City of Portsmouth, New Hampshire Audit Committee, 25 Jul 2022

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From YouTube: 7.25.2022 Audit Committee

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7.25.2022 Audit Committee

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A lot of committee meeting for july 25, 3 15 in the afternoon.

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Here, mr furman.

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And the chair is here as well, and deputy city manager, woodland is present, is here.

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Thank you. So if we could, please, uh in your in the packet which uh a deputy city manager has prepared.

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uh You'll find um draft minutes for may 11th, which I've added sections describing this comments by.

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Deputy manager, as well as uh councillor tavern, and if these, if I could get a motion please to approve.

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Mr fern and a second.

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We're doing both at the same time.

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uh I will second thank you. Any discussion.

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um All in favor aye all right opposed.

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Then, if we could also, please take a look at the july 20, which was this last time.

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And if I could get a second, please.

C

All right well, a second.

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All in any discussion uh chair I'm going to stay because I wasn't present for this meeting right.

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Any discussion.

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All in favor aye aye opposed.

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Okay, now we come to um the.

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Uns, the unsealed minutes from.

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Back to my piles.

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These are not correct. For the whole, uh I see the unsealed for february 15 and 24.

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Just so that you're aware of what's been done in terms of the redactions, these were unsealed. As of.

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The 20th- I don't think that requires an approval. No, so so then I'd like to turn to.

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We're still dealing with old, sealed minutes to the june 29 2021 um sealed minutes and uh I think.

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The people here have seen the um productions as proposed by deputy city manager and.

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I think that I have frankly some concerns about this because of how extensive they are.

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And I understand this is non-public, but this also happened under uh former councillor buddha's.

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Tenure as chair, and so I would like to ask her if this is okay with all of you to invite her to.

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Comment on the unsealing of these minutes, because it really reflects on on the meeting which she.

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Chaired one option that exists for the committee is to enter non-public session to discuss whether.

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To unseal non-public session minutes, and if you choose to do that, uh you could invite council or.

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Former council huda to attend okay, I don't have the proper citations of letters and numbers and.

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I'd say describe them as best you can okay. Well, then, I would entertain a motion to go.

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Into non-public to uh discuss the sealed minutes and the possibility of unsealing them for june 29.

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2021 and I would further entertain a motion to include.

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Former counselor peter huda, who was the chair of the committee at that time,.

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So if I could get a motion, please.

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Thank you. Do I hear a second.

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Is there a second for that motion.

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I have a point of clarification request, um I'd like to ask for legal advice, sure this this.

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Motion will be for the purpose of discussing whether or not minutes should be unsealed.

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Okay, so here's my my request on point of clarification. um If.

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Those of us who are present were not part of the committee at the time and if we do not have a.

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Quorum of individuals who are a part of the committee, can we unseal minutes that do not.

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Include us, yes, it's the committee's determination and the committee as it.

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Sits when the dead makes the decision? Okay. Thank you thank you. So do I hear a second.

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I'll second, it thank you um all in favor, aye.

B

B

Chairman, I have to abstain. I wasn't here at the time. That's what I'm going to abstain as well, but.

C

I think I wasn't yeah. I think we just heard that this is an issue in front of the committee, so.

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You're welcome to abstain. All you wish to, but I think that uh this is an issue. That's relevant.

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For the committee's business.

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But you're choosing to abstain. I I.

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I will oppose okay um and I'm voting in favor. So that's three to one.

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So what I'm gonna do is.

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I'm pleased to unseal the minutes from june 29 2021 for the mayor's blue ribbon audit committee.

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I make a motion that we unseal the minutes from the june 29th meeting. Thank you. Do I hear a second.

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Second, any discussion, all in favor all right opposed. Thank you.

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Let's see, I need some guidance in terms of recording the uh these minutes for going into.

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Non-Public then, going back out again. Can you help me with that? Thank you um so, but it was.

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Okay, thank you.

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uh Deputy city manager, woodland, um I can't remember, I think, that I signed or did a.

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Date approved as a sealed minutes, but now will cynthia cast these and then I can date. Those also.

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And we usually just type in the date yeah. I saw that so that's perfect. um Thank you.

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I have these sealed minutes and I don't.

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I don't want to discuss them, but I have individual copies. I think I've got.

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So um what I'd like to do is to wait on further discussion of this until you've had a chance to.

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Review them. Actually, I just have three, I'm sorry, uh but if so, if we could just hold that.

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You could move that item to the bottom of the agenda and that way, if.

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You need to go into non-public again, you might deal with your other okay, all right.

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But well, if you had a chance to look at them by then I might, while I'm sitting here, it depends.

F

Okay, okay, so now we move on to the rfp.

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um Deputy city manager, woodland: do you want to speak to the changes that you've made.

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Sure, please um what I shared with the committee is us document, which has some a couple of revisions.

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From my version that I shared at the last meeting, specifically.

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There was a small change that I thought I should add to the introduction just to flag at the.

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Beginning that there is an audit committee that will be involved in making a recommendation to the.

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City council- and that was just a housekeeping matter to kind of tie it in in terms of the.

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Paragraph nine, which is on page six um as I was kind of looking over various parts of this, I added.

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A section that specifically refers to the governing body as may be required because, as.

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I mentioned at the last meeting the auditors were very clear that they will take items of specific.

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Concern directly to the full governing body, depending on you know, for something very serious.

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um And so I just they're gonna, do it anyways, but I figured I'd add it in here and why I was.

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Noodling over and going back over, this provision is that I was trying to figure out if there was.

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A place within this document to kind of get at what I heard from jesse about well. Is there some.

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Place where the audit committee could see like a final draft, if you will of the audit report.

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And the md a before it goes to publication, and so I was noodling that over on sunday.

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Actually um and looking at this and figuring out well- maybe we can put something in here.

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And then I thought well wait a minute if a draft document is being circulated to.

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A whole committee, it becomes a public record and you know I there's no. I couldn't come up with any.

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Grounds for let's, assuming that it's not there's nothing illegal or goes to material irregularities.

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That might implicate you know like a privacy interest or a personnel interest. That would.

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Allow you to go into non-public session if it's just a draft and everything's relatively.

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Okay and there's some management advice, but it's you know no material concern. You know.

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Then there's no way to go into non-public session that I could think of.

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So then, you, as the audit committee, would be getting a draft ahead of its formal publication.

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And distribution to the city council, so I I was like I can't figure out what language I.

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Could put in here that would allow that kind of mid-stream or towards the end of the stream.

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Look that wouldn't really make it public. You know a couple of weeks before we generally roll it out.

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When it's all bound and we've got the copies and can get them at the library and schedule a time.

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With the city council and the audit committee to meet- um and I asked and the reason why.

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Among the reasons why bob is here is I asked him this morning I said: am I missing something here.

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You know, am, I you know, is there some something I'm not thinking of and he said well, what's the.

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Purpose, you know what is the reason you would go into non-public, so he can. He can talk to that, but.

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That's why you don't see any additional language here, because, as I was trying to draft something.

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I was like ah it doesn't fit because you're a public body, so it's really hard for a public.

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Body to be midstream in a process, or even you know, towards the tail end of the process.

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Because of the way, the the right to know law works, at least here in the state of new hampshire.

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And then I'll just flag, the other point and then you can ask any questions. You want.

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I did not. I talked to the finance director, as we were kind of noodling out whether to try and.

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And see to have them tease out this whole issue of whether to.

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Get a number for the non-attest services and I think one of the things that we learned.

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Is when they're bundling those two pieces together, there's a lot of overlap.

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In the sense that they're using similar work products- and so we weren't sure that you're.

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You could get a number, they could put a number on it, but I'm not sure how real or useful.

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It is so for we didn't see the value of pulling it out. um You know I'm happy to keep listening.

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But as we were noodling it over and again, based on what I heard through the process last time.

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Because we've got them combined, it's not sure how valuable that number is going to be.

F

I did put back in the 70 and 30 in the um in the qualifications section and the waiting so page 14.

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So that is in there as it was um in last year's. So those are my pieces.

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Counselor taylor uh yeah before we get into further discussion, is.

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A legal question parliamentary inquiry for bob um can so we have.

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Suzanne's draft here- and we were also given a draft.

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From the audit committee, so my question is: can appointed citizens on a committee create their own.

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Rfp, and can that then become the rfp that's used by the city, or is that, contrary to our.

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Charter and our administrative code, I think the answer to that question is no. The the work of.

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The city, the government of operation government, is sort of generally divided into two categories.

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Policy making and administration and city staff the administration performed the administrative.

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Functions the administrative functions, the direction of which is determined by policy makers.

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This board this committee be policy making committee city council's.

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Policy making committee, but once the policy makers have determined the direction to.

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Go it's the administrators that go in that direction, perform they perform the actual work.

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Okay and then a follow-up question just based on what deputy city manager has said.

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Is there any way under rsa 91a that the council or the audit committee could meet.

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With the auditor, when results are done to have a non-public.

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Session without staff there, in other words the council or the audit committee, as the council's.

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Proxy and the auditor, but no staff to just really it would be a way to do that. Yes, okay, great thanks.

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But that would be a non-public like that was the question yes yeah, and so is that, contrary to what.

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Deputy city manager, woodland just stated: no, she was talking about a different situation. uh The.

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Question concerned, at the end of the process she's talking about at the beginning of the process.

B

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Any other comments or questions.

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I I would like to respond to the line of questioning you were raising about the role.

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Of the audit committee in this um and that I think that and the gfoa booklet speaks to this- that it's.

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The audit committee's job to come up with the rfp now, whether or not that complies with with how.

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The city has operated and this distinction between administrative and policy making.

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Is I think in material that the point that the audit committee needs to focus on is.

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Again, going to best practices of the gfoa and the new hampshire municipal association.

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Is to pull out tease out the critical components of what we, as the audit committee, think, should.

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Be in the rfp now, as we saw last year, the city can choose to do something entirely different.

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But still it's the audit committee's job to determine what it wants to have in that rfp.

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And I think that uh you know we've already fleshed out some points of disagreement, which.

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I think helps to make for a better uh rfp eventually, because we.

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Should be partners at the table with the city staff in trying to develop the best possible rfp.

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That fully achieves the charter's objectives.

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And so for that point I guess I would disagree with the conclusion that that you and bob were.

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Going towards that, it's really the city staff's job. Yes, I understand that the city.

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Staff has to do the procurement process, etc, etc, but the audit committee is here to advise.

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Based on our professional expertise, the direction and the qualities that we want that rfp to embody.

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That was the first point, I'm I'm struggling to remember the second.

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The second point I wanted to make this happens with age. I think bob. Doesn't it.

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A

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It will probably come to me as we continue our conversation.

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Did you want to say something kelsey cook? Yes, thank you chair.

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I I would say I don't disagree that it's the role of the committee.

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To provide directions and qualities of what we would like to see generally in the rfb.

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But ultimately, is the role of the staff to write the rfp, because it's a legal document.

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That the city is required to abide by.

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And we hire professional legal staff at the city level to make sure that we have.

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That we're abiding by all the rules that we need to follow with regard to municipal law and.

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That, in the end, when we have a response to an rfp, it creates a contract. We create a contract.

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With those that respond and the contract is driven by the way that this rfp is written,.

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That's why we that's why we hire professional staff to do it. um It is entirely reasonable.

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For this committee to provide direction to provide some qualities of like this is generally what we'd.

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Like to see, but ultimately I think the drafting of the language comes down to the staff, and that is.

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Not only the way that it has been done, but that's the way it needs to be done to protect the city.

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Thank you. I I think that the you know the attorneys can certainly weigh in and flag.

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Areas that are clearly shortcomings of the rfp, and they should do that and we rely on them to do that.

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The last thing we want to do is to establish something that would harm the city.

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um But by the same token, from our point of view and here I'm speaking as a professional with.

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You know 30 plus years of experience using auditors work.

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There are points.

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That go into in the gfoa booklet speaks to this quite directly. The importance of the.

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Audit committee managing, for instance, the audit process, not not the entity, that's being audited.

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And and that that's a critical component, which uh was missing in last year's audit.

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And I think is missing in this year's last year's rfp and this year's rfp and it and.

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Because it's missing, I believe that the quality of independence that we see in our auditing process.

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Is also deficient and that's a real that's, a real concern that I have as chair um that the.

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That our the quality of independence is deficient in the auditing process because of that.

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I take those points. My concern has been.

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Having members of the audit committee.

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Write document that the city staff would then have to implement if it were passed by this committee.

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Or that would be the implication and.

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I don't think that that's how our city manager form of government works. If we want to have.

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Appointed citizens writing rfps. There need to be some council vote to allow that.

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I don't think it's a good practice. I think the concerns that for independence, that you have.

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The concerns for the content of the rfp can be relayed to staff.

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And I think the way portsmouth operates as a city. We then have staff run the rfp process.

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So I would object to.

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I would vote against an rfp that wasn't written by the staff who has to run the process.

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I fully support instructing staff.

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And coming up with a document that reflects the consensus of that discussion.

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Which of which discussion guidance from this audit committee? But I think the ultimate.

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The way our city operates, the ultimate.

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Decision when it comes to.

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Drafting the rfp and pencils down this is what goes out to the public goes with staff.

C

So you said providing guidance and I think you said suggestions to city staff. Are you.

C

Saying that the audit committee should set in broad strokes what should be in there.

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An interim meeting, for example, and it's city staff's responsibility to simply or not simply.

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To draft that, um in a way that works and protects the city, if we can do that, I think that's.

B

I think that's a good way to go. I think my my I wanted to explain if, if there's a vote on.

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The audit committee developed rfp why I would vote against that.

C

Well, we could, we could take a vote.

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Based on the city's draft and insert provisions from from chairman white's.

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Version as well.

C

I guess I guess I'm I'm still uh processing your first comment on. uh If I heard you right.

C

Basically, europe, your opinion is that the audit committee cannot meet with the auditor midstream.

C

Prior to the final audit being complete, I guess there's a slight nuance, which I had envisioned.

F

Based on the last conversation that you wanted to see a draft document, any draft document that.

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Circulated becomes a public record and okay, so that was the the piece there. I think that's.

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Yeah just to be clear, my and I I won't speak about it, but my my thought there was. It was a meeting.

C

um Midstream update where the auditor and the audit committee could meet independent.

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Of city management and discuss discuss how the process is going if there were any issues so.

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I I would be comfortable with an rfp that didn't have require any documents to be disseminated.

F

So I guess bob that goes then to the based on what jesse is asking for, though, would that be a public.

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Meeting well, of course, every meeting has to start as a public meeting, and you know so. The.

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Committee would call it the meeting and then, in order to go into a non-public session, you have.

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To have one of the reasons that the statute allows you to know not a public session.

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It may be that uh one of those I think could be on point, and that is.

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One of the reasons that public parties are allowed to go into a non-public session is.

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To consider matters which, if discussed in public, would likely affect adversely the reputation of.

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Any person other than a member of the public body itself unless such person requests an open meeting.

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It may be that if there was depending on what was in the report of the auditor.

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At the time, the request was asked that that's an item that would allow a non-public session.

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There are also- and there's also.

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An allowable purpose for non-public session, where legal advice is necessary if legal advice.

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Was necessary for the audit committee to talk with the auditor? That would be another reason.

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It's difficult to project all the possible facts that might exist at the day that.

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You might want to do it, but this is the way I was thinking at the time I answered counselors.

D

Okay, because what I'm suggesting is a standing one-time meeting, so it wouldn't be prompted by.

C

Any issues, um so I guess that's a different. It's very difficult to have non-published sections in.

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In new hampshire government, but there are some ways and those are the obvious ones.

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Which goes back to my point is when I was looking at the rfp there's that section that.

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Says the minute there's anything material or possibly illegal, that that becomes an obvious.

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You know to fit into the category of what bob just explained when the auditor's coming to.

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Someone and saying there's an issue then you've got the non-public need obvious. So that's our.

F

Kind of challenge- costa cook. um Thank you chair. um I would argue that there's no need.

E

um I don't see the need for the audit candidate committee to meet with an auditor midstream.

E

If you're hiring an auditor you're expecting them to be independent and you're, expecting them.

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To conduct their business appropriately, if they find a challenge, they will come back and request.

E

A meeting to discuss that, and that is clearly outlined in the draft rfp here from the city.

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And in fact, the the line was added that they may even discuss with the governing body as may be.

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Required, um but it essentially just adds extra time to the requirements for the auditing firm.

E

um That they're already you know they're already conducting the business that we've hired them to.

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Do um and they are going to report back, um it's it to me. It's kind of a waste of everyone's time.

E

You know, I don't see the point of having a report back at all.

E

Unless there's some material problem found in the audit, then we would expect to hear from them.

A

So jesse, I don't want to jump in on what you're raising, but I I think that the.

A

uh The concept of an interim meeting certainly is part of what the gfoa recommends in terms of good.

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Governance best practices. Is it a waste of time? I would contest that it's not because what you're.

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Trying to achieve is the good governance that that we know is so important. I think that the.

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Inevitably, the auditor will come up with issues or questions. They may not rise to the point of.

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Of what is in this draft, for you know, a deep concern or whatever, but they may still.

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Be uh merit a conversation you know we would like to get some clarity, um for instance, on on.

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How deep to go into this point, do you is this? uh Is this really significant enough to.

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To merit a deeper discussion and that the audit, the audit committee should be able to.

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uh Give some feedback on that uh they may say. Well, that's an excellent question and.

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You know that's something that should be raised with the entire city council, for instance,.

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I don't know, but it's a, but it gives a different forum for the auditor different from discussing.

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These points with management, which is where it stands now, and I think that that is the critical.

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Component that we're seeking to and what the gfoa booklet would seek to introduce here is that it's.

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Not simply going to management to seek guidance on on resolving questions or points of of audit.

E

Yeah chair, um I would respond to that by saying that I don't think the auditing firm or any outing firm that I know of.

E

Would not immediately go to the governing body or an audit committee first, if they actually.

E

Had serious concerns and questions around irregularities in the audit material issues.

E

I I think it makes an assumption that you're hiring an auditing firm that doesn't understand.

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That who they report to essentially and any auditing firm, we would hire understands that.

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Ultimately, they report to the city council, um not to the staff when an auditing firm goes.

E

To the staff during an auditing process, it's asking clarifying questions about the finances.

E

It's not asking they're not asking questions about material irregularities, those questions.

E

Would automatically go to the governing body and the governing body might direct them back to the.

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Audit committee to have those discussions, um if they didn't come here as well in the first place.

E

So what I'm saying is is that when you hire an auditing firm, an independent auditing firm, we.

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Have to trust that that firm is here to do their job and that they understand what their job is.

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And I don't think that we've ever been in a position that we as a city had an auditing firm.

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That did not understand that and in the future, no matter who our auditing firm is. I think that this.

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Committee will select a firm that is qualified to make those calls um it's it's unreasonable.

E

To tie them to a meeting that is not necessary, first and foremost, but also um creates the.

E

I guess the image in people's minds that there's a problem when there's not necessarily a problem.

B

I think, since bob has said that at the end of the audit there can be.

B

A sort of executive session between the audit committee or audit committee and.

B

Council and the auditors, without staff, there's the chance to probe there's the chance to ask.

B

About materiality of anything that was found, there's the chance to talk about internal controls.

B

And to go in depth about strengths and weaknesses of the financial finances of the city.

B

So to me the interim meeting is not necessary with that provision and.

B

Frankly, I think it's a solution in search of a problem.

A

Any further comments yeah. I would just say that um so certainly.

C

We'd expect every auditor that we hire to be independent and to be of of high quality, but the.

C

Gfoa does specifically state that best practice is for the auditor to report to the audit committee.

C

And suggests ways around it if you're a a govern, a government that may have some obstacles so.

C

Yeah, you just want to make that point, that that is the recommendation and it doesn't imply uh by.

C

Us doing that that we don't trust the auditor or there's something happening. It would be a standing.

C

Meeting that would happen every year. It wouldn't be a special meeting if, if we can, if we can do it.

A

So I personally looked to the gfoa booklet for best practices. I know that in the governance.

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Committee you've been doing the same thing, so I don't see why we should be.

A

Ignoring the gfoa on this point and personally, I would strongly urge the city to incorporate.

A

Some interim meeting between the audit committee and the auditor without management present.

A

It may be that that what happens is that they sit down a table and say: why are we here.

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And they get up and leave, but I suspect that a good auditor will take full.

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Advantage of that opportunity to discuss matters apart from city management,.

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And I don't know what will come up, but it's simply.

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A matter of good business practice, if you will to to incorporate that in the process, so.

A

I'm not sure where we bring this to a head, but I guess what I would like is a uh first of all. I.

A

Want to recognize that that you've included the cost. The 30, and I very much appreciate that.

A

The other issue of non-attest and and audit quotes, I think, are- are important. I I would.

A

Want to see those in the final rfp, but that's not a hill, I'm going to die on the hill. I will die on.

A

Is one of having an interim meeting along the lines of what jesse is suggesting and.

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Just as importantly, along the lines of what jfoa recommends.

A

So if I could get a motion please to recommend to.

A

To city management to incorporate an interim meeting between.

A

The auditor and the audit committee as part of the rfp please.

C

I'll make a motion. Thank you. Further discussion.

B

Is it handy to get the gfoa page that that's on 33. just read it to us.

C

It's quite lengthy.

B

You guys up for that. Yes, please, yeah, okay, go for it!.

B

Question 17: what should be the relationship between the independent auditors and the.

B

Audit committee, an important benefit of an audit committee, is that it helps to preserve and enhance.

B

The objectivity and independence of the financial statement audit, by furnishing a forum in which.

B

The independent auditors can candidly discuss audit-related matters apart from management.

B

That's underscored, therefore, the documentation that formally establishes the odd company should.

B

Expressly state that the independent auditors are to report directly to the audit committee.

B

Rather than to management, likewise, specific provisions should be made.

B

For the audit committee to meet privately with the independent auditors as necessary,.

B

If a government is subject to a sunshine law or open meetings, law, rsa 91a, it is recommended that.

B

Such legislation be amended to expressly permit the audit committee to hold private meetings.

B

As necessary, eg was independent auditors. Typically such exemptions already exist for.

B

Meetings involving personnel related issues and the discussion of pending litigation.

A

A

I think that captures it well.

A

So we have a motion: that's been made and seconded further discussion.

A

All those in favor aye opposed no, no, no! Okay! Thank you. Okay. I think that.

A

Unless someone wants to present an argument on the nano test versus audit services, that.

A

It was the other major distinction, the two rfps then I'm ready to uh to move on all the comments.

B

Yeah, I would just add on that last vote.

B

It was informative to read that you know I like the spirit of it, but it specifically.

B

Says you're going to have to have an exemption from the right to know law.

B

And we don't have that, so we would have to have that as council, as the deputy senior manager said.

B

We'd have to have that discussion in public.

A

I think we could. We could continue the conversation on that legal point, but that's.

A

Beyond the scope of this committee, I think it's an important point to discuss, because I think it.

A

What the gfoa booklet is going to- and I don't want to take any more time on this, but what the gfoa.

A

Booklet is going to, I think, is the heart of this independent audit concept right, but.

A

Chairman we'd have to have the state legislate, an exemption which is just beyond our scope.

F

Let me just suggest that the uh keep in mind you know as we go through the selection process.

F

With, hopefully, a couple of firms, um you know there will be an opportunity to negotiate the contract.

F

So there will be, you know this is a. I know it's a big item for you, but in terms of the scope of the.

F

All of the work that the auditor will actually do if we need to have some conversation with the firm.

F

About what to include or not include for a number of meetings, I think that's something.

F

That could be further teased out once we're further in the process, and so I'm just putting.

F

That out there that there's a little bit of time in space for to come back and kind of.

F

Look at this, maybe a fresh and maybe there's a way to you know could be something we take.

B

Up on the legislative affairs committee yeah, so nothing's out of the you know, nothing's fixed here.

F

From my perspective, okay, because it's a hey, could you have one more meeting kind of after the scope.

A

Yes, I just have a quick question before we move to public comment um on the question of not a test in.

E

The bidding, what do we gain from having that separated out, given that I think.

E

The plan has been to have everything bundled so there's several there's several points to that.

A

From my conversations with various cpa firms, um my understanding is that the.

A

That the accounting regulatory authorities are increasingly looking at trying to divide.

A

The nanotest from the audit services.

A

By simply changing the rfp and asking for that, additional information on price quotes. What we're.

A

Essentially, doing is gathering data which can be helpful to the audit committee in making decisions.

A

A year or two or three years in the future, and I think that it's important to be looking.

A

Out that far in advance for putting the audit committee in a better position, the city council.

A

In a better position to make decisions regarding that, so it's simply um an.

A

Effort to try to develop a track record, and I I understand the economies of scale and scope.

A

Are critical um and but I think that there is a uh when, when these um bidding firms know that.

A

They are submitting a competitive bid that will cause them to sharpen their pencil. Perhaps more.

A

Than what we saw this last year and the numbers will be of value to the committee going forward.

A

Okay, so um anything else on that before we open it up for public comment.

A

Okay, uh anyone wish to weigh in please.

A

G

Peter huda, portsmouth um first thing: I'd like to clarify.

G

For the members who have not been on this committee since the beginning is.

G

Together with deputy city attorney at the time, woodland this rfp that you're using and have.

G

Morphed into what we have now was developed with staff, and that was the staff we we actually use.

G

The attorneys to develop the staff the this and then push it forward. So what I'm saying is.

G

The argument that staff should be doing this and putting it together.

G

That was the beginning of this, so it was taken from.

G

A different format and actually developed with staff both of us learning as we.

G

As we went along so this is not like we are or the we previously or this audit committee has.

G

Taken anything away or is trying to pull anything away from the basically purchasing department.

G

This was done like that and the purpose the original purpose of this whole thing was to.

G

Assist the staff that didn't have total financial knowledge, which deputy attorney woodland and I.

G

Found out there was a lot to learn as far as what was actually in here and what they actually needed.

G

To do so, that was the development process, so you understand um the next thing, I'd like to say is.

G

On page, two of attorney woodland's.

G

Introduction, personally, I don't see the need for the red item in the middle. The city has a.

G

Standing audit committee that will be involved in the process that is listed all throughout here. I.

G

Think this is redundant. That's the only comment I had on there. I do have some concern on the on.

G

The one change that city attorney woodland made not as to the governing body but on number nine.

G

The auditor shall be required to make immediate written report to discovery of.

G

Material irregularities, illegal acts and I think we need to be really careful here or indications.

G

Of illegal acts to the audit committee to the audit committee and city attorney, so my first.

G

I guess red flag here would be who makes the determination of indications here.

G

I think you need to be careful, because this is um this could be construed as accusatory.

G

The other question I would have is on this: the the city attorney in this case.

G

I don't know if they would have the financial background to know.

G

What is being told of them, or what this indication actually means.

G

So in this case I guess I would, I would ask you to think about.

G

I guess financial staff or bringing in.

G

The highest level of financial staff to discuss this before making any accusations.

G

The thing the thing on on this is this is part of something that could stop the audit to um to.

G

Mr lynch's point um things happen or auditors come across any kind of irregularities or illegal acts.

G

Is strong, but when they look at the numbers they could tell what? What exactly is going on? What the.

G

Flow is and everything else if they find something or an issue that they cannot resolve without.

G

Going or coming to either the audit committee or staff or having a meeting on this without staff.

G

It should be. It should be noted that that's probably why the gfoa puts that in there and.

G

That could happen at any time in the audit. The other thing that I would like to remind you is.

G

You need to- and this is hard to do account for all the situations that possibly could happen here.

G

Yes, we want to, we want a wonderful audit, we want a shining report and it's going to be handed to the.

G

Hand it to the city council, if that is not the case,.

G

Especially with different auditors, looking at different things and I'll I'll I'll look at I'll.

G

um Address the amount of test services in a minute on that note different firms- this is all auditing.

G

But different firms do different methods of testing and are used to different levels of risk.

G

You have to account for all of that in your in your thinking and and what you're putting in here.

G

When you, when you actually make that statement, and that's all I'll say about that um on dr on.

G

Attorney woodlands uh suggestion that uh the two services overlap uh in the discussion with nana.

G

Test and audit, I would disagree on that uh that two services do not overlap the first service.

G

Nanotest services is completing the financial statement, preparation process, including adjusting.

G

Entries eliminating entries, taking it to cash and consolidating the whole the whole system.

G

That has to be done before an auditor could come in and say this is done right. So the two of them.

G

Do not overlap, they are different services. So, from my perspective, I would say that um the.

G

Having put the bid in there for both of them and you'll you'll you'll probably get a discount.

G

Just like was was discussed if they do the both of them, but in looking forward, as chairman white said,.

G

If the regulatory agencies are going this way anyway, where they want to see more independence,.

G

And more separation of the duties that have to be done here to get to the end product.

G

This, this is a good opportunity to start there. The other thing on this is this was a very.

G

I guess this was one of the points of contention that we had in the last audit.

G

Where this was discussed as not a test services, the audit committee came up with one rfp.

G

And discussed it in the audit committee discussion and it did not include the.

G

uh Not a test services and then outside of that city staff went out and discussed it with vendors.

G

That already had previous knowledge of everything, so this would also prevent that it would prove.

G

It would just outline what needed to be done and in what order. It should be done.

G

I guess the other thing.

G

G

When the counselor cook said something about the the council um or or the the uh the auditor is.

G

Here to do a job and we're going to hire the, but yes we're obviously going to hire the best.

G

Firm they, they obviously know what they're doing they. This is what they do for a living.

G

But um to have it laid out for the protection of the city to say this.

G

Is what our process is? This is what our intent is, lays it out in the beginning and out front.

G

And the rfp is the total rfp is the basis for the contract and right now, whether the whether the.

G

uh Audit committee reviews the final contract and verifies and validates that all of the provisions.

G

In the rfp were followed is not really clear to me and it wasn't clear and it didn't happen last year.

G

It had to be requested, so that would be the the other comment. I have the only other comment I have.

G

Sitting back and looking at this from an audit firm perspective.

G

You're asking for a return on in october, I would just say this is a little early.

G

Audit firms will be doing their staffing for the next year november december january, as we.

G

As we have seen prior so um that would be my my only other note. Thank you. Thank you. Thank you.

A

Other comments.

A

A

Roy, do you want to check zoom, please yep looks like looks like robin. Has some comments.

F

You want to unmute.

H

H

Robin russo cpa- and I'm telling you that, because I want to give you background on where.

H

My comments are coming from have advised various boards of directors and audit committees.

H

In my career as an auditor for grant thornton ernst, young and pwc, I've done.

H

Special investigations for audit committees- I still advise them, I'm advising a company right.

H

Bio tech, company right now in massachusetts, and I will be doing work for grant florida in october.

H

I've been vice president for the institute of internal auditors for the state of new hampshire.

H

And I'm here today, because I am hearing that this quote governance committee, this newly.

H

Formed governance committee is not wanting really an audit committee or independent members of an.

H

Audit committee, they want city councillors only on an audit committee so for public.

H

Companies, an audit committee is comprised of the independent members of the board of directors.

H

For a reason- and the reason is just as I'm watching this meeting today- that the city council.

H

Members are advocating on behalf of management and those that are really independent. Members of the.

H

Audit committee are advocating for integrity and transparency and integrity in the process.

H

Which is very important, because our city right now really is the size of a mid cap. Public company.

H

And there are complex financial transactions um and petra and her team had.

H

um Sort of a good decision to put together an audit committee and get members from the public.

H

The city of portsmouth and we have plenty of financial experts in the city of portsmouth.

H

That might help more come forward because we need them and we're thankful that they're.

H

Volunteering, their time and their amazing years of experience to step into this role, the role of.

H

An audit committee is an oversight committee. They are the oversight committee of the management team.

H

They're not here to just kick the tires a little bit and no, it is not the city council who.

H

Basically is who the audit firms report to is an audit committee. First, they don't go to the board.

H

Of directors, first they go to the audit committee first and if there are any issues regarding fraud,.

H

The audit committee would do an investigation of that and then report to the board of directors.

H

I'm sorry my interrupting notes. Sorry, um so I'm here to say that I'm very thankful.

H

For this uh audit committee, and um also it's very appropriate, as I was listening to your meeting.

H

For the audit committee to design the rfp and hand it off to management tell management what they.

H

Want to accomplish not the other way around. Unfortunately, I'm hearing and I'm seeing that.

H

Management is trying to tell the audit committee what to do. I don't think they have the expertise.

H

To do that, they certainly don't have the expertise to trump. The financial experts on the committee.

H

And I I can't agree more with all of the points that the chair of the audit committee made.

H

um As far as the oversight and the rfp process, and maybe if he wants to go into a private session.

H

During the oversight of the financial that come up, and that is their responsibility to ask the tough.

H

Questions on behalf of the people of the city of portsmouth, looking at those financial statements.

H

And maybe kicking them back to the management team to make changes or kicking them back or asking the.

H

Questions of the audit firms in the process- that is the job of an audit committee before it gets to.

H

The city council, there's no one. I know on the city council that our financial experts, by any measure.

H

They're not supposed to be they're average people from our community. So when we have financial.

H

Experts available and they've, given us their time. We need to be thankful for that and allow them to.

H

Do what they need to do and try don't try to start what they're doing, because they've done a lot of.

H

Homework on what the responsibility of an auto committee is and they're doing, the right thing.

H

Unfortunately, I'm seeing city council members here advocating for a management team. You know that.

H

Really doesn't have a lot of financial expertise if they're, allowing your external audit firm.

H

To put together their financial statements, and yes, you need to do different pricing for non-test.

H

Services and a test services, they should be very separate by separate firms if you're going to have.

H

Independence right now you have no independence. So really your auditor is auditing themselves.

H

And that should give no comfort to anyone in the city of portsmouth. So hopefully we can have.

H

Some change in that direction and have a real, independent audit and maybe have an audit firm.

H

That hasn't been around for 25 years. That's not appropriate that particular audit firm that we.

H

Have now audits every major city in the state of new hampshire, that's a red flag! That's an.

H

Audit and fraud red flag to someone like me and when you have the city management, trying to tell.

H

Our audit committee, you can't talk to the external audit firms putting in rfps. You can't talk to the.

H

Partners, you can't talk to them. Why? What are you trying to hide that is a red flag to any.

H

Auditor, so you need to watch that and you need to consider yourself lucky as city councillors,.

H

That you have an audit committee of financial experts who are willing to volunteer their free.

H

Time to make sure our financial situation is in good standing, because right now, there's some big.

H

Fat question marks there's question marks as to the likes of me. Who's been doing this for over.

H

25 years, so thank you to the auto community of the city of portsmouth and I hope we keep them.

H

Because if we don't that's a red flag to the next auditor, if you get rid of your.

H

Audit committee, or only put city councillors on the audit committee, that's a fraud red flag.

H

Have a great day, thank you robin any other comments. I would just say here here. Thank you bill.

A

A

We had the suzanne we're still looking at the february, 8th and 10th uh non-public.

A

Handle at another time um here, let me uh yeah I'm supposed to be in another meeting which.

F

Is why bob left, because I borrowed someone's, I'm not having you know major heartburn, about.

F

Unsealing those, I don't you know normally, I would wait until after we'd finished, but I know there's.

F

A different kind of agenda in interest so but, like I said, there's what I would prefer to do.

F

And and but I'm not having real uh concerns about this, given what's already been disclosed and.

F

And we made uh available to all the parties that asked uh the copies of the proposals.

F

That were submitted by each firm right, so good, okay, thank you! So uh if I could get.

A

A motion please to unseal the sealed minutes of february 8 and 10. so moved by your second.

A

Thank you. Any discussion.

A

I'm all in favor, aye aye opposed.

A

Thank you that really helps clean up a lot of stuff good, that's good! Okay! uh I think the last.

A

Item of business on our agenda is the german thing that we adjourn. Thank you second,.

E

A second uh all in favor, aye aye, all right, thank you. So that is.

A