HomeMy WebLinkAbout2013-09-19 Audit Committee Minutesw � „�;ING. Mr{SS•
Audit Committee Meeting 9 A 9`
September 19, 2013
The meeting convened at 7:35 p.m. in the Town Hall Conference Room, 16 Lowell Street, Reading,
Massachusetts. Present were Chairman Barry Berman and Audit Committee members Paul
McNeice, Phil B. Pacino and Stephen Herrick. Also present were Town Accountant Sharon
Angstrom as well as Ed Boyd and Scott McIntire, from Melanson Heath.
Barry Berman called the meeting to order, he started the discussion with the first agenda item of
approving the February 21, 2013 minutes. There was some discussion if the minutes could be
approved as only two members that were present the night of the meeting were in attendance.
Herrick made a motion to accept the minutes which was seconded by Pacino, two members voted to
accept the minutes and two abstained from voting. Thus the minutes will be presented for vote again
at the next audit committee meeting.
Berman then instructed McIntire to start the discussion on the next agenda item involving selecting
areas of specific audit emphasis. McIntire began by stating that the FY13 audit is very much
underway as the town has already presented the majority of the items on the audit request list. Audit
field work is scheduled to begin on Monday.
McIntire explained that receipts are typically the primary area of focus when selecting
departments/areas to test because they have the greatest risk for loss. The committee was instructed
to review the provided listing of departmental testing that had been done over the last several years.
Berman inquired of McIntire what areas he would recommend. McIntire stated school lunch and
recreation have not been tested in the last two years thus he would recommend them for this year's
testing.
Berman stated he felt recreation was a good area to Iook at as he felt receipts are received in this area
in a variety of different ways. McIntire agreed and stated that it is likely there is some cash collected
as well as checks.
Herrick stated he felt school lunch seems like another good area of focus because our school lunch
card program was put in place to reduce the risk of loss and it would be nice to see how things are
going.
The committee continued to review the other areas listed and Boyd noted that Treasurer /Collector is
not listed as this area is tested every year due to the volume of receipts. Berman inquired if people
actually pay their taxes in cash? Angstrom replied that it is more common than you would imagine
for people to come in and pay tax, water, sewer, and excise bills in cash.
Berman stated that he believed the compost stickers sold by the police department are cash only. He
felt this was odd and inquired if the audit committee has the right to recommend that checks only be
taken for these purchases. McIntire stated that this was an area that was looked at in the FYI audit
and that it is much more likely that a person would have cash, debit card or credit card on them than
a check. Angstrom stated it could be recommended to the Town Manager but the decision would be
his to make.
Herrick inquired if the town currently accepts credit cards. Angstrom responded that we do accept
credit card payments for payments for Fall Street Faire payments but not for taxes because there are
fees involved that would result in lost revenues to the town.
Herrick inquired of the auditors if they see less fraud when credit cards are involved. McIntire stated
that cash always has the highest risk. Herrick stated the committee should make a recommendation
that no cash be accepted. McNeice stated that you can't accept cash for some transactions and not for
others. Pacino stated the answer may be to request the auditors make a management letter comment
about accepting payments in cash.
Upon further review of the testing performed in recent years McNeice inquired why two areas were
tested two years in a row. Boyd stated that the area was likely tested and recommendations were
given. The following year the area would then be looked at again to ensure the recommendations had
been executed.
McNeice inquired how much time is spent on controls as opposed to substantive testing. McIntire
stated about 40% of the time is spent on controls. McNeice inquired if the town has any formal
policies for reviewing areas. Angstrom stated that each month revenues are analyzed against budget
and to the same time the prior year. This usually points me in the direction of areas that may need
attention. Inquiries are regularly made of department heads if receipts lag behind budget or prior
year. Some receipts are not as consistent from year to year than others.
Berman brought up the area of ambulance billing and that he believed the fire chief does the billing
himself and the town was looking into a third party to take it over. He inquired if McIntire could
provide recommendations regarding how other communities handle ambulance billing. McIntire
stated it would be difficult to make a recommendation but that he does feel that most communities
use third party. Berman inquired if the ambulance revenues are shown. McIntire stated our
ambulance revenues are shown net of abatements.
Pacino made a motion to instruct the auditors to test school lunch and recreation as part of the FYI
audit, Herrick seconded the motion. The vote was unanimously accepted.
Berman inquired when the auditors would likely want to meet again to go over the results of the
audit. McIntire stated that January would be a good time. Pacino stated it should be noted that the
committee would be willing to meet earlier if an emergency were to be identified.
Berman instructed Angstrom to begin trying to identify a meeting date in January and to reach out to
the school committee to see when they will appoint a new audit committee member to replace Rob
Spadafora who recently moved out of the country. Angstrom agreed to do so. Pacino instructed
Angstrom to ask Laura Gemme if the minutes would need to be re -voted or if she would accept thorn
with the two member approval.
Motion to adiourn was made by Phil Pacino and seconded by Stephen Herrick, the Audit
Committee voted unanimous to adiourn.
Respectfully submitted,
Sharon Angstrom