* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:05] WELL, UH, GOOD AFTERNOON FOLKS. WE, WE HAVE A PROBLEM TODAY. WE GOT, UH, A FEW, UM, MEMBERS THAT AREN'T HERE TODAY, SO WE DON'T HAVE A QUORUM, BUT WE DO HAVE ONE ITEM ON HERE FOR BRIEFING PURPOSES ONLY. AND, UH, WE'LL GO AHEAD AND TAKE THAT ITEM TODAY AND, UH, RESCHEDULED THIS MEETING, THE AGENDA THAT WAS SUPPOSED TO HAPPEN TODAY FOR A FUTURE MEETING OUT THERE. AND I APOLOGIZE FOR NOT HAVING ENOUGH FOLKS HERE, BUT HEY, THINGS HAPPEN AND WE GOTTA KEEP MOVING FORWARD. SO, WITH THAT, [Staff Briefing  ] UH, MR. GOEL, CAN YOU TALK TO US ABOUT THIS NEXT ONE, OR TROY? UH, THANK YOU CHAIR. UH, REAL QUICK, THIS IS SOMETHING THAT WE BRING, UH, TO THE COMMITTEE EACH YEAR FOR THE REQUIRED COMMUNICATIONS FOR THE EXTERNAL AUDIT. UM, HAVE TWO INDIVIDUALS HERE. MELANIE KEATON IS MY ASSISTANT DIRECTOR. SHE'LL KIND OF KICK THIS ITEM OFF, AND SHE'LL BE FOLLOWED BY ANGELA DUNLAP, PARTNER WITH B K D TO INTRODUCE HERSELF AND HER TEAM. SO WITH THAT, MELANIE, THANK YOU, TROY. UM, SO AS TROY MENTIONED, THIS IS THE EXTERNAL AUDIT REQUIRED COMMUNICATIONS THAT'S REQUIRED EVERY YEAR. UH, ANGIE HAS BEEN DOING IT FOR THE LAST FOUR YEARS. THIS IS THE LAST YEAR OF THE CONTRACT. UH, AND JUST TO GIVE A LITTLE, UH, EXPLANATION, SO THE EXTERNAL AUDIT IS REQUIRED BY STATE STATUTE AS WELL AS BY CITY CHARTER. UH, REALLY IT PROVIDES, UH, IN, IT PROVIDES A FAIR AND TRUE VIEW OF THE CITY'S FINANCIAL STATEMENTS, MAKING SURE THERE'S NO MATERIAL, UH, MISSTATEMENTS, AND THAT WE COMPLY WITH PRINCIPLES, UM, CONCEPTS AND ACCOUNTING STANDARDS. SO IT LOOKS AT SORT OF THE GLOBAL CITY ASPECT. UM, AND WE, WHAT'S ISSUED IS A COMPREHENSIVE ANNUAL FINANCIAL REPORT THAT'S DIFFERENT FROM THE CITY'S INTERNAL AUDIT, UH, WHICH WITH OUR INTERNAL AUDITOR, THE INTERNAL AUDITOR, UH, REPORTS OF COURSE TO THIS COMMITTEE, UM, HAS PROGRAMS OR AUDITS THAT ARE MORE PROGRAMMATIC OR SPECIFIC IN NATURE, USUALLY LOOKING AT, UH, SPECIFIC CONTRACTS, PROCESSES, OR CONTROLS VERSUS THE GLOBAL NATURE THAT THE EXTERNAL AUDITOR LOOKS AT. SO, AS I MENTIONED, ANGELA OR ANGIE'S, UH, BEEN THE PARTNER FOR THE LAST, UH, THIS IS NOW THE FIFTH YEAR OF THE CONTRACT. YOU CAN SEE THE PRICING FOR THE LAST SEVERAL YEARS IN MAY, UH, ACTUALLY, SORRY, IN JUNE, UH, COUNCIL APPROVED THE LAST EXTENSION FOR, UH, THE BASE OF NINE 70 PLUS 144,000, UH, DOLLARS TO COVER POTENTIALLY 12 ADDITIONAL SINGLE AUDIT PROGRAMS. THE BASE INCLUDES EIGHT WITH THE RECEIVING OF THE C OVID 19, UH, GRANT FUNDS. WE WEREN'T REALLY SURE HOW MANY NEW SINGLE AUDIT PROGRAMS WOULD MEET THAT QUALIFICATION BASED ON EXPENDITURES DURING THE YEAR, UH, THROUGH INTERIM. WE'VE ALREADY HIT 14 PROGRAMS OUT OF THAT 20, AND THEY, UH, AUDITORS WILL BE GIVEN NEW REPORT THIS WEEK TO SEE IF THERE'S ANY, ANY ADDITIONAL PROGRAMS TO ADD. BUT WE WILL NOT GO BEYOND THE 144 ADDITIONAL DOLLARS THAT WAS AWARDED TO COVER THOSE SINGLE AUDIT, UH, CONCEPTS. SO WITH THAT, I'M GONNA GO AHEAD AND HAND IT OVER TO ANGIE, WHO'S WITH B K D? GOOD AFTERNOON, EVERYBODY. SO, UM, I'M ANGIE DUNLAP, AND AS MELANIE SAID, I HAVE BEEN THE AUDIT PARTNER FOR THE CITY OF SAN ANTONIO AUDIT FOR THE LAST, UH, FIVE YEARS. AND SO I HAVE WITH ME A COUPLE OF MEMBERS OF OUR TEAM BECAUSE PART OF OUR RESPONSIBILITY IS, UM, INCLUSIVE OF HAVING, UH, M W B E PARTICIPATION IN OUR ENGAGEMENT. SO I HAVE TWO OF OUR PARTNERS HERE THAT I SEE, UM, BOB WILLIAMS, UM, WHO'S BEEN WITH US FOR THE LAST FIVE YEARS, AS WELL AS TERRY BRITTS WITH BRITTS AND ASSOCIATES. AND THEN WE HAVE TWO OTHER, UH, FIRMS, A V A ARMSTRONG VAUGHN AND ASSOCIATES, AND THEN, UH, CARMONA, CHRIS CARMONA FROM SHRIVER CARMONA. SO THOSE ARE THE INDIVIDUALS OF OUR TEAM. AND SO I JUST WANTED TO COVER REAL QUICKLY FOR YOU, UM, KIND OF THE AUDIT PLAN FOR THIS YEAR. WE HAVE, UH, DONE SOME INTERIM FIELD WORK THAT WE DID, UH, EARLIER THIS YEAR. UM, AND THEN WE'LL COME BACK IN NOVEMBER, UH, FOR FINAL FIELD WORK. BUT, UH, THIS JUST KIND OF OUTLINES OUR RESPONSIBILITIES AS IT RELATES, UH, TO THE AUDIT. AND, UM, WE WILL BE AUDITING THE CITY'S ANNUAL COMPREHENSIVE, UH, FINANCIAL REPORT. UM, IT WILL BE IN COMPLIANCE WITH, UH, GOVERNMENT AUDITING STANDARDS. AND THEN, UM, ALSO WE'LL BE AUDITING THE FEDERAL AND STATE FUNDING THAT THE CITY RECEIVES UNDER UNIFORM GUIDANCE AND THE STATE OF TEXAS SINGLE AUDIT, UH, GUIDANCE. AND THEN AN AUDIT JUST IS TO OBTAIN REASONABLE, BUT NOT ABSOLUTE ASSURANCE AS IT RELATES TO THE FINANCIAL STATEMENTS AND FINANCIAL OPERATIONS OF THE CITY, BECAUSE WE DON'T LOOK AT EVERY TRANSACTION. [00:05:01] WE DO IT ON A SCOPE BASIS BASED ON MATERIALITY, WHICH I WILL TOUCH ON, UH, IN A MINUTE. SO FROM AN AUDIT DELIVERABLE STANDPOINT, UM, THESE ARE BASICALLY KIND OF THE FIVE DELIVERABLES, UH, THAT WE WILL BE PRODUCING. UH, THE FINANCIAL STATEMENTS OF THE CITY AS A WHOLE. AS I MENTIONED, THE SINGLE AUDIT FOR BOTH STATE AND FEDERAL. UM, THE CITY DOES HAVE A PASSENGER FACILITY CHARGE PROGRAM AS IT RELATES TO, UH, THE AIRPORT. AND THEN THERE'S A TEXAS COMMISSION ON ENVIRONMENTAL QUALITY AGREED UPON PROCEDURES REPORT THAT IS DONE, UH, IN RELATION TO SOME OF THE ENVIRONMENTAL MATTERS OF THE CITY FROM A TIMELINE STANDPOINT, UM, YOU CAN KIND OF JUST GET A, A PICTORIAL OF WHAT OUR TIMELINE IS. AS I MENTIONED, UH, WE HAD BEEN IN THE FIELD IN JUNE AND JULY, UM, DOING FIELD WORK, AND I THINK IT PROBABLY SPILLED A LITTLE OVER INTO AUGUST AS WELL. UH, WE'LL COME BACK IN NOVEMBER, UH, THROUGH FEBRUARY, AND THEN, UH, REPORT BACK TO THIS COMMITTEE, UH, IDEALLY IN MARCH. FROM A MATERIALITY STANDPOINT, AS I SAID, YOU KNOW, WE DON'T LOOK AT EVERY TRANSACTION, SO WE DO BASE IT OFF OF MATERIALITY. AND THERE'S KIND OF TWO COMPONENTS HERE. ONE IS IN RELATION TO THE FINANCIAL STATEMENTS AS A WHOLE, AND WE LOOK AT, UM, A SPECIFIC BENCHMARK TO DETERMINE KIND OF WHAT OUR, UH, SCOPE WOULD BE AND WHAT LINE ITEMS OF THE FINANCIAL STATEMENTS WE WILL, UM, AUDIT. AND SO THAT'S GONNA BE, UM, BASED ON EITHER, UM, ASSETS OR REVENUE OR EXPENDITURES. IT KIND OF JUST DEPENDS ON THE PARTICULAR FUND THAT WE'RE LOOKING AT. AND THEN FROM A SINGLE AUDIT STANDPOINT, WE BASE THAT MATERIALITY CONSIDERATIONS OFF OF THE ACTUAL EXPENDITURES OF THE PROGRAMS. THEN THERE'S JUST SOME OTHER ACCOUNTING AND AUDITING MATTERS, UM, THAT I WANTED TO, UH, MAKE YOU AWARE OF. AND UNFORTUNATELY, EVEN THOUGH I HAVE THESE GLASSES, I CANNOT SEE ALL THE WAY OVER THERE. UM, SO WE LOOK AT THE INTERNAL CONTROLS. UM, SO WE IDENTIFY, YOU KNOW, SPECIFIC CONTROLS THAT THE CITY HAS IN PLACE OVER VARIOUS AREAS, AND PERFORM, UH, SOME WALKTHROUGH PROCEDURES ON THOSE TO ENSURE THAT THE CONTROLS ARE IN PLACE, UH, FROM A SINGLE AUDIT STANDPOINT. WE ACTUALLY TEST THE OPERATING EFFECTIVENESS OF THOSE CONTROLS TO MAKE SURE THEY'RE OPERATING EFFECTIVELY. AND THEN, UM, WE LOOK AT SIGNIFICANT ESTIMATES, AND SOME OF THOSE ARE IDENTIFIED ON THIS SLIDE AS WELL. AND THEN, AS I MENTIONED, WE TEST THE MAJOR PROGRAMS AND THANK YOU. AND SO MELANIE, UM, HAD MENTIONED THAT WE'RE ALREADY UP TO 14, UM, PROGRAMS. AND SO, UH, WE'LL CONTINUE TO ASSESS THAT WITH THE ADDITIONAL FUNDING FROM ARPA THIS YEAR. THERE'S A NUMBER OF PROGRAMS, UM, THAT HAVE BEEN IDENTIFIED AND ARE CONSIDERED HIGHER RISK THAT WE WOULD HAVE TO LOOK AT. UM, SO ONE OF THE THINGS I JUST WANTED TO POINT OUT, BECAUSE THE CITY DOES HAVE A NUMBER OF COMPONENT UNITS, UM, THAT ARE INCLUDED IN THE ACTUAL FINANCIAL REPORT OF THE CITY, SOME OF THOSE ARE CONSIDERED BLENDED AND SOME OF THOSE ARE CONSIDERED, UM, DISCREETLY PRESENTED. AND SO WHAT WE LISTED HERE JUST FOR YOUR BENEFIT IS, UM, THE IDENTIFICATION THAT THERE'S ACTUALLY 17 COMPONENT UNITS THAT ARE AUDITED BY OTHER AUDITORS. AND SO WE RELY ON THE REPORTS OF THOSE OTHER AUDITORS, UH, IN RELATION TO THE CITY'S AUDIT AS A WHOLE. AND THEN, UH, SIGNIFICANT RISK AREAS, THIS IS WHERE WE DO JUST KIND OF A RISK ASSESSMENT OF THE CITY AND IDENTIFY, UH, SOME POTENTIAL RISK AREAS. A COUPLE OF THESE ARE STANDARD RISK AREAS JUST FROM KIND OF THE PROFESSIONAL STANDARDS THAT WE LOOK AT. AND SO ONE OF THAT IS MANAGEMENT OVERRIDE OF CONTROLS, UM, MAKING SURE THAT THERE'S, UM, APPROPRIATE CONTROLS IN PLACE AND NO OVERRIDES. SO THERE'S SPECIFIC PROCEDURES THAT WE DO IN THAT AREA. A LOT OF IT IS AROUND, UM, LIKE JOURNAL ENTRY TESTING AND THINGS OF THAT NATURE. AND THEN WE, UM, LOOK AT REVENUE RECOGNITION. SO THERE'S A NUMBER OF REVENUE STREAMS, UM, THAT THE CITY HAS. SO WE LOOK AT THAT, UH, BECAUSE THERE'S A KIND OF A PRESUMED RISK OF FRAUD, UM, ASSOCIATED WITH REVENUE RECOGNITION. AND THEN, UM, THE PROGRAM COMPLIANCE, WHICH WE'VE KIND OF ALREADY TALKED ABOUT. UM, AND THEN WE TALK WITH VARIOUS INDIVIDUALS JUST TO MAKE SURE THAT WE UNDERSTAND KIND OF WHAT OTHER RISK FACTORS THERE ARE. SO, UM, FROM YOUR PERSPECTIVE AS, UM, COMMITTEE MEMBERS, IF THERE'S OTHER, ANY OTHER AREAS FROM A RISK PERSPECTIVE THAT YOU WOULD WANT US TO CONSIDER, YOU CAN SHARE THAT WITH US AT A LATER DATE. AND THIS IS JUST REAL QUICKLY, THE MAJOR PROGRAMS THAT, UM, HAVE BEEN IDENTIFIED THUS FAR, UM, THAT WE'VE BEGUN, UH, TESTING ON. SO, UH, THE WOMEN INFANTS AND CHILDREN, C D B G, EMERGENCY SOLUTIONS GRANT, AIRPORT IMPROVEMENT, AND THE CORONAVIRUS RELIEF FUND. AND THEN YOU CAN SEE THE REST HERE, EMERGENCY RENTAL ASSISTANCE, WHICH CAME OUT OF THE, UM, ARPA FUNDING, [00:10:01] THE, AS WELL AS THE, UM, CSA FUNDING CORONAVIRUS, STATE AND LOCAL FISCAL RECOVERY FUNDS, UM, IMMUNIZATION, COMMUNITY SOCIAL, UH, BLOCK SERVICES, UH, BLOCK GRANT. AND THEN, UM, THE DISASTER GRANTS FOR PUBLIC ASSISTANCE UNDER FEMA. AND THEN HERE'S THE STATE PROGRAMS THAT WE'VE IDENTIFIED THUS FAR AND THAT WE'VE ACTUALLY BEGUN, UH, PROCEDURES ON THE LAST COUPLE OF SIDES. UM, JUST WANTED TO MAKE YOU AWARE THAT ALTHOUGH, UM, WE'RE NOT REQUIRED, YOU KNOW, FROM AN AUDIT PERSPECTIVE, UM, TO DETECT FRAUD, BUT WE ARE REQUIRED TO, I, UM, DESIGN OUR AUDIT PROCEDURES TO ADDRESS ANY PARTICULAR FRAUD RISK FACTORS. AND SO, UM, AS PART OF OUR AUDIT PROCESS, WE DO GO THROUGH A BRAINSTORMING SESSION WHERE WE EVALUATE KIND OF WHAT ARE THE RISK FACTORS SPECIFIC TO THE CITY, BUT ALSO MAYBE SPECIFIC, UM, TO GOVERNMENTS AND MUNICIPALITIES IN GENERAL. AND THEN WE ACQUIRE OF MANAGEMENT AND OTHERS, UM, THEIR PERSPECTIVE RELATIVE TO FRAUD. UM, AND IF THERE'S ANY OTHER RISK FACTORS. AND WE'VE SPOKEN WITH A LOT OF INDIVIDUALS ALREADY WITHIN THE ORGANIZATION. AND WE WILL SUBSEQUENTLY, UM, SPEAK WITH, UH, YOU THE CHAIR AS WELL, AND GET THAT SET UP TO HAVE A, A SPECIFIC CONVERSATION. AND THEN WE REVIEW ACCOUNTING ESTIMATES FOR ANY BIASES AND, UM, EVALUATE ANY BUSINESS RATIONALE FOR SIGNIFICANT OR UNUSUAL TRANSACTIONS. AND SO, UM, ON THIS SLIDE, THIS IS, YOU KNOW, IN ESSENCE KIND OF OUR DISCUSSION POINTS, BUT THESE ARE JUST THINGS FOR, UH, YOU GUYS TO CONSIDER. UM, AND SO IF THERE ARE ANY PARTICULAR RISK AREAS FROM THE COMMITTEE'S PERSPECTIVE, UM, THAT YOU WOULD LIKE US TO BE AWARE OF AS WE MOVE INTO THE FINAL FIELD WORK, UM, WE WOULD WELCOME THOSE CONSIDERATIONS AS WELL AS, UM, IF YOU'RE AWARE OF ANY KNOWN OR SUSPECTED FRAUD, YOU CAN SHARE THAT WITH US AS WELL. WE HAVE A COUPLE OF ITEMS IN THE APPENDIX JUST TO MAKE YOU AWARE OF. UM, THERE IS A DETAILED LISTING OF THE COMPONENT UNITS, UM, OF ALL THE ONES THAT WE JUST MENTIONED. AND THEN THERE ARE SOME ACCOUNTING STANDARDS THAT ARE EFFECTIVE THIS YEAR, UH, FOR THE CITY THAT, UH, THE CITY WILL BE IMPLEMENTING. AND WE WILL BE AUDITING TO THE EXTENT THAT THEY ARE APPLICABLE. AND THEN THERE'S A NUMBER OF ACCOUNTING STANDARDS THAT ARE EFFECTIVE, UM, IN FISCAL YEAR 2022 AND 2023. UM, THE ONE THAT'S PROBABLY THE MOST SIGNIFICANT IN 2022 WOULD BE IN RELATION TO GSS B 87, UH, RELATED TO LEASES. UM, THOSE WILL BE ASSETS, RIGHT, TO USE ASSETS OF THE CITY, UH, WHICH PREVIOUSLY HADN'T BEEN RECORDED, AND THERE'LL BE A LEASE LIABILITY REFLECTED ON THAT. SO THERE'S A LOT OF EFFORT AND WORK THAT, UM, THAT ONE WILL ENTAIL THAT THE CITY IS ALREADY WORKING ON. SO WITH THAT, THAT IS OUR BRIEFING. SO THERE'S NO QUESTION, SO WE'LL JUST QUIT THAT ASIDE AND SAY THANK YOU. UH, YOU OBVIOUSLY HAVEN'T BRIEFED ME BEFORE ABOUT NO QUESTIONS. UH, IF YOU, IF YOU DON'T MIND, I, I DO HAVE A FEW QUESTIONS HERE. YEAH. JUST BECAUSE WE'RE, WE'RE NOT HAVING A MEETING, WE'RE NOT SUPPOSED TO HAVE ANY DELIBERATIONS, THAT MEANS ANY BACK AND FORTH, IT'S JUST A STATE BRIEFING. OKAY. INFORMATION. ALRIGHT. HOW CAN WE, HOW WOULD THE OPPORTUNITY COME ABOUT FOR ASKING QUESTIONS ON THIS PARTICULAR BRIEFING? IF, IF YOU LIKE, I THINK IF YOU POINTED WRITE DOWN QUESTIONS AND, AND SEND THEM TO TROY OR, OR FANS, THEY CAN PROBABLY PASS THEM ON TO CHAIR. MAYBE WHAT I WOULD SUGGEST, RAY, IS THAT WE JUST, WE'LL SCHEDULE TIME COUNCILMAN WITH YOU ACTUALLY. UH, ANGIE MENTIONED THAT YOU'LL BE ONE OF THE INDIVIDUALS SHE WANTS TO SPEAK WITH. SO WE CAN COVER YOUR QUESTIONS AT THAT POINT IN TIME. OKAY. UH, IN ADDITION TO THAT, WE WILL REACH OUT TO THE OTHER, UH, COMMITTEE MEMBERS AS WELL TO MAKE SURE THEY GET THIS INFORMATION. IF THEY HAVE QUESTIONS OR COMMENTS THEY WOULD LIKE TO PASS ON TO ANGIE AND THE TEAM, THEN THEY'LL BE ABLE TO DO THAT. AND MS. SOTO, YOU, YOU, YOU CAN DO THE SAME ON IF YOU GOT ANY QUESTIONS, JUST JOT THOSE DOWN AND WE CAN, IF YOU CAN SEND THOSE TO ME AND WE WILL, OR, AND WE'LL GET YOU THE ANSWERS BACK, UH, WITH THAT. SO, UH, GREAT PRESENTATION. THANK YOU VERY MUCH. AND YES, I DO HAVE SOME QUESTIONS FOR YOU , SO, UH, I FIGURED YOU DID LOOK FORWARD TO THAT. BUT, UH, YEAH, WELL WITH THAT IN MIND, THIS WAS JUST A BRIEFING. WE DIDN'T MAKE ANY, UH, NO DISCUSSIONS, NO QUESTIONS, NO DECISIONS OR ANYTHING FROM, FROM THIS OPPORTUNITY, BUT AN OPPORTUNITY TO TAKE A LOOK AT THIS. AND WE'LL COME UP WITH SOME QUESTIONS FOR THE FUTURE. BUT, UH, WITH THAT BEING SAID, ARE THERE ANY OTHER COMMENTS OR ANYTHING OR QUESTIONS FOR ME? ALRIGHT. GREAT. [00:15:01] WELL, THANK Y'ALL VERY MUCH AGAIN. I, I APPRECIATE IT. I APOLOGIZE WE DIDN'T HAVE ENOUGH FOLKS HERE FOR QUORUM, BUT WE'LL WORK THAT ON ON THE NEXT MEETING, MAKE SURE THAT WE HAVE THAT AVAILABLE. THANK Y'ALL VERY MUCH. HAVE A GREAT DAY. . * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.