Loading...
HomeMy WebLinkAboutAudit Committee Minutes 12-14-2004 Deschutes County - Audit Committee MINUTES - 12/14/2004 Re: Deschutes County Audit Committee Meeting Minutes – Tuesday, December 14, 2004 Committee Members Present: Commissioner Dennis Luke; Scot Langton, Assessor; Tom Anderson, Community Development; Barry Jordan, Jade Mayer, Jim Keller, and James Kerfoot, Public Sector. Others present were: Commissioners Tom DeWolf and Mike Daly; Marty Wynne and Jeanine Faria, Finance; Mike Maier, County Administrator; and David Givans, County Internal Auditor. Guests present for a portion of the meeting from Harrigan Price Fronk & Co. were Candace Fronk, Wes Price, Jennifer Welander, and Richard Bailey. Barry Jordan called the meeting to order at 12:15 p.m. Introductions Introductions were made for the benefit of a new member to the Committee. Scot Langton, with the Assessor’s Office will be taking the place of Les Stiles. Presentation of County’s Comprehensive Annual Financial Report Candace Fronk with Harrigan Price Fronk & Co LLP reviewed the Financial Report. She said Jeanine Faria with County Finance Department compiled most of the documentation that was needed for the report. Ms. Fronk said that their responsibility is to give opinions for the basic financial statement. Key elements to the report are: making sure that there is support for all documentation, verify assets, and perform liabilities sampling. The reports include all the Service Districts. The accounting policies are set by general accepted accounting principles. There are times that there are choices or changes to the accounting principles. Those changes are something that could be brought to the Audit Committee. The report also includes: estimates, depreciation (considered an estimate), Solid Waste closure (considered an estimate.) These are the kinds of things that could come before an Audit Committee. Ms. Fronk said that there were adjustments they did not make. They went through the list with Ms. Faria. There were a few year end accruals that will show up next year. Minutes of Audit Committee Meeting Tuesday, December 14, 2004 Page 1 of 5 Ms. Fronk discussed some adjustments for a couple of categories. One was PERS bonds. For budget purposes it is an expenditure, for government purposes it is an asset that gets amortized out. The other change was deferred revenue. In the real world, once you bill somebody as a receivable, it is revenue. In the world of government, you pretty well take what you get, plus what comes in the next 60 days as revenue. That is the budget basis way of doing things. On the government wide statements, you get to count the whole thing as revenue. There are some various tax receivables and notes receivable that are fully recognized on the government wide statements. That is added as revenue for prior year and it is a pretty big number. Items that were moved to the trust funds for accounting purposes were asset forfeitures and Central Oregon Drug Enforcement funds. Those were basically other people’s money. A concern Ms. Fronk had was that Ms. Faria developed a spreadsheet to account for changes required in preparing the fund statements. These expenditures are not part of the accounting system and are developed solely by the experience of Ms. Faria. Ms. Faria is working on a solution within the current accounting system to solve this issue. Ms. Fronk also had a concern that things don’t always get to the accounting department. It is a communication issue. She referred to things like Healing Health Campus LLC, La Pine Sewer and New Neighborhood Development. Another example was Road Dept. and Millican Road. The agreement with Crook County to give them rock from ODOT and enter into a long term note paid over time, needs to be recorded. Ms. Fronk said that another department that they reviewed was Property Management. It was not because of activity but because there is a lot of different land, parcels, and buildings that the County owns. They did some balance testing, looking for historical cost basis and checking that the ownership is what everyone thinks it is. Ms. Fronk said they felt Mr. Givans could do a little more investigation in the area of property that is no longer owned but still being recorded as owned on one of the fixed asset lists. Ms. Fronk said that County net assets are going up. This is a positive factor for financial stability of the County. Some areas were reserves have been built up is the PERS reserve, proactively trying to set money aside for potential litigation. Community Development has grown, the self insurance fund has done well in setting money aside for future claims, and there are reserves for the Solid Waste landfill closure. Some reserves that have gone down are the Sheriff’s Office fund that was spent down by a considerable amount more than last year and Mr. Maier said that spending down will probably be seen with the Mental Health Department as well with employee’s going back on a 40 hour week. Ms. Fronk said the County has enough working capital in the general fund to get through until the revenues from taxes start showing up. Minutes of Audit Committee Meeting Tuesday, December 14, 2004 Page 2 of 5 Jennifer Welander did some additional procedures – -Sheriff’s Office. She looked at their collections of revenue. Richard Bailey was out there a couple of times making sure that their controls over receipting and getting that money deposited and recorded properly had good segregation of duties and good checks and balances. -Mental Health Department- Ms. Welander went out and did some checks on the billing system. She found a couple of areas that she thought there could be some improvement made. - Road Department – Ms. Welander went out to look at part of their cost accounting system because they have to make a comment for the Secretary of State. They are required to have a cost accounting system whenever they are doing work for other people (public improvements) and need to be able to show their costs as being competitive. This is an area that might have some room for improvement if there are variances from those standard costs. If they were a little bit off one year then they could find out why and move that into their standard costs system for the next year. Ms. Fronk said that they looked fairly heavy into fixed assets. There had not been a lot of detailed auditing of that before. They looked at acquisitions for the current year and what departments had on their lists for prior years. One of the staff accountants from her department went to a lot of the County Departments and asked to see various items on the list. They felt that the Department heads knew that they were accountable for the items on their lists. Marty Wynne said that for inventory purposes, the County typically uses $1,500.00 (Capital Outlay requests are required) but will go lower if an item is theft sensitive. Ms. Fronk said the review actually went pretty well. Ms. Fronk said they did some single audits. Single audits are for everyone who spends more than $500,000.00. Some single audits were: - Road and Schools, including Title III money. - CDD block grant testing which involved 3 different projects – Alyce Hatch Center, Healing Health Campus, and funds to COCAAN for Housing Rehabilitation. - WIC – Ms. Welander did some compliance testing to see how they intake WIC participants and how they manage them through the processes to make sure they are spending the money in accordance with the rules. Ms. Welander said they came out alright. Ms. Fronk said the only compliance finding was regarding expenditures exceeding appropriations. She felt the County could do better and it was suggested that this should definitely be a focus of the 04/05 review. Overall, the County scored pretty well. Minutes of Audit Committee Meeting Tuesday, December 14, 2004 Page 3 of 5 At 1:10 p.m. Tom Anderson with Community Development Department joined the meeting. Tom will be filling in for George Read. Commissioner’s DeWolf and Daly left the meeting. Members of Price, Fronk and Harrigan also left the meeting. Approval of Minutes from the meeting on September 9th Jim Keller: Moved Approval of the Minutes from September 9, 2004. James Kerfoot: Second. VOTE: Unanimous Approval. Audit Committee Member Roles/Terms Barry Jordan said he had been the Chair of the Committee for 2 years. He said he would remain in that position if no one else could. Jade Mayer volunteered to fill the Chair position. Jim Keller: Moved Approval for Jade Mayer to serve as Committee Chair. James Kerfoot: Second. VOTE: Unanimous Approval. Review of Accomplishments David Givans gave an overview of accomplishments. (See Attached document marked as Exhibit A) Status of Current Audit Projects - Mental Health – Reviewing business services and contract issues - Surveyor – Mr. Givans was at the office once and will be going back on December 30th for more review. - Finance/Tax – Mr. Givans did interviews with staff and developed recommendations (draft.) Minutes of Audit Committee Meeting Tuesday, December 14, 2004 Page 4 of 5 - Policy P2003-097 – Misconduct Policy. Mr. Givans has been working on the policy. It has been broadened and procedures have been added. If Mike Maier receives complaints, he can direct them to Mr. Givans or to someone else. - Indirect Cost Plan Review and Survey – Mr. Givans will be presenting the Survey results to the Board of County Commissioners today for their review. Mr. Maier stated that there is dissatisfaction by some of the Departments on Indirect Costs and said that an Indirect Cost budget needs to be done before the other Departments do their budgets. - Work on Charter – Mr. Kerfoot asked what is involved. Mr. Givans said the Charter is an Ordinance. He said Mark Pilliod, with County Counsel, has a few questions and they will be going over the Charter. Being no further issues brought before the Committee, Barry Jordan adjourned the meeting a 2:40 p.m. Respectfully submitted, __________________ Connie Thomas Senior Secretary Minutes of Audit Committee Meeting Tuesday, December 14, 2004 Page 5 of 5