Guest sullinss Posted December 1, 2009 Report Share Posted December 1, 2009 Proceedings of the Audit Committee School District No. 2, Yellowstone County High School District No. 2, Yellowstone County Billings, Montana November 23, 2009 Call to Order Chair Marcy Mutch called the Audit Committee to order at 11:35 a.m. on Monday, November 23, 2009 in Room 213 of the Lincoln Center. Committee members in attendance were Marcy Mutch, Jack Eagle, Joyce Weber, and Peter Gesuale. Members Malcolm Goodrich and Laura Bailey were absent. Also attending were Chief Financial Officer Thomas Harper, Auditors Edie Hanson and John Jacobsen of Eide Bailly LLP, Partner in Charge Barb Aasen of Eide Bailey LLP was present via speakerphone, District Clerk/Internal Auditor Leo Hudetz, and Accountant Alan Staszcuk. Communication From the Public There was no public comment. Review Draft Comprehensive Annual Financial Report (CAFR) for Year Ended 2009 Barb Aasen reviewed the Independent Auditors’ Report saying it was a clear opinion and the financial statements were prepared in accordance with generally accepted accounting principles and are materially correct in that regard. There has been no real change in how the District operated last year from a financial accounting standpoint. The Report on Internal Control over Financial Reporting and on Compliance and on Other Matters Performed in Accordance with Government Auditing Standards reported there were no findings or comments in the financial statements. The Report on Internal Control over Compliance Requirements for Federal programs for the A-133 reported one finding, #09-1, for Title I that relates to the District’s procurement card. Not all tested expenditures had proper approval. Part of our internal control structure is that every item has different levels of authority and signatures. John Jacobsen clarified that they were allowable expenditures but lacked proper approval. Barb reported all prior year Federal findings have been resolved. The Management Letter, which is all required communication needed to be made to those charged with managing government funds, contained nothing unusual. Thomas added his response to finding #09-1 would probably be the need for remedial training. Thomas asked the Committee’s opinion on how to deal with compensated absence and service credit termination in the MD&A section of the CAFR. Most of the government restricted net assets deficit of $12.7M is due to these two items. The source of funding for these two items is the General Fund and the Retirement Fund. General Fund Reserves are about 6%. The cap in the General Fund limits the amount we can levy. Our budget under the cap will not allow us to fund those liabilities. We met the minimum disclosure requirement in the footnote; but, do we need to address it further in the MD&A? Assuming we can meet our current obligations on a pay-as-you-go method this deficit will continue to increase as we accrue it over the next 30 years. Marcy thinks we should add language about unfunded liability under the District-wide Financial Analysis section in the MD&A since it is a huge factor in our financial health. Barb said we have $5.3M in our general fund unreserved fund balance and total expenditures in the general fund of $94M. We have less than one month reserves on hand which is a really small amount for a government our size. We need to look at that negative net asset balance in two ways: 1) we have a big unfunded liability that’s created the negative net asset balance; and, 2) we don’t have much of a reserve in our general fund fund balance to counteract that. We do not have money to prefund those liabilities. Barb thinks the financial planning of the District needs to consider this liability and whether the Board relies on this committee to bring forward this issue that relates to the audit. John agreed it may not be the mission statement of this committee but Trustee members on the Committee can take this message back to the Board, and if they have further questions the auditors would be willing to help them look at it. Peter asked if State cap limits for raising revenue was an issue that was considered in the minimum disclosure requirements. Barb said the fact the State puts a cap on our levy ability is not a required disclosure. You can add that information in the MD&A in the Economic Indicators section. Committee members agree it’s worth disclosing in the MD&A. Barb said it is a good idea to have a fund balance policy. GFOA recommends a 15% fund balance which is about two months of operating expenses. The State of Montana has set a 10% maximum fund balance on the general funds. Thomas said we have draft fund balance policies. Peter said the Board has a multiple-year commitment to increase reserves since it also affects our bonding ability. Approve Minutes of October 15, 2009 Peter Gesuale moved to recommend the Board approve the Audit Committee minutes of October 15, 2009. Joyce Weber seconded the motion. The motion carried unanimously. Review Draft Comprehensive Annual Financial Report (CAFR) for Year Ended 2009 (continued) Committee members reviewed the CAFR page by page. Editing will be completed and the second draft CAFR will be reviewed by Committee members on Friday, December 04, 2009 at 11:30 a.m. at the Lincoln Center. Adjournment There being no further business, the meeting was adjourned at 1:28 p.m. Marcy Mutch, Chair Sherrill Sullins, Recorder Link to comment Share on other sites More sharing options...
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