NEW AUDIT STANDARDS
VICTORIA TO REVIEW PROCEDURES
"What did we pay for this docu-ment?" asked Victoria City Councilmem-ber Jim Paulsen about the audit report before him on February 8^th.
Replied Steve McDonald, CPA and managing partner with Abdo Eick and Meyers, the City of Victoria's financial consulting firm, "It was $25,000.  You've got to have that document."
Major changes have been made to audit standards.  "We've dealt with fraud in five separate instances," said Mr. McDonald.  "It's been an eye opening experience.  It's easier if we document things so everybody can do their job.  Audit standards are changing, especially since 2000 and Enron.  It puts the spot-light on internal control and audit com-mittees."
He gave an example of a school district where the budget was approved in total, but then the line items were shifted and rearranged.
"We will expand the audits where we see risk," said Mr. McDonald.  "Audit standards are forcing us to step back and become a referee.  When we see a foul, we've got to call a foul.  It'll be tougher.  One time we had to write that a bookkeep-er basically didn't know what she was doing.  That's a tough thing to do."
He continued, "Procedures matter more than trust, but in small cities we've lived on a lot of trust ... One of the dan-gers is management override in small cities ... The risk in smaller cities is not paying attention to trends."
He suggested that each city fund could be tied into the city budget along with executive summary information and analysis.
City Councilmember Kim Roden said she was interested in seeing costs per tax-payer and comparisons to other cities, "some generic things such as Public Works cost per capita, engineering cost per capita.  Are we spending too much money on parks?"
Clarified Councilmember Jim Paul-sen, "We want measurements and we want stuff in English."
Replied Mr. McDonald, "That's what I want to get at.  What are your needs?  We've got 100 cities in the State of Minnesota."  At the same time he added, "You can't rely on us for your internal control.  Auditors can't be part of your management decisions.  There's a differ-ence between being part of your manage-ment and auditing your own work.  You have the information and capabilities to do this."
Regarding the City of Victoria, spe-cifically, he stated, "You're borrowing basically from earmarked funds to fund internal projects.  If you have clear a pay-back, maybe that's okay.  But speculation should be driven by policy.  You don't have a policy here."
Stated Mayor Mary Thun, "Just tell us what we need to do and we'll do it."
Mr. McDonald said that councilmem-bers should prioritize issues, starting with a first quarterly report, including analysis, from City Finance Director Jylan Johnson. 
Councilmember Roden summarized priorities as discussed during the work-shop:  analysis in reports, financial poli-cies, amount of permissible management override, trends, bench markers with comparable cities, more detail, under-standing interfund borrowing, how other cities do it.
Commented Mr. McDonald, "You're expressing needs that aren't being met right now.  Sounds like reporting is your priority."

BILLING FOR VICTORIA MUNICIPAL WATER
TO BE MORE USAGE-BASED
On February 8^th Victoria council-members directed staff to gather new data for the water billing structure and to have the billing be more usage-based rather than pipe diameter-based.  This motion re-sulted from a request by Pastor Bill Bonner of Waterbrooke Fellowship.
After the new church was built at County Road 43, its quarterly water bill was $720, although water usage at the small church is less than water usage of a single family home.  Minimum residential quarterly water bill is only $30.
Said City Engineer Cara Geheren, "The fees received several complaints.  The rate study by TKDA was approved in 2002.  The fire flow coming out of that pipe [at County Road 43] is significantly higher than for residential.  In the event of fire, that water is always available to them.  The fee also helps to pay for the water treatment facility ... The new water rate structure was adopted in 2005.  It's our recommendation that you don't make changes until we get all the data."
The engineer also stated that the other churches in Victoria are larger and are high water users.  She said that in 2002 the City of Victoria received the complete study.  It would cost $10,000 to gather new data.  Council approved this expendi-ture.  It will include a summarization of types of users.
Said Pastor Bonner, "We've lived here since 1994.  We appreciate you being attentive to a small church.  We'd be will-ing to pay something like $120 and then based on usage.  We've got two wells on the property but the city required us to have a fire sprinkler system ... and then this large quarterly fee."
The new information and suggestions for a more usage-based billing structure is expected within the next 30 days or so.

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