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HomeMy WebLinkAboutAudit Comm. 09/23/2019Town of Mansfield Audit Committee Meeting Minutes Monday, September 23, 2019 s'ED . 'S OFFICE Present: Jess Aptowitz, Michael DeSantis, Kiera O'Neil, Kris Moussette, Christopher George, Recorder; ry Guests: Matthew Violette (Mansfield Town Accountant), John Stanbrook (Assistant Town Manager), Joe Sollecdto (Mansfield Electric), Joe Pereira (Mansfield Electric), Kyle Warne (Powers & Sullivan), Michael Nelligan,(Powers Sullivan), Eric Kinsherf (Eric Kinsherf CPA), The Town of Mansfield Audit Committee was called to order at 7:00pm by Assistant Town Manager John Stanbrook. Mr. Stanbrook opens the floor for nominations for Chair of the audit committee. Mr. DeSantis nominates Jess Aptowitz. *Motion to appoint Jess Aptowitz as Chair made by Mr. DeSantis, 2nd by Ms. O'Neil. Vote 3-0 PASSED Mr. Aptowitz opens nominations for a Vice Chair. *Motion to appoint Keera O'Neil as Vice Chair made by Mr. DeSantis, 2"d by Ms. Moussette. Vote 3-0 PASSED Mr. Aptowitz opens nominations for Clerk. *Motion to appoint Michael DeSantis as clerk made by Ms. Moussette, 2"d by Ms. O'Neil. Vote 3-0 PASSED Acceptance of Meeting Minutes *Motion to accept the minutes from December 4, 2018, with the requested edits, made by Ms. O'Neil, 2"1 by Mr. DeSantis. Vote 3-0-1 PASSED Matthew Violette introduces himself to the Committee. He explains the four step conversion process. He says MtJNIS is due to go live in February. He says the next step is the tax collection piece. He says this is about a nine month process. He says after that is utility billing and then payroll with a nine month timeframe for each piece. Mr. Violette says that financials are the building block and they take the most time. He says the tax and collections piece will be more complicated as they're running parallel systems. He says this will also happen with utilities billing. He says they've had about 35 implementation sessions going back to March. Ms. O'Neil asks if the school has been involved in stage one. Mr. Violette says yes. Mr. Violette says one issue, in Softright, is that the school is represented by two accounts and they'll be breaking it out into eight hundred accounts. Mr. Violette fields for questions. Mr. DeSantis asks what the length of time is that they'll run the software in parallel. Mr. Violette says they're going to have Softright saved on the Town's local servers and they'll be able use it as a reference point. He says he prefers to look back into Softright. Mr. DeSantis asks at what point do they cut off looking for parallels. Mr. Violette says that Softright will be used through 2021 but they'll be eliminating the use of Softright as MUNIS goes live. Mr. Aptowitz says that they'll have to do journal entries. Mr. Violette says they have a third party import for payroll but what is an issue is utility billing and treasurer collector software. Ms. Moussette asks if they're not updating prior years into MUNIS, then will there be an issue pulling the data. Mr. Violette says, after speaking with the MIS Department head, that it will still be available. Mr. DeSantis says there's been a lot of municipal software being hijacked and asks if MUNIS has put any preventative measures in place. Mr. Violette says it's much easier for a hacker to get into a local hosted server than it would be for them to access the MUNIS servers. Mr. Aptowitz fields for questions. Mr. Nelligan asks if they'll be using MUMS' payroll. Mr. Violette says the Treasurer's Department felt more comfortable waiting to implement the payroll aspect until a later date. Mr. Aptowitz fields for questions. There are none. Mr. Aptowitz introduces Mr. Kinsherf. Mr. Kinsherf says he first looks at what fraud is occurring and what measures are in place to mitigate the fraud. He says the biggest cash collection points are the Assessors and Treasurers department. He says they interview all the departments and that they've done about twenty-one departments so far. He reviews the audit report that the Committee will receive and how it can be used as a tool. Mr. Kinsherf says they have found some common areas. Mr. Aptowitz asks where they are in their process. Mr. Kinsherf says they have about five departments remaining but has been writing the report as they go. He says they should have a draft to the Assistant Town Manager within thirty days. Ms. O'Neil asks if the schools are involved in this. Mr. Kinsherf says yes. Mr. DeSantis asks if there is anything financially that could hurt them that they should know now. Mr. Kinsherf says departments are used to checking their expense reports to the budget but they're not as attune to keeping track of all the revenues that they collect and ensuring they get posted to the main ledger. He says to just let people in the Town know that they're looking at this type of thing and that it's good when people know they're being audited. Mr. Kinsherf says internal audits done by the Town Accountant are also beneficial to show that people are looking at the audits. Mr. Kinsherf says a lot of questions are geared around how to report problems and they'll recommend a standard policy surrounding fraud based issues. Mr. Kinsherf says he's a proponent of a fraud hotline. Mr. Aptowitz asks if it would be standard practice to go to the next level. Mr. Kinsherf says yes, but they would need to make a decision on where it goes. Mr. Aptowitz thanks Mr. Kinsherf for his time. Mr. Nelligan explains the handouts he provided. He notes that the Town received three comments on their Audit; which is the least amount he's seen. He says two of the comments were just clerical errors. Mr. Nelligan summarizes the audit of the light plan. He says they did phase one field work back in May. He says they did their field work on the light plant on August 12. He says that, during the year, they lost their chief accountant at the MMED. He says that Mr. Pereira came in and that they did not experience any transitional issues and that everything was reconciled. He says they're not waiting on OPEB. He says the actuary on the OPEB plan is current up to June 2019 and it should be the last time they have to do that. He says there were no new GASB statements. Mr. Nelligan says the audit report starts on page one with a clean opinion. He overviews the placement of each topic within the audit report. He says the net income went from $2.9 million last year down to $256,000 this year. He says this is mainly caused by power cost being up this year and there was a flush of funds for a MEMIC release of $2.2 million of debt service. Mr. Nelligan says rates are set just to cover the costs and to make a profit is rare. Mr. Aptowitz reiterates that rates are set to cover costs. Mr. Nelligan says they shouldn't look at this as a negative. Mr. Nelligan says, besides operating expense being up 18% over the previous year, everything else is consistent from year to year. Mr. Nelligan says the pilot payment back to the Town increased from 650 to 727 and there is a formula for that which they are using. He says the department added acquisitions of capital assets of about $2.5 million for the year and took depreciation of just over $2 million. Mr. DeSantis asks if they feel comfortable at the 5.75% OPEB rate. Mr. Stanbrook says that it's based on funding as you get closer to the funding level then the assumptions are allowed to go back and forth. He says they aren't close to the general fund. Mr. Nelligan says the OPEB rate is the same for all departments. He says the discount rate is being pushed by the actuaries and that they have their standards to follow. Mr. Nelligan says it's not 5.75% across the board but it's based on the bond rate; making it more of a blended rate. Mr. DeSantis asks if this will have an impact that they should plan for. Mr. Nelligan says he doesn't think he can speak to that but does see the OPEB plans performing better than pension plans. He says the actuaries smooth out rate changes over five years. Mr. Nelligan says they're still positive in all three positions. He overviews the cash flow statement, on page 11, which shows the degenerated $2.4 million in operating cash that was spent on taxes to the Town and capital asset additions. He says the notes on financials are pretty much the same as they've been in the past. Mr. Nelligan says, on page 26, you can find the change of assumptions in the OPEB plan. Mr. Nelligan says, on page 40, they list out the schedule of maintenance expenses in a more detailed way. Mr. Aptowitz fields for questions. Ms. Moussette says there are inconsistencies in labeling of the retirement systems. She wants to ensure there is consistency in the terminology. Mr. Nelligan asks if he can change it. Ms. Moussette says yes and then it wouldn't need to be redefined on page 19. Mr. Nelligan says he'll change it to plural. Mr. DeSantis asks Mr. Stanbrook if there's any long-term, outstanding debt. Mr. Stanbrook says he doesn't believe so and asks Mr. Sollecito. Mr. Sollecito says no. *Motion to accept the FY19 MMED draft audit and authorize to release the FY19 MMED audit when in its final form made by Ms. Moussette, 2nd by Ms. O'Neil. Vote 4-0 PASSED Mr. Nelligan says they're scheduled to come back in the middle two weeks of October. He says they can easily get the rest of audit work done within those two weeks. Mr. Nelligan says to look at the first week of December None *Motion to adjourn at 8:01pm made by Ms. O'Neil, 2"d by Mr. DeSautis Vote 4-0 Passed Signature 11 Date Approved