REPORT:

Administrative Committee

SYNOPSIS:

The Administrative Committee met on Friday, January 15, 2010.  The Committee discussed various issues detailed in the Committee report.  The next Administrative Committee meeting is scheduled for Friday, February 12, 2010, at 10:00 a.m. in Conference Room CC-8.

RECOMMENDED ACTIONS:

Receive and file.
 

Dr. William A. Burke, Chair
Administrative Committee

Attendance:  Attending the January 15, 2010 meeting via videoconference were Chair Burke and Committee Member Ashley.  Present at AQMD were Committee Members Jane Carney, Josie Gonzales, Ronald Loveridge and Dennis Yates. 

ACTION/DISCUSSION ITEMS:

Dr. Burke mentioned that Barry Wallerstein, Kurt Wiese and Barbara Baird were at court today trying to prevent an injunction request to keep AQMD from issuing permits in implementation of SB 827.  He wished them well.

1. Board Members Concerns:  None.
   
   
2. Chairmans Report of Approved Travel:   None.
   
   
3. Approval of Compensation for Board Member Assistant(s)/Consultant(s):  None. 
   
   
4. Report of Approved Out-of-Country Travel:    None.
   
   FEBRUARY AGENDA ITEMS:
   
   
5. Audit for FY Ended June 30, 2009:  Rick Pearce, Chief Financial Officer, stated that Committee members last month requested this item be postponed in order for the auditors to be provided input and recommendations related to this years audit and answer questions Committee members may have.  Mrs. Carney stated there was not an issue with the audit process, but she felt the Committee members should meet with the auditors without staff present prior to the audit being approved.
   
   (This portion of the meeting was held with no staff or Board Consultants in attendance, but with public in attendance.  This portion of the minutes was, therefore, prepared and submitted by the auditor staff.)
   
   Mrs. Carney asked if Mike deCastro would walk through the Sarbanes-Oxley Act (SOX) handout of suggested items that auditor TCBA compiled.
   
   Mr. deCastro began by stating that the Sarbanes-Oxley Act Requirement Matrix handout was compiled based on a request from Rick Pearce and as a result of the previous Administrative Committee meeting in December 2009. Mr. DeCastro emphasized that the SOX requirements do not apply to Governments; however, some requirements of the SOX may be beneficial to AQMD. 
   
   The first SOX requirement that TCBA identified that could be beneficial to Governments is that Corporate officers (CEO and CFO) are required to attest to the fairness and completeness of financial reports, and that they have established and maintained adequate internal controls. The AQMDs management (CFO and CEO) responded that the CEO and CFO already attest to the fairness and completeness of financial reports and internal controls in the CAFR transmittal letter. TCBA expressed that this was sufficient and the committee agreed.  Mrs. Carney also stated that she would like the CEO and CFO to attest directly to the Board.  TCBA stated that the CAFR transmittal letter is addressed to the Chairman and the Board and signed by the CEO and the CFO.  Mrs. Carney stated that she is fine as long as the CAFR transmittal letter is addressed to the Board.
   
   The second requirement that TCBA identified was to establish an audit committee composed entirely of non-management directors.  Also, if there is not at least one committee member who is a financial expert, that fact and the reasons therefore, must be disclosed.  Mrs. Carney stated that the Administrative Committee serves as the Audit Committee for the agency.  Mrs. Carney concurred with AQMDs managements response that the Administrative Committee consider asking assistance from the Investment Oversight Committee since they would have financial expertise.  Committee member Marion Ashley questioned what would constitute a financial expert.  Mr. deCastro stated that a person who has knowledge in finance and accounting such as a CPA and understands how to read financial statements.   Mr. Ashley stated that he is a CPA and founded a real estate investing firm and has served on many committees and boards.  Mrs. Carney and Mr. deCastro stated that he would be considered the financial expert within the Administrative Committee. 
   
   The third requirement that TCBA identified was that the organization must disclose whether or not, and if not, the reason therefore, it has adopted a code of ethics applicable to its senior financial officers.  TCBAs understanding is that AQMD currently does not require senior management to annually attest in writing that they have read and understand the code of ethics.   In addition, AQMD does not have a separate code of ethics applicable to its senior financial officers.   Mrs. Carney requested of TCBA to provide them a sample of code of ethics language specifically related to senior management and officers related to financial issues.  Mr. deCastro stated that TCBA would research this.
   
   The fourth requirement that TCBA identified was that management must report annually on the internal controls of the organization, and the auditor must attest to that report.  Mr. deCastro stated although AQMD has identified and documented key internal controls, which are reviewed annually during the financial audit, it has been 10 years since the last comprehensive review of internal controls. He suggested that the Administrative Committee consider having a comprehensive internal controls review performed, and that it may be perfect timing due to an upcoming change in the CFO due to retirement.  Mrs. Carney inquired if it would be better to have the review before or after the change in CFO.  Mr. deCastro responded that it may be better to have the review after the new CFO is hired because the new CFO should have some input on the scope of the review.  The Administrative Committee concurred.
   
   The last requirement that TCBA identified was that Whistleblower protections from retaliation will apply to employees who report wrongdoing. Mr. deCastro noted that AQMD has a whistleblower protection policy that is posted as a notice to employees about their rights as a whistleblower under California law.  In addition, AQMD staff is preparing a draft policy, which will be presented to the Administrative Committee for consideration at its February meeting.   The Administrative Committee members concurred with this action.
   
   In addition to the SOX requirements, Mr. deCastro discussed SAS No. 114, Auditor Communication With Those Charged with Governance.  Mr. deCastro stated that the handout is an excerpt from SAS No. 114 and rather than going through it in detail, he suggested the following communications be made between TCBA and the Administrative Committee on future financial audits, beginning with the 2010 financial audit. 
   
   • TCBA will meet with the Administrative Committee (without AQMD staff present) prior to beginning audit fieldwork. At this time, TCBA will provide a schedule/timeline of the audit and discuss any concerns Administrative Committee members might have.
   • TCBA will meet with the Administrative Committee during the audit only if the auditors deem it is necessary to communicate any significant matters found during the audit.
   • TCBA will conduct an audit exit meeting with the Administrative Committee (without AQMD staff present) at the end of fieldwork and prior to the issuance of the financial audit report. 
   • TCBA will then present the final audit report to the Administrative Committee at its January meeting.
     

The Administrative Committee agreed with this audit process. Mrs. Carney thanked Mr. deCastro for the discussion and expressed that the discussion was very helpful in assuring that the Administrative Committee was carrying out its audit oversight duties appropriately.

(Staff was invited back into the meeting.)

Mr. Pearce stated this was a file and receive report.

Moved by Yates; seconded by Gonzales; and unanimously approved.

6. Weather Reports Sponsorship on TV:  At the request of Mayor Yates at the September 18, 2009 Administrative Committee meeting, Sam Atwood, Media Relations Manager, presented detailed proposals solicited from broadcast media for AQMD sponsorship of on-air and online news and weathercasts.  Proposals were received from ABC 7 and CBS 2.   Mr. Atwood presented both proposals to the committee.  Both offer promotion of AQMD on-air and online for around $60,000, but proposals differ in total number of on-air and online commercials, online billboards and weather report sponsorships.  Mr. Atwood stated that the CBS2 proposal included significantly more on-air spots, but that the ABC7 plan featured a more robust online advertising package.
   
   Committee Member Carney asked whether the stations would also provide information to the public regarding current state of affairs, such as fires, using natural gas fireplaces, etc.   Mr. Atwood responded that this could be discussed with both stations to see if it could be incorporated.  Committee Member Gonzales asked whether a health component for children could be included as well, consistent with AQMDs clean air priorities.
   
   Supervisor Ashley left the meeting at 10:48 a.m.
   
   Mayor Loveridge left the meeting at 10:53 a.m.
   
   On behalf of the Committee, Dr. Burke directed Mr. Atwood to request both CBS 2 and ABC 7 to expand their current proposals so that each is equal to the other in the number of on-air and online promotions offered, and authorized Mr. Atwood to recommend a contract with the station that presents the best amended proposal.
   
   
7. Modify Guidelines for Supplemental Environmental Project (SEP) Included in Enforcement Settlement:  Peter Greenwald, Senior Policy Advisor, stated that this item will be postponed to the January 22, 2010 Stationary Source Committee meeting.
   
   
8. Appropriate Funds and Authorize Amending of Existing Contract with Special Outside Counsel to Assist with Litigation Regarding SB 827 and AB 1318 and the Internal Bank:  Mr. Greenwald stated that this item is to consider appropriating funds from the BP ARCO Settlement Projects Fund ($1 million) to amend an existing contract with existing counsel to defend the agency in litigation relating to the operations of the internal bank. 
   
   Moved by Yates; seconded by Gonzales; unanimously approved.
   
   
9. Appropriate Funds from Designation for Litigation and Enforcement and Amending/Initiating Contracts with Outside Counsel:  Mr. Greenwald stated that this item is to appropriate $375,000 for litigation support from the list of prequalified counsel.
   
   Moved by Yates; seconded by Gonzales; unanimously approved.
   
   Committee Member Yates left the meeting at 10:59 a.m.
   
   
10. Authorize Funding for High School Students Conference:  Chung Liu, DEO/Science & Technology Advancement, explained that this item is to authorize funding to organize a high school conference and to use $300,000 from the Clean Fuels Conference Fund which has an adequate balance from previous conferences, along with $270,000 anticipated to come from sponsorships and exhibitors.  The majority of the expense will be paid for students lunches, transportation and substitute teachers.  This conference will be held to build awareness of air quality and climate change issues, and will include information on career training, transportation exhibits and invited guest speakers Governor Schwarzenegger and former President Clinton. 
    
    Dr. Burke requested the Internet be used to outreach for the conference and e-mails from participating schools be captured to be able to continue communicating with them.  He stated that attending a field trip changed his direction in his profession and life.
    
    Moved by Gonzales; seconded by Carney; unanimously approved.
    
    
11. Execute Contract to Provide Technical Support for AQMD PAMS Upper Air Meteorological Monitoring Network:  Laki Tisopulos, Asst. DEO/Planning, Rule Development and Area Sources, stated this item is to provide technical support in the amount of $90,000 for the next three years.
    
    Moved by Gonzales; seconded by Carney; unanimously approved.
    
    
12. Execute Contracts for Student Co-op Program:  Dr. Tisopulos stated this item is to sign a contract with Cal Poly Pomona for $15,000 to provide AQMD with student intern in the Modeling and Meteorology Section.
    
    Moved by Gonzales; seconded by Carney; unanimously approved.
    
    
13. Local Government & Small Business Advisory Group Minutes for November 13, 2009 meeting:  Attached for information only are the minutes from the November 13, 2009 Local Government & Small Business Advisory Group meeting.
    
    
14. Review February 5, 2010, Governing Board Agenda:  None.
    
    
15. Other Business:  None.
    
    
16. Public Comment:  None.
    

Meeting adjourned at 11:06 a.m.

Attachment (DOC, 16k)

Minutes from the November 13, 2009, Local Government & Small Business Assistance Advisory Group meeting