Good afternoon.

Will you please call the roll?

Good afternoon.

Councilmember Scott Benson.

Councilmember Letitia Johnson.

Present.

Councilmember Denzel McCampbell.

Councilmember Renata Miller.

Councilmember Gabriela Santiago Romero.

Councilmember Mary Waters.

Councilmember Angela Whitfield Callaway.

Council President Pro Tim Call Me Young the second.

Pro Tim Young went to go search for Council colleagues.

Council President James Tate.

Yep.

Mr.

Chair do not have a quorum present.

Thank you.

We can note that we've been joined by Member McCampbell.

Uh seeing that we do not have a quorum.

Would like to recess to the call of the chair.

Welcome to this life.

I will now like to call back to order the expanded budget finance and audit standing committee.

Madam Clerk, will you please call the role?

Councilmember Scott Benson.

Councilmember Letitia Johnson.

Present.

Councilmember Denzel McCampbell.

Councilmember Renata Miller.

Present.

Sorry for my attorney.

I'm behind everything.

Member Gabriela Santiago Romero's absence has been noted.

Councilmember Mary Waters.

Present.

Councilmember Angela Whitfield Callaway.

Council President Pro Tim Cole Me Young the second.

We have a quorum, which means we're now in session like to ask Madam A.

G to please come forward for the budget hearing for the Auditor General's office.

I was about to say, Mr.

Lockett, you shrunk on us.

Good afternoon, Madam Auditor General.

Thank you for being here.

And you would like to introduce your team, and once you do so, the floor is yours to begin the presentation.

Good afternoon.

It's always my pleasure to be here.

Laura Goodspeed, Auditor General, City of Detroit, Office of the Auditor General.

Mark Lockridge, Office of the Auditor General, Deputy Auditor General.

Kevin DeSadi, Chief Auditor, Officer of the Auditor General.

And I would like to introduce my team from the Office of the Auditor General.

Thank you.

Hello all.

Everybody.

Squatted up.

Again, it's my pleasure to present our fiscal year 2027 budget presentation.

And I will go through these slides rather quickly so that I give much time for the questions.

I'm happy to announce our office is celebrating 89 years in the city of Detroit.

We were established.

I know.

We were established in uh September 1936.

And the first audit general was seated in July 1937.

Mark Lockridge is the 10th Auditor General for the City of Detroit, and I am the 11th Auditor General.

Our office operates with full independence from political influence, and that is very important for us as we carry out the work that we do.

This helps to ensure that we can that we offices are accountable.

We look at transparency, the effectiveness and efficiency across all city departments, agencies, and operations.

Again, we were established as an independent agency, a watchdog, a critical watchdog over the use of public funds and the performance of city governance.

Just a brief note on our peer review.

It is important to note that in April of 2023, we passed our first ever peer review.

And the peer review is intended to assure you and the public that we maintain a robust system of quality uh control and that we conduct our audits and the work that we do in compliance with the generally accepted governmental auditing standards.

You'll hear the term gagus as compiled by the Comptroller General of the United States GAO office.

Our next peer review, our three-year peer review is scheduled for August 2026, and I can tell you we're on target.

We will pass that as well.

Just a little bit of information about our head count.

Thanks to the funding last year, we were able to increase our FTEs from 18 to 23.

And we are now at Fort 19.

We have four vacancies.

Two of the vacancies were due to uh two new hires that we hired in July, did not pass probation, but three of the ones that we hired in July, I'm here to announce who are sitting with us, have become permanent city of Detroit employees.

We had one of our senior auditors to relocate, and just recently we lost one to uh a resignation seeking better opportunities for himself.

We fully intend to fill those vacancies by July of this year.

I always like to talk about our staff.

Uh we are have three administrators, myself, Mark, and our executive administrator, and there's 16 personnel currently under the operations.

You've met Kevin, our chief auditor.

We have three audit managers, two supervisors, and 10 auditors.

And as you can see, our staff is highly credentialed with well over 60 percent having master master degrees.

We have um over 35 percent of us are certified internal auditors.

Mark and myself are certified public accountants.

We have certified government auditing professionals.

We have a certified information systems auditor.

We have a certified risk management auditor.

And being at a total of 19 employees puts us in the category of a large governmental, local governmental internal auditing shop.

We are well known across this country for the work that we do.

We have our chief auditor and our managers and super our manager who are non-union.

But I want to point out that 63% of our staff are union members.

And our auditors, formerly under the seniors appraisers, analysts, and accountants union are also a part of the AFSME new union.

Those contracts were ratified in December of 2025.

But I want to point out that our auditors were operating under expired contracts for two years.

It has significantly impacted the morale in our department, and I'm sure you'll hear from other agencies in the in the city that had union members.

These unions have about 1,400 members across the city in various occupations, including the accountants, the appraisers, some of our information technologies.

So it is encouraging that while that contract was ratified in December, they still are in negotiations for supplemental agreements.

Just a little bit about our demographics.

42% of our staff are Detroit residents.

And we have kind of even spread in terms of seniority within our department.

So we have all types of people ranging from baby boomers to even the Gen Alpha demographics.

And for the public, just talk briefly about our charter mandated operations.

We base our audit plan on annual risk-based plan, and we focus on those high-risk agencies and our programs.

We also conduct audits as requested by this honorable body.

The results are published to city council, to the mayor, and to the public.

And we also present those audit reports, the findings, the recommendations before the budget finance and audit committee.

Just briefly about the types of performance or operational audits.

Typically, they are broad, they are very diverse range, they include financial reporting, compliance, could include information technology, risk management, and more.

We assess the operations of functions of systems and processes to determine the efficiency and the effectiveness, and in some cases, compliance with legal and other requirements.

Special requests may be limited in scope.

And again, just to talk, touch on our risk-based audit plan.

We score each of the departments based on these seven metrics.

We look at the revenues, the amount of expenditures, the number of staff, whether it's a general or enterprise agency, the type of audit request, whether it's in uh from our risk-based plan or it's a special request from council, and the date of the last audit.

And lastly, we do incorporate emerging emerging issues.

We want to make sure that our audits are looking at the riskiest areas that the city faces in terms of implementations of its strategic objectives.

This is an overview of the current audits.

We've got a lot going on.

The top three audits, citywide payroll, the employee pre-onboarding, and position control, and the human resources employee services are all connected.

We uh started these audits in 2023, and we wanted to look at, and so there's citywide employee audits.

We wanted to look at the experience of employees from onboarding to continued employment or to termination.

In terms of the city payroll, we've published two reports.

The first one was a limited scope limitation as it relates to the Detroit Department of Transportation.

We just recently published the citywide payroll report.

That presentation will be coming before the BFA in April.

And we are in the draft reporting of the final report, which will be a report on public safety payroll.

And the red bar, just as you know, indicates where we were with these audits in March of last year.

So as you can see, we've launched several new audits.

The police authorized tolling, which is actually an investigation.

We're looking into the BC rental division, the health department food safety operations.

We're conducting our third opera audit on the Joe Lewis Greenway and a follow-up audit on public lighting department.

The status of other audits.

We initiated in December of 2025 a performance audit of the Department of Housing and Revitalization Department housing process for the unhoused community.

This was a request made by Councilmember Johnson.

We suspended that audit in January, pending the execution of the mayor's executive organization plan that was presented to the city council on January 19th, on January 9th of 2026.

As you are aware, the a major part of the reorganization actually splits the activity that was once housed totally in the housing and revitalization department between the new, some of it still rests with HRD, but some of it rests with the new housing department.

We plan to continue that audit once the EOP plan is adopted or the structure is finalized in April.

We initiated a follow-up audit of the Office of the Assessor Division based on our second interim report.

We just recently suspended that audit due to a perceived conflict of interest as identified by the City of Detroit's law department.

That audit was going to be conducted by our partners, and so we will continue this follow-up audit once additional resources within our organization have been identified.

As of yesterday, we announced or initiated the a performance audit of the Detroit Department of Transportation.

Again, this is based on our risk our risk-based audit plan as DDOT was indicated as a high-risk organization.

In 2025 or 2026, we published the following four reports.

A forensic audit of the residential property tax assessments.

That's our third and final report within that audit.

And we just published the audit of the Opera Neighborhood Beautification Initiative Program.

That audit was published in January, and we just concluded part of the budget finance audit committee hearing last week.

I won't spend a lot of time on the external audits, but this is one of our charter mandated operation, and that is to provide a report on the financial statements for the city of Detroit as soon as the close of the business.

We again for the fiscal year ending June 30, 2025, had an unmodified audit opinion from our external auditors, Plant Moran.

The reports were again published timely on December 19th.

And again, it's performed by Plant Moran through a contract from our office.

I am happy to announce that the results of a competitive bid that Plant Moran will continue to be our external auditors for the next five years through fiscal year ending 2030.

Other activities that we do, we support the annual budget process, we participate in the revenue estimating conferences, and we support the legislative policy division with the council city council budget hearings.

As a member, as auditor general, I am a member of the risk management council, and according to the charter chair of the fire cost and the police cost recovery reviews.

We are still currently looking at our roles and our responsibilities under this charter mandate.

The charter also mandates that the auditor general is responsible to settle all disputed claims in favor of or against the city to the extent in the manner provided by ordinance.

The ordinance allows for a claimant to request a hearing, an appeal hearing before the auditor general if their claim is denied by the law department, and that we make a determination and that determination is final.

In 2025, there were 13 claims that were appealed to the AG.

The dollar amount of those claims was 10,000.

We awarded two claims for a total of $5,850.

Most of those claims involved vehicular damage from dead and fallen trees.

And also we're looking to revise the ordinance so that we can continue with this process without any issues or concerns from the law department.

The charter also says that I am the chair person of the touring rate commission.

As you all may recall, we convened in 2024.

Prior to that, the touring rate commission had not convened for over 10 years.

It is five commissioners with the AGS chairperson.

As of present, I do not have a quorum to convene that commission.

I have I'm waiting on the design from the police department as well as the appointees from this honorable body to represent the touring industry and the appointee from the mayor's office, which would represent the public interest.

I hope to get those appointees and designees before the end of this month.

My plan is to convene in April so that we can provide recommended rates or by to this honorable body by October 1st of 2026 as required by the ordinance.

In 2012, the Detroit City Charter, and it was agreed that the City Council would establish a proportional method to fund its oversight agencies, and that was to ensure the proper oversight of the branches of government.

That was in 2012.

And that the system should include a formula to distribute funds to each of the agencies contained in this section and any other agencies added by ordinance.

Currently, the four oversight agencies is the Office of the Auditor General, the Board of Ethics, the Office of the Inspector General, and the Office of the Ombudsman.

So that was in 2012.

It also said that the proportional funding system should be enacted by ordinance.

Now we'll fast forward to when that ordinance was finally adopted, and that was in July of 2024.

The ordinance adopted a proportional equitable funding formula, which basically says it is a percentage of the general fund, and it's an amount that enables the oversight agencies to carry out our charter mandate and other authoritative responsibilities.

It is expressed as an equitable percentage by agency of the city's prior year total general fund budget.

In 2026, and again, thank you so much for allocating this agency as well as the other oversight agencies, our first year allocation of a three-year ramp up.

When we presented our request last year, we were asked to ramp it up over three years.

And so in fiscal year 2026, and again, thank you so much for the additional proportional funding allocation of $467,000.

This gives you a brief overview of how we use that money and the impact to our operations.

In terms of personnel, it allowed us to hire to additional FTEs, which increased, as you can see, our audit coverage capacity.

It also allowed us to launch our first investigation.

When we presented our proposed uses, one of the things that the charter requires us to do is investigations of various accounting and other types of activities.

To date, we had not done that.

So I'm happy to say that we have launched our first and guest investigation, and that is into the prompt payment for the police authorized touring tours.

Particularly as it relates to heavy data analytics and other more technical legal types of internal auditing.

All the other expenses of $84,000, that has allowed us to contract with a organizational development and a consulting firm to help us be prepared for our upcoming three-year peer review.

The general the generally accountability office and our standards known as Yellow Book, they have revamped the system of quality control, so we are required to look at that, and that was effective as of December in 2025.

We will give you additional details of this as we publish within the next month our first required proportional funding annual report.

And since I am the first of the oversight agencies to present to you, I thought it would be important to present our collective fiscal year 2027 proportional funding overview.

Last year during the executive session, we were asked to go back and bring before this body what is the collective impacts, and that's where we talked through the first year allocation and the three-year ramp up.

Collectively, our second year proportional funding request would put us at.81.81, less than one percent of the general fund budget.

And in total, again, as we said before, our collective ask, our collective proportional funding is still less than one percent of the general fund budget.

Each of the agencies were presenting their own details to support their proportional funding request allocation.

Just to give you a quick example, uh quick overview.

The mayor has proposed a budget of 5,634,000, which represents a decrease of 217,000.

So essentially, it is a decrease that wipes out half of the proportional funding that you provided with us last year.

It essentially wipes out the two FTE positions as well as all of our training budget, and I'll show you that on the next slide.

The results of this is to speak to the next slide speaks to what we've requested versus what the mayor has proposed.

The difference is the 940,000.

The decrease, the difference would eliminate an additional FTE.

We are currently at 23.

Our request includes moving to 24 FTEs toward our full optimal staffing level of 25 FTEs.

Every auditor, every uh person in our department are required to have a minimum of 40 hours of continuing professional education credits.

Many of those credits have to be within the auditing and accounting area.

They are offered by the standard body, the body standard body that we report to.

And so eliminating our training budget is just not acceptable for us in terms of the work that we need to do and being able to pass our peer review.

So in summary, I'm asking this honorable body to put our entire budget into the executive session.

I'm asking that you consider funding us at our second year allocation and proportional target equitable funding percentage of 0.41%, less than half of a percent of the total general fund prior year general fund budget, and to increase our budget accordingly as presented in these slides.

Again, I want to thank this honorable body for allowing us to present our request, and I'm open to any questions, comments, and or concerns.

And thank you.

I will start off with questions.

We'll start down on the side.

Thank you, Mr.

Chair, and good afternoon.

Um Madam A.

G.

and uh the team.

Uh I just have a question on you said about the claims uh that have yet to be paid out.

Uh so you said most of those were city trees to have those retreat uh claims.

Yes, the there is a total of $19,000 that has not been paid going back to 2023.

The bulk of those are damage from trees.

Uh, I'm happy to report that last week I met with the corporation council as well as David, the director from the legislative policy division.

We have a path forward, and we're hoping to have something before this body relatively quickly to resolve the past payment of the claims as well as how we're going to move forward with uh revisions to the ordinance.

Thank you for that.

And you know, we just had a conversation at the table around tree trimming and uh removal and the contracts, and I just wanted to lift that up because this is what we see the impact of not taking care of our city trees as expeditiously as we should because then there's either property damage or even worse, and hopefully it doesn't happen further harm to people and the need to do that.

And then now with this, I'm glad to hear that the issue seems to be being worked out.

Um then folks are not paid out the damages that they deserve to have.

So I'm just wanting to underscore that.

I definitely have a motion at the end, but I had a question on is there any is there are there any enforcement mechanisms that exist if departments fail to implement any audit recommendation or corrective plans or actions.

That's a great question through the chair.

Um first I would like to acknowledge the efforts made by the administration.

I think it was last year they established an internal audit division.

Uh and so that part of their charter and and representatives from the OCFO can speak more to it.

But the good news is that they have begun following up with the departments on our prior audit reports.

We typically do not do follow-ups in the past.

But given that the this internal audit division now will follow up with the divisions.

Our first instance of that was the follow-up with the second report for the assessor's office.

That allows us to follow up on their follow-up.

And so again, we we initiated that that audit, but just had to suspend it due to those concerns.

So we encourage the departments to implement our recommendations.

While we don't bring in revenue necessarily, the work that we do save money.

I'll give you two examples.

In 2022, we we produced an audit of the public lighting authority, and in that audit, we recommended that they do uh change their operations quickly because there was no segregation of duties.

Fast forward to 2023, it was uncovered that one person was able to set up accounts, bank accounts, and really uh embezzle eight and a half million dollars from the city.

I'm sure some of that was recovered, but had our recommendation been put in place, it possibly could have prevented that.

The second instance is in 2023, we published an audit of the Detroit Transportation Corporation.

We found in that we uh suggested that they really look at the uh there were some weaknesses in their internal controls within their databases, and we found out uh that in just this last year that there was some embezzlement uh for for about 350 million dollars.

We feel again had our recommendation been implemented and those internal control areas been strengthened, it could have possibly prevented.

That was thousand.

350,000, I'm sorry.

I'm sorry.

Um but still uh I know thank you.

Millions to thousands 350,000.

But still that's significant for their budget.

Um had had our recommendations been implemented, it could have possibly prevent that.

So we are preventative, and we hope that with this new division and that this administration will really look more in terms of you know, look to implementing our recommendations as soon as possible.

Thank you, Madam A.

G.

And uh yeah, yeah, 350,000.

350,000.

Yeah.

But as you said, still significant, but yeah, three okay.

Um and you know, I I'm glad that the um internal audit division has been established.

And I know as you mentioned at the budget finance and audit uh committee, we do hear about the audits and and see into those corrective action plans as well.

Um, and I do see those audits as being preventative to make sure to say um this is what we flag, and it may be good to tighten up here.

So I appreciate the work there.

Um and I I also think that underscores the the work and importance around the independent agency, especially yours, and and the need to make sure that we we have as much as possible in terms of resources there.

Um so with the um Mr.

Chair of a motion to put the uh uh OAG's um entire budget into executive session.

Thank you, sir.

There's a motion on the floor, colleagues.

Any objections?

See none, that action shall be taken.

All right, uh member Johnson.

Thank you, Mr.

Chair, and good afternoon.

Thank you for the presentation.

Thank you for the hard work that you all do, and you have such a beautiful team back there behind you.

I see a bunch of women.

Um so that's always great to see.

Um, I have a lot of women in my office as well.

So I do not have any questions at this time for you.

I'm appreciative of the um the information that shared with us in the budget finance and audit standing committee, and and just look forward to continuing to learn about the work that you're doing and how we can improve uh what we do as a city.

So thank you.

Thank you, Mr.

Chair.

Thank you.

Through the chair, I just want to say uh in response partially to your question, is that having these agencies come before you in the budget finance audit does help enforce and you know what we recommend as well.

So hold them accountable as well.

Thank you.

Thank you, Mr.

President.

Hello, um Auditor General and team.

This is the most comprehensive, amazing report I have seen in my what is this 17 or 18?

Uh this is the best.

I would like to applaud you guys.

You broke down.

You broke down who, what, when, where, how.

And it was simple.

And to our residents that's listening, this is what transparency look like.

This is what oversight looks like.

And I bet that $19,000 was driving you crazy, wasn't it?

It is.

On your on your books to just see it just sitting there for since 2023.

I bet you was probably saying because you must be a penny counter, and you're probably over you just probably just you know, everybody was driving you crazy.

But I'm glad that they came through in the midnight hour to sell it before this hearing, because it's in here, but now it's been rectified.

So kudos to them for stepping up.

I'm sure nobody wanted to have to hear it on live.

But I will say two years without a union is sad, but I am happy to hear that more than half your staff is unionized.

That that is amazing.

I applaud that and um shout out to the people that brought that to fruition.

Uh when I looked at your packet, we talked about the status of an audit.

You had one for HRD that was suspended.

It was suspended this year, but you had already had a whole year of compiling information.

So for me, um, I don't know how the suspensions take place, but I would like to know what you did or come up with for that year, even though it's suspended um because of the new ELP, because I would like to compare the differences between what we did and the HRD, and how it's gonna line up with the new ELP.

That is possible.

I don't know how far you got along, but you have been investigating for an entire year to bring forth a report, then all of a sudden it stopped.

So who who requested stop it?

Because also under the external audit portion, there was another report that was also stopped.

Where is that one?

Through the chair.

We just initiated that audit in December of 2025.

So not an entire year.

Yeah, and that's on page 13.

Um, so not a lot of information.

We uh I think the team had conducted some initial interviews at the same time with Director Schneider at the same time, like that same day that morning, the announcement was made.

So we we've had to suspend it because we're not sure who's going to end up being the director or who we need to talk to for the specific uh areas that we plan to cover in that audit.

Okay, so was there a prior preport done in end of 25?

I mean end of 24.

Now this is a new audit.

We do not have a prior audit report.

Right, Cardin.

Not for this specific uh division of HRD.

Because this is a specific request to look at the processes around the unhoused community, and so we do not have a we've had prior audits within HRD, but none specifically around this particular uh area.

Okay, the part for the um the external page.

What page is that like can I tell me what page the external report was on that's on page 16?

The external audit?

Yes, yes.

16 okay.

The part about uh understand it correctly.

Okay, mic.

Oh you know, I'm gonna put that in question.

I just I'm need to re-revamp to where I am, but I would just say I will end it right there.

But when you do have the part for the BC rental, I saw on your graph, you didn't get all the way to the end.

I would like to um meet with you regarding that, and I would like to also meet regarding the pre-employee onboarding and um position control.

Yeah, I just want to do the onboarding process and my team, and I would like to add or maybe give some insight regarding that and those two right there for audit investigations.

I would like to um know how do we take part or survey or give feedback for those.

Okay, he's gonna pull back up that slide, and that is slide 12.

So the this chart, if you there are five phases to our audit through the chair.

Uh planning, risk assessment, field work, reporting, and wrap-up.

And so the pre-on boarding, we're actually in the wrap-up phase of that, the report phase of that.

Uh that audit was started in 2023.

So we're hoping to have that audit wrapped up and published within the next two months.

Uh, the other audits from the police authorized tolling down are just new audits that we just initiated, maybe late 2025, and then the last one the follow-up on the public lighting department was just initiated uh in March of this month.

So if we have onboarding typically every four years when there's an election, how do we determine what goes with that?

The all three of these audits the payroll, the onboarding, and the human resources all look at that employee experience.

City council, your onboarding process is included.

Um there it was included in the audit work, and I'm sure my team will have some recommendations that we're kind of not privy to share at this point.

Okay, I look forward to seeing it.

I just got on board at my entire team, and we're still boarding.

We had not taken off yet.

Okay, all right.

Thank you very much.

And that's one of the reasons through the chair.

We wanted to do this.

Um there has not been a comprehensive.

Well, part of it was in 2014, we launched an audit of the human uh the HR payroll system at that time.

We were asked to pause that.

We was going in bankruptcy, and we knew we would have uh we was asked to pause that pending the implementation of UltiPro, and so this is a follow-up on that audit.

I think that was published in 2010, really wasn't uh uh audit but a memorandum.

This is a follow-up on that, but we thought it was important to expand that to cover the full experience.

And yes, we have looked at the operations within the city council as well as every other agency involved, which is everyone in the city, and so these are very comprehensive reports.

I urge you to either tune in to the BFA hearings, particularly with the upcoming uh hearing on the citywide payroll, as well as the future report on public safety payroll and um these other audits, and certainly if there's findings and recommendations that are specific to this body, we will certainly share that with you.

Thank you.

You're welcome.

Thank you.

Thank you for all the work that you all do.

You do a great job.

Uh, got no uh questions at this point verbally for the sake of time, got some things we're gonna be submitting to you in the writing.

But colleagues asking for a motion, requesting for a motion to uh place um first a discussion uh into executive session regarding the revision of the claims ordinance motion, seeing no objections, and action shall be taken.

Uh, the other is if we can place into executive session a discussion on the proportional funding for this department.

This motion on the floor.

Any objection, colleagues?

See none, that action shall be taken.

Uh pro to mean thank you, I appreciate that.

Thank you, Mr.

President.

Good to see you.

Always a pleasure.

I could tell you've been busy.

I just wanted to ask you really quickly were all the changes made for your office renovations, because an effective workspace is important.

Are they up to your standards and liking?

Through the chair, absolutely.

You missed our open house.

Our office is being shown as the office of the future.

We have a few more renovations or to find to finish up.

One of the things that we will be doing this within the next two weeks is actually soundproofing our uh conference room.

We were afforded a new roof, and with that, kind of took out some of the soundproofing.

So the DWJBA will be doing that.

And but pretty you have to come down and visit it.

The state of the art.

Our conference room is state of the art with the smart board and integrated TVs and everything that you need, and you're welcome to use it for meetings.

Excellent, excellent, excellent.

Thank you.

And then my second question I wanted to ask, I wanted to ask one, you talked about money that you had saw that had been misspent or that you had caught in the programs.

Is there a certain amount of money that is there a certain amount of money that would trigger a forensic audit?

When I'm talking about a forensic audit, I'm talking about an audit that's used to be able to collect data for the purposes of presenting it to a court to file criminal charges.

Is there a certain level of funds that you have to see that's misappropriate or misspent before that happens?

Is there a protocol, or is it because it's so expensive to do, you have to really be careful about where you apply that?

Now through the chair.

Is it in-house or contractual?

Through the chair.

So we it let me just say this.

If we're conducting an audit and we suspect that there is criminality involved, we will refer that to the Office of the Inspector General.

Okay.

Because they have that capacity to follow up on criminal charges.

What we do is though we when we uncover those weaknesses in internal control, again, preventative.

If you do this, it may prevent this.

Those are well within our purview to report on.

But we have used our audit partners, I can say our forensic specialists.

Um and so if there is a need, as it one of the one of our requests was the forensic audit of property taxes, and that's where these last two reports.

That was a forensic audit that we contracted out with our audit partners.

Does that answer?

No, no, it well, when you said inspector general, I really kind of got the gist of what you're saying.

I appreciate that.

Usually this is the part where I talk about artificial intelligence, but I'm not trying to tell you what to do.

So uh I will submit uh my recommendations to you in writing.

Thank you so much for your time.

I appreciate it.

Thank you, Mr.

President.

Thank you.

Member Waters.

Okay.

Thank you.

Good afternoon.

After um, I just want to better understand.

You talked about your risk-based audit plans.

What goes into developing such a plan?

I want to understand that.

And then how is it that you target those specific departments for such a plan to include them in your plan?

Our risk-based audit planning.

It's based on these seven metrics.

So we have all we we look at every department as well as the divisions, and we score them.

So we look at the uh amount of revenues.

So if it's 10 million dollars, that gets a 10 on a scale of say one to 10.

We look at the expenditures, okay, because some departments only have expenditures and no revenues.

We look at the number of staff.

The more people you have, the riskier it tends to be.

We look at whether it's a general fund or enterprise agency.

So all these seven metrics are scored by by the agency by division, the type of audit request.

If it's a council special, we want to try to address those issues that are important to you as quickly as possible.

So you'll get a 10 versus our audit plan, we'll get something less.

We look at the last audit.

We've been averaging and we're closing this gap, thankfully, to by having more staff, but our audits can be 10 years old.

When we look at a prior year audit report, it's 10 years old.

For example, the prior audit report on human resources, that was published in 2010.

So we're trying to close that gap.

And again, along with working with the internal audit uh division, we can try to close that gap.

But of course, if it's the longer it's been, the more you get in that score.

And then lastly, which is very important, is emerging issues.

So we're looking at what's before council, what's important to you, what's important to the public, and trying to give those items and those agencies where that issue may reside a higher score.

And so our auditing software allows us to put it in and help publish this risk assessment plan, and it tells us here are your high high risk agencies, high risk, medium high, and low.

And then we look at our resources and assign our audits accordingly.

Okay.

So along that same line that they there could also be random audits to be a part of that plan.

I wouldn't necessarily you have the seven points that you look at, but at what point do you look at the uh random do random audits?

Through through through the chair.

Um those are our performance audits where we rank them on the risk base.

One of the other charter mandates that we hope to implement and are implementing is we're required to look at every odd every agency that we don't audit to do analytics on it from a financial standpoint.

Okay.

And so with the proportional funding, we're starting down that path.

Okay.

So we need you to keep us going so we can meet that charter mandate as well.

Okay, I was one that's what I was trying to get to, so thank you so much for getting there for me.

Just one other quick question.

Does it include uh duplication of services?

You know, it's very important that that we make sure that we don't have duplications of services throughout our various uh departments.

We through the chair, we have seen that, and we we try to address that as well.

You try as best we can.

I mean, our auditors, the the more experienced ones have that.

That's one of the things we bring to the table.

Is this citywide view?

Is this view at the top?

And so we have uh uncovered and where there is duplication.

Often though, that's difficult to speak to because of the it's the administration's plan and operations.

Yeah, no, I I you gotta notify us some kind of way.

I mean, I want to see some sort of chart or something that says these are duplications of services.

We need to know we have very important decisions to make uh in the future.

We don't know what the future holds given some of the things that are happening here in the United States.

So if you see duplication of services, please notify us, create a chart, do something because we need to know.

I I through the chair.

I yeah.

I who do you report to through the chain of command?

Uh that's an interesting question.

By being independent, I like to say I report to everybody, the public.

We are public servants.

Um administratively, I report through council president.

Oh, just the president?

Administrative.

I repeat Administratively.

And our uh dotted line through the budget finance audit committee.

So to this honorable body.

Well, what well the reason the only reason I ask is because you were hesitant about putting together a chart, which is something we've got to be fiscally responsible.

So I I just want to uh be able to see such data.

I mean, really.

I think I think it's gonna be important for all of us to see and to know.

Um as we deliberate on budgets this year, next year we we need to know.

Through the chair, as I said, we do uncover that uh as we go through the audits.

Uh we were look particularly looking at it when we initiated the how the um unhoused community uh audit.

It's difficult for us to see it without going through the audit and looking at the specifics.

Uh that perhaps the administration might be able to share that overview with you rather quickly.

No, you said you were independent.

That's what I who I want it from.

Okay.

All right.

Thank you.

We accept uh request from the city council.

Thank you.

Thank you.

Member Callaway.

Thank you, Mr.

Chair, and good afternoon, everyone.

Um page 12.

Um you don't have to do it now, but I will need some um help with understanding these charts.

Um what you put here.

Um I'm just not following.

Um, but I know I need to follow, so I can understand why you have these lines here, and why some are extended and some are not.

I believe that's because you're just starting to look into these and audit.

Through the chair, I I I should have clarified that.

The red bar shows where we were last year with those audits.

So anything to the right of it is the progress we've made.

The colors, for example, the blue represents the planning phase, the orange represents the risk assessment.

We see I see that I just I just want to.

So that's what the red was, and I know I need to make it a little more clear.

That's where we were with these audits last year.

Okay.

Um thank you for um that clarification.

And you you kind of nonchalantly, and I'm like shocked that when you start talking about um the 8.5 million dollars being um embezzled, and then another 350 million, then you corrected and said it was 350,000.

That's a lot of other people's money.

And so um, I don't think we should, and I'll have to talk to law and LPD.

I don't think we have to wait on our auditor, not our auditor general or our um office of inspector general.

This is criminality, so we don't have him to we don't have to you know wait for him to make that determination.

This should be reported to the prosecutor or to the police department.

This is and I believe those cases have through the chair, those cases have been.

They have been, okay, because I know I heard when I first started working here about over 400,000 dollars being embed embezzled through the library system, but I don't I um I think I read an article too, but I don't know, I don't know what happened with that.

But my question is um the officer um your office submitted the third interim report, property transactions data February 20, um, February 26, 2025.

This was this report focused on uncapping property taxes and recording transfer of property, among other issues.

This portion of the audit indicated input into the city's property database was not performed timely.

Is that correct?

That is correct through the chair.

All right.

Has the off has your office seen any improvement in recording information related to title transfer and uncapping property taxes?

Where are we with that?

Through the chair, we have not conducted a follow-up audit on this.

I'm hoping again, I'm I'm very hopeful that working with the internal audit department.

They completed the follow-up on the second report.

It's my understanding that they are working with the office of the assessor on these recommendations.

Um, but we have not conducted a follow-up audit.

But I will submit to this honorable body that it's within your pre purview to call the offices and the agencies before you to have them report to you where they are with our recommendations.

Okay, and and to that point through the chair, which department should I be calling?

Should I be calling on the question I just asked you?

Would that be the assessor's office or whose office?

That would be through the chair, the assessor's office.

Okay.

All right, thank you, because that's important, and to just start stuff and stop it, and then you know, I don't know where you have to stop.

Um what are you doing, Mr.

What?

Through the chair.

He was also suggesting that you could contact uh Mr.

Jerome Lee in the internal audit division as well.

Jerome Lee.

He's the director LE, Director of Internal Audit.

Okay.

In the office of the CFO.

Okay.

Well, I I've submitted all my questions.

I was just um stuck on that property tax database not being performed timely because that's impacting people's lives when you uncapping, and um, it's just important that we be um be really dil diligent about that report and the follow-up because people have been complaining about property taxes and what's happening, the uncapping of them or not.

And um we're here speaking on their behalf and just you know doing our due diligence.

Um my next question is I don't know if it should go to you or the office of the chief financial officer regarding the um the overall impact of the dollar spent through ARPA.

I don't know if I should hold off and just wait for um to send that question to Donnie Johnson or to uh Tanya Staudemeyer.

Where are we with ARPA dollars or is that more of a um office of the chief?

Yeah, through the chair.

Through the chair.

That is a question more so for the uh OCFO.

Okay, but as I mentioned, we are conducting our third audit of the ARPA dollars.

So we're looking at the uh effectiveness and the efficiency and the programs.

Okay, did they do what they want to do?

Uh as you can see with the neighborhood beautification initiative uh opera uh initiative, we felt that it did accomplish what it uh set out to do.

So we will not stop just because the dollars will be fully like we hope spent by the end of this year.

We will continue to look at the opera projects to uh report out to you and the public as to were did it meet its intended objectives going forward.

Okay, I look forward to that.

I've already submitted my questions.

Thank you so much.

Thank you, Mr.

Chair.

Thank you, colleagues.

Are there any additional motions before we wrap up this budget hearing?

Have a motion with member waters and waters.

Thank you.

Um this goes in closing resolution.

Um the auditor general to encourage the auditor general to report back to uh city council duplication of services that will go in the closing resolution.

Colleagues, there's a motion on the floor.

Any objections?

Discussion with discussion, Member Johnson.

Thank you.

Uh Mr.

Chair, Member Waters, is that something that we can request on a regular basis for the auditor general to present in BFA?

Well, and maybe we can, but I still want to put it in closing resolutions.

I'm not saying that we can or we can't.

But we we may or may not get around to that.

So I'm not asking for anything other than closing resolution.

I'm gonna write it up, put it in closing resolution.

Who does the closing resolution?

I thought that was usually information for the administration you, Mr.

President, to LPD.

Yes, Mr.

Witta.

Ms.

Woodaker.

Yeah, a closing resolution is a is a statement of your priority.

So it can be it can be a statement directed to you, to the to the council, reminding you of something that you want to continuously monitor, or it can be directed to the administration, but it's just a statement of of your intent to move in a certain direction on an issue important to the council.

Thank you.

Um through you to member waters.

Would you also like to ask the chair of BFNA to just maybe put it on the agenda maybe a couple times a year or something, just so that it's something we do regularly?

Well, but but how does that really get back to the auditor general?

Just I I just want to highlight it for uh for the future.

You know, if if we don't if we if we end up not putting it on the agenda, um then it's not I wanted it to be out there for part of the record.

That's the whole idea.

Now there's a certain way that it needs to be written.

I'm willing to do that too.

I mean, you know, I can make sure that it's directed to city council.

Doesn't matter with me.

I just want it in a closing resolution.

And and maybe LPD has has a because they they turn around and review all of the uh closing resolutions anyway.

Through you, Mr.

Chair.

I'm not saying don't put it in the closing resolution, but it's a request back to us.

So could you not request that as a member of BFNA?

I'm a member too.

That's what I'm saying.

That you are a member of BFNA that we have it be a biannual uh report or something that is done and presented to BFNA.

Thank you, Mr.

Chair.

I'm I'm open to some suggestions.

I'm you know, I'm not I'm not stuck on doing it one way.

I just want it to happen.

So wherever we decide uh through you, Mr.

President, maybe LPD has a suggestion.

Yes, I think this is part of the the the process once we get to the the executive session and closing resolution portion, we'll have an opportunity to hash exactly how uh we want to see it.

So I think we can look in the executive session.

Right now you it sounds like you're just putting it on the table, but yeah, we still need to formulate what that looks like.

So that's the way I hear it.

That's the way you you got it right.

Through the chair.

May I also suggest uh as we said, we we often take uh requests from council, and that is done through a memorandum through the president to the council to us, and so those get into our queue, so to speak, of the work that we need to do.

This falls in lines with again us in starting to do those types of investigations and reporting that's different than an audit.

So and I think this gives us still an opportunity for us to add another motion later on as we move forward if we want to fine-tune it just a bit.

Um but it sounds like we don't have the all the pieces today.

It's just um there's a motion on the floor, colleagues.

Any objection?

Seeing none, that action shall be taken.

Are there any further motions on the floor?

All right, madam A.

G, uh, any closing uh remarks?

Again, I just want to thank you on behalf of myself and my staff, and to really consider the work that we do and the our request for our second allocation of the proportional funding uh amount.

I understand that the uh budget is what it is in terms of being conservative and careful in how you allocate those dollars.

But I will close with collectively, collectively, your oversight agencies asking for less than one percent of the prior year general fund budget.

So with that, thank you.

Thank you.

Thank you, madam AG.

Thank you.

We'll now close out the auditor general's budget hearing, and now invite the Department of Innovation and Technology to come forward.

Do it.

Yes, ma'am.

Yes, ma'am.