City of Portsmouth, New Hampshire Audit Committee, 29 Nov 2022

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From YouTube: 11.29.2022 Audit Committee

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11.29.2022 Audit Committee

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Needed one other recording it's good, so I'm susan morrill, I'm the city attorney here in.

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Portsmouth and I'm going to call to order the new audit committee a newly formed pursuant to our.

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City, ordinances and I'll take a roll call and then you'll go into electing a chairman. And then I will.

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Parked my role here so counselor tabor, president counselor moreau.

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Here, counselor denton here chris white here jesse lynch here and hawk furman.

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We believe we'll be joining us by fall later I'll, keep an eye out. Yep.

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So under the agenda, the first item of business is to elect a chairperson.

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um Under the ordinance, the chairperson is to be a city councilor.

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So I would I have a question about that, just because I thought when we actually.

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Were appointed that john was actually appointed as chair, I believe the mayor indicated that was.

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His preference is up to the committee to have a formal vote. I nominate john tabor a second.

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um So are any other counselors present interested in.

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No good share. I already chair land use thanks, I'm good.

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Okay, all in favor, I should that be a roll call or you could make it a roll.

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Call in case since I did not hear I so I'm assuming there's a post.

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um I guess I should have said that I thought everybody said I so counselor tabor. uh Yes,.

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Counselor moreau, yes, councilor denton, yes, chris. What nay, okay and jesse lynch hi and [ __ ] is not.

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Present so four to one congratulations: counselor! Yeah! You are now the chair of this committee. Okay,.

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Thank you, um john. I wish you well well. I appreciate that um and I'm going to excuse my.

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Things right off the top. um We have a busy night tonight we're going to interview two.

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Bidders multiple bitters for our auditing work, um so uh hopefully the temple will be.

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Allegro con brio by necessity. um I also wanted to extend my thanks and appreciation to chris.

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White and jesse lynch and hawk fuhrman for continuing on and giving us their expertise.

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And lastly, I would say my role as a chair, um as is true in governmental bodies, is to make sure that.

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We have full deliberation and every voice is heard and, as chairman I probably I should say the least.

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And make sure that everyone else's point of view is heard so that.

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The decisions we arrive at have been the process of a full deliberation of all the minds of all.

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Of us that doesn't mean we won't disagree and we can even name those disagreements. But I ask that.

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We do that tactfully and respectfully we all love the city we're all here, because we want.

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To do good for the city, we may differ on how to do that, but I look forward to our deliberation.

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Any comments or questions about that. We have minutes to approve from.

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Let's start with the july 25th minute minutes, these went back for some revisions.

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um And uh all the way to motion to approve those.

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So moved I'll. Second.

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Suzanne can we approve without yes, we have enough vote. Yes,.

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You don't actually have to be in a meeting if you trust frankly, the author and the.

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Representations of the the keeper of the minutes, you can actually vote on the minutes.

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A lot of people prefer not to, but that is you know, certainly, and certainly to.

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The extent there were public minutes, um people could watch the public meeting.

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But right now you've got a quorum, so you really only need a majority.

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Of those voting so does he need four votes for them to pass or three no majority of those voting.

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Of those votings, okay, one two, three, four five, so we have a motion. Do we have a second.

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I'll second, you seconded anyways, okay, all in favor, aye, aye, aye, call abstain.

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Because I didn't get a chance to watch her read so I had a busy afternoon.

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And then we have fresh minutes from october 21.

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Which I've had a chance to read, but I don't know if anyone else has if.

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Anyone if no one else has had a chance to read these, we can perhaps defer.

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Yeah, I don't know whether hawk has seen them at all either, given that they just.

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Went out today, okay! Well, let's set those aside then for later um and.

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That gives us a chance to have a brief discussion before public comment.

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um I just thought I would ask our members uh to give to share their thoughts on the purpose.

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Of our committee now that the new ordinance has been put in place and and sort of to make.

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uh Implicit things explicit: if you have feelings about what this committee's work should be.

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To air those now so that we know where each other's coming from so I'll start off with.

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Chair mr white's had the longest tenure so.

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Thank you, chair.

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I haven't, I haven't prepared anything except for this 20 page.

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I think that the the work of the audit committee is critical in terms of.

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Trying to provide a mechanism that is based in the city council.

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For uh recommending to the city council, a choice of auditor for the coming year.

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um And I I know that what hangs over the city council's work and our work is the fact that.

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We've had the same auditor for so many years and that issue was risen time and time again.

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So I think that uh whether it's on the agenda or not, it certainly is a critical issue for.

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Us to address in trying to find the best auditor for the city for this coming year,.

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That's probably fewer words: the better okay.

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And committee member lynch you're the second and seniority. Thank you chairman.

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um I would say that um I think it's important for this committee to have a fresh start this year.

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um I think we made a lot of progress last year on process. We were deliberate in how we approached.

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Our recommendation to the city council last year was not without its hiccups.

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But I would encourage everyone involved to build on the process we built last year and to take a.

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um Approach this time around with the press fresh view and really work towards that goal of getting.

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The best auditor having an independent audit um and I'd share chair former chairman white.

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Thought that um you know we have had the same auditor for for 25 years. They are.

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Millions of a valid candidate, but I think that's something to consider.

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So thanks yep uh counselor denton. Thank you. Although I.

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Voted against the changes to the ordinance. I think the purpose of this committee by the.

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Ordinance remains the same, which is to evaluate and recommend the best auditor for the city.

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Great councilor, I agree with everything that's been said. I don't know that. There's really much.

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More to add other than we need to pick the best most independent auditor to make sure.

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We are able to continue for the city to thrive and be as financially solid as it is and has been.

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um And for myself I.

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I go to the ordinance which stresses two things: selecting the auditor is our primary duty.

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And in the independence of the audit, um because to me the oversight, role of the city's finances.

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Is the city council responsibility which we exercise by picking an auditor.

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And this committee is the council's eyes and ears to determine who the best auditor is.

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But I think that financial oversight responsibility is very important. The auditor has to exercise independent judgment in giving.

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His or her assessment of the city's finances to the council.

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So, that's how I see it all fitting together and I think we've got a an important job to do.

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um Questions or comments on a further discussion on that.

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And I'm sure that are as we get into our work, you know we'll we'll find.

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Areas where we we ask ourselves what our scope is and and that's a healthy discussion.

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We have next, we have public comment.

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It's it's yep. You also have esther kennedy who has raised her hand.

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So it's up to you, I'd like to share something with everybody that I'm going to discuss. Okay,.

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Thank you. Thank you.

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If you're comfortable with this, uh who could.

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We do three minutes as a time limit, I will try. Okay, thank you.

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Foreign 280 south street- um I just want it to be known what I have shared with the entire committee.

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Is a right to know I just filed pursuant to 91a, and this was for information that should have.

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Been in last year's kafir, um I will just express that um I find it disturbing, and I think this is.

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One of those things that should not have to happen by a regular resident to file for this information.

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I know most of you are new to the accounting, the exciting world of accounting and auditing.

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So, um for the benefit of those of you who are new, um I will just kind of briefly go over what.

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I'm asking for here the amounts for in the kafir, for projects and in cip, which is construction and.

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Progress and what happens, is you go through the capillary proven plan which you are about to.

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Embark on once that's approved and bonded, it moves into construction and progress, and you start to.

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um To uh bid a project and start to start your construction at that time, in account in the.

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Accounting, world you're accumulating your costs and at the end of that period, when the asset is.

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Placed in service, the asset is capitalized, so what I'm asking for here is data that was included in.

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The last five years, and even further back in the kafir and um this year it was not included. We just.

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Had totals so um the information that I want to discuss with you as an audit committee who will be.

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Looking to choose the next auditor for the next year is that um the previous auditor uh should.

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Have looked at this these these statements, the kafir, is prepared as a nana test service by the.

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Staff and the auditor, as previously stated in the rfp, I'm sure, council tabor you're, familiar with.

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This and and council, white and and mr lynch, so all of this data, should be consistently reported.

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And it should be available to the public uh what happened with this year? um If you, I know you.

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Haven't had a chance to read any of this, but if you go through here, all we had was totals.

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And the totals are substantial for the government activities and construction and progress. We have.

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18 million 12039 with no detail. So what I'm asking for um uh for city attorney to provide through the.

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Right to know is the detail and the projects that relate to this, and then we go down- and this is the.

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First year that there was no amounts attached to any of the projects that were listed in here.

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So I have asked for the data for the governmental entity, the water, the and the sewer.

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And it's all listed in here. I have also attached, because I know that everybody isn't familiar with.

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All of this, so you could have an example of what it should look like for the past five years. So.

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um That is my um that is my little presentation to you and basically, I know uh in tonight's meeting.

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You're going to go into non-public to discuss the evalu and evaluate the new proposers, so the first.

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Question the first thing I would ask of you is that in the rfp um there is a requirement and.

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I don't know if it was still on the same page uh page nine that the auditor shall attend at.

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Least one meeting with the audit committee and one meeting with the city council at which time.

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um What you will discuss the audit report and the and the management letter? uh I would ask that you.

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Follow the rfp and actually have a meeting, and please look at what the report looks like now.

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Because, as a resident, I should not have to ask for this data in a right to know it should be.

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Consistently reported according to gaap and gasby, which is the government connell standing board.

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Rules, so um that's the first thing and the the next one would be that um since you are evaluating.

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um According to chair to at least two proposers, I would ask that you that you look at this and.

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Consider um changing from the prior um audit firm, based on the information that is in here. We have.

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Had this firm for 27, probably 28 years now, the level of familiarity is evident in the reports.

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That are being put out, and I would hope that you would take this into consideration at this time.

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You thank you so may I just ask a clarifying question. Certainly thank you.

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So each of what you're saying is that, on your first two pages.

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All these blanks would have, in years past, been filled in with actual dollar amounts. Yes, if you.

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Take a look at um at fy20 kafir. You can see what was uh what was standard uh reporting process.

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The con the construction in progress for governmental activities- I mean I could.

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Read some of it at year end was 17 million, which included amounts for all of the described projects.

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um They went through this was 20, so it went through um uh maplewood avenue in the.

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Islington street market street extension, mcdonough, pleasant street um and beverly hills, sidewalks.

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These are large amounts, and um they should they should have been detailed, as you can see by the.

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Fy21, uh there's just nothing there there's for the construction of progress. There's an 18 million.

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Dollar number for the governmental uh funds, capitalization of assets, there's 15 million and.

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It just says: senior center carriage and upgrades to the new franklin school, so my request is to.

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um I have the recorded the reporting be consistent here with the with probably probably forever, but I.

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Only pulled the last five years, so I can't I can't tell- and this is uh this is standard operating as.

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Far as consistency and um the other thing, that's that's concerning is the size of these numbers.

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That were just um left whole and not detailed out. So answer your it's very helpful. Thank you. So the.

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Importance then, of these numbers is that they help to track from year to year to year the expenses.

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That the city is making on these various projects right and then these these projects, after after.

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They're, complete actually become assets and start getting depreciated. This. This also rolls into.

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um The bonding of um the bonding of each project when it occurs and how much was put into there.

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In the end here, when you bond, when you bond the project for five million, your your the the staff.

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Is basically telling you that they need five million dollars to complete that project and.

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Get it to the point where it's a capitalizable asset right, so this is all rolled together.

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um In here and as I asked previously, but I never received the information um we we need to know as.

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Residents where these projects are, um you know if, if the council and the staff is telling us.

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That my street is going to get paved or we're going to build a certain building. um You know.

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The representation from the city council is what they look to for for transparency and evidence of.

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Where they are, and for those of us who know how to read the financials, you can trace it through and.

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um This is one of the key methods of doing that. Thank you for bringing that to our attention all.

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Right, please share the the numbers with us when you get those from the city. Oh thank you. Thank you.

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By arthur clow 431 pleasant street, I didn't get to see much of the meeting. I didn't log into the.

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Meeting through zoom, but I walked through the door and the one phrase I heard was.

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An independent audit is necessary when you have lived with the same auditor for 27 years. It's.

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It's not independent, it's it's a marriage. At that point, there are conflicts of interest and one of.

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Those conflicts really came out during the last session of the audit committee, where an effort.

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Was made to try to keep that generation of the nana test data the basis of the kaffir report.

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To the same auditor that we've had for 27 years, melonson and hearing this recent development that.

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Miss huda found it really worries me that melinson didn't generate after 27 years a competent kapha.

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Report because in the rfp, uh the edits that were made by staff rather than the audit committee.

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They specifically called out separating out the nana test services so that they could.

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Keep getting their reward that they get now their reward is a nothing award. I'm a member of.

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The afp association for financial professionals, my certification, is certified. Treasury professionals.

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If they called me certified treasury professional of the year and did it for a thousand other people.

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Who had the same designation as me because I submitted a piece of paper? Well, it's not so.

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Valuable this, this award that we get every year is really just a member. It's just a part of the.

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City managers, professional association and the submission for it is available online. It's very.

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Simple and one of the things that it does require, is that you meet the gap requirements. So it's it's.

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A nothing award, but it means every everything to the city manager and to the accounting department.

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To get something out there, that gives them this public label that they take as a term of prestige.

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The kaffir report not having correct numbers after 27 years when, when they're the only people who've.

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Done it and when they audit off from some of their own work, apparently gives me a lot of concern.

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But in the event, that of the two now that we know that number of the two firms that are running for.

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A bit putting in bids uh if one of them is melanin again, we got a problem. We can't keep going back to.

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The same well, because it's not independent, you can't be together so long and you can't be so.

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Dependent on them for this uh kapha report and for this award and it's in writing, it's.

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In the rfps, it's it's it's out there it's been admitted to and the over-involvement of city staff.

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In the selection of the audit committee uh shows us again, it's not truly independent.

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It's it's like the prisoners, choosing the warden uh unfortunate reference, but.

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I I don't mean to say anybody's committing a crime here. What I'm trying to say is you have people.

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That are responsible for oversight and they're not being treated independently by the city staff. They.

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Have gone in and overwrote the audit committee's rfp document ignored it. This audit committee seems.

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Like the compo composure of it is getting more and more city-centric.

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Audits are used to check how reliable things are going on in our finances.

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By allowing the city staff to be so overbearing in this process, you've almost assured that there.

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Will not be an independent audit because I I know who you're going to choose already. I don't even.

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Have to think about it, I know who you're going to choose you're going to choose who the city wants.

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You to choose you're going to choose melinson again, that's not independent! You guys are just.

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Doing theater here essentially, because you had a chance last year to choose the better daughter.

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Audit firm and you came up with just a ridiculous red herring to disqualify them. Thank you.

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So we have people on zoom, uh esther kennedy did was here and had her hand raised, but she's.

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Dropped off, um I don't know if anyone else wishes to have any public comment.

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Okay, that's a no! Unless she's trying, okay.

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She's not muted, so yeah. She may not have heard yeah yeah we're doing public comment.

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So if you would like to comment esther, I think the committee's ready now's the time.

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Not getting any audio hang on just me just make sure.

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Not seeing any it doesn't see if it looks like she has it's not saying, there's an audio issue.

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We could ask one of the other members to unmute and just make sure it's not on our end now: she's, muted, okay,.

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Still not hearing anything.

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Oh, she got her hand went on. Can you hear me now? Yes, there we are all right guys, keep.

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Getting kicked out not sure why, but that's okay, um so I apologize I'm actually on roof and I am.

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um Attending this community beans, esther kennedy, 41 59 minutes.

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But really worried me is that I have heard one of the counselors that sit on this committee.

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Say publicly they're not great with numbers, and I do hope that as you go through this deliberation.

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Because I think everyone has been very clear, we have had the same modern affairs that you rely.

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On the expertise of chris jesse and hawk- and you really look at what they have them to offer, none.

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Of them really have an alternative mission, except for making sure what happens in the city is right.

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We have had concerns counselor tabor knows us over some of the accounting that has taken place.

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We've had some concerns over the lack of getting some information and when I was.

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Sitting on the audit committee, I did have concerns over the amount of involvement. The.

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City staff had in the audit when they were when the others are to be auditing. The city.

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In my audience, personally, as I've shared a couple times, I do audits um as a school district, employee.

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As an administrator of major grants- and I have no involved now- the only involvement I have is.

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When the auditors come up and ask for a piece of information that I have not provided, but I have no.

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Discussion afterwards, I have no discussion before it is truly a pure audit of our school system.

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Now, granted it's not the multi-million dollar audit that you do, but it is a 27 plus a million.

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Dollar audit, so I request and ask that you look at our community members that are highly qualified.

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Have years and years of expertise in us and really listen to them? Mr tabor, you have said that it was.

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Time for change and that the current auditor is when you voted them in um in in the last january,.

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That they would be only for one year and you would you truly try to bring in another firm to do some.

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Checks and balances. I hope you live up to your commitment, but you may and statement you made.

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Again, these people are highly qualified. The three individuals you have on as.

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And I believe they have more qualifications than the counselors sitting there.

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So I would ask: do you truly make it independent? So the six of you let the six of the buddhists.

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And I, and not someone from the city because anytime the city gets involved. It makes it part.

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Of the decision making that it can't be a pure, truly audit, thank you for the time of speaking.

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Thank you, esther do we have any others on zoom who'd like to comment. This is public comment.

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So now, if you want to move forward, you'd want to move into non-public.

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Session and, though right references down below I'll, close public comment and.

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We are going to interview prospective bidders for city work, so we're going to move into non-public.

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Under rsa 91, a colon 5 and 91a colon 3, 2 c d, and I um and I'll need a motion to do.

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That so moved second, all in favor. uh Thank you. Let me give me a minute here and assume.

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All right, I will open up the other zoom until we have everyone out.

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Thank you. Thank you. Thank you. Have a good night.

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So let me just uh I've got a little updates. uh Okay,.

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Recording recording light off yeah hold on. Thank you. Let me make sure I stop the recording.