FINANCE COMMITTEE MEETING
MINUTES
NOVEMBER 15,
2005
The meeting was called to
order by Chairman Fogt at 5:30 p.m.
MEMBERS PRESENT: Mr. Fogt, Mr. Pleasant Excused: Mr. Taylor
OTHERS PRESENT: Kathy House, John Morehart, John Green,
Michael Balestra, Ryan Horns
AGENDA:
Agenda items: 2) Tap-in Fees, 3) Malcolm Pirnie Study, 4) Impact
Fees
Received a quote of $7,500
for a tap-in fee study on wastewater by Malcolm Pirnie. Consensus of Council is they are in
favor of conducting the study. Mr.
Burke has proposed using inflation rate to increase tap-in fees on a yearly
basis.
Mr. Pleasant stated he met
with the Mayor, and the Mayor is not excited about the tap-in fees. He agrees philosophically, but would
like to see a much more comprehensive study, including traffic.
From Mr. Pleasant’s
standpoint, his commitment to the public was to look at any and all things that
could offset any affect that growth would have on this community to the existing
people in the future.
Ms. House expressed concern
for doing this right now. An
assumption in the Malcolm Pirnie proposal is that the City is planning to
construct a 6 MGPD wastewater treatment plant. There is a possibility that an 8 MGPD
plant may be built if the bids come in the right way. It won’t be known which one will be
built until Spring. She does not want to move too quickly,
but agrees it does need to be reevaluated on a regular basis.
Mr. Pleasant would like to
charge Administration under the premise of having dialogue, of what the game
plan would be with a time factor.
He encouraged further dialogue between Administration and Council, with
Council’s philosophical approach to growth, what possibilities would be
available and what the parties could have joint dialogue on to head in the
direction of having growth pay for itself.
Ms. House suggested Finance and Public Services Committee be the parties
for joint dialogue on this issue.
She agrees taking a more comprehensive look at it is
best.
Mr. Pleasant suggested
starting discussion in December.
Mr. Morehart stated the
City is always looking at revenue sources and the type of revenues
received. Needs
further discussion as to what sources of revenue. Feels existing sewer tap-in fees are
fairly current. With inflation
index, always a concern you may price yourself out of the market, but could
increase yearly by a certain percentage.
Another approach would be to set a five-year plan for capacity fees, as
is done with the rate structure.
Need to decide whether it’s an index or percentage increase.
Mr. Fogt said he would like
to do something now. The public
wants to see action now. Feels the
initial steps should be done within the next couple of months. Ms. House does not want to sign the
contract for the Malcolm Pirnie study before the decision is made as to the size
of the wastewater plant and before the Water Master Plan is completed.
Mr. Pleasant suggested
discussions the next couple of months with some direction. See what plan Administration brings to
the December meeting.
Mr. Fogt agreed. Mr. Fogt
would like to look into multiple residents, condos and apartments, on a single
meter. Do a comparison with
other cities. Mr. Green
stated the tap-in fee is based on the meter size, and the meter sizes are
determined by the American Water Works Association as far as equivalencies
are. Mr. Fogt would like to have
the family living in that condominium or apartment pay for their sewage and
water usage. Mr. Green will call
for some comparisons.
1)
2004 Post Audit
Review
Mr. Michael Balestra, of
Balestra, Harr & Scherer, CPA’s, Inc., addressed the Committee. They performed the 2004 Audit. Approval was received from the
State Auditors. There were no
comments on the report that was submitted.
It was certified with no problems.
Mr. Balestra went over
communication requirements and the audit approach. Audits are done in accordance with the
AICPA Audit Guide,
Audits of State and Local
Government Units, Government Auditing Standards and Direct as Issued by the
Auditors of State. Current policy in current audits are
performed utilizing a sample transaction rather than attempting to audit all
assets, liabilities, net assets, revenues, expenses, etc. Use a risk-base
approach. Plan the audit, document
the controls then determine the higher-risk areas that need further
attention. Testing is required in
compliance, payroll and vouchers each year.
Some adjustments were made
to this report and agreed to by all.
Audit was completed on June 27, 2005.
The auditor’s
responsibility is to audit the financial statements; it’s the City’s
responsibility to prepare them.
There was no significant
change in accounting policies this year.
The only significant estimate is depreciation expense. There were no problems with that.
The auditor is responsible
for other information or documents contained in audited financial
statements. There was no other
information presented or required to be presented in the financial
statement.
Disagreements with
management whether or not satisfactorily resolved. There were no disagreements with
management.
Consultations with other
accountants. There were none.
Used the same SAS70 Report
as last year. Need to get started to make sure it gets
done earlier this year. Mr.
Morehart has already made initial contact.
Mr. Green explained that a SAS70 report is whenever an outside agency
processes a significant volume or dollars of our transactions; they have to be
audited as well as an evaluation of their internal controls. Medicount Management manages the City’s
ambulance runs and
There were no major issues
with management.
There were no difficulties
encountered in performing the audit.
Everyone signed off on the
SAS61 Report, saying it had been reviewed.
Audit Report Review and
Management Letter
Audit Report includes two
opinion reports that are required.
One is the Independent Auditor’s Report on the Financial Statements and
the other one is the Report on Internal Control over Finance or Reporting and
Compliance and Other Matters Based On an Audit of
Financial Statements Performed in Accordance with Government Auditing
Standards.
Independent Auditor’s
Report - The first opinion by the Auditors is a “clean” opinion, which is the
best opinion you can get. They
found nothing they felt was significant that would cause any problems in the way
the financials were reported. They
had no discrepancies or errors in the financial
statements.
Pages 2 thru 8 - The
Management’s Discussion and Analysis - This is the most informative section of
the whole report. This is prepared by the Finance
Department. Although this is not
audited, the auditors tie all the numbers back and verify that what’s prepared
matches or agrees to the audited financial statements.
Pages 9 thru 20 – Basic
financial statements. Gave a brief explanation and encouraged
members to review on their own and call with any
questions.
Page 50 - Report on
Internal Control over Finance or Reporting and Compliance and Other Matters
Based On an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards. In
this report, the auditors test the City’s internal controls over their financial
reporting and also compliance with local, state and federal requirements. The auditors found nothing that they
felt was material or a material weakness that is required to be reported in the
body of the report. Mr.
Balestra pointed out the Management Letter dated June 27, 2005. This letter includes issues that are not
significant enough to include in the body of the report, but are areas they want
to bring to the City’s attention to see if it’s feasible to correct.
Non-Compliance Issues - In
several instances, the auditors noted where the invoice was before the P.O.
date. They were not significant to
worry about.
Matters for Improvement -
q
This is a repeat, where the
utility clerk did not initial the U/B Receipts Posting Journal verifying that
she agreed to the payment stubs. Documentation is needed to say she actually did
that by initialing.
q
Checking the finding for
recovery database that the State Auditor has on their website. The City attorney verified this
information. In the contracts
tested, they did not find anybody that was awarded the contract that was on the
database. The City attorney did not
maintain the documentation to show that he actually checked it. This needs to be done. Mr. Green will print a list of
businesses on a monthly basis and keep on hand. Mr. Balestra agreed this would be
sufficient.
q
This is a repeat. Based on some audit adjustments in the
past, still are out a little between the records on the system and what was
actually in the financial statements.
Mr. Green explained the adjustments would be done this year then make
appropriate reconciliations. The
number has been identified; it’s just a matter of working it out.
Mr. Pleasant commended Mr.
Morehart stating the report looked very positive. Mr. Fogt agreed.
Mr. Morehart asked about
encumbering the $7,500 this year for the Malcolm Pirnie study. Committee agreed to hold off until
2006.
The meeting was adjourned
at 6:20 p.m.