MINUTES OF THE REGULAR MEETING
Table of Contents
Subject Page No. Exhibit
1. Adoption of the Proposed Meeting Agenda 3
2. Approval of the Minutes of the Regular Meeting 4
of March 27, 2012
3. Internal Audit Activity Report – June 30, 2012 5 “3-A – 3-C”
4. Motion to Conduct an Executive Session 8
5. Motion to Resume Meeting in Open Session 9
6. Authorization to Engage with KPMG to Provide 10
Consultation Services Associated with
Participation in New York TransCo
7. Next Meeting 11
8. Closing 12
Minutes of the regular meeting of the New York Power Authority’s Audit Committee held at the Authority’s offices at 123 Main Street, White Plains, New York at approximately 10:10 a.m.
The following Members of the Audit Committee were present:
Also in attendance were:
John R. Koelmel Chairman
Gil Quiniones President and Chief Executive Officer
Judith McCarthy Executive Vice President and General Counsel
Donald Russak Chief Financial Officer
Karen Delince Corporate Secretary
William Nadeau Senior Vice President and Chief Risk Officer
Thomas Concadoro Vice President and Controller
Lesly Pardo Vice President – Internal Audit
Dennis Eccleston Chief Information Officer
Gary Schmid Manager – Network Services
Lorna Johnson Assistant Corporate Secretary
Sheila Baughman Senior Secretary, Corporate Secretary’s Office
Chairman Terrance P. Flynn presided over the meeting. Corporate Secretary Delince kept the Minutes.
Chairman Terrance Flynn welcomed committee members Trustees Nicandri and LeChase, also Chairman Koelmel and Authority senior staff to the meeting.
1. Adoption of the Proposed Meeting Agenda
By motion made and seconded the agenda for the meeting was adopted.
2. Approval of the Minutes
The Minutes of the Committee’s Regular Meeting of March 27, 2012 were approved.
3. Internal Audit Activity Report – June 30, 2012
Mr. Lesly Pardo submitted the following report:
“The Internal Audit Activity Report covers the performance of the Internal Audit Department for the period of January 1 through June 30, 2012.
“For the first six months of 2012, Internal Audit completed 16 audits; one special project and three audits were in progress. Based on the 2012 Internal Audit Plan, there are 21 audits remaining and these audits are scheduled to be completed in the last six months of 2012. Internal Audit issued 11 audit reports containing 28 recommendations to improve internal controls/operational efficiency. All issues and recommendations are being appropriately addressed by management.
“During the first six months of 2012, Internal Audit completed several other projects, including assistance to the Ethics Office in the investigation of Whistleblower Events and work on the Economic Development Job Commitment audits.
“The Internal Audit Department is an independent, objective and consulting function designed to add value by improving the Authority’s internal control structure and operations. It helps the organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate, test and improve the effectiveness of internal controls, risk management and governance processes.
“The Audit Committee Charter states that the Committee is to provide direct oversight of the internal audit function and shall meet at least three times a year with the head of the Office of Internal Audit (“OIA”) for the purpose of reviewing audit activities, audit findings, management’s responses, remedial action plans, and providing the OIA an opportunity to discuss items and topics of relevance to the Audit Committee.
“The purpose of this report is to provide the Audit Committee the status of the 2012 Internal Audit Plan which was reviewed by the Committee at its meeting in February.
1. Highlights as of June 30, 2012
· Completed 16 audits and one special project including 12 financial/operational and four (4) information technology audits.
· Three (3) audits were in progress.
· Twenty-one (21) audits remaining based on 2012 Internal Audit Plan.
· Issued 11 audit reports containing 28 recommendations to improve internal controls/operational efficiency. Five reports currently under review.
· All issues and recommendations are being appropriately addressed by management and have either been implemented or are scheduled for implementation.
· No restrictions have been placed on Internal Audit’s work. Full cooperation is being received at all levels.
· There are no matters that need the Committee’s attention.
2. Audits Completed/In-Progress
A. Exhibit “A” lists all audits in the 2012 Audit Plan and their current status. As of June 30, 2012, approximately 48% of the audits in the Audit Plan have been completed or are in progress. The following reports were issued in the first six months of 2012:
Generation Resource Management 02/28/2012
Mobile Device Security & Controls 02/28/2012
STL LEM 03/09/2012
SAP – Business Intelligence 03/09/2012
SENY Governmental Customers – LTA 04/16/2012
Hydro Revenues 04/18/2012
Health & Safety Program – Training 04/30/2012
Central Region O&M 05/30/2012
Headquarters ProCard 05/31/2012
B-G Finance & Administration 06/15/2012
Operational Planning 06/15/2012
Exhibit “B” provides a summary of audit reports issued, including audit objectives and findings and/or recommendations.
B. Reports under Review with Management:
· Enterprise Risk Management
· NYISO Energy Settlements – LSE
· Information Security – SAP
· Navigant Consulting Contracts
· White Plains Office Data Center
C. Audits in Progress:
· Flynn Outage Management
· Fleet Operations
· Astoria Energy II Project Agreement
3. Other Internal Audit Activities
A. Investigation Support
During the first six months of 2012, Internal Audit assisted the Ethics Office in the investigation of Whistleblower Events.
B. Economic Development Programs Job Commitment Audits
A sample of 35 hydropower customers (replacement and expansion) was selected for audit. The purpose of these audits is to verify the accuracy of job reports submitted by customers. These audits are being conducted by an outside consultant.
C. Transmission Consulting Project
IA participated in a benchmarking study, along with Transmission Division personnel, to identify best practices in the management and monitoring of Right-of-Way Vegetation Program costs.
4. Internal Audit Plan – July through December 2012
There are 21 audits remaining in the 2012 Audit Plan, including 15 Financial/Operational and six (6) Information Technology audits; these audits are scheduled in the second half of 2012.
Exhibit “C” lists the audits and audit scope.”
4. Motion to Conduct an Executive Session
Mr. Chairman, I move that the Authority conduct an executive session pursuant to the Public Officers Law of the State of New York section §108 to discuss matters relating to contract negotiations. Upon motion made and seconded, an Executive Session was held.
5. Motion to Resume Meeting in Open Session
Mr. Chairman, I move to resume the meeting in Open Session. Upon motion made and seconded, the meeting resumed in Open Session.
6. Authorization to Engage with KPMG to Provide Consultation
Services Associated with Participation in New York TransCo
Mr. Donald Russak provided highlights of staff's recommendation to the Committee. He said the Authority has been exploring potential participation in a joint venture with other transmission entities in the state which may result in the formation of New York TransCo. Authority staff is now requesting the Committee’s approval to retain KPMG for non-audit related services, i.e., tax and consulting services, under the terms of the existing agreement with KPMG, as it relates to this endeavor.
The following resolution was unanimously adopted.
RESOLVED, That the Audit Committee hereby authorizes the engagement of KPMG LLC to provide tax and other consultation services to the Authority relating to its potential participation in creating a public-private transmission joint venture (New York TransCo or TransCo) under the existing contract with KPMG for independent accounting services.
7. Next Meeting
The next Regular Meeting of the Audit Committee will be held on Thursday, September 20, 2012, to commence at approximately 9:30 a.m., at the New York Power Authority’s Albany Office, unless otherwise designated by the Chairman with concurrence of the Committee Members.
On motion made and seconded, the meeting was adjourned by the Chairman at approximately 10:50 a.m.