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Town of Nantucket Audit Committee Meeting thMinutes – Audit Committee Meeting August 13 , 2008 Present: Ms. Libby Gibson, Mr. Michael Kopko, Ms. Patricia Roggeveen, Mr. Malachy Rice, and Ms. Constance Voges Absent: Mr. Jim Kelly Also present: Mr. Rick Atherton, Ms. Irene Larivee, Mr. Whiting Willauer, and Mr. Craig Abernathy 1. Announcements and Updates: Ms. Voges stated that the Fiscal Year 2007 Audit was complete, and that all three reports (Basic Financials, Federal Financials, and Management Letter) would be filed by Powers and Sullivan thwith the Department of Revenue by August 14 , 2008. Ms. Gibson added that the deadline with the thDepartment of Revenue was Friday, 15 , 2008, and that either her office, Ms. Voges or the Abrahams Group had been in touch with Powers and Sullivan on a daily basis. Ms. Voges directed Audit Committee members to information packages, which contained drafts of the Report to Management and the Federal Financials. She stated that there had been very few changes between the preliminary drafts and the final versions. Ms. Voges said that on the Report to Management there were a total of fifteen material weakness comments, and that of those comments six were stating that previous comments had been resolved. Continuing, she added that several of the other comments were in regard to cash reconciliations and transfers. In the case of off‐duty police and fire details, Ms ...
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TownofNantucketAuditCommitteeMeetingth Minutes–AuditCommitteeMeetingAugust13 ,2008Present:Ms.LibbyGibson,Mr.MichaelKopko,Ms.PatriciaRoggeveen,Mr.MalachyRice,andMs.ConstanceVogesAbsent:Mr.JimKellyAlsopresent:Mr.RickAtherton,Ms.IreneLarivee,Mr.WhitingWillauer,andMr.CraigAbernathy1.AnnouncementsandUpdates:Ms.VogesstatedthattheFiscalYear2007Auditwascomplete,andthatallthreereports(BasicFinancials,FederalFinancials,andManagementLetter)wouldbefiledbyPowersandSullivanth withtheDepartmentofRevenuebyAugust14 ,2008.Ms.Gibsonaddedthatthedeadlinewiththeth DepartmentofRevenuewasFriday,August15 ,2008,andthateitherheroffice,Ms.VogesortheAbrahamsGrouphadbeenintouchwithPowersandSullivanonadailybasis.Ms.VogesdirectedAuditCommitteememberstoinformationpackages,whichcontaineddraftsoftheReporttoManagementandtheFederalFinancials.Shestatedthattherehadbeenveryfewchangesbetweenthepreliminarydraftsandthefinalversions.Ms.VogessaidthatontheReporttoManagementtherewereatotaloffifteenmaterialweaknesscomments,andthatofthosecommentssixwerestatingthatpreviouscommentshadbeenresolved.Continuing,sheaddedthatseveraloftheothercommentswereinregardtocashreconciliationsandtransfers.Inthecaseofoff‐dutypoliceandfiredetails,Ms.Vogesstatedthatmoreworkneededtobedone.Toresolvethosematters,Ms.VogessaidshewillneedtolookatwhentheMassachusettsGeneralLawwasacceptedandwhetherornotseedmoneywasprovided.SheexplainedthattheTownpaysthepoliceandfiredetailpersonnelpriortocollectingfromthecustomersandthatinordertodothattherehadtobeaMassachusettsGeneralLawthatwasacceptedandseedmoneyprovided.TheacceptanceofthelawwouldhaveoccurredbeforeMs.Voges’timewiththeTownofNantucket.ShestatedthatastheprogramhasgrownlargermoreseedmoneyhasbeenrequiredinordertoavoidhavingadeficitbalancewhiletheTowniswaitingforcollections.Mr.Kopkoaskedifitwerenotpossibletobillinadvanceforfireandpolicedetails.Ms.VogesstatedthattheTownofNantuckethadpresumablyacceptedalawthatsaystheTownwillpayfortheservicespriortocollection.Ms.Gibsonsaidthatifpeoplearen’tpayingforthirdpartydetails,theTown’srecourseistorefusepermittingorlicensinguntilthefeesarepaid.Ms.VogesdirectedtheCommittee’sattentiontotheFraudRiskAssessmentintheinformationpackage.Theassessment,knownasSAS‐12,nowrequirescommentfromCertified
Minutes – Audit Committee th August 13, 2008Page 2 of 6 PublicAccountantsthatareperformingaudits.ThesecommentsarecontainedintheReporttoManagement,andMs.Vogesstatedthattheywillbeapartofthe2009Auditwork.Ms.VogesstatedthatthelasttwoitemswerenewontheFY2007report.SheintroducedthefirstitemasMassachusettsWaterPollutionAbatementTrust(MWPAT)Loans.ShesaidthatwhenMWPATapprovesaloantheTowndrawsdownontheloan.ThepracticeinTownoperationshasbeenforTomParecewithEarthTechtopreparethedrawdowns.Mr.DickinsonmaintainsregularcontactwiththeMr.Pareceduringtheprocessofpreparingthedrawdown.Ms.Vogesnotedthatthisitemshouldbeseenasresolvedinnextyear’sReporttoManagement.Ms.Vogesthencommentedontheinvestmentearningsfortheambulancerevolverfund.Shesaidthatthecommentslistedgoalongwithreconcilingcashandrecordinginterest.Shestatedthattherearelawsthatgoverntherecordingofinterestindifferentkindsoffunds.ShesaidtheFinanceDepartmentneedstokeepacompletesummaryofwhichaccountsgettokeepinterestandwhichfundsdonotkeepinterest.Sheaddedthatthisisanotheritemthatshouldbelistedasresolvedinnextyear’scomments.Mr.Athertonaskedifdrawdownsrequirepreparation.Ms.VogesrespondedthatEarthTechpreparestherequestthatgoestoMWPATforthedrawdownofloanproceedstoreimbursepaymentstheTownhasmade.Ms.VogesstatedthatEarthTechisresponsibleforallofthecontractsandthattheyhaveallofthesupportingdocumentationthatgoesalongwiththedrawdowns.Sheaddedthatthishasbecomeamuchlargerissueduetotheincreaseinsizeofprojectsoverthelastfewyears.Mr.Athertonaskedformoreinformationregardingtheitemlistedasnumbertenintheinformationpackage.Ms.VogesrepliedthattheiteminquestionreferredtoanincidentatthescalehouseintheTownLandfill.SheremindedtheCommitteethatthisitemwasreportedatthetimeitoccurredinthesummerof2006.Theincidentinvolvedanemployeethatleftcashreceiptsonthecounterandwalkedoffthejob.Theemployeehadbeendepositingmoneyintoaccounts,buthadincorrectlybeenrecordingthedepositsintheaccountsreceivabledetailandnotreportingthereceiptstotheFinanceDepartment.Ms.WandaHilts,currentAccountsPayableAdministrator,wentouttotheLandfillandworkedormonthstocleanuptherecordingsystemandworkbackwardsdocumentingtransactions.Ms.VogesstatedthatalloftheworkMs.HiltsdidisnolongerattheLandfill.Theauditorsrequestedthisdocumentation,anditisnotedinthecommentsduetothefactthattheywereunabletoviewthedocumentation.Mr.Athertonstatedthatherecalledtheincident,andthankedMs.Vogesforherexplanation.2.ApprovalofMinutes:thMs.RoggeveenmadeamotiontoapproveminutesfromthemeetingsofJuly9 andJulyrd 23 ,2008.ThemotionwassecondedbyMr.Kopko.rd 3.AccomplishmentssinceMeetingofJuly23 ,2008.Ms.VogesspokeabouttheFY2010Budgetprocess.ShestatedthatmembersoftheCommitteehadintimateknowledgeoftheprocessandthatMs.Lariveehadbeenworkingonthebudgetforecast.ShesaidthatMs.LariveewouldbemakingaPowerPointpresentationoftheFY2010BudgetProjectionatthatevening’sBoardofSelectmenmeeting.
Minutes – Audit Committee th August 13, 2008Page 3 of 6 Ms.VogesstatedthattheFY2009TaxRecapisinprogress.ShesaidthattheAssessor’sofficehasagoalofsubmittingdocumentationbySeptemberinordertohaveanapprovedtaxrate.Sheaddedthatanapprovedtaxrateisnecessaryinordertosendtaxbillsout.Thesebillsnormallyst gooutonNovember1 .OnthetopicofFY2009cashreconciliations,Ms.VogesstatedthattheTreasurerwasstillreceivingstatementsfromJuly,butRobinLaPieneisworkingonthegeneralledgerreconciliation.Mr.DickinsonandMs.LaPienehavealsobeenworkingonaweekbyweekbasissothatthemonthlyreconciliationshouldbeeasytocomplete.Ms.VogesstatedthatTreasurer’scashportionhasalsobeenfinished.InregardtoFY2008cashreconciliation,Ms.Vogesstatedthatcashreconciliationforthefirstthreequartershasbeencompleted.Inaddition,shesaidabouthalfofallaccountshavebeenreconciledthroughJune.SheclarifiedthatshewasreferringtotheTreasurer’scashbeingreconciledtobankstatements.Additionally,Ms.VogesstatedthatCountyreconciliationshavebeencompletedandthoseTreasurer’scashbookshavebeenturnedoverforgeneralledgerreconciliation.(Note:TheprocessofreconciliationbeginsbyreconcilingtheTreasurer’scashbooktothebankstatements;theTreasurer’scashbookisthenreconciledwiththegeneralledger.)Ms.VogessaidthatwhentheTown’sTreasurer’scashbooksarecomplete,theywillbeturnedoverforreconciliationtothegeneralledger;addingthatMr.DickinsonandMs.LaPienewillsoonbeginworkingonthefirstmonthofFY2008.Mr.Kopkoaskedifthiswasanewprocedure,andMs.Vogesrespondedthatitwas.Ms.VogesalsosaidthatFY2008accountsreceivableshavebeenreconciledtothegeneralledger.Mr.AthertonaskediftheaforementionedreconciliationshavebroughttheTownandSheriff’sofficeclosertoagreementonbalancesintheCountyaccounts.Ms.Vogesrepliedthatthetwopartieswereclosertoagreement,buttherewerestillsomeissueswithCountyfunds.ShesaidthatshewasadvisedbyBillMeehan,DepartmentofRevenue,thattheCountyAdministrativeportionofthedeedsexcisetaxesshouldbekeptinthedeedsexcisefundaccount,notintheCountygeneralfund.ShenotedthatthissituationwascorrectedfortheFY2007AuditinordertoprovideMr.MeehanandSheriffBretschneiderwithcorrectedbalances.Ms.GibsonnotedthatoneofthemajormilestonesinprovidingaccuratenumberstotheSheriff’sofficewasthecompletionoftheFY2007Audit.Shesaidthatrevenuesfromdeedsexcisetaxesaredividedbetweenthreedepartments,CountyAdministration,theRegistryofDeedsandtheSheriff’soffice.Ms.Gibsonaddedthatalthoughtheaudithasbeencompleteditdoesnotstipulatehowthesefundsaredivided.Shesaidthatherofficehasnotpreparedabreakdownoffunds,butitissomethingthatisbeingworkedoninternally.ShehopedtohaveaspecificbreakdownoffundsfortheFY2009Audit.Asanaside,Ms.GibsonsaidthattheFY2009CountyBudgetwillneedtobeamendedduetothreeitems:theSheepPondRoadsettlementandassociatedlegalcosts,replacementcostsfortheroofoftheLORANBarracks(ThiscostwastobefundedbytheSheriff,butwillnowbefundedbyCorrectionsfunds.),averbalagreementbytheSherifftopayfornewpolicedepartmentfirearms.ShestatedthatshewillcompletetheamendmentthismonthandthenresubmitthebudgettotheState,butthattheStateneededtohavetheFY2007Auditbeforetheycouldbesureoffundbalances.Mr.Athertonstatedthatgettingthefundsclearlybrokendownwillbegoodforeveryone,andMs.Gibsonagreed.Heaskediftherewasalsoanissuewithbalancesfrom2002.Ms.Gibson
Minutes – Audit Committee th August 13, 2008Page 4 of 6 saidthattheSheriffinitiallytookissuewithsomeofthenumbers,butwhentheTownindicatedthattheywouldbelookingatexpensesaswellasrevenuestheissue“disappeared.”Ms.VogesaddedthattheTown’saccountingsystemisstraightforwardwithrespecttorevenueandexpenses.Shesaidwhathasn’tbeenstraightforwardistransferringthemoneytopayfortheexpenses,becauseallexpensesarepaidfromoneaccount.Ms.VogesstatedthattheSheriffbelievedthatallofthemoneyinhisaccountswasavailable,butattimesthebalancedidnotreflectoutstandingrevenuesandexpenses.SheaddedthattheTown’sauditreporthasneverhadalotofdetailfortheCounty,buttheTownnowhasthatkindofdetailinthegeneralledger.Continuing,shenotedthatNantucketisprobablytheonlyCountythatdoesnotprovideaseparateauditreporttothestate;shebelievedthiswasduetothefactthatPowersandSullivantreattheCountyasacomponentunitsincetheelectedofficialsarethesame.Mr.AthertonindicatedhisdesirethattheTownbeinapositioninwhichtheSheriffwouldnotquestionthebalancesinhisaccounts.Ms.VogessaidthatMs.LariveespokewiththeSheriffinMarch,butthenthereweresomecorrectionstothebalances.ShestatedthattheSheriffhasagreedtotheprocessofcorrectingthebalances,andthatitisnowamatterofdeterminingtheamountsandprovidingthemtotheSheriff.Mr.AthertonaskediftheTown’shandlingoftheCountyAudithadanystrategicrelationshiptoanyeffortsbytheStatetoperiodicallytakecontroloftheCounty.HealsoaskedwhetheritwouldbebettertocontinuewiththecurrentpracticeorbeginpreparingaseparateauditfortheCounty.Ms.Vogesansweredthatinregardtodeterminingwhichfundtousetotakecareofexpenses,usingthedeedsexcisefundwouldbeagoodstrategy.Mr.AthertonstatedtheTownandCountyhavingonlyoneauditmightmakeiteasiertothwartanyStatetakeovereffortsbypointingoutthattheTownandCountyareessentiallyoneentityandassuchcannotbedivided.Ms.GibsonsaidthattheTownwillhaveabetterideaofrequirementsfortheCountyinthenextfewweeks.Ms.VogesstatedthatherofficehadprovideddetailsforMr.Meehan’srequestsinbothMarchandAugust.ShesaidthatMr.MeehanstatedthathewouldwaitfortheFY2007Audittobecompletedbeforemovingforwardwithanymorequestions.Mr.KopkonotedthattheFY2007Auditwouldbesubmittedaccordingtothetimelinetowhichallpartieshadagreed.Heaskedifgoingforwardallotheritemswouldbeonschedule.Ms.VogesstatedthatshewouldbereviewingsomeoftheRecapinformation,buteverythingappearedtobeonschedule.Mr.KopkoaskedaboutthetimelinefortheAbrahamsGroupStudy.Ms.Gibsonansweredthatthedraftwastobesubmittedattheendofthefollowingweekorthebeginningofth thesecondweek.AfinalversionofthedrafthasaduedateofAugust29 ,2008.Inadditiontotheorganizationstudy,Ms.GibsonstatedthatinvolvedpartieshadbeenlookingintowhatportionsoftheFY2008AuditcouldbeperformedbytheAbrahamsGroup.Shesaidthatsomeitems,suchasthebalancesheet,havebeenidentified.Ms.VogesstatedthatinadditiontothefinancialreportskeptbytheTown,anothercompletesetissubmittedtotheDepartmentofRevenue.SheaddedthatthesereportscouldbepreparedbyDonAndrewsworkingfromMartha’sVineyard.Ms.VogesbelievedthatthistaskcouldbeaccomplishedwithoutalotofsupportfromtheFinanceDepartment.ShesaidthattheinformationcouldbesenttoMr.AndrewsandhewouldputtheinformationintothecorrectformatbeforesubmittingittotheState.
