San Diego Audit Committee Meeting - November 8, 2017
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San Diego Audit Committee Meeting - November 8, 2017
The Audit Committee met on November 8, 2017, to review audit reports, budget proposals, and follow-up on prior recommendations. The meeting included presentations on the city auditor's monthly activity report, the annual budget for the Office of the City Auditor, a semi-annual recommendation follow-up report, the business cooperation program (BCP) audit, a park and recreation maintenance audit, and an update on utility billing audit recommendations. Several actions were taken, including unanimous approvals of reports and budgets.
Consent Calendar
- Routine approvals and unanimous actions were noted, with no items pulled for discussion. The consent calendar was approved by unanimous consent.
Public Comments & Testimony
- Martha Wells criticized the city's focus on performance audits rather than financial audits. She argued that lack of financial transparency leads to problems, stating that the city is "hiding stuff" and that improper auditing cascades into errors in the CAFR and budget. She expressed concerns about accountability and openness in government.
Discussion Items
- Item 6: Monthly Activity Report (City Auditor) - City Auditor Mr. Luna reported on recent audit products issued, including audits of parks and recreation, IT security (SCADA), grant management, and communications department charges. Audits in progress include economic development, stormwater, IT implementation of Accela, and planning department development impact fees. Nine audits were in preliminary review, covering topics such as data security, police data, fleet services, and fiscal sustainability. The report was informational.
- Item 1: Review of Annual Budget of City Auditor's Office - Mr. Luna presented the proposed fiscal year 2019 budget, noting no new positions or additions—maintaining the same budget as the current year. The $350,000 outside audit cost (CAFR) is included in the budget for administrative ease. The audit committee unanimously accepted the report.
- Item 2: Recommendation Follow-Up Report - Deputy City Auditor Danielle Knighton presented the semi-annual follow-up. As of June 30, 2017, there were 160 open recommendations from 46 audit reports. Of these, 45 were implemented, no longer applicable, or determined not to be implemented; 115 remain. Notably, 40 recommendations over two years old are still in process. Two recommendations were deemed no longer applicable (take-home vehicle audit and utility undergrounding program audit). One recommendation from a park and recreation contract audit was not implemented due to low potential recovery. The committee voted unanimously to accept the report and deem three recommendations no longer applicable.
- Item 3: Business Cooperation Program (BCP) Audit - Andy Hanau and Kevin Christensen presented the audit. The BCP captures additional use taxes from businesses. Since its inception, it has generated $3.9 million in net revenue, but only two companies are currently enrolled. The audit found that the city missed opportunities by not targeting large public and private construction projects. Recommendations included assigning responsibility to a department for construction outreach, developing procedures to notify BCP staff of projects over $50 million, and requiring BCP enrollment in large public project bids. The committee discussed implementation challenges, including the impact of Proposition H (which directs new sales tax revenue to the infrastructure fund) and the need for contractor incentives. Economic Development Director Eric Caldwell noted the program is being reassessed. The report was unanimously accepted and forwarded to City Council.
- Item 4: Park and Recreation Department Maintenance Operations Audit - Shawnee Pickney and team presented findings. Park and Rec manages the second largest park system in the U.S. by acreage. The audit found that the department does not use data-driven approaches to assess maintenance performance, lacks standards for some work order completions, and discontinued quarterly park inspections. There was a disconnect between internal inspection scores and resident satisfaction surveys (e.g., District 4 had highest inspection scores but lowest resident satisfaction). Four recommendations were made: develop maintenance standards, track all standards in a work order system, incorporate citizen feedback into deployment decisions, and improve accountability. The committee unanimously accepted the report and forwarded it to City Council.
- Item 5: Update on Utility Billing Audit Recommendations - Jack Clark and Aaron Liu from Environmental Services provided an update on implementing recommendations from the utility billing audit. Progress includes replacing the electronic data interchange system, developing process narratives with the Comptroller's office, and working on a memorandum of understanding with SDG&E. A streetlight reconciliation found that the city actually had 2,700 more lights than previously accounted for, not the 3,700 overcount initially thought. No refunds were expected. The update was informational.
Key Outcomes
- Unanimous approval of the City Auditor's Office FY19 budget (item 1).
- Unanimous approval to accept the recommendation follow-up report and deem three recommendations no longer applicable (item 2).
- Unanimous approval to accept the BCP audit and forward to City Council (item 3).
- Unanimous approval to accept the Park and Recreation maintenance audit and forward to City Council (item 4).
- The utility billing update was informational; no action required.
- The next audit committee meeting is scheduled for January 18, 2018.
Meeting Transcript
Thank you, Mr. Sherman. They're considered approved by unanimous consent on this. They are pool for discussion. I see none. Hearing no request to pull the actions, they stand approved. At each meeting, we invite the public for comments for up to two minutes about issues within the committee's jurisdiction, but they're not listed on the agenda, and they do have one public comment request. Good morning. You have two minutes. Good morning, Martha Wells. We only have performance audit, no financial uh leads to all the problems when it like no backup and the clerk who doesn't have books and all it goes to police or not best uh closed uh part tongue on stations all leaves all that it shows not in the open or kept government uh uh doesn't hope uh honest could um uh government. This it this is it goes on so much that it if right now we can't uh other side if you're a citizen we can't find what's going on. Now this started in 2016 because it's I was uh meetings um 2015 I started the main uh vet um vest and um what goes on in the city and I um I remember what happened before we have we used to have financial and catheter and everything we don't have right now and this is wrong you're hiding stuff from us because something must be doing doing something wrong because you don't uh I'm not up front with that with the financials because if we have financials, that's what you can tell what's going on in the city. And it means all these problems because you it starts right here in the audit. If you don't audit the right way, it's gonna is gonna come out to the CAFR and the budget and everything is gonna be all screwed up because you don't work with the numbers. You only performance performance talks about how people are doing, not what how much money you spend or anything like that. It doesn't show how much money you have in the the budget or anything like that. It just it talks about people and the uh it doesn't talk about what you do or anything like that. So it's it's wrong. It's it's leading to problems. Thank you, Ms. Martha. Um there in the committee members' uh comments or comments from the controller's office, IBA, city attorney, or auditor. I see none. I have no comments either this morning. Are there any requests for continuance? Um hearing no requests for continuance, we will move on to the agenda items. I would like to uh take the items out of order, starting with information agenda item six. We will hear the presentation on item six, which is the monthly activity report. I would like to welcome Mr. Varaluna, our city auditor. Thank you for being here today. I turn it over to you. Good morning, Madam Chair, members of the audit committee. I'm here to give our monthly activity reports as our last meeting. Uh since we last met, we've issued four audit related products. This includes our audit report on the park and recreation department, which will be heard later today. In addition, we issued an IT security audit of public utility of the SCADA system. We've also issued the audit of the grant management program, and an audit of the communications department charges for services to enterprise funds. Moving on to audits that are in the report writing phase. We have the main economic development department business and industry and center program audit report being drafted. We expect to provide that to the department the next few days for review. In addition, we also have an audit report on the stormwater division. Audits that are in the field work includes the IT audit of the Excel implementation and an audit uh the planning department development impact fees. And moving on to the next slide of audits in preliminary review, we have several audits that have been initiated and are in the planning stages. We have nine. Um these includes the IT audits of data security and controls over sensitive police data, IT audit uh with regards to the security of city hub and supporting infrastructure. In addition, we also have the fleet services vehicle acquisition audit underway, the curb cleaning process of transportation and stormwater, an audit on human capital. In addition, we also have public utilities water meter cover replacement process audit, community planning groups, real estate assets, leads, and surplus properties, and also finally the city's fiscal sustainability and financial condition report. So our plate is fairly full, and we're fairly active right now.
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