| SUBMITTED AGENDA ITEMS:
Presentation about FC audit by Nick & Janice from Spectrum
· Nick & Janice from Spectrum are here to discuss the upcoming
auditing process. There have been changes after the fraud problem with
Enron, what auditors are expected to do has changed especially concerning
looking for fraud. The auditors are now expected to be more proactive
looking for fraud. The auditors start with a discussion with management
and the audit committee (our finance committee) of the company being audited
so they can plan for what they'll need to set up ahead of time.
· Looking at long time standards for what's been in place. Financial
statements that come out of the audit process and their assertions are
the responsibility of First Alternative. Assertions are that the financial
statements are complete, everything that's listed actually exists, the
rights & obligations to the assets and liabilities do exist, everything
is valued accurately, and that everything is presented the way it is supposed
to be presented.
· The auditors will be looking at different elements in the financial
statements in relation to looking for fraud as part of the normal auditing
process. They're assessing the risk of whether assets exist and that they're
valued correctly. The auditors have asked the management do a self-assessment
of the controls in place to prevent fraud. The auditors have done an assessment
as well based on their knowledge of our operations.
· Discussed the general elements of fraud - who usually perpetrates
it, how it's done, what the reasons are, and the rationalizations for
it.
· The auditors went through a list of questions and had management
& the finance committee identify where concerns might be and what
policies are in place. What is the anti-fraud culture at the Co-op? Are
there incentives or pressures that would cause employees to try and fake
financial results?
· Discussed the role of the auditors in testing the internal controls
that are represented by management.
Review of Oct. Financial Statements
· October is a non-inventory month, so Cost of Goods Sold is estimated.
Labor is over budget for the month, but under for the year. This trend
will continue through the 4th quarter, with the year-end percentage being
on the annual budget target. Some unusual expenses occurred during Oct
(break down of cooler, large supply order came in). The bottom line for
October (with the estimated CoGS) is a negative $8,283 instead of the
budget of a positive $19,469. Year to date actual Income is $190,566 well
above the budgeted $19,111.
Review of full draft of next year's budget
· Reviewed the draft budget submitted by management in preparation
for submission to the full Board at the December meeting. Please submit
corrections and changes to Dana by Friday. All emails will be copied to
all of the Finance Committee members. Toni will submit the finalized version
to the Executive committee for the December Board meeting.
Meeting adjourned: 6:35pm
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