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HomeMy WebLinkAbout1981-05-12 340 MINUTES OF THE SPECIAL MEETING OF THE CITY COMMISSION BOZEMAN, MONTANA May 12, 1981 ********************* I The Commission of the City of Bozeman met in special joint session with the Audit Com- mittee and representatives of the audit firm, Coopers and Lybrand, in the Commission Room, Municipal Building, May 12, 1981, at 10:00 a.m. Present were Mayor MacNab, Commissioner Vollmer, Commissioner Stiff, Commissioner Swanson, Commissioner Mathre; Gil Crain, Audit Com- mittee; Alan Davis, Kurt Caulson, and Nick Gray, representatives of Coopers and Lybrand; Interim City Manager Evans, Interim Assistant City Manager Barrick, City Attorney Plan alp and the Interim Clerk. The meeting was opened with a prayer by Commissioner Vollmer. Mayor MacNab welcomed Commissioner Vollmer back after his absence due to illness and surgery. Signing of the Notice of the Special Meeting Interim City Manager Evans requested that the Commissioners each sign the Notice of Special Commission Meeting. Each Commissioner in turn signed the Notice. I Discussion - Present and future audits Interim City Manager Evans stated that the Water and Sewer Enterprise Funds are required by the bond indenture to be audited every year. He stated that the City has fore- gone a full-fledged audit for Fiscal Year 1981 with an objective of an audit at the end of Fiscal Year 1982 to allow the Finance Department sufficient time to remedy the majority of the deficiencies noted in past audits. Interim City Manager stated that the representatives from Coopers and Lybrand had met with himself, the Interim Assistant City Manager and Interim Director of Finance. The City staff felt there might be complications in getting fixed asset records ready for the Water and Sewer audits. They also discussed the fees for future and last year's audit. The Interim City Manager stated that there was a legitimate basis for a cost overrun, but was not sure it should be $29,771. The City did not have all records available when needed and not in the form needed for the audit. He also stated that Coopers and Lybrand had agreed to a cost overrun of $15,000, or approximately one-half of the actual amount. Interim City Manager Evans stated that he felt the offer was fair and that the City should accept the I offer. He stated that it is a good firm, we received a good audit, and we would like to con- tinue to have them audit the City in the future. He also recommended that the Audit Commit- tee work with Coopers and Lybrand to establish future fees. Interim City Manager Evans stated that the City has recognized audit overruns before, and stated that the City has suf- ficient monies in the budget to pay the overrun. He stated that it would be divided between the General Fund and the Enterprise Funds. H41 The City Attorney saw no problem with this method of payment of the overrun. Commissioner Stiff stated that the Audit Committee had made the original negotiations and had not considered the overrun as yet. He also felt that there were some legitimate changes that would automatically lower the amount of the overrun. I Interim City Manager Evans stated that there is a problem on who should deal with the audit firm -- whether or not it should be through the Audit Committee. Commissioner Stiff recommended the possibility of eliminating City employees from a voting capacity on the Audit Committee. He also recommended that negotiations be with City employees, as they were the ones dealing directly with the matter. He stated that the City Manager's purpose was to establish a contract with the audit firm and the City. Commissioner Swanson stated that the proposed changes to the role and scope of the Audit Committee would change the word "negotiate" to "discuss" with the auditors. He also noted that the proposed changes have not yet been adopted by the City Commission. Gil Crain, Audit Committee, stated that one part in the role and scope of the Audit Committee deals with the second and third years, and nothing about cost overruns. He sees no problem with the City Manager dealing with that phase. He stated that the City Manager and Finance Department are the individuals dealing with this issue on a day-to-day basis and that the Audit Committee has no expertise in this area. He stated that the Audit Com- mittee doesn't need to be involved with the overrun. I Commissioner Stiff stated that no one really knows the books. Kurt Caulson, of Coopers and Lybrand, stated that the previous City Manager was aware of problems that arose during the audit because of a lack of records to substantiate the accounting records, particularly in the field of SID's. The largest problem arose during the conversion from manual to automation. There was no documentation kept during the change. He also stated that the hospitalization of the Director of Finance, Grant Murie, and the resignation of the Controller, Steve Hilfers, left the auditors with no one to work with from day to day. Alan Davis, of Coopers and Lybrand, stated that the previous City Manager was noti- fied of the overrun and that he was told to curtail the hours as much as possible and yet com- plete the audit. He stated that at that time a certain amount of money was not discussed, but the possiblity of the overrun was clear. He also stated that the matter was dealt with in gen- eralities with the Audit Committee. Commissioner Stiff said that Dan Fenno, Veltkamp and Dore, who worked on the City's audit for Fiscal Year 1979, had stated that the City could not be ready for an audit at the end of Fiscal Year 1980. However, the previous City Manager stated that the City could be I ready. Commissioner Swanson noted that the lack of communication was the obvious problem on the overrun. He also stated that he saw no problem with the Interim City Manager negotiating on the matter. Commissioner Vollmer stated that there is a point of trust between the City Commission and the people working for the City of Bozeman. He stated that we work and live on trust. He also stated that his math isn't any too good, but 50 percent is better than 100 percent. 3~2 Kurt Caulson, of Coopers and Lybrand, stated that the cost overrun was figured just to cover the out-of-pocket expenses and payroll. He stated that the revised total figure of $53,500 would cover the costs incurred. Gil Crain, Audit Committee, stated that he feels that we have benefited from the I investment in the audit. It was moved by Commissioner Vollmer, seconded by Commissioner Stiff, that the Com- mission accept the $15,000 overrun on the Fiscal Year 1980 audit, for a total audit cost of $53,500, as conditioned on the State of Montana's Department of Community Affairs' approval. The motion was carried on the following Aye and No vote: those voting Aye being Commis- sioner Vollmer, Commissioner Stiff, Commissioner Swanson, Commissioner Mathre and Mayor Mac Nab; those votin g No, none. Interim City Manager Evans stated that the Water and Sewer Fund audit for this fiscal year and the full-fledged audit for Fiscal Year 1982 are subject to negotiation of fees. He stated that this should be an item for the Audit Committee to delve into and negotiate. He feels the governing body should select the auditor, and the Audit Committee should make a recommendation to the City Commission for the fees. Alan Davis, of Coopers and Lybrand, noted that organizing records for the fixed assets would be the hardest, and most crucial, part of preparing for this year's Water and Sewer audit. He also noted that the audit firm could review the SID's during the audit of the En- terprise Funds. He also noted that if the City is considering additional revenue bonds, I having a clean financial statement may have an effect on the interest rate. The City Engineer stated that he could use SID files to get most of the information for the auditors. He noted that the records for the past twenty-five years are mostly com- plete and would take little effort to find the costs. City Attorney Planalp asked if it would be best to cover those SID's where bonds are outstanding first. Alan Davis, of Coopers and Lybrand, stated that they are concerned with the entire Enterprise Funds. He also stated that unless sufficient records are available on fixed assets in the Enterprise Funds, there will be a disclaimer in the audit regarding the fixed assets and depreciation. Commissioner Swanson suggested that Coopers and Lybrand write a proposal and have the City Attorney look at it and see if it is possible. Alan Davis, of Coopers and Lybrand, suggested that the auditors meet with the City En- gineer and the City Attorney and stated that they could get a rough estimate together and respond within a week to two weeks. Adjournment I There being no further business to come before the Commission at this time, it was moved by Commissioner Stiff, seconded by Commissioner Swanson, that the meeting be ad- journed. The motion was carried by the folhwing Aye and No vote: those voting Aye being Commissioner Stiff, Commissioner Swanson, Commissioner Ma thre , Commissioner Vollmer and Mayor MacNab; those voting No, none. H43 { / I I I /L J A.-~---~ ," DUNCAN S. MACNAB, Mayor ATTEST: I ROBIN L. WILLIAMS Interim Clerk of the City Commission I I