May 6, 2010
A meeting of the Trustees Finance and Audit Committee was held at the Boston Public Library, Trustees Room, Johnson Building, on Thursday, May 6, 2010 at 3:00 p.m.
Present at the meeting were: Chairman Evelyn Arana-Ortiz; Trustee Donna M. DePrisco; Trustee Zamawa Arenas; Daria McLean, Boston Public Library Foundation; Elizabeth Dello Russo, Esq., City of Boston Law Department; Jean Capizzi, City of Boston, Office of Budget Management; Ruth Kowal, Director, Administration & Finance, Sean Nelson, Chief Financial Officer; Ed Maheigan, Budget and Procurement Manager; Sean Monahan, Supervisor of Accounting; David Diiulis and Steven Cohen, Auditors, O’Connor & Drew, P.C., and Jamie McGlone, Clerk of the Board.
Chairman Evelyn Arana-Ortiz presided.
Chairman Evelyn Arana-Ortiz welcomed the members to her inaugural meeting of the Trustees Finance & Audit Committee as Chairman and addressed the first item on the order of business pertaining to the review of the committee Charge adopted on January 8, 2007 as follows:
Boston Public Library Trustees Finance and Audit Committee
Purpose: The purpose of the Finance and Audit Committee of the Board of Trustees of the Public Library of the City of Boston is to assist the Library and the Trustees in decision making regarding all matters related to the finance functions of the Library. Additionally, the Committee’s purpose is to serve as an audit review committee designated with the process of interviewing and selecting outside auditing services for the Boston Public Library and receiving the auditors’ report.
Composition: The Finance and Audit Committee shall include no fewer than one member of the Board of Trustees of the Public Library of the City of Boston and all Trustees are welcome to serve on any Trustee Committees. The other members shall be appointed by the Chair of the Board and the Library President. The Library President or designee shall serve on the Committee.
Adopted by the Trustees Finance and Audit Committee on January 8, 2007
In an overview of the Charge of the Trustees Finance & Audit Committee, it was noted that the Charge does not address the responsibilities relative to the financial aspects of the Boston Public Library’s Investment Policy, Trust Funds portfolio, and the role of the investment managers.
To that end, Ruth Kowal and Sean Nelson offered to propose revisions to the Charge relative to the BPL’s Investment Policy and the responsibilities of the fund managers and bring them back to the committee at the next meeting.
The Chairman welcomed and invited recommendations on the proposed schedule of future committee meetings. The members suggested the desirability to meet every six weeks, ideally in the morning at 8:00 a.m., and at least two weeks prior to the Trustees Meetings coupled with a schedule developed around critical dates relative to the audit, budget deadlines and critical financial compliance regulations.
To that end, Clerk Jamie McGlone would develop a proposed schedule for future meetings based on Board meetings and in concert with critical dates and bring them back to the committee at the next meeting.
At the request of the committee, the next item addressed was a review of the draft Trustees of the Public Library of the City of Boston, Management Letter, June 30, 2009. The auditors from O’Connor & Drew, P.C. noted their firm has been auditing the Boston Public Library for nearly four years and met with the Trustees Finance Committee in early October 2009 to discuss the BPL’s Financial Statements and today’s purpose is to review the Management Letter, June 30, 2009.
The auditors noted while the audit review found nothing critically serious with respect to compliances and financial operations they suggested several areas for improvement in routine operations as noted in the Management Letter including: Cash Receipts – Pay for Print, Photocopying, Fines; compliance with Revisions to IRS Form 990; Review and update of Investment Policy; and Improvements for Special Event Billings.
The Chairman noted that it would be beneficial if the level of severity were provided with each item listed in the report in order for the library to develop a priority list and develop an action plan for their resolution.
The committee then discussed the recommendations from the auditors and management’s responses to the areas aforementioned with respect to levels of priority. The first priority identified in the Management Letter pertained to Item #5 regarding Special Event Billings.
The auditors recommended that all special event billings should be posted in the accounts receivable module of the financial management system to better keep track of any open invoices which would strengthen the Library’s controls over the billing process and facilitate the collection and reconciliation process.
Meanwhile, the library’s managers reported that the City has agreed to set up the Accounts Receivable module in the library’s Business Unit in Peoplesoft this fiscal year. To further that end, Sean Nelson and Jean Capizzi offered to work collaboratively on bringing resolution to this item in a timely fashion with an implementation deadline of October 1, 2010.
The second priority identified in the Management Letter pertained to Item #8 regarding the recent revision of IRS Form 990. The auditors provided background information on the ruling that will affect the Library’s filing for the year ended June 30, 2009.
The goal of the revision is for the IRS to gather information to assess a “potential for private benefit or private inurement, whether adequate books and records are maintained, which is required by the tax code, and whether the organization is organized and operated in furtherance of its charitable mission.”
The auditors provided the library with a list of the areas covered by the revision and Sean Nelson and Elizabeth Dello Russo, Esq. offered to work together on instituting all changes required as a result of IRS Form 990 toward the goal of fulfilling the requirements by December 31, 2010.
The third priority identified in the Management Letter pertained to Item #3 regarding the Boston Public Library’s investments and investment managers. The auditors noted the economic landscape has greatly changed since the last Investment Policy was adopted dated May 2002 and recommended both a review and update of the Investment Policy as well as the investment portfolio to properly reflect the policies coupled with a review of the investment managers.
Following discussion, the library management has identified this recommendation as a top priority and will work in concert with the Trustees Finance and Audit Committee to bring recommendations to the Trustees for approval with a deadline for evaluation and recommendation by December 31, 2010.
The committee discussed the issue of Cash Receipts – Fines with the goal for improving the Library’s internal controls over cash receipts and reducing the risk of theft. To that end, the library is making an effort to identify and reduce the reporting errors while also addressing the true cash variances coupled with implementing additional internal controls over cash receipts.
With respect to Cash Receipts – Pay for Print and Photocopying, the committee identified an action plan to continue to monitor the recorded value of the cards against the amount of cards dispensed in light of the relatively low variance between the cards issued and the income received given the capital outlay required to replace the existing system would be cost-prohibitive at this time.
The Chief Financial Officer agreed to revise the Management Letter to reflect the priorities identified by the committee with action plans for completion in preparation for consideration at the Trustees Meeting on May 11, 2010. Following discussion, on a motion duly made and seconded, it was
VOTED: “that the Trustees Finance and Audit Committee recommend that the Trustees of the Public Library of the City of Boston accept the Boston Public Library FY09 Management Letter at the Trustees Meeting on May 11, 2010”.
The committee reviewed the proposed Award of Contracts and the Summary of Contracts which provides a description, contract term, total contract amount, FY11 cost, and identifies the library’s source of funding for the contracts.
The committee reviewed the City of Boston Law Department’s, Summary of the Basics of Procurement Law that provides an overview of Massachusetts General Laws, Chapter 30B, the Uniform Procurement Act, which establishes the procedure for the City of Boston, and the Boston Public Library, to use when contracting for supplies, services and real property, including Bidding and RFP procedures and requirements.
The committee noted the strong desirability to review the contract RFP’s prior to being issued publicly which would better inform the Finance Committee members to gain an understanding of the contracts that ultimately are brought to the Board for approval by the committee.
To that end, it was agreed that procedures would be established to include the participation and input of the Finance and Audit Committee members with respect to issuing and reviewing the RFP’s and throughout the entire award of contract process.
Following discussion, on a motion duly made and seconded, it was
VOTED: “that the Trustees Finance and Audit Committee recommend that the Trustees of the Public Library of the City of Boston approve the proposed award of contracts at the Trustees Meeting on May 11, 2010”
The committee discussed the series of enabling votes that would be presented for approval at the Trustees Annual Meeting on May 11, 2010 and suggested the Finance and Audit Committee review them at a future meeting.
The Chief Financial Officer provided an overview of the Boston Public Library, Report of Gifts and Grants, May 1, 2009 – April 30, 2010 which lists the donor, purpose and amount of gifts and grants received by the BPL during this period and presented to the Board at the Trustees Meeting on May 11, 2010 for acceptance.
Following discussion, on a motion duly made and seconded it was
VOTED: “that the Trustees Finance and Audit Committee recommend that the Trustees of the Public Library of the City of Boston accept the Boston Public Library, Report of Gifts and Grants, May 1, 2009 – April 30, 2010 at the Trustees Meeting on May 11, 2010”
Ms. Daria McLean provided an overview of the Report of The Boston Public Library Foundation, Expenses to the Boston Public Library, July 1, 2009 – May 5, 2010 which reflects money transferred to the BPL for expenses the library incurred that the BPL Foundation provides funding for library initiatives.
The report also includes money transferred from the BPLF to the BPL for the period May 1, 2009 – April 30, 2010 to match the period of time for reporting at the Trustees Meeting on May 11, 2010 and gives a breakdown of expenses. In an overview of the report, the committee noted that it would also be beneficial if the report included what the initial gift was to the Boston Public Library.
Following discussion, on a motion duly made and seconded it was
VOTED: “that the Trustees Finance and Audit Committee recommend that the Trustees of the Public Library of the City of Boston accept the Report of the Boston Pubic Library Foundation, May 1, 2009 – April 30, 2010 at the Trustees Meeting on May 11, 2010”
Ms. McLean provided an update on the BPL Foundation fundraising initiatives noting that overall revenue in FY09 was $1.45 million and the Foundation has already raised $1.3 million in FY10 as of April 30, 2010.
The Foundation has undertaken significant fundraising efforts in FY10 including donor cultivation events throughout the year, a direct mail annual fund program raising $205,000 to date, and there will be an upcoming BPLF Event with Best-Selling Author Dennis Lehane on Friday, June 4, 2010, 6:30 p.m., McKim Building.
Chairman Evelyn Arana-Ortiz provided an update on the Trustees Fellowes Athenaeum Trust Fund Advisory Committee initiatives. The Chairman provided an overview of two documents pertaining to the proposed FY10 Fellowes Athenaeum Programmatic Plan reflecting the programs offered throughout the year and a request for a contract extension for highly popular programs in the community including GED practice testing and autism awareness.
Following discussion, on a motion duly made and seconded, and on the recommendation of the Trustees Fellowes Advisory Committee, it was
VOTED: “that the Trustees Finance and Audit Committee recommend that the Trustees of the Public Library of the City of Boston approve the expenditure from the Fellowes Athenaeum Trust Fund in an amount not to exceed a ceiling of $150,000 to support the Fellowes Athenaeum Trust Fund Programmatic Plan for FY11 as recommended by the Fellowes Advisory Committee”
Ms. Ruth Kowal reviewed background information on the proposed Central Library Private Event Policy & Procedures and revised Private Event Pricing Guide. Ms. Kowal noted the proposed Event Fee Revisions reflect costs associated with private events and are competitive with otheorganizations in the city.
The private events being held at the BPL are booming this year including 47 currently confirmed weddings through the end of the year and the library proposal offers off-peak rates during January through March coupled with the assessment of a 10% administrative fee for events not using the library’s designated caterer.
The committee recommended doubling the assessment charge to $1,000 or 20% administrative fee or whichever is greater to reflect the labor intensive costs associated with outside caterers.
Following discussion, on a motion duly made and seconded, it was
VOTED: “that the Trustees Finance and Audit Committee recommend that the Trustees of the Public Library of the City of Boston approve the Central Library Event Fee Revisions at the Trustees Meeting on May 11, 2010”
The committee tabled discussion on the proposed Central Library Private Event Policy & Procedures for discussion at the next meeting to provide the opportunity for more analysis and thought on policies related to fundraising events held at the Boston Public Library.
There being no other business, the Trustees Finance and Audit Committee meeting adjourned at 5:15 p.m.
Clerk to the Trustees