Loading...
HomeMy WebLinkAbout10-06-2003 Audit Committee MinutestJ KI/tJ1' tJ. AI'. /7 Minutes AUDIT COMMITTEE MEETING City of Orange - Weimer Room Monday, October 6, 2003,4:00 p.m.ATTENDEES: AUDIT COMMITTEE Voting Members)Present David E. Sundstrom CPA, Chair David L. Rudat, City Manager Jeanne Arehart CPA, Internal Audit Mgr.Dwight Nakata CPA David Piper, CPA Absent Eric Woolery CITY STAFF Richard Jacobs, Assistant Finance Director David Christian, Accounting Manager EXTERNAL AUDITORS Gary Caporicci 1. Call to Order - Chairman DavidSundstrom called the meeting to order at 4: 10 p.m.2. Approval of Minutes of December 19. 2002 -reviewed and approved as submitted with the exception of one misspelling word.3. Status of 2002-03 City/A2enCY Financial Audit - Gary Caporicciof Caporicci &Larson: Gary Caporicci stated they've completed and gone through three separate sessions this year. First was the interim, planning and control phase, and then a separate phase looking at investments and single audit on federal grants. The year-end phase was recently completed. The events went well and the controls were good.What we found were some very minor issues. The City was well prepared on their schedules and were able to answer questions. All the major systems were flow charted this year and we also did transaction and detail or functional attribute type testing. Very minor things came up and when we discussed them at the exit conferences, they were taken care of. We spent a good deal of time discussing easements and right of ways. The audits were very fruitful.4. Reportin2 of Ri2hts of Way in Financial Statements - Rich Jacobs: One of GASB 34 requirements was that we pick up infrastructure and put that on entity-wide statements. This was done two years ago. There's very little guidance from GASB in terms of how to go about valuing infrastructure and specifically the rights of way. At the time, we took vacant land value and trended it back in time to when we thought the street was developed or dedicated and so those are the values that we picked up. In our case, it totals some $330 million just for the rights of way. Our auditors at the time concerned with this valuation. We've since changed auditing firms. Caporicci stated that some agencies are ignoring it entirely and not picking up anything. Some Cities are picking up a nominal value for the rights of way and some agencies, like us, have picked up a fair market value and turned it back. We want to bring this issue to the Audit Committee's attention. After quite a bit of discussion with Caporicci, we decided that we're going to wait and leave that value on our balance sheet at this point. We're not going to change it or adjust it in any way until we get further guidance from GASB. It's probably going to take GASB a year or two to come out with some decisive guidance on this area, but in the meantime, we've agreed that we're just going to leave our value on the entity-wide statement the way it is.5. Status of 2002-03 Audit Plan - Jeanne Arehart: We have completed an audit of the employee evaluation tracking process. Some evaluations are behind and we need to bring them up to date. Both the Personnel Director and the City Manager have talked to Department Heads and expressed that we need to get back on track with that area.We looked at the Waste Management of Orange County contract compliance review.Public Works staff is responsible for monitoring the contract compliance. Each year the Internal Audit Manager ensures it is being monitored. Annually, we ensure that internally we are monitoring the contract compliance on a number of issues and once every 2 years we hire out part of the contract compliance review on the more technical issues of the contract. We're in the process of getting the external audit done. We had one done 2 years ago and there were a few things identified. They have since been resolved. On TOT audits, we've gone to a two year cycle. For 2002,we audited 11 of the 21 hotels and motels. Six of those are complete. The remaining 5 are just about to be finalized. It costs us $5200 for the audit and we found $3200 in underpayments. We've been doing this for 4 or 5 years now and we may want to go to every 3 years. We're also reviewing our contract with a company called Signs of Support who contracts out with those who want to advertise on City vehicles. Signs of Support comes in and puts the sign on our vehicle and collects the revenue and gives us 50%. There is approximately $10,000 in revenue. We've had some problems with them remitting the 50% to the City in a timely manner. Vle reviewed their compliance with our agreement and found a number of things they weren't really complying with. We've tightened up the contract with them. Diehl Evans did a review of our purchasing process and our compliance with our own procedures and any other requirements we have in the purchasing area. A recommendation was made that we're a little too zealous in doing formal bids when we could do informal bids.Also, there was a recommendation that our procedures should include some information about insurance requirements and so forth. There are several audits that are currently underway. We've contracted out with Liebert Cassidy Whitmore to do an audit of our compliance with the Fair Labor Standards Act and that is almost complete. The Internal Audit Manager is working with the Finance Department on developing a program to do ongoing audits of business license taxes paid, in the service business area. Weare looking at the Fire Department's process for issuing permits on hazardous materials and occupancy. Also, the building department has some relatively new software and they have expressed concerns about how that software reports the cash receipts that they're getting daily and if its accurate compared to what they're actually taking in. The Community Development Department collects fees on behalf of other City Departments and agencies. They've had concerns about that process since they're collecting it on behalf of other people and are not always getting the information they need to collect them accurately. The Internal Audit Manager has been asked to take a look at that process and make some recommendations. 6. 2003-04 Audit PlanlWork Plan - Jeanne Arehart: After Helen Bell's departure, the Internal Audit Manager has helped Finance with various projects. Finance is moving heavily into the implementation of their utility billing software upgrade and the Internal Audit Manager will be working closely with them. As a result, the number of audits will be scaled down. The Internal Audit Manager will continue with the audits that are in progress, namely helping develop a business license audit process; reviewing the hazardous materials occupancy permits; building permit software; and the collecting of fees on behalf of other agencies; the waste management contract compliance review; the annual financial audit and the remaining TOT Audits. The other big project is the risk assessment and 175 hours is anticipated to complete the assessment. David Sundstrom asked about follow-up audits. Jeanne stated that, to date, she had not performed any, but she would be doing some as part of the 04-05 audit plan.7. Annual Write-Off Report - Rich Jacobs: The City has $43,000 in receivables that is requested to be written off from the Utility Billing division and our Accounts Receivable division. At least 3 notices and an attorney's letter have been sent before the account gets sent to collections. Overall, it's less than 1 % of the total that we bill each year.8. Other Audits - An evaluation report was done by the California Regional Water Quality Control Board regarding our NPEDS permit. Some minor findings were noted, to which staff responded.9. Public Comment - There was no public discussion. Next meeting is December 18, 3:00 p.m. Meeting adjourned 4:48 p.m.