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1991.05.21_FAB_Minutes_RegularTOWN OF HIGHLAND BEACH i� FINANCIAL ADVISORY BOARD REGULAR MEETING - MINUTES Tuesday, May 21, 1991 9:30 A.M. Chairman S. Myron Browner called this Regular Meeting of the Financial Advisory Board to order in Commission Chambers at 9:30 A.M. Deputy Town Clerk Doris Trinley called the roll. Present were the Chairman, Vice Chairman Victor P. Hadeed and Regular Members Fred Firstenburg and Dennie Freeman. Regular Member Richard Brunton was absent. Also present were Town Manager Mary Ann Mariano and Finance Director Michael Seaman. Commissioner John F. Rand was in the audience. Chuck Haas, Managing Partner of Presas & Haas, was present in reference to the Board's review of their audit contract proposal. Upon MOTION by Mr. Hadeed/Mr. Freeman, the minutes of the Regular Meet- ing of May 9, 1991 were unanimously approved. OLD BUSINESS Meeting of Financial Advisory Board and Water Resources Advisory Board Sub -Committees re WRAB Budget Recommendations Some discussion took place regarding a meeting of the two subcommittees during which it was noted that the only budget recommendation the WRAB had made for Fiscal Year 1991/1992 was for an additional ICWW pipeline. To clarify this recommendation for the newer members, Commissioner Rand advised that the existing line was approximately 15 years old and said the second line was imperative to ensure continuity of the Town's water supply. The possibility of Commissioner Voress, past Chair of the WRAB, and Jane Rayner, current Chair of that Board, addressing the FAB so that the newer members of the FAB could have a better understanding of cur- rent and future possible expenditure recommendations by the WRAB was considered. In the interim, Mr. Freeman will try to set up a subcom- mittee meeting with Commissioner Voress and Mrs. Rayner, with himself and Mr. Firstenburg representing the FAB; water rates for the upcoming fiscal year was recommended as an area of discussion if this meeting can be arranged. NEW BUSINESS 1) Presas & Haas Audit Contract Review The Chairman recognized Chuck Haas and invited him to address the Board before review began. Mr. Haas first thanked the Board for their number one ranking of his firm after reviewing solicited audit proposals and commended Town staff on the professional way they had handled the pre- sentation process. Financial Advisory Board Regular Meeting - Minutes • May 21, 1991 Page 2 of 7 Review of Presas & Haas' May 14, 1991 confirmation letter outlining the terms of their audit then took place. Pertinent areas of discussion included: start of audit would be approximately November 4, 1991, with the report being issued not later than January 13, 1992. . the contract would be entered into on a 3-year basis, but renewed on an annual basis; intention not to renew, by either party, would be required in writing and re- ceived by May 1 following each fiscal year. . fee for first year would not exceed $18,500; fees for subsequent years would be adjusted for changes in the CPI. Start-up costs would be amortized over the 3-year period. • Presas & Haas personnel consists of 10 professional staff and three support staff. Assignments to the Town's audit would include two accountants, one being the audit manager, and one audit officer; all will have prior government ex- perience. • Town staff does preparation of financials. . Presas & Haas has carried $1 million in malpractice in- surance since 1979 with no claims thus far. Concluding review, the following MOTION was made by Mr. Hadeed/Mr. Freeman and met with unanimous favorable vote: THE FINANCIAL ADVISORY BOARD RECOMMENDS THAT THE TOWN COMMISSION APPROVE THE PRESAS & HAAS AUDIT CONTRACT AS OUTLINED IN THEIR CONFIRMATION LETTER RE TERMS OF ENGAGE- MENT DATED MAY 14, 1991. Mr. Haas thanked the Board for its recommendation and complimented Town Manager Mariano to them on her thoughtful and intelligent negotiations with his firm. It was then noted that their original bid had been $20,000. Before he left the meeting, Mrs. Mariano advised that Mr. Haas, upon learning that the members had been deliberating the Town's participa- tion in the State Pooled Investment Fund, had supplied some additional information for them. Copies were distributed and a short discussion took place. Note: A copy of Presas & Haas' letter of May 14, referred to herein, is attached to and made part of these minutes. Financial Advisory Board Regular Meeting - Minutes May 21, 1991 Page 3 of 7 2) Preliminary Expenditure Budget Review for Fiscal Year 1991/1992. Before review began, Mrs. Mariano referred to the Budget Summary sheet and advised the members that the 7.8% increase shown in the Total General Fund was an extremely preliminary figure. She advised that many factors would come into play as the budget process continued, noting that revenue figures from State and other sources were not yet available and fire/rescue costs would most likely be decreased substan- tially by the county when the Town's assessed valuation became availa- ble. Therefore, she said, there would likely be a substantial drop in that percentage by the time the final budget was presented to the Town Commission for adoption in September 1991. Mrs. Mariano explained the increase in refuse collection was required due to the recycling program wherein an extra pick-up day had been negotiated with County Sanitation at half-price for condominiums during the "season" to preclude the necessity of the condos obtaining addi- tional containers and it was her recommendation that the Town absorb this cost. The $50,000 budgeted in Professional Services (5310) under Other Gen- eral Government, Mrs. Mariano advised, was for a stormwater drainage study mandated in the Comprehensive Plan. 10 It was also pointed out by Mrs. Mariano that while a 4.7% CPI adjust- ment was figured in to the Regular Salaries (5120), at her recommenda- tion no merit increases were reflected in these figures for the coming fiscal year. The members were also advised that communication costs (telephones) for all departments were now shown in Other General Government (5410). Discussions of individual departments included the following: TOWN COMMISSION Decrease in Professional Fees (5310) was due to the Comprehensive Plan having been adopted and fees for planners in this regard no longer ap- plied. However, $5,000 was budgeted to cover the possibility of man- dated amendments to land development regulations and one (1) supplement to Town Code books. Operating Supplies (5520) included costs for newsletter mailings and new trash receptacles for beach. TOWN MANAGER The $2,500 expenditure in Machinery & Equipment (5640) was for the pur- chase of a computer for the Town Manager's office; $200 expenditure in Repair & Maintenance (5460) was for a maintenance contract on that com- puter. Mrs. Mariano advised that for several months she has been using a computer owned by her to do Town work and emphasized the need for this equipment, noting she has no secretary/staff and does most of her required written work by herself. Financial Advisory Board •Regular Meeting - Minutes May 21, 1991 Page 4 of 7 TOWN CLERK Professional Fees (5310) represented honoraria paid to all Board mem- bers for attendance at meetings; Other Current Charges (5490) covered all Board ads (Public Hearings). The new position listed as "Secretary part/time" had been mentioned by the Town Manager at a previous meeting. This position replaces a full- time secretarial position. It was the Board's recommendation that col- umns 5, 6 and 7 be changed to reflect an accurate salary distribution. FINANCE Machinery & Equipment (5640) expenditure of $700 represented purchase of a new typewriter to replace one approximately 25 years old. Included in expenditures in Other Current Charges (5490) were bank charges and State Pooled Investment Charges. It was noted that all checking accounts were interest -bearing. Contractual Services (5340) expenditures included ADP services for checks, as well as computer assistance re software programs. OTHER GENERAL GOVERNMENT The members were advised that the previously explained $50,000 for a stormwater drainage study as called for in the Comprehensive Plan will be done by J.M. Montgomery Engineering. Lot Clearing (5341) in the amount of $1,500 would be offset by revenues via pass -through billings. It was reiterated that Communications (5410) in the amount of $7,000 represented telephone costs for all departments. The $3,000 allocated in Machinery & Equipment (5640) represented the purchase of a new golf cart. POST OFFICE Rentals & Leases (5440), in the amount of $1210, was for rental of the postage meter. It was noted that Operating Supplies (5520),totalling $1,500, was for mailing envelopes sold to Post Office patrons and this cost would be easily recouped through these sales. . Mrs. Mariano advised the Town is subsidized $18,000 by the Government for the running of the Post Office; the Town maintains it. Financial Advisory Board Regular Meeting - Minutes May 21, 1991 Page 5 of 7 LAW ENFORCEMENT The most notable category in this department was Communications (5410), wherein the cost had been reduced from an approved budgeted $50,000 to zero due to a switch -over from the City of Boca Raton to the Palm Beach County Sheriff's Office for all Police Communications. The Town Mana- ger said the start-up costs will be reflected in an upcoming budget transfer and the system would pay for itself within a year. Machinery & Equipment not only included monies for a new police car (yearly), but also a copy machine. It was noted that the existing copy machine (donated) was old and inefficient for the many uses the depart- ment has for such an item (reports, records, etc.). PROTECTIVE INSPECTION (BUILDING DEPT.) A decrease in Contractual Services (5340) was explained to be the result of no new multi -unit buildings coming on line for outside in- spections in the coming fiscal year (the Building Official does all in- spections for single family structures). Under Travel & Per Diem (5400), it was noted that the Building Official must attend certain conferences yearly to maintain certification • status. LIBRARY Mrs. Mariano advised how the reclassification of the Town's only em- ployee in this category (Library Director) came about, saying she had surveyed surrounding municipalities and found that the position was severely underpaid. She added that while the Library Director has no Town employees under supervision, the position calls for the scheduling and supervision of 30 library volunteers, as well as responsibility for one of the Town's biggest assets. Donations - Friends of H.B. Library (5830) was advised to be a supple- mental amount made available to the Library on which they could draw to buy books. LEGAL COUNSEL Regarding Professional Fees - General Legal (5310), the Town Manager advised the Town Attorney had recently submitted an increased fee schedule to the Town Commission, which is scheduled for discussion at their May Workshop Meeting; she added that over the last 10 years there has been but one $5.00 @ hour increase in these fees. A reduction in Professional Fees - Other (5331) was attributed to the no longer needed services of outside law firms re litigation. Financial Advisory Board Regular Meeting - Minutes May 21, 1991 Page 6 of 7 PALM BEACH COUNTY FIRE/RESCUE This expenditure had been addressed by the Town Manager previous to the start of review; it was repeated that the figure was expected to de- crease. REFUSE COLLECTION The increase in Contractual Services (5340) was also previously ex- plained; it reflects the extra recyclable pick-up day for condominiums in "season." RESOURCE CONSERVATION The expenditure under Contractual Services (5340) was explained as necessary as the Town now has a contract fee arrangement with County Sanitation since the recycling program began, rather than the previous franchise fee arrangement. In the interest of time, it was the Consensus of the members to recess review at this time and defer review of Water and Sewer systems until their next meeting on June 11. During the course of review..... ..Several of the members, as well as Commissioner Rand, expressed dissatisfaction with the way sub -object 5120 (Regular Salaries) was presented in all departments and requested that the Town Manager and Finance Director devise a method of presentation for more accurate figures of current and approved, as well as actual and estimated salaries. .....Chairman Browner suggested that an outside firm be consulted re- garding insurance in general to evaluate the kinds of insurance being carried, the coverage being carried, and the price being paid. .....Vice Chairman Hadeed suggested that perhaps Office Supplies (5510) as it applies to the Town Commission, Town Manager and Town Clerk De- partments could be better represented by a percentage formula being applied to budget for these three departments, since the present system allowed for budgeting on an department basis, but did not allow for dispersing on a department basis. ..Throughout review of all departments, it was noted that there was no increase in Books, Dues, Education & Subscriptions (5540); in fact in some departments this figure would most likely be decreased. l Financial Advisory Board Regular Meeting - Minutes May 21, 1991 Page 7 of 7 There being no further business to come before the Board at this time, the meeting was adjourned upon MOTION by Mr. Freeman/Mr. Firstenburg at 11:40 A.M. dmt APPROVE: � . Myr Wifter, Chair ffian ctor P. Hadeed, Vi a Chairman Fred Firstenburg— Dennie Freeman ATTEST: DATE: • 1 FR I 121 _ 44 PRESNS & HP4 P _ 0 2 May 14, 1991 Town of Highland Beach 3614 South Ocean Boulevard Highland Beach, Florida 33487 We are pleased to confirm our understanding of the terms of our engagement to audit the annual financial report of the Town of Highland Beach. Initially, we will audit the financial report for the fiscal year ending September 30, 1991. The contract will automatically be renewed on an annual basis to include the audit of the financial reports for the fiscal years ending September 30, 1992 and September 30, 1993, unless either party gives notice to the other of its intention not to renew. Notice of intention not to renew shall be in writing, delivered by registered mail and must be received by the May 1, • following each fiscal year. Our audit will be conducted in accordance with generally accepted auditing standards and will include tests of the accounting records of the Town of Highland Beach and other procedures we consider necessary to enable us to express an unqualified opinion that the financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles. If our opinion is other than unqualified, we will fully discuss the reasons with you in advance. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals. creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry, At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore; our audit will involve judgment about the number of transactions to be examined and the areas to be tested. Also, we will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. loot )3C)t'et1;YC Roal.t S1111C 700, F;I5E t)CS[ 1'a1n1 Mc wii. J'L , ► tr<-t.. (407) F1s: (407) 471-1 210 1 F R I 0 <S 4 5 .• G • Town of Highland Beach May 14. 1991 Page Two PRESr4:s S. HAAS R _ 0 3 However, because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, irregularities, or illegal acts, including fraud or defalcations, may exist and not be detected by us. We will advise you, however, of any matters of that nature that come to our attention. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. We understand that you will provide us with the basic information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. This responsibility includes the maintenance of adequate records and related internal control structure policies and procedures, the selection and application of accounting principles, and the safeguarding of assets. We understand that your employees will type all cash or other confirmations we request and will locate any invoices selected by us for testing. Our audit is not specifically designed and cannot be relied on to disclose reportable conditions, that is, significant deficiencies in the design or operation of the internal control structure. However, during the audit, if we become aware of such reportable conditions or ways that we believe management practices can be improved, we will communicate them to you in a separate letter. We expect to begin our audit on approximately November 4, 1991 and to issue our report no later than January 13, 1992. Our fees for these services will be based on the actual time spent at our standard hourly rates. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. The fee for the first year will not exceed $18,500. The fees for subsequent years will be adjusted for changes in the consumer price index. This estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. We appreciate the opportunity to be of service to the Town of Highland Beach and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with FR I 0S 45 PRESAS & HAAS R _ 04 Town of Highland Beach May 14, 1991 . Page Three the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, Presas & Haas, CPA �tEs�nHs�:: This latter correctly sets forth the understanding of the Town of Highland Beach. By: Title: • Date: 0