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Town of Nantucket Audit Committee Meeting thMinutes – Audit Committee Meeting September 10 , 2008 thApproved October 10 , 2008 Present: Ms. Libby Gibson, Mr. Jim Kelly, Mr. Michael Kopko, and Mr. Malachy Rice (Ms. Patricia Roggeveen participated in the meeting via telephone.) Absent: Ms. Connie Voges Also present: Mr. Rick Atherton, Ms. Elizabeth Brown, Mr. Bob Dickinson, Ms. Deborah Dilworth, Ms. Irene Larivee, Ms. Patricia Perris, Mr. Whiting Willauer, and Mr. Craig Abernathy 1. Call to Order Mr. Kopko called the meeting to order at 9:00 AM. 2. Announcements and Updates: None. 3.Approval of Minutes: Mr. Kelly made a motion to approve the minutes from the meeting of August th13 , 2008. The motion was seconded by Mr. Kopko. 4. Abrahams Group Study Report Ms. Gibson began by reviewing the process of conducting the Abrahams Group Study. She said the Abrahams Group was engaged by Town Administration in recognition of chronic difficulties in completing timely audits as well as issues raised in auditor letters to management. The goal of the study was to have the Abrahams Group take a look at staffing and internal control regulations. Ms. Gibson stated that several significant accomplishments have been made and acknowledged by the Department of Minutes – Audit Committee thSeptember 10 , 2008 Page 2 of 7 Revenue: the completion of three audits in less than twelve months ...
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TownofNantucketAuditCommitteeMeetingth Minutes–AuditCommitteeMeetingSeptember10 ,2008th ApprovedOctober10 ,2008Present:Ms.LibbyGibson,Mr.JimKelly,Mr.MichaelKopko,andMr.MalachyRice(Ms.PatriciaRoggeveenparticipatedinthemeetingviatelephone.)Absent:Ms.ConnieVogesAlsopresent:Mr.RickAtherton,Ms.ElizabethBrown,Mr.BobDickinson,Ms.DeborahDilworth,Ms.IreneLarivee,Ms.PatriciaPerris,Mr.WhitingWillauer,andMr.CraigAbernathy1.CalltoOrderMr.Kopkocalledthemeetingtoorderat9:00AM.2.AnnouncementsandUpdates:None.3.ApprovalofMinutes:
Mr.KellymadeamotiontoapprovetheminutesfromthemeetingofAugustth 13 ,2008.ThemotionwassecondedbyMr.Kopko.
4.AbrahamsGroupStudyReport
Ms.GibsonbeganbyreviewingtheprocessofconductingtheAbrahamsGroupStudy.ShesaidtheAbrahamsGroupwasengagedbyTownAdministrationinrecognitionofchronicdifficultiesincompletingtimelyauditsaswellasissuesraisedinauditorletterstomanagement.ThegoalofthestudywastohavetheAbrahamsGrouptakealookatstaffingandinternalcontrolregulations.Ms.GibsonstatedthatseveralsignificantaccomplishmentshavebeenmadeandacknowledgedbytheDepartmentof
Minutes–AuditCommitteeth September10 ,2008 Page2of7 Revenue:thecompletionofthreeauditsinlessthantwelvemonths,variouscashreconciliationchanges,andfillingtwoadditionalpositionsallwhilemakingimprovementsinotherareas.ShenotedthatthefocusoftheAuditCommitteeandtheBoardofSelectmenhashelpedkeeptheimprovementsontrack.However,shealsohighlightedtheneedtorecognizetheamountoftime,effortandhardworkperformedbytheFinanceDepartmentinachievingthesegoals.Ms.GibsonspecificallymentionedMs.Voges,Ms.Larivee,Ms.WeinerandMr.DickinsonasbeinginstrumentalinachievingthegoalsoftheFinanceDepartment.SherepeatedthatthehardworkperformedbytheFinanceDepartmentneededtoberecognizedandthatitcannotbeoveremphasized.Ms.Gibsonsaidthatthepastfewmonthshadbeentoughandthenextfewmonthswillcontinuetobetough.ShesaidthatthehardworkperformedbytheFinanceDepartmenthasputtheTowninapositiontomakesystemicimprovementstomakesurethatauditswillbeperformedontimeinthefuture.Ms.Gibsonaddedthatithasbeenalongroadbutallpartiesaremovingaheadwithmeasurableprogress.Movingforward,shestatedthattheTownwouldbelookingatwaystodocumentworkandtodothingsmoreefficiently.Theimplementationprocesswillbenextinthetimeline,andsheassertedabeliefthatitwillconsumeaconsiderableamounttimeforMs.Voges,Ms.Lariveeandheroffice.Ms.GibsonsaidthattheFinanceDepartmentwasonlythefirstdepartmenttoundergoanorganizationalstudy,asoverthenextseveralyearsalldepartmentswillbeengagingintheprocess.ShethenaskedMarkAbrahamstoprovideanoverviewofhisstudy.Mr.AbrahamsbeganbyexplainingthathewouldliketogiveaquickfivetotenminuteoverviewofhisreportandthenturnthediscussionovertotheAuditCommitteeforquestions.Hestatedthathisfirm,TheAbrahamsGroup,hadbeenhiredbytheTowntoconductanorganizationalreviewoftheFinanceDepartment.HenotedthatinthepastbothPowersandSullivanandtheDepartmentofRevenuehadbeencriticaloftheFinanceDepartment.Inaletterinthespringof2008,theDepartmentofRevenueaskedtheTowntoestablishmilestonesforcompletingfinancialreportinginatimelymanner.Hestatedthattheobjectiveoftheorganizationstudywastoreviewdepartmentstaffing,organization,andactivities,andthenmakerecommendationsforimprovement.Additionally,Mr.Abrahamsstatedthatthestudysoughttoreviewinternalcontrols,assureasounddivisionofresponsibilities,makerecommendationstoassureeffectivepracticesandprocedures,reviewoperations,systems,andworkflowsinordertoimprovethepre‐auditandreviewfunctionaswellascontrolsandtodevelopanimplementationplantosetinmotiontherecommendationsofthestudy.Mr.AbrahamsstatedthatmostofthisworkhadbeencompletedinJulyandAugust,andth thathisorganizationdeliveredadraftreportonAugust26 ,2008.Hesaidthatafterth makingsomeedits,thefinalreportwasdeliveredonSeptember5 ,2008.Mr.Abrahamshighlightedthirty‐sixrecommendationscontainedinthereport,notingthat“someoftherecommendationsoverlapbecausetheyarerecommendations
Minutes–AuditCommitteeth September10 ,2008 Page3of7 thatareorganizationalinpartandalsohelptoenhanceinternalcontrols.”Continuing,hestatedthatsomeoftherecommendationscenteredoninternalcontrols,somecenteredonorganizationandstaffing,andsomecenteredonoperations.Mr.Abrahamspointedtofourthemesintherecommendations:•Strengthenthepre‐auditandcontrolfunctionoftheaccountingfunction.•Withrespecttoworkflow,decentralizetasks.•AddressproblemswiththeTreasurer’sCashreconciliationfunction.•Improvetheintegrityofthegeneralledger.Movingforward,Mr.Abrahamsemphasizedhisbeliefthatmanyoftherecommendationscouldbeimplementedquickly,whileotherswilltakesometime.HeaddedthattheTownhasrecentlyachievedseveralmilestones.Mr.AbrahamsstatedthattheTowncompletedtheFY2006andFY2007Audits,completedthefirstbi‐ th monthlyreporttotheDepartmentofRevenue,andsubmittedtheSeptember4lettertotheDepartmentofRevenue.HealsonotedthattheseachievementsweremadewhileconductingandcompletingtheorganizationalstudyoftheAbrahamsGroup.Mr.AbrahamssaidthathehasseenasignificantturnaroundintheTown’sabilitytoestablishtimetablesandmilestones,andthenattainthosetimetablesandmilestones.Pointingtotheneedtoaccomplishthesegoals,Mr.AbrahamscitedthenecessityofcompletingthesestasksduetothescrutinyoftheDepartmentofRevenue.Inclosing,Mr.Abrahamssaidthathehopedthathisfirm’srecommendationswouldsetafoundationfortheTowntocontinuetoestablishandattainmilestones.Mr.Kopkoaskedforquestionsorcomments.Ms.Roggeveenstatedthatoneoftheitemsthatinitiallycaughtherattentioninthereportwasthewordimmediately.Shesaidthatshefeltaneedtoclarifyterminology,andthatshealsobelievedthattherewouldbearealneedtofollowupontimelines.Ms.Roggeveenalsosaidthatshebelievedthatsomeoftherecommendationscouldbeachievedquickly,butotherswouldtaketime.Shenotedthatshiftingtheresponsibilitiesassignedtopositionsmaybemorecomplicatedandmaytakemoretime,butshebelievedthatintheenditwouldbe“doable.”Ms.RoggeveensaidthatshewasconcernedaboutoverallaccountabilityinmovingresponsibilityawayfromtheDirectorofFinance,andthatshewouldliketoseemoredetailontheprocess.Inreferencetothetimeline,Mr.Kopkosaidthatitwashissensethatallpartieswouldtalkaboutarealisticscheduleforimplementationoftherecommendations.HesaidthathebelievedthetimelinewoulddevelopmuchinthesamewaytheDepartmentofRevenuetimelinedeveloped.Ms.RoggeveenaddedthattheotherdepartmentsintheTownwouldhavetoshareresponsibilityinimplementationoftherecommendations.ShesaidthatshehopedtheAdHocBudgetCommitteewouldworkwiththeSchoolinimplementation.Mr.KopkosaidthathebelievestheimplementationwillinvolvediscussionswiththeSchool,AirportandtheWaterCompany.Mr.KellyaddedthathefelttheAbrahamsGrouphascompiledathoroughplanforeacharea,andaskediftheworkredesignisincludedintheimplementationplan.
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Mr.AbrahamssaidthathecouldanswerMr.Kelly’squestionintwoparts.InthefirstresponsehestatedthathewouldbepresentingthereporttotheFinanceDepartmentstaffthefollowingweek,astheyhadnothadnothadtheopportunitytolistentoandrespondtotherecommendations.Afterthat,Mr.Abrahamssaidthatitwashisintenttobeginamoredetailedimplementationoftheplan.Hesaidthatwhilehehasdevelopedsome“highlevel”implementationplans,hehasnotcollectivelysatdownwiththeFinanceDepartmenttodeterminethebestplacetostart.Hehighlightedtheneedtostudytheimpactsofimplementation,andthencollectivelydeterminethebestcourseofactioninmakingchanges.Mr.Abrahamssaidthattwoofthefinalresultsaretodocumentnewpoliciesandproceduresaroundthenewwayofdoingthingsandthentotranslatethatintonewjobdescriptions.Mr.KellysaidthathefeltitisimportanttocommunicateexternallychangesthataremadewithintheFinanceDepartment.Hefeltthatasdutiesshift,itwillbenecessarytocommunicatethatinformationinordertoavoidconfusion.Inregardtotheimplementation,Mr.Kopkosaidthatclearlytherewererecommendationsthatarealreadyinplace,andother“housekeeping”itemsthatcanbeeasilyputintoplace.Mr.Kopkostatedthatbeforetacklingtheimplementationplan,itwouldbebettertogoafterthe“lowhangingfruit.”Headdedthatafterthelesscomplicateditemshadbeenresolved,interestedpartiescouldmeettoworkonimplementationofthemoredifficultitems.HenotedthatthereareclearlyitemsthatmustbeaddressedbytheSchool,AirportandtheWaterCompany,andthattheseitemswillinvolvetheeffortsoftheBoardofSelectmen.DivisionofresponsibilitiesanddividingspecifictaskswerecitedbyMr.Kopkoasimportantconsiderationsintheimplementationprocess.Mr.KopkocomplementedMr.Abrahamsonthethoroughnessofthereport.Ms.Lariveesaidthatsomeoftherecommendationswouldrequireadditionalfunding,andthatallpartiesneedtobeawareofthatfactduringimplementation.SheaddedthatinthecurrenteconomicclimatetheTownhasbeenseekingwaystocutspending,sothischallengewillneedtobeaddressedearlyintheimplementationprocess.Mr.KopkopointedoutthatsomerecommendationsinvolvetechnicalaspectsofMUNISthatwillinvolvethetrainingofpeopletoperformnewtasks,aswellasadditionalsoftware,consultants,andnewstaff.Hesaidthatifanymoneywasinvolveditwouldobviouslyneedtobeapartoftheimplementationplan.Mr.KellyaskedaboutthelevelofcooperationandtheavailabilityofstaffwithintheFinanceDepartment.Mr.Abrahamsrespondedthatcooperationwassuperbandthatresponseswerealwaysextremelytimely.Ms.Griffinstatedthattheexcellentlevelofcooperationwascitedinthereport,andaddedthatsheoftenreceivede‐mailresponseswithinfiveminutes.Mr.Kopkosaidthatitwashissensethateveryoneisonthesamepageinregardtomakingchangesandmovingforward.Mr.KopkoaskedMs.Gibsonifsheagreed,andshestatedthatshewasn’tsurethateveryonewasonthesamepage,buteveryonerecognizedtheneedforsystemicchange.Shenotedthat
Minutes–AuditCommitteeth September10 ,2008 Page5of7 changeisdifficultforpeople,butchangehastobemade.Shesaidthatpartoftheimplementationchallengewouldbemovingfromthedifficultiestothenecessityforsystematicchange.Mr.Kopkoaddedthathebelievedthiswouldbethefirstofmanydepartmentalreviewsinthecomingyears.Ms.Gibsonaskedtofollowup,andbeganbystatingthatoveralltherearemanywaystoimprovework.Shesaidthatchangescanbedifficultforeveryone,fromtheimplementerstothepolicymakers.ShealsoremindedtheCommitteethatsometimesitmaybenecessaryto“slowdowninordertospeedup.”Mr.Kopkonotedthat“inthiserawhenchangeisallaroundus,itisenoughforustoknowthattopmanagementiscommittedtochange.”Ms.Gibsonagreed,statingthatsheandMs.Roggeveenhadspokenthedaybeforeabouttheneedto“buckup,”aschangemightbeuncomfortableforsomepeople.Mr.Ricespokeoftheconceptofculturalchangeasaverydifficultchangetoaffect.HesaidthatthesechangeswouldputthingsintoeffectthathaveneverbeenineffectintheTownofNantucket.Hehighlightedabalancethatallowedforforwardmovementthatdidnotmovesoquicklythatallstakeholderswerenotbroughtalongwiththechanges.Mr.Ricesaidthatthedangerofmovingtoquicklywouldbethatpeopledidnot“buy‐in”oracceptchanges.Additionally,hesaidthathefeltthecorrectapproachwouldbetomovequicklybutbecognizantoftheneedtakeadeliberateapproach.Mr.KopkoaffirmedthesupportoftheBoardofSelectmen,aslongastheprocesscontinuedtomoveforward.Mr.KellyaddedthatfromtheperspectiveoftheFinanceCommittee,aperceptionoforganizationandfocusonimplementationofthereportwillbewellreceived.Mr.KopkocommentedthathefoundtheroleoftheAuditCommittee,asdefinedbythereport,interesting.Specifically,hereferredtotheemphasisandfocusplacedonreportingtotheAuditCommittee.HealsosaidthathebelievedthattheAdHocBudgetCommitteewouldbeakeytoolinmakingsurethechangesareimplemented.Ms.Dilworthstatedthatshefeltthereportiswelldone.ShesaidthatshehasbeenworkingfortheTownsince1982,andassuchhasseenalotofchange,includingsignificantgrowthinthebudget.ShespokeofherearlydayswiththeTownwhenallfinanceofficeswereundertheTreasury,duetotheTown’ssmallsize.Ms.DilworthcomparedtheFinanceDepartmenttoan“oldclunkycar.”Shesaidthatthecarhadjustrambledalongwithmoreandmorepassengersgettingonboard.Shefeltthatthefactthatsomeonewasfinallytakingalookunderthe“hood”wasapositivedevelopment.Aftercompletingthisprocess,Mr.KopkosaidthathebelievestherewillbealotmoreresponsibilityandaccountabilitytotheFinanceDepartmentandtheTownManager’sOffice.Hestatedthatwhiletreatingenterprisefundsasiftheyareapartof
