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Town of Nantucket  Audit Committee Meeting  thMinutes – Audit Committee Meeting January 14 , 2009  thApproved February 10 , 2009   Present: Mr. Jim Kelly, Ms. Patricia Roggeveen, Ms. C. Elizabeth Gibson, Mr. Malachy Rice, and Ms. Constance Voges, Mr. Bob Dickinson  Absent: Mr. Michael Kopko.  Also present: Mr. Rick Atherton, Ms. Reneé Davis, Mr. Glenn Field, Mr. Craig Abernathy, and Mr. Whiting Willauer  Call to Order:    Ms. Roggeveen called the meeting to order at 9:00 AM.  Announcements and Updates:    None.  Approval of Minutes:   Mr. Kelly made a motion to approve the minutes from the meeting of December th10 , 2008; seconded by Ms. Roggeveen.  So voted unanimously.  Discussion of FY 2008 Audit with Powers and Sullivan: Reneé Davis, of Powers and Sullivan Certified Public Accountants, stated that after working for eight days on the FY 2008 Audit she believes the Town’s financial statements are in good shape.  She noted that she does expect some slippage in the draft timeline due to delays in receiving cash reconciliations, the Treasurer’s Cash Book and updated fixed assets for FY 2008.  Ms. Davis added that she expects to receive these documents by the rd23  of January, 2009.  Ms. Gibson asked if Ms. Davis expects to meet the deadline for stsubmitting a FY 2008 Final Audit on March 31 , to which Ms. Davis responded that she believes that to be a realistic deadline.  Mr ...
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TownofNantucketAuditCommitteeMeetingth MinutesAuditCommitteeMeetingJanuary14 ,2009th ApprovedFebruary10 ,2009Present:Mr.JimKelly,Ms.PatriciaRoggeveen,Ms.C.ElizabethGibson,Mr.MalachyRice,andMs.ConstanceVoges,Mr.BobDickinsonAbsent:Mr.MichaelKopko.Alsopresent:Mr.RickAtherton,Ms.ReneéDavis,Mr.GlennField,Mr.CraigAbernathy,andMr.WhitingWillauerCalltoOrder:Ms.Roggeveencalledthemeetingtoorderat9:00AM.AnnouncementsandUpdates:None.ApprovalofMinutes:
Mr.KellymadeamotiontoapprovetheminutesfromthemeetingofDecemberth 10 ,2008;secondedbyMs.Roggeveen.Sovotedunanimously.
DiscussionofFY2008AuditwithPowersandSullivan:
ReneéDavis,ofPowersandSullivanCertifiedPublicAccountants,statedthatafterworkingforeightdaysontheFY2008AuditshebelievestheTown’sfinancialstatementsareingoodshape.Shenotedthatshedoesexpectsomeslippageinthedrafttimelineduetodelaysinreceivingcashreconciliations,theTreasurer’sCashBookandupdatedfixedassetsforFY2008.Ms.Davisaddedthatsheexpectstoreceivethesedocumentsbytherd 23ofJanuary,2009.Ms.GibsonaskedifMs.Davisexpectstomeetthedeadlineforst submittingaFY2008FinalAuditonMarch31 ,towhichMs.Davisrespondedthatshebelievesthattobearealisticdeadline.Mr.KellyaskedifaoneweekdelayinreceivingcashreconciliationsandfixedassetswillresultinaoneweekdelayfortheFY2008DraftAudit.Ms.Davisrespondedthatthedelayinreceivinginformationwillresultinaonetotwoweek
MinutesAuditCommitteeth January14 ,2009 Page2of4 delayinthedraftduetoschedulingissues.Ms.RoggeveenaskedthatMs.Davissendanemailtoconfirmthattheauditscheduleisontrack.Ms.VogesaskedifadraftoftheFederalFinancialshasbeencompleted,towhichMs.DavisrespondedthattheFederalFindingsareingoodshapeandthattherewerenonewfindingsinthisyear’saudit.Shealsostatedthatthesamematerialweaknessesfrompreviousyearswillagainappearintheaudit.Mr.Ricecommentedthatthishasbeentheexpectationofallstakeholders,sincetherehasbeenlittletimebetweenthecompletiondatesforseveralyearsoffinancialreporting.
Mr.KellyaskedMs.Davistodescribetheprocessusedtoperformthepayrollaudit.Ms.Davisstatedthatherfirmlooksattwoareaswhenperformingapayrollaudit:ensuringthatitemsarecategorizedinthecorrectfiscalyearandreviewingpoliciesandprocedures.Mr.KellythenaskedifPowersandSullivanperformsa“paystub”audit.Ms.Davisansweredthatherfirmdoesnotperformthistypeofaudit.Mr.Kellythenaskedifthefirmlooksatovertimeandothertypesofpremiumpaytoensurethattheyarecalculatedinthecorrectmanner.Ms.Davisansweredthatasapartoftheaudittheaccrualofsickandvacationtimeisscrutinizedandtested.
CashReconciliationUpdateforFY2009:
Ms.VogesstatedthattwoweekspriortothemeetingshedirectedtheFinanceDepartmenttofocusitseffortsontheFY2008Audit,soworkoncashreconciliationsforFY2009hasbeenputonhold.Mr.DickinsoncharacterizedworkontheFY2008cashreconciliationsas“thorny,”butstatedthattheFinanceDepartmentwillbeinamuchbetterpositionregardingcashreconciliationsforFY2009.HeaddedthatworkonFY2009cashreconciliationshashelpedidentifyissueswithcashreconciliationsinFY2008.Ms.Davisrd askedMr.DickinsonifheiscomfortablewithadeadlineofJanuary23forcompletingtheFY2008cashreconciliationsandfixedassets.Mr.DickinsonansweredthatDebPalmer,StaffAccountant,isworkingonfixedassetsandheisworkingwithDebWeiner,Treasurer,tocompletethecashreconciliations,andstatedthathefeelscomfortablethathewillbeabletomeetthedeadline.
InreferencetoanauditoftheimplementationofnewcashreconciliationsperformedforFY2009,Ms.Davisaskedifanyonewouldliketodiscussthefindingsofthiswork.Ms.Roggeveencommentedthatshefeelsanauditofanothermonth’scashreconciliationswouldbeappropriate,asitwouldallowforcomparisonbetweentwomonthsofcashreconciliations.Ms.Davisnotedthatmostoftheerrorsdiscoveredintheauditwere“firstmontherrors”thatshouldhavebeencorrectedinsubsequentmonths.Ms.VogesaskedthatthecurrentfocusremainoncompletingtheFY2008Auditbeforecommissioningfurtherauditwork.Ms.GibsonremindedtheCommitteethattheauditworkperformedoncashreconciliationswascostly,andthatiffurtherauditworkiscommissionedamethodoffinancingtheworkwillneedtobefound.
DiscussionofIndirectCosts:
MinutesAuditCommitteeth January14 ,2009 Page3of4 Describingaformulausedtodeterminecostsincurredthroughjointusageofadministrativeservices,Ms.GibsonstatedthattheFinanceDepartmentisdevelopingaformulaforassessingindirectcoststhatisreasonableandcalculatedinafairandconsistentbasis.ShecommentedthattheAirportandtheWaterCompanyhavedisputedtheamountsassessedforindirectcostsinrecentyears.Ms.Vogesstatedthattherearefourissueswithindirectcosts:theformulaforassessingindirectcosts,budgetingforindirectcosts,achangeintheDepartmentofRevenue(DOR)instructionsonhowtobudgetforindirectcosts,andhowtohandlerevenuedeficitissueswiththeSolidWasteEnterpriseFund.Providinghistoryontheprocess,Ms.Vogesexplainedthatinthepastthepaymentwasbasedonpropertyvalueandassessedasapaymentinlieuoftax.ShenotedthattheAbrahamsGrouphasrecommendedthataformulaforassessingindirectcostsbedeveloped.Ms.Vogesstatedthatshehascontactedothermunicipalitiesthatoperateairportenterprisefundsinordertocomparemethodsofassessingthesecosts.Mr.Kellyaskedhowthecurrentamountoffundscollectedforindirectcostsisassessed.Ms.VogesansweredthattheFinanceDepartmentpresentstheAirportandtheWaterCompanywithanamountbaseduponareasonableformulathatiscalculatedinafairmannerthatisconsistentwithothermunicipalitiesintheCommonwealth,buttheseentitieshavedeclinedtopaytheassessedamounts.Mr.Kellyaskedwhatamounttheseentitiespay,towhichMs.Vogesstatedthattheypayaselfdeterminedamountthatisincludedwithintheirexistingbudgets.SheaddedthatifareasonableformulaisassessedtheTownwouldaddanadditional$150,000to$200,000totheGeneralFund.
Ms.RoggeveenassertedherbeliefthatthedevelopmentofsuchapolicyshouldbeapolicydecisionfortheBoardofSelectmen,notingthatsuchapolicywouldbesimilartoexistingpoliciesthatareenactedbytheBoardandimplementedbytheFinanceCommittee.Ms.Gibsonagreed,statingthatshebelievesaBoardendorsementwilladdweightandvaliditytotheformula.Mr.KellynotedthattheAirport’sproposedcapitalplanincludesfundingaresidencefortheAirportManager($800,000),addingthatthisexpenditurewaspartiallyjustifiedbyaneedtoallocateunrestrictedassets.Mr.KellythenaskedifitiswithinthepurviewoftheAuditCommitteetoconsiderapolicydecisionregardingindirectcosts,towhichMr.RiceansweredthatasthematterisarecommendationoftheworkperformedbytheAbrahamsGroupfortheCommitteeitiswithinthepurviewoftheCommittee.
InregardtoimpendingchangestobudgetingmethodsforindirectcostsproposedbyDOR,Ms.VogesstatedthatthereissomeconfusionaboutthesechangesasBarbaraDakin,DORRepresentative,statesthesechangeswilltakeplacewhileMarkAbrahamsstatesthattheywillnottakeplace.Ms.Vogesalsonotedthatanyformuladevelopedtoassessindirectcostsappliestoallenterprisefundsandassuchitshouldbeapplieduniformly.Ms.Davisstatedheropinionthatwhatevermethodisuseditisimportanttodemonstratethatacalculationisperformedandindirectcostsareassessedequally.Mr.Riceagreed,notingthatitisimportanttoconsiderallcostswhenlookingatrevenuestreams.Mr.Kellyencouragedpartiesnegotiatingfortheuseofaformulaindetermining
MinutesAuditCommitteeth January14 ,2009 Page4of4 indirectcoststolookbackatrecentyearsanddocumenttheamountofindirectcoststhathavebeenpaidaswellastheamountthatcouldhavebeenallocated.NewBusiness:
Ms.RoggeveenspokeofherinterestindevelopingaTownpolicyforprovidingcompensationintheformofahousingallowance.ShenotedthatcurrentlytheTownhasnopolicyforprovidingortrackingtheseallowances,andnotedthatinrecentyearstheamountofhousingallowanceshasbecomesubstantial.Ms.Gibsonaskedwhichdepartmentsreceivesuchallowances,towhichMs.VogesrespondedthattheSchool,Airport,andWaterCompanyprovidehousingallowances.Ms.GibsonnotedthatthesedepartmentslieoutsideoftheauthorityofTownAdministration.Ms.RoggeveenproposedthattheBoardofSelectmencanimplementarecommendedpolicyforprovidingadditionalcompensationintheformofahousingallowance.Discussionofotherformsofcompensationfollowed,including:freehousing,takehomevehicles,andcommutingexpenses.
OtherBusiness:None.DateofNextMeeting:Ms.RoggeveenproposedthatthenextmeetingshouldtakeplaceonWednesday,th January28 ,2009,at9:00AM.AdjournmentMs.Roggeveenaskedforamotiontoadjournwhichwas“somoved”byMr.Kopko.Themeetingwasadjournedat9:57AM.”””””””””””””””””””””””””””””””””””””””” PreparedbyCraigAbernathy
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