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HomeMy WebLinkAbout2011-08-08 - Finance-Accounting Committee Meeting Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE-ACCOUNTING COMMITTEE MEETING August 8, 2011 A meeting of the Finance-Accounting Committee was called to order by Director Collett at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. COMMITTEE STAFF Director Ric Collett, Chair Ken Vecchiarelli, General Manager Director Robert R. Kiley Stephen Parker, Finance Director OTHER VISITORS None. 1. PUBLIC COMMENTS None. 2. DISCUSSION ITEMS 2.1. Auditor Discussion with Those in Governance Nitin Patel, Partner, and Daphnie Munoz, Manager, from Diehl, Evans & Company, LLP spoke to the Finance-Accounting Committee about the requirements and limitations of the external audit and the reports that would be issued. The Committee asked some clarifying questions. Mr. Patel indicated that internal controls had already been reviewed at the interim phase of the audit, and that the final fieldwork portion would begin the week of August 22, 2011. He expected to present results to the Finance-Accounting Committee in their October meeting. 3. ACTION CALENDAR 3.1. June 2011 Budget to Actual Results Mr. Parker presented the June 2011 Budget to Actual results. He explained that while the Accounting Section had completed all the year- end accruals, the audit still might reveal some minor changes to these numbers. Overall, despite operating revenues falling 10% short of expectations, the District ended the year better than budgeted. One of the factors that negatively affected June's numbers is the closing of a couple of jobs that were budgeted in CIP but did not meet the definition of a capital asset, and were required to hit the expenses category. These jobs were studies that did not result in moving forward with capital asset improvements, including the Recycled Water Program, the Sewer Master Plan Update for 2010 and the OC-51 Connection Upgrades. Another negative factor was the Vista del Verde Valve Replacement project, which required writing off just over $100,000 in asset value for defective valves that were not fully depreciated when they were replaced. The combination of these factors resulted in additional unbudgeted charges of $500,000. Even with these charges, the District ended the year with a net loss of 1 $1.57 million, which was positive by $500,000 compared to the budget. The Committee reviewed the results and recommended the Board of Directors receive and file the quarterly budget to actual statements. 3.2. Investment Report through June 2011 Mr. Parker discussed the Investment Report Through June 2011. He explained that yields increased to 1.04% primarily because the District invested the majority of its 2008 COP Reserve in a three-year Federal Home Loan note, which will result in an effective yield of 0.9% over the life of the asset, a large improvement over the money market fund, which was earning 0.1 Also, Mr. Parker explained that a number of transfers were made to various reserves to end the year in accordance with the District's reserve policy. The Committee reviewed the results and recommended the Board of Directors receive and file the quarterly investment report through June 2011. 4. DISCUSSION ITEMS CONTINUED 4.1. June 2011 Unaudited Debt Service Ratio Mr. Parker presented the June 2011 Unaudited Debt Service Ratio. Primarily as a result of revenues not meeting budgeted expectations, the District's debt service ratio was lower than budgeted - despite ending the year better than budget on the financial side. The District's unaudited debt service ratio for the year ending June 30, 2011 is 1.66, which is significantly above the 1.10 bond covenant requirement, but trending in the wrong direction to maintain a high rating on the District's bonds. 4.2. Possible Change to Regular FAC Meeting Day Mr. Parker explained that currently financial information was reported to the Committee with a delay (e.g., June's information is presented at the August meeting). He explained that if the Committee were able to meet any time after the third Monday of a given month, the Accounting Section would be able to present the financial information for the prior month. The Committee was in support of the change, and after a review of their calendars, suggested that future meetings occur on the 4t" Monday of the month, beginning with the September meeting. 4.3. Status Report on Committee Specific Strategic Plan Initiatives Mr. Parker recapped the changes to the Strategic Plan Initiatives as they related to the Fiscal Responsibility area. There were some questions by the Committee that were responded to. 4.4. Future Agenda Items and Staff Tasks None. 5. ADJOURNMENT 5.1. The Committee adjourned at 5:09 p.m. The next regular meeting of the Finance-Accounting Committee will be held September 26, 2011 at 4:00 p.m. 2