Audit 10-22-98
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Cupertino
City of Cupertino
CUPERTINO AUDIT COMMITTEE
Regular Adjourned Meeting
October 22, 1998
MINUTES
1.
CALL TO ORDER
Carol Atwood caned the meeting to order at 8:08 a.m. in Conference Room A of Cupertino
City Hall, 10300 Torre Avenue.
2.
ROLL CALL
Council members: Sandra James, Wally Dean
City Staff: Don Brown, Carol Atwood and Jennifer Chang
Community Representatives: Tom Hall
Absent: Emily Wagner
3.
APPROVAL OF MINUTES - Motion by Tom Hall, Second by Don Brown, Approved by
all present.
4.
ORAL COMMUNICATIONS
None
5.
NEW BUSINESS
1997-98 Audit Report - Amy Nicholini from Grant Thornton was present to review the
audit. She stated that the audit work went smoothly and that they had full co-operation
from staff. There will be no management letter issued this year as no deficiencies in
internal control had been detected that were not already resolved in conjunction with the
computer conversion project.
Amy reviewed the audit report noting the following major areas:
1. Fixed Assets - The City performed a complete inventory of all fixed assets and
reconciled that inventory to the general ledger and financial statements. Major
acquisitions were traced back to original escrow statements and other source
. documents. All assets have now been property recorded and reflected in the 1997-98
financials. Finance has implemented recording of assets purchased and disposed of on
a monthly basis. Councilmember Dean discussed the impact of the adjustment to the
fixed asset account with Ms. Nicholini. She stated that most governmental agencies do
not have a complete record of their fixed assets. In Cupertino's case, it appears that
assets which were sold or disposed of over the years had not been properly removed
Page 2
3.
from the books. She assured the committee that the auditors concurred with the
inventoried dollar value and the new controls in place.
Lease of the Water Company - the financial statements reflect the close out of the
Water company and the transfer of its assets and reserves to the General fund. The
auditors felt that this was the proper accounting treatment for the operating lease
transaction. Councilmentber Dean expressed the need to retain good records of the
Water assets for future information and negotiation needs. Those assets are all
currently recorded and reflected in the General fund's fixed asset accounts.
Liability - Grant Thornton had some concerns as it relates to the City's liability for
clean up of the McDonald Dorsett property. Ms. Nicholini discussed the footnote
disclosure related to this contingency.
2.
FIN/HR Conversion - Carol gave an update on the computer conversion. Staff is
currently revising the chart of accounts to automate internal and external reporting. The
conversion is currently on track and the first of our system cut-overs will occur in
December 1998.
Investment Review - Carol reviewed the August investment report highlighting year to
date financial trends. She explained that the City had some problems at year-end with the
State freezing access to all LAIF deposits. Fortunately, we had temporarily pulled a
substantial portion of our funds at June 30th because of concerns over the State not adopting
a budget.
ADJOURNMENT
The meeting was adjourned at 9:01am to January 21,1999 at 8:00am, Conference room A.
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Carol Atwood, Chair
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