Audit Committee
Minutes
October 23, 2001, 2:30pm
Civic Center Council Chambers, 1175 East Main Street
I. Roll Call
Present: Roberta Stebbins, Emile Amarotico, Barbara Christensen, City Recorder, Alan DeBoer, Mayor (Council Liaison), Lee Tuneberg, Finance Director (Staff Liaison)
Absent: Martin Levine
Staff: Joanie Baker, Patrick Caldwell, and Kirsten Bakke
II. Call to Order
Tuneberg called the meeting to order at 2:47pm.
III. Introductions
Tuneberg welcomed Stebbins and said that we would do more introductions later when Marty Levine arrived sometime after 3pm.
IV. Update on Current Activities
Tuneberg talked about challenges for this year regarding staffing, scheduling, auditor selection process, GASB34 transition, and computer conversions. He said that producing the Comprehensive Annual Report in November is the goal for this year and at this point it might be necessary to reschedule our current date of December 4th for council. Another change this year is that we are doing the CAFR in-house. Currently we are working on a final draft of the CAFR. Amarotico asked if there were substantial savings. Tuneberg said that overall there was not a great saving but he saw it as a fiduciary responsibility. The agenda for the next meeting on Monday, November 19th will be with the auditors presenting their opinion. He explained that we are not doing a GASB34 presentation this year. We have until the report for June 30, 2003 to comply. We are interested in making that transition as soon as possible with the auditor's help, whether that is next year or not.
V. Discussion on Selection Process for the next Audit Contract
The discussion included the issues below:
1. RFP Criteria
2. Search Scope Issues
Availability
Scheduling
Staffing
References
Proximity
Transition into GASB34
Other Issues:
Add Living Wage provision to RFP
AFN
Christensen asked if we were looking at what was done with the previous RFP process. Tuneberg said yes, that we provided a copy of the previous audit contract and lists of qualified municipal auditors. He talked about the last audit selection process. Christensen recalled that there were not as many qualified auditors to choose from last time. Stebbins asked about the certification process for municipal auditors in Oregon. Caldwell said that the criteria for evaluation and scoring were included with the proposal.
Tuneberg asked for recollections on the Parks Department, as a separate entity, and the impact on the selection process. Christensen asked about a copy of the Parks Department CAFR. Stebbins asked if Parks was included in this audit. Tuneberg confirmed that is was part of this audit, as a component unit, bid separately under an umbrella contract. Caldwell explained the financial independence of the hospital and their annual qualification as a component unit. He also explained the lease with Ski Ashland. Christensen offered copies of the contracts for additional information.
Tuneberg described the RFQ vs. RFP for the auditing selection process, targeting, screening, and public notification process. Christensen compared it to the bank bidding process done last spring. Tuneberg said the target date to start the process is December, with the selection done by February. Amarotico asked about targeting local firms. DeBoer suggested that we rely on references rather than do face to face interviews for each. Tuneberg preferred to narrow it down with the first screening and then do a face to face dialog with some of the audit firm staff that will be doing the audit.
Tuneberg suggested a 3-year contract. Amarotico asked about a 4-year contract or a 3-year with an option for more. Tuneberg said that in his experience with bids, they loose money the first year, they break even the second, they make it on the third, and maybe they'll sharpen the pencil on 4th and 5th year to keep the job. This gives an opportunity to develop that work relationship, due to the amount of learning and documentation in the first year, and falls within the guidelines established with personal service contracting in the state. Caldwell said that a roll-up contract with one year extensions work best.
Tuneberg asked if there were any other issues to consider that we haven't put on the list. DeBoer suggested adding the Living Wage provision to the RFP. Christensen asked about consulting services like cash management. Tuneberg said that we could craft an RFP that asked about their availability and expertise in consulting services outside of the pure scope of the audit itself. Christensen said that she would not want to make it knockout criteria.
Stebbins asked if Moss Adams had been used in other areas. Tuneberg said that we have talked about using them for cash management. Caldwell said that in the first year they were contracted by Parks to audit the cash procedures at the golf course as a separate service. Tuneberg talked about the reference in the contract to consulting with another auditor. Tuneberg said that AFN should be included as part of the scope. Christensen asked about how we audit AFN activities. Tuneberg said that we are receiving some indirect benefit from Moss Adams expertise in that area. He also talked about amortization of start up costs for AFN.
Christensen asked about the current status on written policies and procedures for federal programs. Tuneberg recalled that the recommendation was that we have a grant coordinator, but we don't have the funds for that at this time. Currently, we are asking all departments to provide us with copies of their grant applications, protocol for requirement to go to council for approval, managing payment process. Concerted effort on control and documentation of grants. Christensen asked about a written procedures and policies manual. Tuneberg replied that the Finance Department is going through a process redesign and that we are developing a policy and procedures manual.
VI. Committee Comments
Christensen asked about quarterly reports for purchasing contracts. Tuneberg said that we are redesigning our A/P process to capture purchase order information up front. Kari Olson, our Purchasing Representative, is chasing that information up front. Tuneberg explained that the Finance Department is struggling through some staffing issues and absenteeism and he apologized that we haven't provided that on a timely basis like we had promised last February. Our intent is that we will have that report by December. Christensen expressed concern that we make sure we are following all the steps needed in the process. Tuneberg described the guidelines and process for purchasing, contracts and the database that is maintained by Kari. Stebbins asked how this impacts the Audit Committee. Christensen spoke about tracking all the documentation and the committee’s previous request for a procedure for auditing contracts. Stebbins asked about Davis/Bacon compliance. There was further discussion regarding committee responsibilities.
Tuneberg said the audit firm indicated that it was their understanding that the committee receive quarterly reports and anything that they needed to feel comfortable about the execution of the audit itself or compliance of things in the management letter. He said that most presentations are done right to the elected officials and we were one of the few cities that have an audit committee. The perspective he garnered from the 4-year absence was that the Council felt that there were issues that deserved more input.
Amarotico talked about quarterly print outs of the database and the process followed for contracts and compliance. Tuneberg said that there is no database in the system right now that ties all these pieces together, its a manual process. Stebbins asked if there were other management letter issues that hadn’t been resolved. Tuneberg replied there were none.
Tuneberg pointed out that by the time the management letter is generated, it is in the middle of the subsequent year, thus, you still have the violation in current year, they have a tendency to overlook that knowing it will be resolved by end of the year. Amarotico wanted to see a report for purchasing/contracts this year to date, even if it was in a draft format. There was more discussion on the quarterly reports. Christensen said it made sense to have that database in the Recorder's office.
Tuneberg confirmed the preparation of a status report for this year to date identifying criteria, with purchases below $10,000 ruled out, and department and insurance certificate information where appropriate. Tuneberg said we would generate the list for the November 19
th meeting.
Tuneberg recapped the meeting.
At the Monday, November 19th meeting we will have:
A report on the purchase orders and contracts
A schedule supporting our selection process this year
The Auditors here
CAFR Draft available the week prior to the 19th meeting
To Reappoint a Chair
DeBoer talked about a single page document that shows budget vs. actual. Tuneberg talked about a section in the notes of the budget that identified over expenditures. DeBoer concerned with under budget by individual funds. Tuneberg asked for a copy of that single page document.
VII. Adjournment
Meeting adjourned at 4:00pm.
Respectfully submitted by Kirsten Bakke, Administrative Assistant
