HomeMy WebLinkAbout06-29-10 Special Called Regular Meeting of Fiscal Affairs Committee minutes
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MINUTES OF THE SPECIAL CALLED REGULAR MEETING OF THE FISCAL AFFAIRS
COMMITTEE
June 29, 2010
1. Call to Order
The meeting was called to order by Chairman Chuck Engelken at 5:30 p.m.
Members of Committee Present: Board Members Chuck Engelken, Louis Rigby and Tommy
Moser.
Members of Committee Absent: None
Members of City Council. City Executive Staff and City Employees Present: City Manager
Ron Bottoms, Director of Finance Michael Dolby and City Secretary Martha Gillett.
Others present: Phillip Hoot and Kathryn Aguilar.
2. Consider approval of Minutes of the Special Called Regular Meeting of Fiscal Affairs
Committee held June 22, 2010.
Motion was made by Committee Member Rigby to approve the minutes as presented. A
second by Committee Member Moser. The motion carried.
Ayes: Engelken, Rigby and Moser
Nays: None
Abstain: None
Absent: None
3. Discuss and determine scope of work to be performed by Belt Harris Pechacek in conducting
a forensic audit of the Town Plaza Project - C. Engelken
The committee discussed the scope of work to be conducted in the forensic audit. The scope
of work will be agreed upon at the meeting next week.
Chairman Chuck Engelken will be the point of contact for the City of La Porte.
Items the committee requested to be audited are as follows:
· Follow all wire transfer monies through all points that the 4b Corporation paid to the
developer and his repayments
· Journal entries made due to clerical errors
· All transactions, bids, invoices and documents related to the Five Points Project
· Minutes, Agenda's and all back up for Fiscal Affairs Meetings that involved the Five
Points Project
Fiscal Affairs Committee - Special Called Regular Meeting - July 8, 2010
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B. Inquiry of staff regarding specific factual information or existing policy
7. Adjournment
There being no further business to come before the committee, the meeting was adjourned at
_p.m.
Respectfully submitted,
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Martha Gillett, TRMC
City Secretary
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Approved this~ day July of 2010.
Chuck Engelken, Chairman
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THERE IS NO BACKUP FOR THIS
ITEM
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Engagement Letter for
Agreed Upon Procedures
July 8, 2010
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W~ are p1e~~~cl to confirm our understanding of the nature and limitations of the services we are to provide fo~
the City of La Porte, Texas (the "City"). g
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Honorable Mayor and City Council
City of La Porte
604 W. Fairmont Parkway
La Porte, TX 77571
We will apply the agreed-upon procedures which the City has specified, listed in the attached schedule
("Exhibit A"), to analyze transactions associated with the City's 5-Points Project. This engagement is solely to
assist the City for the purpose of gaining a better understanding of certain aspects of the 5-Points Project as they
relate to applicable City and 4B Development Corporation policies and procedures as well as applicable State
law. Our engagement to apply agreed-upon procedures will be conducted in accordance with attestation
standards established by the American Institute of certified Public Accountants. The sufficiency of the
procedures is solely the responsibility of those parties specified in the report. Consequently, we make no
representation regarding the sufficiency of the procedures described in Exhibit A either for the purpose for
which this report has been requested or for any other purpose. If, for any reason, we are unable to complete the
procedures, we will describe any restrictions on the performance of the procedures in our report, or will not
issue a report as a result of this engagement.
Because the agreed-upon procedures listed in Exhibit A do not constitute an examination, we will not express
an opinion on transactions associated with the City's 5-Points Project. In addition, we have no obligation to
perform any procedures beyond those listed in Exhibit A.
We will submit a report listing the procedures performed and our fmdings. This report is intended solely for the
use of the City and should not be used by anyone other than this specified party. Our report will contain a
paragraph indicating that had we performed additional procedures, other matters might have come to our
attention that would have been reported to you.
You are responsible for the presentation of the requested items in accordance with the procedures listed above;
and for selecting the criteria and determining that such criteria are appropriate for your purposes. You are also
responsible for making all management decisions and performing all management functions; for designating an
individual with suitable skill, knowledge, and lor experience to oversee the services we provide; and for
evaluating the adequacy and results of those services and accepting responsibility for them.
Partners
Robert Belt, CPA
Stephanie E. Harris, CPA
Nathan Krupke, CPA
Partner of Counsel
John R. Pechacek, CPA
Houston
730 N. Post Oak Rd., Stc. 401
Houston, TX 77024
713.263.1123
Bellville
6100 Windy Hill Lane
Bellville, TX 77418
979.865.3169
Austin
100 Congress Ave., Sre. 2000
Austin, TX 78701
512.381.0222
All Offices
'\\'WW. texasaudirors.com
info@txaudirors.com
713.263.1550 fa."\
== Governmental
_ Audit Quality Center
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We plan to begin our procedures when the City approves the start date and unless unforeseeable conditions are
encountered, the engagement should be completed within 6 weeks. At the conclusion of our engagement, we
will require a representation letter from management that, among other things, will confIrm management's
responsibility for the presentation of the subject matter in accordance with the established criteria.
Our fee for these services will be at our standard hourly rates plus out-of-pocket costs (such as report
reproduction, travel, etc.) Our hourly rates vary according to the degree of responsibility involved and the
experience level of the personnel assigned to the engagement which range from $125 to $245 per hour. We
expect that a project of this nature will entail using one of our in-charge auditors ($125 per hour), with the
exception of clerical support. We estimate 168 hours will be expended on this project. Fees for our services
under this agreement will not exceed $24,600 without prior written approval.
Our invoices for these fees will be rendered each month as work progresses and are payable within 30 days. In
accordance with our fIrm policies, work will be suspended if your account becomes 30 days or more overdue
and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment,
our engagement will be deemed to have been completed even if we have not completed our report. You will be
obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the
date of termination. Notwithstanding anything contained in this engagement to the contrary, in the event no
funds or insufficient funds are appropriated and budgeted or are otherwise unavailable in any fiscal period for
fees due under this engagement agreement, the City will immediately notify us in writing of such occurrence
and this agreement shall terminate on the last day of the fIscal period for which appropriations have been
received or made.
Any client certifIed public accountant involved with assisting us shall not be prohibited from disclosure of
information required to be made available by the standards of the public accounting profession in reporting on
the examination of fInancial statements. Management understands and provides permissions to staff certifIcate
or registration holders as required under the Rules of Professional Conduct, Texas Administrative Code, Title
22, Part 22, Chapter 501, Subchapter C, Section 501.75.
We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms
of our engagement. If you have any questions, please let us know. If you agree with the terms of our
engagement as described in this letter, please sign the enclosed copy and return it to us. If the need for addi-
tional services arises, our agreement with you will need to be revised. It is customary for us to enumerate these
revisions in an addendum to this letter. If additional specified users of the report are added, we will require that
they acknowledge in writing their responsibility for the sufficiency of procedures.
Sincerely,
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Stephanie E. Harris, CPA
Partner
RESPONSE:
This letter correctly sets forth the understanding ofthe City of La Porte, Texas.
Authorized Representative
Date
Authorized Representative
Date
Authorized Representative
Date
Exhibit A
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Obtain further understanding of 5-Points Project and areas of concern through interviews of
Fiscal Affairs Committee Members and Concerned Citizen, as well as by a review minutes and open records request by Citizen
to further define scope.
Obtain listing of all expenditures coded to 5-Point Project as recorded on the City's and/or 4B Development
Corporation General Ledger and review supporting documents/invoices against applicable policies and
procedures for preparation of exhibit for final report.
Obtain copy ofEDC Project plan and other applicable documents associated with advertising and approval
of final project by City Council and review for compliance with applicable State Statute/By-laws.
Prepare timeline of events associated with 5-Point Project from inception to completion thru review of minutes and other interviews.
Question officials about an alleged meeting on 10/1/08 with URS to determine if there was a violation of the open meetings act.
Review the contract and resulting invoices for services as submitted by URS (Project Engineer) to the City in
connection with the 5-Points Project for accuracy and compliance with the City's applicable policies and procedures.
Review process for selection of 5-Points Project Engineer and Construction Contractor for compliance with applicable State Statute.
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4
5
6
7
8
9
Verify filing of Conflict of Interest by 4B Development Board Member.
Review the expenditure of funds by the 4B Development Corporation for the 5-Points Project for compliance with
applicable State Statutes.
10 Verify proper authorization for expansion of funding for 5-Points Project.
11 Review transactions between the City and Developer as they relate to the following:
11 a Criteria used for providing loan to Developer
11 b Review loan documents to determine compliance with the agreement and applicable laws and regulations
11 c for repayment by Developer
Obtain Confirmation from the City to determine depositor of wire transfer used for repayment of loan
12 Review various real estate transactions between the City/4B Development Corporation and the Developer as they relate to the following
12a The sale of a portion of San Jacinto St. to Developer
12b Payment of property taxes on Triangle Property
12c Review of evidence of payments made by City to all parties at closing on Triangle Property
12d Review of Exhibit C for proper execution
12e Review title history along with lien documents on property if available and timing of transactions
13 Prepare report
14 Review procedures completed and report
Exhibit A
Est. Hours Est. Hours Auditor Partner Total Cost Total Cost
Procedure Auditor Partner Billing Rate Billing Rate Auditor Partner Total
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12 $
125 $
225 $ 1,000 $ 2,700 $ 3,700
2 16 125 225 2,000 2,000
3 6 125 225 750 750
4 12 125 225 1,500 1,500
5 6 125 225 750 750
6 12 125 225 1,500 1,500
7 8 125 225 1,000 1,000
8 1 125 225 125 125
9 6 125 225 750 750
10 6 125 225 750 750
lla 4 125 225 500 500
lIb 4 125 225 500 500
llc 2 125 225 250 250
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12a 2 125 225 250 250
12b 2 125 225 250 250
12c 1 125 225 125 125
12d 4 125 225 500 500
12e 8 125 225 1,000 1,000
13 24 125 225 3,000 3,000
14 24 125 225 5,400 5,400
132 36 $ 16,500 $ 8,100 $ 24,600