San Diego Audit Committee Meeting - October 2, 2019
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San Diego Audit Committee Meeting - October 2, 2019
The Audit Committee met on October 2, 2019, at 5:00 PM to review several items, including a proposed ballot measure to change the city auditor selection process, performance audits, fraud hotline reports, and inventory verification. The meeting lasted approximately three hours.
Consent Calendar
- Approval of Minutes: The committee unanimously approved the minutes from the July 10, 2019 meeting.
Public Comments & Testimony
- Martha (public speaker): Expressed concern about the lack of financial audits, stating that the city focuses too much on performance audits and hides where money goes. She specifically mentioned that a council-approved project (pump) was not on the list to be built and questioned estimates for water bills. She urged the auditor to look into these financial issues.
Discussion Items
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Mayor's Appointment of City Auditor: Councilmember Campbell noted that the appointment of the new city auditor (nominated by the mayor) was not on the agenda. Almas from the mayor's office explained that the nomination was not pulled but was being reconsidered depending on ongoing charter amendment discussions. The committee agreed to schedule the matter for a future meeting.
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Advisory Review of Ballot Measure to Amend City Charter Section 39.2 (Auditor Selection): Councilmember Sherman presented a proposal to change the auditor selection process from mayoral appointment to an audit committee-led selection, with council confirmation. The IBA (Jeff Kawar) provided comparative data on auditor terms in other cities, noting that most exclude mayoral involvement and have terms of 4 years or indefinite. The mayor's office suggested three modifications: (1) two five-year term limit for the auditor, (2) requiring no fewer than three candidates from the committee, and (3) specifying that the principal assistant serves as interim auditor during a vacancy. After discussion, the committee voted 3-1 to recommend the following modifications to the council: a five-year term with a possibility of reappointment for a second five-year term (not to exceed 10 years), with the council able to waive a national search for reappointment; the council must select from at least three candidates identified by the audit committee; and the principal assistant shall serve as interim auditor. The motion passed with Councilmember Campbell dissenting on the term limit.
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Performance Audit of Public Utilities Department (PUD) Advanced Metering Infrastructure (AMI) Implementation: The city auditor presented findings on the Smart Water Meter project. Key issues: poor project management, staffing shortages (22% vacancies, 44% annual turnover), inaccurate cost tracking, and data entry errors causing billing delays. Only 6% of meters were actively transmitting data as of the audit. PUD management agreed with all 13 recommendations and outlined steps to improve, including hiring a third-party contractor via RFP, developing a staffing plan, and enhancing system controls. The committee accepted the report and forwarded it to the city council.
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Hotline Report of Abuse Related to Unfair Award of a Multi-Million Dollar Contract: The fraud investigator presented findings of potential violations of state law, city charter, and municipal code in the award of a piggyback contract. The vendor had extensive pre-award meetings with city staff, and the contract was modified from the source contract. The committee discussed the confidentiality of the full 100-page report (only 50-page public version available). The city attorney advised that state law limits disclosure. Management agreed to implement all eight recommendations. The committee accepted the report and forwarded it to the city council.
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Hotline Report of Improper Free Trash Collection at Short-Term Residential Occupancy Units (STROs): The investigator found that the city provides free trash collection to about 16,000 STROs, likely violating the People's Ordinance. Management partially agreed and planned to evaluate impacts by December 2020. The committee accepted the report and forwarded it to the city council.
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Central Stores Inventory Verification (Agreed-Upon Procedures): MGO presented the results of the physical inventory count as of June 30, 2019. Of the 208 sampled items, 72 had variances (mostly small dollar amounts, netting about $9,500). The committee discussed presentation improvements and accepted the report.
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Quarterly Fraud Hotline Activity Report (FY19 Q4): The fraud investigator reported 69 new cases in Q4, with 45 assigned for investigation. There was an increase in theft-of-time allegations. Twelve cases were substantiated with corrective actions. The committee received the report as information.
Key Outcomes
- Ballot Measure: The committee voted 3-1 to recommend modifications to the auditor selection charter amendment (term limits, candidate pool, interim succession) to the city council.
- AMI Audit: Accepted and forwarded to city council; PUD to implement all recommendations by July 2020.
- Hotline Report (Contract): Accepted and forwarded to city council; management to implement recommendations.
- Hotline Report (Trash): Accepted and forwarded to city council.
- Central Stores Inventory: Accepted.
- Fraud Hotline Report: Received as information.
- Next Meeting: Scheduled for October 30, 2019, at 9:00 AM.
Meeting Transcript
All right. Welcome back for October 2nd, 2019 meeting of the audit committee. Today we have Vice Chair, Councilmember Jen Campbell, Committee members Spencer. Mr. Halburn is not here. And Ricardo Valdivia will be out today with uh some fit some issues. Um we have Kyle Elser, our interim city auditor, Lisa Byrne from the IBA, we've got Mr. Clark from the Department of Finance. Jones here from City Attorney's Office, and the committee consultant Dan Manley. Looks like we do have enough for a quorum, so we'll get proceeding if we we need to go over the approval of the committee actions from our July 10th meeting. Um anybody has any changes or issues entertain a motion to approve. Second. Perfect. All in favor say aye. The minutes are approved. We'll move on to non-agenda public comment today. Where's Martha? There she is. I'm talking about the lack of uh um you don't have that right now performance. I will have that. It's half of um you know half of um supposed to sell um do that because we are half a pen and doesn't show what happens with uh from money. Look at the pump um two we voted a two about um council voted that about two years ago. And nothing happened where the millions and what happened to the money. It is not on the list to build at all. That's not right. Where's the money go? That should be something we should look in the audit because they voted for that and it didn't show up on the list. And that's financial, that's not right because um we the the people want to know where the money goes. And not performance. Um the money is more important. I know that because the city doesn't do the right thing all the time. But if we don't say what money goes, that's not right. Because the money is important to us. We want to know how you spend the money. And all the we vote for stuff and doesn't show up all the time. And that's something the audit should look unfair because we vote from the council all the time and it doesn't show up. And where does the money go? And that's why I want to know because the audit should look at these things. Also, we have estimates in the water department. Now that's not right. How that happened? And how do they get these estimates? That's something the auditor looked also. How do we get these estimates for water? That's not right. They don't know how people live there. Maybe there's four people, five people, three people moved out, come again, people visit. How do you know how much money they're how much water they're using? Maybe they put a low far um toilet or and showers long stuff. You don't know.
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