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4. Finance and Audit Committee Meeting - September 27, 2023

Minutes of the MWRTA Advisory Board Finance & Audit Committee

Wednesday, September 27, 2023, @ 12:30 PM

MWRTA Advisory Board Finance & Audit Committee Members: Colette Aufranc (Chair) of Wellesley, Linda Marshall of Holliston, and Joe Nolan of Wayland

Also in attendance: Jim Nee (Administrator), John Glynn (CFO), Daniel Fitch (IT Consultant), Paula Doucette (Financial Assistant), Jennifer Bassett-Glynn (Auditor), Bruce Norling (Auditor 12:50 pm), Dave Correia (MetroWest Center for Independent Living), and Sam Stivers of Southborough (12:32 pm)

1.  Call to order: Ms. Aufranc, Chair, called the meeting to order at 12:30pm

2.  Review and approval of prior minutes: A motion was made by Ms. Marshall of Holliston: To approve minutes from the Financial & Audit Committee Meeting of April 18, 2023. Second, Mr. Nolan of Wayland. The vote was unanimous.

3.  Public comment:  No public comments.

4.  Management Update: Ms. Aufranc noted that committee members should have received in their packet a memo from Administrator Nee on the Revised FY24 budget driven by an increase in state transportation funding (State Contract Assistance) for FY24. Ms. Aufranc invited Administrator Nee to address the Committee.

Administrator Nee noted an increase in State Contract Assistance (SCA) from $3.2 million to $9.35 million. MWRTA plans several actions: reduce the Revenue Anticipation Notes (RAN) by 30% increase fixed route service by adding evening and weekend hours and increasing frequency during peak weekday hours; and bring drivers and other front-line employee wages up to a more competitive market rate; ensuring federal formula funds are concentrated on capital investments; and advertise to build and retain ridership.

Ms. Aufranc noted the Committee will give a brief report back to the full Advisory Board on this discussion.

5.  Committee Reorganization: MWRTA’s By-Laws state committee must have at least two members appointed by the Advisory Board chair. Ms. Aufranc and Mr. Nolan will remain on Board in their current capacity. Ms. Marshall resigned. Committee members thanked Ms. Marshall for her service. At the next Advisory Board Meeting, the Committee will ask for volunteers.

Ms. Aufranc summarized the committee's accomplishments since March 2022. Ms. Aufranc thanked committee members and Administrator Nee, CFO John Glynn, and Daniel Fitch for their time and assistance with the committees’ work.

6.  Presentation of Final Financial Statements for the Year Ended June 30, 2022: The auditor reviewed the Independent Auditors Report, noting the clean audit opinion and no significant findings. The auditors drew the committee’s attention to the increased cost of repayments on the RAN as a result of interest rate fluctuations. The FY23 interest rate was 3.75%; the current rate is 4.5%. The auditor's recommendation is to reduce the RAN. As of FY2022, vehicles funded through MAP grants were added as capital assets and will continue hereafter. The committee requested to see a draft of the financial statement before submittal.

7.  Discussion and Acceptance of the Management Letter: Ms. Aufranc noted that a draft of the Management Letter had been reviewed by the committee at their previous meeting, and managements responses had been discussed at that time. Discussion included:

·       Creating a Reserve/Stabilization Fund.

·       Delay in receiving the audited financial statement of the retirement plan resulted in delayed issuance of the MWRTA financial statements.

·       Recording vehicle purchases funded through MAP grants as fixed assets on the balance sheet.

8.  Auditor’s Required Communications: The Management Letter dated May 2023 reflects all required communications from the Auditors to the Committee.

9.  Discussion of the scope of the June 20, 2023 Audit with Auditors: The committee discussed a focus on fare collection procedures, cash management, and grant application compliance. As a reminder, last year Norling looked at fare collection policies in anticipation of return to collecting fares.

10.  Discussion of Actual Results Versus Budget for FYE 6/30/2023 and the Two-Month Period Ended 8/31/2023: Ms. Aufranc drew the committee’s attention to the following actual results of FYE 6/30/23:

·       Fare Collections – down as a result of late introduction of fare collection

·       Fixed Route and ADA – costs below budget as a result of the slow ramp up/return of ridership

·       Gas – below budget – as a reminder when the budget was being prepared gas costs were at $5 a gallon and it was an uncertain environment.

No questions from the Committee were presented. The CFO noted a few more months data in the current period would make review and discussion more effective.

11.  Discussion of Cybersecurity: The IT Consultant summarized MWRTA policies and procedures for cybersecurity. The committee recommended hiring an outside consultant to conduct an independent targeted review and risk assessment of overall data security controls and best practices, as a matter of good management and responsible oversight. MWRTA will look for grant funding.

12.  Discussion of the Next Meeting Date and Topics: Ms. Aufranc proposed a tentative schedule for the committee as follows:

·       May/June - set audit scope and review operating budget

·       October/November - receive final audit if available, discuss capital plan/budget

·       January – interim financial report, financial statements if not available in Oct/November

·       March - look at proposed budget and give recommendation to full Advisory Board

13.  Urgent Items Not Anticipated Prior to 48 Hours of Posting:  No items were presented.

14.  Adjourn @ 1:32 PM

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