Audit Committee Minutes - Oct 09

Audit Committee Minutes - Oct 09

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UUA Audit Committee Monday, October 26, 2009 Rice Room Picket & Eliot House Boston, MA MINUTES Present – Chris Reece (Chair), David Friedman (Board Liaison), Carol Gable, Jim Key, Dan Brody (UUA Financial Advisor) Staff – Tim Brennan, Rachel Daugherty Welcome and opening remarks 1. Minutes Motion to approve minutes from the May 2009 meeting: Brody moves, Gable seconds, minutes approved. 2. Report from CFO • Status FY08 Management letter response o Documentation of policies and procedures, Javier has put in a lot of new controls o Redesigning chart of accounts - already made substantial changes. Have engaged a consultant to help. Plan to start using the new chart by mid-FY10 o Staff training – Phil Murray joined the staff as endowment accountant in February. Brennan is very happy with the changes. Murray ‘cleaned up’ the accounting in order to move on to next phases. Next phase includes putting together a catalogue of accounts that fund programs to help the BOT better understand what funds are being utilized. • Financial Statement Presentation and Overview o No significant change in the operating cash o A huge change in total net assets – which include endowment, Holdeen and split interest trusts. The decline in assets had nothing to do with operations o Kept expenses down by reducing expenses, switching to electronic publications, reduced travel by incorporating more virtual meetings. Started taking steps in the fall and ...

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UUA Audit Committee
Monday, October 26, 2009
Rice Room
Picket & Eliot House
Boston, MA
MINUTES
Present – Chris Reece (Chair), David Friedman (Board Liaison), Carol Gable, Jim Key,
Dan Brody (UUA Financial Advisor)
Staff – Tim Brennan, Rachel Daugherty
Welcome and opening remarks
1.
Minutes
Motion
to approve minutes from the May 2009 meeting
:
Brody moves,
Gable seconds, minutes approved.
2.
Report from CFO
Status FY08 Management letter response
o
Documentation of policies and procedures, Javier has put in a lot of
new controls
o
Redesigning chart of accounts - already made substantial changes.
Have engaged a consultant to help. Plan to start using the new chart by
mid-FY10
o
Staff training – Phil Murray joined the staff as endowment accountant
in February. Brennan is very happy with the changes. Murray ‘cleaned
up’ the accounting in order to move on to next phases. Next phase
includes putting together a catalogue of accounts that fund programs to
help the BOT better understand what funds are being utilized.
Financial Statement Presentation and Overview
o
No significant change in the operating cash
o
A huge change in total net assets – which include endowment,
Holdeen and split interest trusts. The decline in assets had nothing to
do with operations
o
Kept expenses down by reducing expenses, switching to electronic
publications, reduced travel by incorporating more virtual meetings.
Started taking steps in the fall and winter of last year to reduce
expenses. The result was people felt listened to and continue to be
motivated. There was no reduction of salaries or benefits. The drop in
expenses was not devastating
Updated Strategic Plan
o
Adding procedures and forms for UUCEF investors
o
Three items are all interrelated to restructuring the chart of accounts
o
Document Retention policy – we keep too many documents, secondly
we need to move toward more electronic storage, and third there are
no guidelines for what needs to be kept
o
Monitoring Reports – how do you make this rational so the BOT has a
general idea of what’s happening without making things difficult for
staff. In theory this will be liberating for the staff.
ƒ
The first round of reports will be quite time consuming for the
staff
o
Identify the need to have a consultant come in and have some kind of
self assessment for the UUCEF. With the Carver changes, this might
be the right time and opportunity to start discussing this
Changes within the UUA – new president
o
Changed the organizational structure. Promoted Harlan Limpert – who
now directs about 5 program staff groups and Kay Montgomery directs
a number of other staff groups.
o
So far it’s going well.
o
Brennan’s job didn’t change at all. The only thing that’s different is
that he will probably develop a “dotted line” to Harlan. Harlan’s eager
to do that.
o
Is there a need to extend the same invitation to Harlan Kay has for a
standing invitation to the Audit Committee meeting? The AC will
extend the courtesy to him.
ƒ
Action Item#1
Chris Reece will contact Harlan to extend invite
o
cutting the Finance budget by 25%
the Audit Committee commends Tim Brennan for responding to their
demands, the auditors demands and for taking ownership and bringing it to
where it is today. This has been a very successful engagement for KPMG and
the Audit Committee. Identifying issues and implementing systems is the
hardest part of the process.
o
It’s very obvious the contributions Phil has given. What are we doing
to prepare ourselves if Phil isn’t here? One note is that Phil has been
doing a process redesign effort. Once that’s completed, do we need
someone at his level to maintain it or does it become a routine
operation for someone to do at the lower level.
o
Going forward we need to make sure that the process of cross training
and process documenting is in place
o
The Audit Committee is VERY appreciative of Tim and what he’s
done so far.
3.
Presentation by auditors –
Eric Knox, Steve Caron, KPMG
Financial Statement
o
We received a clean opinion
o
Footnote E, Investments – has been substantially redone in accordance
with the new rules.
o
FAB 157: the majority of significant assets are level 1 and 2. Only
community investments, Holdeen and outside trusts are level 3.
o
We did not itemize all of the investments this year. That information is
posted quarterly online and that is necessary disclosure. The audited
statement should be self-contained, so there’s no reference to the
online list of holdings.
Report to the Board
o
“No material weakness”
o
UUA management deserves a “major pat on the back” – Caron. The
elimination of the convolution with the UUCEF was outstanding.
From Knox’s perspective the information provided was at a much
higher level, which was comforting to him.
o
They still have a minor amount of work to do, but they don’t expect
any significant changes.
** Executive Session**
4.
EBT Audit
– Caturano & Co.
Status: waiting on outstanding confirmations
o
Once they have this together they scheduled some time in mid-
November to push through.
o
Original deadline for confirms was Oct 15
th
, if there are still more
outstanding confirms there will be more of an aggressive approach.
o
Open Item – intent of the plan document
5.
RFP for auditing services
The auditors should be charged with doing some of the monitoring – this is
not included in the RFP. Should we expand?
Æ
NO. There is no benefit, in
my judgment – Key.
Motion:
The RFP for audit services should not include any request for
monitoring services as those services are inappropriate for external auditors to
provide as the present a conflict of interest for the firm.
Public accounting
firms are prevented from offering consulting services to clients for whom they
provide auditing services. Key moves – Brody seconds MOTION PASSED.
Add “at least” and “or more if necessary” to #3
Include a detailed staffing plan, how many people, what’s their commitment
and how many days will they be in the field
Tim will update the language and circle it back to the BOT
6.
Other Business –
Agenda Items
Dec 2
nd
conference call
o
one day dedicated to interview
o
the day before is a meeting for normal business – will have final
financial statements for approval
o
internal control assessment
o
review EBT audit – have KPMG back as well as Caturano
o
risk assessment and monitoring – Tim will be updating the AC
Next meeting date – purpose is to get the report from the auditors for the plan
for the year – possibly just do it over the phone.
Add conflict of interest and Audit Committee transition and continuity for
next time