Sep 15, 2020 Audit and Accountability Committee on 2020-09-15 10:00 AM

[00:00:02]

TO THE, UH, MEETING OF THE AUDIT AND ACCOUNTABILITY COMMITTEE FOR TUESDAY, SEPTEMBER 15.

UH, IT LOOKS LIKE, UH, ALL OUR COMMITTEE MEMBERS ARE HERE.

AND SO, UM, I THINK, UH, MS. KANO IS SECRETARY WITH US TODAY.

YES.

WOULD YOU GO AHEAD AND DO THE ROLL CALL, PLEASE? YES.

UH, CHAIRMAN, COURAGE PRESENT, COUNCIL MEMBER SANDOVAL.

COUNCIL MEMBER PERRY HERE.

CITIZEN MEMBER PRISCILLA SOTO ISLE HER HERE.

UH, CITIZEN MEMBER JUDY TREVINO CHAIR.

YOU HAVE A QUORUM.

OKAY.

THANK YOU VERY MUCH.

AGAIN.

WELCOME EVERYBODY.

UH, WE HAVE, UH, AN AGENDA THAT REALLY HAS QUITE A FEW ITEMS ON CONSENT.

UH, BUT WE WILL HAVE, UH, ONE MAJOR ITEM THAT WE WILL BE DE UH, TALKING ABOUT.

UH, BUT

[1. 20-5358 Approval of the minutes from the Audit and Accountability Committee meeting on August 18, 2020]

SO MOVED.

SECOND.

OKAY.

WE HAVE A MOTION BY COUNCILMAN SANDOVAL, SECONDED BY COUNCILMAN PERRY FOR THE APPROVAL OF THE MINUTES OF AUGUST 18TH.

ANY QUESTIONS OR CONCERNS ABOUT THOSE MINUTES? OKAY.

SEEING NONE.

ALL IN FAVOR SAY AYE.

AYE.

OKAY.

MINUTES ARE APPROVED.

THANK YOU VERY MUCH.

AS I SAID,

[CONSENT AGENDA]

LET ME JUST, UH, GO THROUGH THOSE PRETTY QUICKLY.

WE HAVE A PRES SOLICITATION HIGH PROFILE ITEM.

UH, IT IS ON-CALL CONSTRUCTION INSPECTION SERVICES.

UH, WE HAVE ITEM NUMBER THREE, ANNUAL CONTRACTS FOR MEAL PREPARATION SERVICES FOR SENIOR NUTRITION PROGRAM.

ITEM NUMBER FOUR, BASIC LIFE AND ACCIDENTAL DEATH AND DISMEMBERMENT.

VOLUNTARY SUPPLEMENTAL LIFE, INDEPENDENT LIFE INSURANCE.

ITEM NUMBER FIVE IS AN AUDIT ITEM.

UH, AND THAT'S A FOLLOW-UP AUDIT OF D H SS AT D H S AFTER SCHOOL CHALLENGE PROGRAM ITEM NUMBER SIX.

ALSO, AN AUDIT IS A PUBLIC SAFETY RADIO SYSTEM CONTRACT.

ALL OF THESE, UH, HAVE BEEN SENT TO THE COUNCIL MEMBERS FOR THEIR CONSIDERATION BEFORE THE MEETING.

UH, THESE ARE ON THE, UH, ON THE, UH, CONSENT AGENDA.

ARE THERE ANY OF THESE ITEMS THAT ANY MEMBER WOULD LIKE TO PULL FOR INDIVIDUAL CONSIDERATION? ANY ITEMS FOR INDIVIDUAL CONSIDERATION? OKAY.

HEARING NONE, THEN, UH, I WOULD ENTERTAIN A MOTION TO APPROVE THE CONSENT AGENDA.

OKAY.

THANK YOU.

MEMBER TREVINO, MOVE TO APPROVE THE CONSENT AGENDA.

IS THERE A SECOND? I SEE COUNCILMAN SANDOVAL.

THANK YOU VERY MUCH.

SO IT'S BEEN MOVED AND SECONDED TO APPROVE, TO APPROVE THE CONSENT AGENDAS PRESENTED.

ALL IN FAVOR, PLEASE SAY AYE.

OKAY.

ANY MEMBER? OPPOSED? OKAY.

SEEING NONE, THE CONSENT AGENDA IS APPROVED.

THE NEXT

[7. 20-5344 Required Communications for the FY 2020 External Audit [Ben Gorzell, Chief Financial Officer; Troy Elliott, Deputy Chief Financial Officer, Finance]]

UH, WE'RE GONNA HAVE REQUIRED COMMUNICATIONS FOR THE FISCAL YEAR 2020 EXTERNAL AUDIT.

UH, AND WE'LL START OFF WITH, UH, BEN, GO, UH, STARTING THAT OFF, AND THEN WE'LL BE HEARING FROM OUR AUDITORS.

SO, BEN FLOOR, YOURS.

GOOD MORNING CHAIR AND COMMITTEE MEMBERS.

AND I'M ACTUALLY GONNA HAVE EITHER TROY, UH, INTRODUCE THE ITEM, UH, AND I BELIEVE MELANIE WILL BE PRESENTING ON BEHALF OF FINANCE TODAY.

AND THEN WE'LL HEAR FROM OUR OUTSIDE AUDITORS AS WELL.

TROY? UH, THANK YOU, BEN.

UM, EACH YEAR WE BRING TOWARDS YOU, WE BRING TO YOU THE, THE ANNUAL KICKOFF FOR OUR EXTERNAL AUDIT.

UM, THIS ACTUALLY SIGNIFIES THE BEGINNING OF THE EXTERNAL AUDIT.

UM, THIS IS SOMETHING WE DO EVERY YEAR.

AND WE, WE HAVE WITH US TODAY, MELANIE KEATON, WHO'S OUR ASSISTANT FINANCE DIRECTOR, WHO WILL BE KIND OF GIVING YOU AN OVERVIEW FROM THE CITY STANDPOINT.

AND THEN WE HAVE ANGELA DUNLAP, WHO'S A PARTNER WITH B K D, WHO WILL BE WALKING THROUGH HER REQUIRED COMMUNICATIONS AND ALSO INTRODUCING HER TEAM, UM, FOR THE EXTERNAL AUDIT.

WITH THAT, I'LL TURN IT OVER TO MELANIE KEATON TO BASICALLY INTRODUCE THE ITEM AND WALK THROUGH KIND OF THE, THE GENERAL OVERVIEW.

MELANIE.

THANK YOU, TROY.

UM, WE SHOULD HAVE A PRESENTATION IF AUDIO VISUAL.

THANK YOU, LAUREN, UH, CAN GO AHEAD AND PUT THAT UP.

SO, UH, GOOD MORNING, CHAIRMAN AND OTHER COMMITTEE MEMBERS.

MY NAME IS MELANIE KEATON.

I AM THE ASSISTANT FINANCE DIRECTOR OVER ACCOUNTING.

I HAVE WITH ME TODAY ANGELA DUNLAP,

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NEXT SLIDE.

BEFORE I HAND IT OVER TO ANGIE, I WANTED TO SPEND A FEW MINUTES GOING OVER THE DIFFERENCE BETWEEN THE EXTERNAL AND INTERNAL AUDITS, AS WELL AS THE CURRENT EXTERNAL CONTRACT THAT THE CITY IS UNDER.

THE EXTERNAL AUDIT IS REQUIRED BY THE CITY, CHARTER STATE, AND FOR GRANT FUNDING PURPOSES, FEDERAL LAW, THE EXTERNAL AUDITOR IS INDEPENDENT TO THE CITY AND ITS RELATED ENTITIES OR COMPONENT UNITS.

THE AUDIT'S GOAL IS TO ENSURE THAT THE CITY'S RECORDS ARE PROPERLY MAINTAINED FREE FROM MATERIAL MISSTATEMENTS, AND COMPLY WITH ACCOUNTING PRINCIPLES AND REGULATORY STANDARDS.

THE AUDIT PROVIDES A TRUE AND FAIR VIEW OF THE CITY'S FINANCIAL STATEMENTS.

NEXT SLIDE.

CONVERSELY, THE INTERNAL AUDITOR, WHO IS ALSO REQUIRED BY OUR CITY CHARTER AND INDEPENDENT OF THE CITY'S OPERATIONS, IS RESPONSIBLE TO PERFORM FINANCIAL, FISCAL COMPLIANCE AND OTHER AUDITS AS DIRECTED BY THE AUDIT AND ACCOUNTABILITY COMMITTEE.

THESE PROGRAMS AND REVIEWS TEND TO BE MORE PROGRAMMATIC OR SPECIFIC IN NATURE AS OPPOSED TO THE BROAD REPORT AND OPINIONS ISSUED BY THE EXTERNAL AUDITOR.

NEXT SLIDE.

THE CITY ENTERED INTO A $4.5 MILLION CONTRACT WITH GRANT THORNTON AS THE PRIME FOR A THREE YEAR CONTRACT WITH TWO ONE YEAR EXTENSIONS IN 2017.

IN 2020, GRANT THORNTON ASSIGNED ITS RIGHTS TITLE AND INTEREST IN PUBLIC SECTOR CLIENTS TO B K D COUNCIL APPROVED THE FIRST ONE YEAR EXTENSION AND ASSIGNMENT TO B K D IN JUNE OF 2020.

PART OF STAFF'S RECOMMENDATION TO EXTEND THE CONTRACT WAS DUE TO B K D, ACQUIRING THE FORMER PARTNER AND MANAGER ON THE CITY'S ENGAGEMENT FROM GRANT THORNTON, AS WELL AS RETAINING THE SUBS ORIGINALLY INCLUDED IN THE CONTRACT.

NEXT SLIDE.

THE CONTRACT INCLUDES FOUR SUBCONTRACTORS WHO TOTAL ABOUT 48% OF THE CONTRACTS TOTAL VALUES, ROB, ROBERT J. WILLIAMS, RITZ AND ASSOCIATES, SHRIVER, CARMONA AND COMPANY ARMSTRONG VAUGHN AND ASSOCIATES.

ANGIE WILL INTRODUCE THESE SUBS IN HER PRESENTATION.

FINALLY, I'D BE REMISS IF I DIDN'T IDENTIFY THE CITY'S INDIVIDUALS WHO ARE THE PRIMARY POINTS OF CONTACT FOR THE EXTERNAL AUDIT.

THE CITY'S CON, THE CITY'S CONTROLLER'S OFFICE, WHICH IS WITHIN THE FINANCE DEPARTMENT, PREPARES THE CITY'S CER AND SINGLE AUDIT, AS WELL AS GATHERS AND PREPARES ALL THE NECESSARY DOCUMENTS AS REQUESTED BY THE AUDITORS.

THIS TEAM IS LED BY VICTORIA RADER, OUR CONTROLLER, ELIZABETH DRU YARD, AND KIMBERLY NUNEZ, OUR FINANCIAL REPORTING MANAGER, NJ BLACKWELL, OUR GENERAL LEDGER MANAGER.

WITH THAT BACKGROUND, I WOULD LIKE TO INTRODUCE YOU TO ANGELA DUNLAP'S, B KDS ENGAGEMENT PARTNER.

NEXT SLIDE.

GOOD MORNING, EVERYONE.

UM, HOPE YOU'RE DOING WELL IN THIS ENVIRONMENT.

UM, I'M ANGELA DUNLAP, AND I AM THE PARTNER ON THIS YEAR'S AUDIT ENGAGEMENT.

AND AS MELANIE INDICATED, UH, WE RECENTLY, MYSELF AND ERICA BROWN, ONE OF THE MANAGERS RECENTLY TRANSITIONED TO B K D, UH, A COUPLE OF MONTHS AGO, UM, AND ARE EXCITED, UM, TO CONTINUE WORKING WITH THE CITY OF SAN ANTONIO FOR THE FISCAL YEAR 2020 AUDIT.

SO WE JUST WANTED TO SPEND A LITTLE BIT OF TIME TALKING WITH YOU THIS MORNING, UM, ABOUT OUR AUDIT, UM, FROM AN OVERALL PERSPECTIVE, AND THEN, UH, OF COURSE, GET ANY FEEDBACK FROM YOU GUYS AS WE CONTINUE TO WORK THROUGH OUR AUDIT PLANNING PROCESS.

UM, I DO WANT TO INTRODUCE THE MEMBERS OF THE ENGAGEMENT TEAM THAT ARE ON THE CALL TODAY.

SO FROM THE B K D STANDPOINT, UH, WE HAVE TWO MANAGERS, ERICA BROWN, UM, WHO PREVIOUSLY, UH, HAD BEEN A PART OF THE AUDIT PROCESS.

AND THEN SHAQUITA RAW, UH, IS ALSO A MANAGER.

AND INTERESTINGLY ENOUGH, UM, SEVERAL YEARS AGO WHEN GRANT THORNTON HAD THE CONTRACT BACK IN 2011, UM, SHAQUITA WAS PART OF THE ENGAGEMENT TEAM THERE.

SO SHE DOES HAVE SOME FAMILIARITY, UH, WITH THE CITY AND, UH, SOME OF THE CITY PERSONNEL.

ADDITIONALLY, UM, UH, MELANIE HAD MENTIONED THE SUBCONTRACTING FIRMS, AND SO WE HAVE, UH, ON CALL AS WELL TODAY, UH, WITH ARMSTRONG VAUGHN AND ASSOCIATES, DEBBIE FRAZIER, AND THEN WITH BRIS BRISON ASSOCIATES, CARRIE BRI, ROBERT J. WILLIAMS, C P A, BOB WILLIAMS, AND THEN CARMONA AND COMPANY, UH, CHRIS CARMONA.

SO THOSE, THOSE INDIVIDUALS ARE ALL PRESENT ON THIS CALL TODAY AS WELL.

NEXT SLIDE, PLEASE.

UM, ONE OF THE THINGS THAT, UH, WE WANTED TO SHARE WITH YOU THAT WILL BE, UM, PROVIDED TO YOU, UH, AFTER THIS PRESENTATION IS A SPECIFIC LETTER WHERE WE ACTUALLY OUTLINE, UM, A LITTLE BIT MORE INFORMATION

[00:10:01]

AND SO IN THAT LETTER, UM, THE ITEMS THAT ARE COVERED ARE OUR RESPONSIBILITIES AS THE EXTERNAL AUDITOR, UH, RESPONSIBILITIES OF THOSE CHARGED WITH GOVERNANCE.

AND I WOULD JUST SAY THOSE ARE VERY SIMILAR TO, UH, WHAT WE HAD COMMUNICATED TO YOU IN PREVIOUS YEARS.

UM, AUDITS.

UM, ALSO WE TALK ABOUT THE SIGNIFICANT RISKS, WHICH ARE FAIRLY SIMILAR, WHICH, UH, PRIMARILY ARE AROUND REVENUE RECOGNITION, UH, WITHIN THE CITY OPERATIONS, UH, MANAGEMENT OVERRID OF CONTROLS, WE LOOK AT THAT SPECIFICALLY.

AND THEN ANY OF THE, UH, PROGRAMMATIC, UH, PROGRAM COMPLIANCE WITH RESPECT TO THE FEDERAL AND STATE FUNDING, UM, THAT THE CITY RECEIVED.

AND THEN ALSO, WE, UH, TALKED IN THERE ABOUT, UM, THE COMPONENT UNITS AND THE USE OF OTHER AUDITORS.

UM, IF YOU RECALL, THERE ARE A NUMBER OF COMPONENT UNITS THAT THE CITY HAS THAT IS INCORPORATED INTO THE FINANCIAL STATEMENTS, BUT THEY ARE, A NUMBER OF THEM ARE AUDITED BY OTHER AUDITORS.

AND SO WE ACTUALLY RELY ON THE WORK OF THOSE OTHER AUDITORS WHEN PERFORMING THE AUDIT FOR THE CITY.

NEXT SLIDE, PLEASE.

UM, THIS IS JUST REALLY FOR EVERYBODY'S BENEFIT IN TERMS OF SOME DISCUSSION POINTS.

WE WON'T GO THROUGH EACH OF THESE ON THIS CALL, UM, BUT WE'LL BE HAVING A SEPARATE CONVERSATION WITH, UH, COUNCILMAN COURAGE, UM, TO DISCUSS THE, UM, UH, AREAS OF, UH, KIND OF FRAUD RISK AND, UM, ITEMS OF THAT NATURE.

SO FOR THE, UM, MEMBERS OF THE COMMITTEE THAT, UH, HAVE ANY SPECIFIC ITEMS THAT THEY WANNA HAVE ADDRESSED OR WANNA, UH, BRING FORWARD, UM, YOU CAN SHARE THAT WITH MR. RIDGE AND THEN WE'LL HAVE THAT CONVERSATION THERE.

BUT THESE ARE KIND OF THE POINTS THAT, UH, WE COVER IN THAT COMMUNICATION.

NEXT SLIDE, PLEASE.

SO, FROM AN AUDIT TIMELINE PERSPECTIVE, UM, THIS IS WHERE WE ARE WITH RESPECT TO THE AUDIT TIMELINE.

AND SO, UH, IN JULY WE KICKED OFF, UH, WITH MANAGEMENT.

AND THEN, UH, THROUGH AUGUST, UM, UP AND THROUGH OCTOBER, UH, WE'VE DONE OUR AUDIT PLANNING AND RISK ASSESSMENT.

AND WE'RE ACTUALLY, I GUESS YOU COULD SAY, QUOTE UNQUOTE, IN THE FIELD, VIRTUALLY, UH, PERFORMING SOME INTERIM TEST WORK, AS WELL AS TESTING ON THE, UH, STATE SINGLE AUDIT PROGRAMS, WHICH WE'LL, UH, TOUCH ON IN A MINUTE HERE IN TERMS OF WHAT, UH, THOSE ARE PARTICULARLY.

AND THEN WE'LL COME BACK IN DECEMBER, UH, THROUGH FEBRUARY TO DO OUR FINAL FIELD WORK WITH THE, UH, INTENTION OF, UM, HAVING A TENTATIVE, UH, MARCH, 2021, UH, REPORT ISSUANCE OF ALL THE DELIVERABLES.

AND WE'LL TALK ABOUT WHAT THOSE, UH, DELIVERABLES ARE.

NEXT SLIDE, PLEASE.

CAN YOU HEAR ME NOW? SORRY GUYS.

UM, SO AS IT RELATES TO OUR MATERIALITY, SO THIS IS SIMILAR TO WHEN WE WERE WITH, UM, GRANT THORNTON.

OUR MATERIALITY DEPENDS ON THE CITY'S, UM, THE DIFFERENT FUNDS.

JUST THE FUNDS WILL HAVE DIFFERENT MATERIALITIES BASED ON WHAT'S KIND OF GOING ON IN THAT FUND.

UM, BUT THOSE MATERIAL, THOSE BENCHMARKS ARE TOTAL ASSETS, TOTAL REVENUES, OR TOTAL EXPENSES OR EXPENDITURES.

UM, AND THEN AT OUR, OUR FEDERAL AND STATE SINGLE AUDIT PROGRAMS, WE USE TOTAL EXPENDITURES FOR EACH OF THOSE MAJOR PROGRAMS. UM, AND SO THE WAY THEIR TESTING WORKS, UM, AS IN FOUR YEARS, WE JUST TAKE, UM, THOSE BENCHMARKS AND USE DIFFERENT PERCENTAGES TO FIGURE OUT KIND OF A TESTING SCOPE OF WHAT, UM, ACCOUNTS WE'RE GONNA LOOK AT.

AND THEN THAT ULTIMATELY WILL DETERMINE OUR ADJUSTMENT SCOPE.

SO IF WE FIND ANY ERRORS, UM, IN OUR TEST WORK, IF THAT ERROR IS OVER OUR ADJUSTMENT SCOPE, WE WILL PROPOSE AN AUDIT ADJUSTMENT.

NEXT SLIDE.

AND THEN JUST WANTED TO HIGHLIGHT THE DELIVERABLES THAT WILL BE COMPLETED.

SO WE WILL BE DOING, UM, OUR OPINION ON THE CER.

THE CER IS PREPARED BY THE FINANCE DEPARTMENT.

UM, BUT WE WILL DO THE OPINION AND OBVIOUSLY THE, UM, AUDITING OF THE, UH, CERTAIN SECTIONS OF THAT CER.

WE DO THE SINGLE AUDIT UNDER UNIFORM GUIDANCE.

SO THAT'S THE FEDERAL SINGLE AUDIT PROGRAMS, WHICH ANGIE WILL GO INTO, WHAT PROGRAMS WE'RE GONNA LOOK AT.

AND THEN WE ALSO DO THE STATE SINGLE AUDIT.

AND SO THAT'S UNDER THE STATE OF TEXAS UNIFORM GRANT MANAGEMENT STANDARDS.

WE ALSO LOOK AT THE PASSENGER FACILITY CHARGE.

SO WE'LL DO AN AUDIT OF THAT PROGRAM AND ISSUE AN OPINION.

AND THEN FINALLY, WE DO AGREED UPON PROCEDURES ON THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY.

UM, AND WE'LL ISSUE THAT LETTER AS WELL.

NEXT SLIDE.

AND BEFORE WE JUMP INTO OUR, UM, AREAS THAT WE'LL LOOK AT

[00:15:01]

ALL RIGHT.

WELL, I'LL JUMP IN HERE REAL QUICK.

UM, WITH RESPECT TO, UM, OUR INFORMATION TECHNOLOGY AREA, UH, WE WILL BE PERFORMING PROCEDURES OVER THE GENERAL CONTROL, UH, SECTION, UH, WHICH WILL PRIMARILY BE SECURITY, UH, ACCESS CONTROLS AND PROGRAM MANAGEMENT UNTIL WE HAVE BEEN, UH, HAVING CONVERSATIONS INTERNALLY AND ACTUALLY HAVE A MEETING PLANNED FOR THIS WEEK, UH, TO HAVE A KICKOFF TO GET THAT WORK STARTED.

SO NEXT IS THE, UH, FEDERAL SINGLE AUDIT PROGRAM.

SO IN DETERMINING THE PROGRAMS THAT WE TEST FROM A, UH, STATE AND FEDERAL STANDPOINT, UM, IT'S A RISK BASED ASSESSMENT THAT IS BASICALLY DEFINED AND DETERMINED BY THE FEDERAL OFFICE OF MANAGEMENT AND BUDGET.

AND SO AS A RESULT OF GOING THROUGH THAT RISK ASSESSMENT, THE FOUR PROGRAMS THAT YOU SEE ON THIS SLIDE ARE THE FOUR PROGRAMS THAT HAVE BEEN IDENTIFIED AS MAJOR PROGRAMS AT THIS POINT IN TIME.

UH, BASED ON THE PRELIMINARY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, UM, WHAT YOU SEE ON HERE IS THAT WE WILL BE TESTING THE, UH, MOST SIGNIFICANT CARES ACT FUNDING THAT THE CITY HAS RECEIVED.

AND THAT THE CORONAVIRUS RELIEF, UH, FUND OF ABOUT $230 MILLION THAT, UH, WILL HAVE BEEN SPENT BY THE END OF, UH, THE FISCAL YEAR.

UM, THE EMERGENCY SOLUTIONS GRANT PROGRAM ALSO HAS SOME CARE FUNDING, UM, INCORPORATED IN THAT.

SO THERE'LL BE SOME TESTING AS IT RELATES TO THAT.

UM, THE OFFICE OF MANAGEMENT AND BUDGET, UH, EACH YEAR PUTS OUT A, UM, COMPLIANCE SUPPLEMENT.

AND SO ONE OF THE THINGS THAT WE'RE PENDING RIGHT NOW IS THE COMPLIANCE SUPPLEMENT AS IT RELATES TO THE CARES ACT FUNDING.

SO THERE COULD POTENTIALLY BE SOME CHANGES HERE 'CAUSE THERE'S CONTINUING GUIDANCE AND IT'S BEEN PRETTY FLUID IN TERMS OF, UH, WHAT IS GOING TO BE EXPECTED IN THAT AREA, BUT THAT'S WHAT WE ARE CURRENTLY PLANNING FOR FROM A FEDERAL PERSPECTIVE.

NEXT SLIDE, PLEASE.

AND THEN FROM THE STATE, UH, PERSPECTIVE, THIS IS WHERE WE LOOK AT THE STATE FUNDING UNDER THE UNIFORM GRANT MANAGEMENT STANDARDS FROM THE STATE OF TEXAS.

AND THE THREE PROGRAMS THAT WE CURRENTLY HAVE BEEN WORKING ON, UM, OVER THE LAST MONTH IS THE LOCAL PARK GRANT PROGRAM, CHILDCARE SERVICES, AND THE HIGHWAY PLANNING AND CONSTRUCTION.

SIMILAR APPROACH TO FEDERAL, IT'S A RISK ASSESSMENT, UH, PROCESS THAT WE GO THROUGH BASED ON, UH, GUIDANCE THAT'S PROVIDED.

AND SO THESE ARE THE MAJOR PROGRAMS AS IT STANDS RIGHT NOW.

NEXT SLIDE, PLEASE.

AND THEN WE JUST WANTED TO SHARE, UM, THERE'S BEEN A LOT OF, UH, MOVEMENT AND I GUESS YOU CAN SAY ACTIVITY FROM A G A SS B STANDARD, THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD.

AND, UM, THERE WERE A NUMBER OF PRONOUNCEMENTS THAT ACTUALLY WERE GONNA BE EFFECTIVE FOR FISCAL YEAR 2020.

BUT AS A RESULT OF THE, UM, THINGS THAT HAVE OCCURRED RELATIVE TO C OVID 19, UH, GS B ACTUALLY, UH, ISSUED A STATEMENT NUMBER 95 WITH THE POSTPONEMENT OF THE EFFECTIVE DATES, THAT CERTAIN AUTHORITY OF GUIDANCE.

SO THERE'S BEEN A NUMBER OF STANDARDS THAT HAVE BEEN PUSHED OFF OF FISCAL YEAR 2020, AND THIS JUST ACTUALLY REPRESENTS A COUPLE OF STANDARDS THAT ARE EFFECTIVE THIS YEAR.

AND IT'S EVEN KIND OF MORE STREAMLINED IN THAT IT'S CERTAIN PARAGRAPHS AND WITHIN THESE STANDARDS, SO IT'S NOT THE FULL, UH, STANDARD ITSELF.

SO THAT WAS JUST SOMETHING WE WANTED TO MAKE YOU AWARE OF.

NEXT SLIDE, PLEASE.

SO, IN ESSENCE, THAT, UM, YOU KNOW, KIND OF CONCLUDES OUR PREPARED REMARKS AS IT RELATES TO THE AUDIT PROCESS THIS YEAR.

UM, BUT IF THERE ARE ANY QUESTIONS THAT THE COMMITTEE HAS, WE ARE MORE THAN HAPPY TO ADDRESS THOSE AT THIS TIME.

CHAIRMAN, CHAIRMAN, I THINK YOU'RE ON MUTE.

MUTE.

HOW ABOUT NOW? HOPEFULLY YOU CAN HEAR ME.

AND I WAS JUST THANKING MS. DUNLAP, UH, FOR THE PRESENTATION.

I THINK WE, UH, YOU KNOW, HAVE HAD YOU WORK WITH US, UH, IN THE PREVIOUS FEW YEARS, AND SO I'D JUST LIKE TO OPEN IT UP NOW FOR ANY OF THE, UH, COMMITTEE MEMBERS THAT MAY HAVE ANY QUESTIONS.

YES, COUNCILWOMAN SANDOVAL.

I, HI.

UH, THANK YOU FOR THE PRESENTATION.

UH, WHEN YOU SAY,

[00:20:01]

THE HIGHWAY PLANNING AND CONSTRUCTION PROGRAM MM-HMM.

, CORRECT.

THANK YOU.

COULD YOU TALK A LITTLE BIT ABOUT WHAT YOU, HOW A TESTING FOR A PROGRAM LIKE THAT WOULD OCCUR? SO WITH RESPECT TO, UM, SINGLE AUDIT, THERE ARE, UM, BASICALLY 14 COMPLIANCE REQUIREMENTS THAT ARE PRESCRIBED, UH, BY THE, UH, FEDERAL AND STATE, UM, AGENCIES.

AND SO FOR THE FEDERAL SIDE, UM, THEY BASICALLY OUTLINE UP TO SIX COMPLIANCE REQUIREMENTS THAT ARE REQUIRED TO BE TESTED.

AND SO BASED ON THOSE REQUIREMENTS, WE'LL PERFORM AUDIT PROCEDURES FOR, UH, EACH OF THOSE AREAS.

SO FOR EXAMPLE, IN MOST, UH, SINGLE AUDIT ALLOWABLE COST IS ONE OF THE REQUIREMENTS.

AND SO WE'LL PULL A SAMPLE OF COSTS THAT HAS BEEN CHARGED TO THE, UH, IN THIS INSTANCE, THE HIGHWAY PLANNING AND CONSTRUCTION CLUSTER.

AND WE WILL, UH, LOOK IN DETAIL AT THOSE COSTS IN RELATION TO THE GRANT AGREEMENT PRESCRIBED BY, UM, THE PARTICULAR, UH, FEDERAL AGENCY, UH, ANY LAWS AND REGULATIONS TO ENSURE THAT THE FUNDS THAT ARE BEING SPENT ARE IN ACCORDANCE WITH THE PROGRAM.

UM, AND SO THAT'S JUST AN EXAMPLE, UM, OF ONE OF THE COMPLIANCE REQUIREMENTS THAT WE WOULD TEST.

BUT THERE'S TYPICALLY ON A FEDERAL SIDE UP TO SIX ON THE STATE SIDE, UM, IT COULD BE UP TO 14.

WE MAKE AN ASSESSMENT ON WHETHER A COMPLIANCE REQUIREMENT IS APPLICABLE TO THE PROGRAM, AND THEN WE DETERMINE IF IT'S DIRECT AND MATERIAL BASED ON A MATERIALITY THRESHOLD.

AND THEN PERFORM AUDIT PROCEDURES, BOTH FROM A COMPLIANCE STANDPOINT.

AND WE ALSO LOOK AT THE CONTROLS, UM, AROUND THAT PARTICULAR AREA.

SO IF APPROVAL OF AN INVOICE IS THE CONTROL TO ENSURE THAT THAT PARTICULAR, UM, COST IS APPROPRIATE, THEN WE ENSURE THAT THE APPROVAL WAS NOTED.

AND WHY IS IT CALLED A CLUSTER? SAY THAT AGAIN, SORRY.

AND THE TERM CLUSTER, I JUST WAS UNFAMILIAR WITH IT.

YEAH.

SO ALSO, UH, WITHIN THE GUIDANCE, UM, WHAT THE NUMBER THAT YOU SEE BEFORE, UH, EACH OF THESE PROGRAMS IS CALLED A C F D A NUMBER.

AND SO IF THERE IS MORE THAN ONE C F D A NUMBER IN A PARTICULAR PROGRAM, THEN, UH, BECAUSE THEY HAVE SIMILAR COMPLIANCE REQUIREMENTS, THEN THE FEDERAL GOVERNMENT WILL CLUSTER THOSE.

SO, UM, FOR EXAMPLE, IF I CAN'T REMEMBER ALL THE NUMBERS THAT MIGHT FALL UNDER HERE, BUT IF THERE WAS 20.206, UM, AND IF THE CITY HAD FUNDING RELATED TO THAT PARTICULAR PROGRAM, THEN THAT WOULD BE AUDITED AS A CLUSTER.

OKAY.

AND THEN, UM, MY LAST QUESTION HAS TO DO WITH THE SLIDE 11 AND, UM, I FOUND THE PRESENTATION.

THANK YOU FOR POSTING IT.

UH, THANKS BETH.

UH, ON SLIDE 11 AUDIT DELIVERABLE TO BE COMPLETED.

ACTUALLY, I HAVE TWO QUESTIONS.

UM, I WANTED TO HEAR A LITTLE BIT MORE ABOUT THE T C E Q REPORT AND IT SAYS, AGREED UPON PROCEDURES REPORT, AND, UM, I GUESS I'M NOT SURE WHO, ARE YOU TALKING ABOUT PROCEDURES THAT HAVE ALREADY BEEN AGREED UPON BETWEEN THE CITY AND T C E Q? OR IS, IS THAT SOMETHING ELSE? RIGHT.

SO THE T C E Q, UH, AGREED UPON PROCEDURES REPORT IS BASED ON, UH, A SPECIFIC PROVISION, UM, IN THE TEXAS CODE.

AND SO IT OUTLINES THOSE PROCEDURES THAT WE ARE REQUIRED TO LOOK AT WITH RESPECT TO, UM, WHAT IS CALLED A C F O LETTER THAT IS, UM, SUBMITTED TO T C E Q.

SO, UM, THOSE PROCEDURES ARE ALREADY OUTLINED AND PRESCRIBED FOR US, UM, AS TO WHAT WE NEED TO DO AND BASICALLY WHAT, UM, THE CITY NEEDS TO COMPLY WITH.

OKAY.

AND THEN, UM, LAST QUESTION IS, UH, ONE OF YOUR SLIDES SAYS THE ONE WITH THE CLUSTER SAYS TENTATIVE, UH, FOR SINGLE AUDIT.

I GUESS WHEN WILL THAT ALL BE, UH, DETERMINED AND AND FINALIZED, OR DOES IT CHANGE AS YOU DO THE WORK? WELL, UM, SO WHAT THE CITY DOES FOR US IS, UM, SO FOR THE FEDERAL SIDE, THEY BASICALLY HAVE IDENTIFIED ALL OF THEIR COSTS THROUGH JULY 31ST, AND THEN WE'LL PROJECT THROUGH THE END OF THE FISCAL YEAR, SO THROUGH NINE 30.

AND SO THE REASON WHY WE IDENTIFY AS TENTATIVE IS BECAUSE THERE COULD BE SOME, UH, CHANGES THAT OCCUR, UH, WITH RESPECT TO THE EXPENDITURES.

UM, BUT RIGHT NOW IT'S, UH, IN ESSENCE

[00:25:01]

SO WHAT WE DO IS WE PRELIMINARY START TESTING NOW, AND THEN WE'LL GET A FINAL, UH, SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND SCHEDULE OF EXPENDITURES OF STATE AWARDS AFTER NINE 30, AFTER THE CITY HAS THE OPPORTUNITY TO CLOSE EVERYTHING OUT.

AND THEN WE WILL REVISIT THAT TO MAKE SURE THAT, UM, THE ASSESSMENT THAT WAS MADE ON THE MAJOR PROGRAMS, UM, IS STILL ACCURATE OR IF THERE MIGHT NEED TO BE ANY CHANGES AS A RESULT OF CHANGES IN EXPENDITURES.

OKAY.

THANK YOU.

NO PROBLEM.

OKAY.

THANK YOU, COUNCILWOMAN.

ANY OTHER QUESTIONS FROM ANY OF THE OTHER COMMITTEE MEMBERS? OKAY.

AS, AS YOU'VE HEARD, UH, THIS IS A BRIEFING AND I WILL HAVE AN OPPORTUNITY TO GO AHEAD AND MEET WITH MS. DUNLAP, UH, AND MAYBE DISCUSS ANYTHING ELSE THAT ANY OF THE COMMITTEE MEMBERS CONSIDER RELEVANT THAT THEY'D LIKE TO BRING FORWARD, UH, YOU KNOW, FOR REVIEW, UH, DURING THIS AUDIT.

SO IF YOU HAVE ANY QUESTIONS OR CONCERNS, YOU CAN FORWARD 'EM TO ME AND I'LL PRESENT THEM TO HER AND SHE CAN, UH, LET US KNOW HOW RELEVANT THEY MAY BE IN THE WORK THAT THEY DO.

BUT OTHERWISE, UM, THANK YOU VERY MUCH MS. DUNLAP.

THANK YOU FOR YOUR STAFF.

UH, GOOD LUCK WITH, UH, YOU KNOW, THE NEW ORGANIZATION, BUT WE APPRECIATE THE FACT THAT YOU'RE FAMILIAR WITH US AND HAVE WORKED ON THIS BEFORE.

AND SO, UH, YOU KNOW, HOPEFULLY THAT'LL MAKE A, A GOOD AUDIT CONTINUE FOR US.

SO I THINK THAT WAS THE LAST ITEM ON OUR AGENDA, UH, OTHER THAN TO SAY, UM, IS THERE ANY

[Consideration of items for future meetings]

YEAH, UH, ONE OF 'EM THAT, UH, TROY AND I SPOKE ABOUT THIS MORNING WAS, UM, THE UPCOMING, AND IT PROBABLY WOULDN'T BE, WELL, IT COULD BE, UH, THE UPCOMING COMPLETION OF THE FROST TOWER AND THE, UH, THE FINANCING AND THE, UH, THE OPERATIONS MAINTENANCE AND CONSTRUCTION OF THAT FACILITY AND HOW, HOW THE FORMA IS BEING MET, PROVIDED TO THE COUNCIL WHEN THAT WAS APPROVED.

SO I'D LIKE TO SEE THAT SOMEWHERE ON THE SCHEDULE.

UH, WE CAN DISCUSS THAT, KEVIN, ABOUT WHEN THE BEST, WHEN THE BEST TIME TO DO THAT IS, BUT, UH, WE'D REALLY LIKE TO SEE ABOUT PUTTING THAT ON THE SCHEDULE SOMEWHERE.

AND THEN, YOU KNOW, THAT'S FOR THE FROST TOWER, BUT SOMEWHERE ALONG THERE ALSO, THERE WERE SEVERAL OTHER PROJECTS IN THERE TO INCLUDE THE CITY HALL, UH, RENOVATION.

UH, I THINK THAT'S AN IMPORTANT ONE.

ALSO, A BIG TICKET ITEM, YOU KNOW, THAT WAS OVER $40 MILLION.

SO THAT'S TWO OF 'EM THAT, UM, WE'D LIKE TO SEE PUT ON THE SCHEDULE HERE IN THE FUTURE.

AND I THINK SOME OF THOSE HAD AN INTERRELATIONSHIP.

AND SO I THINK IT'S IMPORTANT TO KIND OF TIE ALL THOSE RELATIONSHIPS TOGETHER.

I UNDERSTAND.

YEP.

ABSOLUTELY.

OKAY, THANKS.

YES, SIR.

OKAY.

ALSO, I WANNA MENTION THAT, UH, WE DID NOT HAVE ANY CITIZENS TO BE HEARD SCHEDULED FOR THE MEETING, BUT I BELIEVE ALL OF THE COMMITTEE MEMBERS RECEIVED, UH, SOME MEMOS THAT WERE SENT OUT REGARDING SOME OF OUR AUDIT BUSINESS.

AND SO, UH, I ENCOURAGE YOU TO BE SURE TO READ THOSE, BUT I THINK THAT CONCLUDES THE BUSINESS THAT WE HAVE AT HAND, UNLESS ANYBODY ELSE HAS ANYTHING THEY WANNA MENTION.

OKAY.

HEARING NONE AGAIN, I WANT TO THANK EVERYBODY WHO ATTENDED.

THANKS.

ALL OUR COMMITTEE MEMBERS.

UH, AND LET'S SEE, OUR NEXT COMMITTEE IS SCHEDULED FOR OCTOBER 20TH.

SO LOOK FORWARD TO SEEING YOU ALL THEN.

THANK YOU VERY MUCH.

HAVE A GOOD DAY.