Council Audit and Finance Committee
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Council Audit and Finance Committee

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Council Audit and Finance Committee Meeting Tuesday, December 9, 2003 MINUTES THE CITY COUNCIL AUDIT AND FINANCE COMMITTEE CONVENED ON TUESDAY, DECEMBER 9, 2003 AT 10:30 A.M. IN THE CITY MANAGER’S CONFERENCE ROOM, THTHIRD FLOOR, CITY HALL, 124 W. 8 STREET. Mayor Will Wynn called the meeting to order at 10:40 a.m. Council Members present were Mayor Will Wynn, Mayor Pro Tem Jackie Goodman, Council Member Betty Dunkerley, and Council Member Brewster McCracken. The following represents the actions taken by the Audit & Finance Committee in the order they occurred during the meeting. While the agenda items were not taken in sequential order, all agenda items were discussed. Agenda Item #1: Citizen Communication Jimmy Castro, former board member of the Milwood Neighborhood Association, presented information regarding Austin’s sales tax revenue. No action necessary. Agenda Item #2: Approval of November 18, 2003 minutes The minutes were approved on Council Member McCracken’s motion, Council Member Dunkerley’s second with a 4-0 vote. Agenda Item #6: Briefing on controls associated with the new Employee Health Managed Care Contract The Office of the City Auditor briefed the committee on the monitoring project conducted as a result of the cancelled health claims audit. This audit cancellation was discussed at the October 2003 Audit and Finance Committee meeting. Overall, management has acted to reduce the ...

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Council Audit and Finance Committee Meeting
Tuesday, December 9, 2003
MINUTES
THE
CITY COUNCIL AUDIT AND FINANCE COMMITTEE
CONVENED ON TUESDAY,
DECEMBER 9, 2003 AT 10:30 A.M. IN THE CITY MANAGER’S CONFERENCE ROOM,
THIRD FLOOR, CITY HALL, 124 W. 8
TH
STREET.
Mayor Will Wynn called the meeting to order at 10:40 a.m.
Council Members present were
Mayor Will Wynn, Mayor Pro Tem Jackie Goodman, Council Member Betty Dunkerley, and
Council Member Brewster McCracken.
The following represents the actions taken by the Audit & Finance Committee in the order they
occurred during the meeting.
While the agenda items were not taken in sequential order, all agenda
items were discussed.
Agenda Item #1:
Citizen Communication
Jimmy Castro, former board member of the Milwood Neighborhood Association, presented
information regarding Austin’s sales tax revenue.
No action necessary.
Agenda Item #2:
Approval of November 18, 2003 minutes
The minutes were approved on Council Member McCracken’s motion, Council Member
Dunkerley’s second with a 4-0 vote.
Agenda Item #6:
Briefing on controls associated with the new Employee Health Managed Care
Contract
The Office of the City Auditor briefed the committee on the monitoring project conducted as a result
of the cancelled health claims audit.
This audit cancellation was discussed at the October 2003 Audit
and Finance Committee meeting.
Overall, management has acted to reduce the planning risk, and
although no further audit work is required, the auditors believe additional risk assessment is needed.
Specifically, further risk assessment will confirm whether management has designed an effective
contract monitoring system, is compiling contractor performance data, is reviewing claims accuracy
and timeliness, and has planned the process of contracting for this service to ensure a smooth
transition when this contract ends.
No action necessary.
Agenda Item #3:
Presentation of follow-up on the FY 2002 Audit Management Letter
The City Controller noted that this follow-up is regarding the KPMG Audit Management Letter
presented at the May 2003 Audit and Finance Committee meeting and that there were no material
weaknesses.
The auditors made three recommendations to the City and management agreed or
partially agreed with all three.
Recommendation number one was to monitor future GASB reporting
requirements, recommendation number two was to develop a plan to fund decommissioning costs for
the Holly Power Plant, and recommendation number three was to re-assess the value of the Seaholm
Power Plant.
This recommendation was partially agreed with.
Austin Energy (AE) believes the
Seaholm building and land have value to AE operations and AE would like to see it utilized.
Some
discussion followed regarding possible plans for the Seaholm building and land.
No action necessary.
Agenda Item #4:
Presentation and acceptance of Sales Tax: Potentially Non-Permitted
Businesses audit report
The Office of the City Auditor reported on its third audit in a series of audits designed to review sales
tax revenues.
In their first report, the auditors found 180 businesses within State tax rolls incorrectly
coded as outside the City limits.
The second report revealed another 47 incorrectly-coded businesses
and found up to 30 percent of all businesses annexed 1997 through 2001 were added late.
The
objective of this audit was to determine whether the State Comptroller credited the City for
businesses that sell taxable goods or services within the Austin city limits.
In general, any business
that provides goods and/or services for sale within the Austin city limits is required by State law to
have a current sales tax permit.
By comparing records from the State Comptroller’s “Zip Code
Drops” from sales tax rolls to a third-party listing of active businesses for a handful of zip codes, the
auditors identified 1,290 businesses.
Of those businesses identified, 680 matched listings in the State
Comptroller’s data and 610 could not be found in the State Comptroller’s data.
Of the 610 businesses
not found in the State’s data, 242 were subsequently contacted by phone and confirmed as actively
selling taxable goods and/or services.
A list of those confirmed businesses has been forwarded to the
State Comptroller’s Office for their review.
Council committee members requested that the auditors follow up with the State Comptroller’s Office
to monitor the status of these potentially non-permitted businesses.
The audit report was approved on Mayor Pro Tem Goodman’s motion, Council Member
Dunkerley’s second with a 4-0 vote.
Agenda Item #5:
Presentation and acceptance of Law Department Service Delivery audit report
The City Auditor asked the committee to defer this presentation to the next Audit and Finance
Committee meeting because more time is needed to work with management on their review and
response to the audit report.
Presentation of this audit report was deferred to the next Audit and Finance
Committee meeting, currently scheduled for January 27, 2004.
The City Auditor presented Council committee members with a copy of the Office of the City
Auditor’s calendar year 2004 Service Plan and lighthouse lapel pin and thanked them and City
management for their assistance in the development of the plan.
The motion to adjourn the meeting at 11:13 a.m. was approved on Council Member Dunkerley’s
motion, Mayor Pro Tem Goodman’s second with a 4-0 vote.