Guest sullinss Posted June 10, 2011 Report Share Posted June 10, 2011 Proceedings of the Audit Committee School District No. 2, Yellowstone County High School District No. 2, Yellowstone County Billings, Montana May 27, 2011 Call to Order Chair Marcy Mutch called the Audit Committee to order at 12:04 p.m. on Friday, May 27, 2011 in Room 213 of the Lincoln Center. Committee members in attendance were Marcy Mutch, Laura Bailey, Lindy Graves and Joyce Weber. Also attending were Chief Financial Officer Thomas Harper, District Clerk Leo Hudetz, and District Controller Sheri Weidinger. Communication From the Public There was no public comment. Approve Minutes of December 1, 2010 Laura Bailey requested that one word be changed in the December 1, 2010 minutes: - In the second sentence of the second paragraph relating to “Teleconference with Susann Hartwig and Kim Higgins of Eide Bailley, Denver, CO,” the request was made to change from “material deficiency” to “material weakness.” Laura Bailey motioned and Joyce Weber seconded to approve the December 1, 2010 minutes, pending the aforementioned correction. All voted in favor. Motion passed unanimously. Community Member for Audit Committee Given that Joyce Weber is still a member of the Board of Trustees through June 30, 2011, a motion for her adoption onto the Audit Committee was not needed. This agenda item was done away with. Audit Contract for Fiscal Years 2011, 2012, and 2013 Thomas Harper started the discussion with a brief historical overview of the external auditor contract throughout the seven years he has been with the District. At least once every three years, the District is required to review and establish a new contract for external audit review services. The District awarded the external audit service contract to Eide Bailly in 2005 for fiscal years 2005 – 2007; in 2007 the contract was extended for an additional three-year period, fiscal years 2008 – 2010. Mr. Harper noted a change he has seen through this year’s Request for Proposals (RFP) process: the pool of accounting firms in Montana who specialize in governmental accounting and auditing, equipped with the technical expertise required by the Billings Public Schools is shrinking. Due to the size and complexity of the District’s financial systems, the increasingly complex regulatory environment in which the District operates, and the shrinking number of firms with the required expertise, the annual costs of external audit services are expected to increase rather dramatically. Four companies responded to the Audit RFP published in March 2011 for contract period beginning July 1, 2011. Included with the committee agenda were two brief proposal comparison documents, one based on costs/labor estimates derived from the proposals received, the second based on staff evaluation of the proposals received. Chair Marcy Mutch brought up a number of points that factor into the Committee’s consideration of the Audit Services proposals, in particular Mr. Harper’s employment transition from his current Billings Public Schools Chief Financial Officer position as accepted by the Board of Trustees at their May 16, 2011 Board Meeting. Mr. Harper’s resignation will be effective June 30, 2011. The Business Manager position is currently listed as an open position on the Billings Public Schools employment website; applications will be accepted through June 10, 2011. Chair Mutch expressed hesitation in making selection/contract decisions about external auditing services in an environment with as much transition as is anticipated in the BPS Business Office in the coming months. She pointed out that, to the best of her knowledge, the incoming Assistant Superintendent / Chief Financial Officer has minimal experience in governmental accounting policies and procedures. Additionally, the Director, Business Services position description posted on the BPS employment website states that “A minimum of three (3) years’ experience in business services and/or other job related occupations is required. Experience working directly with public school districts is desirable.” Due to the potential of getting someone in the Director, Business Services role that may or may not have school district experience, in combination with a CFO that doesn’t have a substantial accounting background, “I don’t really want to be on the Audit Committee, frankly. It makes me uncomfortable. How is the person in this position going to write the CAFR (Combined Annual Financial Report) and address all the governmental issues that are going to come up?” Chair Mutch mentioned that she spoke with the Board of Trustees Chair Barbara Bryan prior to the Audit Committee meeting. Barbara was scheduled to meet with Superintendent Beeman on May 27, the same day the Audit Committee met; Barbara assured Marcy that she would do her best to get an answer to the question regarding the financial reporting and accounting background of the new CFO. Chair Mutch went on to mention rumors of unrest ‘among the troops’ which may increase the chances of irregularities happening. On top of this, there is an unknown in terms of who will take over as Director, Business Services, what that person’s exposure to governmental accounting regulations; on top of an incoming CFO with an unknown level of familiarity with governmental accounting. Given the extent to which the Billings Public Schools business and financial operations are going to be in a state of transition as a result of internal staffing changes, there is great potential benefit to securing the same team of external auditors who performed the audit last year, so as to provide tangible consistency to the process. The Eide Bailly team that performed the 2009-2010 audit was led by Susann Hartwig and Kim Higgins, out of the Denver, CO office. Whether it is determined that a 1-year or a 3-year contract is more appropriate, it is going to be most beneficial to the Billings Public Schools for that award to be contingent upon the ability to secure the Hartwig/Higgins team. Lindy Graves motioned to recommend to the Board, the selection of Eide Bailly for one year on the stipulation that we can keep the same team as conducted our external audit last year, Laura Bailey and Joyce Weber seconded the motion and all voted in favor. Committee members agreed that another meeting is needed, to follow up on the Eide Bailly teaming assignments; June 9, 2011 at 5:30pm was determined to be the most appropriate date for this follow-up meeting. GASB 54 Implementation Mr. Harper provided a brief overview of the Governmental Accounting Standards Board (GASB) Statement 54 relating to fund balance reporting and governmental fund type definitions. Mr. Harper assured Committee members that the framework for the GASB 54 implementation will be laid by him prior to his departure. Adjournment There being no further business, the meeting was adjourned at 1:00 pm. __________________________ Marcy Mutch, Chair _________________________ Holly Rensvold, Recorder Link to comment Share on other sites More sharing options...
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