Audit Committee Meeting – April 24, 2019: Pay Equity, Fraud Hotline, and Joint Use Audits
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Audit Committee Meeting – April 24, 2019
The Audit Committee of the San Diego City Council met on April 24, 2019, at 9:00 a.m. to receive information and discuss several audit reports, including the City Auditor's monthly activity report, the quarterly fraud hotline activity report, the fiscal year 2018 single audit, a performance audit of city employee pay equity, and a performance audit of joint use agreements with the San Diego Unified School District. All action items passed unanimously.
Consent Calendar
- Approved the meeting agenda and previous meeting minutes unanimously.
Discussion Items
- City Auditor’s Monthly Activity Report (Info Item): Interim City Auditor Kyle Elser presented the report, noting three audit products issued since the last meeting (pay equity, joint use agreements, quarterly fraud hotline), five audits in fieldwork, and three yet to start. No action required.
- Quarterly Fraud Hotline Activity Report (Info Item): Fraud Investigator Andy Jorida reported 64 hotline reports received in Q3 FY19; 38 assigned to city departments for investigation, 8 substantiated. Committee members questioned classification consistency (e.g., “theft of time” categorized differently) and suggested future trend analysis and fraud risk assessments. No vote taken.
- Fiscal Year 2018 Single Audit Report: Scott Clark (Department of Finance) and Kevin Starkey (MGO) presented the audit of federal awards. The audit covered four major programs totaling $55.7 million (66% of federal expenditures). No findings or deficiencies were identified; an unmodified opinion was issued. The committee accepted the report and forwarded it to council unanimously.
- Performance Audit of City Employee Pay Equity: Lead auditors Andy Hanau and Nathan Otto presented findings. Key statistics: female city employees earned on average 83 cents per dollar earned by males; non-white employees earned 80 cents per dollar of white employees. Adjusted analysis (controlling for line of work, age, years of service) found statistically significant gaps in certain positions, e.g., female firefighters earned $25,000 less per year than similarly situated male firefighters (driven by overtime). Differences by race/ethnicity were smaller. Chief Operating Officer Chris Michelle stated the disparities are “unacceptable” and that the city will contract an outside consultant for a pay equity study. Committee members discussed educational tracking, recruitment, and overtime. The committee accepted the report and forwarded it to council unanimously.
- Performance Audit of Joint Use Agreements with San Diego Unified School District: Auditors Chris Kime and Kevin Christensen reported that the city had not tracked key financial terms from the 2002 MOU. Estimated $1.2 million in prior maintenance costs from the district and $355,000 annually in ongoing costs were not invoiced. The council policy from 1981 was never updated. Parks and Recreation Assistant Director Andy Field agreed with all four recommendations, including revising the MOU, implementing a tracking system, and updating council policy. The committee accepted the report and forwarded it to council unanimously.
Key Outcomes
- Accepted the FY18 Single Audit Report and forwarded to council.
- Accepted the Pay Equity Performance Audit and forwarded to council with six recommendations; the administration agreed to implement them.
- Accepted the Joint Use Performance Audit and forwarded to council with four recommendations; management agreed to implement.
- No motions were required for the information items (City Auditor’s monthly activity and quarterly fraud hotline).
- The next Audit Committee meeting was scheduled for May 22, 2019, at 9:00 a.m.
Meeting Transcript
All right, good morning, everybody. Glad to see you here. Let's start out our April 24th, 2019 meeting, the audit committee. Looks like we have a full slate here with us today. We have Vice Chair Council Member Jen Campbell. Committee members Spencer Hebrink and Valdivia. We have Mr. Elser, our interim city auditor. No Lisa Byrne yet. Scott Clark from Mayor's Office. Joan Dawson with the City Attorney's Office and Dan, my committee consultant. So welcome everybody. Move by Mr. Valdivia, second by Mr. Spencer. All in favor? Passes unanimously. Do we have any non-agenda commenters today? You do not. Well, that'll move it right along. Any uh committee members, staff have any comment before we get started with our info items. Seeing none. No request for continuances as well. Perfect. Then we'll move on to item number four, it's information agenda, the city auditor's monthly activity report. Mr. Elser, sir. Thank you, Chair Sherman. Good morning, everyone. Kyle Elser, interim city auditor. And with me is Danielle Knighton, Deputy City Auditor. And we'd like to present to you the City Auditor's Monthly Activity Report. So since we last met, we've issued three audit products. And they include our audit of city employee pay equity, our audit of the city's administration of joint use agreements, and our quarterly fraud hotline report for the third quarter of FY19. And all three of these reports will be presented to you this morning. We also have one audit in the report writing stage, and that includes the mission bay fund audit for FY18. We have five audits in the field work stage, and they are the Transportation Stormwater Tree Trimming Process Audit, the IT audit of disaster recovery preparedness, our public utilities AMI implementation product project audit, public utilities call center operations audit, and our audit of neighborhood services efforts to combat homelessness. And they include our strategic human capital management audit, development services charges for deposit accounts, risk management city attorney liability payouts, and our IT audit of network perimeter controls. And lastly, we have uh three audits on our FY19 audit plan that we haven't started yet. Our engineering and capital projects department charges audit, our IT audit of citywide sensitive data encryption standards, and our annual audit of central stores inventory for FY19. And that concludes my presentation. Thank you, sir. Any questions from committee? Um the public liability payout audit. Any idea on completion time you're anticipating on that one? Um, we we're just now in the planning stage. That that audit is probably gonna take about seven to eight months to complete. Thank you. Perfect. This is an info item, so we don't need any motions.
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