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Town of Nantucket  Audit Committee Meeting  thMinutes – Audit Committee Meeting November 5 , 2008  Approved December 10, 2008   Present: Ms. Elizabeth Gibson, Mr. Jim Kelly, Mr. Michael Kopko, Ms. Patricia Roggeveen, Ms. Connie Voges, Mr. Bob Dickinson, and Mr. Malachy Rice  Absent: None.  Also present: Mr. Whiting Willauer, and Mr. Craig Abernathy  Call to Order:    Ms. Roggeveen called the meeting to order at 9:00 AM.  Announcements and Updates:    Ms. Roggeveen congratulated Tim Madden on his electoral victory.  Approval of Minutes:   Mr. Kopko made a motion to approve the minutes from the meeting of October th8 , 2008.  The motion was seconded by Mr. Kelly. Status of Phase I & II Abrahams Group Recommendations Implementation: nd rd  Ms. Gibson stated that on October 2  and 3  the Abrahams Group was on the Island to speak with various individuals in the Finance Department in order to draft implementation plans for the Abrahams Group recommendations.  She noted that there were three outstanding issues; tasks to achieve, target dates for completion of tasks, and identifying who would be responsible for achieving the tasks.  Ms. Gibson asked Ms. Voges to elaborate.  Ms. Voges said that the meetings identified which recommendations would take priority for implementation and that in subsequent conversations she had reached agreement with the Abrahams Group on delaying or modifying schedules for implementation ...
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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:
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