[00:00:03]
GOOD EVENING,[1. CALL TO ORDER]
EVERYONE.IT IS THURSDAY, MARCH 28TH, AND IT IS 6:00 PM I WANNA CALL THE SPECIAL MEETING OF THE DESOTO CITY COUNCIL TO ORDER.
I'M GONNA ASK IF OUR CITY SECRETARY WILL GIVE US A ROLL CALL, PLEASE.
COUNCIL MEMBER NICOLE RAPHAEL.
COUNCIL MEMBER ANDRE BIRD HERE.
MARKS COUNCIL MEMBER CRYSTAL CHISHOLM HERE.
[a. Consider accepting the Fiscal Year 2023 Annual Comprehensive Financial Report & Single Audit Report]
YOU.UM, AT THIS TIME, WE WILL HAVE THE FIRST ITEM ON OUR AGENDA.
FIRST, WE HAVE CONSIDER ACCEPTING THE FISCAL YEAR 2023 ANNUAL COMPREHENSIVE FINANCIAL REPORT AND SINGLE AUDIT REPORT.
MAKING THAT PRESENTATION IS LAKITA SUTTON, INTERIM FINANCE DIRECTOR.
I'M ACTUALLY GONNA INTRODUCE OUR, UM, SENIOR AUDITOR WHO IS HERE TONIGHT, MS. PAULA LAU.
BUT, UH, JUST WANTED TO OPEN TO, UM, KIND OF RECAP WHY WE ARE HERE TONIGHT.
WE ARE BRINGING FORWARD THE CITY'S, UH, 2023 ANNUAL, UM, COMPREHENSIVE FINANCIAL REPORT.
AND, UH, WE OF COURSE HAVE WORKED WITH, UH, PATILLO BROWN AND HILL FOR A NUMBER OF YEARS.
UH, WE ARE ON OUR FIFTH YEAR, UM, AUDIT, WORKING WITH THIS FIRM.
AND SO, UH, WE ARE PLEASED TO BRING FORWARD, UH, GOOD NEWS TONIGHT.
WE HAD A VERY SUCCESSFUL AUDIT.
I'M GOING TO ALLOW PAULA TO COME FORWARD AND WALK YOU THROUGH SOME OF THE HIGHLIGHTS OF HOW WE PERFORM DURING THE AUDIT, UM, KIND OF THE AUDITOR'S RESPONSIBILITIES, WHAT OUR RESPONSIBILITIES WERE, AND, UM, JUST, UH, KIND OF WALK YOU THROUGH SOME OF THE SUCCESSES THAT WE HAD THERE.
ALSO INCLUDED IN YOUR PACKET WAS A SINGLE AUDIT REPORT.
AS YOU KNOW, WHEN A CITY SPENDS, UM, MORE THAN $750,000 IN GRANT FUNDS, WE ARE OBLIGATED TO HAVE A SINGLE AUDIT AS WELL.
SO WE ARE ON OUR FOURTH SINGLE AUDIT IN A YEAR.
UM, YEAH, OVER THE PAST FOUR YEARS, WE HAVE DEFINITELY HAD A SINGLE AUDIT.
SO WE'RE, WE'VE INCLUDED THAT IN YOUR REPORT AS WELL.
AND WE'LL KINDA WALK YOU THROUGH WHAT SOME OF THOSE EXPENDITURES LOOK LIKE FOR FISCAL YEAR 23.
SO AT THIS TIME, I WILL BRING FORWARD, UH, PAULA LAU TO GO THROUGH THAT PRESENTATION FOR US.
UM, WHICH IS THIS THE, YEAH, THERE'S A LITTLE BUTTON ON THE RIGHT OR ON THE RIGHT.
WHICH BUTTON IS IT? JUST, UM, AS LAKE MENTIONED, I'M PAULA WOW.
WITH PATI BROWN HILLEL, AND I'M HERE THIS EVENING JUST TO TALK ABOUT THE ART PROCESS A LITTLE BIT.
GIVE YOU THE ART RESULTS, TOUCH ON SOME OF THE KIND OF FINANCIAL HIGHLIGHTS AND OPEN THE, THE, FOR ANY DISCUSSION AS WELL.
WE GOT ANY QUESTIONS THAT YOU MIGHT HAVE.
I'M MORE THAN HAPPY, UM, TO ANSWER THOSE.
UM, BUT JUST TO TALK ABOUT THE AUDIT PROCESS A LITTLE BIT, UH, WE BREAK UP THE AUDIT PROCESS INTO TWO DIFFERENT PHASES.
ONE OF 'EM WE REFER TO AS INNER WORK OR PLANNING.
AND, UM, THE OTHER PIECE IS REFERRED TO IS FINAL FIELD WORK.
UH, FIRST I JUST WANNA TALK ABOUT, UM, THE PLANNING PHASE A LITTLE BIT, UM, AND WHAT THAT INCLUDES.
IT INCLUDES, UM, YOU KNOW, OUR FIRM, UM, TAKING A STEP BACK AND LOOKING AT PROCESSES, UM, LOOKING READING MINUTES AND TRYING TO DO A RISK ASSESSMENT AND LOOKING AT, UM, WHERE WE MIGHT FIND SOME THINGS, UH, MIGHT BE A LITTLE MORE RISKY, UM, IN REGARDS TO MAYBE POTENTIALLY THINGS COULD GO WRONG, SO TO SPEAK.
UM, AND THROUGH THAT PROCESS, WE ASK A LOT OF QUESTIONS TOO, OF, UM, DIFFERENT INDIVIDUALS, UM, HERE AT THE CITY ABOUT THE PROCESSES AND, AND HOW THINGS FLOW WITHIN THE FINANCIAL STATEMENTS AND EVEN CASH DISBURSEMENTS AND HOW THINGS ARE COLLECTED, UM, AS WELL.
BUT AFTER WE GATHER ALL THAT INFORMATION, THEN WE, UM, HONE IN AND DO SOME, WHAT WE REFER TO AS THE, THE FINAL FIELD WORK FACE, UM, OF THE AUDIT.
AND WE LOOK AT, UM, CERTAIN BALANCES THAT WE FELT LIKE, UM, MAYBE THINGS COULD GO WRONG, SO TO SPEAK.
UM, WHEN WE FOCUS IN AND WE GET, GATHER A LOT OF INFORMATION ABOUT, LIKE, SO FOR CASH, WE MAYBE GET SOME INFORMATION FROM OUTSIDE ENTITIES.
WHAT IS THIS BANK ACCOUNT? UH, WHAT IS THE BANK ACCOUNT? BALANCING AND VERIFY THAT, THOSE TYPE OF THINGS, UH, WITH THE CITY'S, UH, RECORDS AS WELL.
SO THAT'S, UM, THE PROCESS THAT WE WORK ON THROUGH, UM, THE LAST PHASE OF THE AUDIT.
AND AFTER WE GET DONE WITH THAT LAST PHASE, THEN WE REPORT INTO, UM, THE AUDIT COMMITTEE AS WELL AND PROVIDE THEM WITH THE
[00:05:01]
AUDIT RESULTS, WHICH I'M HAPPY TO PRESENT TO YOU THIS EVENING AS WELL.AND THOSE AUDIT RESULTS, UM, INCLUDE AN UNMODIFIED OPINION ON THE FINANCIAL STATEMENTS, WHICH IS THE HIGHEST DEPUTY UNION THAT CAN BE RENDERED AND KNOWN AS A CLEAN OPINION, UH, TO MOST INDIVIDUALS AS WELL.
SO THERE'S A SET OF GUIDELINES THAT, UM, THEY SAY FOR LOCAL GOVERNMENTS THAT THESE FINANCIAL STATEMENTS THEY NEED TO BE PRESENTED IN.
AND, UM, THIS PARTICULAR CITY HAS MET THOSE STANDARDS.
SO CONGRATULATIONS ON, UM, COUNCIL AND YOUR FINANCE TEAM FOR, UM, GETTING THAT HIGH REMARK AGAIN THIS YEAR.
SO, GOOD JOB, TRACY AND LATA AND, AND THEIR TEAM.
THEY'VE DONE A, A TREMENDOUS JOB OF GATHERING, UH, THE INFORMATION THAT WE NEED TO BE ABLE TO PRESENT THIS TO YOU THIS EVENING AS WELL.
BUT AS I MENTIONED TO YOU TOO, WE DID LOOK AT, UM, AND CONSIDER INTERNAL CONTROLS AND PROCESSES OVER, UH, THE INFORMATION AS WELL.
AND IF WE DID COME ACROSS SOMETHING WE FEEL LIKE WE NEED TO BRING TO YOUR ATTENTION, MAYBE IT WAS A MATERIAL WEAKNESS OR SIGNIFICANT DEFICIENCY, WE WERE, WE WOULD REPORT THAT TO YOU HERE THIS EVENING AS WELL.
BUT I'M HAPPY TO LET YOU KNOW, WE DID, DIDN'T HAVE ANY TYPE OF FINDINGS OF THAT NATURE, SO CONGRATULATIONS ON, UM, REACHING THAT ACHIEVEMENT TOO.
UM, AS LAKITA DID, WERE MENTIONED, UM, YOU DO HAVE THE SMALLER ITEM, THE SINGLE AUDIT REPORT, UM, IN YOUR PACKET, AND THAT GETS KICKED OFF BASICALLY WHENEVER ENTITY DOES SPEND MORE THAN $750,000 FEDERAL AWARDS BASED ON SOME REQUIREMENTS BY THE FEDERAL GOVERNMENT THAT THEY HAVE, UM, PROVIDED US, WE HAD TO FOCUS IN ON TWO MAJOR PROGRAMS THIS YEAR.
ONE OF 'EM BEING THE COMMUNITY DEVELOPMENT BLOCK GRANT, AND THE OTHER ONE BEING, UM, SOME OF THE ARPA FUNDS.
AS YOU CAN SEE, $800,000 OF EACH ONE OF THOSE CATEGORIES WERE SPENT THIS YEAR.
AND AS WE FOCUSED ON SOME PROCEDURES OVER THOSE TWO DIFFERENT TYPES OF PROGRAMS, WE DID NOT COME ACROSS ANY, UH, FINDINGS OR ANY MATERIAL NON-COMPLIANCE TO BRING TO YOUR ATTENTION HERE OVER THIS REPORT AS WELL.
SO AGAIN, RECEIVING AN UNMODIFIED OPINION FOR YOUR SINGLE AUDIT.
SO CONGRATULATIONS ON GETTING THOSE HIGH REMARKS AS WELL.
AS FAR AS, UM, JUST TALKING ABOUT SOME OF THE FINANCIAL HIGHLIGHTS, JUST WANTED TO, UH, POINT OUT A FEW THINGS HERE.
UM, THIS, THAT YOU SEE IS A SNAPSHOT ON THIS PARTICULAR SLIDE, IS LOOKING AT YOUR NET POSITION FOR YOUR TWO DIFFERENT CATEGORIES.
ONE, THE GOVERNMENTAL ACTIVITIES AND THE OTHER ONE BEING THE BUSINESS TYPE ACTIVITIES.
THE GOVERNMENTAL ACTIVITIES INCLUDES ALL OF YOUR SPECIAL REVENUE FUNDS, GENERAL FUND CAPITAL PROJECT FUNDS, ALL OF THOSE, UM, INCLUDED INTO THAT SECTION.
AND ALSO INCLUDES ALL THE LONG-TERM LIABILITIES AND CAPITAL ASSETS FOR THOSE, UH, PARTICULAR TYPE OF ACTIVITIES.
AND THEN ALSO HAVING YOUR BUSINESS TYPE ACTIVITIES SEPARATED OUT, UM, INCLUDING LIKE YOUR WATER AND SEWER FUND, UM, IN THAT PARTICULAR SECTION.
BUT AS YOU CAN SEE, YOU HAVE POSITIVE CATEGORIES IN ALL THREE DIFFERENT SECTIONS THERE, YOUR NET INVESTMENT CAPITAL ASSETS RESTRICTED AND UNRESTRICTED, UM, AS WELL.
UM, AS FAR AS, UM, ALL OF THESE SECTIONS, YOU DID HAVE AN INCREASE IN THAT POSITION TOO, A $7.4 MILLION INCREASE FOR THE GOVERNMENTAL ACTIVITIES AND A, UM, $266,000 INCREASE FOR YOUR BUSINESS TYPE ACTIVITIES.
AS FAR AS, UM, LOOKING MORE, UM, MORE DOWN AT THE FUND LEVEL, I KNOW THAT A LOT OF TIMES, YOU KNOW, YOU GUYS ARE GOING INTO THE BUDGET SEASON, SO I KNOW LOOKING AT, UM, YOU KNOW, YOUR GENERAL FUND, WHAT WAS ANY FUND BALANCE? WHAT ARE WE LOOKING AT, WHAT DO WE HAVE, UH, THERE AS WELL? I'M LOOKING AT YOUR GENERAL FUND.
YOU CAN SEE THE END, THE FISCAL YEAR FOR 2023, IT WAS APPROXIMATELY $41 MILLION OF ENDING FUND BALANCE FOR THE GENERAL FUND, AND 40 MILLION FOR 20 22 2 IN THE GENERAL FUND WITH, UM, UNASSIGNED FUND BALANCE FOR 2023 BEING ALMOST $41 MILLION, WHICH EQUATES TO ABOUT, UM, 75% OF YOUR GENERAL FUND EXPENDITURES IN THE YEAR THAT WE'RE LOOKING AT, WHICH IS ABOUT NINE MONTHS OF GENERAL FUND EXPENDITURES.
SO IT'S DEFINITELY IN A, IN A GOOD FINANCIAL, UH, POSITION THERE FOR YOUR GENERAL FUND AND, UM, AND OVERALL, UM, OF LOOK AS WELL WHEN WE'RE TALKING ABOUT NET POSITION TO YOU.
UM, BUT THAT'S JUST, UM, TALKING ABOUT THE AUDIT RESULTS AND PROVIDING SOME, A FEW FINANCIAL HIGHLIGHTS OF, UM, OF THE, UM, ANNUAL COMPREHENSIVE FINANCIAL REPORT.
YOU KNOW, THERE'S A LOT OF GREAT INFORMATION IN HERE.
SO EVEN LIKE IN IN THE STAT SECTION, THERE'S THE STATISTICAL SECTION OF THIS REPORT, A LOT OF TREND INFORMATION.
IT'S, UM, YOU KNOW, VERY GOOD READ, I THINK, UM, EACH YEAR.
SO I DEFINITELY ENCOURAGE, UM, EACH OF YOU TO, TO KIND OF TAKE A LOOK THERE AS WELL.
BUT, UM, I'M MORE THAN HAPPY TO ANSWER ANY QUESTIONS YOU MIGHT HAVE.
I KNOW YOUR, YOUR TEAM HAS DONE A TREMENDOUS JOB AND REALLY APPRECIATE
[00:10:01]
IT HAVING THE OPPORTUNITY TO WORK WITH, UM, EACH OF YOU AND STAFF FOR THE LAST FIVE YEARS AS WELL.UM, SO I APPRECIATE YOU COMING, UH, TO PRESENT TONIGHT.
UM, AND JUST ALL THE WORK THAT YOU HAVE DONE, CONTINUOUSLY DONE, AS YOU MENTIONED OVER THE LAST FIVE YEARS, UH, WORKING WITH US ON OUR AUDIT.
ALSO, WE WANT TO THANK OUR FINANCE TEAM, UH, FOR THE WORK THAT THEY HAVE DONE TO, UH, TO, TO ENSURE, UM, THAT WE RECEIVE THESE POSITIVE OUTCOMES FOR EACH OF OUR FINANCIAL AUDITS.
SO IF WE CAN GIVE THEM AN
AND AS WELL AS I WANNA THANK, UH, THOSE THAT SERVE ON THE AUDIT AND FINANCE COMMITTEE FOR THEIR WORK, UM, IN SERVICES.
SO I'M GONNA ASK IF EITHER, UM, I SERVE ON THERE AS WELL AS MAYOR PRO TEM HUGHES AND, UH, COUNCIL MEMBER BUR THEN WE DO HAVE A VACANT POSITION, UM, ACCORDING TO THE NEW STRUCTURE THAT COUNCIL DESIRES, UM, THAT YET HAVE YET TO BE FILLED.
HOWEVER, WE DO STILL HAVE, UM, OUR COUNCIL MEMBER POSITIONS THAT ARE ACTIVE, UM, ACTIVELY ENGAGED WITH, UH, THE AUDIT.
SO I'M GONNA ALLOW IF THEY HAVE ANY COMMENTS, UH, THAT THEY WANT TO MAKE AT THIS TIME REGARDING THE PROCESS, WE'LL RECEIVE THOSE.
AND THEN I BELIEVE WE HAVE SOME QUESTIONS.
COUNCIL MEMBER CHISHOLM, DO WE HAVE SOME QUESTIONS? NO, I HAVE COMMENTS.
THANK YOU MADAM MAYOR, I JUST WANNA SAY THANK YOU FOR THE PRESENTATION.
THANK YOU FOR THE GREAT WORK THAT YOU HAVE DONE AS WELL AS STAFF.
WE APPRECIATE YOU AND LOOKING FORWARD TO SEEING YOU AGAIN REAL SOON WHEN WE CAN.
THANK YOU MADAM MAYOR, AND THANK YOU SO MUCH MS. LOWES FOR BEING HERE.
AND, UH, CONGRATULATIONS TO OUR STAFF FOR CONFIRMING WHAT WE ALREADY KNEW.
THAT STAFF, EVEN IN THE MIDDLE OF A TREND, UH, CHANGING SOFTWARES, THEY WERE ABLE TO MAINTAIN THE STATUS.
I WAS NERVOUS ABOUT THIS ONE BECAUSE I KNOW HOW DIFFICULT IT CAN BE WHEN YOU, UH, UPGRADE YOUR, YOUR SOFTWARE.
BUT FOR THEM TO BE LITERALLY, UH, IN THE MIDDLE OF CHANGING SOFTWARES, GOING FROM ONE SYSTEM TO ANOTHER SYSTEM AND TO MAINTAIN AN AUDITED, UM, LEVEL MM-HMM,
SO, UH, THANK YOU SO MUCH STAFF AND THANK YOU FOR VERIFYING IT SO THAT OUR CITIZENS CAN BE, UM, ASSURED ABSOLUTELY THAT, UH, THEIR TAX DOLLARS ARE BEING HANDLED APPROPRIATELY.
UM, AND I WANTED TO JUST PROVIDE SOME CLARITY BECAUSE I KNOW THERE HAVE BEEN QUESTIONS AND I EVEN RECEIVED SOME QUESTIONS BEFORE WE GOT HERE AS TO WHY WE HAD TO HOST THIS MEETING TONIGHT.
IN TERMS OF THE TIMING, UM, STAFF, COULD EITHER ONE OF YOU COME AND MAYBE JUST PROVIDE AN EXPLANATION SO THAT, UM, SO THAT OUR RESIDENTS AND OTHERS CAN HAVE CLARITY ON WHY WE'RE MEETING TONIGHT AND WHAT THE REASON FOR THAT WAS.
WE NORMALLY, UM, TRY TO HAVE THE ACT FOR ON, UM, THE REGULAR AGENDA.
AND WE TRY REALLY, REALLY HARD THIS TIME AS WELL.
IT WAS MAINLY DUE TO, UM, THE CHANGEOVER FROM THE OLD SYSTEM TO THE NEW.
UM, WE HAD SOME DELAYS IN THE BEGINNING OF GETTING SOME OF THE BALANCES THAT WE NEEDED FROM THE OLD SYSTEM TO THE NEW.
AND, UM, YOU CAN IMAGINE A VERY EXTENSIVE PROCESS OF, UH, WORKING THROUGH A CROSSWALK ACTIVITY TO WHERE WE HAD TO ENSURE THAT WHAT WAS IN THE OLD SYSTEM WAS ACCURATELY REFLECTED IN THE NEW SYSTEM, THOSE END OF THE YEAR BALANCES FOR FISCAL YEAR 22.
WE HAD TO REALLY PUT SOME INTEGRITY INTO THAT AND GO IN AND CHECK EVERY SINGLE ONE OF THOSE.
UM, SO WE DID KIND OF RUN INTO SOME DELAYS.
WE HAD A LITTLE BIT OF A DELAY TOO FROM THE FIRM THAT WE SWITCHED TO.
THEY, THERE WAS SOME STAFFING ISSUES THERE, JUST THINGS THAT WERE KIND OF BEYOND OUR CONTROL.
SO, UH, WE WERE, WE WERE STILL PLEASED TO BE ABLE TO ONLY BRING IT TO YOU ONE WEEK LATER THAN NORMAL.
AND I REALLY DO APPRECIATE YOU GUYS FOR MAKING THE TIME TO COME TO A SPECIAL MEETING FOR THIS TONIGHT.
UM, DID YOU WANT TO, OH, YOU HAD SOMETHING YOU WANNA SAY? THAT'S ALRIGHT.
I JUST WANTED TO ADD TO, UH, WHAT MS. SUTTON SAID WAS THAT, UH, WE'RE REQUIRED TO PRESENT THE AUDIT TO COUNCIL WITHIN SIX MONTHS OF THE CLOSE OF THE PREVIOUS FISCAL YEAR.
SO WE WE'RE BUMPING UP AGAINST THAT TIMEFRAME WITH THE END OF MARCH COMING.
SO THAT'S, THAT'S THE OTHER REASON WHY WE HAD TO HAVE A SPECIAL COUNCIL MEETING.
THANK YOU FOR THAT CLARIFICATION.
UM, AND TO KIND OF PUT A PIN IN IT, AS FAR AS THE AUDIT AND FINANCE COMMITTEE'S, UH, RECOMMENDATION, THE, UM, AS WE KNOW AS IS CUSTOMARY, UM, WITH THE ROLE THAT THE AUDIT AND FINANCE COMMITTEE SERVES, IT IS THE JOB OF THE AUDIT AND FINANCE COMMITTEE TO MAKE A RECOMMENDATION TO COUNCIL ON WHETHER TO APPROVE OR TO DENY WHAT'S PRESENTED IN THESE AUDITED FINANCIALS.
AND SO, UM, THE AUDIT AND FINANCE COMMITTEE IS RECOMMENDING APPROVAL OF, OF THIS DOCUMENT, AND WE WILL TAKE A VOTE ON THAT TONIGHT.
UM, USE, I BELIEVE WE'LL BE USING OUR VOTING PADS, OR WILL WE STILL HAVE TO DO A HAND VOTE? WE'LL HAVE TO DO A HAND VOTE.
SO, UM, WITH THAT SAID, WE WILL TAKE, UM, HAVE AN OPPORTUNITY TO TAKE QUESTIONS, COUNSEL, I DON'T KNOW, DO WE HAVE A LOT OF QUESTIONS? IF SO, WE'LL DO, UH, ROUNDS.
[00:15:01]
HAVE SEVERAL.SO, TOM, DO YOU HAVE, DO YOU HAVE THAT OR COUNSEL, DO YOU ALL NEED TO LOOK AT ACTUAL, UM, SLIDES? I DON'T NEED TO LOOK AT A SLIDE.
COUNCIL MEMBER, RAFAEL, WILL YOU NEED TO REFERENCE SLIDES? OKAY, THANK YOU.
WE'LL GO AHEAD AND DO THE TIMER AND WE'LL HAVE THREE MINUTES, UH, PER COUNCILPERSON.
UH, AND THANK YOU SO MUCH FOR YOUR PRESENTATION TODAY.
YOU KNOW, WE'VE BEEN TALKING A LOT ABOUT FUTURE PLANNING, RIGHT? UM, WERE THERE ANY EMERGING TRENDS FROM MY FINANCIALS THAT WE SHOULD BE AWARE OF IN FOR, TO BE THINKING ABOUT FOR FUTURE WISE, WHETHER IT IS INTERNAL CONTROLS OR JUST, UM, REPORTING IN ITSELF? SO, THAT'S A GREAT QUESTION.
SO, UM, ONE OF THE THINGS THAT, UM, HAS HAPPENED IN THE LAST FEW YEARS, THERE HAS BEEN A LOT OF CHANGE WITH, UM, UM, ACCOUNTING STANDARDS.
AND WE ARE SUPER EXCITED, AND NOT EVEN FROM STAFF POSITION, BUT AS AUDITOR AUDITORS AS WELL.
UM, WITHIN THE NEXT TWO TO THREE YEARS, THERE'S NOT AS MANY AS, UH, SUBSTANTIAL CHANGES, UM, IN REGARDS TO THE ACCOUNTING STANDARDS.
SO THAT'S GREAT FOR ALL OF US.
UM, BUT ALSO TOO THOUGH, BUT I THINK, UM, THOUGH LOOKING AT INTERNAL CONTROLS, THINGS OF THAT NATURE, I THINK IT'S A CONTINUOUS, UM, UH, SITUATION WHERE, UM, EVERY ENTITY ALWAYS NEEDS TO BE DOING A CONTINUOUS RISK RISK ASSESSMENT.
'CAUSE THINGS ARE ALWAYS CHANGING IN THE ENVIRONMENT AND, AND THINGS OF THAT NATURE.
SO, I MEAN, WE ALWAYS JUST, UM, YOU KNOW, CAN ALWAYS RECOMMEND THAT TO STAFF AND HAVE THOSE DISCUSSIONS, UM, WITH THEM AS WELL.
SO HOPEFULLY THAT ANSWERS THE QUESTION TOO.
AND, AND IN YOUR REPORT, NOTHING STOOD OUT WHERE TO CALL OUT THAT PERSPECTIVE? THAT IS CORRECT.
THANK YOU MADAM MAYOR, THANK YOU SO MUCH FOR THE PRESENTATION AND THE WORK, UH, HARD WORK TO THE STAFF.
I HAD A QUESTION ABOUT, I WAS LOOKING AT THE REPORT AND ON PAGE TWO WHERE IT TALKS ABOUT THE, UM, THE RISK IDENTIFIED.
JUST COULD YOU JUST SPEAK TO THOSE THINGS THAT YOU FOUND, AND THEN I GUESS REALLY THE RECOMMENDATIONS MOVING FORWARD.
IS IT FOR THE SINGLE AUDIT OR FOR THE ACTUAL AF A IT IS THE, THAT'S THE SINGLE AUDIT.
I BELIEVE YOU'RE LOOKING AT REFERENCING PAGE TWO ON THAT ONE.
SO, UM, YES, THIS IS A COMMON QUESTION THAT WE GET IS, IS ABOUT THIS LETTER.
SO THANK YOU FOR, UM, TALKING ABOUT THIS, BUT IT WASN'T, IT WAS LAST YEAR THAT THIS, UM, INFORMATION WAS REQUIRED FOR US TO INCLUDE IN THIS REQUIRED COMMUNICATION LETTER.
UM, AND BASICALLY WHAT IT IS, IS WHENEVER WE PERFORM OUR RISK ASSESSMENT, THIS, THESE ARE ITEMS THAT WE FELT LIKE ARE SIGNIFICANT RISK AND, UM, YOU KNOW, MAYBE AN AREA WOULD THAT COULD REALLY GO WRONG, BASICALLY.
AND, BUT, UM, THAT ONE THAT YOU SEE THERE IS MANAGEMENT OVER VARIETY CONTROLS.
THAT IS A REQUIRED, UM, SIGNIFICANT RISK FOR ANYBODY THAT'S PERFORMING AN AUDIT IN ACCORDANCE WITH, UM, THE AUDITING STANDARDS.
EVEN IF YOU'RE, UM, DOING THE AUDIT FOR CITY OF DALLAS OR AMAZON OR WHOEVER IT MIGHT BE, THAT IT HAS TO BE A SIGNIFICANT RISK.
AND THEN WE DO ADDRESS IT AS A PART OF OUR AUDIT PROCEDURES AS WELL.
SO THE GOOD THING IS, IS THAT WE, YES, THESE WERE SIGNIFICANT RISKS BASED ON, UM, US PERFORMING OUR RISK ASSESSMENT, BUT AT THE SAME TIME WE DID NOT FIND ANYTHING, UM, THAT WAS WRONG THAT WE NEEDED TO BRING YOU TO YOUR ATTENTION AS WELL.
AND SO, UM, I THINK MAYBE I'M NOT LOOKING FOR NECESSARILY WHAT, WHAT WAS WRONG, BUT ARE THERE RECOMMENDATIONS, IS IT POLICY OR IS IT JUST, JUST WANTED TO UNDERSTAND, WAS THERE A RECOMMENDATION OR YOU DON'T DO THAT, YOU JUST RE HIGHLIGHT THINGS FOR US? YEAH, SO THIS IS JUST, UH, RE HIGHLIGHTING, HEY, THIS IS A SIGNIFICANT RISK.
AND THEN, UM, BUT IF THERE WAS A RECOMMENDATION AND SOME ONE OF THESE ITEMS IS TOO, JUST IN REGARDS TO A NEW ACCOUNTING STANDARD AND, UM, WE FELT LIKE THE MANAGEMENT DID TAKE THE APPROPRIATE ACTIONS TO MAKE SURE THAT THIS ACCOUNTING STANDARD WAS TAKEN CARE OF AS WELL.
AND THEN THE ONE THAT, THE NEXT ONE THAT SPEAKS ABOUT ACCOUNTING FOR THE IT SUBSCRIPTIONS, COULD YOU SPEAK TO THAT A LITTLE BIT AS WELL? AND SO THAT ONE IS THE NEW ACCOUNTING, UM, STANDARD, THE NEW, UM, FOR, WE REFER TO 'EM AS
UM, YEAH, AND THAT'S THE ONE WE FELT LIKE THAT, UM, MANAGEMENT DID HANDLE THAT ONE APPROPRIATELY, THAT NEW ACCOUNTING STANDARD AND DIDN'T HAVE ANYTHING TO BRING YOUR ATTENTION, SO.
AND I GUESS I DON'T, I DON'T KNOW IF THIS IS A QUESTION FOR A CITY MANAGER, JUST IN TERMS OF THE OVERRIDES PIECE, JUST IN TERMS OF OUR INTERNAL CONTROLS.
SO WHAT I UNDERSTAND IS THAT WE'RE GOOD, BUT JUST WANTED TO UNDERSTAND, UM, OUR CONSTRAINTS.
WHAT CONS, WHAT CONSTRAINTS DO WE HAVE IN PLACE FOR, IF IT'S BEEN IDENTIFIED NOW, WHAT, WHAT ARE WE GONNA DO NOW THAT THEY'VE MADE THIS IDENTIFICATION? MAYBE THAT'S MY QUESTION.
[00:20:01]
YOU.AND THE MANAGEMENT OVERRIDE OF CONTROLS IS, UM, SOMETHING THAT'S MS. LAB, CAN YOU TALK INTO THE MICROPHONE JUST TO MAKE SURE, UM, OUR ONLINE VIEWERS CAN HEAR YOU AS WELL.
UM, BUT BASICALLY, SO THE MANAGEMENT OVERRIDE OF CONTROLS IS SOMETHING THAT, UM, WE HAVE TO IDENTIFY AS A SIGNIFICANT RISK AND WE JUST HAVE TO PLAN OUR PROCEDURES TO MAKE SURE, UM, THAT THAT WASN'T THE CASE AND WE DID GET COMFORTABLE THAT, THAT THERE ARE CONTROLS IN PLACE TO MAKE SURE THAT, UM, SOMETHING WOULDN'T GO WRONG IN THAT PARTICULAR SITUATION.
SO IT SOUNDS LIKE IT'S A STANDARD SOMETHING YOU HAVE TO, TO NOTE.
AND WHAT YOU FOUND WAS THAT DIDN'T HAVE ANYTHING TO THANK YOU BE CONCERNED ABOUT.
OR TO BRING TO YOUR ATTENTION TO BE CONCERNED ABOUT EASY EITHER, SO, OKAY.
BUT IT'S, IT'S A GREAT QUESTION AND WE'VE HAD THAT QUESTION FROM ALMOST ALL COUNCIL MEMBER, YOU KNOW, BOARDS AND THINGS OF THAT NATURE SINCE WE HAD TO START PUTTING THAT IN THERE LAST YEAR.
COUNCIL MEMBER PARKER, DID YOU HAVE ANY QUESTIONS? I SAW YOUR LIGHT.
NO QUESTIONS SHE HAD OH, OKAY.
I, NO, I WAS GONNA, UM, FURTHER COMMENT ON, UH, COUNCILWOMAN RAPHAEL'S, UH, QUESTION.
UH, THE GEO FO A DOES TEACH US, UH, UH, WHAT INTERNAL CONTROL SHOULD MEAN WITHIN THE FINANCE DEPARTMENT.
AND SO THE REASON THAT THERE WEREN'T ANY DEFICIENCIES FOUND, WE, WE DO FOLLOW THAT.
AND WHAT THAT TELLS US IS THAT, UH, FOR EACH STAFF MEMBER IN THE COURSE OF THEIR EVERYDAY WORK, MEANING THERE IS NO REASON TO GO LOOK FOR ANYTHING WRONG, UM, JUST IN THE COURSE OF YOUR EVERYDAY WORK, THERE IS SUCH A SEPARATION OF DUTIES INVOLVED THAT IF THERE IS ANYTHING AMISS, IT WILL BE FOUND WITHIN ONE PERSON CANNOT MOVE FORWARD WITH THEIR TRANSACTION UNTIL A, A CERTAIN THING IS RESOLVED.
AND SO IT'S DESIGNED THAT WAY AND WE FOLLOW THAT VERY STRICTLY.
SO THAT SPARK ME TO SAY THANK YOU FOR ALL THAT YOU GUYS ARE DOING.
AND IF I'M HEARING YOU CORRECTLY, THE VERY QUESTION SHE ASKED WAS WHAT I WAS GONNA ASK ABOUT THE INTERNAL CONTROLS.
SO THOSE ARE IN PLACE? YES MA'AM.
THIS DOCUMENT NEXT YEAR WON'T HAVE THIS ITEM ON THERE.
IS THAT WHAT I'M HEARING? WELL, THAT PARTICULAR STATEMENT IS OKAY.
A A STANDARD IS WHAT SHE WAS STATING.
OH, IT'S ALWAYS GONNA BE ON THERE.
IT'S GONNA, IT'S GONNA BE IN THERE.
IT'S, IT'S KINDA LIKE, YOU KNOW, WHEN WE TALKED TO YOU GUYS ABOUT THE TAX RATE AND THAT STATEMENT THAT SAID IT'S A TAX INCREASE, EVEN THOUGH IT'S NOT
AND THIS IS SOMETHING THAT, UH, THE AUDITORS ARE REQUIRED TO HAVE IN EVERY FINANCIAL STATEMENT.
JUST THE FIRST ONE, NOT THE SECOND ONE.
THE SECOND ONE IS A LITTLE BIT MORE JUDGMENTAL AND, UM, AND REALLY JUST THAT NEW ACCOUNTING STANDARD IN REGARDS TO, UM, TECHNOLOGY ARRANGEMENTS THAT WAS SIGNIFICANT.
AND WE HAVE, UM, FELT LIKE IT IS A LITTLE BIT RISKY FOR, FOR A LOT OF THE ENTITIES THAT WE HAVE BEEN WORKING WITH THIS YEAR.
IT IS COMPLEX THINGS OF THAT NATURE.
SO WE FELT LIKE THAT WE NEEDED TO ADDRESS THAT IN OUR AUDIT AND WITH SOME SPECIAL PROCEDURES TO MAKE SURE THAT EVERYTHING WAS CAPTURED AND INCLUDED IN THE FINANCIAL STATEMENTS THE WAY THAT IT NEEDED TO BE.
SO, OKAY, SO NEXT YEAR YOU PROBABLY WON'T SEE THAT, SEE DEADLINE.
BUT THE FIRST ONE IS ALWAYS GONNA BE THERE NO MATTER WHAT.
SO IT'S JUST BECAUSE THE AUDITING STANDARDS SAY, HEY, THIS HAS TO BE THERE, SO THAT WE HAVE TO INCLUDE THAT PART.
SO, BUT THANK YOU FOR THE QUESTIONS.
COUNCIL, ARE THERE ANY ADDITIONAL QUESTIONS BEFORE WE CALL FOR A VOTE? AND THEN, UM, I'VE ASKED OUR CITY MANAGER TO GIVE US AN UPDATE ON, UM, THE NEXT STEPS AS IT PERTAINS TO SELECTION OF A AUDITING FIRM, UM, SINCE WE HAVE MET THE FIVE YEAR MARK, BUT HE WILL GIVE US MORE, MORE DETAILS ON THAT.
UM, COUNSEL, ARE THERE ANY ADDITIONAL QUESTIONS? OKAY, HEARING NONE, WE WILL, UM, CALL FOR A MOTION.
MADAM MAYOR, I MOVE THAT WE ACCEPT, UH, THE PRESENTATION OF THE ANNUAL AUDIT AS PRESENTED.
SECOND, IT HAS BEEN MOVED, UH, BY COUNCIL MEMBER BUR SECOND BY COUNCIL MEMBER CHISHOLM TO APPROVE THE AUDIT AS PRESENTED.
UM, COUNSEL, WE'LL JUST, WE'LL GO AND TAKE A, UM, YES NO VOTE.
AND COUNCIL MEMBER PARKER? YES.
THAT MOTION PASSES UNANIMOUSLY.
UM, THAT CONCLUDES I BELIEVE EVERY ITEM WE HAVE ON OUR AGENDA FOR THIS EVENING.
UM, AT THIS TIME, WE'LL HEAR FROM MY CITY MANAGER.
[00:25:01]
I KNEW WHAT YOU MEANT.UH, SO WE, WE HAVE ENJOYED OUR RELATIONSHIP WITH PAT BROWN AND HILL OVER THE PAST FIVE YEARS.
THEY'VE BEEN, UH, EXTREMELY PROFESSIONAL AND JUST, UH, WONDERFUL TO WORK WITH.
UH, BUT, UH, UNFORTUNATELY, AND MAYBE FORTUNATELY, OUR POLICIES REQUIRE US TO, UH, CHANGE AUDITORS EVERY FIVE YEARS.
AND THE PURPOSE OF THAT IS JUST TO MAKE SURE THAT WE KEEP A, YOU KNOW, FRESH SET OF, UH, EYES ON OUR, ON OUR BOOKS.
AND IT ALSO, UH, PROHIBIT, PROHIBITS THE INCUMBENT FIRM FROM, UH, MORE THAN 1, 1 5 YEAR CONSECUTIVE TERM.
SO WE'LL BE GOING OUT FOR, UH, RFP FOR, UH, UH, AUDITING SERVICES AND, UH, TO IDENTIFY A NEW FIRM.
BUT, AND THAT MEANS THAT PATELLA BROWN AND HILL WILL NOT BE ABLE TO SERVICE AS OUR AUDITOR AUDITING FIRM FOR THE NEXT FIVE YEARS.
AND THEN AFTER THAT FIVE YEARS, IF THEY WISH TO APPLY FOR THE RFP, THEY, THEY CAN CERTAINLY DO SO.
BUT, UH, THAT'S, THAT'S PART OF OUR POLICY.
COUNCIL, ARE THERE ANY QUESTIONS REGARDING THAT INFORMATION? YES.
WHAT'S THE TIMELINE FOR THAT? THEY NEED TO BE IN PLACE BY WHEN WE ARE DRAFTING THE RFP RIGHT NOW, WE'RE GOING TO ACTUALLY RELEASE IT IN APRIL.
WE'RE GOING TO, UM, BRING THE FIRMS, UM, THE SUGGESTED FIRM OR THE FIRMS THAT, UH, APPLIED AND WE'RE GONNA INFORM THE AUDIT AND FINANCE COMMITTEE.
AND WE PLAN TO BRING, UH, FORWARD SHORTLY AFTER THAT, UH, TO COUNCIL.
IS THERE A CERTAIN, IS THERE A MANDATORY STATUTORY DEADLINE? LIKE WE HAVE TO HAVE SOMEONE IN PLACE BY A CERTAIN TIME FOR, FOR THE PROCESS TO HAPPEN THE WAY, NOT STAT, UM, AS FAR AS THAT'S CONCERNED, BUT TO KEEP US IN, UM, IN ACCORDANCE WITH OUR REGULAR AUDIT SCHEDULE, WE DO WANT TO HAVE THE FIRM IN PLACE BY JULY.
AND I KNOW MS. SUTTON, WE DID TALK, UM, VERY HIGH LEVEL IN THE AUDIT AND FINANCE COMMITTEE ABOUT EVEN BRINGING THE RFP TO COUNCIL, JUST TO SEE WHAT THE RFP READS, LIKE WHAT WE'RE LOOKING FOR IN TERMS OF WHAT'S BEING REQUESTED IN TERMS OF WHAT'S REQUIRED, I GUESS, IN TERMS OF WHAT THE FIRM NEEDS TO HAVE IN PLACE, NOT FOR COUNCIL TO, AND IT WOULDN'T BE FOR US TO EDIT OR ADD OR SUBTRACT.
HOWEVER, JUST BECAUSE THIS WOULD BE MANY OF OUR FIRST TIME, UM, GOING THROUGH THE SELECTION OF AN AUDIT FIRM YES.
UH, WITHIN THE LAST FIVE YEARS OR SO.
AND SO I THINK HAVING THAT KNOWLEDGE AND JUST KIND OF UNDERSTANDING WHAT'S GOING OUT, UM, TO EVEN BETTER UNDERSTAND WHAT WILL BE COMING IN.
UM, WE DID TALK ABOUT POSSIBLY ALLOWING COUNSEL TO REVIEW THAT RFP BEFORE IT GOES OUT SO THAT YOU ALL WOULD HAVE, UM, A COPY OF IT AND JUST BE ABLE TO ASK QUESTIONS ABOUT IT AND SO FORTH AS WE GO THROUGH THIS PROCESS THAT MANY OF US WILL GO THROUGH FOR THE FIRST TIME.
WE HAVE IT DRAFTED AND UM SURE.
IT'S AN EXTENSIVE RFQ, SO WE'D BE HAPPY, UH, FOR COUNSEL TO TAKE A LOOK AT IT.
AND IS THAT SOMETHING THAT YOU ALL WOULD JUST SEND TO US AS A, 'CAUSE I'M A, I'M, I WOULD IMAGINE IT'S A PUBLIC DOCUMENT, SO IF THAT'S SOMETHING YOU COULD JUST SEND TO US VIA EMAIL TO HAVE US TO HAVE FOR OUR, OUR INFORMATION.
SO, SO IT WOULDN'T ACTUALLY, THANK YOU.
SO IT WOULDN'T ACTUALLY BE A PART OF A, AN AGENDA ITEM OR ANYTHING.
IT'S JUST GONNA BE US TAKING A LOOK AT IT, RIGHT.
UH, SINCE, UM, THE MAYOR POINTED OUT IT IS A NEWER PROCESS FOR SOME OF THE NEWER COUNCIL MEMBERS.
SO IT WOULD JUST FOR YOU GUYS TO LOOK AT IT AND SEE IF YOU HAD ANY QUESTIONS ABOUT OR ANYTHING LIKE THAT.
AND THEN WE WILL GO AHEAD AND PUT IT OUT OFFICIALLY IN APRIL.
AND SO MY QUESTION WAS, I HEARD YOU SAY RFQ, DID YOU MEAN RFQ OR RFP? I PROBABLY AM SAYING RFP, BUT IT'S RFQ.
SHE PROBABLY HEARD ME SAY, I KNOW I SAID R AS A MATTER OF FACT, I'M POSITIVE.
I APOLOGIZE IF THERE WAS ANY CONFUSION.
UM, AT THIS TIME, STAFF, IF THERE'S NOTHING ELSE, UM, FROM OUR STAFF OR COUNCIL MEMBERS, WE WILL ENTERTAIN A MOTION TO ADJOURN.
IT'S BEEN MOVED BY COUNCIL MEMBER CHISHOLM.
SECOND BY COUNCIL MEMBER BUR TO ADJOURN.
COUNCIL ALL IN FAVOR, PLEASE SAY AYE.
THAT MOTION PASSES UNANIMOUSLY.
COUNSEL AT 6:29 PM EVERYONE HAVE A GOOD NIGHT.