San Diego Audit Committee Meeting – January 26, 2022
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San Diego Audit Committee Meeting – January 26, 2022
The Audit Committee of the San Diego City Council met on Wednesday, January 26, 2022, at 9:00 a.m. via Zoom. Chair Stephen Whitburn presided over the meeting, which included updates from the City Auditor, approval of reports, and a presentation of the Fiscal Year 2021 Annual Comprehensive Financial Report. The committee heard no public testimony. Members unanimously approved the committee actions from November 17, 2021, accepted the quarterly fraud hotline report, accepted and forwarded the performance audit of the city’s financial condition to the City Council, and received and filed the FY2021 ACFR.
Consent Calendar
- Approval of Committee Actions (November 17, 2021): Motioned by Vice Chair Moreno, seconded by Committee Member Halpern, and passed unanimously (5-0).
- Quarterly Fraud Hotline Activity Report (FY2022 Q2): Presented by Senior Fraud Investigator Andy Harida. The committee voted unanimously to accept the report as an information item. (Motion by Vice Chair Moreno, second by Halpern, passed 5-0.)
Public Comments & Testimony
- No members of the public offered testimony during any of the public comment periods.
Discussion Items
- Item 4 – City Auditor’s Monthly Activity Report: City Auditor Andy Hanau reported that two work products were issued since the last meeting: an audit of the city’s financial condition and the quarterly fraud hotline report. He highlighted ongoing audits (workers’ compensation, SDPD body camera usage), audits in planning (IT audit of fire rescue emergency response system, Get It Done app, code enforcement division), and an update on the independent legal counsel ballot measure. The city is targeting the November 2022 election for the measure, and negotiations with labor unions are set to resume. Committee members (Moreno, Halpern, Mafia, Tabshuri) expressed strong support for the independent legal counsel initiative and discussed options for reaffirming committee support. Chair Whitburn noted several procedural paths but took no formal action.
- Item 2 – Performance Audit of the City’s Financial Condition as of FY2020: Principal Performance Auditor Chris Kime and colleagues presented the audit, which assessed 10 financial ratios over a 10-year period (FY2011–2020) and compared San Diego to six peer cities. Key findings: San Diego ranked first or tied for first overall, but areas of concern included financial performance volatility and net change in capital assets (ranked fifth). The presentation also covered contingencies, commitments (stormwater obligations increased by $760 million to nearly $4 billion), and pension/OPEB trends. Committee members discussed the need for infrastructure investment, the city’s conservative debt policy, and the limitations of peer comparisons. Vice Chair Moreno moved to accept the report and forward it to the City Council; motion seconded by Halpern and passed unanimously (5-0).
- Item 3 – Fiscal Year 2021 Annual Comprehensive Financial Report (ACFR): Director of Finance Rolando Charvel and Assistant Director Jeff Peel presented the report. External auditor Peter George of MGO confirmed a clean (unmodified) opinion, no material weaknesses, and no significant deficiencies in internal controls. The city received its seventh consecutive Certificate of Achievement for Excellence in Financial Reporting for FY2020. General fund unassigned balance was $126 million; emergency reserve $106.1 million; stability reserve $99.5 million. Committee members commended the finance team for the exceptionally clean audit. Vice Chair Moreno moved to receive and file the report; seconded by Halpern and passed unanimously (5-0).
Key Outcomes
- Approval of Committee Actions (Nov 17, 2021): Unanimously approved (5-0).
- Quarterly Fraud Hotline Report (FY2022 Q2): Accepted as information (5-0).
- Performance Audit of City’s Financial Condition (FY2020): Accepted and forwarded to City Council as informational item (5-0).
- FY2021 Annual Comprehensive Financial Report: Received and filed (5-0).
- Other: Committee members thanked retiring Assistant City Auditor Kyle Elser for his 27 years of service. Chair Whitburn noted the next meeting is scheduled for February 16, 2022, at 9:00 a.m.
Meeting Transcript
TV while we wait for him to rejoin. Okay, Chair. It is 9 a.m. You have a quorum. I can make the webinar live if you would like to begin. Yes, please do. Thank you. Whenever you're ready. Well, greetings, everyone. Welcome to today's meeting of the audit committee. Thank you very much for being with us today. California Government Code Section 54953G allows the city to use teleconferencing and to provide the public an opportunity to address the committee via a call-in option or an internet-based service option. As such, the committee members are participating via Zoom, and no members of the public are in physical attendance in the interest of public health and safety. However, the committee liaison has arranged for the public to make comments using the Zoom webinar platform. As we go forward, I'll go over the specifics of how to join the webinar and we'll give details on how people can offer public testimony. At this time, I will call to order the audit committee meeting of Wednesday, January 26th, 2022. And I will now. Vivian Moreno. Present. Committee member Stuart Halpern. Committee member Andy Mafia. Committee member Andy Mafia. All right. Committee member uh Tufik Tabshuri. Present. All right. And I'm Stephen Whitburn, so we have a quorum. Uh the committee is fortunate to have several permanent attendees from our city government. Lisa Byrne from the Office of the Independent Budget Analyst is with us. Heather Ferbert from the City Attorney's Office, Christina Gauger from the Chief Compliance Officer, and of course Andy Hanow, our city auditor. Thanks to each of you for being here this morning. Well, I'm delighted to step into this new assignment chairing this important committee, and I am very much looking forward to working with each of you. Uh to prepare for this assignment. For our viewers who may not be aware of this committee's origin, it was created due to unfortunate events in our city's history, and it led to reforms in our city's governing structure. As explained in the Kroll report, which assessed the city's underfunding of its infrastructure and pension systems in the early 2000s. The problem was as follows quote. Under the pressure of short-term needs, city officials gave expedience a higher priority than fiscal responsibility and came to view the law as an impediment to be circumvented through artful manipulation. Exacerbating the city's culture was a deplorable lack of accountability and organization built within the structure of city government itself. It seems that no one within city government viewed himself or herself as accountable for the accuracy of city financial disclosures. Only when the city's new auditor, KPMG, refused to issue an audit report on the city's financial statements that city officials begin to face reality. Unquote. The voters gave the audit committee important responsibilities intended to increase transparency, accountability, and to build the public's trust. The audit committee's value to our city today is no less important than it was when it was created in June of 2008. Our job is to provide oversight of management practices in key areas, such as risk management, internal audit, values and ethics, governance, and financial stability. We are the eyes and ears of our city government. We are responsible for holding ourselves accountable and earning and keeping the trust of Sandy Agans who created our committee and the position of the auditor with certain goals in mind, namely preserving city resources for the use and enjoyment of those who reside here. I take our responsibility to the public very seriously, and I know that you do too. And as your chair, I look forward to arranging for robust training to ensure that we are the best that we can be. And I look forward to working together to ensure that our city government is accountable to the taxpayers, that this committee is accountable to the taxpayers, and that our the office of the city auditor is accountable to the taxpayers as well. Our city is counting on us.
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