Audit Advisory Committee - Regular Meeting

Good morning, everybody. I wanna call the meeting of the Audit Advisory Committee, to order. It's Thursday, December 4, 2025. Now we can't believe it, but we're three weeks from Christmas. But we're happy that we're here to have this meeting. I'd like to have a roll call if I could. Thank you, Joe.

Member Fontana?

Here.

Member Castholm?

He stepped out. He'll be right back in.

Member Michaels? Vice chair McFan?

Present. Member Ritchie?

Here.

Member Sommerfeld? Here.

And chair Siegel?

Here. Please, join me in, standing for the pledge of allegiance. I pledge allegiance to the flag of

The United States Of America

and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all. Thank you. May I make a note that Daniel Castholm has arrived and he is here in person. Thank you. Next on the agenda is the approval of the agenda. Has everyone had a chance to look over it? And if so, I would entertain a motion to approve the agenda.

So moved. Second.

Moved by

Chris and second by Terry. All in favor signify by saying aye. Aye. All opposed? Like sign. Thank you. And the next would be the approval of the minutes of our October 29 audit advisory committee meeting. Has everyone had a chance to look at those minutes? And are there any suggestions, corrections or comments anyone would like to make? I don't hear anybody.

I have one I have one question, that I'm not sure we can get it answered. But, Jose Duran was here at the at the last meeting, and he made a report on the audit and saying that there was a process of swapping out several critical pieces of IT equipment. And he was given a thirty nine day time to complete and correct that. And I was just wondering if that was actually taken care of and corrected. I don't know if, Carol, you wouldn't have any idea or so, we might make I don't,

but I can follow-up.

I'm just assuming that by now it should have been corrected, but, I would like to have heard from Jose if that in fact was corrected. Other than that, I have no other questions on the minutes of that October 29 meeting. And I would entertain a motion to approve those minutes.

So moved.

Moved by Elena and seconded by Chris. All in favor signify by saying aye. Aye. Any opposed, like sign? Okay. Those minutes are now approved. Going to the old business. On what was that? November 17, Elena made a presentation to city council regarding our our objectives and responsibilities for the audit advisory committee. I think it was well received by the committee.

There were a few constructive suggestions. And I asked Elena to go over that go over those suggestions and then take us forward to what how we proceed with that.

So to be clear, this was not the Elena show. This was just the privilege of representing the work of this committee. And if anyone's had an opportunity to watch that city council meeting, I think we did a good job on that. So first of all, there was in terms of the presentation, basically, was a rerun of what we did here in the October 29 meeting without the in situ editing process. Number two, Chair Palumbo made the observation that he was very impressed with how this committee has come together as a team, which is certainly interesting because outside of this venue, we don't spend any time together.

So that's a we gave that as an example of this is what happens when people come together and focus on a problem, not on personal issues. And we're just all focused on working together for the city whom we serve. There were helpful questions and confirmations around what is who do we support and who do we report to, if you will. And it was it's Carol as the finance director. If there was a reporting, but there's an independence here was the other part. So or who do we advise? Go ahead, Carol.

Can you hear me? I actually think you support the council.

Right. Yes. We serve as an extension of the council. That's right.

I think we look at you as our liaison Mhmm. With the council.

That's a better word.

Yeah. But you're you're the advisory committee for the for the council.

For the council.

Yes.

That's I was surprised when the council asked who we report to. I agree.

That was a little bit of a surprise.

All of

all of the advisories report to.

Yes. That's right. That's that's an excellent clarification. In that vein, several of the counselors noted that our role is to help them with capacity, right, to call out surprises, make them aware of how things are progressing. Do not be shy about that because they can't be everywhere all at once.

And that was helpful. There was a confirmation of what is your relationship with the external auditor, CLA, independence, so reaffirming that. And then the game plan and you can tell me if I missed anything, Jean or anybody else who watched it. The game plan is for the the objectives and responsibilities document to be rolled into a resolution, which Joan is taking responsibility for, for discussion for final resolution of approval at an upcoming council meeting. I saw it on the tagged for likely the 01/05/2026 agenda.

So let me pause there and ask Gene, did I leave anything out?

No. I think you you covered it very well, Elena. And, yes, it it I'm happy that we'll be on the agenda, and I hope it's on the consent agenda so that we can, you know, get it get it approved without any any, question. But, yeah. So it's gonna go to in the form of a resolution. And once the city council approves that resolution, that that will become our new task, our new objectives and responsibility roles. So, that's updated. So thank you, Elena. Anything else you wanna comment on that?

I would ask our fellow committee members if they have anything that they might wanna add in.

Was there any commentary on the actual wording or adjustments by any of the city council?

There was there was one errant carriage return Oh. That I fat fingered Typo. That that we took care of that.

That's good. That means they read it.

Yes. Yes. Absolutely. Carrie, did you

No. I I watched I watched from afar, and I was impressed. Right. You guys did a great job.

Thank you.

Representing.

Thank you.

Your work. I think That's right. Dismount statement.

It's it's nice to know that your advisory committee is valued.

Absolutely. And the I think the the citizens who attended noted that as well. And, you know, I think the dismount statement we made was, you know, it's you know, went out on a limb and said, you know, we serve speaking on behalf of the committee, it's a privilege to serve the city, and it's a privilege to serve our councilors. So onward. Mhmm.

Yeah. I think the city council gave us a good vote of confidence. I was pleased about that, and, we appreciate we appreciate that vote of confidence. So if everybody's in agreement to go forward with this, the the proposed objectives and responsibilities as corrected and discussed just now, we would I would entertain a motion that we, we approve it and we approve that the it's put into a form of a resolution to the city council and to be presented at probably the January 5 city council meeting. So I would entertain a motion to go forward with that.

So moved.

Moved by Chris and second by Daniel. So all in favor of moving forward and giving this, the objectives and responsibilities, to city council in the form of a resolution signify by saying aye.

Aye.

If there's any anyone opposed, like sign. So that's approved, and we will we will do that. And, hopefully, that it'll fly through to the city council on the fifth of of January. Also on the agenda is a proposed meeting calendar. And, in your attachments, there's four one, two, three, four meetings dates, that are being proposed.

I know it's a little early probably to for you to know what your calendars are gonna look like going forward, but we've got four dates. The first one, would be February 18 at 01:00 and then March 17 at 11:00 and May 20 at 01:00 and August, nineteenth at 01:00. And, there's in the roles and responsibilities, there's kind of an outline of what would be covered in those meetings. And basically, it's a review of progress of the audit and as we're going forward into the audit. So I don't know if it's too soon for you to know your calendar to look alike, but these are the proposed dates.

And does anyone have any thoughts or suggestions on Just

a question. I thought that these dates were established somewhat in relationship to the audit auditors.

That's correct. That's correct.

So we wanna stay pretty close to the dates that they're recommending. The only other thing that I question is how this then dovetails into reports to city council, especially if we're going to be looking at quarterly reports. I I had a sense that we might be looking at quarterly reports after the council is looking at quarterly reports, which may not be an issue, but we could have, we we could have recommendations that would be more timely if we're looking at those quarterly reports before they go to counsel.

Yeah. Very good point.

And I it just feels like it it might be the cart before the horse as to how we get those.

Yep. Yeah. Good point. But I I there is a some verbiage in the roles and responsibilities where we will report to the city council quarterly. It says it says the chair will, but I'm happy to do it or as a group, we can do it together and report to the I

guess what I was hoping is that that report would had some comment related to the quarterly report.

Yeah. It it would it should it should. That's a good point. Thank you on that. So if you go to the last page of the roles and responsibility, there's kind of a meeting outline of what we would cover at these various meetings.

So if you're looking at the January because the audit is, I guess, the field work starts in January. So we would then be meeting with the external auditors and reporting on what the internal how the internal controls are and discuss other financial performance and also risk management. So those items would be included in that agenda for the January meeting I guess February meeting actually, February 18 meeting.

And we should would we have first quarter done by January 18 or February 18?

I haven't built that schedule yet. We're still just trying to get through year end.

Yes, I understand.

What I'll do is I'll line up the meeting dates and see how we can deliver the financials.

Yes, because then it would be May for the second quarter, etcetera.

So to

And you were saying

that

we'd we'd wanna review those before the city council meetings, not after because what's the purpose of an advisory committee reporting after they've already reviewed them when we are advising.

Way this lines up right now, we would be reporting the financials for October, November, December. Our goal would to have it. We report to the council the second meeting in January. So that's when we would try to attach the financials.

Okay. The second meeting in

January. January. But again, I have to check back with the team to see when they can deliver them. We should have a cadence, but I'm just working on year end right now in the audit.

I need to get better about using my little button here.

So I get some of these meeting dates, the suggested meeting dates, I guess, revolve around the availability of this room and how it fits into the schedule that Martin puts out for all the other meetings that are going on. So and I'm glad that they're a little bit later than 09:00. So we have time to walk the dog. But so this is a tentative it's tentative.

I know I can't make one of them. I'm going on a holiday overseas on the May 19 and coming back on the June 4. So I could make an May 18 or June 5, but not the twentieth. The other three I can make.

Well, can make adjustments as we go forward. The main thing is we if we could lock in February 18, if everyone's available on that date. And then we'll see how time goes. And if there needs to be adjustments, we can always do that. But since that's the would be our next meeting, would be on Wednesday, February 18 at 01:00.

May I ask if you would be comfortable, Chair Seagull, with my reaching out to Martin to see if we could move to the eighteenth in May? Because there is a I appreciate that there's a long lead time.

Mhmm.

This is a very this is a very popular room.

Yeah. Definitely. So Absolutely. If you would reach out to Martin and and via the proper vehicle, let us know about any of the changes.

Excuse me, the May 18 will not work. Martin, just

Okay. All right. So that won't work.

But I do have a takeaway from this conversation. I'll put together a production schedule so you know when we can get the financials to you so that we can at least be informed on when we can look at it.

Great. Then I confess I am not expert in sunshine laws, but take good advice from Joan and others. Is there would there be any issues, Carol? Or would it be appropriate for us to check with Joan on one way distribution of the financial the flash reports or whatever you would be preparing for city council so that we have that in advance.

I'll check with Joan, but I believe if I send it all if I send it to you Mhmm. All at the same time, I think we're okay. But let me check with Joan.

Okay. We can't respond, though.

That's my I I have the light on.

Right. I you can talk one

So it's great to get them. But then what do we do with our questions? You know, if I look at even what we have today in the flash report, there are questions that I would want to just to ask and have discussions around and how do we get that?

Yeah. That's a good point.

I think you have to ask Joan, but I would assume you would ask just provide those on an independent email back to Ed to central repository.

Okay. Think it's a one on one conversation with But I will get that rule.

So again, run into this seven of us. Yep. And we all may have questions. And then we have this barrage of questions too. So we want to minimize that. And

I

think based on some of the conversation we had last meeting and Joan's feedback, we could have a meeting with you, all of us, as long as we're not making any decisions and not directing anyone just to ask questions and get answers. That might be the most efficient way.

Or if you

I

don't know if this solution would work, but you just send the the questions to Joan. She consolidates them. You, Carol would answer them, and then she could disperse them all so everybody gets the same answers. Right. I I I assume that would be the most efficient way to do it if that's acceptable per Sunshine Law.

I'm not an expert, and I've been told not to opine on it, but I can definitely ask June.

It's something I would suggest.

An approach.

I I think that distributing documents are not violations, But and and asking questions individually isn't a problem. But the part that I think is missing is the actual dialogue that we have based upon those questions. So individually, we can all ask questions, but questions lead to discussion and then recommendation. And we won't have that discussion recommendation piece. We'll just have a question answered. So I don't know that that necessarily puts us in a position to be effective.

But it does help if we can you can have the answers at the same time to and see what the questions came forward, and you get the answer to all the questions together at the same time so that you at least know what's been asked and what's out

It's a good start for us to have all those questions. But again, the other pieces of it, I think, are most important.

Carol, a question. The flash report that you handed out this morning, we haven't had a chance to really study it, but it looks really good. And this is for year end. So the next one would be for the after the first quarter.

It would be for the first quarter.

First quarter. So that would be sometime early February that we would have another flash report like this.

And put a schedule together. My goal would be to get it done a little bit sooner.

Okay.

Because I I I think it's due to the council in in the January report. And that's what I'm I'm that's why I said I have a takeaway to put together a production schedule, align it with when it needs to go to the council so we can back into when the audit committee needs to see it.

And I agree that I think this is really good. To save you time, you know, I would look at something like this and say, interest actual versus budget was 33% off. I'm gonna ask a question about that. So you might as well give a little narrative in the document so that we avoid asking you the question.

I agree with that. And one of the new things that we're doing is this goes out. That's why this is preliminary. We're still closing the books. It's pretty much closed. But these numbers are managed by the department heads, division heads. So they need to see it. So they have this right now to provide feedback and input. So we have some preliminary explanations down there that are legacy. They've sort of evolved through the year because you just keep updating quarter over quarter. But I'm just putting it out to them to get more clarity so we have an understanding of the business driver for the change. Perfect.

Very good.

So then for clarity, without locking us into a workshop date, it does feel like there might I guess I can't solve every problem, I suppose. But I'm I'm what I'm struggling with is how do we how do we give the committee members the confidence that we're that if we have questions after we do the one way back and forth with the responses, how do we have a dialogue about those? And do we have to convene a workshop for that? Because I think what I'm hearing, but I without being an expert on sunshine laws.

I don't I suppose. I don't know how we deal with that. Would

it be helpful if I posed that question to Joan? Yes.

I I do.

You you definitely can.

I mean, know from what Carol's telling us, the first report

Mhmm.

Quarterly report will go, excuse me, to the council in January. And so we know, at least right now, that we won't see that report in in discussion until February.

If it's a quarterly report, the first quarter is January, then the you would would you have that report before February to give to the console?

I'm saying yes, we should. I have to go back and put the production schedule together.

Yes. My thought is, realistically, we wouldn't really see this until February 1 and our meeting is the eighteenth, which would give us time to analyze it and discuss it at next meeting.

May I make a suggestion? Sure. Even if it doesn't align with a council meeting, it doesn't mean that the dialogue if you have the dialogue after the council meeting that it's not useful because we're building as we go through the year. So it's not as if that something had happened in Q1. If you have questions or concerns that if you haven't brought it to the council within that time frame, that creates an issue because we're going to be talking about things on a year to date basis as we move through on this report.

So we have plenty of time to bring any concerns to the council to address anything. So the quarterly cadence is important. But if it's impossible to line up, it doesn't mean we still can't bring your concerns at the next council meeting or with the next financials.

Okay. So are we in agreement that our next meeting would be Wednesday, February 18 at 01:00. Is everybody okay with that with that time?

And we'll

put together an agenda based on the outline that was in your roles and responsibilities, the last page, and anything else that comes up, review of the flash report. And going on, Carol, you're going to be up with new business. Could you give us an audit update on where we stand right now? I know the field work doesn't start until next month,

but No, the field work doesn't start until next month. I have talked to Chris several times. We are so the status of the the progress of the audit really depends upon the the city finance team meeting the deadlines and get pulling the documentation together. And we're working on that simultaneously as we do year end. So we have a relatively unseasoned team, and they're working very hard to pull the information together.

We have an official kickoff meeting with Chris and team on December 9. So we've been working with them, but we're having a teams call with them just to go through where we are, the questions we have, and have a formal introduction of the audit team with the finance team. It's pretty much standard practice whenever you kick off a year end review in an audit. What we're doing right now, because we still don't have a controller, we have an open posting out there, is we're recruiting somebody who was the former senior accountant for the city. She's the billing manager.

So she knows where all the bones are buried. She has the keys to the kingdom. So she's going to join us on an interim basis to help with the year end close and keep the audit moving. So it's an opportunity for me to really do a brain drain from her and help me assess how we can improve the operations of the finance team. So we're looking forward to that.

So she's joined us as of December 1. So she's doing double duty between utility billing and customer service and helping with year end close and the audit. I did speak with Chris Kessler about sending a delegate to this meeting. And he did not have anybody that he could send, but he did ask that I send the tentative dates for the meeting. So I'll send him this and let him know that February 18 is confirmed.

The other ones are still flexible, that he will do his best to accommodate any future check ins as we get closer to the audit start date, and he's always happy to chat when needed. So if you need to speak with him before the February 18 meeting, he's willing have a conversation. And he will make an effort to be here for the February 18 meeting. And that's really where we're at. So the request the audit information requests come in daily. So it's not as if we have a finite list or final list. It's the list keeps growing. They're working on stuff too.

Big issue from the last audit was the grant accounting. And I know that takes a specialized expert to help us with that. And are you working on that in any way?

So that's a great thing that dovetails into the corrective action.

Okay. Go on. Yeah.

Yeah. So there were four material weaknesses. And of the four, three were related to grant processing, tracking, reporting. So we are bringing Grant was done via a consultant, a former employee who lives outside the state. We're bringing that in house now to so we're bringing the accounting, the tracking and reporting back in house.

So we've made that decision, and this happened about a week ago. And we have we've enlisted the Chief Byrne to help with the emergency disaster grants because he's an expert in the FEMA and FDM reporting and works very well with them. And he has a member of his team who will take over the role that our consultant had where they will track and make sure that we stay in compliance with the reporting. That was one of the bigger things. And then as far as grant accounting, we're going to make sure that for grants, not the emergency ones, we follow the accounting standards with the matching principles so that we eliminate or remediate the weakness that came about with the accounting treatment.

So Casey has a meeting on Friday with all the directors, all of their project managers who have grants with Chief myself, Chief Burns, myself, Kelly, who's taking over the role of our consultant, to lay down the rules of the road, roles and responsibilities so the project managers understand that they're responsible for reporting. They're responsible for reporting up to Kelly what they've done and they've met their deadlines. I think it's a growing process for us, but it's better to have it in house rather than having it sort of at an arm's length distance. So because we're closer together and we can talk. So the remediation is in play.

It's just we've changed the players, and they're going to be here in the city.

Great. Well, I'm pleased to hear you bring it in house because obviously, we were contracting out that work and obviously they didn't do a good job of giving us opinions and that's part of the problem that we had with the audit. So I think bringing it in house is going make a big difference.

And one of the weaknesses was really just a difference in opinion on how something should be treated from an accounting perspective between the two firms. And so we're following the guidance of the current our current auditor, and we'll continue to move

forward. So

sorry. Go

ahead, Terry.

How are you doing with converting things into the Tyler Munis system for grant for managing grants? I think that was one of the things that was discussed when Sharon was here, that they were trying to convert the information into Tyler Munis so it could be tracked and seen by all the department managers who were working with grants.

So I'm not aware that that was something that was a goal that Sharon had. We do have a master grant schedule that's updated that's available to all departments. It is a spreadsheet. But I'm not aware of any effort to bring that into Tyler.

Okay. Well, that was actually a discussion that impacted the finance department in terms of the amount of personnel that they had, that they just didn't have the staff to do it. So now what I'm hearing you say is that it that's really not part of one of the priorities for finance.

Not at this moment. No. Okay. Okay.

Carol, quick question. You said the project managers, are they actually responsible for the accounting and No.

They're responsible for the reporting. So certain grants have milestones that have to be there has to be quarterly reporting. Grant. So things have to be completed in order to get reimbursed. They're responsible for that reporting of where they are in the process because they're closer to it. They're managing it. That accounting has to be done by finance. So that's it's almost like a stool, right? So we're going to have Kelly is going to be coordinating. We have to do the accounting. The project managers have to do the reporting. It all has to come together. And that's why it's better to have it in house.

Tom, your lights on. Did you want to do you have a question?

Yeah. Keep this dialogue going. I have a question about an audit about the audit, but I think it's not this exact question.

Alright. I have a question.

Go ahead, Terry.

We know that I think we know that there are monies outstanding accounts receivable from FEMA. Can you speak to that part of the grant process and where we are with that?

So we're actively engaged with FEMA right now on Milton. The largest part of the expense for Milton is labor hours, overtime, and the benefits with that. And they're doing a heavy duty review on that right now. They've come back to us with questions. So we're responding to that portion. So the focus right now for Milton is on overtime. And that's where they're focused. They did give us a heads up that once they get through this, Helene's on the radar for the same thing. So we've started to go out to the departments that had the bulk of the overtime to make sure that we understand what exactly they did during the emergency so that when it gets we've submitted, it qualifies qualifies for for reimbursement. Reimbursement.

Do we still have outstanding things for Irma?

I think we have a little bit for Irma. Okay. Let me just check.

Well, it's good to hear that they're that we're working on it and trying to pull that money in.

Well, it's it's it's it's a process.

That's why I use the term pull.

Carol, so the regarding the corrective action plan. So when we filed the audit on Page one thirty six of the audit report, we, there was a number of recommendations that we agreed to, regarding a corrective action plan. And this was presented to the city council prior to you being here. Yes. But I don't know if we're going to try and go through that. I mean, at some point in time, make sure that we're living up to those recommendations?

So for the grant accounting reporting, the new process does let us live up to that recommendation to make sure that we're following the matching principle and to make sure that and this will be part of this year's reporting that we review the SEFA and the state financial assistance reports to review the complete and accurate. So that's a standard process and procedure that should take place at this year end and through the audit. Then there was the quarterly review to make sure that we know what's outstanding, and that's part of bringing in the project managers and making sure that we are compliant with the reporting as directed by the grants that we have. So that process has been put in place, and it was in place even before we brought the we're bringing this in house. And again, during Casey's meeting, she is going to emphasize the importance of staying on top of the review and the approval process.

So we're going to clearly define the roles and responsibilities of the grant accounting reporting. And there is a little bit of a difference between the disaster grants versus the grants that we get you know, for some of the roads and from, what is it, Environmental Protection Agency. So

Thank you, Carol. Any other questions for Carol regarding the corrective action plan?

No. Just would say that I did have to an meet with Jose to go through the cybersecurity issues raised, as Helena had done as well. It looks like all the corrective action plans are in process or already closed out. I walked away with two open issues, which I need to come into the building and look at documents because they can't send them to me. But I asked to see the disaster recovery plan, which was raised, and it's done now.

I need to just come into the office to read through it. And I also asked for, from Tyler Munoz, their SOC report. So it's a a system for operational in organizational internal controls. So as a third party, they should be providing that to us, and Jose was trying to get that. So once he gets it, I'll come in, and I'll take a look at that. I did go on Tile Muniz. I did look at their website. I think they at least what you read, their encryption levels and everything you'd expect from a third party seem to be there. But I'm going to look through that report once we receive it.

Thank you, Tom. Appreciate you doing that. Elena, do you have

If I may, there was one more item on the corrective action plan and that was related to audit adjustments. And I just and one of the recommendations was that timely review of financial transactions occurs every day. We also developed and augmented the year end checklist to make sure that we're as complete as we can be before we go into the audit. I consider that a living document because there will be things that we find as we go along, and we're just updating it, making sure we know who owns it so that we don't have anything that falls through the cracks. So again, we are following the year end schedule that was created before I joined, but that doesn't mean we're not improving things as we move through the process.

Great. Thank you, Harold. Chair, Elena?

I'm sorry, I had my light on. I can speak to this as a part of the correction action plan topic. At our last meeting, I had referenced personnel Mhmm. Being the basically, the foundation of the city, and that a lot of our audit findings could be tied to personnel issues. I did subsequently meet with our new HR manager.

I think I we had talked about having her come to the meeting, and I discouraged that because I didn't know how far along she was in getting herself acclimated to our environment. So I asked to not do that, and I met with her personally. And, she's very pleasant. She's very knowledgeable. She, was working at in health care, which she felt was much more complex than, than this.

Though I think what she's really doing right now is making observations, learning the departments, meeting the department heads, trying to look at what their needs are. And she also indicated, and I think you could confirm this, that she was working very closely with Carol. So I think that's a good thing as we're looking at those, deficiencies around the audit that might relate to personnel. I spoke a little bit about what I had concerned about in that just in fundamental ways, job descriptions. So as you're talking about project managers and their roles around grants, I just looked at a sample of job descriptions, and it was interesting to me that some real fundamental things are missing, like the date that the job description was actually developed, a date of revision if there was one, a date of review if there was one.

None of those things existed on the job descriptions that I looked at. But more importantly, the reporting relationship was interesting. There was not clear reporting to an individual. So I didn't know who did the evaluation for this this person because the the reporting relationship indicated the department and not a position. So you couldn't tell it, for example, did the supervisor report to the manager?

It indicated that the supervisor reported to the department. So that was pretty obscure, and I brought that to Diana's attention. But her her interest was to, move a lot of the personnel work into Tyler Munis to eliminate the paperwork and feeling that the paperwork might have been one of the reasons that we had deficiencies, that it just didn't follow through. Carol, I think you want to comment on that.

No. Diana and I are working very closely because I have the payroll person reports into me. And there are things we can do in Tyler to automate and make things more of a straight through process and eliminate paper and maybe and free up some capacity for my team so that our payroll person can take on and do some other things. But yes, Diana and I and Steven, DeSantis, a new procurement person, the three of us are working very closely together because we overlap. Procurement has a big influence on finance.

We I own the finance side, the ops side of payroll. Diana owns the benefits. So we're looking to keep things stay connected. And anything we do, make sure that it helps move things through a straight through process, the documentation is complete, automate as much as you can, and make sure you have the controls in the right place.

Elena, did you have your light Yes.

I just wanted to celebrate for a moment the good discussion here where, for example, Tom jumped in to an area of his expertise to say, okay and deep interest around how are we doing on SOC? What what are we doing on cybersecurity? Terry, you were very comfortable going directly to Diana. And I know that you're very because of your own professional background, you know to look at who's got responsibility for what, how are the job descriptions written, and how are they communicated. So I just wanted to acknowledge that this is a good example, I think, of folks using their expertise and areas of interest and career experience on, I know something.

I'm gonna jump in and help with that process. So thank you for doing that.

I

think it will be very valuable for us to invite Diana to one of our meetings in the future when she can really give us a perspective on the things that she plans to do based upon her assessments.

Down on the list.

Yeah. I think, Daniel, was your light on?

Oh, from

Or maybe I didn't know you.

I jumped in there already.

One of our

Thank you.

I think one of our deficiencies in the past audit was communication. And I'm confident in the short time I've gotten to know Carol that, our communications within that department is gonna be vastly improved. So, we thank you for working on that.

I have to thank my team. They've really stepped up and helped me. And it's you know, we are a little bit shorthanded, but everybody is really trying to move forward. And this is new for them too. They weren't as engaged in the audit last year as they are this year. So we're all coming up a curve, but they're doing a great job.

Thank you. Would you take us through we just had just a few minutes of review this draft flash report, but if you could kind of just briefly take us through it, I'd appreciate it.

So I will be very transparent here. I, too, have had just a few brief time to review it. I just want to point out what did I say here that it is preliminary view. And I am going keep saying it. That's my disclosure right now. I'm going to sound like somebody on repeat. And it's not of the it's of the general fund, which is over on I'm just trying to orient you around the report on the left hand side. And then we highlight some of the larger funds within utilities. So it's not a comprehensive view of every fund in the city. And it's really showing on a full year basis how we do for actual.

And as I said, this is out with the business lines right now to get some commentary on what's driving some of the major variances. And the information that's on here, the notes that are on here, is based on prior quarter reporting and what we've learned. But we do have some more questions out as to why we had such a high budget for, let's just say, if you go over to water and sewer under renewal and replacement revenue and what actually came in on an actual basis. But when you look at it year over year, it trends the same. So we're just trying to figure out what happened in the budget assumptions because it definitely wasn't something that happened on the business side.

If you look year over year, they're consistent. So we're just trying to make sure that we understand and we can note that, which will help us as we move forward in the budget. Was it a delay in something? Is it going to hit next season? Or is it in this year's budget, the '26 budget? That's what's hard about doing year end when you're already into the first quarter of the next year. So this is still a work in process, but the numbers are pretty solid. And there were really no big surprises on the general fund side. And it's not that there are any surprises on the water sewer side. It's just I need to get a better understanding of what was driving some of the variances between budget and year over year.

The one thing I want to say is that this report is always on a year to date basis. So the budget is straight lined. So the comparison really is of value at the end of the year. As you go through the quarter, you've got your month actual and you've just got onetwelve of the budget. That's what you're comparing it to.

So we'll have seasonality as we move through the quarters, especially when we're looking at revenue coming in for the taxes and the expenses coming in throughout the year. So that's something that longer term, I'd like to see if we could do different approach to budgeting, not this year. But I have the question out to Tyler, can we do it by month? What can we do? Aside from that, we are working towards a more of a monthly close so that at least I know the actuals, how they're trending, and I can look at stuff month over month, and we can start to identify the seasonality, which will then help us if we can build a monthly budget.

So that's a longer term goal. But when you're looking at a budget that's straight line against actuals that are coming in, you're going to get some noise as we move through the quarters.

My light's on. That was sort of my my question. How does it work? You know, I think any company that I work for, there's been a a head of a business, and that head would meet with usually the financial controller and the businesses that report into him, and he would take them to task if they're falling below budget on something or if expenses are great. Does that happen? Does the city manager host that kind of meeting on a monthly basis with all the different funds?

So we have weekly meetings with the directors and we do highlight the material things that are going on in their business and we haven't addressed anything that's going on financially because they haven't seen the data yet. We are giving them they have access to the data But if we can start getting more flash reporting, even just something that I can look at, I will be bringing that in to ask them about it. I have no problem doing that. We haven't gotten there, but that's the venue in which we would do it. Everybody is in the room. They hear the same thing. Because if public works is working on something, it might affect sewer. We need I need to hear it together on what what's going on. So I don't know what Casey's plan is. I know she does meet one on one with the directors.

And I may suggest to her maybe we add a financial component to that conversation. I'll see what she says.

One question on the flash report. So we've concentrated primarily on the general fund and there's a little bit on the water and sewer and there's a building fund. But are we when you do the flash reports, will we ever take a look at, like, the police fund or the fire fire fund?

Well, they're in the

It's here.

They're in there. They're under the departments, under the general fund side. We break it out if you go down to the one, two, three, the expense side. On the expense side of under the general fund, it's broken out by, I would say, discipline or

Okay. Yes. Okay. I see it now. Yes.

So in the revenue side, actually, it was we do know that we had some revenue come in because we auctioned some vehicles for the police department. It's harder to break out the revenue that comes in from the fire and the police because it goes right to the general fund, but the expenses are broken out. So that's why it's presented this way. It's by type of revenue and then it's by fund for expense.

Very good. I see it.

Carol, can I ask about the general fund miscellaneous that has the A buy it as a reference?

Yes.

It's the actual budget auction vehicles from Yep. What what does that mean?

We had proceeds from the auction of a few police vehicles.

Okay. So we didn't budget with the idea that we were going to

Not that I

turn those over. Okay.

I'm Oh, sorry. I'm sure I'll be a better contributor after I get oriented to this. I wanna thank you, Carol, for bringing this to us. I'm looking for, I guess, what I would be used to is an EBITDA knowing that we're in a municipal environment, so we probably don't have an EBITDA here. So I see the revenues. I see the expenses. Other I'm looking for a surplus or a or a deficit number here.

You could probably I can do so you'd wanna see a net under Yeah. Under it? Okay.

Yeah. If if you don't mind it, it's

And it will be a net. It's not going to we won't have it by fund because of the way the revenue gets booked. Because of the way the revenue gets booked.

Yes. That's just a that way I could because then just from my how my brain works is and then I go and then I start looking at the drivers, but that's a that could very well just be a personal thing about how how I process information and others might process it differently.

So That's

the way I process it as well. Yeah. Think we all do. I mean, it's a zero profit enterprise.

The revenues coming in kind of

You have deficits or surpluses.

Right. And

also and I would say I know you've got so much but just to add to this there are probably various benchmarks that we could put in such as operating efficiency which would be like administrative payroll to overall general expense or just other types of debt metrics and things. I'm a credit guy.

So some of the things that I want to do as we augment the reporting and that's, again, a longer term goal.

Yes, I understand.

There are certain things that we should be reporting on. Fund balances, what do we have in reserves? Where do they stand, right? The debt service, yes, there should be a debt service schedule that here's what we have in short term, for this year, long term, what's the interest? Those are things that I think are supplemental schedules that should just be a matter of course once we get rolling in through this that can be provided as part of a reporting package. But again, I have to have the team that can produce that and I also just need I need some time. I just need to again focus on my short term goals.

But

I don't disagree. I think transparency on some of the drivers are some of the key things that are important to the city that we get questions on all the time. The data is there. We just have to get it out.

Well, for your first attempt to provide this information, it's very good. Yes. We really appreciate this. It's packed with a lot of information.

It's a lot on one page.

Yeah. Yeah. Packed with a lot of information. So If can

make it smaller, you get even more.

Yeah. Sure I wear my glasses, my readers.

Two pages would be okay.

But I was I was told to I wanted to bring it here first before Casey sends it out to the council.

That's great. Well, by by and large, we we did we had a pretty good year.

No big surprises. Yeah.

We had a pretty good year. But about that year. Just glancing at it and so so thank you for this report and look forward to seeing seeing them quarterly.

May I make one one other? Sure. At the end of the meeting, last meeting, I I forget, one somebody asked me about Doge and where okay. But I couldn't I did I wanted to address everybody. So I went back because you were asking for status. Have we heard from the state yet? We have not heard from the state at all on anything we've submitted. So it's still pending. But I'll keep it on my radar. And if I do hear something, I'll let you know. But I just want to let you know that nothing yet. I don't know if no news is good news or, they're looking at other cities that might be larger. I don't know.

So with transparency, I made a request to the city, public information request for the city's response to what the state submitted. I haven't gotten it yet, but I only just sent it.

We're working on that right now.

Okay. Thank you.

At a federal level, I think Doge has been dissolved. So is that run possibly run down to the state level?

I don't think it's been resolved yet.

Yes, it has.

Has it?

I think it's heard it was absorbed into other departments. So as it stood, it was dissolved.

Right.

But they did identify dozed kind of people within departments.

That would certainly be consistent with sort of private industry and how everyone each company or each major functions in an organization typically have a discipline around improving efficiency. I do believe I don't have my notes here on the Florida Department of Government Efficiency. But there is a time it does have a timeline for its existence, the question because I remember looking at that. I don't know that there's been any action to extend it or anything along those lines. So something for that we'll have to keep an eye on.

On the other hand, based on some of the discussion here and overall the talent upgrades and changes that have been made or continue to be made here at the city, I do my sense

this

is purely anecdotal is that we're driving there's a lot more sensitivity to putting in place the rigor and the discipline and the clarity. We're not there yet. And I know that Carol has been very humble about that. Not waiting for perfection, though. I'm very glad for that.

It would be nice to be perfect, but that's not going to happen. And the pursuit of perfection will just hold us back. So we just have to keep moving and correct as we go along.

Carol, are there any things that this advisory committee should focus on that would be helpful to you?

That's a great question. I'd like to take that back and think about it. I'm actually I think as we our relationship evolves and you bring forward your questions, that helps. That helps just to look at things and to provide clarity. Because the feedback I've heard from the past is that transparency is something that needs to be fostered within the finance team.

Okay. We'll put it on the agenda.

I'm glad you think of it.

Left out Terry Holt's account.

That's the way I'd like you to think about it. And I if I review the disaster recovery plan and I find something, it's not a gotcha. It's let's just make it better.

So I've worked in internal audit early in my career, and I've worked with a lot of internal auditors and external auditors. And you can take you don't have to take every suggestion. But when you're trying to facilitate change and maybe do an assessment of what you need, they're a great tool and it's a good partnership. So I'm doing my best to maintain a good relationship with Chris. He's been very accommodating and responsive. And, you know, we talked about things that are in the audit report and things that, you know, just general observations. And I've been bouncing a few things off of him, so I hope it continues.

How do you manage the budget with him or the expense of Chris?

We have a contract, and it's it's for doing we're just gonna have to track that. He does not want to fall into he is what is it? Once bitten or twice bitten once bitten twice shy. He is very clear. He wants to understand wants to make sure the communication stays open. I've committed to him that we need to stay lockstep through this audit. I want his observations. If he finds something, I want the opportunity to remediate it. It doesn't mean we won't report it, but I don't want to get to the point where it's a weakness. And because I'm used to that.

As you move through an audit, they uncover something. If you can review it and get it done, it it becomes an observation, and it says that it's been cleared. And it still gets disclosed. I mean things people find things, but that's how you build more controls into the process. So but as far as the hours, we are trying to get him based on what was provided last year, improve what was provided, but get him the documentation by the deadline so that they can start going through it and just be as responsive when he asks a question so that the hours aren't building up. But he's on notice. He has you know, he's gonna have to come forward if there's gonna be an issue with the bill.

Carol, thank you very much. We we we appreciate you having you as our liaison and our leader. Appreciate the the work you're doing.

I was bored. I don't know if I'm bored anymore.

We're glad you're not bored.

It's a steep hill, but everybody has been so accommodating and helpful. Can't

Great.

We'll get there.

Staff communications, I guess we've been doing that all along. So if there's anything that we need to add for staff communications. And if not, I was remiss in not, noticing that councilor Xuan and Gray are here in attendance. We always appreciate your joining us at our meeting. And Elliot, thank you for being the lone the lone spectator back there. No problem. Thank you, Elliot. Okay. And city council communication. Any comments from either of our councilors? Appreciate it.

I just have three quick questions, or comments. No questions. What you're doing here is phenomenal. I'm dead serious. We're trying to create the right integrity for the community so that when we try and search them for more money and support, that we have a strong basis for that.

One thing Carol mentioned was seasonality, and she'll learn more about this as she goes along, but we caught a break because we didn't have a hurricane this year. And so to her point, the budgeting process is one twelve, one twelve, one twelve, but some of the rhythms to the execution of the business will be influenced by some of these larger factors. So I I just love the fact that you're thinking that way. I love the conversations and the questions and the attitude, and I believe you're just really setting the right example for the community. I just thank you very much. I love the conversations we're having here. That's it.

Thank you for your comments. Yep. Appreciate it. Ambassador Schwann, good seeing you.

Good seeing you all. Thank you all. I just first of all, we were so appreciative as counsel, the report that came forward with the recommendations from all of you. And it was so well received by the community too. I've received a lot of feedback about they're feeling very confident. And that all has to do with what you've been doing, so thank you very much. Two quick things in regards to if Carol will be on that January 20 agenda, which it sounds like she will be. Any attachment that she has that will be part of the agenda that is released six days prior to our meeting. Actually, our meeting is going to be on Tuesday, the twentieth, because of the holiday. But you would be able to see Carol's document by just tapping into our agenda.

And you also could come to our meeting. There is an opportunity for public comment also. So and that would be great to have that document on there at Carol. The other thing I did wanna qualify, clarify too, and thanks for, Terry brought this up a little bit, in regards to was counsel aware, that the audit advisory committee reports to the city council. I know I was. I know there probably were other members on the council who are aware of that too. We all have different strengths on our team, just like you all have different strengths too. But the important thing is that we're all working together as a team, the council is the legislative body. You're a part of our arm, and we're just so appreciative of all you do for us. So thank you.

Thank you for those comments. Appreciate that, councilor Schwann. Public comment, Elliot, do have any comments? Since you're only public. And Elliot's doing a great job with you're on the, waterway waterways and he chairs the waterways, and I've watched some of those meetings and you're in command there. I appreciate that.

Well, I appreciate those comments. I can probably do even better, but you're gonna see hopefully some progress in the near future too. Be a lot more. I guess I wanted to say, I mean I wasn't prepared with anything, but I wanted to say that after watching your presentation at the council meeting last month, I believe, I think that Marco Island is now headed in a very good direction. I think the population that is paying attention, I think is going to now realize that the problems that we've had with the material weaknesses and everything that has transpired is going to be made right.

I think we're going in really the right direction with your entire committee. And what you had to say and what your presentation was extraordinarily impressive. I was just absolutely you know, I watched it with some other people too and my wife, and we were like, this is where we need to be. This is where we need to go. So just amazing, and I think we have a really good future. And I think that, you know, that your committee will be doing a great job. And I wanna thank you.

Thank you, Elliot. Appreciate those comments. Always do. So we know our next meeting is gonna be Wednesday, February 18 at 1PM. Mhmm. And you got a kind of a tentative agenda when you look at the last page of the roles and responsibilities, but we'll fine tune that and add things to it. And and any suggestions you have regarding the agenda, shoot a note over to Carol or to Jill, and we'll try to include that. And other than that, if anyone has anything else to contribute or not, we will

I was going to offer a quick update.

Okay. Sure. Go ahead.

Actually, at first, sometimes there's like seven courageous, right, that are involved with being a leader. And I want to point out, Carol, you're demonstrating so many of them real time, like the courage to confront, the courage to take feedback. So appreciate the whole process that you're undertaking here. Second, I believe at the last committee meeting, I noted that I was going to meet with now interim city manager Casey Lucius and Diana, the HR leader because I think that was after that meeting about the health care costs, the benefit costs, and the trends on that. It was a very productive meeting.

I shared with them some insights that I've developed through the years. And I looped back with Diana. And what I thought was very interesting, and they shared reports with me, was that it did not appear that the city, which is running a self funded plan. That's a big deal, right? I mean, this is a bank account, and the city is entrusting somebody else, in this case Cigna, to do all the administrative activities.

But there's what I thought was fascinating is that in the reporting, there was no information about incurred but not reimbursed claims. There was no data on utilization trends versus unit cost trends, all these things that should go into a very productive discussion with the broker and with the TPA, because that's really what Cigna is doing. They're serving as a TPA. There was and so Diana took the feedback back, and she reached back out to the broker and said, these are the kinds of reports we want to review. Please provide them.

And so now we're starting to get into, again, in the theme of some of us have some expertise. Let's go in and help. And Diana knows that I'm available at any time to work through that. I'll put my values on the table. If Cigna negotiates a bad contract, I. E, increases its unit costs, seems like, from a negotiation perspective, if I were the city, I'd say, no, not my problem. It's a you problem, not a me problem. I trusted you to do a good job. You didn't do a good job. I'm not interested in your 15% increase. But it was a very productive meeting, and I look forward to continuing to work with them.

Do you know what our increase was this most recent?

Yes. Cigna came out with a 15%. And the city and the broker negotiated that down to about 6% to 7%.

Still,

I was looking at the MLR or the and I didn't think the MLR Reflected. Reflected that. I could not the seasonality was still there the way it always is. I mean, Carrie, you and I lived this, right? The seasonality was always there.

But I did not see anything that should have caused long term for the city or for the actuaries over at the broker to say, that's a great deal. Now that's, again, that's why some of the additional reports would have been valuable. So I inquired about things like, if you've got high cost claimants, what's going on with that? So that de identified claims data no one's getting into anybody's personal life. But the de identified claims data around high cost claimants, very important, right?

Because then you can ask questions like, what are the care management programs that can help those particular enrollees? Yes. Keep the cost down but get the right kind of care. Because I want to be very clear that it's about quality outcomes and managing costs. And the two are never mutually exclusive. They should not be one or the other. It is both. So I'm looking forward to helping with that.

Thank you. Do

So do we put you on a future agenda?

I'm I'm happy to do that

once I end up listening.

Happy to do that.

Is that increase of six you said six to 7%, is that typical in in what's happening in our world today?

That is certainly where if you look at the employer group studies that have been conducted, that's certainly where many of them have said their twenty twenty six plans are coming in at. I will not be Pollyanna and say that we don't have a that there hasn't been an increase in medical costs overall. I just think in this n of one, in this sample of one, I am incredibly skeptical that the city was being well represented by the broker and was provided enough data to argue back.

Yeah. That just kinda dovetails to me into another discussion, not necessarily health care. But I think contracts are something that we need to figure out a way to look at and help the city be more efficient if if efficiency exists. One of the contracts that, comes to mind is our most recent landscape contract, which I think had some flops. And that may be just the tip of an iceberg for contract management, not only the selection, but then the management of that contract going forward.

So I'd like us to consider that as another topic on our agenda at some point in time. Carol, do you have a thought about contracts?

I mean, it all ties back to the financial health of the city. And are we getting the services that the standard that we want? I mean, it goes back to something that I just heard, like things aren't mutually exclusive. Right? You you don't go for the lowest bidder and expect there's a balance someplace. So I I

Well, and that and you bring up something that I've always had concern about, and that is this emphasis on going with the lowest bidder. I never had a sense that we did a reference check of other projects at that particular and maybe we have, and I'm just not aware. But to know that the vendor that we're selecting is the best bidder, not just the lowest bidder.

I think if the goal is quality, there's a difference versus

the

quantity of cost. And there are some places where it is appropriate to get multiple bids and go with the lowest bidder, but there's an analysis that's done. I'm not saying that's not done. I don't have a line of sight into it. All I'm saying is that it does play into the overall financials of the of the city.

And and I think that's what I'm basically saying. I'm not being particularly critical of what we're doing now because I don't know what it is, in total. But I think it's an area of vulnerability, and it would be great for this committee to just look at it and say, yes, it looks pretty good, or these are areas that probably could stand some improvement.

Good point. I think I saw on the January 5 city council agenda, there were some items. I don't remember the details right now. So shame on me. But I think there were some upcoming expenditures to be approved that would be worthwhile for us to look Well, at in

I appreciate your comment, Terry and Elena and Tom and all of you. I think we got a great committee. And you all have an area of expertise that is going to make our committee much more productive. I appreciate that. Any other comments before we adjourn? And if not, I would entertain a motion to adjourn the meeting. And our next meeting is going to be on Wednesday, February 18 at 01:00. So anyone wanna make a motion to adjourn?

I move we adjourn.

Terry, move to adjourn. Elena, did you second it?

Yes. That was my my nod.

It's been moved and seconded, and we are officially adjourned. Thank you all. And thank you all for attending.

Thank you very