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TownofNantucketAuditCommitteeMeetingMinutesAuditCommitteeMeetingJune25,2008Present:Mr.JamesKelly,Ms.PatriciaRoggeveen,Ms.ConnieVoges,Ms.LibbyGibson,andMr.MalachyRiceAbsent:Mr.MichaelKopkoAlsopresent:Mr.MarkAbrahams,Mr.WhitingWillauer,Mr.RickAtherton,Ms.IreneLarivee,andMr.CraigAbernathy1.CalltoOrder;Ms.Roggeveenmotionedtocallthemeetingtoorder.Mr.Kellysecondedthemotion.2.AnnouncementsandUpdates:CraigAbernathywasintroducedtotheAuditCommitteeasthenewExecutiveAssistanttotheFinanceDirector.3.ProgressReportonFiscalYear2006and2007Audits:Thestatusofthe2006auditremainsunchanged.Therehavebeensomeresponsestothedraftaudit.Ms.Vogesreportsthatherprimaryfocusisonthe2007audit.Atthistimethereisnodraftauditfor2007.ThemanagerfortheauditfromPowersandSullivanwillbeonvacationuntilJuly7,2008.Ms.Vogesindicatedthatshewillfollowupinaphonecalltodetermineifanyonewillbeworkingontheauditduringthattime.Theexpectationisthattherewillbelittleifanyprogressontheauditduringthetimethatthemanagerisoutoftheoffice.Ms.RoggeveenaskedaboutimpactsonthetimetableandMs.Vogesadvisedthatsheisunabletopredictaccuratelythetimetableforworkperformedbytheauditors.Ms.Roggeveenproposedthatapapertrailbecreatedshowingthattheauditorsarecurrentlynotmeetingtheproposedtimeline.Thispapertrailwouldbevaluablewhencreatinganewcontractwiththeauditors.Ms.RoggeveenindicatedthatshethinksitisveryimportantfortheFinanceDepartmenttocontinueto“audittheiraudit.”Ms.VogesreportedthattheresponsibilityfornotmeetingthetimelinelieswithboththeFinanceDepartmentandPowersandSullivan.Ms.Roggeveenhopestoimprovethedefinitionoftimetablesoncethe“dustsettleson2006.”Mr.Kellyspokeabouthis
Minutes – Finance Committee June 28, 2007Page 2 of 3 hopestoclarifythetimelineandclarifyexpectationsbybothparties.Hesaidthetimetoagreeonanewtimetablewouldbewhennegotiatinganewcontract.Inrespecttothe2006and2007audits,Mr.KellydoesnotbelievethattheTowncandomuchtoexpeditetheprocess.HebelievesthattheTowncanbettermanagetheauditorsbycreatingveryspecificmilestoneswhendiscussingfuturetimelinesandexpectations.Mr.Ricehighlightedtoday’sphonecallwithPowersandSullivan,scheduledfor4PM.Thepurposeofthephonecallistofindout“whereweare.”Duringthephonecalltherewillbeadiscussionofdeadlinesfordraftsandsubmissions.HesuggestedthatPowersandSullivanputintowritingtheirdeadlines,giventheimportanceofthesituation.4.ResponsetoDepartmentofRevenueLetter:Mr.RiceintroducedthedraftresponsetotheDepartmentofRevenue(DOR)letter.Hesaidthattodayhehopedtofinalizeacoupleofitemsfortheletter.Thesewerethedatesforsubmissionofthe2007auditandmilestonesformovingforwardin2009.Specifically,theletterfocusesonhowthemanagementletterissuedin2005willbeaddressed.Otherissuesdiscussedintheletterarestaffing,implementingtherecommendationsofPowersandSullivan,andtheAbrahamsGroupInternalControlandOrganizationalStudy.Thegoalistostart2009clean,andbegintheimplementationoftherecommendationsofPowersandSullivaninJulyandAugust.Othergoalsincludeddevelopingaworkplanforthe2008audit,managingtimelines,andmonitoringimprovements.Mr.Kellyofferedadviceonhowtoimprovetheresponse.Thatadviceincludednamingthevacanciesthathavebeenfilled,andthenlinkingthatactiontotherecommendationspreviouslyputforward.Headvisedthatthelanguageofthelettershouldbemoreprecise,reflectingaction.Mr.Kellysaidthathewouldlikethelettertocreateatoneoratmosphereofimprovement.HealsorequestedthattheletterdemonstratetheTown’seffortinregardtothebankingchanges;directdepositandcashreconciliation.Ms.Gibsonagreedthatahigherlevelofdetailwouldbepreferred.Mr.Athertonaskedwhowouldbesigningtheletter,andMs.Gibsonrepliedthatshewouldbesigning.Afterdiscussion,itwasdecidedthattheChairmanoftheBoardofSelectmen(BOS)shouldsigntheletter.Thegoalofthisapproachistobuildconfidenceintheprocess,asitreflectsapprovalatalllevels,i.e.AuditCommitteeapproval,BoardofSelectmen(BOS)unanimousapproval.ThiswouldallowforaBoardofSelectmenapproachtotheresponse.Therewassomeconcernaboutthetimelinessofthisdevelopment,butitwasdecidedthatadraftwouldbeprovidedfortonight’smeeting.TheletterwouldshowapprovalbytheAuditCommittee,besignedbyMichaelKopko,th andgoouttoDORonFriday,June27 .Thedraftschedulewillbeincludedasanattachmenttotheletter,perBarbaraDakin’sinstructions.
Minutes – Finance Committee June 28, 2007Page 3 of 3 5.DiscussionofOrganizationalStudyandReviewofInternalControls:Mr.AbrahamshighlightedthegoalsoftheOrganizationalStudyandReviewofInternalControls.TwentyemployeesfromtheFinanceDepartmentwillbeinvolvedinthestudy.Thestudywillbecomposedoftwophases.Ameetingtodaywillexplainthescopeofthestudy.Amajorgoalofthestudywillbetodeterminewhodoeswhattogetthingsdone.Cashistobereconciledandquarterlycashreconciliationreportsaretobesubmittedtothebureau.ThetimelysubmissionofScheduleAandthecombinedbalancesheetarealsomilestonesforthedepartmenttomeet.Therewillbeastartupmeetingtoday.Reviewofmaterialwillbeginalmostimmediately.Interviewsofeachdepartmentmemberwillbeginnextweek.InterviewswithAirport,Water,DepartmentofRevenue,PowersandSullivan,andtheBoardofSelectmenwillalsotakeplace.st AnewcashreconciliationprocedurewillgointoeffectonJuly1 ,2008.NewrequirementswillalsoresultinmoretimelypostingstotheGeneralLedger.ImprovedpostingstotheTreasurer’sCashbookandtheGeneralLedgerwilleliminatewhatMr.AbrahamsandPowersandSullivanconsidertobe80to85percentofthe“problems.”PowersandSullivanwillalsoconductinterimreviews.Oneproposedinterimreviewwillfocusontheimplementationofthenewcashreconciliationprocedure.Assessingtheorganizationandoperationsoffinancialfunctionsisattheheartofthestudyfromanorganizationalpointofview.Thisstudywillfocusonthefunctionalintegrityoftheorganization,thestaffingoftheorganization,internalandexternalcommunications,andcontrols.DraftfindingsandrecommendationswillcomefromtheAbrahamsGroup.Afinalreportwillbeth broughtforthbyAugust29 ,2008.Mr.Kellyexpressedconcernthattheemployeeinterviewprocesscouldresultinnegativeventing,andadvisedthatasystemshouldbeinplacetoaddressthisissue.TheunionpresidentandaHumanResourcesrepresentativewillbepresentatthemeeting.Ms.VogesaskedMr.AbrahamsaboutplanstocomparethesizeoftheTownofNantucketwithothermunicipalities,andhesaidthatsuchacomparisonisoneresourceheplanstouseintheevaluationprocess.ThescopeofworkdocumentandtheJobAssessmentQuestionnairewillbeavailableattheBoardofSelectmenmeetingtonight.6.DateofNextMeeting:RepresentativesfromPowersandSullivanaswellastheAbrahamsGrouphavebeenth invitedtoparticipateinthenextmeetingbeingheldonWednesday,July9 ,2008at9:00AMintheTownHallConferenceRoom.7.AdjournmentMs.Roggeveenmadeamotiontoadjournwhichwas“somoved”byMr.Kelly.