MINUTES OF THE REGULAR MEETING

OF THE

AUDIT COMMITTEE

 

July 31, 2012

 

 

Table of Contents

 

                Subject                                                                                                                                  Page No.                Exhibit

 

Introduction                                                                                                                                     2

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:

 

Trustee Terrance P. Flynn, Chairperson

Trustee Eugene L. Nicandri

Trustee R. Wayne LeChase

 

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.


Introduction

 

                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:

 

SUMMARY

 

“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.

 

BACKGROUND

 

“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.

 

DISCUSSION

 

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:

                                                                                                                                                 

          Report                                                                              Date   

 

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. 

 

 


Closing

                On motion made and seconded, the meeting was adjourned by the Chairman at approximately 10:50 a.m.

 

 

 

Description: Delince Signature

 

Karen Delince

Corporate Secretary