* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:07] OKAY. GOOD EVENING. WE WANNA WELCOME EVERYONE TO THE JULY 7TH, 2026 AUDIT COMMITTEE MEETING. I'M ED MOORE AND I'M THE CHAIR. WE HAVE WITH US VERY DISTINGUISHED GUESTS THIS EVENING, OUR PEOPLE WHO ARE GONNA HELP US TO GET THROUGH THIS AFFAIR. WE HAVE, UH, CHRIS OT, UH, COUNCIL MEMBER, NOT JUST COUNCIL MEMBER. THAT'S, UH, MAYOR PRO, TIM, CHRIS OTT BEFORE ANYBODY ELSE SHOULD TAKE THAT TITLE ON THEMSELVES. WE HAVE OUR CITY MANAGER, MIKE BETS. WE HAVE OUR AUDIT DIRECTOR, JETSON J JOHNSON. I JUST MIGHT AS WELL JUST WALK, LOOK UP AND GO AROUND THE ROOM. UH, WE HAVE ASSISTANT CITY MANAGER, UH, MATT WATSON. I ALREADY FED YOU, CORRECT? YOU DO. WE ALSO HAVE, UH, UH, OF THE COMMITTEE MEMBER MARGARET LUTZ. DID I SAY IT RIGHT? LUT LUT. MARGARET LUT. WE HAVE ALSO WITH US, JENNIFER STUBBS, OUR CITY SECRETARY AND OUR ATTORNEY SCOTT LEVINE. DID I SAY YOU ALREADY? YEAH, YOU DO. I DID. SO I'VE GOT EVERYBODY CORRECT. ALRIGHT, LET'S MOVE FORWARD THEN. ALRIGHT. THE FIRST ORDER OF BUSINESS THIS EVENING IS, UH, THE APPROVAL OF THE MINUTES. UH, IF YOU'VE HAD OPPORTUNITY TO READ THOSE, WE WILL ENTERTAIN A MOTION. UH, MR. CHAIRMAN, HOLD ON JUST A MINUTE. LET ME SEE IF I CAN GET SOME THINGS TURNED ON HERE. FIRST WE HAVE MARGARET, HOW DO I UNMUTE EVERYBODY UP IN THE TOP MIDDLE DISCUSSION MODE, GROUP DISCUSSION, DISCUSSION MODE THERE. OKAY. VERY GOOD. OKAY, EVERYBODY IS ON. ALRIGHT. I WAS UNDERSTAND A MOTION NOW FOR, UH, ACCEPTING THE MINUTES. MR. CHAIRMAN, I'D LIKE TO MAKE A MOTION THAT WE ACCEPT THE MINUTES AS PRESENTED. SECOND. I HAVE A MOTION AND A SECOND. ALL IN FAVOR? AYE. AYE. AYE. ALL OPPOSED? SAME. RIGHT. THANK YOU SO VERY MUCH. PUBLIC COMMENTS, UH, MR. SECRETARY. AND DO WE DO HAVE A NEW SECRETARY WITH US THIS EVENING? WE WANNA WELCOME, UH, JENNIFER STUBBS, OUR CITY SECRETARY. DO WE HAVE ANY PUBLIC COMMENTS? HELLO? YES, SIR. GLAD TO BE HERE. UH, BOB DUCKWORTH. BOB DUCKWORTH. BOB, COME ON DOWN. YEAH, DON'T MIND. I'M GONNA STAY UP HERE. I HOPE NOT. SHE DOESN'T BITE, BUT HER BINDERS DO. OH, MY. AND I WALKED OFF AND LEFT MINE LAST NIGHT. . OKAY. BOB, YOU GOT ABOUT TO 15 SECONDS. I MEAN, AS LONG AS . 15 MINUTES. THANK YOU, SIR. MR. MR. MOORE AUDIT COMMITTEE AND SENIOR MANAGER BETS AND OTHER FINE FOLKS IN THE ROOM. I LISTENED TO THE, UH, PRESENTATION AT THE WORK SESSION LAST NIGHT WITH INTEREST FOR TODAY. I'VE SPOKEN TO THIS COMMITTEE BEFORE AND ENCOURAGED YOU TO ADD A ADDITIONAL PERSON TO DO SOMETHING. I'M GONNA COVER IN MY PRESENTATION HERE TO YOU. UH, MR. JOHNSON, YOU WERE ASKED FOR THE COUNCIL LAST NIGHT, UH, WHERE THEY COULD FIND THE AUDITS AND, BUT I DIDN'T HEAR YOU TELL THE CITIZENS WHERE THEY COULD FIND THE AUDITS. SO MAYBE TODAY WE CAN TELL THE CITIZENS, IT MIGHT BE LISTED AND INTERESTED. I KNOW IT'S ON THE WEBSITE, BUT IT'S HARD TO FIND EVEN FOR ME. SO I DON'T KNOW IF WE CAN MAKE IT EASIER FOR THE PUBLIC TO FIND OR NOT. UH, I'VE STATED THIS PREVIOUSLY, THE CITY NEEDS A COMPLIANCE PERSON TO FOLLOW UP AND ENFORCE THE FINDINGS OF AUDITS AND NOT WAIT A YEAR TO SEE IF RECOMMENDATIONS HAVE BEEN, HAVE BEEN PUT IN PLACE. YOU KNOW, MY BACKGROUND, I CAN TELL YOU SOME COMPLIANCE FAILURES IN MY BANKING CAREER THAT COST LOTS OF MONEY AND LOTS OF TIME. UH, I'VE BEEN TOLD BY MANY TIMES, TAKE THIS AND STICK IT WHERE THE SUN DOESN'T SHINE. UH, MY ANSWER TO THAT IS I JUST WANT US TO BE ABLE TO COLLECT THAT LOAN IF WE'RE GOING TO DEFAULT. IF WE DON'T HAVE THESE DOCUMENTS IN PLACE, WE CAN'T DO THAT. UH, SO IT IS NOT ALWAYS EASY TO FIND FRIENDS AND INFLUENCE ENEMIES IF HER JOB IS TO FIND DEFICIENCIES AND CHANCES TO IMPROVE. AND, AND AUDIT'S A TOUGH GROUND. I'VE BEEN THERE FOR YEARS AND YEARS. I KNOW IT'S A TOUGH JOB AND YOU HAVE TO DO IT AND TRY TO MAINTAIN FRIENDS, BUT YOU CAN'T OVERLOOK WEAKNESSES, UH, AND FAILURES, UH, HOPING IT GETS BETTER. YOU HAVE TO MAKE SURE IT GETS BETTER. UH, I EVEN EVEN HAD TO GO TESTIFY A FEW TIMES BECAUSE FAILURES OF OTHER PEOPLE IN THE BANK, BECAUSE OF MY POSITION, POLICIES AND PROCEDURES THAT DO NOT FOLLOW, THAT ARE NOT FOLLOWED BY ANYONE IN THE CITY, FROM THE MAYOR ON, FROM THE MAYOR ON DOWN, UH, CAN COST MILLIONS OF DOLLARS IN COST, OR IT CAN COST MILLIONS OF DOLLARS IN SAVINGS OR, OR EARNINGS. THAT WE, IF WE OVERLOOK [00:05:01] THOSE, UH, SOME OF THOSE POLICIES AND PROCEDURES THAT YOU REFERRED TO LAST NIGHT, I BELIEVE IN YOUR, IN YOUR PRESENTATION, AND IT'S IMPORTANT THAT WE LOOK AT BOTH SIDES OF THE COIN, SO TO SPEAK, IN, IN THIS PROCESS. UH, WHETHER YOU TO CHOOSE ACTION, AS YOU SAID LAST NIGHT, IT COMES BACK TO THE COUNCIL TO READ THESE AUDITS, TO ABSORB 'EM, TO FIND OUT WHAT'S INTERESTING ON THEM AND BRING IT FORWARD. UH, I MAY BE WRONG, BUT I DON'T THINK I'VE EVER HEARD A COUNCIL PERSON BRING UP AN AUDIT IN A, IN A WORK SESSION OR IN A COUNCIL MEETING. AND I CAN GUARANTEE YOU, I CAN SIT DOWN A COUPLE HOURS WITH, WITH ANY OF YOU AND SHOW YOU SOME THINGS THAT MAKE ME MAD SEEING THAT THEY'RE THERE. UH, WHETHER YOU CHOOSE, CHOOSE STEAK ASHLAND AS UP TO YOU. WHEN WAS THE LAST TIME YOU LOOKED AT YOUR FRAUD WAST AND ABUSE POLICY THAT WAS PUT IN PLACE BY BILL DOLLAR? IT WAS ISSUED IN DECEMBER OF 1998 AND REVISED IN JANUARY OF 2009. THAT'S WHAT, 17 YEARS AGO? UH, I DON'T KNOW THAT THAT'S EVER BEEN DISCUSSED OR LOOKED AT. UH, I WOULD EVEN SUGGEST THAT YOU MIRROR THE FRAUD, WASTE AND ABUSE POLICY INTO YOUR AUDITS IN SOME WAYS, BECAUSE SOME OF THE THINGS WE ARE FINDING THAT ARE NOT BEING DONE CORRECTLY OR MAYBE POLICIES ARE NOT BE FALLING, WOULD FALL BACK TO THAT FRAUD, WASTE AND ABUSE POLICY. AND AGAIN, I, I WOULD RECOMMEND THAT YOU PUT THAT MAYBE YOU PUT THE, THE FRAUD OR FRAUD IS I THINK THE ACRONYM FOR IT IN AND SOMEWHAT IN PUT THAT IN WITH YOUR AUDIT PROCESS SOMEWHAT, UH, TO, TO LOOK FOR THOSE THINGS. BECAUSE I GUARANTEE YOU MY, AS I TOLD YOU MY BACKGROUND, UH, EMPLOYEES DO THEIR JOBS CORRECTLY IF, IF YOU HAVE POLICIES. THANK YOU. THANK YOU SO VERY MUCH, SIR. THANK YOU FOR COMING DOWN. EXCUSE ME. AND I WOULD, I WOULD LIKE TO ENCOURAGE YOU AGAIN TO GET A COMPLIANCE OFFICER INCLUDED IN YOUR AUDITS. AND I WAS HOPING TODAY MAYBE IN, IN THIS DISCUSSION, MAYBE YOU WERE TALKING ABOUT AN OUTSIDE AUDITOR COUNCIL. COUNCIL MEMBER MOORE. YES, SIR. UH, SO, SO THE ITEM THAT'S BEEN POSTED FOR COMMENT IS ANY PERSON WHO DESIRES TO ADDRESS THE COMMITTEE ON ANY ITEM ON THE AGENDA ALLOWED THREE MINUTES TO SPEAK. I WAS WAITING FOR MR. DUCKWORTH TO TIE IT INTO A PARTICULAR ITEM ON THE AGENDA, WHICH IS THE SELECTION OF AN EXTERNAL AUDIT FIRM. I, I THINK, UH, MY CONCERN IS THAT WE'VE GONE BEYOND THAT AND SO IT MIGHT BE TIME TO MOVE ON AT THIS POINT. I THINK THAT'S MY LAST VERY GOOD. INCLUDE A COMPLIANCE OFFICER IN THIS OUTSIDE AUDIT. YES, SIR. DID I SAY THAT, SIR? YES, SIR, YOU DID. AND WE DO APPRECIATE YOU COMING DOWN, SIR. ALRIGHT. OKAY. THANK YOU. SO VERY MUCH ITEM FOR INDIVIDUAL CONSIDERATION. UH, THIS IS, UH, PROBABLY GONNA BE A BRIEF MEETING, BUT A VERY IMPORTANT ONE THAT WE'RE GONNA BE TALKING TODAY, UH, AS IT RELATES TO THE CITY EXTERNAL AUDIT THAT TAKES PLACE EACH YEAR. AND THERE IS INFORMATION THAT NEEDS TO COME BEFORE US AS IT RELATES TO WHO THAT'S GOING TO BE. UH, THERE ARE SOME, UH, CIRCUMSTANCES THAT, UH, WE HAVE TO ADHERE TO AS IT RELATES TO TIMEFRAMES AND THINGS OF THAT NATURE. UH, THERE ARE PROBABLY GOING TO BE SOME, UH, THINGS THAT COME BEFORE YOU TODAY IN THE WAY OF MAYBE SOME EXCEPTIONS THAT NEED TO BE MADE. AND AS A RESULT OF THAT, WE THINK THAT, UH, WE NEED TO, UH, MAKE A PRESENTATION AS IT RELATES TO GOING FORWARD. SO WITH THAT, I'M GOING TO ASK THAT OUR DIRECTOR, UH, AUDIT DIRECTOR WOULD, UH, TAKE OVER AT THIS POINT, LEAD US, UH, AS IT RELATES TO THE AUDIT COMMITTEE, PROFESSIONAL AUDIT SERVICES, RFP RECOMMENDATIONS, CHAIRMAN, UH, GOOD. A GOOD AFTERNOON AND, AND THE COMMITTEE MEMBERS GOOD AFTERNOON AS WELL. THANK YOU FOR HAVING US TODAY. UM, ALISON, OUR CFO HAS PREPARED A PRESENTATION FOR US. UM, AS YOU'RE AWARE, WE HAVE BEEN USING OUR CURRENT FIRM WEAVER, UH, FOR QUITE SOME TIME. SO, UM, OUR CITY HAS, UM, PUT IN A REQUEST FOR PROPOSAL, UM, TO REEVALUATE, UM, YOU KNOW, WHO, WHO WILL BE USING GOING FORWARD. AND, BUT I DON'T WANNA STEAL ALLISON'S THUNDER IF SHE WORKED, UH, DILIGENTLY ON THIS PRESENTATION. SO I WILL HAND THIS OVER TO HER SO SHE CAN GO OVER THE PROCESS THAT WE'VE, WE HAVE TAKEN. AND THEN, YOU KNOW, FEEL FREE TO ASK US ANY QUESTIONS. ALLISON, THANK YOU SO VERY MUCH FOR BEING HERE TODAY. THANK YOU. SEE, THANK YOU FOR HAVING ME AND, AND JED TO CHIME IN. YOU'VE BEEN A PART OF THIS PROCESS WITH ME. SURE. SO IF YOU HAVE ANYTHING TO ADD AS WE GO THROUGH IT, PLEASE ABSOLUTELY. PLEASE CHIME IN. SO JUST WALK YOU THROUGH THE KIND OF THE POLICY AND THE BACKGROUND REGARDING OUR EXTERNAL AUDIT SERVICES. SO WE HAVE AN ANNUAL INDEPENDENT AUDIT AS STIPULATED IN OUR CITY CHARTER, UM, WHERE WE BRING IN A CERTIFIED PUBLIC ACCOUNTANT WHO MAKES AN INDEPENDENT AUDIT OF ALL OF OUR ACCOUNTS AND OTHER FINANCIAL TRANSACTIONS FOR THE CITY UNDER OUR CITY COUNCIL POLICIES AND OUR FINANCIAL AND FISCAL INTEGRITY PROCEDURES. UM, WE DO HAVE, UH, A SUMMARY. THIS IS A SUMMARY OF THAT POLICY. IT STIPULATES THAT [00:10:01] WE ROTATE, UM, THAT OUTSIDE AUDITING FIRM ON SOME FREQUENCY, AND THAT THIS IS SOMETHING THAT STAFF AND THE AUDIT COMMITTEE SHOULD REVIEW EACH YEAR TO DETERMINE IF WE SHOULD MAKE THAT CHANGE. UM, PULLING INTO SOME OF THE BEST PRACTICE, UM, GOVERNMENT FINANCE, ASSOCI OFFICERS ASSOCIATION IS, UM, KIND OF THE LEADING FINANCIAL GROUP FOR LOCAL GOVERNMENT ENTITIES OR GOVERNMENT ENTITIES. UM, THEY HAVE A LOT OF GUIDANCE REGARDING EXTERNAL AUDIT FIRMS AND THE RFP PROCESS AND THEIR RECOMMENDATION AS A BEST PRACTICE IS TO ROTATE FIRMS OR YOUR KEY MANAGEMENT STAFF WITH YOUR SAME FIRM EVERY FIVE YEARS TO RETAIN INDEPENDENTS, UM, AND ENSURE A FRESH PERSPECTIVE, UM, AND THE INTEGRITY OF THE AUDIT. SO, SOME BACKGROUND, AS JED POINTED OUT AT THE BEGINNING, UM, WE AWARD, UH, OUR EXTERNAL AUDIT FIRM THROUGH AN RFP PROCESS, A REQUEST FOR PROPOSAL. UM, ONCE WE RECEIVE, UH, THE SUBMITTALS, WE GO THROUGH A REVIEW AND SCORING PROCESS FOR THOSE WHO ULTIMATELY AGREED TO A ONE YEAR TERM WITH FOUR OPTIONAL RENEWALS. OUR LAST RFP WAS IN 2019, AND THE CITY WAS GRANTED A TWO YEAR RFP EXTENSION DURING OUR WORKDAY FINANCIAL SYSTEM IMPLEMENTATION. BY THIS AUDIT COMMITTEE. JUST TO MOVE INTO OUR RFP CRITERIA, UM, WE, UH, COMPRISED AN AUDIT SELECTION COMMITTEE AND I WANNA THANK THESE INDIVIDUALS. UM, TWO OF WHICH ARE IN THIS ROOM FOR SERVING ON THIS WITH ME. UM, JED JOHNSON, OUR CITY AUDITOR, MATT WATSON, OUR ASSISTANT CITY MANAGER, MYSELF, UH, GARY HAWKER, OUR ELECTRIC CONTROLLER, AND KAREN HOLLINGSWORTH, OUR CITY CONTROLLER. UM, AND HONORABLE MENTION TO DAWN DOTTIE, OUR CASH AND DEBT MANAGER WHO JOINED US FOR FINAL INTERVIEWS. UM, THE SELECTION COMMITTEE SCORED AND REVIEWED THE PROPOSALS. UM, HERE IS A QUICK SUMMARY OF JUST THE ELEMENTS. WE REVIEWED THOSE REQUESTS FOR PROPOSALS ON. WE HAD SOME MANDATORY ELEMENTS. THIS WOULD BE SOMETHING THAT IS, YOU KNOW, AN EXPECTATION A GIVEN FOR ALL FIRMS. UM, ONE OF THE KEY COMPONENTS IN THAT MANDATORY ELEMENTS IS REVIEWING THEIR LAST EXTERNAL QUALITY CONTROL REVIEW REPORT. UM, THESE EXTERNAL AUDIT FORM FORM FIRMS ARE ALSO HELD TO HIGH STANDARDS AND AUDIT IT ON THEIR OWN BASIS TO ENSURE THAT THEY'RE FOLLOWING THEIR POLICIES AND PROCEDURES AND RETAINING THEIR INTEGRITY OF THE SERVICES THEY'RE PROVIDING TO THEIR CLIENTS. WE HAD, UH, A SCORING FOR TECHNICAL QUALITY RESPONSIVENESS OF OUR, THE PROPOSAL COMMITMENT TO PROFESSIONAL GROWTH. AND THEN, UH, THE SCORING BASED ON THEIR TOTAL ALL-INCLUSIVE MAXIMUM PRICE. YOU'LL SEE THAT TECHNICAL QUALITY HAS THE MOST WEIGHT OUT OF ALL OF THOSE ITEMS. THAT'S BECAUSE WE REALLY WANT TO ENSURE THE CITY IS, UM, SIGNING ON WITH A FIRM THAT HAS THE EXPERTISE AND EXPERIENCE, UM, TO PERFORM THE INDEPENDENT FINANCIAL AUDIT FOR THE CITY, PARTICULARLY BECAUSE WE HAVE AN ELECTRIC UTILITY ATTACHED TO US. AND THEN WE ALSO WANT TO ENSURE THAT THEY HAVE A SOUND AUDITING APPROACH. THEY'RE USING TECHNOLOGIES THEY'RE FOLLOWING, YOU KNOW, GIVEN GOVERNMENTAL PROCEDURES, UM, THAT THE FINANCIAL TEAM AS WELL AS THE INTERNAL AUDIT TEAM HAS A LEVEL OF COMFORT WITH, UM, THEIR PROPOSED AUDIT PLAN AND APPROACH OF HOW THAT WOULD MOVE FORWARD. UM, AND SO ONCE WE PUT ALL THAT TOGETHER, THE SCORING WAS VERY CLOSE. WE HAD TWO FIRMS THAT WERE ABOUT A POINT APART. UM, SO THOSE TOP TWO FIRMS WERE SELECTED FOR AN IN-PERSON INTERVIEW WITH THE AUDIT SELECTION COMMITTEE COMMITTEE. AND NOW WE'RE HERE BEFORE YOU TODAY TO WALK THROUGH THAT. AND OUR, UH, AUDIT COMMITTEE SELECTION COMMITTEE RECOMMENDATION. SO TO RECAP, OUR TWO HIGHEST SCORING FORM FIRMS IN THE SCORE ORDER, UH, WAS WEAVER THE INCUMBENT, AND THEN FOUR OF US AZAR, WHO HAS NOT WORKED WITH THE CITY BEFORE. I HAVE A QUICK SUMMARY JUST OF THE PRICING. PLEASE NOTE THE BOLDED, UH, PRICE IS WHAT WOULD BE BE CONSIDERED THE FINAL, BUT THEY WERE ORIGINAL, THEY WERE SCORED BASED ON THEIR ORIGINAL PRICING. UM, BUT GOING THROUGH THE INTERVIEW PROCESS AND HAVING A CONVERSATION WITH THESE FIRMS, WE WERE ABLE TO RE REACH SOME REVISIONS. UM, AND THEN I'VE OUTLINED SOME VERY BASIC PROS AND CONS FOR EACH OF THE TEAM. BOTH REPRESENT HIGHLY COMPETENT, UH, FIRMS THAT COULD PERFORM THE AUDIT THAT WOULD BE EXPECTED FOR THE CITY OF GARLAND. UM, WEAVER DOES HAVE AMPLE EXPERIENCE WITH ELECTRIC UTILITIES, SPECIFICALLY IN THE ERCOT MARKET BEYOND THE CITY OF GARLAND. UM, WHEREAS FOUR OF US HAS SOME [00:15:01] ELECTRIC UTILITY EXPERIENCE, BUT THEY DO HAVE A SMALLER PORTFOLIO AS WHEN IT COMES TO THOSE CLIENTS. UM, BOTH HAVE EXPERIENCE WITH COMPARABLE CITIES AS WELL AS CLIENTS THAT HAVE RECENTLY TRANSITIONED TO WORKDAY, WHICH IS OUR, UH, FINANCIAL AND H-C-M-E-R-P. UM, AND THEN THERE IS A BENEFIT WITH THE INCUMBENT OF HAVING THAT EXISTING, UM, CITY OF GARLAND KNOWLEDGE, BUT THAT IS TO BE WEIGHED AGAINST BRINGING IN A FIRM THAT COULD HAVE A FRESH PERSPECTIVE HAVING NEVER WORKED WITH US BEFORE, UM, FOR FOUR OF US OR THE SECOND ONE. UM, ONE OF THE CONS THAT, UM, FROM MY PERSPECTIVE AS THE CHIEF FINANCIAL OFFICER IS, AND I'LL GET INTO THIS ON OUR NEXT SLIDE, IS JUST THE STAFF COMMITMENT FOR THIS UPCOMING YEAR OF EDUCATING THE TEAM, UM, WITH A NEW FIRM ON THE CITY OF GARLAND ACCOUNTING STRUCTURE PROCESSES, CONTROLS WITHIN OUR FINANCIAL SYSTEMS AND OUR ELECTRIC UTILITY. SO MOVING INTO OUR RECOMMENDATION, UM, THE AUDIT COMMITTEE OR THE AUDIT SELECTION COMMITTEE, NOT THE AUDIT COMMITTEE, EXCUSE ME, UM, IS RECOMMENDING WEAVER BASED ON THE FOLLOWING. UM, FOR THE RFP PROCESS, IT WAS THE HIGHEST SCORE FROM THIS, THE INITIAL REVIEW, YOU KNOW, THIS EACH PERSON INDEPENDENTLY REVIEWING THE RFPS AND SCORING THEM AND, UM, THEY NOW ARE AT THE LOWEST PRICE WITH THE BEST AND FINAL. AND THEN I WOULD LIKE TO WALK THROUGH SOME OF THESE OTHER BENEFITS. UM, THERE IS A BENEFIT FROM CONTU CONTINUITY OF OPERATIONS AND I HAVE A COUPLE NOTES, SO FORGIVE ME, I JUST DON'T WANNA MAKE SURE I GET ALL MY POINTS. UM, THE KNOWLEDGE OF OUR ACCOUNTING STRUCTURE IS, IS HUGE. UM, WITH THE TRANSITION TO THE WORKDAY FINANCIAL SYSTEM, WE COMPLETELY REMAPPED OUR ACCOUNTING STRUCTURE. AND FY 25, THIS PAST FISCAL YEAR AUDIT WAS A DUAL SYSTEM, NEW DUAL YEAR AUDIT WHERE YOU'RE HAVING TO CONVERT FROM 10 MONTHS OUT OF ONE SYSTEM, UH, IN A DIFFERENT STRUCTURE TO TWO MONTHS OF A NEW SYSTEM WITH A NEW STRUCTURE. THIS WILL BE OUR FIRST AUDIT, UH, FULLY IN THE, A FISCAL YEAR IN THAT NEW SYSTEM. UM, BUT WE ARE STILL IN SOME GROWING PAINS WITH THAT. AND THEM JUST HAVING THE EXISTING KNOWLEDGE OF THAT STRUCTURE WOULD BE HUGE. UM, 'CAUSE THAT IT WOULD BE A HUGE STAFF BURDEN TO EDUCATE SOMEONE ON THAT. THE NUMBER OF FUNDS WE HAVE, FUND STATEMENTS, COUNTS OVERALL STRUCTURE, THE COMPLEXITIES OF THOSE FUNDS. UM, IT IS JUST, THERE IS A BIG BURDEN ON STAFF, UM, TO GO THROUGH THAT EDUCATION PERIOD UPFRONT IN AN INTERIM REVIEW PROCESS WITH THEM. WE ALSO HAVE, UM, PRETTY UNIQUE REVENUE SOURCES INCLUDING OUR GPNL, UM, PRETTY SIGNIFICANT GRANT PROGRAMS AS INVOLVED IN THE SINGLE AUDIT AS WELL AS WE ARE IN STILL WORKING THROUGH THE CONTINUING ENTRIES ASSOCIATED WITH OUR PENSION OBLIGATION BOND THAT WAS ISSUED LAST YEAR. UM, AS PART OF THAT TRANSACTION, WE ISSUED THE DEBT LAST YEAR, BUT WE HAD A PORTION, WE HELD AN ESCROW, UM, THAT IS STILL BEING PROCESSED, UH, ACCOUNTING WISE THROUGH FY 26. AND WEAVER GAVE US THAT INITIAL GUIDANCE ON THAT TRANSACTION. SO WE, I FEEL THERE'S SOME BENEFIT TO CONTINUING THE METHODOLOGY AND THE, UM, JUST KIND OF THE UNDERSTANDING WE RECEIVE FROM THEM OF HOW TO PROCESS THAT UNIQUE DEBT ISSUANCE, UM, FOLLOWING THE GS AND BEST PRACTICE INTO THIS NEXT YEAR. LOOKING AT THE NEXT ITEM IS OUR SYSTEM STABILIZATION. UM, WE'RE STILL WORKING THROUGH TWO OF THE ITEMS FLAGGED FOR FY 25 RELATED TO THE CHANGE IN OUR SYSTEM. AND IT WAS HIGHLIGHTED AS PART OF OUR TWO MANAGEMENT LETTERS WITH LAST YEAR'S AUDIT. UM, WHICH IS OUR FIXED ASSETS IMPLEMENTATION AND THE BANK RECONCILIATION. UM, WE'VE MADE GREAT PROGRESS ON THOSE ITEMS OVER THE NEXT YEAR, BUT THEY ARE STILL IN FLIGHT AND THE SYSTEM WILL NOT BE FULLY, I WOULD ANTICIPATE THE SYSTEM WILL NOT BE FULLY CONFIGURED AND UTILIZED TO THAT ABILITY IN THIS FISCAL YEAR AND WORK WE WORKED WITH, UH, WEAVER AND GOT GUIDANCE ON HOW TO BEST HANDLE THAT FOR THE FY 25 AUDIT. WE DO HAVE SOME OUTSTANDING RECONCILIATIONS OF WHERE WE ENDED FY 25 INTO 26. AND, UM, I FEEL THERE WOULD BE GREAT, UM, BENEFIT TO THE CITY TO HAVE CONTINUITY WITH THEIR UNDERSTANDING OF WHERE WE WERE LEFT OFF WITH THOSE TWO ITEMS. UM, TO FLOW THAT THROUGH INTO FY 26, GET THAT RECONCILED AND CLEANED UP AND, AND REALLY REACH A POINT OF STABILIZATION WITH OUR, OUR FINANCIAL SYSTEM. UM, [00:20:01] WE DO BELIEVE, UH, THIS WOULD GO FOR EITHER, BUT, UM, I THINK IT'LL BE A GREAT BENEFIT SPECIFICALLY TO A FIRM THAT KNOWS US IS WITH OUR SYSTEM, WE ARE ABLE TO PROVIDE READ-ONLY ACCESS. AND SO THAT GREATLY REDUCES SOME OF THE STAFF TIME INVOLVED THROUGHOUT THE AUDIT PROCESS. UM, AND I, I THINK JED'S TEAM EXPERIENCED SOME OF THESE EFFICIENCIES OF BEING ABLE TO GO INTO THE SYSTEM AND PULL THE SUPPORTING DOCUMENTATION, SEE THE APPROVALS, VALIDATE THE CONTROLS FIRSTHAND. WHEREAS PREVIOUSLY MEMBERS OF THE FINANCE STAFF AND OUR PREVIOUS SYSTEM WOULD HAVE TO PULL DOWN THAT DOCUMENTATION, PUT IT INTO A SHARED FOLDER, UM, FOR THEM TO REVIEW. THERE'S A LAG TIME AND, AND STAFF COSTS TO ACCUMULATING ALL THAT INFORMATION FOR THEM TO REVIEW. UM, THERE ARE TRAINING OPPORTUNITIES INCLUDED IN THEIR BEST AND FINAL PRICE THAT, UM, I KNOW I WAS EXTREMELY EXCITED ABOUT. UM, AND I BELIEVE JED HAS SOME SITES ON FOR HIS TEAM AS WELL. MAYBE WE CAN DO SOME JOINT TRAINING. UM, SPECIFICALLY RELATED TO, UH, THE GAS IMPLEMENTATION THAT'S COMING UP. WE HAVE 1 0 3 AND 1 0 4 COMING UP. THEN WE'LL HAVE 1 0 5 IN THE FOLLOWING YEAR. THEY OFFER WEBINARS AND THEN THEY'VE, UH, POINTED OUT, THEY RECENTLY DID A TAILORED COURSE SPECIFIC TO ONE OF THEIR CITY CLIENTS. AND, UH, A BRAINSTORM WITH JED OF WHAT MIGHT BE GOOD FOR US, UM, FOLLOWING THE WORKDAY TRANSITION. UH, WE'VE HAD A LOT OF RETIREMENTS IN OUR FINANCIAL SERVICES DEPARTMENT. THESE ARE EMPLOYEES THAT HAVE BEEN HERE 20, 30 YEARS, GOT US OVER THE HUMP OF IMPLEMENTING THE BRAND NEW SYSTEM. BUT THEY, THEY SAID, OKAY, THAT PROJECT TOOK THE REST OF THE STEAM OUT OF ME. I'M, I'M READY TO RIDE OFF INTO THE SUNSET. SO WE, UH, ARE A FAIRLY NEW DEPARTMENT, UM, NEW LEADERSHIP WITH MYSELF INCLUDED IN THAT. UM, SOME, A NEW ACCOUNTING MANAGER, HOPEFULLY A NEW ACCOUNTANT. SO WHILE THERE IS SOME EXISTING STAFF THAT HAS BEEN THERE, NOT ALL OF THEM HAVE BEEN DIRECTLY INVOLVED IN THE AUDITING PROCESS. SO WE FEEL LIKE THIS IS A HUGE BENEFIT 'CAUSE WE WILL HAVE A NEW TEAM INVOLVED IN WORKING THROUGH THIS PROCESS WITH THE EXTERNAL AUDITOR AND GOING THROUGH THE FISCAL YEAR END PROCESS, THE UH, UH, FINANCE ADMINISTRATOR, UM, WHO RETIRED AT THE END OF JUNE, UM, HAD BEEN LEADING THIS EFFORT PROBABLY FOR AT LEAST THE LAST 10 YEARS, MAYBE LONGER. I'M LOOKING AT MATT FOR CONFIRMATION. UM, SO WE ARE IN A BIT OF TRANSITION. SHE'S LEFT A LOT OF EXCELLENT NOTES, DID A LOT OF TRAINING SESSIONS, BUT, UM, HAVING THAT CONTINUITY WILL BE A GREAT BENEFIT IN ADDITION TO GETTING SOME TAILORED TRAINING TO US. 'CAUSE THEY KNOW SOME OF THE COMPLEXITIES OF THE CITY OF GARLAND AND THEY CAN HELP US KIND OF PREP UP QUICKLY, UM, WITH SOME TAILORED TRAINING. AND THEN FINALLY, UM, IN DISCUSSIONS WITH THEM, THEY DID CONFIRM THE ABILITY TO CHANGE THEIR AUDIT MANAGER, UM, WITH, UH, THAT WOULD BE ASSIGNED TO US TO ENSURE THAT THEY RETAIN INDEPENDENCE AND THAT WE CAN GAIN A FRESH PERSPECTIVE WHILE STILL LEVERAGING SOME OF THAT HISTORICAL KNOWLEDGE. SO, UM, I WOULD SAY IN SUMMARY, THE, JUST TALKING WITH THE SELECTION COMMITTEE, UM, I THINK WE ALL LIKED BOTH FIRMS, FELT BOTH FIRMS COULD DO THE WORK, BUT WE REACHED AGREEMENT THAT WE FELT LIKE THIS WAS THE CORRECT DIRECTION FOR US TO RECOMMEND TO THIS COMMITTEE. UM, SO WITH THAT, UM, I'LL PAUSE FOR ANY QUESTIONS, DISCUSSION OR, UM, UH, JUST FOLLOW UP ITEMS FROM YOU ALL. OKAY. COMMITTEE, YOU HAVE HEARD THE PRESENTATION INCOMING FROM OUR CHIEF FINANCIAL OFFICER. UH, IT WOULD APPEAR THAT TWO THINGS ARE TAKING PLACE HERE TODAY AND ONE HAS TO DO WITH GO BACK TO YOUR MM-HMM . RULES AND RECOMMENDATIONS. FIRST ONE HAS TO DO WITH THE RULES OF THE POLICY AND BACKGROUND AS IT RELATES TO WHAT IS EXPECTED IN THE WASTE POLICY. AND NOW GO TO YOUR RECOMMENDATIONS AS OPPOSED TO WHAT THE RECOMMENDATIONS SHOULD BE RELATED TO OUR MOVING FORWARD. SO WITH THAT, WE'RE OPEN FOR QUESTIONS, RECOMMENDATIONS. SO, UM, WITH WEAVER, WE WERE, WE HAD A, UH, WAS IT SARAH DEMPSEY? WAS THAT WHO IT WAS WE WORKED WITH? YES. SHE WILL NOT BE WORKING WITH US GOING FORWARD OR IS OR WILL SHE? SHE IS THE, I'M GONNA THE PARTNER, YEAH, SHE'S A SHE SENIOR PARTNER. I WAS GONNA PULL HER OFFICIAL TITLE. MAY I REPORT TO? I BELIEVE SHE WILL BE INCLUDED. SHE WILL BE, YEAH. IT'S THE MANAGER. YES. GOTCHA. THAT WE ARE PROPOSING FOR A CHANGE THIS JEFF OR SOMETHING LIKE THAT? NO, HE, YEAH, IT'S THE PERSON BELOW HIM. IT'LL BE KAYLEE , I BELIEVE. UM, SO SARAH IS THE SUPERVISORY PARTNER. UM, JEFF [00:25:01] WATA, WHO WAS OUR MANAGER THIS PAST YEAR, HAS BEEN PROMOTED. HE'S NOW PARTNER ON THE AUDIT. AND THEN, UM, KAYLEE VAON IS, UM, I BELIEVE SHE WAS JUST A SENIOR ASSOCIATE PREVIOUSLY. SHE'S NOW BEEN PROMOTED TO MANAGER AND THAT WOULD BE WHO THEY WOULD BE ROTATING. SO WHAT WE DO NOT HAVE THAT NAME FOR YOU TODAY, BUT THAT WEAVER DID COMMIT THAT THAT WOULD BRING IN A NEW PERSON THAT HAS NEVER WORKED WITH THE CITY OF GARLAND. OKAY. UM, FOR THAT, YOU KNOW, INDEPENDENCE AND FRESH PERSPECTIVE WITH THE TEAM AND THE MANAGERS TYPICALLY THE ONE THAT IS, UH, ON THE FRONT LINES DOING ALL THE SAMPLING, DOING ALL THE REVIEWING, DOING ALL THE GUIDING THE, THE AUDITORS. MM-HMM . UH, SARAH'S PRIMARY JOB IS TO REVIEW DOCUMENTS AND, AND GUIDE THAT MANAGER TO THE, TO THE RIGHT PIECE. THE MANAGER MOVING OFF IS THE PERSON ON THE GROUND. YEAH. YEAH. IN ADDITION TO WHAT MATT SAID, MANAGE MANAGER IS THE ONE WHO CONDUCTS WALKTHROUGH. MM-HMM . UM, LEADS THOSE WALKTHROUGHS, IDENTIFIER RISKS, UH, AND, AND COME UP WITH TESTING STEPS AND STUFF LIKE THAT. SO THAT'S WHY WE FELT LIKE, UM, THAT PERSON MUST BE, WE SHOULD GET A FRESH PERSPECTIVE MM-HMM . SURE. AND, UH, I'VE BEEN IMPRESSED WITH, UH, WITH THEIR ABILITIES. THEY'RE, THEY'RE VERY ARTICULATE AND VERY THOROUGH, SO MM-HMM . UH, I DON'T HAVE ANY PROBLEM WITH THE CHOICE IF YOU'RE COMFORT 'EM AND THEY'RE ALSO HAPPEN TO BE THE BEST DEAL TOO. SO FRINGE BENEFIT. THANK YOU. THANK YOU. WHERE ARE BOTH FIRMS BASED? BOTH OF THESE, UH, PROPOSALS ARE, UH, GROUPS, UH, THAT OFFICE IN DALLAS. UM, BUT THEY, THEY'RE LARGE FIRMS, SO THEY HAVE OFFICES ALL OVER THE COUNTRY. UM, BUT BOTH ARE BASED IN DALLAS, BOTH OF THE SENIOR PARTNERS THAT SUBMITTED. I WOULD SAY WITH THE, THE CHANGE IN THE MANAGER, UM, I'M FINE WITH THIS RECOMMENDATION. OKAY. I'D LIKE FOR OUR LEGAL DEPARTMENT TO CHIME IN FOR JUST A MINUTE. UH, TAKING A LOOK AT THE POLICY AND BACKGROUND AS IT RELATES TO, UH, WHAT IS EXPECTED AND ANTICIPATED. UH, I DON'T SEE ANYTHING HERE IN THE WAY OF ANYTHING FIRM, ESPECIALLY UNDER THE CITY CHARTER. UH, BUT I'D LIKE FOR YOU TO JUST KIND OF CHIME IN AT THIS POINT. UM, AS IT RELATES TO, WE HAVE THE ABILITY, WE DON'T, WE'RE NOT VIOLATING ANY RULES, LAWS, REGULATIONS, OR ANYTHING, CORRECT? NO, I THINK THAT THE, THE WAY MS. TEDMAN PRESENTED IT IS ABSOLUTELY CORRECT IS, IS SHE'S PRESENTED YOU WITH OUR REQUIREMENTS, WHICH WOULD ALLOW YOU TO DO WHAT THE RECOMMENDATION IS. AND SHE'S ALSO INDICATED WHAT THE BEST PRACTICES ARE, UM, WHICH UNDER THE CIRCUMSTANCES WOULD, WOULD MEET WHAT WE'RE DOING HERE. SO WOULD BOTH THE, UH, BOTH COMPLY WITH THE AUDIT, WITH THE LAW, AND WITH THE BEST PRACTICES FOR THE INDUSTRY? JUST KIND OF THINKING AS IT RELATES TO WHERE WE ARE, UH, GOING FORWARD. FINANCIAL, WE'RE TALKING ABOUT THIS VOTE TAKING PLACE IN NOVEMBER, AND THERE'S JUST A LOT OF THINGS RIGHT NOW IN THE UP IN THE AIR. I'M ONE OF THOSE PEOPLE THAT BELIEVE THAT, UH, IT'S VERY BEST PRACTICE IS TO KEEP OUR BEST PLAYERS ON THE FIELD AT A TIME WHEN THE GAME IS AT A CRITICAL POINT. BUT, UH, ONE OTHER PERSON I WOULD LIKE TO HAVE CHIME IN BEFORE WE, UH, FINISH THIS IS, UH, FINISHED THIS AS, UH, CITY MANAGER. YOUR THOUGHTS, SIR? THANK YOU, MR. CHAIRMAN. I, I'VE DISCUSSED THIS WITH, UH, BOTH ALLISON AND MATT AND, UH, ALSO WITH JED. AND, UH, IN LIGHT OF THE, THE, UH, TWO, TWO BIGGEST FACTORS FOR ME. NUMBER ONE, WE'RE STILL COMING OFF OF THE TRANSITION TO WORKDAY AND, UH, ALL OF THE SYSTEMS ISSUES WITH RESPECT TO CHANGING OUR FINANCIAL SYSTEM. UH, THAT, THAT WAS PROBABLY THE, THE BIGGEST ISSUE. UH, AND NUMBER TWO IS, UH, WITH, UH, ALLISON BEING OUR FIRST YEAR IN HER ROLE AS CFO, UH, THOSE TWO FACTORS TO, TO BRING A, A BRAND NEW AUDIT FIRM IN WHO WOULD HAVE TO LEARN, UH, ALL OF THE, AS ALLISON POINTED OUT, ALL THE SYSTEMS AND CONTROLS WE HAVE IN PLACE AND HOW OUR ACCOUNTING WORKS, UH, WOULD REALLY CREATE A, A UNNECESSARY CHALLENGE FOR US THIS YEAR. I THINK THAT THE CHANGE IN MANAGEMENT, WHICH IS A BEST PRACTICE AND SOMETHING THAT I, UH, DISCUSSED WITH JED AND AND WITH ALLISON FELT VERY STRONGLY ABOUT IS THAT YES, YOU HAVE TO HAVE SOMEBODY IN THERE WHO'S A NEW MANAGEMENT, UH, FIGURE DOING THIS AUDIT SO THAT THEY HAVE A FRESH SET OF EYES. I WOULD RECOMMEND THE APPROACH THAT, UH, MS. STEADMAN AMENDED AND THE COMMITTEE. OKAY. HAVING HEARD ALL THAT WE HAVE HEARD, ALLISON, WOULD YOU NOW TELL US WHAT IT IS THAT YOU'RE ASKING OF US AND HOW WE MOVE FORWARD? YES. I WOULD LIKE TO KNOW IF THE AUDIT COMMITTEE IS IN AGREEMENT WITH THE STAFF RECOMMENDATION AND IF THEY ARE, WE WOULD LIKE, UM, THIS COMMITTEE, UM, AND I'LL WORK WITH JED ON THAT TO PRESENT THE READOUT FROM THIS MEETING, INCLUDING THE RECOMMENDATION AT THE JULY 20TH MEETING SO THAT WE CAN [00:30:01] AWARD THE RFP THE FOLLOWING NIGHT ON JULY 21ST. UM, SO WE CAN HIT THE GROUND RUNNING 'CAUSE FISCAL YEAR END IS STARTING BEFORE WE KNOW IT WITH THAT SEPTEMBER 30TH DATE. SO WE WOULD LIKE TO GET MOVING COMMITTEE, CAN WE GET CONSENSUS ON THAT? OKAY. VERY GOOD. WITH THAT, WE'LL BE SENDING THIS FORWARD THEN WITH THE RECOMMENDATIONS THAT YOU HAVE PROVIDED FOR US. THANK YOU VERY MUCH. LET'S, I LOOK AT, UM, THIS VERY LONG LIST OF THINGS THAT WE NEED TO DO. THIS MEETING IS ADJOURNED AT 4:30 PM THANK YOU. YAY. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.