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HomeMy WebLinkAbout2010-10-11 - Finance-Accounting Committee Meeting Minutes MINUTES OF THE YORBA LINDA WATER DISTRICT FINANCE -ACCOUNTING COMMITTEE MEETING October 11, 2010 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 John W. Summerfield, Chair Ken Vecchiarelli, General Manager Director Ric Collett Stephen Parker, Finance Director OTHER ATTENDEES Nitin Patel, CPA - Partner, Diehl Evans & Company, LLP Daphne Munoz, CPA - Manager, Diehl Evans & Company, LLP 1. PUBLIC COMMENTS None. 2. ACTION CALENDAR 2.3. Submission of Audit Reports (This item was considered first) Mr. Vecchiarelli indicated that this was the first Comprehensive Annual Financial Report (CAFR) that the District had completed. Mr. Parker identified the three deliverables to the Committee from the annual audit and deferred the discussion to Mr. Patel. Mr. Patel discussed the Report on Internal Control. He mentioned that there were no comments on it in the current year. He referred to one of the findings from the previous year - closing out old jobs on the CIP listing as having been addressed, and resulting in a prior period adjustment on the CAFR. Mr. Patel went through the disclosures on the Communication To Those In Governance letter. He indicated that the disclosures in the letter were basically boilerplate with nothing special occuring in the current year. Mr. Patel then discussed the CAFR and explained that this first CAFR reached a higher level of disclosure and prestige and could be advantageous when issuing debt. He reviewed the auditors' opinion on page 1 and 2 with the Committee and indicated some of the limitations of an audit, which components of the CAFR were reviewed by Diehl, Evans and Company, LLP, and explained that the current years' opinion issued was an unqualified or "clean" opinion. He further discussed the adjustments that related to prior years that were corrected in the current year as detailed in footnote 13. 1 He then referred to the Combined Statement of Revenues, Expense and Changes in Net Assets and pointed out that the District's net assets increased by $5.1 million during the year ended June 30, 2010, which is a positive indicator of the District's financial health and management. He also noted that there was actually a net loss of $1.6 million prior to capital contributions, and the reason net assets increased was related to developer contributions of capital assets. On a less positive note, Mr. Patel reported the District's unrestricted net assets continued to decline from negative $6.2M to negative $8.1 M during the fiscal year ended June 30, 2010. Mr. Patel shared that he had not encountered another water district with negative unrestricted net assets. The Committee discussed what could be done to remedy this situation. Mr. Vecchiarelli explained that funding additional reserves would definitely help improve this indicator. The District has already made some improvements in this area over previous years. The Committee recommended that staff submit the audit reports to the Board of Directors to receive and file. 2.1. August 2010 Budget to Actual Results Mr. Parker discussed the monthly budget to actual results. He noted that water operating revenues are lower than expected due to lower water consumption. Mr. Vecchiarelli explained that the current conservation rate of over 21% is actually a 40% increase over the 15% conservation rate that was budgeted for the current fiscal year. Mr. Parker shared that variable water costs as a percentage of the yearly budget are higher than operating revenues. Mr. Vecchiarelli shared that the same practice that was used last year to save over $190,000 (purchasing water from MWDOC aggressively prior to an upcoming rate increase) was being utilized again in the current year. Ultimately, he explained, this would result in lower water costs for the year, as less import water would have to be purchased after the rate increase goes into effect. Mr. Parker shared that other expenses and revenues were generally on target with budgeted projections, and explained a couple of the more minor line items that varied from budgeted expectations. The Committee received and filed the August 2010 Budget to Actual Results. 2.2. August 2010 Monthly Investment Report Mr. Parker presented the August monthly investment report and noted that the vast majority of the money in CalTRUST's Money Market Account was now transferred into their Short Term Account, which currently yields more than twice the return and is still available within 1 day. He also reported on transfers made between sewer funds (operating and reserves) implementing recommendations consistent with the adopted financial reserves policy. The Committee asked about the CalTRUST investment program. Mr. Parker stated he was pleased with it and noted the benefits of its ability to allow tracking of different reserve accounts. He also shared the benefits of investing in a fund that has an average days to maturity of over a year, yet still allows access to funds within a month. The 2 Committee received and filed the August 2010 Monthly Investment Report. 3. DISCUSSION ITEMS 3.1. Future Agenda Items and Staff Tasks None. 4. ADJOURNMENT 4.1. The Committee adjourned at 4:36 p.m. The next regular meeting of the Finance-Accounting Committee will be held on November 8, 2010 at 4:00 p.m. 3