TO: Mayor Bien-Willner and Town Council Members
FROM: Jill Keimach, Town Manager
Douglas Allen, CPA
DATE: April 9, 2020
DEPARTMENT: Finance
Staff Contact Douglas Allen
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AGENDA TITLE:
Title
Discussion of the Town’s Financial Management Policies for FY2020/21; and Ordinance 2020-04 Authorizing Warrants and Electronic Payments
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SUMMARY STATEMENT:
1. FINANCIAL MANAGEMENT POLICIES
A. PURPOSE
The purpose of this agenda item is to provide a general overview of the Town’s current Financial Management Polices and other priorities that are integral in framing the Town’s financial management, including budgets, financial forecasts and plans.
Staff will highlight the impactful policies and provide an explanation for the recommended amendments.
B. APPROVED DATES
There were three primary dates the Town’s Financial Management Policies were approved. Council approved the Financial Management Policies via resolution on 02/26/2009 and 02/25/2010.
As part of the FY2016/17 budget process, Financial Management Policies were discussed with Council on 04/26/2016. But no official Council action was recorded. Since then, the policies have appeared in the Town’s Adopted Budget books, as presented on 04/26/2016.
C. TRACKING AMENDMENTS
Effective with the FY2020/21 Financial Management Policies, all modification dates are now included with each policy.
D. COMMUNICATION AND COUNCIL ACTION
Management recommends the Financial Management Policies be integrated with other annual processes. It is recommended Council adopt the Financial Management Policies with the annual budget resolution that includes the CIP and Strategic Revenue Plan (stress test)
Separate actions that also occur annually include resolutions for prior year budget amendments; the State mandated PSPRS UAAL Funding Policy; the employee handbook and authorizing contracts and any anticipated purchases over $100,000 that may need to be ordered before Council returns in September.
E. QUALITY REVIEW
The Town requested a review of these Financial Management Policy amendments, some Town Code amendments and other finance related processes and workflows.
In January and February of 2020, The Town’s recent independent auditing firm had reviewed, provided comments. The independent auditor did not have accounting, financial reporting or internal control concerns.
F. QUESTIONS AND NEXT STEPS
Additional discussion on these policies will be scheduled through the budget process. Any questions and feedback on wordsmithing or terminology is encouraged. Council action is tentative with the annual budget resolution in June 2020.
G. INVESTMENT POLICIES
The Town’s Investment policy is a separate document that was reviewed and received comments from industry professionals. But, with the current unprecedented events and market conditions, staff has decided to postpone this investment policy discussion and focus on other financial priorities.
2. ORDINANCE 2020-04: Authorizing Warrants and Electronic Payments
A. PURPOSE
The purpose of this recommended Town code amendment is to maintain continuity of operations for paying Town obligations timely and accurately while continuing to adhere to the Town’s strong set of internal controls.
B. EFFECTIVE DATE
If approved, it is recommended to waive the waiting period for Town Ordinances to be effective immediately.
C. BACKGROUND
Town management has identified various opportunities for enhancing processes and workflows. A common theme is moving from manual processes to secured automated processes. These processes are expected to be more efficient and effective, with stronger quality and internal controls.
On January 23, 2020 Town Council approved amending this section of Town code by modifying what positions are authorized to sign checks. This change was to maintain continuity of operations with the plan to revisit this process later in the fiscal year.
Since then, the Town is facing new challenges with staff working remotely due to Covid-19. This recommended amendment is to ensure continuity of operations in the approval processes. Due to external circumstances, the time needs to be moved up.
D. INTERNAL CONTROLS
Internal controls over issuing payments are addressed in the Town code Section 3-8-3 and the Town’s procurement procedures.
In addition to the attached redline code change, staff is proposing a change in the check approvals, requiring one staff and one elected official (Mayor or Vice-Mayor) for all checks approved over $25,000. Currently, as written, a check could theoretically be approved by a Mayor and a Vice-Mayor without staff (Manager or Chief Financial Officer) approval.
E. QUALITY REVIEW
The Town has requested review of this code amendment and other Financial Management Policy and finance related processes and workflows.
In January and February of 2020, The Town’s recent independent auditing firm had reviewed, provided comments, and did not have concerns as long as the Town’s internal controls remain in place. A second auditor opinion has been requested and will be available by April 9th.
F. OTHER MUNICIPALITIES
Management’s recommendation aligns with other municipalities. Though not addressed in great detail, the table below was included in previous Council packets in January 202 with plans to be revisited later in the fiscal year.
The Town’s Finance department conducted a survey of local municipalities. The common theme of respondents was:
Ø Limited check signers;
Ø Same signers for all thresholds;
Ø Use of electronic signatures; and
Ø Emphasis on their strong internal controls.
ATTACHMENT(S):
01 Presentation
02 Financial Management Policies for FY2020/21 “Red-lined”
03 Financial Management Polices for FY2020/21 Clean version
04 Ordinance 2020-04 Authorizing Warrants and Electronic Payments