Audit 07-14-20161. CALL TO ORDER
City of Cupertino
Audit Committee
Regular Meeting
July 14 , 2016
At 3 :05p.m. Chairman Eno Schmidt called the meeting to order at Conference Room EOC,
Cupertino City Hall, 10300 Torre Avenue, Cupertino CA 95014.
2. ROLL CALL:
Committee Members Present: Councilmember Sinks , Councilmember Paul , Chairman Eno
Schmidt, Mark Zavislak , and Peter Shin
City Staff Present: David Brandt, Kristina Alfaro , Lisa Taitano , Cheuk Law , and Mary
Redwine
Absent: None
Guests: Rick Rosenthal and Carolyn Cox (US Bank), Mitch Barker and Jennifer Meza
(PARS) for item 5A.
3. APPROVAL OF MINUTES
Schmidt invited a motion to approve the minutes of the special meetings of M arch 2 1, 2 016
and of April 14 , 2016, and the motion passed unanimously.
4. ORAL COMMUNICATIONS -NONE -
5. NEW BUSINESS
A. PARS Annual presentation on Retiree Health Trust Performance
Rick from US Bank gave a portfolio performance review as of July 14 , 2016 ,
with a market review and outlook.
B. Review and recommend budget format improvements
1. Budget-at-a-Glance ( existing)
Alfaro reviewed the data and graphs illustrated in the BAAG brochure.
Committee suggested replacing the Revenue by Fund pie with Revenue by
Source pie, removing % from Property Tax pie, and adding a graphic
representing percentage of expenses to employee compensation. Since one of
the Audit Committee 's powers and functions according to the Municipal code
(chapter 2.88.100) us "to recommend a budget format ," the committee agreed
to a) ask City staff to coordinate with OpenGov and to come to the next
meeting to give a presentation on budget formats (maximum 30 minutes) and
b) for City staff to summarize a list for the Audit Committee of the various
budget formats being used currently by the City including summary budget,
printed "big book" budget, quarterly budgets and Open Gov budget fonnats. 2.
2. Budget-to-Actual graphic (proposed)
Alfaro suggested removing the prior 4-year detail at account level tables from
the printed Adopted Budget as this data is available through the OpenGov
p01ial. The committee agreed to remove those tables from the budget book
going forward.
Cupertino Audit Committee
C. Internal Controls and MOIC discussion
Taitano discussed findings in the report provided by Maze & Associates.
a) Findings and Recommendations
b) Hiring additional staff with strong governmental
accounting knowledge
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Taitano gave a review of staffing levels and how she is handling deficiencies.
c) Staff training in technical governmental accounting and
cross training
Money was budgeted for FY2016-17 for staff training within the accounting
group and for decentralize accounting staff.
d) Retainer deposits payable should be monitored more
closely and with better coordination
Chairman Schmidt raised the issue of staffing with respect to this item.
Conversation took place on how the problem occurs, why it is persistent, and
what needs to be done to prevent it going forward. An additional accountant
position was considered in addition to the process improvements implemented
by accounting staff. Chairman Schmidt asked that City staff again to reach out
to Peter to address Peter's questions about not understanding how the prior
period adjustment on developer deposits was properly audited and accounted
for in the financial statements for the year ending June 30, 2015.
e) Status on Interim Audit and Final Audit
Taitano provided dates for the Interim Audit and the Final Audit. The
Standard Work Plan for the Committee has an interim report on the CAFR by
the auditors in the October meeting. As the schedule for completing the final
audit falls after the October meeting date, the Committee requested an update
on the Interim Audit be provided from Maze at the October meeting.
Additionally the Committee requested that Maze provide its audit report at the
October meeting on the investment cycle (with focus on wire cycle) in
accordance with the requirements in the recently approved Investment Policy.
D. Review of Progress on Uncompleted Action Items from Previous Meetings
and Standard Work Plan for Audit Committee
Committee agreed that City staff should add an Expected Date of Completion
column including dates for each item to the list of uncompleted items .
E. Treasurer's Investment Report for Quarter Ending June 30, 2016
Item deferred to next meeting.
ADJOURNMENT
The meeting was adjourned at 5:47pm by Zavislak and seconded by Sinks