MUNICIPAL Audit Committee
Minutes
October 22, 2012
Call to Order
Administrative Services and Finance Director Tuneberg called the meeting to order at 2:01 p.m. in the Civic Center Council Chambers, 1175 East Main Street.
Municipal Audit Committee Members Guy Nutter, Roberta Stebbins and Committee Member Barbara Christensen were present. Municipal Audit Committee Member Dennis Slattery was absent.
Also present were City Administrator Dave Kanner, Administrative Services and Finance Director Lee Tuneberg, Parks Director Don Robertson, Accounting Manager Cindy Hanks, and Administrative Assistant Tami De Mille-Campos.
Approval of Minutes
A MOTION WAS MADE by Committee Member Nutter for the approval of the minutes of November 07, 2011, as submitted.
The Vote: Unanimous Ayes
Presentation by the Auditors
Representing Pauly, Rogers, and Co., P.C. (PR&C), a certified public accounting firm engaged by the City to perform auditing services, Kenny Allen presented the City of Ashland Comprehensive Annual Financial Report (CAFR), the Parks Comprehensive Annual Financial Report (CUFR), and Management Letters to the City of Ashland and the Parks and Recreation Commission.
Parks Comprehensive Annual Financial Report
Mr. Allen reported a clean opinion as stated on page #1 for the Park’s financial statements. No exceptions requiring comment relative to the Oregon Municipal Audit law, and compliance with GASB requirements. No management letter was issued.
A MOTION WAS MADE by Committee Member Nutter to accept the Component Unit Comprehensive Annual Financial Report for the Ashland Parks and Recreation Commission for fiscal year ending June 30, 2012, and to recommend acceptance by the City Council.
The Vote: Unanimous Ayes
City Comprehensive Annual Financial Report
Mr. Allen reported a clean opinion as stated on page #1 for the City’s financial statements. No new exceptions requiring comment relative to Oregon Municipal Audit law, and compliance with GASB requirements.
City Management Letter
Mr. Allen reviewed the two recurring conditions required to be disclosed in the City’s Management Letter, shown on page 149.
- Condition 1 – PR&C noted that the Information Technology (IT) department does not have a cohesive written internal control document that details out their internal controls over their internally developed utility billing (UB) system and that the UB system should be modified to be fully integrated into the Eden GL system and should have a report written that “red flags” unusual or missing charges to individual accounts. PR&C also recommended that the IT department have an external review of the processes and controls from an outside entity.
Administrative Services and Finance Director Tuneberg pointed out that this is a repeat from prior years. He stated that with the conversion from the internally-generated UB software to the new Springbrook software, which is scheduled to be implemented in December 2012, this will eliminate the first portion of the comment and that Staff will also work with IT to tighten the controls on the self-developed software which will still be utilized for AFN cable modem management.
- Condition 2 – PR&C noted that all staff at the Courts department can make manual changes to court charges within the system. Mr. Allen recommended limiting access to as few people as possible and requirement of a supervisory review of all manual changes within the system. He opined that this is an area of high-risk in the court system.
Mr. Tuneberg acknowledged that this is also a repeat from prior years and was a challenging area for small agencies (divisions) with very few staff. He recommended strengthening reviews and internal controls such as sign offs, reconciling, and auditing efforts to improve compliance with the essence of this comment.
Future Accounting and Auditing Issues
Mr. Allen briefly reviewed the hand out covering auditor roles and responsibilities and described changes to the “Yellow Book” issued by the Government Accountability Office; he discussed four new auditing standards issued by the American Institute of Certified Public Accountants, GASB 60-63 (see attachment for details). He stated that the City of Ashland would not be significantly impacted by these changes.
Committee Discussion
Ms. Christensen asked Mr. Allen if the biennial budget would affect any part of the audit going forward. Mr. Allen stated that it will not have any negative impact on the auditing process. Ms. Christensen also asked whether all of the funds are tested, specifically the Cemetery (operations). Mr. Allen explained that deep testing is done on things that stand out otherwise the funds are tested at random.
Mr. Nutter inquired about the Post Employment Stipend shown on page 48. Mr. Tuneberg and Ms. Hanks explained that the City provides certain benefits for 19 retired City employees who have completed a minimum of 15 years of employment with the City. These are obligations which are required by one labor bargaining agreement and by the exempt employee resolutions.
The committee discussed whether Mt. Ashland was considered a liability. Mr. Allen explained that when the permit was transferred it was no longer a liability. Mr. Nutter asked whether there should be any reference to the Gun Club contamination. Discussion addressed the current activities, status of mitigation efforts and the fact that the liability is currently unknown. Mr. Kanner explained that as long as the gun club continues to operate as a gun club then the City has no liability for the cleanup. He also pointed out that the likelihood of the Department of Environmental Quality would require cleanup is unknown. As long as the City owns the property the cleanup likely would be limited. Mr. Allen explained that there was nothing to disclose based upon the city attorney’s opinion letter for the current fiscal year.
A necessary correction was pointed out on page 47. It should read that “Settlements have NOT exceeded coverage’s in each of the last three years”. Staff will make the necessary change.
Ms. Stebbins asked that Staff expand on the basis for waiving the requirement for Ashland Community Hospital’s debt service coverage ratio shown on page 48. Staff noted this request and will update this.
The Committee thanked Cindy Hanks, Lee Tuneberg and the entire Finance department for the hard work put into producing the Annual Financial reports!
Recommendation to City Council to Accept the City 2012 Audit Report
A MOTION WAS MADE by Committee Member Nutter to accept the Comprehensive Annual Financial Reports for the City of Ashland for fiscal year ending June 30, 2012, and to recommend acceptance by the City Council.
The Vote: Unanimous Ayes
Adjournment
Ms. Stebbins adjourned the meeting at 3:22 p.m.
Respectfully submitted,
Tami De Mille-Campos, Administrative Assistant
