10-01-2002 Special Called Regular Meeting

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e e Audit Committee Meeting Minutes - October 1, 2002 - Page 2 On one occasion, Mr. Strong was employed by the City of Baytown, but that was prior to Mr. Tiller being an auditor for the City. That is the extent of his knowledge of Mr. Strong. As for Mr. Reff, Mr. Tiller met him the day he was interviewed during the City's audit, and has no further relationship with him. As for Mr. Herrera, the situation is the same as with Mr. Reff, no further relationship with him. Beginning with the Table of Contents, Tab 2, as in the draft report, this contains most of the analysis done, as well as the expanded analysis requested by the City. There are two additional tabs, which the draft did not have. Tab 11 is the list of the cardholders and employees we interviewed. Tab 12 is the engagement letter, which is the normal procedure to be included in the final report. The transmittal letter precedes Tab 1; the letter is unchanged except for one paragraph, which basically outlines our two objectives for clarification. In addition, the next to the last paragraph, which says in compiling the detailed transactions found in tabs 3-10, they began with copies of the original source documents. These tabs are not an expansion of the internal report, but a database constructed without regard to that report. As Mr. Tiller explained to those that visited with him; he thought the internal document, prepared by Finance, was excellent, but the City wanted to begin anew, including the entire scope of transactions. In the audit firm's opinion, the handling by the Director of Finance Cynthia Alexander in terms of her reporting what she had found through the report to the Audit Committee was entirely appropriate; the firm applauds that action. In the world we live today, your Chief Financial Officer needs to feel that freedom to make contact if they so deem. The firm found the City's report to be a very useful document and actually to be accurate based on the limited scope that it contained. Tab 1, the agreed upon procedures are identical to the draft document. These were already reviewed in the September 17, 2002 meeting. Page 2, the engagement procedure summary, the listing of 14 items is the crux of the body of information reviewed in compiling this report. At the auditor's request, the City attempted to compile, to the extent practical, those documents into the second bound item. These are really City documents that exist in their offices. The firm attempted to compile a brief index; not every document, because some of these items are a whole set of documents. Page 3 remained the same, explaining the American Express and Visa procedures, internally. Page 4 is the summary which has a few wording changes for clarity. Mr. Tiller read the summary verbatim. The following recommendations remain the same as the draft report.