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TownofNantucketAuditCommitteeMeetingth MinutesAuditCommitteeMeetingNovember5 ,2008ApprovedDecember10,2008Present:Ms.ElizabethGibson,Mr.JimKelly,Mr.MichaelKopko,Ms.PatriciaRoggeveen,Ms.ConnieVoges,Mr.BobDickinson,andMr.MalachyRiceAbsent:None.Alsopresent:Mr.WhitingWillauer,andMr.CraigAbernathyCalltoOrder:Ms.Roggeveencalledthemeetingtoorderat9:00AM.AnnouncementsandUpdates:Ms.RoggeveencongratulatedTimMaddenonhiselectoralvictory.ApprovalofMinutes:
Mr.KopkomadeamotiontoapprovetheminutesfromthemeetingofOctoberth 8 ,2008.ThemotionwassecondedbyMr.Kelly.
StatusofPhaseI&IIAbrahamsGroupRecommendationsImplementation:
nd rd Ms.GibsonstatedthatonOctober2and3theAbrahamsGroupwasontheIslandtospeakwithvariousindividualsintheFinanceDepartmentinordertodraftimplementationplansfortheAbrahamsGrouprecommendations.Shenotedthattherewerethreeoutstandingissues;taskstoachieve,targetdatesforcompletionoftasks,andidentifyingwhowouldberesponsibleforachievingthetasks.Ms.GibsonaskedMs.Vogestoelaborate.Ms.VogessaidthatthemeetingsidentifiedwhichrecommendationswouldtakepriorityforimplementationandthatinsubsequentconversationsshehadreachedagreementwiththeAbrahamsGroupondelayingormodifyingschedulesforimplementation.
MinutesAuditCommitteeth November5 ,2008 Page2of6 Ms.GibsonsuggestedthattheCommitteetaketherecommendationsonebyone.Mr.KellyaskedaboutTask4B,FinanceDirectorauthorizesITDirectortoremoveMUNISpermissionsforallpostingfromCollectorandAssessorstaff.Ms.VogessaidthatthistaskwouldnotbecompletedinNovemberduetoatimingissue,butthatitwillbeimplementedatalaterdate.Ms.VogesthendirectedtheCommitteetoTask17C,MUNISabatementreportswillserveasdocumentationinsteadofmanuallogs.SheexplainedthatthistaskrelatestomanuallogsthatarekeptinadditiontotheelectronicrecordskeptinMUNIS,andthattheAssessor’sofficefindsiteasiertousethemanuallog.Additionally,shestatedthatthelogwasalsovaluedforitshistoricalsignificance.Mr.KellyaskedifTask17Cwasassignedbaseduponaperceivedduplicationofefforts,andnotbecauseofinternalcontrolissues.HeaddedthatifthatwerethecaseitwouldbewithintheFinanceDirector’sdiscretiontomakeamanagementdecisiontokeepthelogbaseduponitshistoricalvalue.Ms.VogesansweredthatthiswasherpositionaswellasthepositionoftheAssessor.th InregardtoTask18D,whenbankstatementdeliveriesaremovedtothe5ofthemonththeFinanceDepartmentshouldpresentitscashreconciliationtotheAuditth Committeebythe20ofthemonth,Ms.VogesstatedthatshehadreviewedthetimingofstatementsreceiptwiththeAbrahamsGroup.Shesaidthatafterdiscussingsomeofthechallengesinreceivingtimelystatements,allpartiesagreedtosetthedateforpresentingreconciliationsasthelastdayofthemonth.
Mr.Kopkonotedtwooftasksontheimplementationplan;Task26A,accesshasbeenprovidedtovariousbankaccountstoAirportandWannacometWater,andTask6A,SchooldepartmentwillprovideSchoolLunchandCommunitySchoolevidenceofsaleswithturnovers.HeaskedifthesamesystemfordocumentingcashtransactionsrecommendedfortheSchoolwouldbeimplementedattheAirportandWannacometWater.Ms.VogesansweredthatWannacomet’sreceiptscomewithoutsupportingdetails,butallofWannacomet’sreceiptshavereceivablerecordsthatwillbereviewedbytheFinanceDepartment.SheaddedthatcashreceiptsattheAirportwasstillanissue,andthatSchoolLunchreceiptshadrecentlybeenreceivedbutthemethodofreportingwouldneedtobeaddressed.
Ms.Roggeveenaskedifenterprisefundsareresponsiblefordoingthereowncashreconciliations.Ms.VogesrespondedthatWannacometWaterandtheAirporthaveevolvedintoindependententitiesthatperformmanytasksseparatefromtheFinanceDepartment,butthatcashreconciliationsarestilltheTreasurer’sresponsibility.SheaddedthatitisdifficultfortheTreasurertoperformthisdutywithoutthenecessaryinformation.
InregardtotheNantucketRegionalTransitAuthority(NRTA),Ms.Roggeveenaskedhowitscashdepositsandreconciliationswerehandled.Ms.Vogesresponded
MinutesAuditCommitteeth November5 ,2008 Page3of6 thatNRTAisaStateagency.Ms.RoggeveenaskedifMs.VogesviewsthefinancialrecordsofNRTA,towhichMs.VogesrespondedthatsheonlysignschecksforNRTA.Mr.KopkoinquiredabouttheSolidWasteEnterpriseFund’smethodsforhandlingcashdeposits.Ms.VogesrespondedthatthosedepositsarehandledbyDianneHoldgate.Mr.KopkothenaskediftheFinanceDepartmentbacksupthesedepositswithareview,towhichMs.Vogesrespondedthatthiswasnotsomethingshehaslookedat.Mr.Kopkoaskedifitwassomethingthatshouldbeconsidered.Mr.Kellyrepliedthathefeelsthattherearegoodcontrolsalreadyinplace.Ms.VogescommentedthatreportingformWannacometWaterisexcellent,butinthecaseoftheAirporttheFinanceDepartmentisnotyetreceivingtheinformationitneeds.Mr.KopkoaskedhowtheBoardofSelectmencouldassistinexpeditingthedeliveryoftheAirport’sfinancialrecords.Ms.GibsonsaidthatsheisworkingonmanyoftheAbrahamsGrouprecommendations,andthatshehasmetwiththeAirportandtheyhaveindicatedawillingnesstoprovidetimelydocumentationoftheirfinances.Ms.VogesaddedthatshehasnotreceivedanynegativefeedbackfromtheAirport,butnotedthattheFinanceDepartmenthasrecentlyreceivedinformationthatwasnotcurrent.Ms.GibsonstatedthatshefeltitwouldbebettertoworkonthisissueabitmorebeforeinvolvingtheBoard.Mr.KopkoassertedthathehasseentheAirport’spastperformance,andheperceivesthisproblemasanongoingissue.Inlightofthatcontinuingsituation,hesaidthathefeelsitisappropriatetositdownwiththeAirportanddiscussthematter.Ms.GibsonsaidthatshefeelsitisimportanttoidentifyspecificissuesbeforeconveningtodiscussthematterwiththeAirport.Ms.RoggeveenaskediftheAirportwillbeprovidingarecordofsalesaspartofnewprotocols.Ms.VogesansweredthattheAirportshouldprovideasmuchdataaspossibleinordertosupportitscashreceipts.Ms.RoggeveenthenaskedhowtheAirporthandlescashdeposits,towhichMs.VogesrespondedthattheAirporthandlesallofitsowndepositsandthenprovidesdocumentationtotheTreasurer.Ms.Roggeveenindicatedadesiretodevelopaprotocolforhandlingcash.
Reviewof10/31/08lettertoDOR:
Ms.VogesremindedtheCommitteethattheFinanceDepartmentbegansubmittingbimonthlyletterstotheDepartmentofRevenue(DOR)onApril30,2008.Shenotedtwoattachmentsdetailingaccomplishments,andstatedthatduetosomeproblemswiththeLandfillBudgettheTaxRecapwouldbedelayedduetonecessarychanges.Ms.VogesdirectedtheCommitteetotheAuditworkplanandhighlightedsomeofthetasksthathavebeenmovedtoNovember.SheaddedthattheFinanceDepartmenthasalsobeenworkingontheSpecialTownMeetingwarrantandprovidingadraftofthenewTaxRecaptoDOR,buttheFinanceDepartmentisinabetterpositiontoaccomplishitsgoalsthanithaseverbeenbefore.
MinutesAuditCommitteeth November5 ,2008 Page4of6 Inrelationtothereviewprocess,Mr.Kellyinquiredaboutteacher’saccrualsinSchoolpayroll.Specifically,heaskedaboutthedeadlinelistedasOctober31,2008,inregardtowhetherthedeadlinerepresentedacompletiondateorasubmissiondate.Ms.Vogesrespondedthatthedeadlinerepresentsadatethatdocumentsaresubmittedforreview.Mr.DickinsonaddedthathereceivesinformationfromtheSchoolregardingsalarieswhichhescansandattachestothecorrespondingpayrollwarrant,andthenprovidestheinformationtoauditorswhenrequested.StatusofFY2008Audit:RegardingmultipletasksfacingtheFinanceDepartment,Ms.RoggeveenstatedthatsheknowsNovemberwillbeabusymonth.Ms.Vogescommentedthatthemonthwillbedifficultbutherdepartmentisinabetterpositiontodealwithchallengesthanitwasinpreviousyears.Ms.GibsonaddedthattheAbrahamsGroupwillbeassistinginpreparationoffinancialreportingnecessaryfortheaudit.
StatusofCashReconciliationsforFY2009asof9/30/08:
TimelyreconciliationofcashwasviewedwithutmostimportanceintheAbrahamsGroupstudy,andMr.DickinsonnotedthathisdepartmenthascompletedcashreconciliationsforAugustandalmostallofSeptember.Headdedthattheprojectisvaluableforidentifyingissueswiththeprocess,andthatastheseissuesareidentifiedandaddressedthereconciliationprocessbecomeseasier.Mr.Kopkoaskedifthereisusuallyonepersonineachofficethathandlescashtransactions,towhichMr.Dickinsonrepliedthatthereisusuallyonepersonandonesetofpostingcodes.Headdedthatanewprocedureforcreatingpostingcodeswouldsoonbeimplemented.
ReviewofPowers&SullivanInterimFY2009Audit:
PowersandSullivansentcorrespondenceregardingaSeptember30,2008,auditofthecashreconciliationprocess.Ms.VogesprovidedabriefsummaryoftheauditperformedbyRenéeDavis.
Creatingproceduresforvoidedchecks,reissuedchecksandinterestearnings.Makingtransactionstokeeppayrollandvendoraccountsatazerobalance.Addressingtransactionissueswithnewaccounts,i.e.thebankclearedchecksthroughthewrongaccount.Followinguponoldaccounts.Changingtrustfundaccountstatementstomonthlyissuance.Makingadjustmentstothegeneralledgeronatimelybasis.Addressingtheissueofreconcilingactivitybutnotbalances.(Ms.VogesnotedthatthiswasthemethodPowersandSullivanaskedtheFinanceDepartmenttouse.)Researchingoutstandingchecksontheoldpayrollandvendoraccounts.
MinutesAuditCommitteeth November5 ,2008 Page5of6 Makinguseofreconciliationprocessfromthebank.Ms.Vogessaidthatthetransitionhasbeendifficultbutallofherstaffworkedhardtoensurethatthechangeswereeffectivelyimplemented.ShenotedthatinthelastparagraphoftheletterMs.DavisstatedthattheFinanceDepartmenthaddoneagoodjobinimplementingtherecommendations.Ms.GibsonnotedthattheAuditCommitteemightwanttoconsiderexpensewhencommissioninganotheraudit,asthistwodayauditcostinexcessof$4,000.Inregardtoacommentintheletterabout$2.6millionnotbeingreconciledtothebanks,Mr.Kopkoaskedforfurtherexplanation.Ms.Vogesstatedthatshehasnotlookedatthedetailonthisissue,buttypicallytheseareyearendaccountspayableitems.Mr.Kopkoaskedifthisisa“timingissueorarootingoutissue.”Ms.Vogessaidthatifitisanaccountspayableissueitisrelatedtotimingandifitisatransferissuethecausewillneedtobe“rootedout.”Shenotedthatthenewprocesswilladdressthisissueandthatthisproblemisrelatedtotheoldprocess.Mr.Kellyaskedifanyonefeltthatanyofthefindingswere“material,”towhichMs.Vogesrespondedthatshedidnot.Mr.Kellystatedthathefeltitwouldnotbenecessarytocontinuetheseauditsinthefuture.Ms.GibsonaddedthatMarkAbrahams,AbrahamsGroupconsultantfeltthatthesummarywasgoodandindicatedthattheFinanceDepartmentwastakingcorrectiveaction.NewBusiness:
InlightofthelargeamountoftransitionandchangefacingtheFinanceDepartment,Mr.KellyaskedMs.Vogestoelaborateonhowtheprocessisgoing.Ms.VogessaidthatmanyintheFinanceDepartmentarefeelingthestressofincreaseddemandsontheirperformance,andthatthemonthofNovemberwillbeachallenge.ShenotedthattheSpecialTownMeetingaddedanotherdimensiontothecomplexityoftasksfacingtheDepartment,butithasbeenimportantfortheDepartmenttomaintainitsscheduleforcompletionoftheFY2008audit.Mr.Kopkonotedthatthereare“threesetsofeyes”ontheaudittimeline:MarkAbrahams,PowersandSullivan,andDOR.Ms.VogessaidthatintermsofprioritysherankedcompletingtheTaxRecapandsecuringborrowingfirst,andcompletionoftheauditsecond.Shecommentedthatcurrentstaffinglevelsareappropriatefornormaltimes,buttheconditionswithinthedepartmentarecurrentlynotnormal.
OtherBusiness:None.7.DateofNextMeeting: