Audit Committee Meeting (May 6th)
In response to the District’s need for a comprehensive written framework of Internal Controls and the Board’s authorizing this Committee to engage outside consultants to assist, new Director of Finance Paul Navazio provided an overview for assessing, improving, and implementing an effective system of internal controls.
Mr. Navazio stressed the importance of internal controls and stated that it would be a four part process beginning with his responsibility to provide a complete assessment of the District’s current internal controls in consultation with the Audit Committee, Board of Trustees, District management and potentially outside consultants. This initial collaboration would identify strengths and weaknesses with recommendations for improvement. The second part would involve ongoing review and updates. The third and fourth part would involve a deep dive into targeted internal auditing functions developed in conjunction with an independent internal auditor and any recommendations from the firm auditing our annual financial statements. In some respects, these parts would run concurrently. The objective is to ensure a robust, comprehensive system of internal controls that restores the Board’s and the public’s confidence and trust in that system.
Trustee Treasurer Schmitz who had taken the lead in prioritizing effective internal controls worked closely with Mr. Navazio to expedite the process and researched independent internal auditing firms to provide assistance. In response to Trustee Schmitz’ suggestions, Mr. Navazio assured the Committee that key areas would be targeted first and Staff would receive training.
Audit Committee Chair Dent and Trustee member Callicrate commended Trustee Schmitz and Director of Finance Navazio for this great first start in addressing the community’s concerns and developing a comprehensive framework for the District’s Internal Controls.
Trustee Schmitz presented an overview of the Amendments to “Audit Committee Policy 15.1.0 Accounting, Auditing and Financial Reporting.” Schmitz stated that these amendments incorporated guidance from the Government Finance Officers Association (“GFOA”), Carson City and Washoe County Audit Committee Charters, Board discussions with individual Trustee suggestions, and Mr. Navazio’s recommendations. Overall, Schmitz stated that the policy would be more robust with improved and detailed Audit Committee responsibilities. She also stated that it would be a “working” document that would allow for future improvements that would be brought to the Board for approval. The Policy was approved unanimously and will take effect upon completion of the Audit Committee’s transition plan. You can view Policy 15.1.0 here.
Due to time constraints, the additional agenda items which included the approval of the Engagement Letter with the Independent Auditor for the 2020 Financial Statements and discussion of the communications received from members of the Community were rescheduled for the next, to be announced, Audit Committee meeting.
IVGID May 6, 2020 Board of Trustees Meeting
Public Service Announcements during Public Comment:
Mr. Hansen of Waste Management explained that the reason that pine needle waste collection was moved from May to June was due to the fact that COVID -19 realities required that “excess waste collection” be suspended in Nevada for the protection of Waste Management employees and the public. Because Waste Management understands the potential fire hazard, the public can bring their own pine needles at no charge to the local Incline transit station which is now open and leave the bags at no charge. When collection begins it will continue for 12 weeks.
Due to the impact of COVID-19, Interim General Manager Winquest announced that he is working with the Board, Staff, Contractors, Vendors and members of our community to safely open and operate our recreational venues. As State directives and District preparations are rapidly unfolding, click here for the latest news on the availability of our recreational venues, beach facilities and services along with current restrictions. Members of our community are invited to email Mr. Winquest (at email@example.com) and/or Trustees with their suggestions and comments on preparation and implementation. You can find Trustee email addresses here.
Mr. Winquest provided a few brief highlights on his written report to the Board.
Current District Law Firm Hutchison & Steffen had nothing to report to the Board.
Trustee Treasurer Schmitz updated the Board on her communications with Director of Finance Navazio to obtain the financial information required for the Treasurer Report. As Mr. Navazio is immersed in preparing the District’s 2020/21 budget, he will be meeting with Trustee Schmitz next week and advise the process that will be undertaken to computerize financial information and permit communication across various departments.
Audit Committee Chair Dent reported that the Audit Committee had heard Mr. Navazio’s presentation on the draft framework for implementing internal controls and his emphasis upon assessment, review and future interaction with the independent internal auditor and the current auditor of the District’s financial statements. Mr. Dent also reported that the Audit Committee unanimously approved the amendments to Policy 15.1.0.
Due to the pandemic’s potentially adverse financial and economic impact, Mr. Winquest is working closely with Mr. Navazio and Trustees to prioritize critical and essential capital expenditures and evaluate the merits of other capital projects to determine which should be modified, delayed or canceled. Mr. Winquest and Mr. Navazio outlined their strategy for these determinations. Mr. Winquest emphasized that there would be greater communication and transparency in providing the Board with project budgets and contracts for their approval.
The Board unanimously Authorized Staff to issue the Notice to Proceed on the construction of 4 bocce ball courts to be located outside of the Recreation Center and unanimously approved the contract to Rapid Construction in the amount of $68,860.
The Board held a 75 minute discussion of the amendments to Audit Committee Policy 15.1.0 with Trustee Schmitz answering questions, responding to comments and providing clarification on almost every line of the multi-page policy. The Policy was approved on a 3-2 vote with the two former Trustee audit committee members Wong and Morris opposing.
The Board voted unanimously to approve the draft scope of work and the advertising for a Request for Qualifications for an independent consulting firm to do a complete project review of the District’s Effluent Export Pipeline and Pond Lining Projects. This scope will include components of storing and transporting wastewater from Incline Village through its disposal 21 miles away in Carson Valley. Mr. Winquest and Mr. Pomroy developed the scope of work with Trustees Wong and Dent along with members of our community experienced in planning, developing and constructing public works projects.
The Board unanimously approved Mr. Winquest and Mr. Navazio determining a scope of work and cost estimate for an independent consultant to undertake a construction project audit and internal controls review of project procurement and contract management on a sampling of capital projects. The Board agreed to widen the scope to identify best industry practices for improvements and recommendations for additional auditing if other internal control deficiencies are found. It is expected there may be overlap with the independent consultant selected to work with the Director of Finance on establishing the District’s Internal Controls. This agenda item was cited as a high priority by most Trustees along with Mr. Winquest and Mr. Navazio.
The agenda item to provide the Erickson, Thorpe & Swainston law firm with almost $100,000 for legal expenses incurred in defending IVGID, Trustee Wong and Counsel Guinasso as well as proposed funding to achieve a future settlement of the Smith lawsuit seeking public records was removed from the agenda. Chair Callicrate stated that additional information was forthcoming.
The Board unanimously approved the engagement of Best, Best & Krieger (“BBK”) to represent the District as General Counsel on an interim basis and appropriated $50,000 for these services. The Board had previously approved funding for BBK to provide guidance on terminating the legal contract with Hutchison & Steffen, as well as reviewing the Smith lawsuit.
Chair Callicrate stated that the District will, sometime in the future, issue a Request for Professional Services to determine new General Counsel representation.
In response to questions, Mr. Winquest could not, at this time, provide clarity on how much longer the Hutchison & Steffen law firm will provide services to the District.
During Trustee updates, Chair Callicrate stated that in response to citizens’ outreach, he is working with Mr. Winquest and Board Clerk Herron to return to including in the Board packets correspondence received by the District. He stated that former General Counsel Jason Guinasso had cited a ruling by the Office of the Attorney General in 2018 that resulted in his direction for the Board Clerk not to include correspondence. Chair Callicrate stated that Mr. Guinasso would bring back this information on what can and can’t be included and the Board would adopt a policy on correspondence at a future meeting.