Audit Minutes 02-06-06

Jon O'Bergh

Informations

• Publié par: Veam
• Nombre de lectures: 21
• Langue: English

Extrait

FOOTHILL-DE ANZA COMMUNITY COLLEGE DISTRICT Office of the Chancellor

AUDIT & FINANCE COMMITTEE MEETING MINUTES FEBRUARY 6, 2006

Present Robert Grimm, Pat Millar, Kent Peterson, Hal Plotkin, Bruce Swenson, Delia Ybarra Absent none Others Mike Brandy, Claudette Brero-Gow, Debbie Budd, Bernadine Fong, Jim Klingensmith, Margaret Michaelis, Jon OBergh, Hector Quinonez, Bernata Slater, Tonette Torres, Bret Watson, Gloria Wu

1. INTERVIEWSFOR EXTERNAL AUDIT FIRM AND RECOMMENDATION TO BOARD OF TRUSTEES The Committee discussed the process for asking the interview questions and, at Plotkins suggestion, agreed to ask the same initial questions to each firm with follow-up questions as needed. Eachof the four audit firms were then interviewed sequentially.Paul Peterson, representing Armanino McKenna, gave a brief statement and responded to questions.Tom Perry-Smith, Justin Williams and Tina Trice from Perry-Smith LLP next gave a brief statement and responded to questions.Rudy Vargas of Vargas & Company next gave a brief statement and responded to questions.Finally, Terri Montgomery, representing Vavrinek, Trine & Day, gave a brief statement and responded to questions. Following the interviews, Plotkin initiated discussion by asking input on whether the Committee should recommend a policy of mandatory rotation of audit firms.Brandy discussed the pros and cons of such an approach, recommending a Request for Proposal (RFP) process every five years but no mandatory rotation.Committee members spoke in favor of a five-year RFP process and agreed a mandatory rotation was not necessary, although Peterson supported the idea of periodically changing the partners who manage the audit.Following up on Petersons comment, Grimm and Plotkin agreed it is important to guard against long-term relationships in which the possibility of collusion may arise.Ybarra pointed out the importance of cost considerations in selecting a firm.Plotkin asked Brandy to follow up on the Committees support of a five-year RFP process, and Brandy said he would initiate the change in Board policy. The Committee discussed each of the audit firms and their proposals.It was M/S/C (Swenson/Millar) to vote between Perry-Smith LLP and Vavrinek, Trine & Day.Plotkin asked for a show of hands for each of the two audit firms.Grimm, Peterson and Swenson voted for Perry-Smith LLP; Millar, Plotkin and Ybarra voted for Vavrinek, Trine & Day.Plotkin asked if anyone wished to reconsider his or her vote in view of the tie, but none wished to reconsider. Plotkin then said he would change his vote to Perry-Smith LLP to break the tie, noting the strengths of both firms and the fact that the Committee would be happy with either choice.It was M/S/C (Swenson/Grimm) to take a second vote.Grimm, Peterson, Plotkin and Swenson voted for Perry-Smith LLP; Millar and Ybarra voted for Vavrinek, Trine & Day.Plotkin thus noted that the Committees recommendation to the Board would be to award a contract to Perry-Smith LLP.

Audit & Finance Committee Minutes, 2/6/06Page 2 Brandy pointed out that the District could contract with Vavrinek, Trine & Day to perform the operational audits. Plotkin announced a five-minute recess.

2. PUBLICHEARING No members of the public wished to address the Committee regarding items not on the agenda.

3. APPROVALOF MINUTES It was M/S/C (Peterson/Grimm) to approve the minutes of the November 7, 2005 meeting. Swenson and Ybarra abstained since they were not present at that meeting.

4. MEASUREE CONSTRUCTION PROJECTS UPDATE / NEXT CONSTRUCTION TOUR Klingensmith provided an update on construction projects at each campus.He reported that the Foothill Campus Center Project was three months behind schedule but this had not yet caused any problem with the project budget.Schulze cautioned that he anticipated a problem at the end of the project, however, so a construction analyst specialist has been hired as a strategy to lay the groundwork for a defense against additional costs.Plotkin asked about the magnitude of the disagreement, and Brero-Gow responded that the District is in the process of negotiating a 28-day delay.Swenson asked how the delay might affect the opening of school in the fall, and Budd responded. Klingensmith reported that problems with Cupertino and CalTRANS were being ironed out on the De Anza Campus Entries project.Brandy reported that corrective work is planned this summer for the De Anza Science Center; if the problem cannot be rectified during the summer, it will need to continue in summer 2007.Funding for the corrective action is coming out of other projects. Brero-Gow proposed a construction tour in April, and it was agreed that this should coincide with the next meeting.Grimm distributed a Measure E Progress Report.

5. MEASUREE OVERHEAD COSTS AND RESPONSE TO FINDINGS Quinonez reviewed management responses to audit findings for the year ending June 30, 2005, noting that all recommendations had been implemented except Item 6 (Federal Student Financial Aid Work Study) which is in the process of being implemented and should be completed by June 30, 2006.Swenson asked about efforts to ensure that the situation which led to the finding does not recur.Budd and Quinonez explained that there will be an early warning system and mid-year review to ensure all of the funds are being allocated. De Anza Cash Handling Operational Audit Quinonez reviewed the management response to the finding in the operational audit regarding cash handling at De Anza, noting that all four recommendations had been implemented.Plotkin expressed concern about food services sales and continued instances where customers are not offered receipts.Hawk said there is a point-of-sale receipt policy and inventory tracking

Audit & Finance Committee Minutes, 2/6/06Page 3 mechanisms, but she will look into the matter.Plotkin suggested signage to encourage customers to ask for receipts. Measure E Overhead Operational Audit Quinonez reviewed the management response to the operational audit regarding Measure E overhead. Heexplained that the documentation recommendation had been implemented.He also noted that the records organization recommendation had been implemented and verified, contrary to the notation on the chart. Brandy mentioned that additional operational audits for De Anza Cash Handling and Pro-Card Activity are scheduled for this year.

6. 2006-07BUDGET UPDATE Brandy provided a brief update regarding the current year budget, reporting that the District is close to meeting enrollment projections and expects to end the year with the budget remaining in balance. Hereviewed developments regarding the 2006-07 budget and the governors proposal with its positive impact for the District.However, there are some areas of concern, including increased utilities expenses, the use of one-time dollars to fund medical benefits increases, ongoing funding for the unfunded retiree medical benefit, the cost of regular step and column salary increases above the amount of the state COLA, and enrollment.Swenson suggested that the Audit & Finance Committee, as well as the Board, discuss how to use new revenue streams, and Brandy said he will initiate these discussions in the spring.

7. UPDATEON POSSIBLE BOND MEASURE Brandy reviewed the purpose of the proposed bond measure, which is to provide long-term funding stability for equipment and major maintenance needs.He reviewed elements of the bond and a summary of projects.

8. NEXTMEETING The next meeting was scheduled for Monday, April 10 at 3:30 p.m., preceded by a tour of Measure E projects. CALENDAR OF PENDING ITEMS Measure E Progress Report (Schulze).....................................................................April 10, 2006 Discussion of How to Use New Revenue Streams .................................................................TBA Revised Board Policy 9123, Audit & Finance Committee......................................................TBA Board Policy 3153, Audit...................................................................................................... TBA Pro-Card Activity Operational Audit (Brandy) ......................................................................TBA Cash Handling Operational Audit (Brandy ............................................................................TBA Small and Local Business Procurement................................................................................. TBA jo Approved 4/10/06