AUDIT 2011/10/20 Minutes
The City of Lake Forest
AUDIT COMMITTEE
Proceedings of the October 20, 2011 Meeting
5:15 p.m. – City Hall, 220 E. Deerpath
City Council Conference Room
Minutes
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, Marwede, Reich, and Moreno. Absent: Mayor Cowhey. Ms.
Krebs and Finance Committee Chairman Pandaleon. Quorum present.
City staff present: Kathleen Reinertsen, Finance Director, Louise Breckan, Assistant
Finance Director and Diane Hall, Senior Accountant.
Others present: John Diefenbach, President of the Gorton Foundation, Barrett Davie,
Treasurer of the Gorton Foundation, Mike Ley, President of the Commission of the Gorton
Community Center, Brenda Dick, Executive Director of the Gorton Community Center,
Lisa Teufel, Accounting Manager of the Gorton Community Center, David Cain, Milburn
Cain & Co., Linda Abernethy, Partner with McGladrey & Pullen, LLP.
Number present in the audience: none.
II. Consent Agenda
Approval of minutes from Audit Committee held on July 21, 2011
Mr. Marwede made a motion to approve the July 21, 2011 minutes. The motion was
seconded by Ms. Moreno. The motion carried unanimously by voice vote.
Ms. Amy Krebs entered the meeting at 5:20 p.m.
III. Gorton Community Center – Review of Financial Information for the Fiscal Year ended
December 31, 2010
Mr. David Cain stated that the Audit Committee had been supplied with a summary of
events. Mr. Cain reviewed the summary. He stated that there was no wrong doing in the
Gorton accounting records prior to September 1, 2010 and the new accounting records
were set up on September 1, 2010. He stated that the auditor transition was
accomplished both promptly and smoothly. There was full cooperation of the staff,
unrestricted access to books and records and there was no difference of opinion with
the staff. Mr. Cain stated that Gorton Community Center has a small staff but he was
comfortable with its internal controls. He stated that Milburn Cain & Co. was able to
express an unqualified opinion on the financial statements for fiscal year ended
December 31, 2010 for the Gorton Community Center.
Ms. Lisa Teufel, Accounting Manager with the Gorton Community Center stated that she
prepares monthly reports of the Gorton Community Center for the Commission and
Foundation. Mr. Davie, Treasurer of the Gorton Foundation stated that this assists with
understanding the financial position on a monthly basis. He added that there is a cash
flow policy which assists in future planning. Michael Ley reported that the Commission of
the Gorton Community Center was being too optimistic about the Gorton Community
Center’s operating revenues and therefore experienced a financial crisis in the summer
months of 2010. He noted that the Foundation raises one third of the operating budget
for the Gorton Community Center. He stated that 2011 is a transition year.
Audit Committee Meeting
Minutes – October 20, 2011
Page 2 of 3
Audit committee members recommended that a debt policy should be established.
Chairman Jacobs stated that the new Commission of the Gorton Community Center
should be commended for their efforts and thanked all for coming.
IV. Review of the draft of the Comprehensive Annual Financial Report (CAFR) for the Fiscal
Year ended April 30, 2011
Ms. Kathleen Reinertsen, Finance Director reviewed two summary reports, CAFR
Government-Wide highlights and Trend Analysis at the Fund Level.
Ms. Linda Abernethy, Partner with McGladrey & Pullen suggested that an informative
summary of the fiscal year would be to read the Management’s Discussion and Analysis,
Transmittal Letter, Exhibit B-1 General Fund, Required Supplementary Information,
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual
and the Statistical Section. The FY2011 CAFR was issued an unqualified opinion.
There were no significant changes that were requested to be made to the CAFR by the
committee.
V. Review draft of the Report to the Audit Committee (includes the Management Letter) as
prepared by McGladrey & Pullen, LLP
Ms. Linda Abernethy, Partner reviewed the management letter comments with the
committee.
Ms. Abernethy reviewed the required communications report with the committee. Ms.
Abernethy stated that GASB 51, Accounting and Financial Reporting for Intangible Assets
(easements) had been implemented in FY2011 but nothing is significant for the City at
this time. She stated that GASB 54, Fund Balance Reporting and Governmental Fund
Type Definitions, is significant for FY2012 as this standard will change the look of the
financial statements.
Ms. Reich left the meeting at 6:00 p.m.
A motion was made by Ms. Moreno to accept the FY2011 CAFR, Management Letter
and McGladrey & Pullen, LLP’s Report to the Audit Committee. The motion was
seconded by Ms. Krebs. The motion was approved unanimously by voice vote.
VI. Executive Session with Auditors
A motion was made by Mr. Marwede at 6:30 p.m. to adjourn into executive session with
Ms. Abernethy, McGladrey & Pullen, LLP. The motion was seconded by Ms. Moreno. The
motion was approved unanimously by voice vote.
A motion was made by Ms. Krebs to adjourn back into open session at 6:35 p.m. The
motion was seconded by Mr. Marwede. The motion was approved unanimously by
voice vote.
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Minutes – October 20, 2011
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VII. Other Business
Chairman Jacobs made an announcement that the City Council approved the audit
contract with McGladrey & Pullen for FY2012.
The Committee discussed the survey of comparable communities on audit contracts.
Ms. Moreno volunteered to present the FY2011 CAFR to the City Council on November 21,
2011 as Chairman Jacobs will be out of town on that date.
The Audit Committee will review the financial statements for the Senior Foundation at
their January 19, 2012 meeting.
All thanked Louise Breckan for her 30 years of service with the City and wished her a
wonderful retirement.
VIII. Adjournment
There being no further business, a motion was made by Ms. Moreno to adjourn the
meeting. The motion was seconded by Ms. Krebs. The motion was approved
unanimously by voice vote. The meeting was adjourned at 6:50 p.m.
Respectfully submitted,
Louise Breckan
Assistant Finance Director