San Diego City Audit Committee Meeting - January 27, 2021
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San Diego City Audit Committee Meeting - January 27, 2021
The Audit Committee of the San Diego City Council met virtually on January 27, 2021, via Zoom, under Executive Order 2920. The committee reviewed the FY 2020 Comprehensive Annual Financial Report, an IT performance audit of legacy applications, the City Auditor's proposed FY 2022 budget, and informational reports. All votes were unanimous.
Consent Calendar
- Approved the committee actions of December 2, 2020, unanimously.
Public Comments & Testimony
- No members of the public spoke during non-agenda public comment or on any agenda items.
Discussion Items
Fiscal Year 2020 Comprehensive Annual Financial Report (CAFR)
- Rolanda Trevel, Director of Finance and City Controller, presented with Jeff Peel and Amy Pinion; Peter George of MGO presented the external audit.
- The general fund ended FY20 with a $220 million fund balance; emergency reserve at $106.1 million; stability reserve at $99.5 million. Of the $248 million in federal coronavirus relief funds, $93.4 million was expended by the end of FY20. Water and sewer funds ended with net positions of $2.1 billion and $2.6 billion.
- MGO issued an unmodified (clean) opinion with no material weaknesses or significant deficiencies. The city early-implemented GASB Statement 84, removing certain pension trust funds and creating custodial funds.
- MGO reported no difficulties, no disagreements with management, and full cooperation.
- Vice Chair LaCava moved to forward the report to the City Council to be received and filed; seconded by Member Halpern. Passed unanimously.
IT Performance Audit of Legacy Applications
- Steve Gomez and Wendy Manert presented the audit findings: DOIT's N-minus-one methodology does not capture true legacy systems or facilitate a citywide risk-based approach, and the city does not track full costs of legacy systems.
- The audit made 11 recommendations, including developing a standard definition, centralized inventory, risk assessment policies, high-cost metrics, and an annual confidential City Council report on high-risk legacy applications.
- CIO Jonathan Banke agreed to implement all recommendations, with most completed within six months.
- Members discussed cost-benefit analysis and Brown Act constraints on reviewing the confidential report. City Attorney Joan Dawson advised that closed session likely is not permitted for the audit committee; she will provide a memo. Members expressed concerns and asked for a solution.
- Vice Chair LaCava moved to forward the report to the City Council as an information item; seconded by Member Halpern. Passed unanimously.
City Auditor FY 2022 Proposed Budget
- City Auditor Andy Henao requested an FY 2022 budget substantially unchanged from FY 2021: approximately $3.6 million, 22 FTEs, plus $350,000 for the MGO CAFR contract.
- The administration proposed an 8% cut (~$312,000), which Henao said would force a vacant position and four weeks of furloughs, reducing audits by two to three per year. The 2.6% contracting reduction (~$19,000) could be absorbed.
- Members argued the office provides a positive return on investment and cuts would be counterproductive.
- Vice Chair LaCava moved to recommend adopting the proposed budget with no changes except the 2.6% contract reduction; seconded by Member Halpern. Passed unanimously.
Informational Items
Fraud Hotline Quarterly Report (Q2 FY2021)
- Andy Jorita reported 52 reports received in Q2, 112 half-year total; 33 assigned for investigation and 19 not in purview; 30 closed, 44 open.
- Substantiated allegations included improper use of recycling proceeds, hiring abuse, improper cash handling, get-it-done work order processing, improper mailings, and failure to follow COVID-19 health protocols. No motion required.
City Auditor's Monthly Activity Report
- Henao reported three reports issued; audits in process include climate action plan implementation (February), industrial wastewater control program part 2 (March), and real estate assets acquisition including 101 Ash Street. Four audits in planning, ten not started; eight reports with 60 recommendations issued so far in FY2021.
- Henao is updating the audit report template and developing a recommendation implementation plan template. No motion required.
Key Outcomes
- All four motions passed unanimously: prior actions approval; CAFR forwarded to City Council; IT legacy audit forwarded as information; FY 2022 City Auditor budget recommended with no cuts except 2.6% contracting reduction.
- Chair Moreno will issue a call memo for committee priorities and will docket a discussion at the February 24, 2021 meeting.
- Chair Moreno will follow up with the City Attorney on Brown Act concerns regarding confidential legacy systems reporting.
- Next meeting: Wednesday, February 24, 2021, at 9:00 a.m.
Meeting Transcript
Do we have a quorum? You do with Mr. Tapsaree. Stuart and Ricardo. I don't know if I'm going to. Stuart is trying to good morning. Per executive order 2920, which suspends certain requirements of the Brown Act. The committee members will be participating via Zoom, and no member of the public will be in attendance at the meeting in the interest of public health and safety. In addition, this meeting is being televised and live live streamed on the city's website, and the committee liaison has made arrangements for the public to comment using the Zoom web Zoom webinar platform. We appreciate the public's cooperation. First off, I'll go over the specifics on how to join the webinar and we'll give you details on how the public can offer their public testimony. And I will now call the role. Present. Okay. Each committee member is attending virtually. Also on the virtual meeting is Matthew Helm with the mayor's office. Lisa Byrne with the Office of the IBA, Joan Dawson with the City Attorney's Office, and our city auditor Andy Hanau. The public may view the meeting on public television on City TV Channel 24 for Cox Communication and Time Warner Cable or Channel 99 for ATT or view the meeting online by going to the City Council Committee homepage at Sandiego.gov and selecting the City TV Live Webcast blue button on the right hand side of the page. The committee meeting will be held virtually using the Zoom webinar Zoom webinar platform. Members of the public can offer public comment on items by accessing the Zoom webinar online using a desktop computer, laptop, tablet, or smartphone, or by calling into the meeting using a smartphone, cellular phone, or landline. The link to join the committee meeting webinar by computer, tablet or smartphone is listed on the agenda on how to join by iPhone one tap. To join the Zoom set the Zoom webinar by telephone, you may dial either 1669 254 5252. When prompted, input webinar ID 1617 3853 pound. Information is also available on the agenda and will appear on the screen during the public comment period for each item. When I introduce the item, uh you if you would like to comment, uh you will raise your hand by either tapping the raise your hand button on your computer, tablet or smartphone, or by pressing star 9 on your phone. You will be taken in uh you will be taken in the order in which you raise your hand. Uh you may also speak once on a particular item. You may only speak once on a particular item. Uh when our committee consultant Kevin Smith indicates that it's your turn to speak, he will call you by your name as it appears on the Zoom webinar attendee list, or he will read out the last four digits of your phone number. If you've called into the meeting, obviously, that is how you're gonna know it's your turn to speak. Um, if you've joined the webinar by computer, tablet, or smartphone, you will receive a pop-up notice to select to unmute your device. If you've called into the meeting by cellular phone or landline, it's very important that you press star six on your phone to unmute yourself. Please wait until the item you wish to speak to has been called before raising your hand to speak. If you raise your hand during a non-comment period, your hand will be lowered. When you are uh announced as the next speaker, please unmute yourself and offer your comments. Also, please mute the volume on your TV or computer before you begin to speak. A quorum is now present, and we will dispense with the approval of the committee actions of December 2nd, 2020. Do I have a motion to approve the committee action? I'll move. Is that um is that my council member Jolakova? Yes. Okay. Do I have a second? I'll second. Okay. We will now take committee member questions and comments and have each council have each member register their vote. Please mute yourself once you've completed uh your comments. Chairman uh Lakava? Yes. Committee member Halpern?
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