Informational Meeting

MINUTES Informational Meeting Tuesday, February 22, 2022 at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, SD 57104 1. Call To Order Council Members Present: Janet Brekke, Alex Jensen, Rick Kiley (via telecom), Greg Neitzert, Marshall Selberg, Pat Starr Council Members Absent: Christine M. Erickson, Curt Soehl Council Vice Chair Alex Jensen called the meeting to order at 4 p.m. 2. Committee/Commission Reports A. Accessible Housing Advisory Board: Wednesday, February 2, 2022 (Council Member Selberg) There was no report. B. Multi-Cultural Center Board of Directors: Wednesday, February 16, 2022 (Council Member Starr) Council Member Pat Starr summarized the meeting and stated: the Multi-Cultural Center partnered with the Sioux Falls Health Department and has COVID home test available; recently there was a fair market pop up grocery store, in which more than 200 people purchased groceries, and more than 450 pounds of Smithfield ham was given away; "Let's have a Ball", a new event to teach kids (9-15 years old) how to play a variety of games is coming up; the Board is wrapping up the year-end financials; and they are working on hiring a director. 3. Councilor Remarks There were none. 4. Presentations A. Spectra Agreement Audit by Shana Nelson, Internal Audit Manager Presentation: Approximately 5 minutes followed by discussion Nelson began with a brief background and terms of the agreement, which began on December 12, 2017, and will end on December 31, 2022. The agreement was for Spectra to provide food, beverages, novelty and merchandise concession services,  and catering for the Sioux Falls Arena, the Sioux Falls Convention Center, the Orpheum Theater, the Denny Sanford PREMIER Center, and the Sioux Falls Baseball Stadium. On July 1, 2019, services for the Orpheum were contracted with the Washington Pavilion Management, Inc. The audit objective was to determine if Spectra was compliant with the major requirements of the food and beverage agreement, specifically: insurance coverage; independent audit of gross receipts and commissions; operating account; and reporting requirements. Another objective was to determine if the City and ASM Global (SMG) both had proper internal controls to ensure that Spectra was compliant with the agreement. Nelson reviewed the findings, recommendations and opportunities. She ended the presentations with the audit conclusions. It's believed that the City and ASM have various procedures in place but have room for improvement to strengthen the current controls to ensure Spectra is compliant with the contract requirements. Discussion followed regarding: what to do with the information provided; responses from management and operations; complimenting the audit and the significant findings; following up and reporting back to the City Council; creating a procedures checklist; City safeguards; and praising the Parks and Finance Departments for the great job that they do with their contract checklist. B. Midco Cash Handling Audit by Shana Nelson, Internal Audit Manager Presentation: Approximately 5 minutes followed by discussion Nelson began by providing a brief background on the facility. Revenue for Midco is generated through daily admission fees, annual pass sales, program registrations, meeting room reservations, and swim lane reservations. The indoor pool, which is opened all year round, was closed for three months in 2020, due to COVID. Nelson said the objectives of this audit were to determine: if sufficient segregation of duties exists over the collection of cash; if cash is adequately safeguarded; if cash is deposited in a timely, secure, and accurate manner; and if written cash handling policies and procedures are current, properly documented, and being followed. She said the scope of the audit was in 2020. During audit testing, they found that policy and procedures were not followed. Overall, the findings included: deposit slips are not completed by a manager/head guard; RecTrac (their cash receiving software) lacks proper controls for segregation of duties; shortage of controls in cash safeguarding; deposit slips are not being consistently filled out; Finance's Billing, Cash Receipts, and Collections Policy is outdated and out of compliance. Nelson reviewed the five recommendations and opportunities that were made. Overall it was determined that several adequate controls exits over the cash handling process at Midco; and there was no evidence of fraud, waste, or abuse identified. Discussion followed regarding being notified of completion status and date of implementation. C. Travel Expenditure Audit by Shana Nelson, Internal Audit Manager Presentation: Approximately 5 minutes followed by discussion Nelson explained that the audit focused on employee travel requests, travel expense claims, eligibility of travel expenses, substantiation of expenses, and controls to prevent fraud, waste and abuse. She mentioned that this audit didn't include an in-depth review of travel card reallocation, reconciliation or non travel  reimbursements. The City's Travel Policy was established by an Executive Order and was revised in March 2019. During the scope of the audit, from April 1, 2019, through March 31, 2020, there was $1,065,882 spent on travel and training expenses. Travelers received $137,000 in direct reimbursement. In state travel accounted for 47%, while 53% was out of state travel. During the audit, the Top 4 Departments that traveled were: Highways and Streets, Health, Fire, and Police. Nelson explained that travel expenditures are broken down into three general categories: per diems, personal card expenses, and city travel card expenses. At the start of the audit there were 131 active travel cards. During the audit testing, there were 10 findings where reimbursements were identified as not being in compliance of City policies and procedures, or there was a lack of segregation of duties and or policy language was unclear. Nelson reviewed the findings, recommendations and opportunities. The audit conclusion indicated that there are opportunities for improvement to address the effectiveness of controls and compliance of travel expense reimbursements across the City; and the recommendations provided are based on leading practices and will provide additional assurance to mitigate the risk of potential fraud to travel expense reimbursements. There was no evidence of fraud, waste or abuse detected. Discussion followed regarding: the audit timeline; and the Internal Audit team and the work that they each did with their audits. 5. Public Comment There were none. 6. Adjournment Council Vice Chair Alex Jensen adjourned the meeting at 4:34 p.m. Denise D. Tucker, MMC, Assistant City Clerk