HomeMy WebLinkAboutFINCOM09252014C
Town of Mansfield
Finance Committee
Minutes of September 25, 2014
EWED
=t RjiS OFFICE
Present: Steve Schoonveld, Chairman; Walter Wilk, Vice Chairman; Liz L7t 4I 6eik;n]Yl robe s: Michael
O'Brien; Scott Feely; Yogen Chemburkar; and James Bazinet `'41AIiSr F!_C
3' A �1,�: 1 T J
Call to Order: Chairman Schoonveld called the meeting to order at 7:08 pm
Confirm Builuet Process Calendar and Discuss Strateeies for Success
Steve Schoonveld has reached out to Deb Herbert for a Budget Subcommittee meeting on October 8, 2014.
Walter Wilk would like the Board of Selectmen to set a framework of dates to look at CIP and ask the Board
of Selectmen to prioritize projects.
Steve Schoonveld thinks the Board of Selectmen have a good list of goals. However, it is still a work in
progress.
Scott Feely states the CIP's goal is to present to the Board of Selectmen by the end of December.
Jim Bazinet would like the audit committee to meet after the financials are certified.
FY 2015 Goals
Steve Schoonveld will put together a draft and members can add their edits.
Industrial Park Updates — Town Manager I
Town Manager could not make the Finance Committee Meeting.
The Finance Committee would like to see the data on occupancy and marketing comparisons on other towns.
The Finance Committee would like information on park data, plans for each location, is the Town working
with state agencies (or third party) and also an update on Covidien.
Review and Discuss "Definition of Internal Controls" Exposure Draft
Steve Schoonveld feels the purpose on internal controls is to reduce or eliminate the misuse of funds. Steve
also feels the definition of internal controls will give the residents comfort.
Extensive discussion by the Finance Committee on the by -laws of the Audit Committee (Section 4; Chapter
28). There are 7 duties of the audit committee in the by -laws.
Tim Bazinet recommends the audit committee be expanded.
Page I I
Finance Committee Meeting September 25, 2014
Scott Feely recommends if the audit committee is not happy with the engagement letter, they should make
adjustments to letter next year.
'alter Wilk recommends the audit committee putting together a 3 -year plan.
Updates
CIP — meeting on September 30th
2. Audit Committee — meet after financials are certified
3. Budget Subcommittee potential meeting on October 9th
4. Superintendent Search — officially begins October 23`d when reviewing applications — Liz Christo
would like Finance Committee to put together suggested questions for the interview process.
Review of Minutes
No minutes to review at this time.
Member Comments and Updates
Liz Christo and Scott Feely congratulate Bill Ross and the Town of Mansfield on increasing the bond rating.
739SO � V C
(Steve Schoonveld states that t e Town of Mansfield buyin willowdale Golf Club would not be financially
krative.
Other Items Not Known 48 Hours Prior to Meeting
None.
Adjourn
Motion: To adjourn at 9:00 PM
(Feely/Wilk); All in Favor; 7 -0 -0
Roll Call Vote: O'Brien aye; Bazinet aye; Feely aye; Christo aye; Chemburkar aye; Wilk aye,
Schoonveld aye
Clerk �4nature Date
Page 12
Finance Committee Meeting September 25, 2014
To: Finance Committee (F /C)
Board of Selectman (BOS)
l Mr. William Ross/ Town Manager (TM)
Mr. Edward Vozzella/ Business Manager - School Systems
Mr. Gabin /Director - Electric Department
From: James Bazinet/ Chr. Audit Committee (A /C)
RE: Definition of Internal Control Systems
It dA
Date: August-2 , 2014
EXPOSURE
FOR
DISCUSSION
ONLY
DRAFT
PURPOSES
The "System of Internal Control" is subject to wide interpretation contingent upon which professional organization
is doing the defining; for the purpose of this discussion the Exerts provided here are from The "Committee of
Sponsoring Organizations of the Treadway Commission" (COSO) Report Titled: Internal Control- Integrated
Framework: Beyond this resides a significant body of research which resulted from Internal Control in U.S.
Corporations published by the Financial Executive Institute along with Criteria for Management Control Systems
Sarbanes /Oxley is excluded from this discussion given its legislative dilution.
The advance of current ICS subject matter should be much broader than that presented here for your
consideration. However, the proceeding will promote understanding by providing a Standard Terms of Reference
which can evolve as the Towns' ICS is documented, evaluated and modified to suit the needs of the Town, School
and Electric operations and systems.
The attached Exerts (1 to 12) should also serve to define certain ICS terms, processes and policies that are most
common and subject to A/C scrutiny. For some they are very familiar, to others new, in either case, they are of
specific interest to understanding the role & responsibilities of the Audit Committee as stated by the Town By-
Laws, as amended by Article 37 (See Exhibit A). Once fully understood, it should be evident that the size of the
A/C is inconsistent with its mission as defined by Article 37; as is the professional composition of the A/C itself. The
size and composition of the A/C cannot adequately address the scope of audit activities given that at least two
members are non - financial, at the present time.
As a consequence of these facts, cooperation is vital from all affected parties, as is, access to any I/C evaluation
performed by various independent auditors who are active and review the financial records and ICS for three
separate Town entities. When consideration of A/C responsibilities extends to include the traditional oversight of
independent auditors activities, the implementation of corrective actions, and provide adequate control over a
dynamic, reiterative process as ICS systems evolve, the necessity to expand the A/C to seven active members
(three from the various internal committees and four "at- large" members) is clear. The expanded A/C would
allow for all seven Article 37 objectives to be achieved on a consistent basis. The expanded A/C would allow for
the appropriate sub - committees to be established for each specific area, as needed.
Of course, it is understood that to amend Article 37 to expand to seven active members requires another small
amendment to the current by -laws at the Town Meeting in November. That said it also requires the full support of
each affected party included in an approved Audit Plan for the Town and its' operations. The necessity for
feedback on these issues is critical and should be obtained as soon as possible. It should be noted, the existing
A/C is four in number, so, it is an ideal moment to recruit additional "at- large" members in anticipation of
expansion.
We would appreciate your comments on these issues.
EXPOSURE DRAFT
FOR
Page 2
DISCUSSION PURPOSES
ONLY
Ex. 1 "The term internal control has been used so loosely and in so many ways that it has largely lost its ability to
suggest any clear concept whatever. We recommend that both (independent) auditors and managers forsake its
use when reasonably precise language is required. .....Any complete system of internal control, whether
management or accounting, is comprised of four essential and interrelated components: (1) the internal control
environment, (2) internal control risk analysis, (3) internal control procedures, (4) internal control monitoring.
Each of these components consists of elements which can be identified, described and related to other elements
of the other components."
Ex. 2 "Internal control comprises the plan of organization and all of the coordinate methods and measures
adopted within a business (or organization) to safeguard its assets, check the accuracy and reliability of its
accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. It
recognizes that a "system" of internal control extends beyond those matters which relate directly to the functions
of the accounting and financial departments. Such a system may include: budgetary control, standard costs,
periodic operating reports, statistical analyses and the dissemination thereof, training programs designed to aid
personnel in meeting their responsibilities..."
Ex. 3 "Internal Control comprises the plan of organization and all of the coordinate methods and measures
adopted within a organization to: 1.) safeguard its assets. 2.) check the accuracy and reliability of its accounting
data. Known as Accounting Controls 3.) promote operational efficiency, and 4.) encourage adherence to
prescribed managerial policies. Known as Administrative Controls...
Ex. 4 Accounting Controls extend to "the systems of authorization and approval, separation of duties concerned
with record keeping and accounting reports from those concerned with operations or asset custody, physical
control over assets..."
Administrative Controls extend to "all methods and procedures that are concerned with operational efficiency and
adherence to managerial policies... "include such controls as statistical analyses, time and motion studies,
performance reports, employee training programs, and quality controls."
Ex. 5 Accounting Controls relate directly to:" 1.) safeguarding of assets, which is interpreted to mean protection
against loss arising from intentional and unintentional errors in processing transactions and handling related assets
and 2.) the reliability of financial records for external reporting purposes ...... Administrative Controls relate directly
to, but is not limited to: "the plan of organization and the procedures and records that are concerned with the
decision making processes leading to managements authorization of transactions. Such authorizations is a
management function directly associated with the responsibility for achieving the objectives of the organization
and is the starting point for establishing accounting control of transactions."
....therefore Accounting Controls are to provide "reasonable assurance that a.) Transactions are executed in
accordance with managements' general or specific authorization; b.) Transactions are recorded as necessary (1) to
permit preparation of financial statements in conformity with generally accepted accounting principles or any
other criteria applicable to such statements and (2) to maintain accountability of assets. C.) Access to assets is
permitted only in accordance with managements' authorization. D.) The recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences."
EXPOSURE DRAFT
FOR
Page 3 DISCUSSION PURPOSES
ONLY
Ex. 6 Simply stated, the term "management control" is inherent in these features: "Management control
integrates with other management responsibilities and with management goals and purposes. Management
control is a broad concept including both positive goal directed activities and error and irregularity reduction
measures. It subsumes internal accounting control. Management control is personnel oriented, directed at
facilitating their success in attaining company (organization) goals within company (organizational) policy."
Ex. 7 Each facet of the Management function has control implications including: "1/ The selection of goals; 21
Formulation of policies; 3/ Development of plans to achieve goals within the organizations policy; 4/
Implementation of plans; 5/ Financial reporting of results; 6/ Review and Evaluation of Results, modification of
goals, policies and plans as seems useful."
Ex. 8 Management control, as stated is a broad concept. "Management control includes actions positively
directed toward the achievement of organizational goals as well as precautions and defensive measures intended
to curtail errors and irregularities. As such, practices outside the accounting and financial departments are
comprehended in management control."
Ex. 9 "The nature of human fallibility is such that extraneous conditions and events will sometimes cause people,
intentionally or unintentionally, to do other than they are instructed." "Controls strive first, to motivate officers
and employees to take positive constructive action; second to deter company personnel from engaging in
counterproductive activities; third, to accomplish timely discovery of errors and irregularities." "It is personnel
failure that causes errors and irregularities, not the existence of system deficiencies alone."
Ex.10 There are many ways of creating internal control procedures to mitigate an organizations' risks but most
systems include but are not limited to: "1/ Consideration of relevant circumstances, 2/ Identification of
Possibilities. 3/ Evaluation of each possibility for: a) impact on the Organization, b) Probability of occurrence, c)
Controllability on a cost - effective basis."
Ex.11 Given all of the preceding: "Criteria for Evaluating Systems of Control considers 1/ The internal control
environment within the organization; 2/ A process of risk analysis to identify and evaluate the internal control risks
faced by the organization; 3/ The selection of appropriate internal control practices and procedures to meet the
internal control risks identified and evaluated in component 2/ and finally 4/A monitoring procedure to
determine and report the effectiveness with which internal control procedures accomplish their intended purpose.
The interrelationship among these four components is such that the effectiveness of each relies on the
interdependence among all."
In Conclusion
There are, virtually almost an endless supply of audit systems which are available and capable of evaluating an
organizations' Internal Control System (ICS). But to summarize the most common features encompass the
Organizations' environment, an analysis of risks, matching of procedures /systems with risks and provide a
monitoring capability which evaluates control measures on a continuous basis.
`XPOSURE DRAFT
Page 4 FOR
S USS)ON PURPOSES
An evaluation plan of ICS normally extends to a three way approach which will: ONLY
"First. Identify (and document) the principal activities in each operating component of the organization and define
the control objectives related to the activities.
Second. Identify (and document) the system attributes that contribute to the achievement of the control objective
(the Key Attributes), or identify system deficiencies that prevent the control objective from being achieved.
Third. Evaluate whether the identified system attributes provide reasonable assurance that control objectives are
achieved." ( "Evaluating Internal Control -A Guide for Management and Directors" published by Ernst & Whinney.j
As you consider this cursory review of Internal Control and our ability to provide full adherence to Article 37s'
requirements and its (7) specific tasks: An Audit Committee size of S members, 3 from internal committees and 2
"at large" members is not sufficient, in my view, given the scope of the By -law and cannot provide full compliance.
I recommend that the Audit Committee be expanded by 2 additional "at- large" members to a total of 7 active
members. The expanded size of the committee would allow for the establishment of a sub - committee to address
ICS documentation, policy and reporting issues which are currently uncertain.
Mansfield Board of Selectmen
Goals and Objectives
August 20, 2014
• Create a Mission Statement for the Board.
o Focus on physical elements of the community that will emphasize livability.
Downtown development and street Improvements
Create formal gateway to downtown from Chauncey Street
Create two way traffic on Main Street
Develop Old Colony Way as downtown parking
Install signage to encourage parking in Municipal lots
Install signage, banners on Main Street
Install way finding signs to encourage use of downtown businesses
Develop street lighting along Main Street
Encourage social engagement, more downtown festivals
• Research ultimate build out and diversity of community, encourage zoning to
accommodate all ages in our community. Develop a range of housing types and price
levels. Support as wide range of family types, income levels, individual values and
lifestyle choices.
• Discussion and decisions on Fales Fuel property
• Develop strategy for Transit Oriented Development and Town policy.
• Develop Social media policy for all town employees and elected officials
• Marketing, Marketing, Marketingll
• Develop coordinator for press releases stressing positive benefits of Town.
• Reduce energy consumption, provide better lighting in all town departments
• implement design strategies mentioned in the northeastern students report,
• Install pedestrian amenities in downtown area, bike racks, tree planting where needed.
• Implement changes at North end of town around common.
• New paint on interior of town hall
• TV or monitor at town hall flashing calendar, activities, etc.
• Message Board /sign at memorial adjacent to Police station
• Develop DPW and Public safety complex
• Consider ways to reuse fire station downtown after vacant.
• Purchase property adjacent to Fire station
• Create video of town for marketing purposes.
• Look at Library and Council on aging Building to developmaster plan for future use by
Council.
Communications
• Website design improvement
• Website Content
• BOS Meetings
• Other Board Meetings
• Budget /Warrant Article Presentation (videos)
• Other Educational Videos (e.g., serving on a board)
• Other budget /financial information (see below)
o Expanding Facebook, other social media outreach
• Provide similar content to website (links to meeting videos, etc.)
• Develop social media policy /guidelines
o Develop cable "on- demand" capability as another access for meeting tapes, etc.
Budget /Finance
• FY 2015 CAFR (Comprehensive Annual Financial Report)
• Begin to develop "program budget' format
• "Virtual budget" implementation
• Communicate /provide easy access to financial Information (see "Communications"
above)
• Finalize and publish financial policies
Planning /Economic Development /Growth /Strategic Plan
• IDC /EDC
• Fill positions over near term (8 -10 weeks)
• Report to Town Manager /BOS prior to Town Meeting on proposed format (IDC,
EDC, other)
• Present findings /recommendations prior to Town Meeting
• Build on marketing profile prepared by UMass Dartmouth to develop marketing plan
• Coordinate development efforts (Cultural District, Betterment District, Main Street
program or type program; Chamber, DBA, Planning, Cultural Council)
• Use of Town -owned property (broad view)
• Strategic Plan status update/ assessment (where do we go from here)
• Develop proactive approach to major development initiatives (e.g., Chocolate Factory,
Willowdale)
Facilities
o DPW, Police, Fire, other — coordinated overview
Board
• Streamline meetings
• Event Permits; Licenses; Warrants; Proclamations
• Determine tax rate split
Other As determined by events, opportunities; discussions with other boards; citizen input, etc,