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HomeMy WebLinkAboutAudit Comm. 05/24/2018Audit Committee Meeting May 24, 2018 Present: Frank DelVecchio, Chairman; Kiera O'Neil, Vice -Chair, and IVficch�agI Naintilsr Guests: Michael Nelligan (Powers & Sullivan), Kyle Warne (PoLers &1I'I ittRK DDaO�F Ig Stanbrook. 2818 OCl -5 A 4 18 The meeting of the Mansfield Audit Committee was called to order by Frank DelVecchio at 6:09pm on May 24tH MA SF 1eL0_ 1) Consider the possible vote to approve minutes of the De mf tr6 2071 u'dit Committee Meeting Motion for Acceptance of the Minutes for December 6, 2017 meeting Motion made by Ms. O'Neil, 2nd by Mr. DeSantis Vote: 3-0, Passed. 2) External Auditors update on FY18 audit testing and timetable for FY18 audit Audit Overview - Mr. Michael Nelligan of Powers & Sullivan They have started the single audit process under the uniform guidance as well as the Special Education audit; this will be audited every year. The light plant audit has been scheduled for the last week of August of this year. The Light Plant inventory process is planned for either the 5th or 6th of July. Under the new GASB, GASB 75, OPEB will be a requirement on the books. Mr. Nelligan isn't expecting any issues with the Bristol County ISO reporting, of which the deadline is December 28th. Mr. Nelligan discussed the importance of making that deadline and the ramifications of missing it. During April, their team rolled the performed risk assessment. In May they performed internal audits and previous audit conversions. In June they've scheduled the inventory observations, mail confirmations, and will perform site visits. Another inventory observation is scheduled for July. In August there will be a light plant audit. Phase 3 testing will commence at the end of October; which is 3 weeks earlier than last year. Drafts should be available in early November. The draft financials should be available within the first half of December. Future Accounting Standards - Mr. Michael Nelligan of Powers & Sullivan GASB 75, OPEB liability is coming onto the books in full. Nothing is new, same disclosures as currently on the pension plan. The annual OPEB expense numbers will dissipate overtime. Rating agencies are already used to the liability. Few changes will actually be made. Mr. DeSantis asked if there were any concerns in terms of the preparedness of bank covenants. Mr. Nelligan explained that it's all general obligation debt and the banks should already be prepared for it. Mr. DeSantis asked how it would read. Mr. Nelligan explained it will read generally the same; but include more of the new standard. No one is known to implement GASB standards early. Smaller items are no longer cycle tested as frequently, but risk assessments are rarely known to change based on new debt issues. The Town is going to change the level of spending in the authorization budget. It's migrating from a line item budget to a functional growth. Rather than budgeting at departmental levels, it will be Audit Committee Meeting December 6, 2017 Page 1 budgeted at the level of general government. This will change the way the budget is prepared and presented. Discussions took place in regards to the School and Town utilizing different auditing teams. It was discussed how this could be resolved to help build relations between the two entities. SoftRight has not communicated their long-term plan since their merger. Mr. Dumas is interested in switching to MUNIS. It is recommended this be done town -wide including electric, municipal, and schools; due to the cost of the switch. Mr. DelVecchio noted there has been an abrupt change to that plan and it will be discussed at a later date. Mr. DeSantis asked if there were any studies done on MUNIS. Mr. Stanbrook stated that there are quotes available but he has not brought them to this meeting. There are multiple options based on the structure to be decided. A study is ongoing and will include any consulting fees, purchase price, and annual maintenance fees. However, it's universally considered a good system to use with high standards in security. In regards to the High School window and door project, Mike Ahern is involved and has mentioned he is applying for reimbursement. The main administrative volunteer is retiring from the Municipal Airport Commission and is no longer available. An airport consultanc out of Woburn was recommended; Could be considered as it might be more cost effective than current structuring. Ambulance receivables: At the end of last year, the rough total is $1m with a total of $576K of it being with a collection agency and considered uncollectable. There is a push going on to write those off; still waiting approval. For the financial statements, 80% of that total was already allocated for the reserve. It was discussed that the Town gives Mansfield Cable Access Corporation the cable access fees that are earned. They currently have $1.2M on the books. Mr. Dumas has pulled the agreement between the Town and Mansfield Cable Access Corp, for peg access. Normally, a close relationship is kept between Cable Corps and Towns and most towns keep a one year contract in order to maintain consistency of programing. Every year the town gives MCAC about one-half million dollars in fees. Mr. DeSantis inquired if the Chairmen would talk to the Finance Committee in regards to this item. Mr. DelVecchio said it is planned to be discussed. Mr. DelVecchio has invited the Audit Committee to the Board of Selectmen on June 6th, 2018. Audit Committee Meeting December 6, 2017 Page 2 3) Discussion of action plan to address previous year's management letters, comments, and recommendations Overview of Management Letters Comments & Recommendations — Mr. John Stanbrook An issue was discussed in regards to timesheets not always having authorized signatures. Standardization was suggested utilizing Microsoft Excel Spreadsheet templates. It was recommended that a uniform payroll sheet should become a high priority. Mr. Stanbrook stated there should be more resources allocated to the Finance Department. Given the town's restraints, the best option would be to hire outside consultants on an as needed basis for projects. Framework for the documentation of internal controls Mr. Stanbrook has gone through but it needs be assessed by the group and edited for sections that do not apply to Mansfield. This needs to be completed per federal regulations. The internal controls policies and procedures annual is recommended to move to an outside consultant due to only having a finite amount of time to complete. Ambulance Receivables As of March 2018, there is $572,305.01 currently at collections. Mr. Stanbrook has suggested writing off everything prior to 2013; as it will put a large dent in uncollectables. Ms. O'Neil asked about the contractual obligations of the billing. Mr. Stanbrook explained the inability to bill patients and the adjustment chain. Collection agencies are known to get 4% of everything collected and a new company is capable of determining the amount that is collectable. Mr. DeSantis stated if you are overstating receivables, it should be written off as soon as possible to avoid booking sales which are a liability. Mr. DelVecchio suggested writing off historical items and using a new approach to avoid false receivables. General Ledger Journal Entries Mr. Stanbrook compared the 2016 General Ledger entries to those of 2017. 2016 showed 5,654, and 2017 showed $5,097. A lot of problems correlated to truing payroll holdings to actual. Expenses are often posted incorrectly from the Treasurer's Office and then require correction. Fraud Risk Mr. Michael Nelligan and Mr. Kyle Warne have suggested putting it on the departments to do self - assessments. Although it is unknown if the departments would have the knowledge and time to complete that task. It should be discussed if it can be handled by a consultant or vendor. Mr. DelVecchio asked what the management response will be and what will be found? Mr. Stanbrook believes payroll will be there again along with cable. Mr. DelVecchio mentioned there is a lot of interest on the Board of Selectmen in regards to this issue and would like information to bring to the Board of Selectmen for presentation. Audit Committee Meeting December 6, 2017 Page 3 4) Discussion of departmental internal control listing and possible testing of those controls Mr. Stanbrook presented a draft on bridging the gap between the Electric Department's computer system and how they keep track of cash versus how the Town does. The title of which is Cash Reconciliation. He listed all documents he currently uses to perform this action every month. Based on his findings it is very time consuming and requires a lot of resources. He mentions he does never hear of any discrepancies and perhaps this is a loop that needs to be followed-up on. Mr. Stanbrook mentioned there is no current better way to do it and will ask the auditors to take a look at it to assess the cash control of the process. It was suggested if both Electric and Town were on the same system this process would be redundant. The auditors believe the process is working due to last year's being "to the penny." Mr. DelVecchio asked if the Committee is required to meet once more in the Fall to discuss any progress made. Mr. Stanbrook suggested it can be combined with the Electric meeting in the Fall. Mr. Stanbrook will provide plan to the auditors and, if verified as a valid process, it will move to testing. 5) Other relevant agenda items not known by the Chairman 48 hours prior to the meeting None 6) Adjourn Motion: To adjourn the Audit Committee meeting on May 24, 2018 at 7:1913M. O'Neil/DeSantis 3:0. re Minutes prepared by Nancy Griffin, edited by Chris George Date Audit Committee Meeting December 6, 2017 Page 4