San Diego Audit Committee Meeting - February 14, 2018
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San Diego Audit Committee Meeting - February 14, 2018
The San Diego Audit Committee met on February 14, 2018 (Valentine's Day) with a quorum present including Councilmember Scott Sherman, Tom Hebrink, Alan Spencer, and Ricardo Valdivia. Also present were City Auditor Eduardo Luna, Deputy City Attorney Priscilla Dugard, Interim City Comptroller Scott Clark, IBA representative Lisa Byrne, and committee consultant Bruce Williams. The committee reviewed three discussion items: the monthly activity report, a performance audit of the city's grants management program, a performance audit of the Communications Department's charges for services to enterprise funds, and the quarterly fraud hotline activity report.
Discussion Items
Monthly Activity Report
- City Auditor Eduardo Luna presented the monthly activity report, listing audits issued (quarterly fraud hotline report for Q2 FY2018 and an audit of the Economic Development Department's business and industry incentive program), audits in report writing (stormwater division), and audits in progress (IT audit of Excel implementation, planning department development impact fees, data security of police data, fiscal sustainability, fleet services, curb painting, human capital, community planning groups, and real estate assets). Upcoming audits include climate action plan, cure fee program, IT disaster recovery, and two annual audits. Committee members requested more detailed status charts (e.g., bar chart showing audit phase) and prioritized the water meter accuracy audit, which is expected to complete by early spring 2018. The report was for information only.
Performance Audit of City Grants Management Program
- Assistant City Auditor Kyle Elser and lead auditor Arles Erickson presented findings. The city received approximately $558 million in grant revenue from fiscal year 2000 to fiscal year 2016, averaging $80 million annually. In FY2017, 148 active grants were managed, with 89% from federal and state sources. The audit found that city guidelines had not established requirements for coordinating searches or assessing grants prior to application, and departments lacked written procedures for grant administration. Recommendations included streamlining the application process, creating an oversight committee, and establishing a control framework. City staff (Sarah Brennan, Natasha Kaller, Stacey Lamedico) reported ongoing efforts to implement a streamlined process, with a goal to bring a proposal to the Budget Committee in March 2018. Discussion focused on the inefficiency of requiring City Council approval for all grant applications; the proposed threshold of $1 million for streamlined approval was supported. Councilmember Scott Sherman noted that no grant application had ever been pulled from consent. The committee voted unanimously to accept the report and forward it to City Council.
Performance Audit of Communications Department Charges for Services to Enterprise Funds
- Supervisor Shine Pickney and primary auditor Greg Cleary presented. The audit examined billing accuracy for communications services provided to enterprise fund departments and whether consultant use increased after the 2015 consolidation. Findings showed that billing mechanisms could be strengthened by requiring all staff to maintain activity logs with internal order numbers, and by providing periodic detailed reports to client departments. The department agreed to implement both recommendations. Committee members questioned the delay in implementing a project tracking tool (since October 2016) and requested that IT provide a list of evaluated systems. The committee voted unanimously to accept the report and forward it to City Council, with a request for IT to report on software options.
Quarterly Fraud Hotline Activity Report (Q2 FY2018)
- Fraud Investigator Andy Harida reported 71 complaints received in the quarter. Six were assigned to the City Auditor, 47 to departments, and 18 were outside purview. 58 complaints were closed, leaving 47 open. Two auditor investigations were substantiated: one involving a vendor using city water without payment (four recommendations), and another involving a staff report that omitted material information on a $14 million contract (six recommendations). One auditor investigation into the Transportation Alternatives Program found significant internal control weaknesses (overpayments, unreconciled cash, contracting deficiencies), resulting in 12 recommendations. Eight department investigations were substantiated for issues such as theft of time, abusive behavior, and improper disposal. Corrective actions were taken in 11 department cases. CFO Rolando Trevel provided an update on automating the transportation subsidy process to eliminate cash handling. The committee accepted the report.
Key Outcomes
- Accepted and forwarded to City Council: Performance audit of grants management (unanimous). Performance audit of communications department charges (unanimous, with request for IT to report on tracking software).
- Accepted for information: Monthly activity report, quarterly fraud hotline report.
- Next meeting scheduled for March 7, 2018.
Meeting Transcript
All right. This is Valentine's Day, February 14th meeting of our audit committee. And we have a quorum present. We've got Councilmember Scott Sherman, Mr. Hebring, Tom Hebrink, Alan Spencer, and Ricardo Valdivia. Welcome. Also present, Edwarna Luna, our city auditor, Priscilla Dugard, Deputy City Attorney Scott Clark, our interim city compontroller, Lisa Byrne from the IBA's office. Good morning. And my committee consultant, Bruce Williams. So that is recorded. Do we have any non-agenda public comment this morning? Nope. Say that again, I'm sorry. You were not present at the last meeting. Okay. Okay, we have nothing on uh no public speakers on non-agenda. And any committee members would like to say other than nope. Oh. Certainly. Um just to um to make the audit committee aware, our office, along with 520 other city employees were recently relocated from our office space. Um I just like to acknowledge um the support and assistance my office has received in securing temporary office space throughout City Hall and the various city facilities. Uh in particular, I'd like to thank um uh the various city council offices, Laurie Whitsown, Bret Sesame for helping secure space on the third floor along with Andrea Tevlin and Veronica Mulillo and then the rest of the IBA staff making this feel very welcome on the third floor. Uh in addition, also Liz Malin and Diana Fuentes also helped secure space for us in the city clerk's office. In addition, uh we had uh Ilea Corey at Fleet providing space for us, real estate assets providing space for us, and also at the branch libraries. Thank you. And I want to thank everyone for accommodating you as well, and actually a lot of others. Um of the buildings that we are that is being renovated that it's not city hall, it's being renovated. Uh they found asbestos. And what do we have? Over 500 employees that were uh displaced for I don't know how long and being absorbed by everybody else. So thank you to everyone who was able to accommodate. I don't know how we did that 500 and some employees, but I guess we're double and triple bunking people. So that too shall pass, but um thank you. And um there's no request for continuances. Nope. So we'll go straight to our um our discussion agenda and uh uh back to welcoming Mr. Luna, and he is going to start with our monthly activity report, which is just an information item. And uh, Mr. Luna? Certainly, good morning, uh members of the audit committee, Eduardo Luna, San Diego City Auditor. I'm here to present our monthly activity report since our last meeting. In terms of audit products that we've issued, we had two reports. This includes a quarterly fraud hotline report for the second quarter of fiscal year 2018. In addition, we issued a report on the economic development department, business and industry incentive program. We have one audit that's in report writing. This is an audit of the stormwater division of the Department of Transportation and the Stormwater. Going on to the slides of audits that are in field work, what we call audits in progress. We have several audits that are um in field work. This includes the audit of the IT audit of Excel implementation, the audit of the planning department, development impact fees, an IT audit of data security controls of some set of police data, the city's fiscal sustainability and financial condition, fleet services vehicle acquisition, um, an audit of the curtaining process, audit of human capital, community planning groups, and the real estate assets lease and surplus property. So our office is fully engaged in several audits.
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