Audit Committee

AUDIT COMMITTEE MINUTES DATE: September 18, 2018 LOCATION: STAFF CONFERENCE ROOM (City Hall Fourth Floor) TIME: 3:00 PM I. CALL TO ORDER – Chairman The meeting was called to order by Joyce Norris at 3:00 pm. II. ANNOUNCE MEMBERS IN ATTENDANCE (VERIFY QUORUM) Audit Committee members present: Joyce Norris, Wilbur Berry, Lynn Stokes, Jeff Henley, Jerry Weatherspoon Audit Committee members absent: None Quorum verified? Yes Internal Audit attendees: Rodney Wright, Stephanie Fox Other Attendees: Camille Thomas, Laurie Matta III. ADOPTION OF MINUTES: None IV. DEPARTMENT REPORT A. Discuss proposal review process and timing B. Scoring of firms C. Request and Review of References D. Questions / Concerns from Committee E. Purchasing Manager Below is a summary of the discussion that took places regarding all topics under the department report section. Qualifying proposals were received from three firms. Two additional firms submitted proposals, but did not submit all required forms, resulting in their disqualification. The purchasing manager provided a list of other firms that received the RFP directly or downloaded it from the City’s website. After communicating the proposals to the audit committee and receiving feedback, Rod decided that a meeting would be beneficial. The committee discussed three possible options to proceed. Option 1 – Continue with the current RFP process and evaluate the three firms that submitted qualifying proposals. Option 2 – Reject all current proposals and restart the RFP process after the consolidation vote has occurred. Option 3 – Extend the agreement with Crosslin to perform the FY 2019 audit due to the retirement of the City’s Finance Director, an integral part of the financial reporting structure. In discussion of these options, the audit committee spoke at length on the following items:  The pending consolidation vote could have decreased the number of firms to apply due to uncertainty regarding the continuation of the contract with the City. Rejecting all RFPs and postponing until after the vote would at least allow firms to know whether the City will continue to exist in its current form and may result in additional proposals to consider.  Based on the audit director’s conversations with the audit committee, some members may have potential conflicts of interest, which if not allowed to continue on the evaluation committee, may result in lack of a quorum to make any decisions. There will be a new audit committee member in January, which could be vetted to ensure no conflicts are present. The committee discussed the potential conflicts of each member and what issues would be considered a conflict. Ultimately, the committee determined that each member should report their potential conflicts on the required conflict of interest form and allow purchasing and the City attorney to review and make a determination on the validity of those conflicts.  The current auditors for the City did submit a proposal; however, they did not submit the required forms and their proposal was rejected. One additional firm is also in this situation.  Two of three firms with qualifying proposals have prior experience with the City, which may require additional research or safeguards. These issues would need to be specifically addressed by the firms during their presentations. o One firm in the past has not completed the City’s audit timely. o From prior experience and current political activities, firms may require additional safeguards to address the possibility of a bias threat, as defined in Government Auditing Standards (GAGAS).  The committee discussed the prior RFP process for awarding the City’s audit contract and determined that four firms applied and Lynn believes that she checked references for all the firms.  If the RFP process was restarted, a draft timeline would be to post the RFP in November, leave it open for a couple of months, receive proposals in January and possibly award the contract in March. Discussion resulted in a determination that the timeline would make it difficult for an audit firm to build the engagement into the annual plan.  If the RFP process was restarted, Rod would like to allow additional time for firms to compile and submit proposals, to extend the timeframe for evaluating the proposals to include time to check references, and Camille would like to provide more clarity regarding the federal forms.  The committee discussed the appearance of taking each of the options presented, including possible outcomes.  Rod indicated that, while he would proceed with whatever the committee decided, he was at the very least request that they postpone the presentations scheduled for September 21st to allow the potential conflict of interest issues to be resolved and allow time for the internal audit department to check references provided by the firms. The committee agreed that slowing the RFP process, but continuing with the current proposals was the best course of action. After evaluating each proposal, if the firms are not found to be qualified or suitable, the RFP process could be reopened at that point. The committee also discussed the following items related to the logistics of the remainder of the proposal process.  Presentations would be rescheduled for a later date to allow additional time to address conflicts of interest and reference checks.  The City’s CFO and the CFOs of the enterprise funds will attend the presentations and provide feedback to Rod, which he will compile anonymously and distribute to the committee members.  Evaluation committee scores will remain anonymous, although the names of committee members is public record.