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Home My WebLink About17.a. Committee Minutes-Finance 10-23-18 Page 1 of 7 Item 17.a. CENTRALSAN CENTRAL CONTRA COSTA SANITARY DISTRICT November 1, 2018 TO: HONORABLE BOARD OF DIRECTORS FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: OCTOBER 23, 2018 - FINANCE COMMITTEE - PRESIDENT NEJEDLYAND MEMBER PILECKI Attached are minutes of the above Committee meeting. Strategic Plan re-In GOAL ONE: Provide Exceptional Customer Service Strategy 1 - Build external customer relationships and awareness ATTACHMENTS: 1. Finance Committee Minutes 10-23-18 2. (Handout) Item 5.a. Loss Control Report November 1, 2018 Regular Board Meeting Agenda Packet- Page 459 of 499 Page 2 of 7 I CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF REGULAR MEETING OF THE BOARD OF DIRECTORS: CENTRAL CONTRA COSTA JAMESNEJEDLY President SANITARY DISTRICT DAVID R, WILLIAMS FINANCE COMMITTEE President Pro Tem PAUL H CA USEY MICHAEL R.MCGILL M I N U T E S TAD'PHECKI PHONE: (925)228-9500 92 Tuesday, October 23, 2018 FAX cent alsan. rg www.centralsan.org 2:00 p.m. Executive Conference Room 5019 Imhoff Place Martinez, California Committee: Chair Jim Nejedly Member Tad Pilecki Staff. Ann Sasaki, Deputy General Manager Phil Leiber, Director of Finance and Administration Stephanie King, Purchasing and Material Services Division Manager Thomas Brightbill, Senior Engineer (left during Item 4.b.) Shari Deutsch, Risk Management Administrator Todd Smithey, Finance Administrator (arrived during Item 4.b.) Donna Anderson, Assistant to the Secretary of the District 1. Call Meeting to Order Chair Nejedly called the meeting to order at 2:00 p.m. 2. Public Comments None. 3. Old Business a. Follow-up information requested on Expenditures/Procurement Card (P- card) transaction information provided at previous meeting COMMITTEE ACTION: Received the information. November 1, 2018 Regular Board Meeting Agenda Packet- Page 460 of 499 Page 3 of 7 Finance Committee Minutes October 23, 2018 Page 2 4. Items for Committee Recommendation to the Board a. Review September 2018 Financial Statements and Investment Reports Mr. Leiber stated that revenues and expenses are tracking about the same as last year. As is typical, spending is slightly below budget for the first three months of the year and there are no significant revenue variances on the capital side. Capacity fees are slightly less than budgeted thus far. He noted that benefits from adoption of the Uniform Public Construction Cost Accounting Act (UPCCAA) effective September 1, 2018 may start appearing in the coming months. Staff will be coming back with a progress report at a future meeting. With regard to debt service, Mr. Leiber said the effects of the recent refinancing will not be reflected until the October financial reports. Member Pilecki asked if the larger budget variances on page 8 of the report regarding Collection System Operations (CSO) were the result of timing issues or unexpected expenditures. Ms. Sasaki and Mr. Leiber said they will look into the variances and report back to the Committee. COMMITTEE ACTION: Recommended Board receipt and requested additional information on CSO budget variances. b. Review and recommend approval of expenditures dated November 1, 2018 The Committee reviewed the expenditures included with the agenda material, and staff responded to questions from Committee Members. Chair Nejedly requested additional information on Check No. 38642 (page 54) in the amount of$373,369.91 to Branaugh Development for refund of a deposit. Staff will provide additional information at the next meeting. The discussion then focused on P-card transactions and the level of detail that is provided to the Committee to review. It was noted that the new method of reporting P-card purchases to the Committee, which was meant to streamline the amount of staff time to prepare the information, ultimately has proven less helpful in terms of providing Committee oversight. Member Pilecki said he felt extremely uncomfortable recommending approval of the P-card statements without more detail. Chair Nejedly agreed. Mr. Smithey joined the meeting, and Mr. Brightbill left the meeting. Once the new Enterprise Resource Planning (ERP) system is in place, Mr. Leiber said staff should be better able to gather more useful detail on P-card November 1, 2018 Regular Board Meeting Agenda Packet- Page 461 of 499 Page 4 of 7 Finance Committee Minutes October 23, 2018 Page 3 transactions while not spending an excessive amount of time on manual data entry. In the meantime, it was agreed that staff will return to the previous method of reporting P-card transactions. COMMITTEE ACTION: Reviewed and recommended Board approval, and requested a return to the previous method of reporting P-card transactions. C. Review draft Position Paper to authorize the General Manager to execute an agreement for internal auditing services with Macias Gini & O'Connell LLP (MGO) for an amount not to exceed $450,000 to provide internal audit and risk management services for a three-year period with a possible two-year extension Mr. Leiber reviewed the information included in the draft Position Paper and the rationale used for recommending entering into an agreement with MGO. Six firms responded to the RFP, and three were chosen for interviews. All three firms were impressive, but ultimately staff has proposed MGO based on best local presence, good qualifications and affordable rates. He stated that the plan in the first year of the agreement would be for MGO to help finalize the risk assessment that was begun by staff last year and assure that the new ERP system is configured appropriately from an internal controls standpoint. He noted that the actual amount spent under the contract could exceed $150,000 per year depending on the results of the risk assessment and audit plan, for each year if the Board choses to cover more areas in the audit program scope. Member Pilecki asked if any of the project managers participated in the interview process. Mr. Leiber said yes. Member Pilecki stated that in his opinion the quoted rates are expensive for this kind of work. Mr. Leiber said all the work will not be performed by senior partners and staff with the higher billing rules, but through a mix of resources. Admittedly, using an accounting firm may cost more on an hourly basis, but he indicated that it will allow for better continuity with a broader skill base than using a temporary employee. Mr. Leiber noted that the State has required in recent years that agencies must have internal controls in place or risk consequences. If problems were to arise without proper controls, it could be problematic. Member Pilecki said that years ago Central San used to have internal audits conducted by a single person which seemed to have worked pretty well. The temporary internal auditor hired last year, Theresa Nidetz, prepared three excellent reports during her time with Central San. In his belief, someone who is embedded with staff generally does a better job because they have access to all departments. For that reason, he said he would not be November 1, 2018 Regular Board Meeting Agenda Packet- Page 462 of 499 Page 5 of 7 Finance Committee Minutes October 23, 2018 Page 4 supporting the proposal to hire MGO. He suggested a five-year employee contract might better serve the District. Chair Nejedly agreed. Discussion was also held regarding the possibility of employees responsible for each area performing audit work. Mr. Leiber noted that internal audits conducted by employees responsible for an area are not independent audits. Member Pilecki said he prefers using a single person who is familiar with staff; otherwise, the District is having to pay people to re-learn the system. Chair Nejedly said it would be cheaper to hire an employee. COMMITTEE ACTION: Neither Committee Member supported the proposal. 5.* Other Items a. Review Risk Management Loss Control Report as of October 19, 2018 Ms. Deutsch distributed an updated Loss Control Report (see handout), which she reviewed with the Committee. COMMITTEE ACTION: Reviewed the report. b. Receive list of future agenda items COMMITTEE ACTION: Received and provided input to staff. 6. Announcements None. 7. Future Scheduled Meetings a. Tuesday, November 20, 2018 at 2:00 p.m. Tuesday, December 18, 2018 at 2:00 p.m. 8. Suggestions for Future Agenda Items None. 9. Adjournment— at 2:49 p.m. * Attachment November 1, 2018 Regular Board Meeting Agenda Packet- Page 463 of 499 CCCSD 2018-19 Loss Control Report Item 5.a. (Handout) New Incident 0 Ongoing Incident Prior FY Litigated OVERFLOWS Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to Type Paid* Paid** Closed 1 2019003 SSO 08/20/18 Bettencourt Ranch H0j 400 Coventry Place Danville $ 1,250.00 HOA $ 5,632.26 $ 6,882.26 Servicemaster Closed 2 2019006 SSO 10/08/18 James Campos 91 Scenic Drive Orinda $ 2,782.53 $ 2,782.53 Servicemaster Closed 3 2019007 SSO 10/15/18 Julie Dejarlais 720 Palmer Road Walnut Creek $ 1,718.98 Servicemaster $ 195.00 $ 1,913.98 Claimant Open 4 2019008 SSO 10/14/18 Steve Knight 1536 S rin brook Roa Walnut Creek $ 5,000.00 $ 5,000.00 Total-SSO $ - $ 10,133.77 $ 1,250.00 $ 11,383.77 PLUMBING REIMBURSEMENTS Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to Type Paid* Paid** Total-PL $ - $ - $ - $ - LIABILITY INCIDENTS-OTHER Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to Type Paid* Paid** Open A 2017028 GL 2/9/17 Jane and Patrick Settle 273 Scofield Dr Moraga $ $ $ $ Closed B 2018003 GL 10/11/17 Christophe Pierrat 3100 Sandalwood Ct. Lafayette $ $ $ 7,317.78 $ 7,317.78 Closed C 2018004 GL 10/23/17 Earl Dunivan 210 Berrellesa Martinez $ $ $ - $ - Paid by CT Open D 2018013 GL 4/23/18 Ranisha Babber 219 Jewel Terrace Danville $ $ $ $ Denied SoL 10/25/18 Open E 2018016 GL 10/2/17 Abeba Nicola 2574 Buena Vista Ave Walnut Creek $ $ $ $ Denied-Sol-12/5/18 Closed 1 2019004 GL 7/19/18 Rick Hernandez District Employee Martinez $ $ $ 239.90 $ 239.90 Claimant Total-Liab $ - $ $ 7,557,681$ 7,317.78 AUTO INCIDENTS Status # ID# Loss DOL Other Party Location Veh# Reserve Expenses Claim Incident Total Paid to Type Paid* Paid** Open 1 2019001 APD 07/02/18 N/A Madrone PI.Orinda V288 $ $ $ 3,972.63 $ 3,972.63 Open 2 2019002 APD 07/13/18 Patricia Savitsky Willow/Mellus,Mtz V285 $ $ $ 7,800.00 21st Century Insurance Subro to Policy Limit $ (5,000.00) $ $ 2,800.00 Open 3 2019005 AL 08/23/18 Wayne Engelstad NB 680,Martinez M225 $ 5,000.00 $ $ - $ 5,000.00 Total-Auto $ - $ - $ 3,972.63 $ 3,972.63 *Paid per GM Authority *` Board approval required to pay claims of$50,000 or more November 1, 2018 Regular Board Meeting Agenda Packet- Page 464 of 499 CCCSD 2018-19 Loss Control Report PROPERTY INCIDENTS Status # ID# Loss DOL Other Party Address City Reserve Paid to Date Incident Total Paid to Type Total-Prop $ - $ - $ Note: Prior fiscal year closed claims have been removed from report. 10/22/18 "Paid per GM Authority Board approval required to pay claims of$50,000 or more November 1, 2018 Regular Board Meeting Agenda Packet- Page 465 of 499