Metropolitan Audit Committee - Dec 08 2009 Minutes

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Metropolitan Audit Committee December 8, 2009 Meeting Minutes Page 4 Loreen Spain, ...

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• Publié par: Acti
• Nombre de lectures: 25
• Langue: English

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METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY METROPOLITAN AUDIT COMMITTEE DECEMBER 8, 2009 MINUTES On Tuesday, December 8, 2009 at 4:00 p.m., the Metropolitan Audit Committee met in nd the Metropolitan Courthouse, 2Floor Committee Room 4. The following attended the meeting: Committee MembersOthers Bob Brannon, ChairmanMark Swann, Metropolitan Auditor Brack Reed, Vice ChairmanJoseph McGinley, Internal Audit Richard Riebeling, Director of FinanceMargaret Darby, Department of Law Walter Hunt, Metro CouncilKim McDoniel, Finance Department Phil Carr, Finance Department Committee Members AbsentEileen McGinn, KPMG Diane Neighbors, Vice MayorBrandon White, KPMG Ronnie Steine, Metro CouncilRoss Burden, KPMG

Quorum presentYes

The meeting was called to order by Bob Brannon, Committee Chairman.

Approval of Minutes

The minutes of the last meeting on Tuesday, November 10, 2009 were approved and seconded.

New Business

External auditor presentation FY 2009 CAFR (Eileen McGinnKPMG):The  report, “The Metropolitan Government of Nashville and Davidson County, External Audit ResultsYear ended June 30, 2009”, was reviewed. Eileen McGinn highlighted several points while stepping through the report. The firm followed the standards set forth by the American Institute of Certified Public Accountants and the Government Auditing Standards in preparation of the report. The audit was designed to obtain reasonable assurance that Metro’s financial statements were free of material misstatement.

The report included determination of existence of fraud and the adequacy of management controls, a listing of report deliverables (accompanying KPMG handout, page 7) and audit approach for high volume accounts (accompanying KPMG handout, page 8.) Office of Management and Budget Circular A-133 audit procedures requires audit of programs involving federal funds greater than $3 million dollars. Total funded programs equaled $148 million during the fiscal year. Because of a fiscalear 2007 material weakness, KPMG was required to audit programs that represented 50% of federal funds.

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Metro Nashville adopted Government Accounting Standards Board (GASB) 49, ccounting and Financial Reporting for Pollution Remediation Obligations, in fiscal year 2009.

In performing required communications with Metro Nashville, KPMG reviewed internal controls and identified significant deficiencies. No material weaknesses were identified.

GASB 45 requires Metro Nashville to report the funding status of post employment benefits other than pensions. The unfunded balance for general government is $1.8 billion.

KPMG identified uncorrected audit differences which included prepaid expenses, health insurance claims reserve, and the value of re-sale inventory. None of the differences were thought to be material weaknesses in part or in whole (see accompanying KPMG handout,ppendix I, Letter to the Audit Committee, page 4.)

KPMG provided recommendations on a significant deficiency to Metro Nashville management regarding regulation and inspection services (see accompanying KPMG handout, page 16.) KPMG also pointed out several information technology related control deficiencies. They mentioned Information Technology Services was incorporating other controls that lessened the overall effect of the deficiency.

Management is working on an implementation plan for GASB 51,ccounting and Financial Reporting for Intangible Assets,and GASB 53,ccounting and Financial Reporting for Derivative Instruments,which became effective on June 15, 2009.

Discussion on KraftCPAs audit of MDHA Music City Convention Center  Contracts (Mark Swann-Metropolitan Auditor):Mark Swann sent a copy of the KraftCPAs audit report on Metropolitan Development and Housing Agency (MDH ) Music City Convention Center contracts to members of the Audit Committee on Monday, November 30, 2009. Bob Brannon requested that a representative from KraftCPAs attend the next Audit Committee meeting in February 2010.

Discussion on Request for Audit of Public Art Program (Councilman Walter  Hunt): The Office of Internal Audit received a request from five Metropolitan Council members dated December 4, 2009 asking that an audit of the public art program be conducted due to pending legislation, substitute ordinance BL2009­ 568. The request was to review a fund used by the Public Art program, which has amounted to $3 million dollars over the past nine years. These funds are allocated based on a percentage of the net proceeds of bonds issued by Metro Nashville for construction projects. The council members asked for an audit of

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this fund. Mark Swann indicated that an audit of the Arts Commission was done in 2007; however, the entire fund was not reviewed at that time. Upon Mr. Bob Brannon’s question, Richard Riebeling stated that the custodian of the fund is Metro Nashville.

Mark Swann asked the Audit Committee for approval to add the audit of the Public Art Program to the Office of Internal Audit’s CY 2009 Audit Work Plan. The motion was approved.

Old Business Annual Review of Audit Committee Bylaws:Margaret Darby discussed the  paragraph titled “Scope” in the Bylaws and presented a change to the Audit Committee. A recommendation was made to bring these changes forward to the February 2010 meeting to incorporate them in the Bylaws. Annual Review of Office of Internal Audit Bylaws:See Audit Committee  Bylaws notes.

Metro Hotline Request for Proposal Status:The vendor, “The Network”, has implemented the new hotline called the Metro Nashville IntegrityLine. A phone number and website have been set up and are active and new posters are being distributed throughout Metro Nashville. An example of the poster was included in each Audit Committee member’s workbook.

Internal Audit Project Status (Mark SwannMetropolitan Auditor):Mark Swann mentioned that two Office of Internaludit reports were due in December 2009, the Traffic Citation ProcessPart A, and Capital Projects Governance Process. The Office of Internal Audit will start two audits this month, which are Arts Commission Fund and the State Trial Courts.

The department will also conduct Decision Making Tools and EnterpriseOne training for the staff this month. Bob Brannon asked if the training would award National Association of State Boards of Accountancy continuing professional education (CPE) credit, to which Mark Swann replied, “No” to the Decision Making Tools training but “Yes” to the EnterpriseOne training.

Other Administrative Matters (Mark SwannMetropolitan Auditor):Mark Swann noted that the Office of Internal Audit was operating under budget at this point. This budget information was included in the data packet to the Committee. He plans to use consulting budget dollars to fund the Metro Nashville IntegrityLine and State Trial Court audit.

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Loreen Spain, Administrative Assistant, will be retired from Metro officially on Thursday, December 10, 2009. Mark Swann will not replace Loreen, but has dispersed her duties throughout the remaining staff.

Mark Swann plans to interview all Audit Committee members concerning the risk assessment and future audit plan. The new plan is due in February 2010.

Brack Reed indicated the dates of service were wrong for Bob Brannon on the list of Committee members. His renewed term should be for four years.

Kim McDoniel will coordinate the request for proposal effort for the selection of a firm for the Metro financial and single audit contract.

Consideration of Items for Future Meetings

The Audit Committee will review the Consolidated Annual Financial Report (CAFR) and PMG report at the next meeting in February 2010.

Adjournment

The meeting was adjourned at 4:57 p.m. The next meeting date was set for Tuesda, February 9, 2010.