City of Portsmouth, New Hampshire Audit Committee, 8 Dec 2021

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From YouTube: 12.8.2021 Audit Committee

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12.8.2021 Audit Committee

A

That's a good idea: you're not getting anything stiffer.

A

So esther you were up uh quite late. The other night.

B

Yes, I was now I get up for work at 5, 30, so par 5 15., we're recording now.

A

Thank you. I'm sorry, what's your name kevin, I'm chris. Thank you kevin. Thank you. Thanks, kevin.

C

Recording in progress, okay, as soon as petra comes back, then why don't we get started.

A

So we're now recording okay.

D

So we're waiting for well, I'm just going to go ahead. Okay, we have no time to spare. I know so.

A

um I wish to call the product committee uh to order uh for our meeting on thursday december 9.

A

21 at 2 pm: this is a public meeting and we're in conference room a of the city hall. Okay, thank you.

A

So I'll do a roll call. um So uh chairman white is here present uh petra. Do you wanna uh counselor.

D

Here now, president councillor kennedy, president, thank you heart, firm and present beautiful.

A

And then can we please get a motion on the approval of the minutes.

B

Second, all in favor aye opposed. Thank you very much now peter. What happens to those do those.

A

Get filed off and they need to go to joanna diemer, okay and they, yes, they will get filed.

A

Okay and be made public okay, would you be willing to forward those to johanna for me.

A

Please, or do you want me to do that, um chair the chair? Okay, there are many duties, I'm unaware of.

A

Okay, so let's get started on the rfps um and, with your permission, what I'd like to do is to change.

A

The order slightly on the agenda, um because I had the audit committee charter as last and I'd.

A

Like to have that, are you there, oh good, thank you esther um yeah, I'm here. Can you see me still.

A

Well, yes, yep, that's very helpful, thank you and I have hard copies here. Okay, thank you. Thank you and.

A

So what I'd like to do is to change the order please and do the rfp for the nana test. Last.

A

Oh suzanne he's here I had expected that karen was going to be here.

C

And we had to divide and conquer again so, okay.

C

Yes, so karen won't be coming downstairs and you're representing yes. Thank you. Good apologies for.

A

um Being late, so, let's see this, this is for suzanne. Thank you. uh So this is the uh what what I.

A

Just uh stated was that I'm wanting to change the order of the agenda so we'll do.

A

The auditing rfp first and uh councillor kennedy's on the zoo, okay,.

B

Hello and then we're going to do the charter second and then the nano test.

A

Rfp, which is the roughest one last.

A

So what I just handed out is the auditing rfp and we're, I think, we're just about.

A

There, with the exception of the highlighted- and I have page numbers actually on this now so.

A

uh Page number: three: you can see that the highlighted portions were still.

A

Missing the the updates on these numbers and that I asked karen to please provide.

A

A draft audit for 2021, so we could pull the numbers from that. But in any case, if we could.

A

Please get those number the updates. We are working on those updated numbers.

A

Okay, great estimated estimated time arrival soon, let's say okay. Well, it would be good to get them.

A

By the end of this week or uh by monday, because uh our next meeting is on the 15th at five o'clock.

A

And I'd like to have this all sealed and ready to go off to you guys.

A

At that time, so if we could, please get it in the next couple of days, that would be very.

A

Helpful yeah: do you want to discuss now kind of the city's position on some of these issues in.

C

Terms of the nana test, services and kind of maybe clarify some of the scheduling pieces.

A

I think that the uh feature did you have. Did you want to say something? Well, yeah. It wasn't on it.

D

Wasn't on the schedule- and I think um in your I I don't know if uh I'm pretty sure suzanne.

D

Got copied on the uh the memo that went to the city manager on your position on this right so.

D

um I guess when we get to the naughty test services, because I I do also have a lot of.

D

Questions on the non-test rfe- I don't I'm not surprised, so um I guess when we get there if.

A

We can, we can talk about it then yeah, okay, because I just figured you would be helpful to know.

C

Some of the I know you wanted the schedule in terms of how it unfolds in the finance.

C

Department from a scheduling point of view, so I have some of that information information.

C

On the 60-day rule and how that plays into the schedule for performance of the audit.

C

The fact that how we you know our general, the city government, is a modified accrual basis.

C

The sewer funds, water funds are a full accrual basis and how that all plays into the unfolding.

C

Of the fall shall we say we understand that uh that the uh that whatever gets odder it.

A

Needs to be on a full accrual basis so and that that's where the test services come in.

A

So and we understand that they're essential for having a successful audit correct, so I can walk.

C

You through the the schedule yeah, why don't we then I agree with peter: why don't we hold off.

A

Until we get to the nano test rfp on that, is that, okay with you, uh certainly it's your.

C

Meeting and I will weigh in where appropriate, okay thank you so um and again, I repeat our.

A

Need for getting the highlighted data in the auditing rfp from the city in the next few days.

A

So that we can on the 15th, we can have a final auditing rfp other than that. I think that the.

A

Oh and then there was these highlighted statements on page nine.

A

And the top of 10, which I think are put in there as part of.

A

The non-attest work being done as part of the auditing.

A

But in point of fact, I don't think they really belong in here.

A

So counselor kennedy is scrolling to the back of the document.

A

But it talks about a city, preferring interim field work and a pre-closing trial balance.

A

Being done by june 15th, I don't think that pertains to the work of the auditor. I think.

A

That's the work of the non-test service provider and then the top of page 10.

A

A preliminary draft of the audit and required journal entries, I think, are similarly non-attest.

A

So unless you have an objection suzanne, my inclination would be to strike.

A

Number five, six and eight.

C

So you should understand that the city does not recommend splitting the non-attest services.

C

From the auditing services, without having a conversation with the city council, because.

C

This has impacts in terms of the budget and the timing of those you know services so.

C

We're not saying it can't be done, but I'm willing to walk you through.

C

Why we have traditionally done it as one package and lar a chunk of it is financial and part of.

C

It is the timing of getting all the work done uh in the compressed time frame that we have.

C

So, like I said, I came prepared to kind of give you the perspective of it. So we're not.

C

Saying it can't be done, we're just saying there are significant impacts if one is to split it.

C

Those two services- and it is probably a policy decision because it will have.

C

Significant impacts on cost so happy to to walk you through that. Whenever you decide it's helpful.

C

And appropriate to do so. I appreciate that, thank you, so why don't we hold off on that, then.

A

um And so I will simply put question marks next to number five. Six and eight.

A

And we'll wait for the further conversation.

A

Otherwise, uh petra and hawk and astor did you have.

A

Further comments on this draft rfp for the auditing.

A

Please yeah, okay, so I guess the and this this will um kind of coincide with. um I I believe what.

D

Suzanne brings to the table here the um I'm not really clear on on h the schedule of activities.

D

And how that how that would be changed, um and I I guess I would. uh I guess I would.

D

Remind everybody that when we discussed, we were advised as an audit committee, that um we should.

D

Have the non-attest services separated out by elena of melonson when we did this last time.

D

That's the reason we're bringing this forward and the schedule on page 10 of activities.

D

I know we can't have um closing entries, I'm trying to get it straight. In my mind of the.

D

Of what has to be done, and I'm not really clear as to um what the city was preparing.

D

Previously and what um the the services of the accounting services that were provided by melonson.

D

And then, at what point in time did was it actually provided to the audit section of melonson.

D

That wasn't doing the attest services and said that the books are closed. They're consolidated.

D

And we have final financials and now your auditing section can come in and do this.

D

So I think that will be involved in section h here and trying to get the nano test. Services.

D

Straightened out and the timing, because the non-test services will need to be.

D

If I understand it right, the trial balance comes out and previously and and went to melonson.

D

um They dropped it into um a program and they cranked out all the entries. And then I guess they.

D

Worked with judy to do closing, consolidated and eliminating entries to have a final financial and.

D

Then, after that, um basically the um the auditing section uh picked that up and audited what was.

D

Done there and the audit committee had a problem with that as far as independence, because we.

D

Weren't really clear on what kind of entries and who was doing the entries at that point in time.

D

I've got some of those answers for you. I tried to take good notes and come back with some answers.

C

For you guys, we were going to um a separate rfp, based on the advice that we did receive from.

D

Previously so um I guess the black hole for me is that section and then what so, starting with.

A

The item number six may 1st, where it stipulates that the management prepares, closing entries.

A

That's up for grabs. Well, we need to refine them. The other thing is, you can't do closing entries.

D

Until the books are closed right, so that's going to be down aft anytime after june june 30 june.

D

30Th, but um does the city staff prepare the closing entries or do they receive it.

D

From the model that mellinson was doing and that's what we we need, we need clarity on.

D

First, I guess so maybe it would help if I give you some of the clarifications as to.

C

The the pieces that we've been talking about on terms of how we do our books.

C

And then what happens at year end with the the schedule, so I think if you give me a moment, I'll.

C

Kind of walk through this, and that might help inform your conversation. So that's: okay, okay,.

C

So, first off I I thought I heard and I wanted to make sure if, if it did come up at the last.

C

Meeting just to kind of clarify the starting point, so the city does not maintain its trial balance.

C

On a cash basis, so the city maintains its general ledger on the modified accrual basis of accounting.

C

For government funds and on the full accrual basis of accounting for its enterprise funds, consistent.

C

You know with the generally accepted principles, so that's your starting point. You've got modified.

C

Accrual basis on the city side and then for your enterprise funds. We have the full accrual.

C

So melanson has never prepared the city's traditional year in.

C

Closing entries, melanson prepares entries to convert.

C

The government funds which are maintained on that modified accrual basis of accounting.

C

To the full accrual basis of accounting, so that's that's the.

C

That's the they help with that conversion process. So in terms of the schedule, what that means, so the.

C

Finance department, you got to remember, maintains approximately 50 funds that require year-end.

C

Closing so just put that in your mind, I'm sorry are those the enterprise funds. So we have the.

C

Two enterprise funds, water, sewer yep, but then we have a bunch of other funds, some of them.

C

Underwater sewer and then additional funds, so that's why it's a little more complicated than one.

C

You know might initially think from a first look at the budget, so you've got 50 funds.

C

So what happens, is you get to june 30 and you have year-end your year-end closing.

C

So, in accordance with the modified accrual basis of a county, there is a 60-day rule after the year.

C

End where government agencies record revenues that are recognized in the accounting period.

C

In which they become susceptible to accrual, that is when they become both measurable and available.

A

So I'm sorry so this start. The clock starts on june 30., so june. 30 is our fiscal year end, but.

C

There's a 60-day rule yeah and the 60-day rule brings us then to august 30 right. So you've got.

C

That 60-day period of time, where there's still the transactions are taking place so to speak.

C

um In terms of recognition, as I understand it, of revenues that are, you know showing up and.

C

Invoices that are still you know, the work was incurred in june before june 30th and are still.

C

Coming in are getting recorded, if you will so so you have invoices also that are issued.

C

Before june, 30 are still being processed in the months of july and august, and I can tell.

C

You judy is always hounding all of us in all the departments to make sure we get those invoices in.

C

So, the month of september and partly into october, the final closings are prepared by the city.

C

And then mid-october, the trial, balances and schedules are provided to the auditors in.

C

October, so you remember counselor huda. When you had wanted, you had some request. I think.

C

In late august of judy from this, you know in the city council packet and she said.

C

We'd be better able to answer that in october. That's why it's the schedule right here.

C

In terms of letting that 60-day period run and then we need to do our work and then deliver the.

C

Answers you know kind of where we are in october, so I'm sorry so uh september, 1 say to mid october.

A

The the adjustments are being made and converting from these trial balances to a fully accrued.

C

That's my understanding and consolidating the account yes yep and that's done by city staff.

C

So there's a good chunk of work done by city staff and I will be honest with you. I'm not sure where.

C

Malanson comes in and then they get uploaded all the information, so they're getting information as.

C

They go but it kind of gets finalized when you get into that mid-september october period. So I.

C

I believe that's that's the key section that we're going to need because so it says which I've got on.

C

My notes from judy it says the trial, balances and schedules are provided to the auditors in october.

A

D

So trial balances mean no closing entries, no consolidated entries, nothing.

D

As far as I understand.

C

I'm happy to double check that okay.

B

My guess is that um this is very common, with most municipalities in most schools and.

B

And people that deal with federal the timeline suzanne just gave you. My guess is though mollison.

B

Is looking for things, they usually give a list in july of what they're looking for.

B

In particular, what is important you know what is like with us for funds for the federal money that.

B

Is coming in, I know a lot of the auditors are trying to get a hands around that, so they give.

B

You uh information that they request, so I'm my guess is that would take place and then, in august.

B

Or at the end of august, um in in september they they're just finalizing it. Am I acting that sedan.

C

So there's a lot of information that does get uploaded to the um auditing firm. You know in july.

C

You know it was in our contract, so, for example, you know if there are grant conditions and things.

C

Like that, you know there is a base of work that does get uploaded. You know early on in the season.

C

Which is why you want an auditing firm to be in place. You know early in the year because there.

C

Is this setting up and they begin to figure out where they're going to test so they need? You know.

C

There's there is a lot that can get uploaded, it's that closing piece that just doesn't happen so.

C

This is not to suggest that there isn't a lot of work happening. You know earlier, it's just that you.

C

Can't do the closing piece and the trial balances until you finally finish and close out the year.

C

Which is that crazy period for us of september october, where okay, now we're really really done.

C

And getting it to the next level, but counselor kennedy is, is right and you guys saw you know when.

C

We worked with malanson last year, which is we had a deadline to provide a bunch of information prior.

C

To because that's how they set up their testing right, you know where they want to test they're.

C

Starting to get that information of the city's systems and processes, I guess, is better word.

C

So then, in the end of november mid december we usually have a draft of that comprehensive annual.

C

Financial report and the md a and december 31st is that deadline of the submission for the now. It's.

C

Called the akfa, which is the annual comprehensive financial report, since they changed the name.

B

When do they come into the city, so in this past year they came twice, they came once at.

C

The end of august to do some preliminary work like I said there is a lot of work.

C

That goes on before the end. You know before we finish the closeout and then they came in november.

C

I think it was mid-november this year, then, with all kind of the next wave. Now that we had closed.

C

Out the year-end so they're they're they're, um so they did the preliminary audit in august.

B

And they did the final audit in november. Well, I wouldn't call it preliminary, but preliminary work.

C

Is what I would call it preliminary work? Well, we call plumbing about it.

B

So, basically, that's very common for everyone there. I know a lot of you guys are in business a little.

B

Different but for governmental entities because of the way the grants from that's very common.

B

It makes common sense yep and then let me just, I think it might be helpful. Let me tell you what our.

C

Concerns are about splitting out the nana test services. um I think you would probably hear.

C

From a lanson that I don't think they recommended splitting out the nona test services, I don't know.

C

I think maybe contr you know contraction like we could have done a better job, maybe.

C

Lumping them together in terms of how we described them in the contract, but not.

C

Necessarily splitting them out, but let me tell you the pros and cons because we're not saying.

C

It can't be done so I think, let me spell it out and then you guys can take that into consideration.

C

So um so what we would be anticipating is that, if you are going to.

C

Split out the non-attest services from the audit itself, um we are clearly going to have a.

C

More cost because you're going to have two firms and there's going to be a fair amount of overlap.

C

Not fair amount, but there's going to be some overlap in terms of what you're providing.

C

Each firm because you've got obviously you know the nano test, services and right now.

C

Because you have one firm doing it, they don't have to do a lot of extra work to get up to speed to.

C

Then produce the other piece, so I think you just have to recognize and it may be worth that cost.

C

But we have to acknowledge that there is a cost. Second, it does compress the time frame.

C

For the auditing firm to complete their audit and provide an opinion in time for the submission for.

C

The december 31st deadline, because you have to wait till that all those financial statements.

C

Are completed, which may not be until you know november, for then that next piece to happen.

C

Third piece is: it does increase the burden from the finance department and on the legal.

C

Staff as all documents, discussions and craft references will be basically done by two firms.

C

So there is an impact on staff to basically do some of the work twice.

C

The finance department would anticipate that if we are going to move away and split this up, that.

C

We are probably talking about an additional staff person for the finance department. If we're going.

C

To be splitting this up, because we're anticipating there will be additional work related to that.

C

So it's that's why it's feeling more like a policy, you know, there's a piece full-time or part-time.

C

It may not have to be full-time, but we we anticipate, there would be a staff.

C

Impact and, like I said, we're scrambling because we're you know: we've only.

C

We've only had this, you know kind of concept since the last meeting and so we're trying to feedback.

C

As much information as we can, because we were in our mind, already drafting to go out for rfp.

C

Based on the model we've had in the past right, I think here's the other couple pieces and.

C

Again that way, you've got them in in full in terms of what you're, what you can think about.

C

Which is, um we think the reason why you will see that most new hampshire municipalities are.

C

Doing it exactly the way portsmouth is doing it, which is you have the same firm doing the.

C

Nana test services as the as the as the audit firm is new hampshire permits. It.

C

It saves money and it helps you meet the time frames. So as far as we're aware, this is how most.

C

Towns in new hampshire municipalities and even in new england are doing it and maybe we're just.

C

Frugal and cheap up in new england- I don't know, but this and and we did reach out to melance and.

C

They said yeah in other parts of the country. It's done differently or bigger. You know: bigger cities.

C

Real big cities, you know, do have it separate um or they have in-house. You know a more robust.

C

Finance department so they're doing all their. You know they don't have to shop out for non-attest.

C

So so it is common here in new hampshire and lansing actually does this for all their other.

C

Clients they do both and we did ask melansen about this. You know, how can you do both and the section.

C

That they gave us is that an auditor is allowed to perform, not a test services. If you look at chapter.

C

3 of the 2018 yellow book, which is for those who don't know the generally accepted government.

C

Government auditing standard identifies assistance with financial statement preparation as a.

C

What they call threat to independence, so you guys are right. You know, there's! No, I'm not.

C

Arguing with you, the identification of a threat requires the auditor to apply.

C

The safeguards to ensure independence and that process, as we understand it, is rather involved.

C

But melanson has advised that they do apply those safeguards and they have satisfied itself.

C

That the city also has an individual, because this is part of it. The city has an individual.

C

With suitable skill, knowledge or experience to oversee and accept responsibility for the service.

C

So there are components within malanson and malanson looking at its client to make sure.

C

The client has enough, basically financial, hutzpah and skill, and you know ethics and all that kind.

C

Of thing that this works, so there is a structure built into place within the auditing field, for.

C

This combined services, but that's why you can do it. You know, that's why I want to make it.

C

Clear you can pull it out and we're not saying you can't, and there may be reasons to do that.

C

But it is not common here in new hampshire, at least and and to some extent, new england.

C

But it is done in other places, and it's just. It does rise to the. If we're going to do that. There.

C

Are policy implications in the sense of we got to be thinking about the cost of that, because.

C

The way we budgeted it last year is assumption that yeah we're going out for an rfp. We might.

C

Be paying a little more but you're, probably you may be talking on the order of magnitude of 25.

C

000 more, you know if you're gonna, split up and you've got some fair amount of.

C

Duplication of work and that's our best guess because we haven't split it out, so we're just.

C

Trying to you know figure this out so so that's why that's what I wanted to bring to you guys.

C

Okay, first of all, I very much appreciate you're laying this out suzanne. It's very helpful, so.

A

um Melanson looks to the city for in-house expertise that uh can oversee the process to help.

A

Respond to and alleviate these concerns that are verbalized in the yellow book.

A

Who is that person? uh Is that person already on staff? I assume it is. I assume it's the finance.

C

Director, okay and uh okay, and it may be also- or maybe the two andrew pergal- has also been with the.

C

City for a long time he was our controller right. So so we've got robustness. You know we don't have.

C

You know someone who works part-time, who may not have the full credit. You know when you think of.

C

Other smaller towns and places where they may not have the robustness plus you have to remember.

C

Because we do get a lot of grant funds. As you know, councilor kennedy is very familiar with.

C

We sometimes get audited by the state of new hampshire and as or the some arm of the federal.

C

Government, so we have you, know kind of like when you have a commercial builder. You know there are.

C

Always other people looking over your shoulder, so we do have other people looking over our shoulder.

C

um So so there's there's that piece um and I wanted to if you want the other piece that.

C

We thought would be helpful to feedback. Was this internal controls examination so.

C

Judy recalls that they have it's been a long time done, like a modified kind of you know,.

C

Internals controls look with an outside company when they had questions years ago. On a particular.

C

Department, I forget, which one to try and figure out better processes and get some recommendations.

C

That kind of internal controls work does not need to go with the audit, so.

C

There is going to obviously there'd be an additional cost for getting that opinion.

C

But we could pull that out. It doesn't need to go with this rfp. It can be done at any time.

C

And in fact, we'd recommend, given that it will have an impact again on the finance department.

C

You know our finance department is not that big and, and so so they would actually recommend that.

C

If that scope of work is going to get done at some point, that that would be done kind of offside, not.

C

In the middle of trying to make sure that we get a good audit done and do it at some other part of.

C

The of the year, um so that was just kind of some of the feedback there that don't feel the need to.

C

Kind of rush that piece out, if, if it yeah, because it doesn't need to be it, can go separate from.

C

So that was that feedback there we don't want to be. uh You know, inundating you guys with so many.

A

Changes that you just throw up your hands and say screw it right. You want changes that can be.

C

Implemented and and you want and be effective good recommendations- not right, I mean, but our.

A

Goal is, to you know, keep incrementally things like kaizen in japanese manufacturing. That.

A

Every year you make incremental improvements to get a better and better car same idea here.

C

Yeah- and we would, I think, absolutely agree that that is part of the when governing government is.

C

Functioning well, you look for improvements and you fix things that aren't working well, so yeah, okay,.

D

So I I guess I have some comments and questions on um a lot of the statements that were just made.

D

um When we did meet uh previously with elena, she suggests she did suggest that we, these be done.

D

They couldn't do to the level that we wanted at the time.

D

So that's why we are bringing this forward. The other part of this is that I will readily admit.

D

I did not, I do not understand and I still don't quite it's not clear to me. The differentiation.

D

Between what the staff is preparing and what is provided by these non-attest services.

D

And then how it rolls in so the other thing is, I I don't have a problem with combining them.

D

And this rfp will be going out to all the other auditing firms involved, so um it might.

D

Be advantageous to discuss that with them, since this year we are going out in a timely manner,.

D

The next thing I kind of want to address- and I don't have any I remember from the budget but.

D

I don't have any idea where it is. Is there was another position uh called for in the finance.

D

Department in the budget- and I don't know if it was hired, I have- I have no idea- update you on that.

C

So let me let me clarify a couple of points, so let me start.

C

Melanson actually would not do an internal cont. An internal controls examination that's not in their.

C

Wheelhouse right elena, has indicated right. We should need to get another one right right, exactly.

D

Test services, though, okay, the sharing of the stuff of the other stuff right, they do that they do the.

C

Non-Attack services, but I just wanted to make it clear that in case it was there was a question.

C

That they normally do not do that type of work, that's not their expertise um and um in terms of.

C

The position we have been looking for someone to fill that new position in finance and, as you might.

C

Imagine given the hiring market and the fact that we have huge numbers of positions not filled here.

C

um It's hard to find people with the right skill set um and the right expertise willing to work for.

C

The you know amount of money we offer, so it isn't unfilled position yep. It is um unfortunately we're.

D

Almost six months in and okay, yeah, okay and yeah, it's hard to find people with enough of a you know.

C

In the ideal world municipal finance background or someone willing to undertake the so we're.

D

September october and that will flip over to another uh fiscal year also so.

D

I guess that's a long time yeah. I would think by that time we would have somebody on board if the.

D

If the requirements were there, we're we're hoping it's like. I said it's a tough market right now.

D

That's the uh that's the other. uh That's the other comment there. I guess. um Can I comment.

B

On personnel yeah yep, okay, um first of all, I really have a hard time believing that we're.

B

Gonna need an extra person um if the things are being prepared because you're, basically breaking.

B

It out and giving it to the same information. So if you're already pulling together and preparing.

B

I I find that quite unbelievable. I understand the shortage. I truly believe the shortage will.

B

Probably continue so it probably will continue to be hard to find personnel.

B

But I really, I don't see that the need for a new person to do this particular audit, where you're.

B

Already pulling everything together, it's really uploading and separating out so um just a thought.

A

So esther you're, talking in terms of what's the issue suzanne raised earlier, that that.

A

That we need that the increased burden on finance and legal would suggest that we need to have a an.

A

Additional part-time, possibly part-time person and and your feeling is that you question that.

A

Need I I question that, because you're pulling the same information together um you're, you know.

B

I we do multi-million dollar audits and 28 million dollars and we have a lot of federal grants and a.

B

Lot of federal and you're pulling things together and at the end of your term after your preliminary.

B

Audit, they pretty much tell you what they're looking for new or preliminary.

B

Gathering of information, however, suzanne wants to say it. They pretty much, tell you what you need and.

B

What new things they're looking for given what's happening in the world, and I guess all that stuff.

B

Comes together I mean your pos are in your your um you know. Hopefully, eyes are bad and your keys.

B

Are crossed and, however, you, whoever you give that information to whether you give to the auditors.

B

Which auditor, I would think, wouldn't really be much of a burden, because you're really uploading.

B

Everything too, I mean we all have these great new software, where everything goes in the software and.

B

You just basically move it to wherever it needs it, so I guess I'm a little perplexed on that one.

B

You know, I think there is some questions about. I mean one of the reasons we're doing this. We had an.

B

Audit committee is there some questions about our audits and anything we can do and I don't, I guess.

B

My question is: do we do we have do we do? Can we do this at least try it and then, uh if it becomes.

B

um Something that doesn't need, but just to get a second opinion this year might be a good thing and.

A

To that point, if I may I um so so, we've contacted five.

A

Additional accounting firms they're all located in massachusetts,.

A

But the I'm happy to do a sampling with a few of them. I've had long conversations with these.

A

Individuals and they're, you know some are more eager than others to do this to be considered.

A

But but clearly there's an interest. So I'm happy to have a conversation with a few of them and.

A

Test their interest and and how they would approach this, whether you know.

A

Also, providing non-test services is enough of a red flag for them that they'd rather not do it.

A

Or maybe that's just a normal, you know operating procedure for them.

A

And so I can make those what's today thursday, I mean I can start making those alison. I drive down.

A

To the cape tonight, but I I can get on the phone as we're driving and start making phone calls.

C

You know we, we were kind of wrestling with that question in-house. You know once you raised the.

C

Issue at the last meeting, um yeah that we were, we were trying to wrestle with how to.

C

How to try and uh meet what we think are our maybe uh our concerns, even if.

C

We don't share your concerns, but try and meet your concerns on on these and and.

C

Yeah trying to figure out whether we could somehow structure an rfp that allowed um proposes to bid.

C

To not bid but to propose on simply one element of the work and and and then see what the cost is.

C

If, if we do it all together, like lansing has been doing what does that cost? And hopefully it's still.

C

In the range of what we would have anticipated, it was like 66 8 this year and you know so maybe it's.

C

Only 70, if it's a continued bundle of services and then maybe you also say, or you could disaggregate.

C

Just yeah you could propose on just the audit alone and what that would look like and then.

C

Propose or not on the non-attest services and then we could really look at the numbers. I think.

C

The challenge that so we were kind of wrestling with that judy and I were back and forth- could.

C

We do that, could we you know, how would that work? Would we get real numbers and then how do we weigh.

C

That all in the mix, so so that was an ongoing conversation, so judy's in the middle right now of.

C

Trying to get everything done for that december 31st deadline, so I my time with her, has been.

C

You know I'm trying to grab it where she's got natural downtime between her other pieces plus.

C

We're doing cip so we've been, and that goes you know to the to the planning board on wednesday.

C

Night, so we have been slammed, um and so that's why I don't have everything I was trying to get you as.

C

Many things as I could in terms of information back because- and I appreciate that you know the.

C

City manager, like I said we we were thinking, we were just going to whip something up because, like.

C

I said we have a different view in terms of the role of the audit committee, but we were planning.

C

Still to go out for an rfp to follow through on the commitment karen made to let's go out. Let's.

C

Survey, the market we had just been starting that process under the assumption it would.

C

Look similar to and let's see what we get for proposals doing it like we've always done it.

C

Simply because it has been cost effective, it is compliant and we've got a triple a bond rating. So.

C

Like why would you possibly mess with the program, at least without having a lot of space to do it.

C

So but but we're trying to take what you're offering and we're teasing it out we're trying.

C

To have that conversation, would it work, you know, what's the pros and cons of it? What's people yeah.

C

So I guess something I I'd like to put out on the table and remind everybody that melinson has been.

D

Doing this on it for 20 25 27 years and the main gist of this was to engage other firms um to bring.

D

That, in also, we do not know as an audit committee, and I wasn't really clear on how you stated it.

D

When uh the previous, um I guess, review of internal controls was done and if there is.

D

A report that we can look at for that the other other big thing here is um on the on the money.

D

This is going to flip over until the next fiscal year, so.

D

I think the audit committee- I know myself has anticipated that we could.

D

Have to have some mores allocated because of the timing of the previous audits.

D

When somebody new comes in whether it's two forms five firms they're going to want to do.

D

Their own due diligence they're going to want to look at what the nano test services are. They.

D

Might rearrange this, I mean the the the problem. We're looking at here is having a firm that has.

D

Done this for 25 years being able to come in and kick out this this this this, where, when we.

D

Get somebody else new new to come in um you're you're, absolutely correct. um All the all the.

D

Information on the lead schedules and everything is usually provided. um That should not change. No.

D

Matter who comes in if it's melon or somebody else, but um as they go through the and and.

D

Kind of make their own plans as far as staffing and everything else um going to be interesting.

D

Because you haven't had anybody different in here for that long period of time and, oh so sorry.

C

No one year round, I didn't mean to I'm trying to avoid that. I totally agree, and I I mean the.

A

Budgeting aspect is going to be an eye opener, but I'm very much aware of the time right. um It.

A

So, let's set aside then this the first rfp.

A

And knowing that we're going to, we need to address the the issue of whether the non-test services.

A

May or may not be part of the rfp, and so that then has obvious bearings on the second rop.

A

Because there's uh I mean this is this has been created.

A

As if it were a standalone service that we were talking about, um it does make me.

A

Nervous because next week you know we're going to have a huge amount of work to do.

A

In order to get all this stuff together,.

A

And we have just one meeting set up on the 15th at five o'clock, so I I guess what I would ask is.

A

If we can perhaps set aside instead of just an hour an hour and a half next wednesday, the 15th.

A

So that we give ourselves a little or more time, esther would would that be convenient for you.

A

I mean it's not a matter of being convenient. Is that possible yeah next week at two o'clock.

A

uh No, this would be at five five on wednesday afternoon, wednesday, okay, the 15th that might.

B

Be a little difficult because I'm supposed to be at a skateboard meeting at 4 30., I see.

A

So I cancelled that because I thought this was replacing it I apologize. I see um I mean if it's.

B

Can we do two o'clock because I don't mind, doing live two o'clock and come.

B

On can you come up at two hawk? What's your, uh I don't know.

D

I'm pretty open myself on the 15th huh yeah. So far I haven't got my other calendar here, but.

B

I think we can do it okay. So let's then, let's uh schedule two o'clock for an hour and a half on the.

A

15Th, perfect, okay, great! So then, let's um peter I'm very interested in hearing your thoughts on.

A

On the non-attest rfp, maybe we could do that on a side. Conversation? Okay, because unless you have.

A

Any major issues that that you want to highlight, I don't I just I think, the uh the time the schedule.

D

um Is a problem? It's problematic, it's a little aggressive yeah because we don't know. um I I.

D

Don't know I'm not clear as to what the finance department is going to be have been preparing or.

D

Is going to be able to prepare, plus we, I I I'm anticipating that we will have a switch out in.

D

In auditing firms on this and um it'll depend on how they look at the nano test. Services versus.

D

This and the timing, you know, frankly that schedule whatever it is, that's outlined on.

A

Page 10., thank you that schedule. I think I mean this is just an rfp and the real you know I mean.

A

Where the rubber really meets the road is when the contract is drafted and so uh and if and if.

A

A bidding firm is interested, I mean, I know, because I used to do this as a geologist you know you take.

A

The rfp and you use it as a launching pad for for indicating how creative and insightful you can be.

A

So I would hope that whoever bids on this would treat it similarly and say you can't do that.

A

You know you need to have this this and this if I can follow up that's exactly what I was going.

C

To offer that as we discussed kind of last year, but I know it's been a long time and.

C

I live this stuff, so apologies. The beauty of an rfp is that you are only getting proposals.

C

And so the contract terms get negotiated. So what is helpful is to put like the key date.

C

Which is in terms of what they would need to do when their proposal is submitted. You know.

C

When questions are due, when their proposal gets submitted, give them a rough time frame for when.

C

You think you'd be under contract. You know we'd like to we intend to be under contract.

C

By I think we talked about no later than april 1st, based on my my recollection from councillor.

C

Kennedy- and I think it'll be sooner than that honestly, if we can get this out the door.

C

And then really all you need is to tell them what the deliverable is and the deliverable is. You know.

C

That december 31st right, you know you need that and after that everything else can be negotiated.

C

And I don't think it's a hard negotiation. You just sit down with the calendars and say: okay.

C

Here's when the finance department- and you know the auditing firm- can look at their calendars.

C

And say: okay, given the people we're going to sign, given when people are, you know on vacation.

C

Let's schedule the date for your to be in, for the week like we did with with malanson and.

C

Then figure out those dates and you just put them into the into the contract. So that is the beauty.

C

Of the rfp and and if you know it, it allows for that flexibility of of conversation about how.

C

To accomplish the work and then you just get it documented, so I actually think you can do much.

C

Less not have to worry about that right now and then it's part of the contract negotiation, yeah.

C

Which, like I said, it's it's a conversation to just memorialize how to get the work done.

C

So I guess my concern there will be from our experience last last year as well. As you know, when.

D

We put it down and we thought it was a simple, simple moving forward and we made some requests.

D

The price went up and the price went up based on their their perception of what they thought.

D

We were seeing and when we went back and looked in the uh the sasses and the gas and everything.

D

And the icv that was supposed to be provided, so I guess that would be. That would probably be my.

D

Only concern about um you know going from the rfp to the contract without um you know, checking all.

D

The boxes and making sure that we were getting uh in the contract what we were supposed to get.

D

And especially if we want to add something so that that would be a definitely a concern of mine.

A

Well, what I will uh what I'll do over this weekend is to try to revise this h, to try to incorporate.

A

The points where you were going right and- uh and meanwhile also uh I have I've gotten to be.

A

Not best at buds, but but uh you know, I've had some pretty good conversations with some of these guys.

A

And uh so I am inclined to give them a call and and see what their thoughts are in non-attest.

A

Versus non-non-nano test um and so I'll, if I can, uh if I include you suzanne, then you become our.

A

Counsel, if you will so it so it's not so it's no longer a meeting, but rather an advisory.

A

Session um and I can share the results of the of my research yeah, I think one of the biggest.

C

Pieces for us to collectively keep in mind is that um when, when we have the reason why you see.

C

Melanson doing so much work within the state of new hampshire and why they have done so much work.

C

For the city of portsmouth, and why? Because because of that, they do have to follow that rotating.

C

Schedule they switch people out every few years is because you've got a fairly small community.

C

Of auditing firms that are interested enough in work in new hampshire, that they're willing.

C

To learn new hampshire law, and that is the key, because you don't want the audit to come back.

C

As you know, in you know having issues simply because they didn't understand new hampshire.

C

Law so like this whole, you know these little goofy things that we have in new hampshire.

C

And that's really finding and it may be, there are firms willing to step up, which is why we should do.

C

An rfp who want to come in and test the market and then part of the the evaluation process is.

C

If they haven't done much new hampshire work, really are they committed to? You know they may.

C

Because they've just hired someone from you know who's done a lot of new hampshire work.

C

Or whatever the issue is, I think that is going to be your key piece, because we as a triple a.

C

Bond traded for company do not want to have a firm, not you know, we don't want them to screw.

C

Up frankly, our good track record yeah. So that's that's that's the thing. We are triple a bond rated.

C

Company, for a reason, quite a jump there for a reason they are, if they're licensed here and.

D

They're practicing and I'm new, it doesn't matter where they're from it does actually.

C

That there is a standard, but there are new hampshire stanzas as well yeah. I just.

C

Yeah and it's something that we will be looking at closely right, uh so the last point I want to.

A

Talk about, then, is the charter and see if we can't get this taken care of. So is it the same as we had.

A

Yeah, it's uh it's essentially the same. um I will highlight the two places where I've added.

A

A little bit more verbiage, um so uh this is what I handed out last time esther. I think you got.

A

A hard copy of that when you were here last, um the addition is the paragraph, the top of page 3.

A

Where there was no mention of our bringing in outside expertise, if need be, and I just I not.

A

That I'm wanting to necessarily do that. But um but I think that the audit committee and I'm trying to.

A

Think you know into the future. The audit committee may feel a need to have that ability to do that.

A

So so that's that's where this paragraph comes in um whether it's legal expertise or whatever.

A

That that is an option and obviously it would require funding for the city.

A

Council so there's a check, there's a check and balance there in terms of what we can do.

A

The the other area that I was trying to get clear in my mind is on page two, this third paragraph.

A

Down and suzanne- maybe you can help me with this because of the length of term once we're up and.

A

Running each person should have, as I understand it, a three year term to allow for staggering. uh Yes,.

A

Yep on page three, um you know, I guess I am told I'm fine with it because and I would hope the.

B

City would be because you're basically saying you're going to go back to the city council.

B

To gather their input and information and expertise in deciding the financial.

B

And if any additional audit- so it's not like this committee- is going solo.

B

They're asking permission to go back to city council, which is what.

B

This committee should do I mean, according to our charter, so I guess I wasn't sure why the city had.

B

A problem, a concern with that part, I I haven't heard any concern expressed. Okay, I'm sorry, maybe.

B

I missed no, no, but I think it. You know I think you're, correct pastor that it. You know we really.

A

We're a creature of the council and that and they they provide our lifeblood and our sustenance. So.

A

um We really so I mean I, I read the document. The whole document is well done and I I think there.

B

Was a question in the last meeting, I really hadn't had time to review this document to the fullest.

B

um When I participated about who had authority but in the whole document.

B

You're, referring back to city council, which ultimately has the authority right right.

A

um Thank you. I don't have any problem with that paragraph that you're just talking about.

C

Okay, says you're: if you decide at some point, you think you need some other counsel. You are free.

C

To petition the city council for I'd, say that's true for any committee without it needing to be.

C

In writing. So you I'm happy, you got it in writing! That's good! Okay! So so uh third paragraph down.

A

On second on the second page, uh help me with the staggering, because when we, when we launch the ship.

A

uh I'm here for three years, whether you like it or not and hawk, is here for two.

A

Yep um will uh if jesse is voted in on the 20th. Will he be here for just one year.

C

I believe that's what's left in, uh let's see hold on, I got the original ordinance. Okay,.

C

The initial terms of the members of the community shall be for three-year terms, except that the.

C

Length of the initial terms to be staggered as follows: in year of initial appointment, three.

C

Members shall be three-year terms. Two members shall be two-year terms thereafter. Thereafter,.

C

Is confusing yeah thereafter, all members shall serve a term of three years, so it looks like.

C

You've got three, members are for three-year terms, and two members are for two-year terms. It doesn't.

A

Make sense it didn't make sense to me as I was reading it so then um jesse needs to be defined.

D

I I never. um The final vote, then, is that well perhaps I I just don't know.

C

My my recollection was, I thought the mayor had indicated your length of term when he appointed.

C

Each of you, I don't remember what it was off the top of my head, okay for two and I'm for three yep.

A

But I don't think there's any definition for um for jesse. I will check that because we.

C

Could fix that when he takes the final vote, yeah excellent, okay, make a note. Thank you excellent.

A

So right now this reads that one would the initial appointments one is for one year and I'm guessing.

A

That would be jesse hawk is for two and one well, I'm looking at the ordinance the ordinance says.

C

Says uh word is very confusing to me: is three members shall be for.

C

Three year terms and two members shall be two-year terms. Let's see there after initial.

D

The the difference is probably the initial time here, right right and in the year of the initial.

C

Appointment three members shall be three year terms and two members two year terms.

C

Thereafter, all members shall serve a term of three years, so I say it as three and two.

C

And then, once that initial term is oh, so once your term is over.

C

If you were to reapply, you would then apply for a three-year term, so how about jesse, though yeah.

B

She should be either three or two. He sorry is a one, a three-year-old, a three or a two. I I just I.

C

Have a vague recollection when, when the mayor appointed the two city, councilors.

C

I just don't remember if he, if he identified you guys as having a specific term or not.

C

I know you're done anyway. I know you get them yeah we're in we're out, I mean counselors are.

D

Going to be in and out of this community, so maybe the mayor, the mayor did appoint. I I know chris for.

B

Three years, I remember that yeah, so jesse would be too. If you look at the or at the new ordinance.

A

Okay, I'm just trying to find it all right. Thank you. Thank you all right, thanks, good, no there's! No.

D

One year ago, yeah, no okay good. Does it not seem to be a one year right? Okay, I will make that change.

A

Great, so what I'd like to do, then, is to vote on this next time to approve the charter.

A

Okay, I think that's it we're four minutes late. I apologize unless there's anything else. That's.

A

Absolutely no I'm going to try and get some of that information available and see how.

C

Much further, we can get on our thinking as well and take back this conversation.

C

To the rest of the crew very helpful here so yeah, it's very helpful to me. So yes, indeed,.

A

Okay, so we adjourn, I get a motion. I move to adjourn a second all in favor aye opposed.

A

By esther esther, thank you. Thank you, bye. Everyone do you want me to send this recording or.

C

We did also have kevin make sure it was getting recorded on the city system so that you.