City Commission Workshop Meeting

APPROVED: 3/19/2015 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 5, 2015 6:30PM City Hall CALL TO ORDER: Mayor Eckian- 7:32p.m. ACKNOWLEDGEMENT OF QUORUM AND PROPER NOTICE Present: 5- Karen LeHeup-Smith; Linda Bob; Bill Brett; Michael Holland ; and Albert Eckian I. Workshop Item 15047 Preliminary Findings of the Fiscal Year 2014 CAFR Audit Colleen Scott, Acting Finance Director, explained the report to be presented is a draft and that the final will be presented at the March 19th Commission meeting. Mark White, Purvis, Gray and Associates, introduced his associate Laurie Walker and cited the number of Government Finance Officers' Association (GFOA) awards the City has received. He explained they would review the highlights of the major operating funds and then their management letter recommendations. He started with the Net Change in Fund Balance of an additional $348, 720 in the General Fund. He explained how they evaluate the health of a fund and proceeded to review the Fund Balance of each of the other funds and any changes. He then reviewed the Water & Sewer Fund Balance Sheet, Income Statement and Statement of Cash Flows and compared the Current Assets and Current Liabilities. The Commission asked about the current indebtedness of each of the funds with Mr. White referring to pages 64 and 65 and the Long- Term Liabilities. He cited the low levels of the City's bonded indebtedness and noted it will be paid off in 2018. He then reviewed the Balance Sheet and Income Statement for the Police and Fire Pension Funds and cited the increase in their investment income. He then reported there are new accounting standards that will be effective for 2015. He explained that it effects some additional note disclosures first for the pension funds, which was implemented for 2014, and then for the City in 2015. He explained it will require that any unfunded pension liability be included in the balance sheets. He noted that the information has previously been included in the audit notes. He further explained that it will require the City to also record the City's pro-rata share of any FRS unfunded pension liability. He noted that the City has a number of employees still in the Florida Retirement System (FRS) . He added that the new standard will also require that the plan auditor for FRS (the Attorney General) must audit the figures. He stated that the requirements have the potential to hold up audits next year. He explained that counties and cities will have to use the June 2015 figures which will not be available until at least December. He noted that there are non-police and fire pension fund members that are also part of the FRS and any unfunded liability for those will have to be accounted for. Ms. Scott noted that the City only has seven employees left in FRS so she hoped it would not hold them up too much. Dianne Kramer, Acting City Manager, commented on the number of pieces that are outside the City's control in compiling the financial report. Mr. White then reviewed their Independent Auditors' Report. He stated they have given the City an unmodified opinion which is the highest level. He stated they have no significant deficiencies or material weaknesses to report. He then reviewed their comments and recommendations contained in the Management Letter. He stated the first comment is an update from the prior year, 2013-1- New Financial System and Key Accounting Personnel. He reviewed their comments regarding issues relating to the utility billing module, user access within the new software system and segregation of City of Eustis, Florida Page 1 Printed on 311112015 City Commission Workshop Meeting Minutes - Final March 5, 2015 duties all of which related to the need to replace key accounting personnel. He noted a number of the issues were resolved in 2015. He expressed their recommendation that the City continue its efforts to fill the Assistant Finance Director position and refine all aspects of the system conversion. II. Commission Discussion The Commission questioned how soon they could expect to be informed by staff that the reporting and control issues have been resolved with Mr. White stating that work is already well underway and he would expect that to be substantially complete by the end of the fiscal year. The Commission then asked when the City should consider hiring a firm to audit the City's internal controls once all of the issues have been resolved. Mr. White explained they are required to examine the City's internal control as it relates to accurate reporting; however, they do not conduct a full operational audit of all financial activities. He stated their normal audit will cover most of the review; however, they could perform a more in-depth review. He noted that the City already had a firm come in for a management review. The Commission commented on the need to be informed by management when they feel the City is operationally sound and, at that point, the Commission can request a professional opinion about whether or not the City needs an in-depth audit of its controls. Comments were also made regarding the improvements to the internal controls since Ms. Kramer has served as Acting City Manager. Mr. White noted they would come in midyear to conduct interim audit work and could provide an opinion at that time. Mr. White then reviewed the 2014 comments and related recommendations as follows: 1) 2014-1- Finance Department Review; 2) 2014-2- Firefighter Pension Plan Investment Custodian; 3) 2014-3- New Governmental Accounting Standards Board (GASB) Pension Statements; and 4) 2014-4- Required Affordable Care Act Reporting to IRS in January 2016. It was noted that the Fire Pension Board has already engaged a new investment custodian. Ms. Walker further explained the new IRS requirements regarding the Affordable Care Act and noted that there would be heavy fines and penalties for incomplete or late filing of the new IRS forms. Ms. Scott reported they are already discussing the need to track the information with the City's software provider, Edmunds, and that Ms. Isaacs has already attended training regarding the requirements. III. Public Input- No one came forward IV. Commission Direction The Commission complimented Mr. White and Ms. Scott on the presentation. It was noted that the final report would be presented to the Commission at the next regular meeting. It was also recommended that, if any of the Commissioners have any questions or concerns regarding the draft report, that they contact Ms. Scott prior to the meeting. V. Adjournment- 8:30 p.m. ALBERT G. ECKIAN, Mayor/Commissioner *These minutes reflect the actions taken and portions of the discussion during the meeting. To review the entire discussion concerning any agenda item, go to www.eustis.org and click on the video for the meeting in question . 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 C ity Clerk for a fee. City of Eustis, Florida Page2 Printed on 311112015