San Diego Audit Committee Meeting - September 12, 2018
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San Diego Audit Committee Meeting - September 12, 2018
The San Diego City Audit Committee met on September 12, 2018, at 5:15 PM UTC. The meeting featured farewell remarks for outgoing City Auditor Eduardo Luna, the presentation of several audit reports, and the appointment of an interim city auditor. The committee discussed a performance audit on water meter cover replacement, reviewed the annual central stores inventory, and accepted the audit of Mission Bay and Regional Park Improvement Fund revenues. All votes were unanimous.
Consent Calendar
- No consent calendar items were listed on the agenda.
Public Comments & Testimony
- Joy Sanyata (District 3 resident) offered public comment praising City Auditor Eduardo Luna for his decade of service, calling him a "star" and commending the audit department's work.
- Dwayne Harvey (self-identified supervisor of the box and lid crew) spoke against accepting the water meter cover audit, stating it was incomplete and unfairly portrayed his crew. He claimed auditors did not use all available information and that his crew worked hard.
Discussion Items
- Farewell to City Auditor Eduardo Luna: Chair Patricia Zapp, Councilmember Scott Sherman, and other committee members thanked Luna for his leadership, noting he established the city's audit function and saved taxpayers millions. Luna stated his tenure was the pinnacle of his career and praised his staff.
- Monthly Activity Report (Informational): Presented by Eduardo Luna. Since the last meeting, the office issued five audit products, including audits of public utilities customer support and water billing, real estate assets surplus properties, water meter cover replacement, and annual Mission Bay fund and Central Stores inventory audits. Four audits are in report writing, one in fieldwork, and seven in planning.
- Performance Audit – Water Meter Cover Replacement Process: Presented by principal auditor Andy Hinaut and lead auditor Luis Bruzeño. The audit found that in FY17, Public Utilities Department (PUD) took an average of over one year to complete work orders, against a six-month goal. Key issues: lack of management oversight (crews spent only 3.6 hours/day in the field), process inefficiencies (40% of trips wasted), and staffing shortages (8 employees vs. 27.5 needed). The backlog grew from 18,000 in FY15 to about 25,000 by March 2018. PUD agreed to all 11 recommendations. Deputy COO Johnny Perkins (six weeks on the job) acknowledged the problems and outlined immediate steps, including appointing an interim director, using photos in work orders, and grouping jobs geographically. Councilmember Sherman (who requested the audit in 2016) called the findings appalling and suggested outsourcing the backlog. The committee voted to accept the report and requested a follow-up in 90 days.
- Central Stores Inventory Agreed-Upon Procedures: Presented by Kevin Starkey (MGO). The annual audit of the consolidated warehouse found an overstatement of about $3,400 on a sample of $345,000, extrapolating to ~1% of total inventory ($1.38M). Two recommendations: standardize cycle count procedures and consider handheld barcode scanners. Deputy Director Matthew Helm (Purchasing & Contracting) noted the consolidation reduced costs and that they are working on implementing the recommendations. The committee accepted the report.
- Audit of Mission Bay and Regional Park Improvement Fund: Presented by Deputy City Auditor Danielle Knighton. For FY17, lease revenues over $29 million were allocated per Charter Section 55.2 (after 2016 Measure J, 35% to Regional Parks, 65% to Mission Bay). Expenditures were allowable and appropriate. Three committee members exceeded the eight-year consecutive term limit, but the issue was not repeated as a finding because prior recommendations are still pending. The committee accepted the report.
- Appointment of Interim City Auditor: Presented by Felipe Monroy (Mayor’s Office). Kyle Elsner was proposed as interim city auditor, effective October 1, 2018, pending a permanent search. Elsner stated he would not apply for the permanent role. The committee unanimously recommended the City Council confirm the appointment.
Key Outcomes
- The committee voted unanimously to accept the water meter cover replacement audit report and forward it to the City Council, with a request for PUD to report back in 90 days on progress implementing recommendations.
- The committee voted unanimously to accept the Central Stores Inventory report.
- The committee voted unanimously to accept the Mission Bay and Regional Park Improvement Fund audit.
- The committee voted unanimously to recommend that the City Council confirm Kyle Elsner as interim city auditor, with salary in accordance with the FY19 salary ordinance.
- All votes were unanimous (aye by all members present).
Meeting Transcript
I want to just welcome everyone. It's uh I hope everyone had a nice summer and we're back um we're back in action here at City Hall. So for the record, uh we have a full quorum present with uh council member Scott Sherman, uh Thomas Hebrink, Ricardo Valdivia, and Ellen Spencer. Um also uh would want to recognize Eduardo Luna, our city auditor, and uh Priscilla Dugard, our deputy city attorney, Scott Clark from the Department of Finance Assistant Director, and I believe Lisa Byrne from the IBA will be joining us, and of course, my superhero committee consultant, Bruce Williams. I know he I love embarrassing him. Um this is quite the uh uh the the meeting we're having uh today. Uh just to bid farewell to Mr. Luna, this is your final meeting. We'll say some uh some more comments later on, but uh this is one of those moments after being here for a decade to say, wow, this is really well, why don't you say something now if you want? Certainly, uh you know I I was talking to Kyle at the beginning of the meeting that um I probably realized I participated in over a hundred audit committee meetings, but uh as I look back on my career of auditing, which is you know approaching almost 30 years, 29. Um this is gonna be uh being the city auditor in San Diego uh is gonna be the pinnacle of my career um to date. Um it was quite an honor to be able to serve as the first city auditor. Um extremely appreciative of the support of this audit committee, the city council and the mayors and working with management. But um first and foremost, uh, you know, I was really privileged to work with just an astounding um group of auditors. Um I in my career, this is the finest group of auditors that I ever worked with. So the city is in good hands. Um the executive management team of Kyle and Danielle will have a steady hand on the office and going forward. My my managers that I have there are absolutely superb, and um rest assured that they will continue to work hard. So we have you know, Andy, Shanae, um Steven, and Chris Kahn there guiding the rest of the staff. And the staff that I have just work immensely hard for this city um and put out their best efforts. But um I'll just share a quick story that a couple weeks back my wife and I went out to to dinner in Little Italy, and we were walking back to our car at 8 30 in the evening, and I encountered one of my auditors just leaving the office looking for by teeth at 8 30 in the evening on a Friday night. No one had asked this person to stay um uh and work like he just did it because he knew it was important. So Luis uh you also hear from him today. So again, thank you uh so much for this honor and opportunity to to serve as the city auditor. So you got here in 2008. I did. Yeah, quite a difference. You know, it is quite a difference, and uh, you know, we we came here or established the office at a real um time when the city was in transition. You know, we were emerging from you know the the some labels that were not very positive in the city. Um we were transitioned to a new form of government. We knew that the city needed to establish an audit function and improve transparency and accountability, and I think uh I knew what I think we needed to be done, and I think uh along the way we had a lot of great success. Um there were some challenges along the way, but I think at the end of the day, we're in a far better position. The city's in a far better position in terms of we established a strong tradition of accountability and transparency. So I'm really happy and very proud of the success that we've had here in the city, and uh just ask that the committee continue to support our office. Great. Well, we'll say a few more words later at the end of the meeting, but um it's it's it's weird. Everything there's one thing that uh is for sure and that things change. And uh, you know, I've I've never thought when I first started that you know staff members would come and go, but you know, uh great opportunities arise, and I hire fantastic people, and uh they find uh really great opportunities. So everyone's very happy for you, and just for the media, you didn't uh you didn't quit uh right? Because I keep getting that. Oh no, what happened? Eduardo quit. What really happened? Certainly, um as I said when I first started here, opportunities to be city auditors of major cities are few and far between. And um I had another up, you know, an opportunity to start this office for the ground up. Um I recently was also offered an opportunity to start a new audit function in uh October 1st. I'll be starting the audit function for the city of Priverly Hills. And I hear they have um quite the digs, quite the nice uh uh uh city hall in office. So you know the it's uh it's a different environment, a different form of government and the new challenges there. So uh you know, I look forward to that opportunity.
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