part of an effort to continually improve the City's grant administration. The Accounting division also provided grant training for divisional grant administrators in August. • A draft audit report related to employees contracting with the City is currently being reviewed and should be issued soon. • A Business Expense Review is currently underway. Business expenses include employee recognition expenditures and business meal expenditures. These expenditures are governed by City policy. All of these transactions from the last 12 months are being audited. • The Internal Auditor is serving as one of the City Facility Emergency Evacuation Project Leaders. The City Administration Building had a fire drill on July 20, 2010. Several other facilities have also had drills during this quarter. • In response to a comment made by BKD in their letter to the Mayor, Council, and Audit Committee regarding the 2009 CAFR, the City has requested a review of court accounting procedures by the Arkansas Division of Legislative Audit. This will probably occur during the month of October. The purpose is to receive an exemption to certain Arkansas Code sections related to court accounting. Many years ago, the City consolidated court accounting into the Accounting division to strengthen controls, but the Code calls for much of the court accounting to be performed by the Court. Also, many of the Code's accounting procedures were written before electronic processing. The City uses Virtual Justice software to manage court operations. Court accounting is processed through the City's accounting procedures, utilizing New World Systems accounting software. Tony asked if this issue had ever been discussed by the auditors in the past. Staff explained that this is the first time the auditors have asked for this type of exemption. Adam asked about the City's responsibilities to the Arkansas Division of Legislative Audit. Paul explained that each year the CAFR is presented to the Division of Legislative Audit for their review and acceptance. Also, Marsha prepares a Revenue Bond Report for them annually. Tony asked if there would be future audits performed related to the City's new entertainment district parking program. The Accounting division has been working with the Parking division to set up cash and credit card procedures. There probably will be some audit work after receipting and reconciling processes are further defined. There were various other questions and discussion about how the parking program operates, and about the new design of Block Avenue. Peggy Vice, Purchasing Manager, spoke with the committee about the City's purchasing procedures. The City follows state purchasing guidelines, except in some instances, our dollar limits are more restrictive. Like items costing between $1,000 and $2,500 require at least 3 verbal quotes. Like items costing between $2,500 and $20,000 require at least 3 written quotes. The City issues requests for bids, Requests for Proposals (RFP), and Requests for Qualifications (RFQ) for purchases over $20,000. These require formal sealed bids and approval by the City Council. Selection committees of at least 5 members (which includes one City Council member appointed by the Mayor) make selection recommendations on purchases of services. Newspaper advertisement is required for purchases over $20,000, and the Purchasing division maintains mailing lists and also utilizes the City's website to advertise bids, RFPs, and RFQs. Peggy brought up the increasing use of procurement cards (p -cards) in the City. She estimates that 70% of the City's spending is by p -card. She told the committee that the City's rebate, which was over $67,000 in 2009 based on over $6.5 million in spending, is growing every year. P -card purchases for January through August 2010 are more than $5.5 million. Peggy said that there are 258 employees with currently active p -cards in the City. She explained that the cards are provided through the Bank of America and managed with the bank's web based software. There is no expiration date on the Bank of America agreement. Each employee p -card has a small amount of discretionary funds on it, but employees must request money for purchases to be added to their cards. Supervisors review and approve requests before funds are added to cards. The City's purchasing guidelines are applicable to all p -card purchases. The Purchasing division reviews all p -card purchases over $1,000 to verify quotes and bids. The Finance and Internal Services Director also approves all p -card purchases greater than $2,500. There has never been any money lost due to fraudulent transactions on a p -card. Bank of America insures the City against fraudulent activity. Adam asked Peggy about consolidating purchasing of similar items throughout the City to achieve discounts and efficiencies due to scale. Peggy said that the Purchasing division has been monitoring purchases and has prepared new bids for services and items like electrical services, plumbing services, HVAC services, street materials, mops, and rugs. Peggy said that the City has received better pricing due to the volume purchased by the City as a whole. The meeting was adjourned. The 4`h quarter meeting will probably be held the beginning of December.