Audit Committee June 23, 2006

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Erie County Fiscal Stability Authority Audit Committee Minutes June 23, 2006 Note: the following is a draft copy of minutes of a meeting of the audit committee of the Erie County Fiscal Stability Authority (“ECFSA”), which was held June 23, 2006. These minutes will not become final until approved at a subsequent meeting of ECFSA audit committee directors, and may be amended before approval) Vice Chairman William Joyce called the meeting of the Erie County Fiscal Stability Authority (“ECFSA”) Audit Committee to order at 10:30 a.m. at the offices of the Buffalo-Niagara Partnership, 665 Main Street, Buffalo, New York. Notice of the meeting had previously been distributed to the members and announced to the public and press. The meeting was open to the public and press. Directors Present: William Joyce, Vice Chair; Kenneth Kruly and Stanley Keysa Others Present: Lee Van Riper, Gail Keil, Ken Vetter and Joseph Klimek. Director Joseph Goodell joined the meeting after it had started Vice Chairman Joyce called on Joseph Klimek from the audit firm of Toski, Schaefer & Co., P.C. to review the draft document with the committee. Mr. Klimek referred to the second page of the audit and stated there were no unusual transactions for the agency. “We had your financial statements at a cash basis and converted the statements over to an accrual basis. We had adjustments for accounts payable, accounts receivable and adjustments for prepaid items ...
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Erie County Fiscal Stability Authority
Audit Committee
Minutes
June 23, 2006
Note: the following is a draft copy of minutes of a meeting of the audit committee of the Erie County Fiscal Stability
Authority (“ECFSA”), which was held June 23, 2006.
These minutes will not become final until approved at a
subsequent meeting of ECFSA audit committee
directors, and may be amended before approval)
Vice Chairman William Joyce called the meeting of the Erie County Fiscal
Stability Authority (“ECFSA”) Audit Committee to order at 10:30 a.m. at the
offices of the Buffalo-Niagara Partnership, 665 Main Street, Buffalo, New York.
Notice of the meeting had previously been distributed to the members and
announced to the public and press.
The meeting was open to the public and press.
Directors Present:
William Joyce, Vice Chair; Kenneth Kruly and Stanley Keysa
Others Present:
Lee Van Riper, Gail Keil, Ken Vetter and Joseph Klimek.
Director Joseph Goodell joined the meeting after it had started
Vice Chairman Joyce called on Joseph Klimek from the audit firm of Toski,
Schaefer & Co., P.C. to review the draft document with the committee.
Mr.
Klimek referred to the second page of the audit and stated there were no unusual
transactions for the agency. “We had your financial statements at a cash basis and
converted the statements over to an accrual basis.
We had adjustments for
accounts payable, accounts receivable and adjustments for prepaid items which is
standard.”
“As far as your financial statements, we want to make sure your numbers agree
with our numbers.
There was some consultation with other accountants and there
was no difficulty while conducting the audit in your office.”
Director Keysa noted that the audit has to be published by law and also transmitted
to the County Comptroller.
Director Joyce stated that he does not think that access to the document should be
limited because of the fact that ECFSA is a public agency and any documents that
we present and that are presented to us are available to the public.
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Joe Klimek stated he would change the last paragraph in the audit to state that the
audit will be public knowledge.
Director Joyce asked to what extent the auditors examined financial transactions.
Joe Klimek stated:
“That is part of the procedure and all of the financial
transactions were looked at because it is a small agency.”
They did confirm the
sales tax transaction with the State Department of Taxation and Finance.
Director Goodell asked if a transaction with a board member would be identified as
a related party transaction and Joe Klimek responded:
“Yes, but that there were no
transactions with board members other than reimbursement for the operations, that
is, for travel and expense.”
Joe Klimek then referred to specifics of the audit report.
“Page one is the audit
report for the fiscal year ending December 2005 and the statements are
unqualified.”
Page 3 of the report was discussed, stating there is a separate management
discussion and an analysis of the ECFSA.
“The ECFSA is a governmental agency.
There are two applicable sets of accounting rules; the government- wide statements
and the government-fund statements.
Since the ECFSA has only a one-fund
financial report, there is no all-funds report.”
Page 5 of the report covers balances.
“There was $88,000 in fund balance at the
end of the year and prepaid expense for a portion of the rent.
Sales tax receivables
from NYS of $12 million offset the Erie County sales tax accrual.” Joe Klimek
stated that the money from the State to the County is transferred within minutes
after the ECFSA receives it. There was an accounts payable liability of $54,598.
Director Joyce asked” “How do we determine the amount of funds we will need as
far as paying expenses?” For 2005, it was explained that the sales tax intercept was
based on the projected budget and since most of the large expenses were
professional services under contract, they were predictable.
Mr. Van Riper explained that sales tax transfers typically occur twice a month and
there is also an interest payment from the State on the money they have held while
it is waiting to be transferred.
The ECFSA reports monthly to the Budget Division
of the County and to the State Comptroller on the sales tax intercepted and
transferred, as required by statute.
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Joe Klimek continued by stating: “At the end of December 2005 we had total other
assets of $35,531.”
Director Joyce then asked if the cash balance was invested in any way.
Mr. Van
Riper responded that it is in a working account, a checking account and does not
collect interest.
“It was what the ECFSA established upon formation and an
interest earning account needs to be established.”
Joe Klimek continued with an explanation of page 6 which states that total
expenses were $1,116,000 for 2005.
Joe Klimek then went through the expenses of payroll, payroll taxes and
professional services, in which the PFM expense was the largest at $864,000, and
there were other professional services.
Director Joyce observed:
“We must be
under budget for the current year, 2006?” Mr. Van Riper stated: “Absolutely, our
expenses have been held to a minimum.”
Director Joyce asked what was budgeted for 2006 and Mr. Van Riper responded:
“A total of $1.8 million, $1.4 million as projected last August when the ECFSA
was formed and an additional $400,000 in State funding for the Office of
Management and Productivity. The $1.4 million as projected last August was what
the County assumed in its budget for 2006.”
Mr. Vetter stated that that was correct.
“In the original financial plan there was a
projection of $1.4 million for Fiscal Stability expenditures in 2006 and the County
budgeted the exact amount projected.”
Joe Klimek continued reviewing pages 7, 8, and 9, and described the ECFSA’s
legal status.
“The ECFSA is governed by seven directors that are appointed by the
Governor, including one each appointed upon the recommendation of the Majority
Leader of the State Senate, the Speaker of the Assembly, and the State
Comptroller.
The Governor also designated the Chairman and Vice Chairman.”
Joe Klimek continued discussing the summary of significant accounting policies of
the ECFSA.
“It is on an accrual basis right now because there are no equipment or
property purchases.
There was no long term debt in 2005.”
He continued by noting that transactions with and on behalf of Erie County are
disclosed.
“The sales tax revenue, which was $137 million for 2005 were
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intercepted by the ECFSA and $136 million was, submitted right back to Erie
County.
The balance was retained for ECFSA operations as described previously.”
Joe Klimek continued that on page 9 was the independent audit report on internal
controls.
“We must look at your internal control procedure over financial reporting
and report upon it. We must also look at compliance with other matters.
We know
no matters involving the internal control over financial reporting and its operation
that we considered to be a material weakness.”
He continued by stating that they looked at the establishment of the ECFSA and
the rules that comply.
However, providing an opinion on compliance was not an
objective of this audit. They do not express an opinion.
The audit is in draft form, and Mr. Klimek stated that Toski, Schaefer & Co., P.C.
will add official language stating that it is open to the public, as previously
discussed, in the final version.
He continued that page 11 of the report is a review of the Investment Guidelines,
which were approved upon formation of the board.
“There have not been any
financings by or investments made by the ECFSA in 2005.
The report as issued
states that the Board had complied with the law.”
Director Joyce asked if Toski, Schaefer & Co., P.C. had any other relationships
with the ECFSA.
Joe Klimek responded that the answer was no.
Under
government audit standards they must remain independent are not allowed any
consulting or other agreements beside the audit.
Director Joyce referred Mr. Klimek back to a memo dated May 19, 2006, the
Public Authorities Accountability Act.
“Our compliance needs to be with in 90
days next year, which would put us into March 2007.
Is that correct?”
Mr. Klimek
responded “Yes, March 31, 2007.”
Director Joyce then asked it there were any other questions from the committee
members.
Director Keysa stated that the board members are required to attend a public
authorities training school, which is set up by the State.
The State has set up a
Public Authorities Office and they are required to hold training sessions and to
train the attendees.
Every Director has to take the training.
Director Keysa said he
had attended, along with Gail Keil and Director Kruly.
He stated that he thought
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there would be another session coming up soon and that the remaining members
should attend.
Director Goodell then asked how the cash is transferred from ECFSA to the
County.
Lee VanRiper responded:
“An e-mail is sent to the County Comptroller by the
State Comptroller stating that amount of sales tax funds to be transferred within the
next three days to the ECFSA.
The County Comptroller responds back upon
agreement with the amount of the transfer.”
He continued that a letter is then
prepared to be sent to the bank stating that when the money comes into the ECFSA
account, please distribute the following amount to the County’s account.
“We
decide if and how much to retain by looking at our cash flow and current balance.”
He continued that he then signs the letter and it is faxed to the bank. Gail Keil
confirms by a phone from the bank administration.
“At first, there were two
signatures required, the Executive Director and the Treasurer.
The bank suggested
we could authorize one signature and a follow-up confirmation by phone call to
expedite the process.”
Mr. Van Riper stated that a report then gets distributed to the offices of both
Comptrollers and the County of all the sales tax transactions that occurred.
Director Keysa noted that State law allows the ECFSA to withhold funds for
administrative purposes, and then for payments on any bonds that have been issued
by the ECFSA.
“They have elected for us not to do any financings.”
Mr. Van Riper stated that the County wants the money as soon as it comes in.
“We accommodate their request to transfer it electronically as soon as it gets into
our account.”
Director Joyce asked for the Committee to temporarily adjourn and convene in an
executive session.
After the executive session ended, the Committee reconvened Director Joyce stated
that there were no votes taken and they had needed an opportunity to discuss the
audit in confidence with the auditor.
Director Joyce then asked for a motion for
committee approval of the audit. Director Keysa stated that he so moved, with the
final paragraph of the audit report to be amended by stating that the audit has to
filed with the State Comptroller, the County Comptroller, the Governor’s Office
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and the Fiscal Committees of the State Senate and Assembly and will be made
available for the public.
The motion was seconded by Mr. Goodell and the
Committee voted unanimously to approve.
Director Joyce stated the committee would ask for formal ECFSA approval of the
audit at the ECFSA’s next meeting.
Joe Klimek stated he would have the audit changed as requested and sent to the
ECFSA office.
Director Joyce stated that he thought a mini-audit should be performed from the
end of the fiscal year to mid-July by Toski, Schaefer & Co., P.C..
He felt that it
was appropriate due to the change of Executive Directors.
He will recommend that
a limited engagement audit by Toski, Schaefer & Co., P.C. be approved by the
ECFSA.
Director Joyce asked for a motion for approval to recommend the mini-audit.
Direct Goodell moved and Director Keysa seconded the motion.
The motion was
unanimously approved.
Director Joyce asked for a motion to adjourn the meeting.
Director Keysa moved
and Director Goodell seconded.
The motion was unanimously approved, and the
meeting was adjourned.
Respectfully submitted,
____________________________
Stanley J. Keysa
Secretary
March 26, 2007
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