San Diego Audit Committee Meeting – October 21, 2020
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San Diego Audit Committee Meeting – October 21, 2020
The Audit Committee met on October 21, 2020, to review audit follow-ups, the city auditor's activity, fraud hotline results, and an industrial wastewater control program update. Members participated via Zoom under executive order due to the pandemic. The meeting included public comments and detailed department-by-department review of outstanding audit recommendations.
Consent Calendar
- Approval of Minutes (September 30, 2020): Motion by Vice Chair Moreno, second by Halpern, passed unanimously.
Public Comments & Testimony
- Non-Agenda Public Comment: Two callers spoke. The first criticized the city's reliance on seller appraisals (citing 101 Ash Street and Mission Valley Stadium) and called for independent appraisals and criminal prosecution. Martha Welch demanded financial audits and accused the city of not acting in the public interest.
- On Item 4 (IWCP): Martha Welch again questioned the plan for treating heavy metals and alleged the city withholds information.
- On Item 2 (Auditor's Activity): Martha Welch demanded performance audits and said she has not seen a financial audit since 2016.
- On Item 3 (Fraud Hotline): Martha Welch referenced a missing $13 million and accused the city of embezzlement.
- On Item 1 (Recommendation Follow-up): Lucera Sanchez of San Diego Coast Keeper urged the committee to ensure the stormwater funding report stays on track for January 2021.
Discussion Items
- Staff Update on CARES Act Expenditures: Chief Compliance Officer Matthew Holmes reported $177 million in total expenditures (first cycle $93M, second cycle $83M), on track for December 30 deadline, flowing through Operation Shelter to Home, PPE, rental assistance, and small business relief.
- Item 4: Industrial Wastewater Control Program (IWCP) Audit Update: Shauna Lorenz presented progress on all nine recommendations. Key actions include drafting policies, completing a fee study, sending invoices for unbilled costs, and selecting a new billing system. Target dates range from December 2020 to June 2021. Committee members praised staff's responsiveness. Councilmember Halpern requested probability assessments; staff expressed high confidence except for items requiring council adoption or renegotiation with participating agencies.
- Item 2: City Auditor's Monthly Activity Report: Interim Auditor Kyle Elser highlighted three audit products issued, a memo requesting independent legal counsel, and ongoing audits (IT legacy apps, purchasing/contracting, sustainability, human capital part 2, CARES Act, real estate/101 Ash). The human capital audit on employee discipline and incentives is expected in November. Committee reiterated strong support for independent legal counsel.
- Item 3: Quarterly Fraud Hotline Activity Report: Andy Hanao reported 60 total reports, 39 city-related, 47 closed, 41 open. One substantiated report involved a delayed replacement container due to erroneous close-out via Get It Done app. Corrective actions addressed hazardous materials, theft of time, and other issues.
- Item 1: Recommendation Follow-up Report: Kyle Elser and Andy Hanao presented the semi-annual follow-up. Of 170 outstanding recommendations, 18 were implemented, 8 deemed no longer applicable, 144 carry forward. They highlighted 13 attention items, including superseded recommendations and two from the Business Cooperation Program (BCP) audit. The BCP recommendations were controversial: Economic Development staff (Christina) argued they lacked resources and the program is stalled due to budget cuts and pandemic; committee members (Moreno, Halpern, Tab Shuri, Valdivia, Chair) strongly supported keeping the recommendations in process, noting potential revenue from large developments like Sports Arena and Ballpark redevelopment. Moreno read extensive criticism of the department’s survey methodology.
- Department-by-Department Review: Led by Councilmember Valdivia, the committee systematically reviewed attachment C recommendations with department representatives. Many departments reported progress or near-completion; some had delayed updates due to turnover or pandemic. Key exchanges included:
- Human Resources: Pay equity study contract awarded, final report due December 2020.
- Communications: Records request policies in progress.
- Risk Management: Two recommendations considered implemented pending documentation.
- Convention Center: Funding uncertain due to Measure C legal challenges.
- Economic Development: All recommendations implemented; documentation pending.
- Fleet Operations: Draft regulation nearing city process.
- Human Resources (TAP program): Proposal withdrawn due to COVID; will be reproposed for FY22.
- Parks and Recreation: Logic implementation delayed; new database overlay planned.
- Planning: Waiting on council policy revision docketed by city attorney.
- Public Utilities: Several recommendations in progress; water billing improvements reduced implausible reads from 190 to 30 per day; AMI implementation paused to align support systems.
- Purchasing and Contracting: Most items expected by December 2020; corrected a target date typo from 2022 to 2020.
- Real Estate Assets: Two recommendations advanced to council policy; one still tied to Park and Rec.
- Police Department: Patrol operations recommendation nearly implemented, likely will be cleared.
- Transportation and Stormwater: Street light repair recommendation met intent; Vision Zero enforcement targets on track; stormwater pipe repair and reinspection fee requests unfunded; tree trimming memo in progress.
- Process Improvement Discussion: Committee members (Halpern, Tab Shuri, Valdivia) noted discrepancies between reported dates and actual progress, turnover causing loss of continuity, and the need for action plans with milestones. Matt Helm (Chief Compliance Officer) acknowledged shortcomings and committed to improving reporting consistency. The auditor’s office proposed requiring detailed action plans for each recommendation, which the committee endorsed.
Key Outcomes
- Votes: Motion to accept the recommendation follow-up report with a friendly amendment endorsing the new recommendation follow-up procedure (action plans with milestones, responsible parties, and timelines) passed unanimously. The Business Cooperation Program recommendations remain classified as “in process.”
- Directives: The city auditor will work with departments to implement action plans and improve update timeliness. The committee urged faster resolution of long-outstanding items and clearer categorization of delays due to external dependencies (e.g., council action, legal review).
- Next Steps: A possible November meeting may be called to review the human capital audit on employee discipline and incentives. The committee chair (Sherman) noted this might be his final meeting after six years of service.
Meeting Transcript
One two. Today I walked down the street I used to wander. Yeah, I shook my hand and made myself a bed. There was all these things that I don't think I remember. Can one man get my shoes and I hump from the review mirror? Rides the admiration in a blast by the grant. Those are all these things that don't think I remember. And lit my cigarette. Well, there was all these things that I don't think I remembered. Can't one man get a street I used to wander? Yeah. Shook my hand and made myself a bed. There was all these things that I don't think I remember. I can't write man give. Uh, even though it's remotely. Uh, per executive order 2990, which suspends certain requirements of the Brown Act. Uh, the members will be participating via Zoom and no members of the public will be in attendance at the meeting in the interest of public safety and health. Uh, in addition, this meeting is being televised and live streamed on city's website, and the council committee liaison has made arrangements for the public to comment via telephone and electronically. We uh appreciate the public cooperation, and I'll now call the audit committee meeting of Wednesday, October 21st, 2022 order. Um, do we have let's see? Do we have council member Moreno yet? She's not on yet now. I'm right here. Oh, there you go. Sorry. Perfect. There she is. So it looks like all members, Councilmember Reino, Tab Shuri, Valdivia, and Mr. Halpern. Looks like we are all present, so we have a quorum. Uh let's see. We've also got Kyle Elser, our interim city auditor from the mayor's office. We have Matt Helm, the Chief Compliance Officer. I think Lisa's here with the IBA, and then Dan Manley, our audit committee consultant is also here and available on the Zoom meeting. Uh committee is fully remote now, but we'll still operate the same of the public to call in. Once I introduce an item, that will begin the call-in period for the public to make a comment. The number to make a public comment is 619 541 6310. And when you're prompted, please enter the access code 87761, followed by the pound sign. After staff gives the report, I'll call on my oral staff and IBA for comments. From there, we'll take public comment. Each speaker will get two minutes. If we have any calls, Dan will take them in order as they appear on his screen. When the queue is empty, public comment on that item will be closed, and we'll move on to committee member comments. Comments will be taken in the following order. We'll start with Vice Chair Moreno, then we'll go to Halpern, Tab Shuri, and then Mr. Valdivia, except in the item number one. Mr. Valdivia will go first and take the lead on that one. Um of course the chair usually goes last. Also, friendly reminder to all members and staff on the line.
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