San Diego Audit Committee Meeting - February 24, 2021

The San Diego Audit Committee met virtually on February 24, 2021, at 9:00 AM, pursuant to Executive Order 2920 due to the COVID-19 pandemic. The meeting was broadcast on City TV and live-streamed. The committee considered a performance audit of the city's Climate Action Plan (CAP), received the city auditor's monthly activity report, and discussed committee member priorities for 2021. Key outcomes included unanimous approval to forward the CAP audit to the Environment Committee and then to the full City Council, and commitments to address issues of confidential audit reports, independent legal counsel for the auditor, and enhanced audit recommendation tracking.

Consent Calendar

• The committee unanimously approved the meeting actions of January 29, 2021, without comment.

Public Comments & Testimony

• Non-Agenda Public Comment:
  • Joy Sanyata (District 3) expressed appreciation for the committee's work and emphasized the importance of the audit committee in keeping the city's operations finely tuned.
  • A caller (last four digits 7511) demanded financial audits, specifically mentioning Mission Bay, and argued that the city must conduct financial audits to receive state funds.
• Item 1 - CAP Audit:
  • Malika Marsden, Co-Director of Policy at Climate Action Campaign, agreed with all audit findings and recommendations but expressed concern that the audit did not address which CAP strategies the city is behind on, how far behind, and what is needed to get back on track. She provided eight additional recommendations, including implementing audit recommendations immediately, correcting the GHG baseline, creating a detailed transportation roadmap, releasing a CAP five-year outlook, establishing a climate equity fund, hiring a grant writer, increasing funding for the sustainability department, and supporting a regional climate authority.

Discussion Items

• Item 1: Performance Audit of the City's Climate Action Plan (CAP)

  • City Auditor Andy Hanau introduced the audit, stating that plans are only as good as their implementation. The audit found weaknesses in oversight, communication, cost estimation, and prioritization of CAP initiatives.
  • Nathan Otto, Principal Performance Auditor, provided context: the original CAP was adopted in 2015, and an update (CAP 2.0) is underway. The CAP includes five strategies and multiple measures cutting across city departments.
  • Mary Sanchez and Danielle Novikolski presented findings:
    • Finding 1: The city can strengthen oversight mechanisms. Sustainability lacks authority to hold departments accountable; CAP-related departments are not required to assign formal staff; sustainability roundtables were held only 13 times from 2015-2020, with only one meeting in 2019 and 2020; the CAP annual report is presented only to the Environment Committee, not the full City Council; staff reports do not include CAP impact information. Most City Council offices surveyed indicated a desire for more information on CAP implementation.
    • Finding 2: The city can improve fiscal planning by developing a prioritization mechanism and estimating costs. The city has not created a prioritization scorecard (e.g., San Francisco's example) or a fiscal plan for CAP implementation. The IBA and sustainability department attempted but faced challenges. Six recommendations were made, all agreed to by the sustainability department and city administration.
  • IBA representative Lisa Byrne summarized next steps with target dates: quarterly sustainability roundtables (next meeting March 2021), revisions to staff reports by August 2021, staffing analysis by January 2022, rating system by March 2022, implementation plan with cost estimates by August 2022, and administrative regulation by end of calendar year 2022.
  • Eric Caldwell, Chief Sustainability Officer, confirmed support for the recommendations and noted that the CAP update is expected to be completed by December 2021 or early 2022. He emphasized that the update will include the elements called for in the audit.
  • Committee members discussed the findings:
    • Vice Chair Lakava thanked the auditors and noted the audit looks backward but serves as a guide for the new administration. He expressed interest in including CAP impact in staff reports and highlighted challenges in the mobility shift. He moved to forward the audit to the Environment Committee as an informational item and then to the full City Council.
    • Committee Member Halpern seconded the motion but raised concerns about the 22-month timeline for implementing recommendation 1. Eric Caldwell responded that forward progress will be demonstrated through regular touchpoints with the Environment Committee and full council during the CAP update process.
    • Committee Member Tapsuri supported the motion.
    • Committee Member Valdivia noted the timelines are lengthy but reasonable given the coordination required, and he was surprised to learn Los Angeles started similar work in 2015.
  • Chair Moreno expressed full support for the audit findings and recommendations, emphasizing the need for coordinated department goals, meaningful staff report sections, and transparency with the public.
  • Vote: The motion to forward the audit to the Environment Committee and then to the full City Council passed unanimously.

• Item 2: City Auditor's Monthly Activity Report (Informational)

  • City Auditor Andy Hanau reported that since the last meeting, the office issued one audit (the CAP audit). One audit is in report writing (Industrial Wastewater Control Program, Part 2). Two audits are in fieldwork (Real Estate Assets Acquisition Process, including 101 Ash Street, and IT Service Delivery Effectiveness). Three audits are in planning (CARES Act funding, Mission Bay, and City's Administration of User Fees). Ten audits have not yet started. In FY21, the office has issued nine audit reports with 66 recommendations. The auditor also noted that over 120 responses were received regarding the audit report template update.
  • Committee members asked questions: Vice Chair Lakava inquired about the real estate assets audit scope (Hanau confirmed it includes case studies like 101 Ash Street, skydiving center, Othello property, Super 8 Motel). Committee Member Halpern asked about over-budget hours on the CAP and IWCP audits; Hanau explained that scoping and depth of findings drove extra hours, and that stopping audits when hitting budget would not be appropriate if significant issues are found. Committee Member Valdivia noted the backlog of 11,400 hours and asked which audits might not be completed this year; Hanau indicated that some would carry over, and that new hires are expected to fill vacancies. No action was taken on this informational item.

• Item 3: Audit Committee Member Priorities for Calendar Year 2021 (Informational)

  • Each committee member presented their priorities:
    • Vice Chair Lakava: closure of past due audit recommendations and independent counsel on the 2022 ballot.
    • Committee Member Halpern: enabling the committee to exercise governance over confidential audit reports, independent legal counsel, enhancement of audit recommendation follow-up, and an audit of the city's decision-making process for material transactions.
    • Committee Member Tapsuri: incorporating more council member feedback into audit selection, resolving the committee's inability to discuss confidential IT audit reports in closed session, independent legal counsel, and creating a mechanism for departments to learn from recurring audit findings.
    • Committee Member Valdivia: accountability for audit recommendation implementation (with faster turnaround than relying on future systems), and independent legal counsel, noting it has been two years since he first raised the issue.
  • City Auditor Hanau responded: he supports the priorities and noted that an implementation work plan is being piloted (possibly with the CAP audit recommendations). He acknowledged the need for independent legal counsel and stated that the office is working toward a 2022 ballot measure to amend the charter. The city attorney's office has identified outside counsel for two issues and is working on others. He also noted that the office highly weights input from the committee and council in selecting audit work plans.
  • Chair Moreno affirmed her agreement with the priorities and stated she would docket for discussion at future meetings: (1) determining how to discuss and utilize confidential audit reports, (2) the need for independent legal counsel for the city auditor, and (3) changing the approach to monitoring audit recommendations (targeting a revised system for discussion at the April 2021 meeting).
  • No action was required on this informational item.

Key Outcomes

• The committee unanimously approved forwarding the performance audit of the Climate Action Plan to the Environment Committee as an informational item, and then to the full City Council.
• The committee acknowledged the city auditor's monthly activity report with no action.
• The committee identified three priority topics for future docketing: confidential audit report access, independent legal counsel for the city auditor, and revised audit recommendation tracking.
• The next audit committee meeting is scheduled for March 17, 2021, at 9:00 AM.