Audit Committee

CITY OF HENDERSON AUDIT COMMITTEE MINUTES September 24, 2014 I. Call to Order Chairman John Marz called the City of Henderson Audit Committee meeting to order at 3:30 p.m. in the Mayor and Council Board Room, 240 Water Street, Henderson, Nevada. II. Confirmation of Posting and Roll Call Melissa Wright, City Auditor, confirmed the agenda was posted three working days prior to the meeting in accordance with the Open Meeting Law by posting in the four Official Bulletin Boards within the City Limits of the City of Henderson. In addition, copies of the agenda were mailed to each person having an item on the agenda and to all those on the Agenda Master Mailing List. PRESENT: Chairman John F. Marz Mayor Andy Hafen Bryan Allison EXCUSED: None STAFF: Roy Borsellino, Accounting Manager Nechole Garcia, Assistant City Attorney I Ian Massy, Chief of Alternative Sentencing Paul McPhee, Sr. Internal Auditor April Parra, Council and Commission Services Reporter Brian Reeve, Assistant City Attorney II (left at 4:25 p.m.) Josh Reid, City Attorney (left at 4:25 p.m.) Jacob Snow, City Manager (arrived at 3:35 p.m.) Melissa Wright, City Auditor Development Services Center Advisory Committee Page 2 September 24, 2014 – Minutes III. Acceptance of Agenda (Motion) Mayor Hafen introduced a motion to accept the agenda as submitted. The vote favoring approval was unanimous. Chairman Marz declared the motion carried. IV. Public Comment There were no comments presented by the public. V. New Business 1. Approval of Minutes for Audit Committee on June 18, 2014 (Motion) Mayor Hafen introduced a motion to approve the minutes for the June 18, 2014, as submitted. The vote favoring approval was unanimous. Chairman Marz declared the motion carried. 2. Receive and Approve Draft Audit Report for the Citywide Purchasing Card Program Melissa Wright, City Auditor, distributed the draft Audit Report for the Citywide Purchasing Card Program and reviewed it with the Committee. Areas of discussion included: Background; Preventative Controls; Volume of P-Card Usage; Objectives, Scope, and Methodology; Results, P-Card Purchases Occurring on Non-Scheduled Work Day; P-Card Purchases Not Compliant with NRS and City Policy; Approval of P-Card Transactions; Monitoring Controls over Non-Capitalized Assets; P-Card Policy and Procedure Does Not Address Training; Transactions Are Split to Avoid Transaction Limits; Span of Control of Some Approving Officials is Excessive; Purchases Not Compliant with City Policy; Departments Should be Responsible for Missing Receipts; and Noteworthy Accomplishments. The following questions were asked and answered: Q: Was the audit deep enough to look at fraudulent use? A: A thorough audit was conducted regarding transactions and ensured all the property was located. Q: Do employees get authorization prior to purchases? A: No. Chairman Marz commented that he is surprised that 24 percent of employees have p-cards. Q: What items are being purchased? Development Services Center Advisory Committee Page 3 September 24, 2014 – Minutes A: Tires, supplies, boots, as well as other items. Josh Reid, City Attorney, briefly explained the procedures followed in his department and noted that there are rules regarding purchases and employees must provide receipts. Q: How is fraud prevented? A: There are controls in place. Receipts must be submitted, statements must be approved by department staff, and then approved by staff in Finance. Q: Does Finance conduct random checks on an individual’s purchases? A: Approximately 10 to 15 percent of purchases are audited each month; however, there is no systematic audit process in place. Q: Is there a purchasing department and do they negotiate prices for items? A: Yes, we have a purchasing division within the Finance Department and they do negotiate prices. It was noted that some vendors are set up on a purchase order system. Mr. Borsellino briefly explained that the P-Card system was put in place to handle small purchases (less than $10,000.00.) Mayor Hafen said it makes sense to use a P-Card system for efficiency provided there are controls in place to monitor spending. Mr. Borsellino commented that the City saves an average of $69 per transaction using a P-card instead of a purchase order. Chairman Marz said he feels there should be random audits conducted to review transactions to verify purchases. He requested that this be added to the audit report as a recommendation for the Finance Department to initiate. Jacob Snow, City Manager, summarized his experiences with the P-Card program and said he is satisfied that we have adequate controls in place. He noted that he understands why there are concerns in certain departments. Ms. Wright detailed the findings and recommendations (see attached report.) (Motion) Chairman Marz introduced a motion to approve the Draft Audit Report for the Citywide Purchasing Card Program and direct the City Auditor to move forward with the next steps. The vote favoring approval was unanimous. Chairman Marz declared the motion carried. Development Services Center Advisory Committee Page 4 September 24, 2014 – Minutes 3. Receive and Approve Draft Audit Follow-Up for the Alternative Sentencing Department Melissa Wright, City Auditor, distributed and reviewed the Draft Audit Follow-Up for the Alternative Sentencing Department. Ms. Wright reviewed the findings in the initial audit report, the recommendations, as well as the changes that have taken place. Ian Massy, Chief of Alternative Sentencing, gave the Committee members an update on new procedures that have been put into place as a result of the audit. (Motion) Mayor Hafen introduced a motion to accept and approve the Draft Audit Follow-up for the Alternative Sentencing Department. The vote favoring approval was unanimous. Chairman Marz declared the motion carried. VI. Public Comment There were no comments presented by the public. VII. Chairman/Member Comments There were no comments presented. VIII. Set Next Meeting The next meeting of the Audit Committee was scheduled for December 3, 2014, at 3:30 p.m., in the Mayor and Council Board Room, City Hall, Henderson, Nevada, 89015. VIII. Adjournment There being no further business to come before the Committee, the meeting was adjourned at 4:37 p.m. Respectfully submitted, _______________________ April Parra, Council and Commission Services Reporter