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HomeMy WebLinkAbout2016-05-05 Audit Committee Minutes 0,4 0",40 Town of Reading Meeting Minutes board - committee - commission - council: 2012 JAN 15 AM 8: 21 Audit Committee Date: 2016-05-05 Time: 7:30 PM Building: Reading Town Hall Location: Berger Room Address: 16 Lowell Street Purpose: FYSS Audit Results and FY16 Audit Planning Attendees: Members - Present: Barry Berman, Phil B. Pacino, Paul M[Neice, Mark Dockser and Stephen Herrick Members - Not Present: Chuck Robinson and lean Borawski Others Present: Sharon Angstrom, Ed Boyd and Scott McIntire Minutes Respectfully Submitted By: Sharon Angstrom Topics of Discussion: Mr. Dockser called the meeting to order and asked the Committee if they had an opportunity to review the minutes from May 15, 2015. Mr. Pacino made a motion to accept the minutes as written with a correction to the spelling of Mr. McNelce which was seconded by Mr. MCNeice. The Audit Committee voted 4-0-1 to accept the minutes as written. Mr. Dockser Instructed Mr. McIntire to begin the review of the FY15 audit results. Mr. McIntire started by saying that in his opinion the audit went very well. He pointed out that no material journal entries were proposed and that the records are In good working order. He noted that the auditor's opinion Is found on pages 1-3 of the financial statements. He stated the opinion is that the financial statements present fairly in all material respects, the financial position of governmental and business-type activities of the Town of Reading. Mr. McIntire explained that the FY 15 financials include changes related to GASB 68 that requires the net pension liability to appear on the face of the Balance Sheet. In the past this liability was in the disclosures but did not appear as a liability on the face of the financials. Mr. McIntire then directs the Committee Members to turn to page 5 where the Manager Discussion and Analysis begins. He points out that this section gives a snapshot of the General Fund. It is a great resource as it summarizes the key elements of the General Fund. McIntire then points out on the bottom of page 10 the unassigned fund balance as of 6/30/15 was just over $11.9 million up $454k from last year but as a percent of expenditures it went from 13.2% to 14.5%. McIntire pointed out that this is a solid increase. He referenced a chart In the middle of page 11 that summarizes the balances of the stabilization accounts as of 6/30/15 as compared to 6/30/14 noting that the balances remain stable in these accounts. McIntire then pointed out that at the bottom of page 11 there is a chart that provides a 6 year trend analysis of general fund balance. For 2015 total fund balance was just over $16.98 million. The various components of the total fund balance are as follows rounded to the nearest thousand: Page 1 1 Committed for Stabilization 503 Assigned for Encumbrances 2,827 Assigned for Subsequent Year Exp. 1,800 Unassigned 11.853 Total Fund Balance $16,983 McIntire then directs the Committee to turn to pages 15-17. He notes that the Statement of Net Position and The Statement of Activities provide a long term perspective. He points out on the Statement of Net Position the unrestricted is -$20.6 million. The negative balance is attributable to adding the net pension liability of$20.3 million for governmental and $25.8 million with enterprise Included. McIntire points out that band rating agencies will not be shocked to see this liability as this in not a new liability it has been shown in the disclosures until this point. He also comments that the Town's $25.8 million in pension liability is smaller than many similar size communities. Mr. McIntire points out that there is a funding schedule that provides an annual required contribution to fully fund this liability by 2029 and the town is fully funding Its annual required contribution. Mr. McIntire pointed out on page 15 that the town's net OPEB obligation for governmental is $15.9 million and $16.3 million in total Including enterprise funds. He further explained that these figures do not represent the full OPEB liability but represent the shortfalls from the annual required liability from the funding schedule. The enterprise funds have begun to fully fund the annual required contribution for OPEB but the General Fund Is only able to fund an additional $500k over the pay as you go amount, as a result, the liability increased by $1.6 million Mr. Dockser inquired how Reading compares to other communities as far as OPEB funding. Mr. McIntire said Reading's OPEB liability is smaller than most of Its peers. Some are fully funding but that Isn't common. Mr. Berman inquired what would happen if the town funded the liability slower. Mr. McIntire explained that rating analysts comment on how quickly debt and liabilities are paid off. Faster payback is viewed as a financial strength. Mr. McIntire continued on page 18 stating that the change in net position unassigned fund balance Is $11,852,773, up approximate $550,000 over prior. Mr. McIntire also states that this is the first place the readers of the financial statements Nip to. McIntire explains that unassigned fund balance is funds available for future use. He further explains that unassigned fund balance Is not necessarily free cash; as DOR makes some adjustments. Stabilization funds are considered unassigned unless the purpose is specified. McIntire then directs the Committee to turn to pages 48-49 where the different types of fund balance is detailed out. He notes that the unassigned fund balance includes $1.5 million in stabilization funds. Assigned funds are encumbered funds or funds voted to fund next year's budget. Nothing in the General fund is classified as non-spendable. Restricted funds are federal and state grants and revolving funds. Mr. McIntire then began reviewing the Management Letter with the Committee. He began by stating that there were no significant weaknesses. The current year recommendations are to prepare for Single Audit changes and to prepare for new GASB statements regarding OPEB. Mr. Pacino then moved to accept the Audit and Management Letter. Mr. Berman seconded the motion. The Audit Committee voted unanimously (5-0) to accept the audit and management letter. The discussion was then shifted to areas of specific audit interest for the FY16 audit. McIntire then referred the members to a departmental testing listing that showed when each area was last tested. After discussion regarding the departmental tests that are due to be tested, Mr. Pacino makes a motion to test revolving funds and Town Clerk receipts. MCNeice seconded the motion. The Audit Committee voted unanimously (5-0) to select these areas for departmental testing. Page 1 2 Dockser noted he received the 3 year contract for the FY16 - FY 18 audits. Mr. McIntire explained that the fees were going up by $6k in FY16 due to increase testing of census data related to GASB 67. Mr. Berman made a motion to accept the contract, Mr. Pacino seconded the motion. The Audit Committee voted to accept the engagement letter (5-0). Mr. Berman made a motion at 9:15 to adjourn seconded by Mr. Pacino. The Audit Committee voted to adjourn (5-0). Page 1 3