HomeMy WebLinkAbout09-17-2002 Special Called Regular Meeting•
MINUTES OF THE SPECIAL CALLED REGULAR MEETING
OF THE LA PORTE AUDIT COMMITTEE
SEPTEMBER 17, 2002
IN TRANSCRIBING THE AUDIO TAPE, IF THE
QUESTIONER/COMMENTOR WAS NOT SPEAKING INTO A
MICROPHONE, IT WAS DIFFICULT TO HEAR THE
QUESTIONS/COMMENTS CLEARLY
OR TO KNOW WHOM THE QUESTIONER WAS.
1. Call to Order
The meeting was called to order by Chairperson Chuck Engelken at 6:00 p.m.
Members of Committee Present: Chairperson Chuck Engelken, Councilmembers Howard
Ebow and James Warren
Members of Committee Absent: None
Members of City Council Present: Mayor Norman Malone, Charlie Young, Bruce
Meismer, Peter Griffiths and Barry Beasley
Members of C~ Executive Staff and City Employees Present: City Secretary Martha
Gillett, Director of Finance Cynthia Alexander, Assistant Director of Finance Michael
Dolby, City Manager Robert Herrera, Police Chief Richard Reff, Director of
Administrative Services Carol Buttler, Acting City Manager John Joerns, and
Administrative Assistant of the City Manager Crystal Scott
Others Present: John Black, Tim O'Connor, Sylvia Herrera, Alan Buttler, Stan Sherwood,
Spero Pomonis, Bill Scott, Attorney Randall B. Strong, A. J. France, Sue Gale Mock
Kooken, Dottie Kaminski, Bill White, Dorothy White, Charlie Doug Boyle, Colleen
Hicks, Maggie Anderson, Rob Roy, Bruce Koenig, Wade M. Allen, Ryan Harrison, and
Tim Bush
2. Consider approval of the Minutes of the Regular Meeting of the City of La Porte Audit
Committee held on July 30, 2002.
Motion was made by Howard Ebow to approve the minutes as presented. A second by
James Warren. The motion carried unanimously.
3. Committee to receive and review draft report from independent auditor, Mark Tiller, of
Tiller and Company; and the Audit Committee and City Council members to provide input
to independent auditor.
Chairperson Engelken instructed the audience that questions for the Auditor will be
limited to Committee members and City Council members. Any member of the public
with questions or comments about the audit may file these in writing with the City
Secretary's Office by 4 p.m. on Thursday, September 19, 2002; they will be forwarded to
Mr. Tiller for consideration in the final audit report.
Upon receipt of the report from Mr. Tiller, the Audit Committee will consider calling a
meeting for Monday, September 23, 2002, at 4 p.m. to receive the final report. At the
conclusion of that meeting, members of the press and public may obtain copies of the final
•
CJ
Audit Committee Meeting Minutes -September 17, 2002 -Page 2
report from the City Secretary's Office under the Texas Public Information Act. With
that, Mr. Tiller was introduced.
Councilmember Warren requested to speak prior to Mr. Tiller speaking. Mr. Warren
requested it be noted, for the record, that with exception of hiring Mr. Tiller, according to
the hiring process; any other action that has went on with the auditor, Mr. Warren had no
part of.
Mr. Tiller distributed copies of the draft audit report to Council; outlining and walking
through the mechanical organization of the report; then describing how they went about
performing their work in compiling the report. On reviewing the report, they added some
detail.
Before Tab 1, you'll see the transmittal letter. Immediately following Tab 1, you will see
our written report. Behind Tab 2, you will see a dollar summary of transactions we
reviewed during this engagement; explanations of headings and notations that will help
you walk through the detail schedules that are attached in the back; and analysis of
transactions in summary form, which will be explained. Tabs 3-10 will be detailed
transaction schedules, by credit card holder, for the entire audit period, approximately 68
months.
Mr. Tiller explained how they tried to understand the needs in terms of this engagement,
and fashioned their engagement letter with 10 points in the letter. Once the letter was
performed, we basically went through Chairperson Engelken to request and obtain all
information, in fairness to all parties involved.
Our review began primarily with looking at all of the statements from Accounts Payable
that were used to make payment for American Express and Visa Bank Card bills during
the audit period. Those, from the accounting standpoint, are your beginning source
documents for this type of engagement and as our beginning database.
We have looked at what was paid, listed out every transaction, and looked at the
documentation behind the statements. From there, we requested certain accounting
information; looking at different types of transactions as they possibly interfaced with the
credit card system, travel reimbursement forms and information. We looked at numerous
documents the City uses that may interface with the credit card process.
Once we reviewed all that information and had some understanding of the transactions that
had transpired, we questioned and interviewed fifteen non-card holder employees in an
attempt to understand the process. We approached this process beginning in reverse order
and worked up to the point of the accounting chain, to the point of purchase. Ultimately,
we interviewed all six of current credit card holders to gain an understanding of what was
developing in the system and how the paper flow and the approval process for these
expenditures were occurring. You will see in the report a description of this process, as
we saw it as a result of those procedures.
After we completed the interviews, we requested (again through Mr. Engelken) all credit
card holders to provide us additional support/information/calendars, anything of support to
add additional documentation to these transactions. This will be explained as we move
further in the report.
•
Audit Committee Meeting Minutes -September 17, 2002 -Page 3
Once we obtained that information, we added that to our database and compiled an
accumulation of the support that existed at the time, along with other support that came to
us from the gathering process. This has basically been compiled in a format that will be
meaningful to the City, in terms of understanding what occurred. We have lengthy lists
for improvements in the system, with detail and analysis.
The transmittal letter indicates covering approximately asix-year period, sixty-eight
months. The two primary objectives in this engagement; one to review present fmdings of
specific data related to supporting American ExpressNisa card charges paid within the
audit period, and adequately summarize our findings to enable Council to determine the
propriety of the expenditures resulting from the use of those cards. The second objective
was to review the current procedure related to American ExpressNisa Cards and provide
useful information to Council; enabling implementation of improvements and the internal
control system surrounding the card use.
The last paragraph is very important; we appreciate the openness and professionalism of
all the employees with which we came in contact. We were able to freely obtain, without
restriction, requested information and interview employees as needed regarding our
engagement. In addition, we appreciate your patience with our timeline sliding a couple
of weeks. However, there was a great deal of detail information that needed to be
gathered and properly assimilated.
Tab 1-the written report is approximately six pages long. The first page is a
summarization of the ten agreed upon procedures (verbatim), and the body of the
engagement letter. Most of you have probably seen these items.
Page two is the engagement procedure summary. These fourteen items give you a flavor
of the significant documents that we reviewed during this engagement. Note the reference
to the interviews of employees.
Page three is the summary of procedures that we see happening in the City's credit card
process. The City's current procedures related to credit card use and payment are not
outlined or expressed in any written document, policy or ordinance. The current unwritten
procedures appear to have been in place for many years, some dating prior to the hiring of
the current City Manager. That continues to explain the mechanics of the process. The
last sentence states that use by each card holder varies significantly, as we see them in the
city records.
The American Express bill process describes how the information is assimilated, and how
it is forwarded to Accounts Payable. However, receipts may be missing or not available at
the time of the statements. They are filed in the assistant's or secretary's area for
reference. Quite frankly, this is what has led to a big debacle in your documentation
surrounding your credit cards. If you read the entire paragraph, you will see this is a
function of the time line/time pressure when the bill is received in your offices, statement
date, and deadline, this creates a timing problem.
The second category describes the Visa process, which is somewhat different. Each
cardholder receives their statements directly, the American Express bill goes to the City
Manager's office, with all American Express cardholders on that statement, creating an
u
•
Audit Committee Meeting Minutes -September 17, 2002 -Page 4
accumulation situation. Most of the support for those cards does not reside in Accounts
Payable, however, support resides in the office of the cardholder, such as approval of their
statements, initial check request and support in the office. Account Payable's reliance is
primarily on the signature, not addressing if all support is attached. Under existing
circumstances we would not expect Account Payable to perform verification or determine
if adequate support exists. Read the last 2 paragraphs regarding this.
Our recommendations clearly establish authority to consider a broad council ordinance,
but with a detailed administrative policy, existing manuals and policies. These would
need to be revised to be consistent, clearly define what expenditures that are not covered
by car allowances, clearly identify and document per diem rate, and card payment and
documentation should be more closely aligned with your current purchasing procedure.
All statements should begin at Accounts Payable. Develop processing form with timely
accumulation. Somebody other than the cardholder or assistant should approve all
payments prior to going to Accounts Payable, plus we recommend an executive level
employee be delegated to quarterly review all credit card accounts.
The detailed transactions of credit card use, are points to keep in mind as you look at
summary of these transactions. Note credit cards used by the Mayor, the City Manager
and the Assistant City Manager were used to book flights/hotels for other employees and
Council. There were two cardholders listed which are former employees, whom do not
have benefit of receipts in their office or historical calendars, as do existing employees.
Page 6 gets to the heart of the matter. Documentation was poorly handled. The auditor
understands why internal or external questions arose about specific credit card
transactions. This was poor business practice. Council should study these transactions to
draw conclusions as to whether credit cards were or are being appropriately used. We
listed some questions that Council should address, and use as a partial basis for any action
that might be taken regarding employees or policies.
Tab 2 is the summary of dollars by the cardholder. Total transactions and total net dollars
expended in credit cards during this period totaled $143,170.24. The net dollars are due to
some reimbursements. All the transactions are shown in gross. There are some
employees who had both Visa and American Express; keep in mind the Visa card was not
implemented by the City until February of 1991. Remember to note the cards were not
always used by the cardholder themselves, but for other employees/Council travel.
Page 9 is a limited analysis of transactions you will see in detail in Tabs 3-10. Mr. Tiller
explained the breakdown of the transaction columns. A percentage column was given by
cardholder. The next to last category is food and beverage; a large number is food and
beverage for the entire audit period (breakdowns of support and without support).
Tab 3 breakdowns each individual with their total. Page 8 is an explanation of headings
on these particular schedules. The middle column "original support" is our review; the
next column to the right is "type of expenditure", "U" is unclear what it was for; and the
right hand column is "subsequent documentation" after gathering all the additional
requested support, calendars, receipts, memo of explanation, which came in a number of
different forms. We considered that information to be credible and supportable of that
transaction and considered that to be documented. When "0" appears, there was no
documentation for the expenditure. This is how they compiled the analysis. The way to
utilize this document is to spend time reviewing those schedules and looking at the
• •
Audit Committee Meeting Minutes -September 17, 2002 -Page 5
documentation that was presented and the nature of the transactions. Make your
determination on whether you believe those things, using as an outline the previous, earlier
questions. As a result of not having written policies and ordinances governing; it is
basically impossible for me to make the judgment as an auditor. With your role as
council, hopefully, you can take this information and appropriate questions mentioned
earlier, and use the three questions I presented to you earlier in interpreting the
information.
I have been instructed to let you know, Council, as well as cardholders, my office offers
each of you individually an opportunity to schedule an appointment during the remainder
of this week, prior to the issuance of the final report. Since we'll collect these reports at
the end of the day for review; spend time looking at the report, ask specific questions you
may have as a result of tonight or further looking at the report. It would then be our plan
to incorporate any changes based on any questions or analysis.
We have a representation letter that we will obtain and need to have signed during the
remainder of this week as documentation for our files. Based on your changes, and
additions based upon your questions; we plan to deliver the final report next Monday
afternoon.
Councilmember Griffiths questioned if there is a designation of reimbursement in the right
hand column; that number has been netted into the total dollars. We wanted to show you
the gross dollars that were expended, but to the extent, either the cardholder themselves
reimbursed; or if they were on a trip, a third party reimbursed the City. We traced those
reimbursements in and then netted those numbers out. Let me give you an example; go to
the back of Tab 5, page 69, you will see the total dollars, you will see we have netted some
dollars to arrive at the total that is on the summary page, and those are designated. We
tried to identify those in the right hand column.
Mr. Griffiths questioned the interview choices and procedures. Once they reviewed the
original statements that were paid, we were able to determine, through seeing names of
approval, coming out of various offices, which were a part of those documents. We spoke
with your Director of Finance to determine the key people, from an accounting standpoint,
that handle certain areas. From that we tried to draw a line from payment back to each
cardholder and determine what people would be involved in that process. All of those 15
people are either currently or over the six-year period, at one point or another, had some
contact with this process. Either they were opening the invoice, collecting the receipts,
assistants, or accounts payable personnel confirnung they were mathematically correct and
forwarding them through the system to have a check cut.
Councilmember Bruce Meismer asked for further clarification on interview choices, plus
the names of those whom were dropped from the interview list.
Mr. Tiller met with Mr. Joerns and Chuck Engelken regarding choice of those to be
interviewed. The interviewees dropped from the list were not considered to be in a role
that was necessary during the audit process.
Councilmember Barry Beasley questioned if additional support was requested for those
being interviewed. A memo was sent to all the cardholders with brief requests to provide
additional support during the time period in question. These schedules, as you see them
here, have not been reviewed by those cardholders. To the extent I have something on my
schedule that is not supported, they have obviously not had an opportunity to see that and
• •
Audit Committee Meeting Minutes -September 17, 2002 -Page 6
to verify. In one case, however, the person responding took their entire universe and
responded, per line item. In the right hand column, if they had no further support
explanation, it was left blank, but they had seen the line item and knew it was there. A
question was asked regarding who that person was. Mr. Herrera's office provided a
detailed spreadsheet due to the calendars being in their office and the body of invoices.
Mr. Herrera reviewed the document; the spreadsheet and invoices were forwarded to Mr.
Tiller.
Mr. Griffiths brought up the statistics of the former employees on low support of their line
items. When looking at the statistics on page 9, it was not surprising because they did not
have the opportunity to respond. You then have an overview that support did not reside in
your Accounts Payable area, but resided in other areas that is not out-of--line with what we
expected; we expected their percentages to be higher.
Mr. Meismer questioned the information that was compiled within the offices themselves;
there was a certain body of information that was kept with that cardholder or their
subordinates. In this interview process, I assume you talked with all the subordinates of
those responsible for gathering information. Mr. Tiller stated that to his knowledge, this
was correct. As you know, some of those personnel have changed. If they were still an
employee, we attempted to interview them.
Councilmember Howard Ebow gave an analogy of the process of credit card
documentation being handled poorly, like a puzzle with missing pieces.
Mr. Meismer questioned common expenses, some of the same charges that were multiple
charges for Council trips or other activities, who would be the person or did you establish
who the person would be to make the decision who's card that was applied to. The audit
did not clarify who would be responsible.
Mayor Malone noted on page 88 was a good example of this. There are 12 things, with
the same price that are documented, with one card paying for that, hotel being the same.
Mr. Tiller had some comments along those lines. He knows that American Express is not
that easy to deal with. Had any thought been given, through Purchasing, how to get a
credit limit appropriate for the cards being used and some clear delineation. If that card is
full, then the next available card is used to accomplish the need; to allow them to fmish
booking the remaining reservations.
There was a question on page 101 (an error in presentation). As late as last week, the
auditor was receiving documentation and this was an oversight on their part.
Chairperson Chuck Engelken asked about the questions on page 6, could you apply a
dollar amount? The appropriate use of the three questions is of the detailed transactions
and not the totals. These are the three questions you need to be asking yourself as you
look at each specific expenditure in the detail schedules, not as a total. You need to go to
each tab and make sure you understand the job function the person holds, ask yourself
what is your expectation, should they be using a card for city business for travel, for
meals, for miscellaneous purposes. I think the answer will vary depending on their job
function. After you review this, you should get a feel whether these are appropriate. This
should give you a feel of the parameters that you need to establish on a go-forward basis,
as it relates to each cardholder.
Audit Committee Meeting Minutes -September 17, 2002 -Page 7
Mr. Meismer requested the determined per diem rate. The established per diem rate was
looked at on a limited basis as it interfaced with credit card charges. We saw that on
some occasions, several months ago, the City Manager was using a per diem rate equal to
the Council rate. We didn't find anything that established authority for that and we did not
find anything that did not establish authority. The inconsistency of documentation for
meals was, quite frankly, pretty uniform from all the cardholders. Some employees,
probably due to their job function, had a need to use their card for other things;
unfortunately that documentation was not all that well put together.
Mr. Meismer inquired about the fact that there was no one governing the process, or taking
responsibility for issuance of the credit cards. Were questions asked whether any cards
had been requested or denied, or anything along those lines? The auditor is not clear on
whom you would ask to be authorized for a city credit card. In reviewing all the
documents, the Director of Finance and the Purchasing Manager stated it was not their
responsibility.
Quite frankly, there is a document where the City Manager was given a card when he was
employed and nobody told him he was responsible for that area. An attendee questioned
where that document came from. The auditor does not know. In the auditor's view, it's a
common practice. Have there been any recent requests for cards, and who would sign for
them or initiate the process? It is our understanding, when the need for Visa cards was
determined, it came about due to problems with booking things through American
Express. It looks as though they went forward to put documentation together to obtain
those cards. They would like to see auditors in that particular area, for Council to clearly
establish where this is going to lie. It really should be a duel function between the City
Manager and Purchasing Department, making a joint recommendation to the Audit
Committee for proper oversight for which card and/or who should receive a card. There is
not a clear view on a policy for credit cards, it needs to be clarified. There were no
problems with payments being made on the cards; however, they did not have the detailed
statement; and this has been very time consuming to obtain (approximately two weeks).
The statements were all in line with what they were seeing.
The auditor's timeframe was limited, their engagement letter was signed the beginning of
August. The holiday period interfered with the interview process, plus a friend's funeral,
and scheduling the interview date/time.
A question was asked about information on some purchases that Mr. Herrera did not have
any information on, with the auditors giving him a lead on where he maybe able to get the
information required. Plus, late today, we received a fax from a former employee. This
substance has been incorporated into this report.
Councilmember Young asked if there were any guidelines or criteria that major companies
use regarding limits of spending compared with the salary. It varies widely across the
board; the answers can be varied according to the entity. The Internal Revenue Service
does have their own guidelines.
We can certainly compare the process, procedures and standards for use and
documentation, but even city-to-city, the difference for road maintenance, etc., is difficult
to compare. City budgets are hard to compare with each other with the broad parameters,
it's hard to compare yourself, and there's some level of benchmarks. Each physical
location for the city dictates the need for their budget. The same kind of thing you will
~.
n
Audit Committee Meeting Minutes -September 17, 2002 -Page 8
find with card use, the size of executive staff will dictate card use, how your accounts
payable function, etc. For dollar level, you will be hard pressed to find.
Discussing the category with no support, further dividing that into types of expenditures,
there needs to be more information. Mr. Meismer asked if there were any outside or
unsolicited contacts to the auditors. Mr. Tiller could not think of anyone that was not
employed by the City. It was the auditor's opinion that the documentation looked
reasonable in terms of presentation. For the most part, they were looking at xerox copies
of original receipts, both in Purchasing and in subsequent data. You can imagine the
quality of that, but no reason to think they were not legitimate. The responses returned by
everybody looked very plausible.
The current Purchasing Policy Manual has a sentence on the first page (paraphrasing; This
manual attempts to address all purchases of the City regardless of its source). You can
construe that to be credit cards, that is why we would like to see the issuance reside in
Purchasing, their manual to dovetail and to be clear of credit card usage.
Mr. Warren voiced concern about the status we are still in. Mr. Tiller assured him they
now have all the transactions of what documentation existed, and a policy to compare.
Mr. Mosteit also questioned the status. What the auditors are telling us is, as we look at
this information, it is reasonable to assume that these are proper transactions for the City.
The level of support could go either way. Determine whether or not, in your opinion, the
nature of the transaction, the level of the transactions, were within reasonable expectation
for the City of La Porte for that job function. For example, the Director of Parks and
Recreation, what expenditures would you expect for him, would you expect to see 20
meals a month, 5 meals a month, guidance on how to use the card and how much.
To be honest with you, there is no direction in your documents from the point of
interview, to use as a good example that states the cardholder cannot procure that
particular purchase. The Purchasing Manual does not give any guidance. These
transactions do not seem to be beyond the bounds of expectations. Unfortunately, the job
will fall back on Council due to the lack of guidance, and the lack of guidelines being
documented.
You have more information than at the beginning of the audit. You now know more about
your process than you knew several weeks ago. I can tell you now, that with these
transactions, we did not see anything fraudulent. We did not see any type of purchase that
we felt was clearly an asset, such as, a trip to Hawaii where no meeting was being held.
You can make an argument that some of these purchases in the miscellaneous column; if
you believe that the purchasing document covers all purchases, you could say there was a
violation of the purchasing document. However, one of the memos I read from your
Purchasing Manager, basically said this document does not cover this. There's a wide
array of misunderstanding amongst all of your people about what governs and what does
not govern.
Go back to page 2, those are the governing documents. Provide a separate document from
a binding perspective that houses those documents. Mr. Tiller explained the report
regarding documentation arriving at a later date and notation in the far column. Also, a
trip file has a lot of the documents and this needs to be referenced in the accounts payable
documentation. These are logistics that need to be worked out. If you look at the
engagement letter, that what is not absent in other settings; generally there is some level of
Audit Committee Meeting Minutes -September 17, 2002 -Page 9
direction to be able to make those types of determination. Generally, you will find some
type of Travel Policy, Purchasing Policy that clearly says that it governs those levels of
transactions. Quite frankly, in your case, those do not exist.
Mr. Tiller instructed the City to be sure we are all staying within the guidelines the City
operates under. Ask additional questions. The auditors will be addressing specific
requests and gathering information.
Statistically, in terms of this information, any auditor, whether the District Attorney's
office or anybody else, will be hard pressed to give you comparison between this and any
other entity. Probably what that type of office would do, is look at our report, look at all
the files we built, determine if they see any problems from their perspective, based on their
guidelines and charges. Again, Mr. Tiller stressed the opportunity to visit with him for
further explanation of the draft report.
As an example of documentation for a meal, what was going on, who was in attendance,
the receipt and a reasonable explanation of that meal. This would be a reasonable
transaction. If they were having this meal with someone, and you did not feel they should
have the City pay the bill, depending on their level, this will need to be clarified by
Council. You need to decide how much overlay of control you want.
The most poorly documented area in most other entities is why you were there. This
needs to be done as the document for payment is prepared. The auditor saw varied types
of handling of event type documentation; all the way from the charge slip, the trip file or
seminar file, event file, generally more than one person as a group. Accounts Payable
needs to refer to cross-reference on check requisitions where the documentation will be
residing for those types of things. This should not happen at the post statement standpoint;
this should happen upfront, prior to submission of that invoice for payment. Mr. Meismer
asked if this was common practice, with support being collected by the secretary/assistant
and/or access of a calendar, substantiation of why and what was going on was not done
very often. In the auditor's opinion, all the records they asked for and obtained were for
further support and to fill in the gaps, In my opinion, as I expected this was prepared in
response to our memo and did not exist in files, they had to go and compile that
information
A function in the American Express case is you get one statement, which covers three or
four cardholders; and comes to one assistant, or secretary. Their responsibility is to try
and find something to get the statement documented and sent on to accounts payable
before it goes past the delinquent payment date. You are a very busy operation and the
emphasis is not put on maintaining the records; they did not even have a form to help them
accomplish this task. They may have to buttonhole an employee to get an explanation.
If a cardholder who generally did not have much activity; when the statement arrived and
they had two charges, my suspicion is probably a telephone call was made, asking for
detail charges on this statement. If it arrived in time, the statement was sent forward.
There were no clear directions for that person to follow on going through that process. A
comment from the audience was there was no clear direction of who should be the
recipient of the statements. The American Express statements were received by the
Administrative Assistant of the City Manager. If she had been given receipts by any of the
cardholders, she would attach them and verify their validity. Even without a receipt, she
would know what the cardholder stated the charge was. A check request was prepared and
Audit Committee Meeting Minutes -September 17, 2002 -Page 10
sent forward, often times receipts would follow and be filed. There are no significant
changes in this process; the auditor thinks there were variances when someone was out,
the other person may handle in a different way.
The auditor has a request for the name of the people they interviewed, and the one person
removed from the list. The reason she was removed is that she was not part of the process
during the audit period.
Under Tab 2, the auditor has the following revisions; see the 2°d set of columns dealing
with charges of no support, you want to see what that looks like based on our review of the
first set of information versus the second set of information. Slicing that information by
type of expenditure, so you can see what's going on there. Then we are going to add some
additional dollar information in the far right hand column, as it relates to transactions
greater than, but not less than $500. We will provide you the same schedule, with the
former employees removed, so you can see that information exit those dollars. We are not
sure whether or not you want a copy of all of the documents under Tab 2 or maybe Tab 1,
page 2. We will be glad to provide those to you.
The final report should be ready on Monday, September 23, 2002. Because of time
constraints, whatever questions you forward to me; the City would like as a tab listing the
questions. You need to remember that some cardholders had a card a longer period of
time than others. The auditor will not know what comes up after visiting their office, if
delayed, we will have contact Chairperson Engelken. Tomorrow, each of Council will call
to discuss and schedule interviews, plus the credit card holders to see where we stand.
5. Director of Finance Cynthia Alexander provided the Committee with an overview of the
Third Quarter Investment Report.
6. Committee Comments
Committee Member Howard Ebow thought the City was at the point that it of completion,
but we still have more work to do.
Committee Member James Warren is disturbed; he feels he was circumvented through this
whole process. He has some questions, some of the things he heard during the interview
stated this audit would solve and answer some of the questions. The City is back to square
one. There is still much more work to accomplish.
Committee Member Bruce Meismer feels the report was reasonably comprehensive,
though there were other things he would of liked to have seen in the report. There is good
information in the report; we could use this tool to garner some trends and activities.
Councilmember Barry Beasley also felt the report was very comprehensive, they did a
good j ob with the facts and trends.
Chairperson Chuck Engelken was disappointed in the delays, and the timing of the
interview. He feels there is no need to meet until the auditor is through gathering
information. He feels like a traffic cop through this entire process.
Audit Committee Meeting Minutes -September 17, 2002 -Page 11
7. There being no further business to come before the committee, the meeting was adjourned
at 8:20 p.m.
Respectfully submitted,
Martha A. Gillett, TRMC
City Secretary
Passed and approved on this the 1'` day of October 2002.
~!~~
Chuck Engelken, Chairman
•
CITY OF LA PORTS
Interoffice Memorandum
TO: Howard Ebow, Councilman
Chuck Engelken, Councilman
James Warren, Councilman
John Joerns, Acting City Manager
FROM: Cynthia Alexander, Director of Finance
Shelley Wolny, Investment Officer
IJATE: September 17, 2002
SUBJECT:' Quarterly Investment Report
The City's investment portfolio has been stable for the third quarter of the fiscal year. The yield
has been between 2.44% and 2.63% over the past 3 months. The average return on the portfolio
for the third quarter of the fiscal year was 2.53%, compared to our average benchmark of 3.30%
(see graph belaw). The total interest earned for the 2002 fiscal year is $810,010.
City vs. Benchmark
5.00%
4.00%
3.00%
2.00%
1.00%
O~ O~ Off' O~ Off' O~ Off' Off' Off' 01' Off' 01'
Portfolio Yield 2 Year Yield
At June 34`~ the City's portfolio consisted of 39% in Agency Notes, 61% in Texpool and Logic,
and less than one percent in CMO's (see pie chart below).
We have been steadily investing in Agencies, but due to several calls, the majority of the City's
investments remain in Texpool.
~J
At the end of the third quarter, the City's portfolio consisted of 27% of the portfolio maturing
within 2 years and 61% maturing overnight due to the heavy investment in Texpool (see graph
below). A total of .88% of the City's portfolio matures in less than 2 years.
By Investment 1Vlaturity
®Overnight ~ 1-12 Months ^ 12-24 Months ^ Over 24 Months
Currently, the 3-month T-Bill is a 1.73%; 2 year, a 2.99%; 5 year, a 4.19%; and, the 20-year is a
5.65% (see yield curve below).
Yield Cua~ve
7.00%
5.00%
3.00%
1.00%
0 5 10 15 20
3 Months Ago Current
Rates appear to have stabilized, but they still remain at low levels. The City will continue to
focus on laddering the portfolio to maintain a constant cash flow and a liquid position.
2 Year ~'-lvote
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00°.0
0.00%
~`L ~~` ~(° ~~ ~O ~`l. ~~ ~(° aft 00 OrL
In summary, we will continue to invest the City's funds in conservative investments, as
authorized by the Public Funds Investment Act, always keeping in mind Safety first, and then
Liquidity and lastly Yield.
• •
Monthly Summary Report of Cash Management for June 2002
I. Purchases and Associated Interest Rates
START END INVESTMENT
TYPE DATE
COST RATE
CMO*
AGY
AGY
AGY
AGY
AGY
AGY
AGY
AGY
AGY
AGY *
AGY
AGY
AGY *
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 1 02
6 5 02
6 1 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
6 30 02
t 52,627.40
1,000,000.00
2,500,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
TEXPOOL 6 1 02 6 5 02 20,688,399.96
TEXPOOL 6 5 02 6 14 02 19,688,399.96
TEXPOOL 6 14 02 6 27 02 19,383,791.34
TEXPOOL 6 27 02 6 30 02 18,883,791.34
TEXPOOL 6 30 02 6 30 02 18,913,275.79
LOGIC 6 1 02 6 30 02 3,734,764.46
LOGIC 6 30 02 6 30 02 3,740,593.99
12.290%
4.630%
4.510%
4.375%
4.050%
4.000%
3.620%
3.500%
3.500%
3.420%
3.1
3.0
1.834%
1.801%
1.816%
1.955%
1.986%
1.899%
1.852%
2. Calculation of Purchasing Effectiveness
DAYS INVESTMENT DAYS RATIO OF ADJ 2 YEAR ADJ
LD COST * COST TOTAL RATE RATE T-BILL T-BILL
30 152,627.40 4,578,822.00 0.404% 12.290% 0.050% 3.220% 0.013%
30 1,000,000.00 30,000,000.00 2.645% 4.630% 0.122% 3.220% 0.085%
30 2,500,000.00 75,000,000.00 6.613% 4.510% 0.298% 3.220% 0.213%
30 1,000,000.00 30,000,000.00 2.645% 4.375% 0.116% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 4.050% 0.107% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 4.000% 0.106% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 3.620% 0.096% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 3.500% 0.093% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 3.500% 0.093% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 3.420% 0.090% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 3.420% 0.090% 3.220% 0.085%
30 1,000,000.00 30,000,000.00 2.645% 3.330% 0.088% 3.220% 0.085%
25 1,000,000.00 25,000,000.00 2.204% 3.100% 0.068% 3.160% 0.070%
30 1,000,000.00 30,000,000.00 2.645% 3.005% 0.079% 3.220% 0.085%
4 20,688,399.96 82,753,599.84 7.297% 1.834% 0.134% 3.220% 0.235%
9 19,688,399.96 177,195,599.64 15.624% 1.801% 0.281% 3.160% 0.494%
13 19,383,791.34 251,989,287.42 22.219% 1.816% 0.404% 2.920% 0.649%
3 18,883,791.34 56,651,374.02 4.995% 1.955% 0.098% 2.850% 0.142%
1 18,913,275.79 18,913,275.79 1.668% 1.986% 0.033% 2.900% 0.048%
29 3,734,764.46 108,308,169.34 9.550% 1.899% 0.181% 3.220% 0.308%
1 3,740,593.99 3,740,593.99 0.330% 1.852% 0.006% 2.900% 0.010%
TOTALS 119,685,644.24 TOTALS 119,685,644.24 1,134,130,722.04 100.00% 2.63% 3.12%
T-BILL = U.S. TREASURY BILL; T-NOTE = U.S. TREASURY NOTE; T-BOND = U.S. TREASURY BOND; CMO =COLLATERALIZED MORTGAGE OBLIGATION; TEXPOOL =TEXAS LOCAL GOVERNMENT
INVESTMENT POOL; AGY = U.S. GOVERNMENT AGENCY; LOGIC =LOCAL GOVERNMENT INVESTMENT COOPERATIVE. INVESTMENTS MARKED WITH AN ASTERISK (*) REPRESENT LONG TERM
INVESTMENTS AND ARE BROKEN INTO ONE MONTH SEGMENTS FOR CALCULATION OF PURCHASING EFFECTIVENESS.
1
Monthly Summary Report of Cash Management, Continued
3. Comparison to Performance Indicator 7. Divers4/icotion ojlnvesdnents
2 Year T-Bill
This Months Adjusted Rate 2.63%
- Measurenrerrt Rate 3.12% A. By Investment Type
+/- Adjustment for Past Performance History 0.03%
Performance Rnte for the Morrth (Basis Points) -0.52%
CMO's Logic
This Months Performance Rate Applied 0% 10%
to Interest Earned Formula to arrive Agency Not
at Impact for the Month (16,731.07) 39%
4. F.fjediveness to Date (Since October 1, 2001)
Interest:
Summation Through Beginning of Month (69,148.22)
+1- impact of Investment Purchases (16,731.07)
Summation Through End of Month (85,879.29)
Gain (Loss) on Investments:
Summation Through Beginning of Morrth 0.00
+/- impact of Investment Purchases 0.00
Summation Through End of Month 0.00
Total Impact Through End of Month (85,879.29)
5. Interest Earnings to Date
Interest Earned this Month plus Gain or (boss) 81,837
Total budgeted 1,911,916
Interest Earned Year to Date 810,010
Yet to be earned 1,101,906
Percentage Earned 42.37%
B. By Stated Maturity
Texpool
S1%
Over 24 Months
12-24 Months 12%
27%
1-12 Months
0%
Overnight
61%
6. Market Ya4te and Wei
Beginning Book Value 39,082,776.42
Beginning Market Value 39,105,566.21
Ending Book Value 37,306,497.15
Ending Market Value 37,349,167.89
Beginning Weighted Average Maturity (Mths)
Ending Weighted Average Maturity (Mths)
Change in Mazket Value from Prior Month
Unrealized Gain/(Loss) on Portfolio
Net Asset Value
10.0
10.0
12,896.33
42,670.74
100.1%
2
TOTAL RETURN CALCULATION REPORT
FOR JUNE, A 30 DAY MONTH
PURCHASE MATURITY DAYS INVESTMENT INTEREST INTEREST DAYS
DATE DATE HELD COST RATE EARNED COST
01/28/94 08/12/15 30 152,627.40 12.290% 1,541.75 4,578,822.00
04/22/02 10/22/04 30 1,000,000.00 4.630% 3,805.48 30,000,000.00
11 /21 /01 11 /21 /06 30 2,5 00,000.00 4.510% 9,267.12 75,000,000.00
08/08/01 08/08/03 30 1,000,000.00 4.375% 3,595.89 30,000,000.00
02/ 15/02 I 1 / 15/04 30 1,000,000.00 4.050% 3,328.77 30,000,000.00
04/22/02 04/22/04 30 1,000,000.00 4.000% 3,287.67 30,000,000.00 '
05/28/02 05/28/04 30 1,000,000.00 3.620% 2,975.34 30,000,000.00
10/01 /01 10/O 1 /03 30 1,000,000.00 3.500% 2,876.71 30,000,000.00
12/26/01 12/26/03 30 1,000,000.00 3.500% 2,876.71 30,000,000.00
02/19/02 02/19/04 30 1,000,000.00 3.420% 2,810.96 30,000,000.00
03/04/02 03/04/04 30 1,000,000.00 3.420% 2,810.96 30,000,000.00
01/30/02 01/30/04 30 1,000,000.00 3.330% 2,736.99 30,000,000.00
06/05/02 12/05/03 25 1,000,000.00 3.100% 2,123.29 25,000,000.00
05/24/02 11 /25/03 30 1,000,000.00 3.005 % 2,469.86 30,000,000.00
06/01/02 06/05/02 4 20,688,399.96 1.834% 4,157.86 82,753,599.84
06/05/02 06/14/02 9 19,688,399.96 1.801% 8,744.72 177,195,599.64
06/14/02 06/27/02 13 19,383,791.34 1.816% 12,538.02 251,989,287.42
06/27/02 06/30/02 3 18,883,791.34 1.955% 3,034.34 56,651,374.02
06/30/02 06/30/02 1 18,913,275.79 1.986% 1,029.09 18,913,275.79
06/01/02 06/30/02 29 3,734,764.46 1.899% 5,635.88 108,308,169.34
06/30/02 06/30/02 1 3,740,593.99 1.852% 189.80 3,740,593.99
TOTALS:
INTEREST EARNED 81,837.21 1,134,130,722.04
GAIN (LOSS) ON INVESTMENT ACTIVITY 0.00 963,567.17
TOTAL RETURN 81,837.21 36,584,862.00
TOTAL RETURN ON AVERAGE DAILY INVESTED BALANCE 2.63%
r
INVENTORY REPORT
INVESTMENT PORTFOLIO AT JUNE 30, 2002
PURCHASE MATURITY INTEREST BEGINNING BEGINNING ENDING ENDING CHANCE IN MONTHS TO INVESTMENT ACCRUED FUND
TYPE DATE DATE RATE BOOK VALUE MARKET VALUE BOOK VALUE MARKET VALUE MARKET VALUE MATURITY PAR/FACE INTEREST
CMOs
FHLMC 01/28/94 12/15/08 12.290% 159,612.00 171,743.79 152,627.40 166,618.14 (5,125.65) 70 152,627.40 488.41 POOLED
159,612.00 171,743.79 152,627.40 166,618.14 5,125.65 152,627.40 488.41
AGENCIES
FHLB 04/22/02 10/22/04 4.630% 1,000,000.00 1,003,750.00 1,000,000.00 1,001,250.00 (2,500.00) 28 1,000,000.00 3,858.33 POOLED
FHLB 11/21/01 11/21/06 4.510% 2,500,000.00 2,477,350.00 2,500,000.00 2,505,475.00 28,125.00 53 2,500,000.00 9,395.83 POOLED
FHLB 08/08/01 08/08/03 4.375% 1,000,000.00 1,004,370.00 1,000,000.00 1,002,060.00 (2,310.00) 13 1,000,000.00 3,645.83 POOLED
FHLB 02/15/02 11/15/04 4.050% 1,000,000.00 1,003,440.00 1,000,000.00 1,001,880.00 (1,560.00) 29 1,000,000.00 3,375.00 POOLED
FFCB 04/22/02 04/22/04 4.000% 1,000,000.00 1,002,810.00 1,000,000.00 1,000,940.00 (1,870.00) 22 1,000,000.00 3,333.33 POOLED
FHLB 05/28/02 05/28/04 3.620% 1,000,000.00 1,002,188.00 1,000,000.00 1,002,500.00 312.00 23 1,000,000.00 3,016.67 POOLED
FNMA 10/O1/O1 10/01/03 3.500% 1,000,000.00 1,005,310.00 1,000,000.00 1,002,810.00 (2,500.00) 15 1,000,000.00 2,916.67 POOLED
FHLMC 12/26/01 12/26/03 3.500% 1,000,000.00 1,005,800.00 1,000,000.00 1,004,290.00 (1,510.00) 18 1,000,000.00 486.11 POOLED
FHLB 02/19/02 02/19/04 3.420% 1,000,000.00 1,002,190.00 1,000,000.00 1,001,560.00 (630.00) 20 1,000,000.00 2,850.00 POOLED
FHLB 03/04/02 03/04/04 3.420% 1,000,000.00 1,000,000.00 1,000,000.00 1,001,880.00 1,880.00 20 1,000,000.00 2,850.00 POOLED
FHLMC 01/30/02 01/30/04 3.330% 1,000,000.00 1,003,110.00 1,000,000.00 1,003,350.00 240.00 19 1,000,000.00 2,775.00 POOLED
FHLB 06/05/02 12/05/03 3.100% 1,000,000.00 1,000,000.00 1,000,000.00 1,000,625.00 625.00 17 1,000,000.00 2,238.89 POOLED
SLMA 05/24/02 11/25/03 3.005% 1,000,000.00 1,000,340.00 1,000,000.00 1,000,060.00 (280.00) 17 1,000,000.00 2,504.17 POOLED
14,500,000.00 14,510,658.00 14,500,000.00 14,528,680.00 18,022.00 14,500,000.00 43,245.83
POOLS
LOGIC 06/30/02 1.880% 3,734,764.46 3,734,764.46 3,740,593.96 3,740,593.96 0.00 0 3,740,593.96 POOLED
TEXPOO L 06/30/02 1.833% 20,688,399.96 20,688,399.96 18,913,275.79 18,913,275.79 0.00 0 18,913,275.79 POOLED
24,423,164.42 24,423,164.42 22,653,869.75 22,653,869.75 0.00 22,653,869.75 0.00
TOTAL: 39,082,776.42 39,105,566.21 37,306,497.15 37,349,167.89 12,896.35 10 37,306,497.15 43,734.24
•
•
PORTFOLIO DETAIL TRANSACTION REPORT
FOR PERIOD ENDING JUNE 30, 2002
PURCHASES
TYPE PAR COUPON YIELD MATURITY PRICE PRINCIPAL PREM/(DISC) ACCRUED TOTAL FUND
FHLB
SALES 1,000,000.00 3.100°/a 3.100% 12/05/03 100.0000 1,000,000.00 - - 1,000,000.00 POOLED
TYPE PAR COUPON YIELD MATURITY PRICE PRINCIPAL PREM/(DISC) ACCRUED TOTAL FUND
CALLED
TYPE PAR COUPON YIELD MATURITY PRICE PRINCIPAL PREM/(DISC) ACCRUED TOTAL FUND
MATURED
TYPE PAR COUPON YIELD MATURITY PRICE PRINCIPAL PREM/(DISC) ACCRUED TOTAL FUND
i
Portfolio Yield vs 2 Year T-Bill
6.so°i°
6.00°~0
s.so°i°
s.oo°i°
4. so%
Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02
D 2 Year T-Bill 2.79% 2.s8% 2.94% 3.00% 3.OS% 3.43% 3.ss% 3.23% 3.12%
^PortfolioYield 3.77% 3.s7% 3.48% 2.96% 2.s3% 2.43% 2.44% 2.s3% 2.63%
6
Additional Earnings
60,000
40,000
20,000
(20,000)
(40,000)
(60,000)
(80,000)
(100,000)
.~-
~,:
--~ =~:
~_ '=`:~
_. _~
_~
~: -_ - _ .~
_ ~~_-
V ~.
';
s
Oct-01
®Monthly 17,257
D Cumulative 17,257
Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02
23,243 12,523 (3,869) (19,129) (37,185) (37,471) (24,518) (16,731)
40,500 53,023 49,154 30,025 (7,160) (44,631) (69,148) (85,879)
Jul-02 Aug-02 Sep-02
7
Investment Maturity
& Cashflow
(excluding Texpool & Logic)
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
•
oti oti pti o'~ o'~ p'' o'~ p'~ p'~ cP` cQ` cP` o°` o°` eQ` p`~ oh p`' p`~ p5 ph p~O o,~b
10~ 5~'4 .~o~ ~~~ ~~ ~~~ So~ S~~ ,~o° ~~ ~g,~ ~r~ 10~ S~4 ,boa ~~ ,~~ ~'~ 10~ ~~4 ,~o~ ti~ ,~~~
Market Gain (Loss)
by Month
100,000
50,000
(50,000)
(100,000)
(150,000) OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
AGENCIES 104,715 66,878 11,663 (10,590) 7,695 (117,410) (9,655) 10,658 28,680
SCMO'S 11,848 9,276 14,361 11,656 12,348 8,537 12,056 12,132 13,991
-~--TOTAL 116,563 76,154 26,024 1,066 20,043 (108,873) 2,401 22,790 42,671
i
Monthly Portfolio Division
^ 7% ^ 1%
u1:
^ 40%
~ 37%
7 KMPR ^ First SW ^ Coastal Securities
7 Duncan Williams ^ Harveston Securties
Average Returns on Investments
14
00%
.
12.00% a
10
00%
.
8.00% _ -_~
6
00% _
.
4
00% _
-- -
.
2.00%
0.00% _
= = ._-
,1. -
- _
KMI'R First SW Coastal Duncan Harvesto
^ Average Yields 12.29% 3.80% 3.83% 3.81% 3.42%
10
June 30, 2002
This report is in full compliance with the investment strategy as
established for the pooled investment fund and the Public Funds
Investment Act (Chapter 2256).
Cyn exander
Finance D ctor
ichael Dolby
Assistant Finance Duector
Shelley Wolny
Investment Officer
11
AUDIT COMIVIITTEE AGENDA
SPECIAL CALLED REGULAR MEETING OF CITY OF LA PORTE AUDIT COMMITTEE
TO BE HELD JULY 30, 2002, IN THE COUNCIL CHAMBERS OF CITY HALL, 604 WEST
FAIRMONT PARKWAY, LA PORTE, TEXAS, BEGINNING AT 2:00 P.M.
1. CALL TO ORDER
CONSIDER APPROVAL OF MINUTES OF REGULAR MEETING OF CITY OF LA
PORTE AUDIT COMMITTEE HELD ON JULY 22, 2002.
3. INTERVIEW CONSULTANTS TO CONDUCT AN AUDIT OF CREDIT CARD
TRANSACTIONS - C. Engelken
4. CONSIDER RETAINING AN ACCOUNTING FIRM TO CONDUCT AN AUDIT OF
CREDIT CARD TRANSACTIONS - C. Engelken
REVIEW THIRD QUARTER INVESTMENT REPORT - C. Alexander
6. COMMITTEE COMMENTS
7. ADJOLiRNMENT
If during the course of the meeting covered by this agenda the Council should determine that a closed or
executive meeting or session of the Council should be held or is required in relation to an item noticed in
this agenda, then such closed or executive meeting or sessions authorized by the Open Meetings Law,
Chapter 551, Texas Government Code; will be held by the Council at that date, hour and place given in the
meeting notice or as soon after the commencement of the meeting covered by the meeting notice as the
Council may conveniently meet in such closed or executive meeting or session concerning any and all
subjects and for any and all purposes permitted by Sections 551.071 through 551.076, and 551.086 of said
Open Meetings Law, including, but not limited to:
Section 551.071-For the purpose of a private consultation with the Council's attorney on any subject or
matter authorized by law.
Section 551.072 -For the purpose of deliberating the purchase, exchange, lease or value of real property.
Section 551.073 -For the purpose of deliberating a negotiated contract for a prospective gift or donation to
the City.
Section 551.074 -For the purpose of deliberating the appointment, employment, evaluation, reassignment,
duties, discipline or dismissal of a public officer or employee or to hear complaints or charges against a
public officer or employee, unless the officer or employee requests a public hearing.
Section 551.075 -for the purpose of conferring with an employee or employees of the City, only for the
purpose of receiving information from the employee or employees or to ask questions of the employee or
employees; provided, however, that no discussion of public business or City policy that affects public
business shall take place between the members of the City Council during the conference.
Section 551.076 - To consider deployment, or specific occasions for implementation, of security personnel
or devices.
Section 551.086 - To discuss or deliberate regarding commercial or financial information that the
governmental body has received from a business prospect that the governmental body seeks to have locate,
stay, or expand in or near the territory of the governmental body and with which the governmental body is
conducting economic development negotiations; or to deliberate the offer of a financial or other incentive
to a business prospect described by Subdivision (1).
There may be a possible quorum of City Council present at this meeting and may participate in
discussions at this meeting, however, they will not vote on matters.
THIS FACILITYHAS DISABILITYACCOMMODATIONS AVAILABLE. REQUESTS FOR
ACCOMMODATIONS OR INTERPRETIVE SERVICES AT MEETINGS SHOULD BE MADE 48 HOURS
PRIOR TO THIS MEETING. PLEASE CONTACT CITYSECRETARY'S OFFICE AT 281-471-5020 OR TDD
LINE 281-471-5030 FOR FURTHER INFORMATION.
•
•
MINUTES OF THE SPECIAL CALLED MEETING
OF THE LA PORTE AUDIT COMMITTEE
JULY 30, 2002
1. Call to Order
The meeting was called to order by Chairman Chuck Engelken at 2:00 p.m.
Members of Committee Present: Chairman Chuck Engelken, Howard Ebow and James
Warren.
Members of Committee Absent: None
Members of City Council Present: Bruce Meismer, Mayor Norman Malone, Mike Mosteit
and Bang Beasley.
Members of City Executive Staff and City Employees Present: City Secretary Martha
Gillett, Finance Director Cynthia Alexander and Assistant Finance Director Michael
Dolby.
Others Present: City Attorney Knox Askins.
2. Consider approval of minutes of Regular Meeting of City of La Porte Audit Committee held
on July 22, 2002.
Motion was made by James Warren to approve the minutes as presented. A second by
Chuck Engelken. The motion carried unanimously.
3. Interview consultants to conduct an audit of credit card transactions - C. Engelken
The Committee interviewed four auditing firms as follows:
Tiller and Company, Baytown, Texas
Sanderson, Knox & Belt, Sugarland, Texas
Patillo, Brown & Hill, Waco, Texas
Mosher, Seifert & Co., Pasadena, Texas
Attached is a copy of the Scope of Services and interview questions.
4. Consider retaining an accounting firm to conduct an audit of credit card transactions - C.
Engelken.
At the close of the interviews, each committee member rated each consulting firm. Tiller
and Company received the highest rating.
Motion was made by Howard Ebow to hire Tiller and Company to conduct an audit on
credit card use subject to receipt and approval of engagement letter outlining the Scope of
Services, completion time and fees. Second by James Warren. The motion carried
unanimously.
City Attorney Knox Askins requested Tiller and Company to provide the City with an
engagement letter to be approved at the August 12~', 2002 City Council Meeting. It was
•
Page 2 -Minutes July 30, 2002
•
noted that John Joerns Acting City Manager was authorized to sign the agreement not to
exceed $15,000.
It was noted the committee would meet again when a draft report was provided.
5. Adjournment
There being no further business to come before the committee, the meeting was adjourned
at 6:00 p.m.
Respectfully submitted,
`~au.,,~~~,~
Martha A. Gillett, TRMC
City Secretary
Passed and approved on this the ~ ' day of ~ 2002.
Chuck Engelken, Chairman
c~ ~*°