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2004-06-28 JPWB Minutes JOINT POWERS WATER BOARD MINUTES Regular Meeting of June 28, 2004 6:00 PM JPWT Plant Board Room 6 00 PM Call to Order by ChaIrperson, Don Peterson Board Members Present Joyce Paulhn (6 08 pm) Wayne Kessler, Tom Hagerty, Gerhardt Kottke, Tom Fay Board Members Absent None Staff Present Chns CatlIn, HR Green, Kelly Browning, Veoha Water NA, Shelly Keyes, Veoha Water NA Staff Absent None Browmng added the WAC fee meettng update to Unfinished Busmess MOTION BY HAGERTY, SECOND BY KESSLER, TO ADOPT THE REVISED AGENDA MOTION CARRIED UNANIMOUSLY There was no one present under the Citizen Forum MOTION BY FAY, SECOND BY KOTTKE TO APPROVE THE MINUTES OF THE MAY 24, 2004 REGULAR MEETING MOTION CARRIED UNANIMOUSLY MOTION BY KOTTKE, SECOND BY HAGERTY TO APPROVE THE CONSENT AGENDA AS PRESENTED MOTION CARRIED UNANIMOUSLY Under Unrmished Business, Keyes dIscussed the audItor request for proposals Four of the five CPA firms contacted had submitted bids and Keyes suggested settIng up Intervtews WIth some or all Board Members present Hagerty questIoned If Abdo, Elck & Meyers had done previous audits and why they had been replaced after 4 years Browmng explained that Abdo, Elck & Meyers thought they had been let go because the audIt wasn't fimshed on tIme, but there was no mentIon of the situatIon m previous years' Board MInutes Browmng noted Abdo, Elck & Meyers would probably have the best understandmg of our accountIng system which would make the transItIon to new auditors qmcker (paullm present) Hagerty recommended the three audIt firms WIth Similar bids be mtervtewed and Keyes agreed, but stated she feh most comfortable WIth HLB Tautges Redpath and Abdo, EICk & Meyers based on phone conversatIons Peterson wondered how the firms had been determmed and Keyes explaIned she had used a webslte sponsored by a MInnesota CPA AsSOCIation and chose from ftrms slalled m government audIts Brownmg encouraged one or two Board Members to sIt m on the mtervtews so Hagerty and Paullm volunteered MOTION BY PETERSON, SECOND BY KESSLER FOR HAGERTY AND PAULLIN TO ASSIST OFFICE STAFF IN THE SELECTION OF NEW AUDITORS MOTION CARRIED UNANIMOUSLY Other Unfinished Business Included an update on the recent WAC Fee meeting held on June 23rd Cathn briefly explamed the progress of standardlZmg the procedures for determinmg WAC I; I JOINT POWERS WATER BOARD MINUTES I Regular Meeting of June 28, 2004 6:00 PM JPWT Plant Board Room fees Browmng added the next step will be a meetIng of the engtneers to update design standards for any new constructIon projects Kessler noted the ongmal agreement between the crties called for regular engineenng meetmgs and Browmng stated the meetmgs were mutually waived while procedures were estabhshed but wtll now resume Under New Business, Brownmg discussed the updated Document Retention Schedule, which IS based on the League ofMmnesota Crtles' recommendatIons The Schedule was adapted to mclude only the documents which are cotIcal for Jomt Powers records Browmng added that good record-keepmg mcludes destroymg out-dated mformatlon and the RetentIOn Schedule proVided gUIdance necessary to mamtam records for the proper length of time The Schedule shows the retentIOn time LMC recommends and addItional tIme of one year the office staff felt some documents, such as customer change work orders and pump mamtenance records, should be held Browmng also explamed there were addItIOnal permanent records bemg kept whIch mcluded the EDA trunk lIne Issue and resolutIon Kessler suggested keepmg the first five years of records for postenty Hagerty agreed and Browmng confirmed the records from 1977 through 1981 would be retaIned MOTION BY HAGERTY, SECOND BY PAULLIN TO ACCEPT THE UPDATED DOCUMENT RETENTION SCHEDULE WITH THE EXCEPTION THAT THE FIRST FIVE YEARS OF RECORDS BE RETAINED FOR POSTERITY MOTION CARRIED UNANIMOUSLY Under the Engineer's Report, CatlIn recommended two payments for the Raw Watermam Project Requested payments were $1000 to the CIty of St Michael for restoration of the Welters Playlot Park and $4000 to Leuer-Munstertetger as final payment for completIon oftherr portIon of the project Cathn negotiated a $391 97 reductIon m the Leuer-Munstertelger bIll to offset the $1000 patd to City of 8t Michael CatlIn explatned the Raw Watermatn Project had been a pubhc/pnvate project for transmtSSIon of water from the well near the west tower around the school and to the plant Leuer-MunsterteIger had been contracted for the proJect, but the CIty of 8t Michael had requested they be allowed to restore the Welter Playlot Park to therr satisfaction usmg City crews and local labor Catltn plans to negotiate additional reductIOns from other contractors Peterson questioned whether the correct project budget was bemg referenced and Cathn confirmed MOTION BY PETERSON, SECOND BY FAY TO APPROVE PAYMENT FOR COMPLETED RAW W ATERMAIN PROJECT MOTION CARRIED UNANIMOUSLY Under Operations/Office, the 2002 Audit was discussed Browmng stated the audrt and management letter had been receIved the pnor Monday at which tIme LarsonAllen' s representative stated they would not be present at the current meetIng. an mdicatIon they reahzed they wouldn't be performmg the 2003 audit Browmng added the only legal comphance issue m the audit report was msufficIent pledged collateral, whIle the management letter mentIoned several internal control Issues Bank reconcIhatlons, reclasSIficatIOns, finanCIal reportIng process, pledged collateral, debt payment to St Michael and software were areas of concern addressed by the auditors BrownIng explamed her memo was a response to the concerns LarsonAllen presented in the management letter BrownIng was dIsappomted m the cntIcal nature of the letter smce Veolta Water had patd $11,000 to LarsonAllen over the past two years for "accountmg JOINT POWERS WATER BOARD MINUTES Regular Meeting of June 28, 2004 6:00 PM JPWT Plant Board Room asSiStance and consulting" to present Jomt Powers fmanclal records m the way LarsonAllen requested Hagerty agreed the letter was not comphmentary and expressed IDS concern that the auditor would wnte a letter and then not attend the meetmg so Board Members could get more mformatlOn Peterson suggested requestIng LarsonAllen attend a board meetmg smce the audit WIll be reViewed by each city's councd members who may have additional questions Kessler stated hIs biggest concern was the pledged collateral Issue Browning and Keyes explained that a pledged collateral report will be requested monthly from the bank when the bank statements arnve and Keyes WIll momtor the pledged collateral routInely Kessler also questIoned whether the current software was workmg Browmng explamed the software Itselfhad never been an Issue but rather LarsonAllen's mabihty to tell office staff exactly how they wanted revenues to be recorded so the proper reports could be generated Peterson wanted to know how to prevent future occurrences of the same problem by utdizmg Veoha Water resources for accounting assistance Browmng replIed that she has been in contact WIth Veoha corporate accountIng advisors smce recelVlDg the management letter, but prior to the letter had never been mformed by LarsonAllen that any additional action was required by office staff, nor that any mformatlon requested had not been prOVided Veoha Water accountIng consultants adVised Browmng that the management letter was an indication that some improvements could be made, but was not overly unusual or suspect At Hagerty's request, Browning prOVided a copy of the 2001 management letter and audit, whIch was also performed by LarsonAllen Hagerty reViewed the 2001 management letter, whIch suggested only mInor changes be made to financial reportmg, and questioned why there would be such a drastiC dIfference m the letter's tone Browmng noted that financial reportIng had remained the same for 2001 and 2002, the only dIfference was the $11,000 paid for consultmg and the staff changes at LarsonAllen Dtscusslon followed and Board consensus was nothtng would be accomphshed by asking LarsonAllen to attend a meetmg Browmng added that once the new auditors were m place, Veoha Water would be WIlhng to request and pay for a revIew of the 2002 audit Members agreed that would be an acceptable solutIon to venfy financial reportIng, confirm the status of Issues presented by LarsonAllen and recommend changes necessary MOTION BY HAGERTY, SECOND BY PETERSON TO ACCEPT THE 2002 AUDIT AS PRESENTED MOTION CARRIED UNANIMOUSLY MOTION BY PAULLIN, SECOND BY FAY, TO APPROVE TIIE LIST OF CLAIMS AS PRESENTED MOTION CARRIED UNANIMOUSLY In Other Business or Announcements, Browmng explamed the St Michael project had been nommated and won an Amencan Water Works AsSOCiatIon (A WW A) National Safety Award for 2004, which WIll be recogmzed wrth a plaque MOTION BY PAULLIN, SECOND BY KOTTKE TO ADJOURN THE MEETING AT 6 43 PM MOTION CARRIED UNANIMOUSLY