Audit Committee Meeting - April 27, 2016
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Audit Committee Meeting - April 27, 2016
The Audit Committee convened on April 27, 2016, with all members present. The meeting included approval of minutes, recognition of awards, a monthly activity report, a detailed review of outstanding audit recommendations, a performance audit of select contracts, an IT audit report, a quarterly fraud hotline report, and the FY2017 budget proposal for the Office of the City Auditor. All votes were unanimous.
Consent Calendar
- Approved minutes from the March 9, 2016 meeting.
Public Comments & Testimony
- No members of the public spoke.
Discussion Items
- Monthly Activity Report (Information Item) – Presented by City Auditor Mr. Luna. Noted issuance of several audit products (contracting follow-up, IT audit on treasurer's tax systems, quarterly fraud hotline report, semi-annual recommendation follow-up). An ongoing audit on the San Diego Public Library is in the report writing phase. A planned fleet services audit was replaced with a street lighting audit per administration request, citing recent fleet review and public safety concerns.
- Recommendation Follow-Up Status Update as of December 31, 2015 – Committee member Mr. Hebreck led a detailed review of older audit recommendations, expressing concern about delays. Discussed: Housing Commission audit (10-002) – target date extended to June 2016; City Treasurer delinquent accounts (10-010) – recommendation 1 deemed immaterial and recommended for removal; Code enforcement audit (11-001) – a committee formed two months ago, progress expected by December 2016; Facilities maintenance (13-001) – first recommendation now complete, remaining work to be coordinated; Industrial wastewater control (multiple recommendations) – delay due to drought restrictions and water rate work; Police add-on pay (14-013) – policy changed, recommendation no longer applicable; Park and Recreation asset assessments (10-001) – all but last component complete, with commitment to resolve by 2017. Mr. Hebreck moved to accept the report and drop recommendations 14-013 and 10-010 (recommendation 1). Motion carried unanimously.
- Performance Audit of Select Contracts – Presented by auditor Sonny McClarnan. Management agreed with all recommendations. A procurement-to-pay (P2P) system overhaul began in early 2015, including technology and policy changes. Most recommendations expected to be completed within the calendar year. No public testimony. Motion to accept report passed unanimously.
- IT Audit Report: Treasurer's R Tax and B Tax Systems – Presented by Steve Shelby of Moss Adams. Concluded controls were effective; no recommendations. First year of stepped-up IT audits. Motion to accept passed unanimously.
- Quarterly Fraud Hotline Report (Q3 FY2016) – Presented by fraud investigator Andy Harida. 11 complaints assigned to City Auditor; 12 referred to departments. 25 cases carried forward from prior quarters; 7 closed. One case (15) updated from unsubstantiated to closed after the quarter ended. Motion to accept report passed unanimously.
- FY2017 Office of the City Auditor Budget – Presented by Mr. Luna. The requested budget was fully met in the mayor's proposed budget; no additional positions were requested. Motion to recommend approval to City Council passed unanimously.
Key Outcomes
- Approved the minutes and accepted the monthly activity report.
- Accepted the recommendation follow-up report and voted to drop two outdated recommendations (14-013 and 10-010 recommendation 1).
- Accepted the performance audit of select contracts, with management committed to implementing recommendations by end of 2016.
- Accepted the IT audit report with no recommendations.
- Accepted the quarterly fraud hotline report.
- Unanimously recommended the FY2017 Office of the City Auditor budget to City Council.
Meeting Transcript
Good morning, everybody. Looks like we're all present and ready to get started. So welcome to the April 27th, 2016 meeting of the audit committee. Looks like we have everyone involved here today from the mayor's office, Mr. Charvel, our city auditor, Mr. Luna, Mr. Valdivia, Committee Members Spencer Hebrank, Councilmember Zap, Mari Alley from the City Attorney's Office, and Lisa Byrne from the IBA, and of course Riley Webb, the committee consultant. So thank you all for being here. Um we're gonna do approval of the minutes from the March 9th, 2016 meeting, unless anybody has an thing they want to discuss or things they want to change. And those will be approved by unanimous consent. Do we have any non-agenda today? We do not, which is good because we have a long meeting ahead of us, so we might as well get started right away. Any uh comment from committee members. Just a quick uh comment here, if I may. Wanted to first of all congratulate Rolando from the mayor's office and all the work you guys did on the GFOA certificate of excellence that you received for the fit 20 uh uh 15 CAFE. Excellent job. I mean, it's how many years does that now? It's a second year in a row. Second year, two years in a row. Congratulations. Thank you. Uh Mr. Hebrain can probably attest to the fact of where we were when you first came on to this committee and where we are now. So it just shows very, very good work. And then uh Mr. Luna, not to overlook what your office has been doing. You got the 2015 Distinguished Knighton Award in the extra large shop category for code enforcement audit that you did. And we all know some of the things that code enforcement audit pointed out, and we are very appreciative and congratulations on your award. All right, thank you very much. Anyone else? Perfect. Any requests for continuances. Seeing none, we'll go on to our first item of the day is an information agenda item, and it's a monthly activity report. Mr. Luna. Certainly, good morning, Mr. Chairman and members of the audit committee at Water Luna, City Auditor. I'm here to present our monthly activity report since our last meeting. Um since we last met, we've issued several audit um products. This includes the contracting follow-up audit report, which will be heard later today. We also issued an IT audit on the treasure's R tax and B tax systems. In addition, we issued a quarterly fraud hotline report for the third quarter of this fiscal year. We issued a hotline investigation report on landscape contracts and also our semi-annual recommendation follow-up report. In terms of audit reports that are in um progress, we have one report that's in the report writing phase. This is the audit report on the San Diego Public Library. We held the exit conference on um April 21st, and we expect to issue that report in May. Um is also in progress. This last slide shows the audits that are to approved work plan that have not commenced. The first one is street lighting, which is replacing our fleet services audit. We received a request from the administration to switch that audit out.
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