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HomeMy WebLinkAbout12.07.2022 Minutes @6:30 CALL TO ORDER Chair Del Rosario called the meeting to order at 6:36 p.m. ROLL CALL Committee member Brosnan, absent Committee member Rey, present Committee member Zemke, present Committee member Romero (alternate), absent Vice Chair DeGuzman, present Chair Del Rosario, present AGENDA REVIEW No changes. REMOTE PUBLIC COMMENTS • Mina Richardson, Resident WELCOME AND INTRODUCTIONS Finance Director Karen Chang introduced Amy L. Meyer, CPA, City’s auditor and partner of Maze & Associates to the committee members. MATTERS FOR CONSIDERATION 1. Motion to approve the Minutes from the meeting October 19, 2022 Motion – Chair Del Rosario/Second – Vice Chair DeGuzman: To approve the Minutes from the meeting October 19, 2022, by roll call vote: AYES Committee member Rey, Committee member Zemke, Vice Chair DeGuzman, Chair Del Rosario NAYS: None; ABSENT: Committee member Brosnan; ABSTAIN: None 2. Presentation of audit overview and draft Measure W financial results by City's independent auditor. (Amy L. Meyer, CPA, Partner, Maze and Associates). MINUTES MEETING MEASURE W CITIZENS’ OVERSIGHT COMMITTEE CITY OF SOUTH SAN FRANCISCO Wednesday, December 7, 2022 6:30 p.m. TELECONFERENCE MEETING This meeting is being held in accordance with the Brown Act as currently in effect under the provisions of Assembly Bill 361 which allows attendance by members of the Measure W Citizens’ Oversight Committee, City staff and the public to participate and conduct the meeting by teleconference. Teleconference locations are not open to the public. MEASURE W COC MINUTES December 7, 2022 MINUTES PAGE 2 Certified Public Accountant and Maze & Associate Partner, Amy Meyer shared a presentation regarding the draft results of the audit. She began her presentation by thanking the committee Members and explaining that an audit is an independent verification that the City’s financial statements are materially correct or fairly present the financial position of the City’s funds. CPA Meyer explained that Maze & Associates, the City’s external and independent auditor plans to opine the City’s financial statements, which includes the major funds individually and non-major funds in aggregate in accordance with auditing standards generally accepted in the United States of America. She went on to present Maze & Associates responsibilities under U.S. Generally Accepted Auditing Standards (GAAS) and defining materiality. CPA Meyer went on to present on the audit scope and the audit timeline, citing that the reports should be finalized in December 2022. Before presenting the draft results, CPA Meyer stated that because Maze & Associates is far enough into the audit there is no anticipation of change in the results, but there could be a difference. CPA Meyer shared the Measure W – Draft Results Balance Sheet, Income Statement and Budget-Actual Statement showing a Fund Balance-June 30, 2022 of $11.9 million. She then opened for discussion and questions. Vice Chair DeGuzman clarified, as stated by CPA Meyers, that the separate presentation does not conform with Generally Accepted Accounting Principles (GAAP) but that the numbers presented are audited. CPA Meyer confirmed Vice Chair DeGuzman’s statement adding that the numbers are audited as a component of the General Fund, clarifying that Maze & Associates only opines on the general fund, of which Measure W is a component. She stated that Measure W does not meet the qualification to be reported as its own fund as it is not a restricted revenue source. Vice Chair DeGuzman then clarified that on the “Measure W-Draft Results Balance Sheet” slide the Receivables: Accounts is a forward-looking number. CPA Meyer explained that the money was received as cash in the accrual period, clarifying that the accrual period reaches out 60 days from the fiscal year for anything related to the fiscal year. Vice Chair DeGuzman further clarified that the accrual is to account for the two months lag in sales tax receipts for the closing period June 30, 2022, received in July and August and that the numbers are now actuals. CPA Meyer agreed with Vice Chair DeGuzman’s statement. Vice Chair DeGuzman asked for clarification on why the budget to actual on “Measure W-Draft Results Budget-Actual Statement” show a variance of $2.7 million. CPA Meyer explained that sales tax actuals have exceeded budgets at most of Maze & Associates’ clients as sales tax has increased because of spending increases. Chair Del Rosario asked for clarification on formatting related to the presentation given by Maze & Associates as it relates to the presentations given to the committee at previous meeting. Director Chang stated that her presentation following the current item will follow the previously presented format with budget and actual comparison and confirmed that in the past the committee has been shown revenue and expenditure detail reports where the current presentation is a high-level summary. Vice Chair DeGuzman asked if the Police Station Building becomes an asset of the City and if it would be reflected in the presented balance sheet. CPA Meyer explained that it would not be reflected because capital assets do not get recorded in governmental funds. Vice Chair DeGuzman clarified that the auditors only verify the funds received by the City from the State Controller’s Office and that the auditors do not do any additional auditing to verify the funds into the bank. CPA Meyer stated that as part of control testing, Maze & Associates picks MEASURE W COC MINUTES December 7, 2022 MINUTES PAGE 3 transactions for revenue and expenditures. She stated that when a transaction is picked, it is traced from the beginning to the end, where it comes from and into the bank or out of the bank. Because there have been tested controls over receipts and disbursements, it allows Maze & Associates to trace remittances form the State to the general ledger. Chair Del Rosario asked for confirmation that revenues shown on the “Measure W-Draft Results Income Statement” is a percentage allocated to Measure W and if the auditors audit that calculation. CPA Meyer responded that the calculation is done at the State level and is not audited by Maze & Associates. She further explained that Maze & Associates tested what the State reports as disbursed to the City matched what is being recorded by the City. Vice Chair DeGuzman requested confirmation that the final audit will be completed by end of year. To which CPA Meyer stated that they are working on a revised draft but anticipates that the final audit will be completed by end of year. The following individual provided public comment: • Mina Richardson In response to the public comment, Director Chang stated that in previous presentation staff shared information related to the bond sale and debt service with the committee and while the information is not readily available at the current meeting, staff will respond to the inquiry at a future meeting. Deputy Director Jason Wong provided a brief overview of the bond sale and debt service to address the public comment per Director Chang’s request as he stated that he had the information available. Deputy Director Wong shared that the City issued $43.9 million of bonds in 2020 for the police station, in 2021 the City issued $86.4 million of bonds for the Library, Park & Rec Center, the Streets Program and Solar Panels, and in 2022 the City issued $65.4 million for Orange Memorial Park, the Pool, the bridges, and other playgrounds. Deputy Director Wong stated that in aggregate the City has issued roughly $195 million in bonds with $13.2 million in annual debt service. Chair Del Rosario asked if the information from previous meetings is posted for public viewing. Director Chang responded that the information is available, she said that minutes and prior presentations can be found on the City’s website. 3. Report providing Measure W financial overview of Measure W and transmitting results for Fiscal Year 2021-22 and update for FY 2022-23 (Karen Chang, Finance Director) Finance Director Chang presented a financial overview of Measure W which included a revenue and expenditure summary, revenue details, and expenditure details. Director Chang then discussed the next step following the auditor’s presentation regarding the audit scope and audit timeline, being the City Council report. Director Chang stated that once the auditor’s finalize the audit report and the City has the annual financials, they will be shared with the committee members and staff will help to draft the City Council’s report for committee’s review. Vice Chair DeGuzman asked how much time the committee will have to review the financials and and finalize the report. Following discussion, the committee agreed with Director Chang that two to three weeks is sufficient time to review the report before going to Council in February or March for adoption. MEASURE W COC MINUTES December 7, 2022 MINUTES PAGE 4 Chair Del Rosario questioned if the committee will be expected to meet separately to discuss the report or if Finance Director Chang will be assisting the committee through the process. Director Chang stated that she would provide a draft of the report to Council and answer any questions the committee may have at the next Measure W meeting. Vice Chair DeGuzman asked if the committee would need to be present at the Council meeting to answer any questions that the Council may have. Assistant City Attorney Alexandra Wolf responded that per her understanding the report would be a written report presented to Council on the consent calendar and the committee would not need to present an oral report. Committee member Zemke stated that in his experience he does not recall a need for the committee members to be present. Director Chang stated that the Chair may be the only one to be present if needed and asked Assistant City Attorney Wolf to verify and Director Chang will send an email to the committee members to confirm. Chair Del Rosario clarified that Director Chang will put together a draft for the committee to review, ask questions, and modify as needed and present to Council, to which Director Chang acknowledged. Director Chang stated that per past practice the report will be an acknowledgement from the committee that they have received a copy of the annual financials, that the committee has reviewed the information, and that it looks correct. This acknowledgement would be submitted as a written report summarizing the financial information presented for Measure W. Vice Chair DeGuzman clarified that there would not be a separate or segmented report for Measure W rather that the full audited financial statement would be shared, to which Director Chang confirmed that the report would be the full financial report but that the discussion would only be related to Measure W. Chair Del Rosario asked if the report would be shared with the committee via email. Director Chang stated that the annual financial report would be shared via email as a link as the report will be made available online on the City’s website. To clarify, Assistant City Attorney Wolf stated that there is a difference between the audit report that was viewed at the meeting, the final audit report that will be issued at the end of December, and the report from the committee to Council. She reiterated that the committee action is to adopt a brief document that states that the information presented has been reviewed and is found to be satisfactory, not including the committee’s own analysis of the audit itself. Vice Chair DeGuzman asked if Director Chang could confirm with the committee following the Final Audit Report, if the numbers presented at the meeting in the auditor’s presentation are the final audited numbers released in the report. Director Chang stated that the committee can verify the number that were presented match the numbers issued in the auditor’s report by comparing the presentation provided in the agenda packet to the auditor’s report. She confirmed that she would also confirm that fact via email. The following individual provided public comment: • Mina Richardson In response to the public comment, Deputy Director Wong stated that all three bonds that have been issued are fixed rate lease revenue bonds. He restated that there is no fluctuation in interest rates. ADJOURNMENT MEASURE W COC MINUTES December 7, 2022 MINUTES PAGE 5 Being no further business, Chair Del Rosario adjourned the meeting at 7:58 p.m. Submitted by: Approved by: _____________________ ______________________________ Amanda Parker-Govea Engy Del Rosario Committee Secretary Chair Approved by the Measure W Citizens’ Oversight Committee: / /