HomeMy WebLinkAboutAudit Letters 2003-2004 �y1i i MIS M� I
Public"' TRUCKEE DOTER
Staff Report
To: Board of Directors
From: Peter Holzmeister
Date: August 12, 2005
Subject: Monthly report
Please find attachments to this item that were to be included in your
board packet last week.
Audit management letters: Attached are the audit letters for 2003 and 2004. These
are the two of the three years for which KPMG has audited our financial reports. We
have not yet received the report for 2005.
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Memorandum
To: Peter Holzmeister
Cc: Stephen Holipbaugh, Mary Chapman
From: Jim Wilson i
Date: June 20,20d�
Subject: PCB Superfund Environmental Cleanup
Truckee Donner PUD is one of a group of approximately 50 contributors involved in a matter
relating to the disposal of small amounts of PCB waste at two sites. The clean up of the two
sites falls under the federal EPA Superfund Program. The District believes it has resolved
this matter with the EPA as the District and the EPA entered into de minimis settlement in
June of 2001.
Details of the cleanup and removal settlement included a 50% premium, with a reopener if
the cost of cleanup exceeds $60,000,000. Estimates for cleanup were between
$34,752,000 and $51,000,000. If the reopener is triggered by cleanup costs exceeding
$60,000,000, the District will owe our percentage share (0.163%) of the allocated weight
(161,672 lbs.), multiplied by the amount of removal costs which exceed the $60,000,000.
•Page 1
Suite 2000
1211 South West Fifth Avenue Telephone 503 221 6500
Portland, OR 97204 Fax 503 796 7650
Board of Directors
Truckee Donner Public Utility District
Truckee, California
April 11, 2003
Ladies and Gentlemen:
We have audited the financial statements of Truckee Donner Public Utility District (the District), for
the year ended December 31, 2002, and have issued our report thereon dated ApriI 11, 2003. In
planning and performing our audit of the financial statements of the District, we considered internal
control in order to determine our auditing procedures for the purpose of expressing our opinion on the
financial statements. An audit does not include examining the effectiveness of internal control and
does not provide assurance on internal control. We have not considered internal control since the date
of our report.
During our audit, we noted certain matters involving internal control and other operational matters
that are presented below for your consideration. These comments and recommendations, all of which
have been discussed with the appropriate members of management, are intended to improve internal
control or result in other operating efficiencies and are summarized as follows:
ACTUARIAL VALUATION
Observatio n/Recomm en da tion
The actuarial valuations for the Truckee Donner Public Utility District Pension Plan were originally
prepared in accordance with FASB 87, rather than the applicable rules and disclosure requirements of
GASB 27, For purposes of the 2002 audit, it was necessary to obtain revised valuations from the
District's consulting actuary. We recommend that the District ensure that all future valuations a
prepared using the correct methodology. re
MANAGEMENT OF CAPITAL ASSETS
Observation/Recommendation
During performance of test work over 2002 fixed assets, we noted that the current accounting
methodology for fixed assets appears time-consuming and cumbersome. In particular, the District has
a complex method of allocating overhead costs. Currently these costs are manually allocated by
expense type, based upon yearly percentages. While the current method yields an accurate result, the
amounts allocated do not materially change the value of the asset. In addition, the amount of
administrative time spent in recording the manual entries and making any necessary corrections to the
allocations may outweigh any benefit realized. We suggest automating this process, and simplifying
the allocation percentages. For example, a single overhead percentage could o applied based upon
direct labor charged to a work order. We also noted numerous assets currently being capitalized that
are insignificant. We suggest an increase in the capitalization threshold, with smaller maintenance
type costs expensed.
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Board of Directors
Truckee Donner Public Utility District
April 11, 2003
Page 2
SEGREGATION OF DUTIES
Observation/Recommendation
During performance of test work over the payroll process, KPMG noted that the same employee
responsible for changes to employee data in the human resources system also processes the bi-weekly
Payrolls. These duties should be segregated to enhance the effectiveness of the internal controls.
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Our audit procedures are designed primarily to enable us to form an opinion on the financial
statements, and therefore may not bring to light all weaknesses in policies or procedures that may
exist. We aim, however, to use our knowledge of the District's organization gained during our work
to make comments and suggestions that we hope will be useful to you.
We would be pleased to discuss these comments and recommendations with you at any time.
This report is intended solely for the information and use of the board of directors, management, and
others within the organization and is not intended to be and should not be used by anyone other than
these specified parties.
Very truly yours,
KPMG LLP
Swte 3800
1300 South West Fifth Avenue Telephone 503 221 6500
Portland, OR 97201 Fax 503 820 6565
April 9, 2004
Board of Directors
Truckee Donner Public Utility District
Truckee, California
Ladies and Gentlemen:
We have audited the financial statements of Truckee Donner Public Utility District (the District), for the
year ended December 31, 2003, and have issued our report thereon dated April 9, 2004. In planning and
Performing our audit of the financial statements of the District, we considered internal control in order to
determine our auditing procedures for the purpose of expressing our opinion on the financial statements.
An audit does not include examining the effectiveness of internal control and does not provide assurance
on internal control. We have not considered internal control since the date of our report.
During our audit, we noted certain matters involving internal control and other operational matters and
have presented below a recommendation for your consideration. This recommendation, which has been
discussed with the appropriate members of management, is intended to improve internal control and result
in operating efficiencies and is summarized as follows:
FINANCIAL ACCOUNTING AND RE PORTING P0SIT10N
Observation/Recommendation
During the current year audit, the District required significant assistance from KPMG, in relation to the
accounting for certain fiber transactions, as well as implementation of the reporting requirements of GASB
No. 34. With the increasing complexity of accounting and reporting rule making as well as the District
entering into more complex accounting transactions, we recommend the hiring of an accounting
professional with technical accounting expertise. This position should require a strong accounting and
financial reporting background,preferably with governmental accounting experience.
MOWN
IXqV
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Board of Directors
Truckee Donner Public Utility District
April 9, 2004
Page 2
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Our audit procedures are designed primarily to enable us to form an opinion on the financial statements,
and therefore may not bring to light all weaknesses in policies or procedures that may exist. We aim,
however, to use our knowledge of the District's organization gained during our work to make comments
and suggestions that we hope will be useful to you.
We would be pleased to discuss these comments and recommendations with you at any time.
This report is intended solely for the information and use of the board of directors, management, and others
within the organization and is not intended to be and should not be used by anyone other than these
specified parties.
Very truly yours,