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AUDIT 2013/04/18 MinutesThe City of Lake Forest AUDIT COMMITTEE Proceedings of the April 18, 2013 Meeting 5:15 p.m. – City Hall, 220 E. Deerpath City Hall Conference Room Minutes I. Call to Order and Roll Call Chairman Moreno called the meeting to order at 5:30 p.m. Audit Committee Members present: Chairman Moreno, Baier, Logan and Finance Chairman Pandaleon. Absent: Acting Mayor Schoenheider, Ms. Krebs and Mr. Marwede. Quorum present. City staff present: Robert Kiely, City Manager; Elizabeth Holleb, Finance Director; Diane Hall, Assistant Finance Director; Mary VanArsdale, Director Parks and Recreation and Sally Swarthout, Superintendent. Others present: Linda Abernethy Partner of McGladrey LLP.; Paul Bergmann and Jay Owen of the Elawa Farm Foundation, John Powers and Mary Kay Jaekel of the Parks and Recreation Foundation. Number present in the audience: None II. Consent Agenda Approval of minutes from Audit Committee held on January 17, 2013 Ms. Baier made a motion to approve the January 17, 2013 minutes. The motion was seconded by Mr. Logan. The motion carried unanimously by voice vote. III. FY13 Audit Engagement Letter The Committee reviewed the engagement letter with Ms. Linda Abernethy, Partner with McGladrey LLP. The preliminary meeting was held with City staff in preparation for the pre-audit work to begin on April 22nd and final field work to begin in July. She stated the manager on the job had been changed, per the request of the Committee to change out a senior member of the team. The committee did not have any changes to the draft engagement letter. At the July Committee meeting Ms. Abernethy will present an early look at how the pension changes will affect the financial statements. IV. Tax Incremental Finance District (TIF) Audit Report Ms. Holleb stated the City’s TIF ended December 31, 2012 during the fiscal year. To finalize for the distribution of surplus funds, the City hired McGladrey, LLP to complete the annual audit early. The Committee had no changes to the TIF report. V. Grants Policy Ms. Holleb stated as part of the FY12 audit recommendations; City staff developed a grant policy for the administration of grants. City staff requested input from the committee prior to implementing the new policy. The Committee had no changes to the proposed policy. Committee members discussed petty cash procedures along with procurement cards. VI. Elawa Foundation – Financial Presentation Mr. Paul Bergmann explained the different operations that are currently taking place at Elawa. Mr. Jay Owen explained the Foundation revenues and expenses and how they have worked on an understanding of the interconnection of the two. He explained the Foundation has received a five year commitment to support the salary of the Garden Manager. The market doubled their revenue within the first year of having a full time employee. The committee discussed the City is currently working with the Foundation to develop an operating agreement between the City and Foundation. The agreement with the City would transfer additional responsibility of managing the property to the Foundation. The Foundation is trying to have the agreement completed the summer of 2013 or early fall. VII. Parks and Recreation Foundation – Financial Presentation Mr. John Powers, Foundation Vice President and Mary Kay Jaekel, Foundation Treasurer discussed the Foundation’s finances as it relates to fund raising as well as providing scholarships to people who are unable to afford participation in the Recreation programs. They discussed the two main fund raising events are the Fireworks and Golf outing. The Foundation has partnered with the Onwentsia Club for the Fireworks event to allow for additional space. The Committee discussed the Foundations largest liability is the $300,000 commitment to the City for the pavilion at Townline Park. VIII. Other Business Memo regarding reporting issues raised by Sikich LLP in audit finalist interview – Ms. Holleb reviewed with the committee a memo outlining the issues raised by Sikich LLP. The schedule in the statistical section was a change implemented per GASB54. The City will add a footnote to explain the change in reporting. She explained the Special Service Area (SSA) debt is reported correctly, as the City has pledged enterprise revenues and has supplemented the SSA payment from the Water Fund. This has been resolved in the refinancing of the three SSA’s. Foundation Financial Review – Ms. Holleb presented an updated list of the Foundation reviews. Two Foundations will present their financial statements at each meeting, except for the October meeting. The City will include at the next meeting a summary for each foundation as it relates to the City. IX. Opportunity for Public to Address the Audit Committee – None X. Adjournment There being no further business, a motion was made by Mr. Logan to adjourn the meeting. The motion was seconded by Ms. Baier. The motion was approved unanimously by voice vote. The meeting was adjourned at 7:06 p.m. Respectfully submitted, Diane Hall Assistant Finance Director