MINUTES OF THE MEETING
THE AUDIT COMMITTEE
A meeting of the Audit Committee was held via videoconference at the Authority’s offices at 123 Main Street, White Plains, New York at approximately 10:25 a.m.
The following Members of the Audit Committee were present:
Also in attendance were:
John S. Dyson Trustee
Gil Quiniones Acting President and Chief Executive Officer
Judith McCarthy Acting General Counsel
Edward Welz Acting Chief Operating Officer
Donald Russak Acting Chief Financial Officer
Karen Delince Corporate Secretary
Brian McElroy Treasurer
Thomas Concadoro Vice President & Controller
Dennis Eccleston Chief Information Officer
Lorna Johnson Assistant Corporate Secretary
Sheila Baughman Senior Secretary, Corporate Secretary’s Office
Ken Deon Managing Partner, KPMG
Chairman D. Patrick Curley welcomed Trustees Foster, Nicandri and Dyson and senior staff to the meeting.
Chairman Curly said that, after discussion with senior staff, in the future, agendas for the meetings will be provided to the committee in draft form prior to the meeting so that, based on any comments, adjustments can be made to the agendas before the meetings. By motion made and seconded the agenda for the meeting was approved.
The minutes of the Committee’s Regular Meeting of March 14, 2011 were adopted.
Mr. Thomas Concadoro presented highlights of the Authority’s financial statements for the six months ended June 30, 2011. He said that the reports are consistent with the results presented by the Chief Financial Officer to the Board in July and are required to be filed annually with the Authority’s banking institutions by September 30, 2011. The highlights are as follows:
In response to a question from Chairman Curley, Mr. Concadoro said that funds transferred to the State and to be repaid pursuant to the MOU are treated as long-term receivables on the Authority’s balance sheet. Contributions, which are not repaid, are reflected as a reduction in net income. In response to further question from Chairman Curley, Mr. Concadoro said that, from a compliance standpoint, additional loans would need to be evaluated as to asset quality before putting them on the balance sheet as assets. Mr. Russak added that, from a business perspective, the Authority would not want to see balances build up to a level such that it would be impractical for it to be repaid.
Responding to another question from Chairman Curley, Mr. Concadoro said that the report was prepared internally by staff and that KPMG was not involved in the preparation but were provided a copy. In response to a question from Trustee Foster, Mr. Ken Deon, said KPMG read the report in conjunction with the recent bond offering and obtained explanations for significant variations compared to last year.
Mr. Lesly Pardo presented an overview of the 2011 Internal Audit Plan to the Board. He said that 36 audits have been scheduled for 2011. As of August 31, 2011, twenty audits have been completed, six audits are in progress and twelve are scheduled to be completed by the end of the year. Approximately 67% of the audits in the audit plan are completed or in progress. Sixteen audit reports with 32 recommendations to improve the Authority’s internal controls were issued, all of which were accepted by management. He said that the Internal Audit staff continues to receive full cooperation and support during the audits.
Mr. Pardo continued that of the audit reports issued to date, Internal Audit staff did not identify any material control deficiencies, that is, any recommendation that is not implemented would have an adverse impact on the Authority’s operations, financial condition or impair its reputation. Most of the recommendations were for improvements to strengthen the Authority’s internal control system.
In response to a question from Chairman Curly, Mr. Pardo said that SAP means Systems, Applications, and Products, and is the application that supports the Authority’s key financial systems e.g., general ledger, accounts payable, customer billings, and human resources.
In response to a question from Trustee Nicandri, Mr. Pardo said that he was satisfied with the level of cooperation from management who has been very supportive.
In response to a question from Trustee Foster, Mr. Pardo said the approval process for union employees was informal and it was recommended that the Authority improve this process by using staffing authorization forms that are currently used for salaried employees. With respect to the Power Contract process, it was recommended that the process be formalized to ensure that all required procedures are being followed.
Mr. Donald Russak suggested that the next Committee meeting be held November. Chairman Curley said he would put this suggestion in abeyance; in the meantime, he will ask that staff plan for the meeting as previously scheduled in October.
The next regular meeting of the Audit Committee will be held on Tuesday, October 25, 2011, to commence at approximately 9:30 a.m., at the Clarence D. Rappleyea Building, White Plains, New York.
On motion made and seconded, the meeting was adjourned at approximately 10:45 a.m.