HomeMy WebLinkAbout2015-11-16 Audit Commission Minutes
Audit Commission Minutes
(Municipal Audit Commission AMC 2.11.010)
November 16, 2015 at 1:00 p.m.
Siskiyou Room 51 Winburn Way, Ashland OR
Call to Order Called to order at 1:03pm Roll Call Present: Thomas Hepford Rich Rosenthal Roberta Stebbins Mary Cody Barbara Christensen (Non Voting) Other: Dave Kanner City Administrator Lee Tuneberg Administrative Services and Finance Director
Cindy Hanks Accounting Division Manager Michael Black Parks Director Kenny Allen CPA Pauly, Rogers and Co., P.C.
Kristy Blackman Administrative Assistant (Minute Taker) Approval of Minutes Moved Hepford Seconded Cody To approve the Audit Commission Minutes of October 27, 2014 ALL AYES MOTION APPROVED Presentation by Independent Auditors - Pauly, Rogers, and Co., P.C. Stebbins complimented all staff on the presentation.
Parks Comprehensive Annual Financial Report (CUFR)
Representing Pauly, Rogers and Co., P.C. (PR&C), a certified public accounting firm engaged by the City of Ashland (COA) to perform auditing services, Allen presented the COA Comprehensive Annual Financial Report (CAFR), the AP&R Comprehensive Annual Financial Report (CUFR), and
Management Letters to the COA and the AP&R Commission. Allen acknowledged that AP&R have received their Government Finance Officers Association (GFOA) award for FY 2013-14.
Allen summarized the audit process and stated that the purpose of the audit was to determine if fair
presentation of the financial statements and compliance with generally accepted accounting principles and auditing standards, applicable Oregon Municipal Audit Law and Administrative Rules, and Federal, State and other agency rules and regulations related to financial assistance had been accomplished.
Directing to pg 19 Allen referred to the overall financial statements for AP&R where he outlined the opinion given and stated that this was an “unmodified opinion” being the cleanest opinion available. He noted that there were no qualifications or issues with this section. Allen then directed the commission to page 87 and discussed the state minimum standard audit which covers budget law, purchasing, investments etc. He noted that there were no issues with this section. Pointed out pg26 of the CUFR, “Statement of Net Position” and noted the implementation of GASB68 and outlined the requirements.
Stebbins complimented AP&R on their transmittal letter. Corrections;
• Pg80 - Rosenthal pointed out that there is a small discrepancy in the number of trees planted and trees maintained.
• Pg24 - Hepford noted the reference to pg41 should actually be pg53.
There was no Parks Management Letter. City of Ashland Comprehensive Annual Financial Report (CAFR) Allen acknowledged that the COA have received their GFOA award for FY 2013-14 and referred to
pg24 noting that an unmodified report was delivered regarding the overall opinion. He clarified that the auditor is responsible for opining the financial statements and the notes only. Allen noted that there were no issues and a clean unmodified opinion was given with regard to the state minimum standards as noted in the report given on pg161. This covers budget, collateral, insurance, outside funded programs, investments, purchasing etc. Allen noted that while there was an audit performed on the Schedule of Federal Financial Assistance found on pg169, focusing on the Community Development Block Grant Program, no issues of non compliance were found.
Allen next referred to the City Management Letter found on page 167 and noted that there were no issues. Allen referred to pg4 of the attached hand out; New Items. GASB 72
GASB issued Statement No. 72, Fair Value Measurement and Application, which prescribes how state and local governments should define and measure fair value. It also prescribes which assets and
liabilities should be measured at fair value, and expands disclosures related to fair value measurements. This standard is required to be implemented in fiscal year 2015-16.
SINGLE AUDIT On December 26, 2013, the Office of Management and Budget (“OMB”) issued the Uniform
Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, for state and local governments, non-profit entities, institutions of higher education and tribal governments. This guidance (also referred to as the “Supercircular”) supersedes the requirements from eight OMB Circulars down into one. As a result of this circular, there will be changes to the single audit requirements previously specified under OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Beyond making changes to auditor requirements the new standards required that non federal entities follow the new Cost Principles in 2 CFR 200 for any grants that were awarded after December 26, 2014. In these standards there are also significant purchasing changes to federal grants that apply July 1, 2016. The purchasing department should be familiar with these new standards, because these standards are detailed and complex. IMPLICIT RATE SUBSIDY FOR OPEBs
In Oregon, an implicit rate subsidy is required for almost all entities, due to the fact that Oregon law requires that any retiree be allowed to buy-back into their former employer’s health insurance plan. In the past, relatively small employers participating in a large, pooled health plan were sometimes exempt
from having to account for an implicit rate subsidy due to a “community-rating” exception. In general, this exception applied when the claims experience of an individual employer would have virtually no impact on the premium being charged to that employer. The accounting standards that apply to
OPEBs refer to the Actuarial Standards of Practice (ASOPs) in determining whether a community-rated situation applied. However, the newly revised ASOP 6 virtually eliminated the concept of the community-rating exception. As a result, agencies participating in community-rated plans that had previously been exempt from reporting liabilities due to an implicit rate subsidy may now be required to do so. We recommend that Management contact an actuary to determine if an actuarial study is required. SENSITIVE INFORMATION The City outsources sensitive information. While sharing sensitive data with an outside service provider may reduce costs or lead to increased efficiencies in operations, it also may create data breach risks for the City. We recommend the Council and Management review the risks regarding this
matter and consider requesting that the service provider name the City as an additional insured party, in order to mitigate such risks.
The question of whether additional insured’s can be audited and it was confirmed that this does not happen. It was suggested that this is something that could be looked into.
Allen outlined figures on pg35 which shows an assumed increase of 3.5% in PERS related liability. Corrections;
• Pg10 paragraph 2 line 6 - Add ”With the exception of the Budget Committee”
• Pg10 paragraph 5 – Stebbins questioned the increase in activity by 400%. Hanks responded that it was the increased valuation of permits not activity. Tuneberg agreed to find a better way to state this.
• Pg15 paragraph 2 line 3 - Award year needs to be changed from twenty first year to twenty sixth year.
• Pg64 - Stebbins asked if we should include something in the note to document communication with the hospital that they will pay. Kanner answered no.
• Pg66 - fix column date from 2016 to 2015.
• Pg148 - fix number of top employers reported from 5 to 4.
• Pg148 – change 2015 reference to the hospital from Ashland Community Hospital to Asante.
Public Input None Discussion Stebbins thanked staff. Moved Rosenthal Seconded Cody To accept the Parks Comprehensive Annual Financial Report as presented or amended through commission discussion.
ALL AYES MOTION APPROVED
Moved Hepford Seconded Cody To accept the City Comprehensive Annual Financial Report as presented or amended through commission discussion. ALL AYES MOTION APPROVED Commission members signed the Annual Letter. Proposed Audit Fees Tuneberg spoke to this subject and requested support and input for an extension with PR&C with the provision that we add another year before going to bid to aide with the software conversion. Support for staying with PR&C was affirmed by Hepford and Christensen. Christensen asked whether
for banking purposes we need to have a contract with one year extensions. Tuneberg responded that it is a good tool and fair and believes it works well with consultants.
Rosenthal suggested that, while there is a relationship between city and PR&C, it may be inconvenient if we were to move away from the company right now and asked if it would make sense to do a new three year contract under the same terms, giving a three year window to get through the software
conversion. Kanner pointed out that all one year options are at the city’s discretion.
Christensen asked if we have to go to bid. Tuneberg responded that we have to follow state contract guidelines.
Hepford asked if there was any question that PR&C would sign another contract with the city. Tuneberg responded he believes due to the good work of accounting and the ease of the process,
that they would accept and extension with the city. Christensen agreed with this statement. Stebbins pointed out that it is quite time consuming to do RFP’s and asked the commission to consider the practicality. Hepford and Stebbins expressed no objection to the extension. Tuneberg added that he would like to extend the current contract for two years. Kanner suggested a two year extension with an option for another year. Moved Hepford
Second Cody To make a recommendation to council that we extend the current contract with Pauly Rogers for two years with an option to extend for a third year.
ALL AYES MOTION APPROVED
Tuneberg thanked staff for their contribution to the process. Adjournment Adjourned at 2:35pm Respectfully Submitted Kristy Blackman Administrative Assistant