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HomeMy WebLinkAbout01/19/1999 Work Session . MINUTES OF THE WORK SESSION MEETING OF THE SPRINGFIELD CITY COUNCIL HELD TUESDAY, JANUARY 19, 1999 The city of Springfield council met in work session in the Jesse Maine Room, 225 Fifth Street, Springfield, Oregon, on Tuesday, January 19, 1999, at 6:20 p.m., with Mayor Maine presiding. ATTENDANCE Present were Mayor Maine, Councilors Ballew, Hatfield, Leiken and Simmons. Councilors Fitch and Lundberg were absent (excused). Also present were City Manager Michael Kelly, Assistant City Manager Gino Grimaldi, City Attorney Joe Leahy, Senior Management Analyst Rosie Pryor, City Recorder Julie Wilson and members of the staff. 1. Museum Board of Directors Application Review. Museum Coordinator Kathy Jensen provided brief information regarding the puppet festival. Ms. Jensen then presented the staff report on the Museum Board of Directors issue. According to Article I, Section 2 of the by-laws of the Springfield Museum Board of Directors, "There shall be eleven members on the Springfield Museum Board of Directors who shall be nominated by the Springfield Museum Board of Directors and appointed by the City Council." . The Board's major functions are establishing policy to guide Museum operations and fundraising for Museum operations and special projects. Both Kathie K. Hardy's extensive experience as a volunteer and fundraiser, and Mary H. Farrington's experience in the museum field and her expertise as a fundraiser qualify them as excellent candidates. The Springfield Museum Board of Directors recommends appointment of both applicants to the Board. Hardy and Farrington were recruited to fill two of the three vacant positions on the Board. Farrington will complete John Lively's term, which ends September 30,2000. Hardy will fill one of two new positions created when Council approved an increase in members from nine to eleven on September 21, 1998. Hardy's term will end January 19,2003. With the appointment of Hardy and Farrington, the Board will have ten members. Ms. Jensen introduced both Ms. Hardy and Ms. Farrington. Ms. Jensen provided background information on both candidates. Ms. Jensen briefly discussed the Museum Board by-laws in general. Mayor Maine has worked with both candidates in the past. She said the candidates had the needed skills. By consensus the council agreed to appoint Hardy and Farrington to the Museum Board at the regular meeting. . Mayor Maine provided the council with a memo regarding the status of board, committee and commission recruitment's. Council members were encouraged to assist in seeking volunteers as appropriate. Work Session Meeting Minutes January 19, 1999 Page 2 . 2. 1998 Annual Financial Report and Management Letter. Accountant Mary Jean Payne presented the staff report on this issue. In accordance with the Oregon Statutes and the City's Charter, the city is required to complete an annual audit and financial statement. The report will be presented to the City Council at the January 19, 1999, work session and is presented herein for formal acceptance. Grant Thornton, the city's independent auditors, have completed their audit of the city's 1997/98 Comprehensive Annual Financial report (CAFR) and have issued their opinion and Management Letter thereon. Ms. Payne introduced Grant Thornton representatives. Mr. Barlow from Grant Thornton reviewed the audit process and discussed the highlights of the CAFR and the Management Letter. As a preliminary summary for the Council's information, you may note that the auditors found no arterial weaknesses in the city's internal financial controls and they issued a "clean opinion" on the city's annual financial report. This means the city is using adequate financial control to help prevent any improper use of those resources. Items reviewed included the combined statement of revenues, expenditures and changes in fund balances, figures for last year compared to totals for this year, and excess of revenue and other financing sources. . The report of the independent certified public accountant on the city's compliance and on internal control over financial reporting was reviewed. This information is contained on page 147 of the Agenda Item Summary staff report. Page 149 of the staff report was briefly reviewed. This related to the report of the public accountants on the city's compliance with requirements applicable to each major program and internal control over compliance. Grant Thornton's Management Letter identifies, for the city's benefit, three areas where changes are occurring in either the financial reporting requirements or expectations of internal audit capabilities. These three areas consist of four issues concerning Y2K compliance reporting, the city's vacation policy, and financial system security. The staffs response to each of these is included below. Y2K Compliance Grant Thornton's Management Letter identifies that changes are occurring in financial reporting requirements. The Government Accounting Standards Board has recently issued technical bulletin 98-1, Disclosures About Year 2000 Issues, requiring the city to disclose a general description of the Year 2000 issue, as it relates to the city. The city plans to make the required disclosures in its financial statements for the year ending June 30, 1999. . Work Session Meeting Minutes January 19, 1999 Page 3 . One of Grant Thornton's suggestions for operational improvement is that the city make greater efforts to determine the Year 2000 status of our suppliers, outside service providers, and outside service bureaus. We completely agree with the auditors' advice and the city has taken the action of forming a Y2K Compliance Committee. As one of the assignments from that committee, the Finance bepartment is planning to survey significant business associates well in advance of any potential Year 2000 impact. Mayor Maine noted that an area-wide Y2K Committee existed and was addressing needs. . City's Vacation Policy Another suggestion by Grant Thornton recommends the city require employees to take earned vacations each year. They also mentioned the importance of having trained back up for positions. We agree with the auditors that regular vacations are an important component of internal control. Finance Department employees routinely take time off each year, however workload issues sometimes impact the timing or length of vacations. Requiring employees to take vacations as suggested would most likely involve labor relations issues for union employees and a change in city policy for non-union employees. The Finance Department will discuss this with the Human Resources Department. We strongly agree that positions should be backed-up by other trained employees and have made an effort to ensure that Finance Department employees are cross-trained. Financial System Security The last suggestion for operational improvement recommends the city make use of a current VAX report to identify any unauthorized changes to the general ledger system. The V AX system is secured by a password. Only a few people in the Finance Department and one person in the IS Department are aware of the password, which is changed periodically. This password restricts access to the financial system to those who are authorized to enter transactions. The report mentioned by Grant Thornton would provide the user name of a person who entered a transaction. In addition to password restriction, we also protect the city against the recording of unauthorized transactions by performing regular account analysis and reconciliation's. In another 45 days, the city will be abandoning the V AX general ledger system for the PeopleS oft general ledger system where the security controls are completely different and will be designed appropriately. Audit Reports . In addition to the Report of Independent Certified Public Accountants, which gives the city a "clean opinion," there are several other required reports issued by the Work Session Meeting Minutes January 19,1999 Page 4 . auditors, which are included in the financial statements. One of these, Report of Independent Certified Public Accountants on the City's Compliance and Certain Items Based on an Audit of Financial Statements Performed in Accordance with Federal and State Auditing Standards, notes two exceptions. The first exception notes there were different occasions where the city of Springfield's bank accounts exceeded their collateral and FDIC insurance. The second exception noted that the city did not meet the deadline for submission of the city's annual budget to the County Assessor. We are aware that these oversights occurred and will exercise diligence to assure that occurrences of this type do not happen again. Staff briefly discussed the Hospital Authority and its relationship with the city. There is no city liability related to this issue. Additional information was available on page 15 of the staff report. Staff would further research this issue and provide an update in the next communication packet. At the regular meeting, the council will formally accept the 1997/98 Comprehensive Annual Financial Report and Management Letter. ADJOURNMENT The meeting was adjourned at 6:55 p.m. . Minutes Recorder - Julie Wilson Maureen M. Maine Mayor '- ~ Ju e Wilson City Recorder .