City Council

~ COMMITTEE REPORT~ Audit Committee Wednesday, July 24, 2024 Chair Frank Salvatore called the meeting to order at 6:30p.m. on Wednesday, July 24, 2024. Present were Committee Members Andrea Gartner, Ben Chianese, and Irving Fox. Absent was Committee Member Elmer Palma. From the City were; Dan Garrick, Director of Finance; Kara Prunty, Assistant Finance Director (Budget & Grants); and Joanne Stark, Assistant Finance Director (Operations). Also in attendance were, Scott Bassett, RSM US LLP; and Michael Weever, Schools’ Chief Financial Officer. In addition, from the City were Roberto Alves, Mayor; and Taylor O’Brien, Chief of Staff, Mayor’s Office. Ex Officio Members present were Peter Buzaid and Ryan Hawley. From the public was Michael Flanagan. Chair Salvatore noted those in attendance. Mr. Bassett provided an overview of the audit process. He explained the firm’s tasks including the reviewing of the City’s financial information, and giving an opinion based on auditing standards. He identified updates to accounting standards and policies, and identified required communications. Member Gartner asked for an example of an immaterial adjustment; Mr. Basset noted an example as cash reconciliation that is off. Member Chianese asked about material weaknesses; Mr. Basset identified the lateness of the 2021 and 2022 audit reports. Member Fox asked about causes for the delays and Mr. Bassett stated management would be better equipped to answer that question. Mr. Bassett discussed the letters that his firm presented to the committee; a transmittal, and a management discussion and analysis which summarizes the key events of the financial statements. He said that there were no surprises in the analysis and that the City’s bond rating remains strong. He identified three business activities including: Water, Sewer and Ambulance funds. He noted $47 million in Federal awards and $60 million from the State. He discussed the State’s timeline for filing which is within 6 months (Dec. 31st) from the fiscal year-end date (June 30th), the State then offers extensions at 1 month increments after that. He noted that only about 25% of municipalities are currently meeting that initial deadline due to the amount of work that has to be done to meet the standards (on page 9). He discussed steps that Danbury has taken to help better meet the standards over the next 2 audits. Member Gartner asked for clarification on the fiscal years for the remaining audits. Mr. Garrick noted the reasons for the audit delays as the delayed filing of the 2021 Audit and staffing shortages. He identified full staffing and the hiring of CLA as key factors for the current quick turnaround of the delayed audits. Chair Salvatore asked about potential improvements to internal control systems; Mr. Bassett identified the need for better collaboration and reconciliations between the schools and the City, maintaining staffing levels, and formalizing a closing process (ie project management). He discussed staff turnaround in 2021 and 2022 as the reason for those delayed Audits, and 2022 reflected delays due to Covid and staffing shortages. He noted that weekly meetings and goals have been established and are being met. Ms. Stark discussed the success of the weekly meetings, and Mr. Garrick identified better collaboration between the City and Schools. Chair Salvatore asked the Mayor and Mr. Garrick if the financial statements and audit presentation represent the City’s standing accurately, and if an appropriate 2022 Audit has completed by RSM; Mayor Alves said yes to both; Mr. Garrick said yes to both. Member Chianese asked about the material statements, and discussed the need for the Audit Committee to be more involved in the process and to ask important questions. He also asked about the deadline for the 2023 Audit. Mayor Alves asked the committee to reach out to his office with questions and for regular updates on the next audit, and he noted the need to keep CLA on board to make sure that the audits continue moving forward. Mr. Bassett suggested an update meeting in mid- August. Member Fox asked that the City continue to put an emphasis on hiring qualified staff, and asked that an advisory committee be considered to work with the City and Schools on their financials to prevent this type of a delay from happening again. Mayor Alves spoke on the hiring of the new Assistant Finance Director (Ms. Stark) and discussed her qualifications that have helped the Finance Department move forward. He also agreed with Member Fox that a collaboration needs to continue between the City and Schools and he is committed to facilitating that. A motion was made by Member Chianese, and seconded by Member Gartner, make a recommendation to the Council as a whole to accept the audit financial statements for the fiscal year ending June 30, 2022, including all management letters and adjustments as is indicated. The motion carried. A motion was made by Member Fox, and seconded by Gartner, to continue the committee until such time as the 2023 Audit is available for review, or at the call of the Chair. The motion carried. The meeting adjourned at 7:45 p.m. Respectfully submitted; Frank Salvatore, Chair, Andrea Gartner, Ben Chianese and Irving Fox