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AUDIT 2011/07/21 Minutes The City of Lake Forest AUDIT COMMITTEE Proceedings of the July 21, 2011 Meeting 5:15 p.m. – City Hall, 220 E Deerpath City Manager’s Conference Room I. Call to Order and Roll Call Chairman Jacobs called the meeting to order at 5:15 p.m. Audit Committee Members present: Chairman Jacobs, Mr. Marwede, Ms. Reich and Ms. Moreno. Absent: Ms. Krebs, Finance Chairman Pandaleon (ex-officio) and Mayor Cowhey (ex-officio). Quorum present. City staff present: Robert Kiely, Jr., City Manager; Kathleen Reinertsen, Finance Director, Louise Breckan, Assistant Finance Director and Diane Hall, Senior Accountant. Others present: Linda Abernethy, Partner with McGladrey & Pullen, Josh Peacock, Senior Manager with McGladrey & Pullen, Susan Tillett, Executive Director of Ragdale Foundation, Jay Owen, Treasurer of Ragdale Foundation and Dennis O’Brien with Pasquesi Shepard, audit firm for Ragdale Foundation. Number present in the audience: none. II. Consent Agenda Approval of minutes from Audit Committee held on April 21, 2011 Ms. Reich moved, seconded by Ms. Moreno to approve the minutes from the Audit Committee meeting held on April 21, 2011. The motion carried unanimously by voice vote. III. Ragdale Foundation – Review of Financial Information for the Fiscal Year Ended December 31, 2010 Ms. Susan Tillett, Executive Director briefed the Committee on the history of Ragdale, the Ragdale Foundation and how the City became the owner of Ragdale. Currently, the Ragdale House is undergoing a $3 million renovation project and the Ragdale Foundation has a loan with the City for $2 million. Finance Chairman Pandaleon entered the meeting at 5:30 p.m. Mr. Jay Owen, Treasurer for the Ragdale Foundation stated that when he came on the board ten years ago there were no endowments. In 2002, the net worth of Ragdale Foundation was $2.9 million and in 2010, the net worth had grown to $5.614 million. The Board believes that it will continue to build endowments. He explained that there was a change in keeping the books ten years ago. A CPA firm was brought in to build a more sophisticated monthly report. The Ragdale Foundation’s Finance Committee has looked at departments and prepares a profit and loss analysis of each department. Ragdale Foundation’s Finance Committee prepares and reviews the annual budget and then presents to the Ragdale Foundation Board. The Ragdale Foundation’s Building Committee is monitoring and reviewing the renovation expenses. The Board’s goal is to be organized and proactive. Ms. Tillett stated that the renovation of Ragdale House began in April 2011 and is projected to be completed by summer 2012. Audit Committee Meeting Minutes – July 21, 2011 Page 2 of 2 The Committee thanked Mrs. Tillett, Mr. Owen and Mr. O’Brien for coming to the meeting. IV. FY2011 Audit Ms. Linda Abernethy, Partner with McGladrey & Pullen, updated the Committee on the status by area of the FY2011 Audit. She stated that overall the audit is 50% completed. The final draft of the audit will be discussed and approved at the October 20, 2011 meeting. Committee members will receive the final draft on October 7. V. Other Business Chairman Jacobs stated that McGladrey & Pullen’s current contract for 5 years ended with the FY2011 audit. He stated that the Audit Committee needs to recommend to the City Council whether or not to extend the contract one more year due to retirements in the Finance Department. Committee members asked Ms. Abernethy if there was a partner rotation policy. Ms. Abernethy said not at their firm. She will continue to be the partner on the audit. Committee members requested that staff find out what is the best practice of rotating audit firms, possible ways to reduce the cost of the audit and ask other communities for their audit costs. A motion was made by Ms. Reich to recommend to the City Council to extend the contract of McGladrey & Pullen for the FY2012 Audit with the cost being the same as the FY2011 audit. Mr. Marwede seconded the motion. The motion was approved unanimously by voice vote. VI. Opportunity for the Public to Address the Audit Committee: none VII. Adjournment There being no further business, Ms. Moreno moved, seconded by Mr. Marwede, to adjourn the meeting. The motion was approved unanimously by voice vote. The meeting was adjourned at 6:35 p.m. Respectfully submitted, Louise Breckan Assistant Finance Director