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Newport finance caucus: investment adviser and finance director outline controls, portfolios and audit items
Summary
At a Nov. 3 caucus following the special meeting, Red Tree Investments and Finance Director Lenny briefed the Board on city investment portfolios, internal controls and recent audit adjustments; commissioners asked about liquidity, vendor/credit-card controls, payroll and a $1.2M TIF accrual found in audit work.
The Newport Board of Commissioners heard a finance briefing Nov. 3 after the special-meeting votes. Joe Voyland of Red Tree Investments, introduced as the city's investment adviser, reviewed the firm's work with Newport (engaged July 2024), explained custody arrangements (US Bank as third-party custodian) and summarized three portfolios Red Tree manages: operating/reserve funds (about $10.5 million, average yield just over 4%), 2024 debt proceeds (a little over $4 million remaining from a 2024 bond issue for the parking garage) and older 2021 debt proceeds (about $12 million, invested in state and local government securities to retain interest that otherwise could be constrained by IRS rules). Voyland said the firm aims to lock in higher yields consistent with liquidity needs and cited Kentucky's permitted-investment rules (KRS 66.480) as the governing standard.
Finance Director Lenny followed with a department-level review of internal controls: monthly bank reconciliations across 19 bank accounts, segregation of duties in vendor creation and check signing, positive-pay and ACH controls to limit fraud, accounts-receivable and accounts-payable workflows and payroll review procedures. Lenny gave a concrete example of a forged/altered check that was caught by positive-pay and described steps the city has taken to tighten bank controls and to require multiple signoffs for large disbursements.
Board members pressed staff on specific risks and practices: who can create vendors (Matt and Lenny), who can cut checks (Missy) and the current approval threshold that sends purchases over $10,000 to the city manager for review. Commissioners also asked about online payment options, commercial-paper counterparties and whether the board should hold charge cards (the board indicated it should not). Lenny noted auditors perform sample-based testing; staff reported an audit adjustment that accrued about $1.2 million in state TIF receipts after the city's 90-day close, a material item flagged during audit work.
Lenny and staff recommended continued quarterly reporting and suggested a follow-up caucus to complete topics the hour did not allow time to cover. A member of the public thanked staff for the comprehensive review before the caucus adjourned.
