City Commission Workshop Meeting

APPROVED: 3/20/2014 City Hall City of Eustis, Florida 10 North Grove Street Post Office Drawer 68 Eustis , FL 32727-0068 Meeting Minutes - Final* City Commission Workshop Thursday, March 13, 2014 4:30PM City Hall CALL TO ORDER: Mayor Bob - 4:30 p.m. ACKNOWLEDGEMENT OF QUORUM AND PROPER NOTICE Present: 5 - Linda Bob; Albert Eckian; Michael Holland ; Karen LeHeup-Smith ; and Kress Muenzmay I. Workshop Item 14098 Workshop for presentation of FY 2012-2013 Comprehensive Annual Financial Report (CAFR) Jim Myers, Finance Director, introduced Mark White and Laurie Walker from Purvis, Gray and Associates, the City auditors. He stated that, at their recommendation, they hired Milestone Professional Services to assist with compiling the comprehensive annual financial report (CAFR). At the request of the Commission, Mr. Myers explained how the auditors and staff review the City's trial balances and other information to prepare the audit. He stated that the final report should be completed no later than Tuesday, March 18th. He noted that the draft does not include the management comments and stated he would forward that to the Commission electronically once it is completed. The Commission expressed concern regarding the amount of time for the Commission to review the CAFR prior to the meeting with comments on their reliance on the City's staff and the auditors to assure the accuracy of the report. Mark White commented on the challenges to the Finance Department in FY2012-13 due to the loss of key personnel and the conversion to the new software system. He explained the responsibility of the auditor to provide an opinion on the City's financial statements based on generally accepted accounting principles. He stated they have reported no significant deficiencies or material weaknesses in the internal control structure for financial reporting. He stated there is only one management letter comment and that refers to the loss of key personnel during the software conversion. He commented on the continuing issue with completing the conversion and evaluating the information. Mr. White proceeded to review the draft CAFR beginning with the Statement of Revenues, Expenditures and Changes in Fund Balances including the Net Change in Fund Balance which reflected the City's use of Fund Balance to balance the budget. He noted the City actually used less of Fund Balance than was originally budgeted. He reviewed the individual fund balances and the changes within each of those funds. He then reviewed the Balance Sheet, as of September 30, 2013, and explained the various categories included. The Commission discussed the Charter requirement that the City maintain a $1 million Fund Balance with Mr. Myers explaining that does not have to be maintained in just the General Fund but can be a composite of all the funds. The Commission discussed the amount in Fund Balance, the length of time it would fund City operations, and how well the City has maintained its financial position since 2009. Mr. White reviewed the Statement of Revenues, Expenses and Changes in Fund Net Position for the Proprietary Funds. He then reviewed the Statement of Net Position for the Proprietary Funds parlicularly the Total Current Assets and Current Liabilities. He commented on the strength City of Eustis, Florida Page 1 Printed on 311412014 City Commission Workshop Meeting Minutes - Final March 13, 2014 of the reserves for the Water and Sewer Fund. He then reviewed the pension plan statements stating they will continue to look good as long as the market continues to do well. He noted that the plans are defined benefit plans. Mr. Myers reported that both plans are in the process of completing new actuarial studies with Mr. White commenting on how the actuaries smooth the contribution rates. An error was noted on Page xiv - "defined benefit portion" should read "defined contribution portion". Mr. White reviewed the management Jetter comments, pages 115 and 116, noting that the next fiscal year end will probably be difficult as well due to the Joss in personnel. II. Commission Discussion The Commission noted that, in the past, the auditors have noted the lack of adequate internal controls and asked why that comment is not in the current comments in light of the loss in personnel. Mr. White indicated that their comments include the need to replace the key personnel as soon as possible which relates to internal controls. The Commission expressed concern regarding the possible need to audit internal controls and the omission of that particular comment from the management Jetter with Mr. White citing the comments in the management Jetter on page 116 regarding prior year recommendations and Mr. Myers stating that is also addressed in the management response Jetter. Ms. Kramer expressed concern about what may not be getting done noting there are only two positions budgeted not three as referenced in the management Jetter. Mr. White agreed the number of required personnel is a City determination and agreed to edit that part of the letter. The Commission indicated it is management's responsibility to identify the necessary tasks and the correct individuals to fulfill those tasks with Mr. Myers emphasizing the need to complete the software conversion in order to assess the positions and the number of staff required. The Commission further discussed the need to audit the City's internal controls once the software conversion is complete. It was noted that the Audit Committee recommended that the individual selected as the Deputy Finance Director should be selected so that they will be able to assume the directorship when the current Finance Director retires. Ms. Kramer reported that the Human Resources Director has broadened the search for the Deputy Finance Director and the requirements and salary level have been upgraded appropriately. The Commission expressed concern regarding the lack of monthly reports as was previously provided to the Commission with Mr. Myers citing the recent difficulty in balancing bank reconciliations and credit card payments with the new system. He explained a problem with credit card processing due to when the City is being told the payments are hitting the bank and when they actually are. He further explained that due to the reduced personnel he has had to set priorities with the initial priority being completion of the audit. He stated he has set a target to, at least be complete through February, by the end of March with the bank reconciliations. He emphasized that he does not want to provide information to the Commission that he is not confident of the accuracy. He cited specific problems with reconciling the credit card statements. The Commission and staff further discussed the need for the accounts to be balanced and to have the right staff in all of the positions. III. Public Input- None City of Eustis, Florida Page2 Printed on 311412014 City Commission Workshop Meeting Minutes - Final March 13, 2014 IV. Commission Direction CONSENSUS: It was a consensus of the Commission for staff to try and have the full report for the regular Commission meeting no later than Tuesday. Mr. Myers commented on the difficulties in getting the complete report to the Commission by Tuesday. The Commission requested that any changes between the draft and final be highlighted for them and indicated that it did not need to be printed and bound prior to the meeting. Mr. White confirmed that the March 30th date is the deadline for submittal to the GFOA in order to obtain the Certificate of Excellence; however, they have nine months from year end to submit the audit to the state. Ms. Kramer emphasized the need to get the section that is not in the draft to the Commission with Mr. Myers confirming he will send it electronically as soon as it is ready. He stated that Milestones is anticipating working all weekend to complete any revisions. He noted that what is presented at the Commission meeting may not be the final but may require some subsequent minor editing. V. Adjournment - 5:52 p.m. ~~~~ Mayor/Commissioner *These m~nutes reflect the action~ taken and portions of the discussion during the meeting. To review the entire discussion concerning any agenda item , go to wwweustts.org and click on the vtdeo for the meetmg m questton. A DVD of the entire meeting or CD of the entire audio recording or verbatim transcript of the meeting can be obtained from the office of the City Clerk for a fee . City of Eustis, Florida Page3 Printed on 311412014