HomeMy WebLinkAboutMINUTES Audit Committee 10-12-2016
Town of Estes Park, Larimer County, Colorado, October 12, 2016
Minutes of a Regular meeting of the AUDIT COMMITTEE of the Town of
Estes Park, Larimer County, Colorado. Meeting held in the Municipal
Building in said Town of Estes Park on the 12th day of October, 2016.
Committee: Mayor Jirsa, Mayor Pro Tem Koenig, Trustee Holcomb,
Town Administrator Lancaster, and Finance Director
Hudson, and Assistant Finance Officer McDougall
Attending: Mayor Jirsa, Mayor Pro Tem Koenig, Trustee Holcomb,
Town Administrator Lancaster, and Finance Director
Hudson; Clifton Larson LLC representatives Paul
Neidermuller and Eric Miller, and Town Clerk Williamson
Absent: Assistant Finance Officer McDougall
Chair Jirsa called the meeting to order at 8:30 a.m.
2015 CAFR AND SINGLE AUDIT REVIEW.
The meeting began with a discussion on what measures could be taken in 2017 to
ensure completion of the CAFR on time and presented to the Board for review and
approval. The Committee suggested a pre-meeting in 2017 be held to outline the audit
process.
Paul Neidermuller/CliftonLarsonAllen reviewed the Independent Auditor’s report for the
2015 audit and single audit in accordance with the auditing standards and the standards
applicable to financial audits contained in Government Auditing Standards. The
auditing firm of CliftonLarsonAllen, LLP conducted an independent audit of the Town of
Estes Park’s financial statements as of December 31, 2015 and have expressed an
unmodified opinion (clean) that the financial statements presented fairly, in all material
respects, the financial position of the funds and activities of the Town of Estes Park in
conformity with Generally Accepted Accounting Principles (GAAP).
Discussion followed on the need to include the Estes Park Local Marketing District
(LMD) in the Town’s annual audit under Other Governmental Funds because the District
provides services almost exclusively to the Town, the Town Board approves their
operating budget, and the Town appoints five members of the LMD Board. The auditors
provide a review of governmental accounting practices that begin with expenses
because the entities mission consists of providing services, whereas businesses such
as L&P or Water provide a service for a fee.
The Town adopted GASB 68, Accounting and Financial Reporting for Pensions and
GASB 71, Pension Transition for Contributions Made Subsequent to the Measurement
Date. These standards require the Town to include in its financial statement the liability
of the Town contributing to PERA for the defined benefit pension (net pension liability)
to ensure the Town has funds to offset the unfunded liability. These numbers would
change from year to year; however, the audit demonstrated the Town’s position with the
inclusion of the net pension liability continues to be positive. The majority of
municipalities have seen their positions go negative with the inclusion of the unfunded
liability.
The Town was required to complete a single audit because the Town received more
than $750,000 in federal grant funds. The audit ensures the Town maintains
compliance with all federal guidelines and requirements outlined in the grant
Audit Committee – October 12, 2016 – Page 2
requirements. The auditors provided the Town with a clean opinion; however, the
auditors found eight material weaknesses, significant deficiencies or deficiencies:
Journal entries were recorded to the Town’s general ledger in error during the
prior period and in the current year. The Town would review its journal entry
review process.
The Town did not properly record transactions to receivables, unearned revenue
or revenue during the last two fiscal years. Recommend the Town review and
amend its existing procedures to more accurately track grant expenditures and
adjust for the related receivables, unearned revenues, and revenue when
expenditures are incurred.
Capital asset activity was not properly recorded and accounted for related to
donated assets – donated street at a value of approximately $550,000.
Recommend the Town implement a process and procedures for capital asset
additions to ensure all donated assets are properly recorded and a procedure for
removing assets which are no longer used or in service.
Purchases are made by Town departments prior to the Town approving the
related purchase order. Recommend the Town prepare and issue purchase
orders at the time of purchase to ensure the Town remains compliant with
Finance policies and procedures.
Town employees switch positions within Town and their user access to the
financial software has not be revised to reflect their new responsibilities.
Recommend the Town implements procedures to periodically review the user
access rights of all Town employees to ensure unnecessary access rights are
restricted and monitored.
The Town has not followed the Provision of Annual Reports requiring annual
financial reports to be filed as part of continuing disclosures with EMMA within 6
months of the end of the Town’s fiscal year. Recommend the Town review and
implement procedures to ensure the CAFR is filed as part of the continuing
disclosures with EMMA.
The Town did not record $108,000 in liability for maintenance and replacement of
water capital assets by December 31, 2015 as required under GASB 62.
Recommend the Town review its financial closing procedures to ensure all
journal entries are recorded and go through the proper controls prior to posting to
the Town’s general ledger.
The Town’s controls over the review of federal expenditures were not conducted
properly because the Town understood only expenditures for reimbursement
were to be reported on the SEFA; however, under FEMA, expenditures must be
included on the SEFA if FEMA has approved the project worksheet and the Town
has incurred the eligible expenditures. Recommend management strengthen
policies and procedures to address the proper recording on the SEFA.
Other items addressed in the management letter included the control procedures for
offsite locations, especially fairgrounds; yearend financial reporting was not properly
reflected and accounted for with regard to compensated absences and self-insurance
liability balances from 2014 to 2015; financial statement preparation must be completed
internally with proper internal controls in place; capital asset review should include
procedures to address the annual review of depreciation and capital asset schedule;
payroll control procedures should be in place to ensure all hourly employee time sheets
are reviewed and employees are paid the correct amount based on hours worked; the
Town should review its five year contract with Light and Power customers for service
line extensions to ensure all refunds due customers are properly paid and recorded; and
the Town paid excessive overtime to an employee in 2015 which should be monitored in
the future.
Finance Director Hudson stated the number of issues outlined during the audit would be
addressed but may not be fully implemented by the end of 2016 with three-fourths of the
year already complete.
Audit Committee – October 12, 2016 – Page 3
After further discussion the Audit Committee recommended the final CAFR and single
audit be forwarded to the Town Board at their October 25, 2016 Town Board meeting.
There being no further business, Mayor Jirsa adjourned the meeting at 10:02 a.m.
Jackie Williamson, Town Clerk