Audit Committee Meeting
NISTAC
2005 Research Circle Park
Manhattan, Kansas
5:00 PM – 6:00 PM
Monday, October 27, 2008
Call to Order: A sufficient quorum being present, the meeting was called to order by Chairwoman Angela Kreps at 5:14 PM. Directors in attendance were John Carlin, Sandra Lawrence, Bill Sanford and Ray Smilor. Mr. Hemenway participated via teleconference. Others present were Jan Katterhenry, Tom Thornton and Marsh LoScalzo with the KBA. Representing legal counsel was Doug Anning from Polsinelli.
Ms. Kreps added to the Agenda item 1.5 the approval of the minutes from the September 28, 2007 meeting.
Review of Minutes from the September 28, 2007 Meeting: The minutes from the September 28, 2007 meeting were redistributed via email. There being no recommendations for change, Mr. Carlin made a motion to adopt them, Dr. Smilor seconded and the motion passed unanimously.
Review of Minutes from the October 6, 2008 Meeting: Ms. Kreps asked if there were any changes or recommendation to the minutes of the October 6 meeting. There being none, Mr. Carlin made a motion to approve them, Dr. Smilor seconded and the motion passed unanimously.
Follow up from previous Audit Committee Meeting: Ms. Kreps referred to a template that AGH prepared which was enclosed in the audit book to formally document KBAs evaluation of collectability and other-than-temporary impairment to track those items with a process going forward.
Ms. Kreps commented that Ms. Hammond of AGH recommended drafting an additional contract for additional services provided. The committee discussed whether there was a need to engage in a formal agreement as directed by the Audit committee or approve Mr. Thornton and Ms. Katterhenry to handle as an operational expense.
Mr. Thornton recommended that KBA handle it as an administrative matter. This would be a standing resource. Additionally, if adjustments or research needed to be done, it would be handled when it occurred rather than waiting until the audit was conducted. Hopefully this will mean fewer adjustments and will give Ms. Katterhenry a professional resource to use when KBA gets into other kinds of investments.
The committee decided that Mr. Thornton and Ms. Katterhenry will make the determination when they need to make extra time with the auditors and not engage in a formal agreement.
Hotline: Ms. Kreps noted that a discussion of establishing a hotline was discussed in the August 11, 2008 meeting relative to establishing a formal notification process for the KBA.
The committee discussed at length the idea of implementing a hotline or a whistle-blower policy and the purpose for putting this process in place, as well as implementing it.
Mr. Thornton described scenarios and issues where the hotline would be important, and noted that these issues clearly fall under the responsibilities of the Audit committee.
Dr. Smilor made a recommendation to pursue a hotline or whistle blower policy in tandem, and determine whatever is necessary to understand the ramifications about it.
The committee determined that staff should conduct more research in conjunction with legal counsel on the outsourcing service as well as policy options and give the audit committee members the opportunity to review a draft. At the next meeting there will be a recommendation on how to proceed with a formal process on the policy and procedure related to it.
Adjournment: There being no further business, Dr. Smilor made a motion to adjourn, Ms. Lawrence seconded the motion and the vote was approved unanimously. The meeting was adjourned at 5:51. The motion passed and meeting adjourned.