Oct 17th Audit Budget Finance Committee Minutes

Jody

Description

AUDIT, BUDGET AND FINANCE COMMITTEE MEETING October 17, 2002 MINUTES OF THE MEETING ATTENDEES: Commissioners: Patricia Scates, Chair John Protopappas (excused) Frank Kiang Staff: John Betterton Patti Heilbron Doug Waring Oliviér Flewellen Ray King Joe Wong John Glover Fred Rickert Tay Yoshitani Visitors: Lance Bateman Gene Yanno, Yanno and Associates Ian Fleming, Price Waterhouse Coppers Agenda: 1. Finance Division Briefing ISO 9000 Implementation Finance Staffing 2. Review June 30, 2002 Financial Statements and Management Letter 3. Board Letters for Committee’s Review MIS Software Purchasing Open Account Agreements Contract for Finance Services 4. Review Series N Refunding Revenue Bonds The meeting was called to order at 12:17 p.m. Finance Division Briefing ISO 9000 Implementation Fred Rickert, CFO, reported that significant progress has been made in producing the procedures required for ISO 9000 certification for the Finance Division. He also reported that it became necessary to divert the consultant initially hired for Finance to assist the Maritime Division, which is falling behind in procedure writing. As a result, compensation approved for the consultant, D Squared, is being consumed at a much greater rate than anticipated and a supplement to the firm’s contract will likely be required to complete the assignment. The Committee ...

Informations

• Publié par: Phiom
• Nombre de lectures: 32
• Langue: English

Extrait

AUDIT, BUDGET AND FINANCE COMMITTEE MEETING

October 17, 2002

MINUTES OF THE MEETING

ATTENDEES:

Commissioners:

Patricia Scates, Chair

John Protopappas (excused)

Frank Kiang

Staff:

John Betterton

Oliviér Flewellen

John Glover

Patti Heilbron

Ray King

Fred Rickert

Doug Waring

Joe Wong

Tay Yoshitani

Visitors:

Lance Bateman

Gene Yanno, Yanno and Associates

Ian Fleming, Price Waterhouse Coppers

Agenda:

1. Finance Division Briefing

ISO 9000 Implementation

Finance Staffing

2.

Review June 30, 2002 Financial Statements and Management Letter

3.

Board Letters for Committee’s Review

MIS Software

Purchasing Open Account Agreements

Contract for Finance Services

4.

Review Series N Refunding Revenue Bonds

The meeting was called to order at 12:17 p.m.

Finance Division Briefing

ISO 9000 Implementation

Fred Rickert, CFO, reported that significant progress has been made in producing the

procedures required for ISO 9000 certification for the Finance Division.

He also

reported that it became necessary to divert the consultant initially hired for Finance to

assist the Maritime Division, which is falling behind in procedure writing.

As a result,

compensation approved for the consultant, D Squared, is being consumed at a much

greater rate than anticipated and a supplement to the firm’s contract will likely be

required to complete the assignment.

The Committee inquired about plans for

updating the procedures and the need for accountability, and then recommended that

the procedures be reviewed cyclically.

Rickert indicated that ISO required

independent semi-annual audits in order to maintain certification.

The Committee

requested regular updates on the progress of the certification program.

It also

commented that while it is commendable of Rickert to take the initiative to get ISO

certification, there is no required deadline for it and every effort should be made to

correct deficiencies already known before requesting any additional resources.

Audit, Budget and Finance Committee Meeting

Page 2

October 17, 2002

Finance Staffing

Rickert reported that he would like to recommend retaining Becky Taylor of Taylor and

Associates, a former Port Commissioner, to perform an executive search for the open

position of Financial Planning Manager.

This position supervises the preparation of the

annual operating and capital budgets, cash management, and debt administration.

Rickert anticipates that the search will take 6 to 9 months.

The Committee

commented that considering Becky Taylor for this assignment was permitted under

the code of ethics since it has been more than one year since she held the office of

Commissioner.

Rickert stated that he would submit an agenda item for this at the

November 19, 2002 Board meeting.

Review June 30, 2002 Financial Statements and Management Letter

Price Waterhouse Coopers, the Port’s external auditors, presented the final Audited

Financial Statements for the Year ended June 30, 2002 to the Committee.

Ian

Fleming, Engagement Manager for Price Waterhouse Coopers, commented that the

new format required by Government Accounting Standards Board Statement number

34 had been implemented.

The management letter is still in draft form and was not

presented.

Board Letters for the Committee’s Review

Purchasing Open Account Agreement

Ray King, Purchasing Manager, presented the annual open account agreements for a

variety of supplies, equipment and services.

It amounts to $3.6 million for the fiscal

year ending June 30, 2003.

The Committee requested that the previous fiscal year’s

2001-2002 costs be provided for comparison.

MIS Software

Rickert reported that the MIS department planned to upgrade all personal computers

to Microsoft Windows XP.

This cost was anticipated in the operating budget for fiscal

year 2003.

An opportunity arose to acquire the necessary licenses at a 50% discount,

a savings of $224,000 if the order was placed by July 31, 2002.

The order was placed

in anticipation of Board approval in August 2002.

The agenda item that included this

transaction was pulled for other reasons.

The Committee inquired if this item was

included in the MIS strategic plan.

John Glover, Deputy Executive Director, replied

that it was.

Both of the items are recommended for approval.

Contract for Finance Services

Rickert reported that he will request Board approval to extend the contract for the

financial consulting services of Lance Bateman.

He anticipates the extension will not

exceed 2 years.

During the last 18 months, Bateman provided consulting services for

the last 3 Bond sales; including managing the proceeds of the 2002 Series K, which

saved $5 million in arbitrage earnings retained by the Port; the successful sale of the

$620 million bond issue, which facilitated the Port’s expansion program; and the

successful Series N Bond issue, which refunded the 1992 Series E Bonds and resulted

in a Net Present Value savings of $24 million. Bateman has acted as interim Financial

Audit, Budget and Finance Committee Meeting

Page 3

October 17, 2002

Contract for Finance Services – (continued)

Planning Manager until a permanent employee can be found.

Extending his contract

will provide a transition period when a new Financial Planning Manager is hired; in

addition to implementing an in-house CIP feasibility analysis system, a Cash Flow

forecasting system, and the design and implementation of controls over bond proceed

spending requested by the Committee.

Rickert stated that he will bring an agenda

item before the Board for approval at the November 19, 2002 meeting.

Executive Directors Report

Tay Yoshitani, Executive Director, reported that he wished to get back to the

Committee on a new automobile policy that was precipitated by their comments as a

result of a recent request to purchase a number of sedans.

While the new policy is

not popular with everyone involved, it is consistent with other local agencies, including

the City of Oakland.

Joe Wong, Director of Engineering, presented an overview of the

new auto policy, which is anticipated to reduce the sedan fleet size, saving

approximately $50,000 per year in operating expenses and $500,000 in capital

spending over the next 2 years.

Many of the assigned vehicles would be replaced with

automobile allowances and mileage reimbursement for use of employees’ personal

automobiles.

The Committee inquired if this would present any liability insurance

problems.

Wong responded that it would not because employees are required to meet

minimum insurance requirements at their own expense before qualifying for

automobile allowance.

Action Items Carried Forward

Request:

Establish ground rules for control over commitment of bond

proceeds

Due:

November 21, 2002

Requestor:

Commissioner Scates

Responsible:

Fred Rickert

Action Items for Future Follow-up

Request: Present Portwide cash flow forecast

Due:

November 21, 2002

Requestor:

Commissioner Scates

Responsible:

Fred Rickert

Request:

Provide FY 2002 costs for open account purchases

Due:

October 18, 2002

Requestor:

Commissioner Scates

Responsible:

Fred Rickert

Request:

Present Board Agenda for new automobile policy

Due:

November 5, 2002

Requestor:

Commissioner Scates

Responsible:

Joe Wong

Audit, Budget and Finance Committee Meeting

Page 4

October 17, 2002

Request:

Present Board Agenda item to award contract to Taylor and

Associates for search for Financial Planning Manager

Due:

November 19, 2002

Requestor:

Commissioner Scates

Responsible:

Fred Rickert

Request:

Present Board Agenda item to extend Lance Bateman’s contract for

Financial Services for 2 years

Due:

November 19, 2002

Requestor:

Commissioner Scates

Responsible:

Fred Rickert

Request:

Schedule cyclical financial procedures review

Due:

November 21, 2002

Requestor:

Commissioner Kiang

Responsible:

Fred Rickert

Meeting went into closed session at 12:19 p.m.

Meeting returned to open session at 1:40 p.m.

Meeting was adjourned at 2:09 p.m.

Next meeting is scheduled for November 21, 2002 at 12:00 noon in the Board Room.