TOWN OF SOUTH WINDSOR
MINUTES
TOWN COUNCIL WORK SESSION
COUNCIL CHAMBERS JUNE 5, 2006
SOUTH WINDSOR TOWN HALL TIME: 7:00 P.M.
1. Call Meeting to Order
Mayor Streeter called the meeting to order at 7:05 p.m.
2. Roll Call
Members Present: Mayor Matthew Streeter
Deputy Mayor Thomas Delnicki
Councillor Deborah Fine
Councillor Edward Havens
Councillor Kevin McCann
Councillor Tim Moriarty
Councillor John Pelkey
Councillor Cary Prague
Councillor Keith Yagaloff
Also Present: Town Manager Matthew Galligan
3. Public Participation: None
4. Communications: None
5. Town Manager’s Report: None
6. Items for Discussion
A. Annual Financial Report of the Town of South Windsor (Year Ended June 30, 2005)
Mr. Joseph Centofanti and Mr. James Lyons, from Kostin, Ruffkess presented the Town of South Windsor’s Annual Financial Report and then addressed questions from the Town Council.
Deputy Mayor Delnicki began by asking the whereabouts of the “Management Letter” usually accompanying the Audit Report and provided to each Councillor with the Audit. Mr. Galligan provided a copy; and the Clerk of the Council duplicated it for the Councillors.
6. A. (Continued)
Councillor Fine asked if the “recommendations” made in last year’s Audit Report were addressed. Mr. Galligan responded that the primary recommendation made last year was with regard to “Capital Assets;” and meeting that criteria would probably be a “work in progress” for several years to come.
The discussion then moved on to the serious problems recently experienced in the Town’s Building Department; and the feeling of the Auditors that the these problems went undetected due to the “inadequate controls” of the software used in the Building Department that allowed things to “look like they balanced” when—in fact, they did not.
Councillor McCann then asked Mr. Lyons about “misdeeds” with regard to improper reporting about funds collected; and added that some people feel these discrepancies should have been “picked up” by the Town’s audit. He asked if this, indeed, was the case—and, if so, was it reported, and what had the Auditors recommendations been. Mr. Centofanti, a Principal with Kostin, Ruffkess, explained that this type of audit was not designed to detect “all fraud;” and emphasized that the scope of the fraud experienced, and the way it was perpetrated might not necessarily be picked up by a regular audit.
Mr. Centofanti continued by explaining that the report that were being prepared, internally, would not have identified this problem. However, he said, just prior to this fraud, the Building Department was one of the areas that his firm was planning on suggesting changes.
When asked by Councillor McCann if it was because of the “dollar amount” involved that this problem was not identified, Mr. Centofanti replied that it was. And when further questioned as to what level of money would have to be reached before these misdeeds were detected, Mr. Centofanti responded that he did not have that information with him.
Councillor McCann then asked the Auditors if they had since come up with recommendations on how to avoid this type of problem in the future; and was told by Mr. Centofanti that they had—that their last recommendation on Departmental cash receipts apply to “everyone” in the Town government dealing with cash payments, etc.
6. A. (Continued)
Continuing, Mr. Centofanti added that with regard to the Building Department, the cash receipts were not forwarded in a “timely” manner, and the “register system” did not have the ability to identify the type of payments made by customers—that is, cash vs. checks. This, he said, “was a critical control—not making sure that everything is getting to the bank and the way it is received.” People, he stated, will steal cash versus checks; and, if the deposits are not matching, that would indicate a problem.
Councillor McCann then asked if the auditors had identified any other Departments where this could happen; and, assumed that the recommendations made by the Auditors would apply to any Department that is “handling cash.”
Councillor Moriarty questioned the “proprietary software” being used by the auditors that failed to pick up this fraud; and asked what the firm was planning to do in the future that would insure this did not happen again. In response to that, Mr. Centofanti pointed out that when this audit was being done, the firm was not looking specifically at the Building Department, but were auditing the “General Fund”—and were auditing $80 million compared to $7,000-$15,000.
Mr. Centofanti again emphasized that the software being used by South Windsor’s Building Department “had inadequate controls which allowed things to look like they balanced.”
Councillor Yagaloff explained that he was not mostly concerned with the overall dollar amount of the theft, but his priority is that the Town does not have employees that are dishonest. He is also concerned that buildings are being built without permits being issued and without the appropriate inspections; and construction being completed without Certificates of Occupancy. He also stated that his being a Member of the Audit Committee has made him comfortable that this Committee, the Council, and the Town Manager have appropriately addressed the underlining issue.
Councillor Pelkey discussed the recommendations in the audit report that the Town establish procedures for capturing certain data. The auditors answered his question regarding depreciation.
6. A. (Continued)
Mayor Streeter asked if the recommendations for the Board of Education were going to be forwarded to that agency. Town Manager Galligan said that he believed it had already been discussed with them.
Deputy Mayor Delnicki discussed the Undesignated Fund Balance for the General Fund. The auditors explained the range and stated that the Town is within the recommended range.
Deputy Mayor Delnicki asked the Town Manager if he is in the position to comment on the recommendations made to management. Town Manager Galligan commented that the staff has been working of the first recommendation. He stated that the second one deals with the accounting system and putting all spreadsheets into Minis rather than in Excel spreadsheets, and the Director of Finance is working on that. He also explained that they wanted to make sure that the major accounts got put on and there are other issues, especially in the Building Department, and they are moving them onto MUNIS to take care of some of the issues including the cash register systems. He said that the third recommendation will be addressed by the Superintendent.
As far as the cash receipts, he explained what was done in the past, and MUNIS will be put in every department and they are looking at some other systems that could help the process.
Deputy Mayor Delnicki asked town Manager Galligan if he is in a position to comment on the recommendations made to management. Mr. Galligan said that the accounting system portion is probably done already. With regard to “cash receipts”, he added, --“all that money used to be collected by the Collector of Revenue. However, people complained about having to go to one Department for the permit, and to another to pay for it. The TQM process tried to be more “customer friendly,” he added. so it was suggested that it would be more convenient to get the permits and pay for them in the same Department.
Deputy Mayor Delnicki then asked the Town Manager if there is any timeline for implementing this new system in the Building Department. Mr. Galligan added that the Town was looking at the new MUNIS system; and the Bank of America was looking at a “scanning cash register” so that any time a check is used to pay for a permit, etc, it is scanned; and the Town’s account is immediately credited with receiving that amount.
6. A. (Continued)
The Deputy Mayor Delnicki then took the time to recognize the Audit Committee, Councillor Yagaloff, Councillor McCann, and himself. He also asked the Auditors to explain the difference between “an audit” and a “forensic audit.” Deputy Mayor Delnicki thanked the Audit Committee and the Auditors.
B. Capital Projects - Bonding
Town Manager Galligan explained that there are a lot of issues in South Windsor regarding infrastructure and how the Capital Projects Committee decided to look at bonding some of those projects.
Michael Gantick, Director of Public Works handed out a list of some of the proposed projects.
Town Manager Galligan explained that in order to meet the time frame, if the Council wants to bond any of these for this year, it will have to be discussed during the last meeting in July or have a special meeting in August or the beginning of September.
Mayor Streeter asked when the Capital Projects Committee meets again. Councillor Pelkey said that he thinks it is somewhere around June 21st.
Councillor Pelkey explained that one of the problems he has with going out to bonding is that he feels that the Town should be properly funding the Capital Projects budget on a year to year basis. He said that the reason why the Town has accumulated so many millions of dollars is because the Town has not done that. Going out to bonding would probably ease some of the projects that need to be done.
Councillor Yagaloff asked if the bonding is intended to replace the Capital Projects line item, and if there is, how is the spending in two accounts going to be dealt with. He also asked about the process, and if it has to go to referendum, and what happens if it fails.
6. B. (Continued)
Mayor Streeter explained that the first project is listed for 2007/2008 and even if they fail in referendum this fall, it will still be something that is discussed for capital projects for the next fiscal year. He explained that what Councillor Pelkey was discussing was that if the bonding does pass, he does not want Capital Projects to be reduced by that amount.
Councillor McCann stated that he believes the Capital Projects Committee is going to come up with a consensus to present to the Council. He explained that it makes sense for the Town to bond.
7. Executive Session
Deputy Mayor Delnicki made a motion to go into Executive Session to discuss personnel issues; and the Possible Purchase of Property by the Town of South Windsor was made at 7:50 p.m.; was duly seconded; and approved unanimously.
8. Adjournment
At approximately 8:00 p.m. a motion to adjourn was made; duly seconded; and approved unanimously.
Respectfully submitted,
Patricia R. Brown
Clerk of the Council
(and)
Vanessa Perry
Executive Secretary
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