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City Council Minutes 06-08-2009 SpecialSpecial Council Minute: June 8, 2008 1 MINUTES SPECIAL MEETING – MONTICELLO CITY COUNCIL June 8, 2008 – 6 p.m. Members Present: Clint Herbst, Tom Perrault, Glen Posusta, Brian Stumpf and Susie Wojchouski Members Absent: None 1. Call to Order. Mayor Herbst called the meeting to order at 6 p.m. Finance Director, Tom Kelly introduced Jim Eichten from MMKR who was present at the workshop to discuss the 2008 audit documents 2. Workshop on 2008 Audit Documents. Jim Eichten reviewed three documents relating to the 2008 audit which were the Special Purpose Audit Report, the Management Report and the Annual Financial Report. He noted that the 2007 audit had quite a number of findings and that although there were still some findings in the 2008 audit they were fewer in number. He stated that most of the findings in the 2008 audit were in the process of being corrected and he anticipated that these findings would not appear in next year’s audit. Jim Eichten stated the findings in the 2008 were very specific in nature while the 2007 audit findings were more general. There were four findings in the 2008 audit that related to internal controls and two findings relating to the City’s compliance with state laws and regulations. The findings relating to internal controls were reviewed: Recorded audit adjusting journal entries: Audit adjustments were proposed for the investment activity account and the escrow account activity. Recorded prior period adjustments: Prior period adjustments were made relating to capital assets and land held for resale Inadequate documentation of the components of internal controls: The City has policies and procedures in place for internal controls but they are verbal and there is no written documentation of these policies and procedures. Deficiencies in the entity-level internal controls over information technology: The City lacks policies regulating the information technology such as access to computer documents and programs and a data recovery plan. Each of the findings was discussed and it was noted what was in the process of being corrected and what still needed to be done. Special Council Minute: June 8, 2008 2 In the portion of the audit dealing with the compliance to state laws and regulations there were two findings: Contract language – A number of City contracts did not contain language required under Minnesota Statute §574.26 that requires the prime contractor to pay any subcontractor within 10 days of receiving payment from the City. Lack of capital improvement budget and parks and open space plan. Under Minnesota Statute § 462.358 if the City receives cash in lieu of land for park dedication, the City must adopt a capital improvement budget and also have an approved parks/trails and open space plan. Jim Eichten explained to the Council that he didn’t feel the findings were especially serious and believed that most of them would be corrected by the next audit. The financial area of the audit was reviewed. The City’s tax rate is above average compared to other cities in the state as the Monticello does not receive state aid and relies more heavily on property taxes. Jim Eichten also pointed out that the City’s interest earnings had dropped considerably. The City’s debt service per capita is higher than other cities. In 2008 there were a number of one time payments to pay off bonded debt. Overall the general fund was up $600,000+. The City is experiencing a decline in building permit fees and development fees. It was felt that most of the increase in the general fund was a result of delaying improvements and equipment purchases. The enterprise funds were also reviewed and it was noted the liquor store fund had its usual consistent growth. As far as expenses, there was a drop in Public Works expenditures and again that was primarily due to delaying capital asset purchases. Tom Kelly noted that most cities do not have the cost of garbage collection included in their Public Works expense. Jim Eichten also comment on the fiber optics fund where the start up costs are reflected noting that this fund has only been in place one year and continues to be monitored. The auditor reviewed some auditing/accounting updates and recent legislation that may have financial implications for the City. Jim Eichten answered questions from the Council. Brian Stumpf questioned information on page 38 relating to the Firemen’s Relief Association benefits as it did not show that the benefits were changes from $3,950 to $3,450. Jim Eichten explained that this was based on the audit of the relief association which is a year behind. 3. Adjourn. SUSIE WOJCHOUSKI MOVED TO ADJOURN AT 6:50 P.M. TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY. Recorder: Dawn Grossinger Approved: June 22, 2009