Loading...
HomeMy WebLinkAbout2002-08-26 ad Hoc - RMLD Governance Advisory Committee MinutesRMLD Ad Hoc Advisory Committee August 26, 2002 Meeting Meeting of the Committee was called to order by Dan Ensminger at 7:35 PM. Present at the this time were Dan Ensminger, Jim Francis, Douglas Cowell, Travis Miller and George Theophanis. John Carpenter joined the Committee at 7:55 PM. Not present was Matthew Cummings. Audit Committee members Catherine Martin, Camille Anthony, Pete Dahl were also present and they were called to order by Chair Catherine Martin at 7:50 PM a quorum being present at that time. Review of the agenda. On motion by Cowell seconded by Francis the Minutes for meeting on August 5th were approved with no discussion and no changes. By a vote of 7/0/0. On motion by Francis seconded by Cowell the Minutes for meeting on August 12"' were approved with no discussion and no changes. By a vote of 7/0/0. Bob Fournier, RMLD Accounting Manager The RMLD Accounting Manager was asked to meet with the Committee to discuss accounting procedures and reporting relationships within the RMLD financial functions. Mr. Fournier began with a brief description of his duties within the RMLD. These were described as follows: • Accounts Payable • Accounts Receivable • Billing • Budget Oversight • Pension Fund and Other Investment Funds • Internal Reporting on Finances • External Reporting on Finances Following this brief description, Mr. Fournier was asked to describe the Accounts Payable (AP) process within the RMLD. This process was described as follows: • The system is largely electronic, with all required approvals contained within the system for electronic check-off by each person. • An individual with a procurement need would begin the process by developing a requisition. • This requisition is then forwarded to that individual's manager for approval. • Upon approval, a purchase order is created and given to the selected vendor. • Upon receipt of the item, a Receipt is generated and attached to the Purchase Order. • When an Invoice is received from the vendor, the Purchase Order and Receipt are "married" to the Invoice by a clerk in Accounting. • This same AP cleric signs off on the "marriage" of the two documents. • The Invoice is forwarded to the proper mid-manager for approval. • The Invoice is then forwarded to the Purchasing Manager for review and approval. • The Invoice is then forwarded to the Accounting Manager for review and approval. • The General Manager (Acting) then receives the Invoice for review and approval (of every Invoice). • Invoices are then placed into a packet which is made available from Friday afternoon until Monday afternoon for review and approval by the members of the Board. • A form is provided to allow Board members to officially register any concerns they have about an Invoice - this is attached to the Invoice. • All approved Invoices are then consolidated into a Warrant. • This Warrant is then reviewed and approved by the Board - at least three members must sign it. The General Manager must also sign the Warrant. • The Warrant is forwarded to the Town Accountant for review and approval. • It is then consolidated into a Town Warrant which is reviewed, approved and signed for payment by the Town Manager. Mr. Fournier noted that several new requirements and policies are in place "since December 11, 2001." These include the following: • A full signature is required from each person making an approval of an Invoice. • The General Manager must review and approve each Invoice. • Any person within the approval process can now halt the payment of an item by refusing the approve it. • The Accounting Manager has a direct (dotted line) reporting relationship to the Board in addition to the day to day reporting relationship to the General Manager. Mr. Fourier was asked about the approval process for the purchase of an item. Specific concerns were raised with regards to the fact that managers are approving purchases within their own budget areas. Mr. Fournier responded that the RMLD Board has already approved those purchases in theory due to the passage of the annual budget and that more direct approvals would result in significant operational impacts (by slowing down the procurement process). Mr. Fournier was asked if there is any review of the budget or expenditures by the RMLD Board outside of the budget making process. He indicated that there was not - that budget reports were provided to managers who were expected to manage their budgets throughout the year. Mr. Fournier was asked what the payment approach was of the RMLD and he noted that they were trying to achieve payment within "Net 30" to attempt to obtain available early payment discounts. Several Committee members opined on the impacts that having the RMLD Board more directly involved in pre-approval of expenditures would result in significant "bogging down" of the procurement process. However, some concerns were raised about the fact that an item could be procured and that an Invoice could be received for an item that the Board would not approve of. Discussion of this potential risk led to a discussion of the forensic audit results. It was noted by Mr. Fournier that the Town spent "$500;000 to find a $28,000 problem..." Several Ad Hoc Committee members commented on the impacts that the problems at the RMLD might have on the Town's financials (since they are consolidated with the RMLD's), on rating agency reviews of the Town (and the resulting increase in the cost of debt service if the Town were rated lower). Members of the Audit Committee made similar comments. RMLD Chairman Bill Hughes noted that there had been mistakes made at the RMLD, including the issues that were raised in the forensic audit. Of particular concern were "rubber stampers" in the Board, that people in the RMLD were "in fear for their job" due to the former General Manager and that many things have changed since "December 11" (the last day of work of the former General Manager). The Chain-nail also noted that the RMLD is "so legitimate now its squeaky..." Mr. Fournier noted that the RMLD auditors are being asked to review expense reports and vouchers. He also noted that this is a non-standard request made in light of the findings from the forensic audits. Mr. Fournier also noted that the credit cards and gas cards have been withdrawn from all employees. He also noted that the process of providing cash advances to employees has been eliminated. He also indicated that travel has been reduced. Mr. Fournier also stated that the RMLD continues to directly pay for airfare and seminar costs. He now requires a copy of the brochure from the event to process payment. Mr. Fournier was asked what the impact would be if his position were to report to the Town Accountant rather than to the General Manager. He indicated that he could not see any benefit from making that change in reporting. Mr. Fournier was asked what the impact would be if the audit of the RMLD were to be conducted by the same as the rest of the Town. He again indicated that he could not think of any clear benefit from doing so. The Audit Committee was asked about the process of consolidating the finances of the Town. The Committee indicated that the Town's auditor signs utilizing the results from the RMLD audit and incorporates them into their consolidated financials. Questions were raised about the cost effectiveness, about the potential for bias within the RMLD audit (since the firm is hired by the General Manager and not by an independent Audit Committee). It was noted that the RMLD maintains a separate fiscal year (calendar year) than does the Town. The Chair of the RMLD noted that there are audit firms that specialize in the audit of power companies. Committee members commented that larger firms with the expertise to conduct both audits might be more likely to bid on projects that involved all aspects of the Town government and the RMLD. Mr. Fournier indicated that in his discussions with the forensic audit team they noted that the policies were in good shape - that it was the compliance with those policies by individuals that comprised the bulk of their findings. Several Committee and Audit Committee members noted that the focus of that audit had been very narrow due to the initial findings by the Inspector General. These same members indicated that they were concerned about the things that were not examined as part of the forensic audit. The Committee asked that the Town Counsel clarify something found in Section 63 of Chapter 164 - specifically text that seems to indicate that the RMLD should be operating with the same fiscal year as the Town. The Committee members also indicated in conversation that they believe it would be appropriate for members of the Ad Hoc Committee to have input into the contract language to be used for a new General Manager. On motion by Anthony seconded by Martin the Audit Committee adjourned its meeting at 9:40 PM by a vote of 4-0-0. A question was raised regarding the on-going effort to recruit for a new General Manager for the RMLD while this Committee still does its work. A Motion to Request that no General Manager be Appointed Until the Work of the Committee is Completed. A motion was made by Jim Francis seconded by Travis Miller as follows: "The RMLD Ad Hoc Committee requests that the RMLD Board not appoint a permanent General Manager until the RMLD Ad Hoc Committee has reported to Town Meeting and until such report has been acted upon by Town Meeting." An amendment was made by Doug Cowell, seconded by Jim Francis to add the following language to the end of the motion: "and until all recommendations have been evaluated and - acted upon by the appropriate bodies." A vote was taken on the amendment which passed 5-1-0. A vote was taken on the following motion, as amended: "The RMLD Ad Hoc Committee requests that the RMLD Board not appoint a permanent General Manager until the RMLD Ad Hoc Committee has reported to Town Meeting and until such report has been acted upon by Town Meeting and until all recommendations have been evaluated and acted upon by the appropriate bodies." The motion passed 6-0-0. This vote was taken at 10:15 PM. On motion by Jim Francis seconded by John Carpenter the meeting was adjourned at 10:20 PM by a vote of 6-0-0. Respectfully submitted S ecretaiy