[0:00] meeting of the audit Committee on July 28th.

[0:03] You know, to order. And city staff.

[0:06] Can we have a roll call?

[0:09] Vice Mayor Chow here. Here.

[0:11] Here, here.

[0:17] Super.

[0:19] So everybody who's watching live

[0:22] and in person, we've had a bit of a scramble here,

[0:27] but we're excited to have our meeting and we will get started.

[0:33] Are there any oral communications that you see?

[0:37] Virtually? I don't see anyone in the room here.

[0:40] I senior class originally and request person.

[0:44] Thank you.

[0:45] So we'll move to the consent calendar then.

[0:49] And there's three items on our agenda in there.

[0:51] And I have a bit of experience.

[0:55] And we've got I didn't reduce the vice mayor here is

[0:59] we're we're lucky to have a quorum.

[1:02] And the vice mayor is representing Ray

[1:05] Wong as a, as an alternate I think the way it works.

[1:08] So thank you very much

[1:09] for fitting us into your schedule so we can have our meeting here

[1:14] and consent items, and we can ask questions if we have a question.

[1:18] Otherwise, we know we can't deliberate unless we owe an item.

[1:22] So I do have a question on the second item started, but I don't want to pull it.

[1:28] I think it's a simple enough one in regard to Dennis,

[1:32] thank you very much for adding page 16 of 33 in the PDF.

[1:38] Dennis is a representative of PSU, US Bank.

[1:43] Thanks for attending.

[1:44] But page 16 is an attribution of.

[1:48] I suppose, our

[1:52] the city's different achievement versus the index,

[1:56] and it's very nice to have that in there.

[2:00] I wondered if as elucidating for a minute or two,

[2:03] you could just explain a bit about how that table works.

[2:08] And primarily there's an attribution on the.

[2:12] The commodity

[2:15] line shows a positive point 4 or 5% attribution,

[2:19] even though both portfolios have a zero allocation to commodities.

[2:24] And that maybe is a springboard for maybe briefly explaining

[2:29] how that works.

[2:35] Thank you.

[2:37] The the simple explanation for that is by

[2:40] is that.

[2:43] In the old benchmark, we had to 2% allocation to the

[2:47] to the commodity benchmark.

[2:50] So if you look at the well let me walk you through this real quick.

[2:54] Here's the benchmark composition in the upper left hand corner.

[2:57] So for stocks

[3:00] we use the MSCI All Country World index.

[3:03] For bonds we use the Bloomberg Aggregate.

[3:05] There's an S&P global REIT index for real estate.

[3:09] And then that next one says S&P GSI.

[3:13] That's the commodity index that stands for S&P

[3:16] Global Goldman Sachs Commodity Index.

[3:19] And then the last one is a three month Tea Bell index for the cash.

[3:24] And remember the index idea of the index

[3:28] is to is the best quote I ever saw was

[3:31] it should represent the pond from which we are fishing for investments.

[3:35] So it represents

[3:38] the entire global

[3:42] public investment opportunity set.

[3:47] The next column you'll see is as of seven one of 26.

[3:50] We have a new benchmark that's in your most recently updated investment policy.

[3:55] It is very close to the old benchmark, just a tiny little change.

[4:00] But the old benchmark is a second column.

[4:02] And since that runs through June 30th.

[4:05] That's the one we're using here.

[4:07] So we're using a benchmark of 63% in a CIO country world index,

[4:12] 29% bonds, 5% rights, 2%

[4:17] commodities GSI and 1% cash.

[4:21] Now to answer your question, the reason.

[4:28] It was beneficial is commodity

[4:30] or performance down.

[4:35] Dennis, I'm not sure we heard your complete sentence.

[4:38] I might.

[4:39] Could you repeat what you just said?

[4:40] My my apologies.

[4:42] Oh, sure.

[4:43] The reason it was beneficial

[4:47] to performance, to not own any commodities is because in the quarter.

[4:51] And this whole chart right here is for the one quarter,

[4:56] because during the quarter it would have reduced performance.

[4:59] It would have detracted from performance if we had owned commodities.

[5:07] So we picked up a little bit.

[5:09] So so the way that let's go over

[5:13] to the pension box, the way that the attribution report works,

[5:18] is there's a column for selection.

[5:21] And this is the effect on the performance

[5:25] for whether or not you had,

[5:29] you, you had investments in that, in that category.

[5:33] And, and

[5:36] did they the whole idea of selection, did

[5:40] your selections do better than the benchmark or worse.

[5:44] And so you can see what we do is for the top line there, the stocks we

[5:49] we take the return of your stocks minus the return of the benchmark.

[5:54] And you can see the selection,

[5:57] the selection attribution on that top line was minus 0.31.

[6:01] That means

[6:03] that means the benchmark did a little bit better

[6:06] than what we selected.

[6:09] The next column is waiting.

[6:11] And and that represents a did.

[6:14] If you were overweight in an investment that did really well,

[6:16] that would be beneficial.

[6:18] And so if you were under weighted in a,

[6:21] in an investment category that did very poorly, that would be beneficial.

[6:25] And then the opposite of those two would be a detraction.

[6:30] There's an interaction component.

[6:34] I'm not going to get into the math of that.

[6:36] But then there's a portfolio total.

[6:38] And that portfolio total is the stocks in your portfolio

[6:43] did a little bit below what the stocks in the benchmark did in total.

[6:47] So -0.23%.

[6:50] If you add up that column portfolio total

[6:53] it comes to 0.26 or 26 basis points.

[6:58] And then if you go down below under total portfolio

[7:01] return for the quarter, you'll see net return was 10.11%.

[7:05] For the portfolio.

[7:06] The benchmark was 9.85, the variance was 0.26.

[7:10] And so that box up there explains the variance.

[7:15] So good news is we outperformed the benchmark just a little bit.

[7:20] And then the box shows how.

[7:22] And to kind of some this up in plain language

[7:26] I put a little paragraph down below slight positive.

[7:29] And this applies to

[7:30] both portfolios by the way because they're managed almost identically.

[7:35] Slight

[7:36] positive variance in the quarter from both bonds I'm sorry.

[7:39] From bonds.

[7:40] Due to high yield exposure, the benchmark does not include high yield exposure.

[7:45] The portfolio does.

[7:46] So there's a little bit of a mismatch intentional mismatch.

[7:49] And it paid off in the quarter.

[7:53] Real estate did the real estate portfolio

[7:58] total number was was positive nine basis points.

[8:02] And global infrastructure we did a little better there.

[8:06] So that was additive stocks slightly underperformed.

[8:12] Performance of stocks was helped however by our allocation to small cap

[8:16] which is not in the index

[8:19] then.

[8:21] I mentioned in here large stocks were up 15%.

[8:25] Small stocks were up 21.

[8:27] So that's why it was beneficial to have some small stocks.

[8:31] Detracting from stock performance was our slight underweight to emerging markets.

[8:36] So the benchmark for stocks is the MSCI All Country World Index.

[8:42] I'm replicating that with several mutual funds one for US

[8:46] stocks, one for developed foreign stocks, one for emerging foreign stocks.

[8:51] And my my percentages are always a little off

[8:55] because it's very difficult to replicate that.

[8:57] Exactly.

[8:59] And so that explains

[9:01] why we're off the benchmark just a little bit.

[9:04] Nope.

[9:05] I think that's that's great.

[9:06] Dennis I just wanted to highlight your question.

[9:09] My question you've answered fully and I wanted to highlight it.

[9:14] Thank you very much.

[9:15] And I expect that we'll we'll have many more

[9:18] chances to interact with this in future quarters.

[9:22] So thanks again for working it through for us.

[9:25] Yeah. Any other questions?

[9:26] You're verification on the consent items in ball screen.

[9:31] Thank you.

[9:31] I was wondering, Jonathan, if you had a chance to look at my

[9:36] questions that I sent in regarding

[9:40] having the ones whose teen and OPEC

[9:44] have pretty much the same percentage in equities.

[9:50] So the I think that one of the questions that you had is,

[9:54] is there a shorter horizon for pension versus OPEC?

[9:59] In short, I don't think there's necessarily

[10:01] because you're looking from the perspective of a retiree.

[10:05] Right.

[10:06] Pensions kind of would be long term right.

[10:09] Same thing with OPEC.

[10:10] However what the the use of those pensions versus

[10:14] or how we were able to utilize a trust for the pension versus OPEC

[10:18] could be strategic or strategically different from the OPEC perspective.

[10:22] And I think you highlighted it is on a downturn of an economy.

[10:25] If the the pension didn't perform well and to maintain a

[10:31] in a desired

[10:33] level of funding status, we can draw on that pension

[10:37] and provide it to CalPERS to help pay

[10:40] for our unfunded accrued liability or UAL.

[10:43] Whereas with the OPEC, we can

[10:45] and this is conversations that I've been having with Tina.

[10:48] And a third party would be to assess our use it similarly.

[10:54] But as of today we're a bit over funded.

[10:57] So if we need to draw on it to assist

[11:01] with a budget constraints. Right.

[11:04] And so we can draw on that to help pay for our retiree benefits.

[11:08] And so you can use them similarly, but for different purposes.

[11:12] And there's different restrictions on both both in terms of reporting

[11:16] and our financials.

[11:17] And and but the method or the investment policies are essentially the same.

[11:24] We have the same investment strategies for both.

[11:28] Could you explain

[11:31] if there was a downturn and CalPERS

[11:34] wanted to raise our contribution to set.

[11:38] Is that what happens there?

[11:41] Helpers would have to it has to hit a certain

[11:45] threshold before they can assess whether they want to change their

[11:51] discount rate, which would then ultimately change how much

[11:55] this each agency would have to be contributing,

[11:58] because then in turn that also change your fund status.

[12:01] Right.

[12:02] And so but that that goes through a process

[12:05] that needs to go to their board, they need to approve it and whatnot.

[12:07] And then it gets kind of trickle down. And it's not immediate.

[12:10] Usually there's like a two year period in which it goes into effect.

[12:14] So it gives agencies enough time to to essentially shift a little bit

[12:18] and kind of understand

[12:19] how that adjustment to the discount rate will affect their funding status.

[12:23] Okay.

[12:24] And the other question I had was the $19 million jump

[12:29] in the general fund of what was going on there.

[12:33] There's actually I had Richard look into this for me.

[12:36] And I have some some data points here, but I'd like him to take a stab

[12:40] at this one first.

[12:41] We're going to the treasure report there.

[12:45] Yeah.

[12:45] Item three on the consent calendar.

[12:51] Richard. Hi.

[12:52] Yeah. Hi, everyone.

[12:54] So OPEC had an increase in 2.6 million

[12:58] as far as from prior quarter and property tax.

[13:04] The balance there is a total of 7 million

[13:07] received in the fourth quarter.

[13:10] And that's a 1.2 million increase from Q3

[13:15] for sales tax.

[13:18] We had a balance of 7 million received

[13:23] in the fourth quarter, with a 1.1 million increase from Q3

[13:29] and the annual excess receipt

[13:35] came through in the fourth quarter.

[13:38] And that was for 1.3 million.

[13:41] And the last major receipt

[13:44] we had to make up to 19 million is PG and franchise fee,

[13:49] which is an annual receipt for 1.4 million.

[13:54] So, in short,

[13:56] there was about $40

[13:59] million in revenue that the city generated last quarter versus

[14:03] the $20 million just specifically for the general fund that IT expense.

[14:08] Now, kind of we're starting to accrue back because we're at year end.

[14:12] So some of those numbers are going to be

[14:13] shifting a little bit as we kind of move away.

[14:15] But from a cash perspective, we saw almost twice as much revenue

[14:19] for that one quarter versus expenditures is the short.

[14:23] So will that when it goes to the council.

[14:25] Can that be added into the the report.

[14:29] Okay.

[14:29] Well we'll just the report to to reflect that that additional detail.

[14:33] Great.

[14:34] And thank you for adding the Cal fit I think it's in the under consent.

[14:39] It is in the treasurer's at port.

[14:42] Any other clarifying questions.

[14:46] Yeah.

[14:48] Being none.

[14:49] Are there any comments from the public?

[14:53] I see none in this room.

[14:57] Chair I see no requests to speak and we have no requests in person.

[15:02] Excellent.

[15:02] Thank you for that.

[15:03] So I would welcome a motion more.

[15:08] I moved the consent calendar.

[15:11] The second.

[15:13] Excellent.

[15:13] We got a second and we've got a motion.

[15:16] I'm not going to repeat that.

[15:18] Any further comments on the motion?

[15:21] I let's take vote. All in favor?

[15:24] I, I I unanimous of the three in the room.

[15:29] And thank you very much and chair for the record, in addition to council

[15:33] member Wong being absent, committee member Wong is also absent.

[15:37] Oh, yeah. Thank you for that.

[15:41] Okay, so moving on to new business.

[15:45] Our item for is an informational item received the fiscal Year

[15:49] 20 2526 act for interim testing update.

[15:54] And I think we're going to go right

[15:57] to the pun group or introduced Richard will introduce.

[16:01] Thank you Richard Wong.

[16:03] Yeah. Hi.

[16:04] So we are in your four of our five year contract with our external auditors.

[16:09] The fund group or interim audit started in May.

[16:13] And Sophia here, the pun group's assurance partner,

[16:17] is here today to provide an update on our fiscal year 2526

[16:22] act for interim audit testing and to answer any questions you may have.

[16:28] Thank you.

[16:28] Welcome, Sophia. Thank you.

[16:30] Good evening.

[16:31] Committee chair and then committee members, and also the city's management.

[16:36] Again, this is Sophia from the group.

[16:38] I'm the engagement partner for the city's audit.

[16:41] And thank you for having me here today.

[16:44] So, like Richard mentioned, I would like to give an update

[16:47] on where we are at for fiscal year 2526 audit.

[16:51] So he also mentioned we started the interview work back in May.

[16:55] And with the focuses on the evaluating the city's internal control.

[17:00] So over the significant transaction cycles that includes financial reporting.

[17:06] So we evaluate the manual journal entry process banker

[17:09] consideration process and also the city's budget process as well.

[17:13] And also the revenue collection category C process procurement expenditures

[17:19] as well as payroll and then HR related functions.

[17:23] And again, we started the field work in late May,

[17:27] and then we completed the we substantially completed our interim field work around

[17:34] June time frame with no observations or findings to report.

[17:38] And I also would like to take this opportunity to briefly discuss

[17:44] the new Gatsby pronouncements that would be effective

[17:47] for fiscal year 2526, and it will be impacting

[17:51] the financial statements that will be presented to you in November.

[17:55] And the first one is Gatsby 103 Financial Reporting Model improvements.

[18:01] And the second one is guess we want for disclosure of certain capital assets.

[18:07] So we have been working with the city's management

[18:10] to determine the impact of these two Gatsby pronouncements.

[18:14] The Gatsby 103 is a relatively higher than gas 104.

[18:18] So the biggest changes, impacts on

[18:22] or on the mDNA management discussion and analysis.

[18:26] So because of the change, the city's management will need to rewrite

[18:31] and reorganize the mDNA with only five components required by the standard.

[18:37] So component number one is.

[18:39] Overview of the financial statements

[18:42] show how the financial statements flow through from fund statement to government.

[18:46] Why and also the note disclosure and request commentary

[18:49] information, supplementary information, how the financial statement look like.

[18:53] And the second component is the financial statement summaries.

[18:58] The third one is the detailed analysis of

[19:02] the transaction happened

[19:03] during the year, with a focus on the current year operations.

[19:06] Instead of only focusing on the dollar amount or percentage changes.

[19:11] The fourth component is the significant capital assets and long term financing

[19:16] activities, and the fifth one is the currently known facts.

[19:21] The session and long term and conditions such as the new labor negotiation,

[19:27] if any, and also the maybe potential pension discount rate changes.

[19:32] If that happens, it also needs to be discussed in the MDMA

[19:36] and other than MDMA changes.

[19:39] Another two significant changes from this pronouncements.

[19:43] The first one.

[19:44] Another one is the proprietary fund operating and non-operating

[19:48] revenue expenses classification to present the statement

[19:52] of revenue, expenses and changes in fund balance properly.

[19:57] And another one is adding.

[19:59] Adding a column on the budgetary comparison schedule

[20:04] include including the variances between

[20:08] original and final budget, and another.

[20:12] Another change on the budgetary comparison special schedule

[20:17] is to provide notes with the significant variances

[20:20] on the original budget and the final budget,

[20:23] and also the final budget and then the final result.

[20:26] So to provide explanations why why those significant variances happen

[20:31] during the year in terms of Gatsby 104,

[20:35] the anticipated impact of Gatsby 104 on the city's financial statements

[20:40] is expected to be minimal, but we will continue

[20:44] to evaluate the implementation and then to determine

[20:47] whether any potential impacts as part of our end the process.

[20:52] So overall, we remain on track

[20:55] to begin our year end fieldwork in late September,

[21:00] which is consistent with our schedule in prior years.

[21:04] Assuming that we receive the trial balance and also all the requested

[21:08] audit documentation as planned, and there are no significant issue

[21:13] during the audit, we anticipate to provide a draft

[21:17] of the effort to the Committee for review due in the second half of November,

[21:23] and so that we can meet and present

[21:27] in late November, early December,

[21:30] depending on everybody's availability.

[21:33] And this will conclude my update for fiscal year 2526.

[21:38] Audit.

[21:38] I will be happy to answer any questions that you may have.

[21:42] Thank you.

[21:43] So let me ask the committee any anyone have a clarifying question?

[21:50] I always have some.

[21:51] But you guys get to go first.

[21:54] Okay I'm curious with what they mean by.

[21:58] And is it Gatsby 103 or 104 that wants to

[22:02] have information about the original and final budget changes?

[22:06] So which one is it and what does that actually mean?

[22:11] So the original schedule, we we I mean,

[22:15] the original schedule shows the original adopted budget and final budget.

[22:19] And they there is a column for variance column.

[22:23] Compare the final budget to the final result.

[22:27] And then because of this new change, we need to add additional column

[22:33] to show the variance from the original budget to the final budget.

[22:37] During the year,

[22:38] the city might have budget amendments and the year budget adjustments.

[22:42] So this is a new requirement.

[22:45] There is additional column need to be added to calculate

[22:48] the difference between the original budget and final budget.

[22:54] So it's not on the financial.

[22:56] It's also on the presentation.

[22:59] As I remember the MDA had quite a bit

[23:02] on those changes anyways, didn't it Jonathan.

[23:06] So this doesn't really maybe the city was providing

[23:10] additional information that was was above the minimal requirements.

[23:15] No, the MDA had various components that well,

[23:20] historically was kind of followed a very somewhat rigid structure.

[23:25] And so every year we would have to at least meet

[23:28] those requirements at least to present it to give away and ensure that it's

[23:32] to get the certificate of excellence or achievement.

[23:37] So there as, as they stated.

[23:41] So there's quite a bit of a difference as to how rigid the structure was to

[23:46] what it's going to be now.

[23:47] And there's just more

[23:49] there's going to be more analysis rather than just telling a story.

[23:53] Right. That's what we're there really want to.

[23:55] Instead of saying these number changed from 10

[23:58] to 15 million, look, well why why did it change.

[24:02] And so that questions is going to be kind of further.

[24:05] Why did something happen and why did that happen.

[24:08] So the MDA is more of a storytelling

[24:12] as to rather than kind of just strictly this number went to this number.

[24:17] And so it's going to be quite a change from prior year.

[24:21] So that's going to be a work in progress between here and in November

[24:26] as far as kind of several

[24:28] different iterations and kind of back and forth between staff and the auditors

[24:32] to make sure that we're meeting the requirements as outlined by Geoffroy

[24:37] or gasp, follow along.

[24:40] So with that, include if you had like a change in revenue,

[24:45] the two top two.

[24:46] Explain that. Certainly.

[24:49] Right.

[24:49] Like fully.

[24:53] So obviously it would be major changes.

[24:57] I mean, if it's probably like a 10% change

[25:00] for revenue, that's quite a change from year over year.

[25:03] Now we I'm not sure to what extent do

[25:07] we include budget to actuals in that situation.

[25:11] But because that's as we know now, one of the biggest variants

[25:15] is that we're going to see next year or last year is going to be sales taxes.

[25:18] Right.

[25:19] And I think kind of going into the detail, even though we don't

[25:22] want to keep bringing up a it's still a kind of

[25:26] we're seeing some of the, the how that's affected the city.

[25:30] And it will continue to affect the city until we've kind of normalized it.

[25:34] And it might take a couple more years before we see that.

[25:39] But Sophia, can

[25:41] you please answer which Gadsby pronouncement would require the city

[25:46] to include the variance column in the budget to actuals or budget to.

[25:52] This is Gatsby one of the financial

[25:55] reporting model improvements?

[25:58] Vice mayor, you've got questions.

[26:01] So this item has no attachment.

[26:06] Right.

[26:07] And you mentioned the the presentation.

[26:10] So if that available it's

[26:14] just a verbal presentation or an update to the audit committee.

[26:18] It's usually no written because it's a lottery formation.

[26:23] I it would be nice to have a written update.

[26:29] And because I can remember all

[26:33] everything.

[26:33] And then a very basic question.

[26:36] So this update is a testing update for.

[26:42] For internal control.

[26:45] What exactly you are doing for testing.

[26:52] So during

[26:53] interim field work that's the like

[26:56] I mentioned earlier, it's our internal control evaluation phase.

[27:00] So it's based on risk assessment.

[27:02] We identify significant transaction cycles.

[27:05] And like so we evaluate the financial

[27:08] reporting process that including how the city process bank

[27:12] or conciliation and also how the city process cash receipts

[27:17] and also the payroll, how it was done and

[27:20] and also how the procurement was executed in all the way

[27:24] to the invoice process and ultimately the cash the check cleared.

[27:28] So that's the that's

[27:30] that's what we call internal control and intern field interim field work.

[27:34] So that's what we test.

[27:35] We pick some or we got we got we

[27:40] we got our population.

[27:41] And then we pick samples and we and then we work with the city

[27:44] to get the support to complete our testing.

[27:48] Okay.

[27:50] Okay.

[27:51] My question is we've had a change in finance directors.

[27:56] And congratulations to our new one who's sitting in the room here, Jonathan.

[28:01] But I want to ask you, it's been a smooth transition, I presume.

[28:06] Or you would have highlighted some some whatever

[28:10] non smooth elements would have arisen.

[28:13] I think we have, I have I personally have been working with

[28:17] Jonathan since we started this contract and then the first year,

[28:22] the first year because changing of new auditors and then

[28:26] and of course and then there were some hiccup and then so the first year

[28:30] it took a little bit longer than what we anticipated.

[28:33] And then after after the first year, the second year went through is mostly

[28:37] and I think even even with the transition and also

[28:41] the change happened at the city are entering really, really smoothly.

[28:45] That's why I can I can be here today to present.

[28:47] And then there was really no fighting and no observations

[28:50] from our internal internal control evaluation phase.

[28:53] Great. Thank you. All right.

[28:56] I don't see any comments from the public in the room.

[28:59] Are there any virtual.

[29:01] No thank you.

[29:02] All right.

[29:03] Why don't we move to a motion?

[29:06] We don't actually have a motion.

[29:08] I think this is an inclination item, so we'll accept it as an information.

[29:11] I thank you so for.

[29:12] And good luck on the rest of your work.

[29:15] We'll see you in November. Thank you.

[29:19] So on to item five on our agenda.

[29:22] Also an informational item and a number of internal audit ones.

[29:28] Here we're going to have in sequence.

[29:29] This one is to receive the internal audit and the fraud waste

[29:32] and abuse programs update. And

[29:36] I guess Baker Tilly is going to go right in.

[29:38] Or do we have a staff comment?

[29:41] I think they can take that out. Great.

[29:43] All right.

[29:45] Wonderful. Well, I will get us started.

[29:47] Great news looking at the grant management internal control review.

[29:52] This is going to be presented to you all today.

[29:54] This was the last item for fiscal year 2425.

[29:58] And that has been finalized.

[29:59] So really good news there.

[30:01] So then looking at fiscal year 2526 internal audit program

[30:07] the investment cash flow policy review recommendation.

[30:11] So this is still going back and forth with city management.

[30:15] I hope to have an update with you all in October on that one.

[30:19] And then the citywide internal control review, this one.

[30:24] We have been really busy at work, lots of different requests

[30:27] going back and forth, but I do believe that we will have a report

[30:31] to provide you all in the October time frame for that.

[30:35] Of course, there is that ongoing internal audit services.

[30:39] That's what we do.

[30:40] Why I'm here today and also involves our fraud, waste and abuse hotline.

[30:46] So going on to page number two, you will see that there were

[30:50] no no complaints that were received this this time frame.

[30:55] But we do have those eight open reports.

[31:00] So I do want to say that those are still under the city attorney's review.

[31:04] But I have met with the city attorney as well as the city manager,

[31:09] and I think that there's going to be some new verbiage in the city

[31:13] fraud and abuse policy that they're reviewing,

[31:15] so that hopefully these are going to be closed soon.

[31:20] Any questions before I move

[31:21] on to the validation report?

[31:25] I guess as a question,

[31:27] it would be helpful for me if we could title

[31:32] the second page fraud, Waste and Abuse report.

[31:36] Okay.

[31:37] And I don't know if that's inconvenient or whatever,

[31:40] but a lot of these get posted on the website and it's not

[31:44] maybe intuitive to people that aren't familiar with this,

[31:48] that this is representing that we can easily get that fixed.

[31:52] Thank you.

[31:53] All right.

[31:54] Any questions before moving on to the validation

[31:56] report piece of our ongoing internal audit services.

[32:00] Looks like we're good. Perfect.

[32:02] If you could bring up actually the PowerPoint.

[32:08] What what you'll find is there were no validation

[32:13] or recommendations that we validated this quarter.

[32:17] And so I thought it would be a good reminder to, you know,

[32:21] why we're doing this process and really what this serves.

[32:40] All right.

[32:44] Perfect.

[32:44] So going on to the second page, really what is this program.

[32:48] And the thing that we involve the ongoing internal audit services.

[32:52] So this is a crucial step in the audit process because

[32:56] believe it or not, it breaks my heart to say this.

[32:59] But sometimes reports are put on the wayside with management.

[33:02] Right. So they get reports, they get recommendations.

[33:04] And nothing comes out of this recommendations.

[33:07] So this is a really great mechanism and tool for the city

[33:10] to make sure that they're held accountable for making sure that they're effectively

[33:15] implementing those corrective actions in the identified audit issues.

[33:20] So what are we doing during this time?

[33:23] We're always reviewing documentation and evidence provided

[33:26] by the city to help remediate those recommendations.

[33:29] We will talk to relevant stakeholders for clarification, any confirmation needed.

[33:36] And we really assess what steps the city has taken

[33:39] to make sure that they have made those recommendations.

[33:43] And so once again, why do we do this?

[33:47] Why is this a healthy practice?

[33:49] It helps improve corrective actions, making sure everyone's accountable

[33:52] and really supports

[33:53] that continuous improvement that the city is always looking for.

[33:58] So next slide.

[34:01] So back in fiscal year 2526 we had 79 recommendations.

[34:08] We have validated 54 recommendations in our time here with the city.

[34:14] And there are still 25 that were open.

[34:18] This is really important though because when talking to the city,

[34:22] right before, we were going to provide this information to

[34:28] for this audit committee, there are 16 open

[34:31] recommendations that the city says that they have completed in July.

[34:35] So I am really hopeful that next quarter,

[34:40] I'm going to have a lot to report in this area.

[34:42] So 16 recommendations, I mean, then we'll only have nine left

[34:46] for this, this entire thing, which is great.

[34:50] So next slide, this this kind of shows you those 25 open areas.

[34:56] And like I mentioned we will have 16 remedied hopefully by the next quarter.

[35:04] Any questions on that.

[35:07] Any questions.

[35:09] Comments. Great.

[35:11] Yeah I'm excited.

[35:12] I do have a question in terms of the

[35:16] the the it's great news that the 16

[35:19] that's unexpected from my side.

[35:23] There's there's been some that are went back to 2022 or not.

[35:30] My my question is I wonder if the 16 is going to address

[35:34] all the really old ones or if it doesn't, if staff could work with you to

[35:39] maybe figure out a footnote that would indicate

[35:43] that maybe later in 2027, the really old ones, if there are any

[35:49] that aren't covered by the 16 when they might get addressed.

[35:53] And I think if you look at that last slide, and I'm sorry

[35:56] to keep on doing that to you, Janet, but that last I just show

[36:00] so staff did want to take that consideration.

[36:02] I think that was something that you had mentioned last time.

[36:05] And so the staff,

[36:06] what they have shown you is the expected completion date by quarter.

[36:11] So they're saying that by this did look new to me.

[36:13] Yes. Yes.

[36:15] So this will this kind of helps illustrate when those findings will be remedied.

[36:20] So let's.

[36:21] So if you could help me then dive a little deeper.

[36:23] For example on this other detail report, there was four.

[36:28] Well I don't want to go into the details, but there were five that were in 2022.

[36:32] How would we use this report to see whether those are in the

[36:38] 16 or remain to be those?

[36:41] You don't see that here, but as Chelsea was saying,

[36:45] we can probably for about an updated report that kind of dials

[36:49] in any outstanding of the nine potential ones that are still outstanding

[36:53] what what period they, they're, they relate to.

[36:57] And so you would see essentially this and with the that specific recommendation.

[37:02] Fantastic. Yeah.

[37:03] I think next time when an update is provided,

[37:07] it will be great to have the list that's already verified

[37:12] and especially the list that's open, because I don't know where

[37:17] to start to even ask, because I don't know what these recommendations are.

[37:22] And and also I do wonder

[37:25] when we do a report, we do a recommendation

[37:29] and we start to implement.

[37:31] A lot of times we find out there might be adjustment

[37:35] needed for for those recommendations.

[37:39] So do you do those kind

[37:43] of reevaluation in the middle of the implementation?

[37:48] That's a great question.

[37:49] So obviously processes things change right from a recommendation

[37:53] from fiscal year 22.

[37:55] So absolutely we're going to take that into consideration.

[37:58] And I do believe Colleen please feel free to jump in here.

[38:01] But I do believe that, you know,

[38:02] sometimes a recommendation might no longer be valid.

[38:06] And in that case,

[38:07] that is something that we would just remove from the listing at that time.

[38:11] Yeah. Correct.

[38:11] A great example is if the city reorganizes

[38:15] a recommendation related to a process or a responsibility might not be relevant.

[38:19] So then we would close that and we would call it administrative closure.

[38:23] But it would it would come off of the list for you all and it would be closed.

[38:27] We wouldn't just close things kind of, hey, it's been too long.

[38:30] Let's close it.

[38:31] We want to work with the city on the appropriate answer,

[38:34] but we definitely do take those things into consideration.

[38:38] Ideally, everything is implementable and practical because we work

[38:42] with staff on the front end, but things do come up over time.

[38:46] Yeah.

[38:47] So if there could be a list of validated recommendation,

[38:52] but what do we have done for each of them?

[38:55] That would be nice.

[38:57] You're talking about column C column C.

[39:01] Could you expand a bit on

[39:03] I what your your suggestion is.

[39:06] Sorry.

[39:07] Like the recommendation of doing something and then maybe a comment

[39:13] on what you have verified on the city have implemented. Yes.

[39:18] So when, when we will have those we do.

[39:22] And so so you know this quarter there wasn't any recommendations

[39:25] that had been validated.

[39:27] When this report is presented, when there are recommendations

[39:30] validated they talk about what what had happened.

[39:34] So what what was validated.

[39:36] What were we able to validate

[39:40] at that time.

[39:41] So you mean if I look into a previous audit meeting, right.

[39:46] That will be there.

[39:48] Correct.

[39:49] It'll talk about what

[39:51] what what the actual recommendation was that we were able to validate my being.

[39:55] Okay.

[39:56] Might be nice if there is a cross-reference

[40:00] like the last time the Valley, the recommendation

[40:04] was at reported in the audit committee on that date.

[40:09] That way people can look for it if they want to.

[40:13] Okay.

[40:14] And then it would be nice

[40:17] for the oak to have a list of the open recommendations.

[40:21] Yeah.

[40:30] May we

[40:31] have that report that the PowerPoint that you just shared?

[40:35] I don't see it online.

[40:37] Also, is there a landing page?

[40:40] Would I find it under budgets to.

[40:43] I remember that there used to be

[40:45] the collection of all the Moss Adams Baker Tilly reports.

[40:49] They were all together on some web page, but I know that we've reworked

[40:53] the website, so

[40:56] I don't know how to pull that up and see some of them.

[41:00] Before.

[41:00] We had our commissioner mayor meeting a couple of weeks ago.

[41:04] So there is an internal audit section.

[41:06] I'm not sure it's been completely updated.

[41:08] So it's a great comment, mayor, how to get to that.

[41:11] Maybe not all internal audit reports are posted there

[41:15] because there been a number in 2026, and maybe there have been some reorganization.

[41:21] Yeah.

[41:21] If you go down below the audit plan there, there

[41:24] and then the final reports, I think we might.

[41:26] How do I get to that. No.

[41:30] Yeah.

[41:30] Usually the I will just mine didn't it didn't take you to it.

[41:34] Go and click on finance.

[41:36] Go to financial reports.

[41:37] And then there's an internal audit subsection okay.

[41:43] So if I landed on the main page

[41:45] I'm starting on the main page of the website city

[41:52] okay.

[41:54] Then under finance

[41:58] there city.

[41:59] So if I just do a search on the city

[42:02] home page for internal audit, I don't get that.

[42:07] I get a bunch of yeah, sometimes search isn't the greatest.

[42:11] So if you go to your yes, if you go to your city. Yes.

[42:15] And then under departments you scroll down, you go to finance.

[42:19] Couple more down there, we go down.

[42:22] And then if you click a couple more over

[42:25] there, there we are.

[42:27] Okay.

[42:27] So I was wanting to see the Baker Tilly report with all of these recommendations.

[42:34] There was one that you had several maybe 30, 30 pages long.

[42:38] And it was a it was a

[42:41] all in a table, really small thought.

[42:44] It's the blocks of recommendation.

[42:47] I think it's the one that it would have all of these recommendations on it.

[42:53] This one had a vast majority of them.

[42:56] Yeah. This is a monster. Eat.

[42:58] This is the era.

[42:59] So I'm thinking that you're you're wanting

[43:02] all the recommendations.

[43:05] Pauline, do you know if we have

[43:06] I don't know if we've provided a report with all the recommendations.

[43:10] We keep track of them, you know, in our own database,

[43:14] but we don't have a report

[43:15] that we've provided the city with all those recommendations altogether.

[43:20] Okay.

[43:20] So so for instance, is I was looking, wanting to know

[43:23] what the for old civil grand Jury

[43:28] 2022 recommendations are because I'm curious

[43:33] if some of them have been just already fixed.

[43:36] And it's been like four years

[43:39] since that report came out and the people of all changed.

[43:43] So I don't know where, like where can I find it,

[43:48] but what the recommendations were

[43:51] that may not have been part of the internal audit reports.

[43:55] Is there a separate we tell you so at that time?

[44:00] If so, for instance, if there were six findings

[44:03] and two had been resolved at that time, we would tell you

[44:07] that there was two resolved, but we wouldn't tell you the four

[44:11] that would be open. So. Right. Colleen.

[44:13] Right. This

[44:15] honestly, that's is a it's a staff function to close the findings

[44:19] and we track whether the the recommendations have been implemented.

[44:23] So I think it will be up to staff

[44:25] how much detail they would want to provide to you.

[44:28] For example, the budget process review that we did once those findings, once

[44:34] we have said they're validated, you could look at that entire report

[44:37] and say, this is closed, but we can work with staff to provide

[44:41] a little bit more detail in our presentation about what's remaining,

[44:45] and it will be up to staff whether they might want to keep a master

[44:49] log available to the public of the audit findings.

[44:53] We show you in the report, kind of a high level,

[44:56] because it would be a very, very long report with a lot of detail to have

[45:01] the language of each recommendation provided and to keep that log over time.

[45:07] So trying to get higher level for the committee.

[45:10] Well, as a council

[45:12] member, and we have members of the public who are not always supportive

[45:16] of the council, that having that for items back from 2022

[45:22] on this report could be used by

[45:26] someone to come up to a council meeting and say, look,

[45:30] there's four things that still haven't been taken care of from 2022.

[45:34] And, and we'll we will know nothing about what

[45:37] these four items are, which make us look really bad.

[45:40] So I would like to be able

[45:44] to kind of risk management

[45:48] that that potential situation.

[45:52] You can we've seen it before where these reports have been misused to abuse people.

[45:59] So yeah that's completely understandable.

[46:03] So we'll work with staff

[46:04] on the format and content so that you have some more detail

[46:08] without it being an overwhelming amount of paperwork

[46:12] that then the city's got to print out and publish every quarter.

[46:15] Yeah, yeah. And it's been it was.

[46:17] So I'm really glad to see the language talking about the process improvement

[46:22] here. And I think that's really important.

[46:24] And we've turned around

[46:25] a good number of, of, of the residents to view this as a positive.

[46:30] And, but it has been used to both

[46:33] insult the council and insult staff at times.

[46:36] And so we want to get everybody on the same page

[46:40] for the positive results that this is having on the city,

[46:45] and try to limit those opportunities

[46:48] for it to be mischaracterized.

[46:54] So. So

[46:56] originally there were 79 recommendations, right?

[47:00] Correct.

[47:00] So is there a document that I'm assuming that's a document

[47:05] the council has approved with the 79 recommendations?

[47:09] That would be every report that we issue

[47:13] adds to the denominator of the recommendation.

[47:16] So it's not a static number 79.

[47:18] We probably started with fewer than 79 when we began the validation process.

[47:23] And every every report

[47:26] that is completed then adds additional recommendations.

[47:30] So we validate and the percentage the number will change over time.

[47:34] You'll keep updating the rates.

[47:36] Oh, that's why it's hard to find one document that has all.

[47:41] So for example, after the grant or grant management is presented to all

[47:46] then we would add those to the list.

[47:49] Does that make sense.

[47:50] Oh I see.

[47:51] So you'll probably see it at the very bottom

[47:54] under under special revenue Fund progress process review.

[47:57] You'll see another line 2026 grant management.

[48:02] So it's not there yet.

[48:04] But maybe in the next quarter you'll see that with the

[48:07] x number of number of recommendations.

[48:10] Oh I see okay.

[48:12] This is a very helpful report.

[48:14] Let me reemphasize because it includes not only internal audit.

[48:17] It includes other recommendations for example

[48:20] from the external auditor as I understand it.

[48:26] So the special revenue fund process

[48:28] or a single audit maybe the single audit is an example.

[48:33] So this one, I believe it's still a function of the internal audit.

[48:37] All these reports were provided by.

[48:39] Okay. So I misunderstood that.

[48:41] I thought this was there was a comprehensive report I get from you guys.

[48:46] I thought that's got all the recommendations that you're tracking.

[48:50] So it's only internal audit.

[48:52] That's not correct.

[48:53] This includes two grand jury reports

[48:56] as well as a single audit finding that the city received in 2022.

[49:00] So the single audit would be the external correct previous auditors.

[49:04] And then the grand jury, of course, is the grand jury.

[49:07] So that's what I thought this was a more comprehensive document.

[49:10] Not that, you know, internal.

[49:11] It's going to come up with most of the recommendations we would expect.

[49:14] But so so what's the basis of capturing a recommendation

[49:19] then since we've got three different sources right now,

[49:23] it makes sense to me to have external audit.

[49:25] Internal audit I guess I wouldn't have expected

[49:28] a grand jury anyways, but so that's fine, I get it.

[49:31] Is there are there any other sources that that you'd guys typically

[49:35] look at when you go into a municipal situation or.

[49:40] Sure, it's

[49:41] great for us as a committee, this is great for us to see what's out there.

[49:44] What's being looked at?

[49:45] I think it's it's maybe we're not giving it as much credit as it deserves.

[49:49] It's quite, quite a nice thing

[49:51] to close the loop, so to speak, which I really like this report.

[49:55] But any others calling that come to mind are we?

[49:58] Is that the typical source of everything?

[50:01] This is pretty typical.

[50:02] This was a management decision at the time.

[50:04] We established this program

[50:08] to go back and include the grand jury reports.

[50:12] We would typically include internal and external audit.

[50:15] And if the city were to receive findings from another auditor, for example, HUD

[50:20] or or another federal agency that came in, you could include those two.

[50:25] Just for transparency sake, there was a decision made to include the grand jury.

[50:30] I would say our clients are kind of 50 over 50 on whether they include

[50:34] grand jury findings or not in this, but it does daylight,

[50:38] whether the city is making movement on recommendations from external bodies.

[50:44] And that's what the committee chose at the time.

[50:47] And there was that reminds me that wasn't there a finding

[50:50] in one of the grants during the Covid era that

[50:55] so that was a special report from the external auditors, probably.

[51:00] I think I do believe that 2022 single.

[51:03] So that second to the bottom.

[51:05] Okay. Okay. Yeah. Great. Okay. Yeah.

[51:08] But I still yeah I think it's nice to include a grand jury,

[51:12] but we had another civil grand jury report this year.

[51:17] So would that be added?

[51:20] I'm curious, but then I do think that we

[51:24] we should have a document with all the 79 recommendations.

[51:29] Even if they are being adjusted.

[51:32] But I assume you do have that list somewhere, right?

[51:38] Yeah.

[51:38] We can work with management like we'll have we'll have an update.

[51:42] I wonder maybe you could enter auditors could work with city staff

[51:46] and come back with maybe a suggestion on how to handle it,

[51:49] because there seems like there's a potential for a lot of material.

[51:53] And we want to make sure we're getting maybe a summary report,

[51:56] and then we can go into detail when we see something.

[51:58] And you've also raised the issue with maybe the public has a different interest

[52:02] than this committee.

[52:04] So possibly one solution to address what you're talking about

[52:08] is you guys could come up with a proposal for us next,

[52:12] next quarter in conjunction with this report to say how you would handle

[52:17] or I'm just throwing it out because as a committee,

[52:21] we may or maybe it doesn't have to be one.

[52:25] Just to clarify, it doesn't.

[52:27] You don't have to create a whole new document for this.

[52:31] Just that would be nice to have a list of 79.

[52:34] And then maybe it's five different documents

[52:37] and then just say, okay, if each one is from which document,

[52:41] then at least there is a place people can look for information.

[52:46] That's good enough.

[52:48] Mayor, you have thank you for mentioning the civil.

[52:52] And so this year we had three Cupertino named in three.

[52:58] So the first was with regards to remote

[53:02] teleconferencing convenience versus compliance.

[53:05] We had a VTA one and then potholes.

[53:10] So unfortunately we've got three more to add

[53:13] and we've been working on the first one.

[53:15] We're we're working on all three.

[53:17] The first one is really in process,

[53:20] and we'll ultimately get into our council procedures manual.

[53:27] We'll have to have a discussion about that probably in November

[53:31] to make some adjustments there,

[53:34] but I guess it would get added

[53:36] on to your reports list.

[53:40] Perhaps.

[53:40] Maybe it comes back to my question of clarification,

[53:43] which was, can we maybe have a little text on the bottom

[53:47] that says reports, what is the universe of total recommendations?

[53:52] And it comes from, I guess we're saying the past

[53:56] the decision was civil juries,

[53:59] internal audit recommendations, external audit recommendations.

[54:03] And that way everybody knows those are city staff.

[54:06] Then when internal audit may not be aware of everything, city

[54:10] staff would have a triggering process to identify these.

[54:16] I'm not thinking of a very

[54:18] extensive, but some kind of note on here that I never thought of would be helpful.

[54:22] I didn't realize there was a decision made in prior years, for example.

[54:26] So that's helpful to to know that we're continuing the work

[54:29] of prior committees that we can build on.

[54:32] Okay.

[54:32] I think we should move on from this item probably if we can.

[54:36] Any other burning questions or we got our stuff addressed

[54:41] so we could vote to

[54:43] or to recommend that we no longer include the civil

[54:47] grand juries here because that's being handled at a council level.

[54:51] And then it's kind of duplicative if we're analyzing

[54:55] and having a consultant analyze the same civil grand jury,

[54:59] let's see if there's any comments from the public.

[55:02] And then we can maybe go to a motion.

[55:05] Even though this is an informational item

[55:09] chair, I see no request to speak.

[55:11] Fantastic.

[55:12] I'm thinking, you know, maybe we could talk some more and have a motion.

[55:16] Or we can.

[55:18] Whatever you take direction from, it sounds like a great idea to,

[55:23] you know, address what we're going to include on this, reaffirm

[55:27] what's been in here in the past or remove.

[55:29] So it could be a nice time to do that.

[55:32] City staff have any comments on your opinion?

[55:36] Ultimately this is a report that goes to the audit committee.

[55:40] So if you all want to remove or include additional by including,

[55:45] maybe it's the external audit findings if there are any.

[55:48] So which I think would be more relevant right.

[55:51] For this body. Right.

[55:54] We can certainly do that.

[55:56] Yeah, I can see lots of other committees or institutions

[55:59] that maybe make complaints.

[56:01] So I don't know that this is appropriate for us necessarily.

[56:04] Colleen, do you have some experience?

[56:06] And you said some cities do add civil jury comments.

[56:09] So is that widespread, do you think anecdotally or.

[56:13] It really depends on how

[56:16] how grand jury complaints are handled.

[56:19] I would agree with the mayor's comment that because these are handled

[56:22] at the council level, it is a little bit redundant.

[56:25] It just depends on how you all want to handle it.

[56:29] But typically the council says here's how we plan to respond.

[56:33] Management implements comes back to council and says we responded this way

[56:38] and then we would validate at the same time.

[56:43] Right.

[56:43] So I'm getting rid of redundancy.

[56:46] I'm all in favor of I mean I don't vice mayor,

[56:51] I don't think we had control over what was being done at that time.

[56:56] I think all.

[56:58] Oh yeah.

[56:59] And it was used as a tool that I really I didn't

[57:04] I really didn't think it's bad to include the civil grand jury

[57:09] because it's nice to see oh four was invented and for still open.

[57:14] I'm curious what still open.

[57:16] But on the other hand, not all the recommendation from grand

[57:21] jury has to do with audit or finance.

[57:26] Right.

[57:27] For so does it make sense to include recommendations

[57:30] that may not have to do with findings?

[57:34] And also a lot of times

[57:37] not a lot of that be some 50%.

[57:40] I think of the recommendations we disagree with.

[57:44] So it doesn't mean they because the grand jury, civil grand jury

[57:48] consists of people who have never been elected official.

[57:52] They make recommendations, but then they don't even know how city works.

[57:56] And so I don't think there.

[58:01] Is always a good recommendation.

[58:05] So I don't know if these eight are those eight that's reasonable

[58:12] that we have accepted or

[58:15] that's directly from the grand jury.

[58:19] So that's what be my concern with

[58:23] taking an external recommendation

[58:26] without our own validation,

[58:30] whether those recommendations are suitable for corporate.

[58:34] You know, I think that goes to my observation.

[58:37] It's typically these kinds of reports

[58:38] or stuff this committee has input or control over.

[58:42] And so internal audit reports into both the city Council

[58:47] and the audit committee is the way that structured.

[58:50] And in the same way basically for the external auditors.

[58:53] So it makes perfect sense to me that this committee would have

[58:56] input on the reports coming back to the committee,

[59:00] whereas we have no real direction with the.

[59:05] I could see where the city attorney has input, I would hope or expect

[59:09] on these kinds of things, but that we would we would get input from

[59:13] either the external auditors saying this is a significant enough issue.

[59:17] It shows up in the Akbar, and you guys could be aware of it,

[59:19] or we see it in the footnote or internal auditor does a project

[59:25] and then brings it up for us, but separately.

[59:28] I mean there's we could probably imagine other organizations that have comments

[59:34] maybe coming

[59:34] to the city that we have no real

[59:38] it doesn't seem to fit within our purview, but I can see where it could.

[59:42] We extend it in.

[59:43] City Council says, why don't you watch over it?

[59:45] So I'm happy to have a motion that clarifies what we think this is.

[59:50] We can either do it through city staff consulting with maybe the city attorney

[59:54] can get involved or whatever you think, or we can

[59:57] we can take a vote here and just say, let's let's stick it with internal audit

[1:00:01] and external auditors, which are reporting directly

[1:00:04] to this committee and other groups that don't.

[1:00:07] Okay.

[1:00:07] So I'll make a motion that we remove

[1:00:12] civil grand jury recommendations from this report.

[1:00:16] And then if there is any financial

[1:00:20] related issue that's recommended from,

[1:00:24] we will rely on, I think this council,

[1:00:28] the city manager or city attorney will can refer them to the internal auditor,

[1:00:35] who can then recommend an appropriate way to integrate those

[1:00:40] into the city's.

[1:00:42] Process

[1:00:46] more. Second. Yeah.

[1:00:48] And I like here I don't want to talk about issues here and the council.

[1:00:53] I don't want to talk about VTA here and council

[1:00:57] or even the council procedures manual or not to go through that.

[1:01:00] It's very redundant.

[1:01:02] People can come to the council meeting and make their input there rather

[1:01:06] than taking a more precious time of it, so I agree.

[1:01:09] Yeah.

[1:01:09] Well, maybe like show me the money, maybe that item is relevant to this committee,

[1:01:14] and then I'm sure that the staff will bring that to the committee.

[1:01:20] And together with Baker City.

[1:01:23] Yeah.

[1:01:24] My input on this might be first.

[1:01:26] I can ask again the city staff or I think the city manager's office

[1:01:30] is represented in our committee here as well.

[1:01:33] But again, to me it's what does this committee have authority over?

[1:01:38] And I'm happy to take responsibility for, for things.

[1:01:41] But I didn't realize this was a decision maybe that had been in scope

[1:01:45] a number of years ago.

[1:01:50] I personally, all the things you said, I'm

[1:01:52] not sure we can rely on the city staff bringing us issues.

[1:01:55] I think that's part of the nice loop being closed here.

[1:01:59] There's a formal report given by the external auditors

[1:02:02] or internal auditors, and they have recommendations.

[1:02:04] And we're going to go soon to a new item that's got a series of them.

[1:02:07] And then they get on this report and then they're either

[1:02:09] addressed, city staff either agrees with them or they don't.

[1:02:13] And then at some point

[1:02:14] there's a resolution, whereas things we don't have control over it.

[1:02:18] I don't see how this loop gets closed easily.

[1:02:20] Only be we simplify the motion to just say we remove the grand jury report.

[1:02:27] I love city Council wants to put it back in our view or something.

[1:02:31] They can pick and choose and direct items.

[1:02:33] So you're withdrawing your first your main motion.

[1:02:36] This is the new motion.

[1:02:38] The new motion that we remove civil grand jury

[1:02:43] recommendations from the audio recommendation report.

[1:02:48] More tracking report. Yeah okay.

[1:02:51] And then we've got a motion and we can discuss it.

[1:02:56] Now again I'd like to clarify that that motion is because we're clarifying

[1:03:02] what this audit committee has purview over as we understand it.

[1:03:06] Okay.

[1:03:07] So can I amend the motion to say that we are removing civil grand jury

[1:03:13] recommendations from the audit recommendation tracking report

[1:03:17] because it's not in the preview of this committee?

[1:03:22] Yeah, it's closer to what I, what

[1:03:24] I also would you like the political the motion.

[1:03:28] I'm just looking at

[1:03:30] the moment.

[1:03:31] Well maybe I always throw my motion.

[1:03:33] You can.

[1:03:34] No no no no no no, that's not what I mean.

[1:03:37] I think just simply lying on the fact that, like, if there was a report like,

[1:03:41] show me the money that the council if while we're talking about it,

[1:03:45] we could direct staff to bring this to the audit committee if we felt

[1:03:50] that the audit committee had some input, that that would be helpful.

[1:03:55] Yeah.

[1:03:57] Something is, but that does not need to be part of the it's

[1:04:00] just what the council is willing to do.

[1:04:04] Yeah.

[1:04:05] So it's a motion clear.

[1:04:07] I do believe it's clear.

[1:04:08] It's just just to add a bit to it

[1:04:12] in its later on our agenda

[1:04:14] is the internal audit work program.

[1:04:17] Seeing that that is going to council in September, maybe that's the opportunity

[1:04:21] council can take to add a civil grand jury

[1:04:25] report to the validation as a follow up or as a work program

[1:04:30] item to ensure that that that one that it's been seen through.

[1:04:35] So if there is a civil grand jury report like show me the money, right.

[1:04:40] It's maybe it's

[1:04:41] within the purview of this body to review and make sure that it's been addressed.

[1:04:45] And maybe the council can make that decision at the time

[1:04:49] when we take the work program for consideration.

[1:04:55] Okay.

[1:04:55] But we can still

[1:04:56] be making that recommendation to the council about this at this time.

[1:05:00] Yeah. Okay.

[1:05:01] Well, I think we can remove it

[1:05:03] if we choose from this report, but doesn't want to if we get.

[1:05:05] No, I'm just saying for future. Right.

[1:05:07] If you let's say we remove them now from all future reports,

[1:05:12] if there is a future civil grandeur report that you want

[1:05:16] Baker, Tilly or internal auditors to ensure that it's been validated,

[1:05:20] we can include it

[1:05:21] as part of that validation process or during that, the annual review of our.

[1:05:26] You mean have that emerged at this level?

[1:05:29] You're saying?

[1:05:31] I would say probably from the direction from council down.

[1:05:36] So that is the same as what I was.

[1:05:39] Okay, okay.

[1:05:40] Where am I at? I guess we've got a motion.

[1:05:43] You may I clarify that accepted the child committed motion.

[1:05:49] Can you read it back?

[1:05:50] Amendment is purview of the.

[1:05:53] Because it is not within the purview of the audit committee.

[1:05:56] I wasn't sure if it's not a committee

[1:06:01] recommendation tracking report

[1:06:03] because it's not in the purview of the committee.

[1:06:06] It may not be

[1:06:08] then if it wasn't, then why have you been doing it?

[1:06:12] If it wasn't in our purview while we were doing it?

[1:06:14] So I would I would question if that was.

[1:06:20] And it seems to be more of an observational statement

[1:06:23] rather than the motion.

[1:06:26] I mean, the reason for the motion.

[1:06:28] Yeah. Yeah.

[1:06:29] And I'm not entirely sure

[1:06:31] because it's been our practice that we've been doing this.

[1:06:33] Why are we now saying that?

[1:06:35] It's not

[1:06:36] I think it's important to include that in a motion for chairs recommendation.

[1:06:42] That was clarify is not within the purview of the committee

[1:06:47] before I heard the mayor's comment, which makes perfect sense as well.

[1:06:50] Unfortunately, I certainly not. But

[1:06:55] I honestly

[1:06:56] think maybe we could handle this in another way, which is, again,

[1:07:00] I'm not trying to push it off

[1:07:01] into a committee, but possibly internal auditors and staff

[1:07:05] can go back in consultation with all the various parties

[1:07:08] that and ask

[1:07:11] what should be the scope of the total recommendation column.

[1:07:16] And we can take that choice with a motion here,

[1:07:18] or we can ask further input, I guess

[1:07:23] I connect there an appetite

[1:07:26] to the front of the amendment, even though I question it.

[1:07:30] Okay, so you accept

[1:07:33] a friendly amendment to add this

[1:07:36] because this is not in purview of the audit committee, right?

[1:07:40] So do we want to amend that to also include the

[1:07:44] the chairs comment about

[1:07:48] direct staff to bring back

[1:07:53] the universe of

[1:07:57] reports that we are taking

[1:07:59] to for the total recommendations?

[1:08:02] I'm happy with that. Yeah.

[1:08:05] Okay.

[1:08:06] Accept

[1:08:08] that may not want to.

[1:08:09] It's okay.

[1:08:12] But I make a quick suggestion.

[1:08:14] Yeah, please.

[1:08:14] We're working as a team here, I know that I know that the committee charter

[1:08:20] is not maybe set in stone at the moment,

[1:08:24] but it would probably be easily covered if the motion just referenced.

[1:08:29] Reports that are under the purview

[1:08:33] of the committee as outlined in its charter or directed by council.

[1:08:36] So that would cover, for example, if a grand jury report came to council,

[1:08:41] there were items that you wanted to refer to, the audit committee,

[1:08:44] you could do that in the the required responses to the grand jury,

[1:08:48] and that would cover the the universe without us then being able to

[1:08:54] put everything into the tracking report that could possibly be relevant.

[1:09:00] Yeah, I like that wording. Actually.

[1:09:01] I think for the motion it's not defining what the universe.

[1:09:07] It's asking directing the staff to make a recommendation to the committee.

[1:09:13] Here is what we should consider.

[1:09:15] And the staff can then say, okay, the universe

[1:09:19] is per the charter of the committee, right?

[1:09:23] So that's okay.

[1:09:26] Right?

[1:09:26] I don't think we need to modify the motion.

[1:09:31] I think what Colleen said

[1:09:34] sounded very succinct and to what I was driving at.

[1:09:39] So I'm I don't mean to be okay knowing here.

[1:09:45] Could you repeat that?

[1:09:46] Yeah, possibly.

[1:09:48] Pauline. Sure.

[1:09:49] It would be

[1:09:52] limited to tracking recommendations that are within the under

[1:09:56] the purview of the audit committee, per its charter or as directed by council.

[1:10:01] Yeah, I accept that.

[1:10:03] Yes. Good.

[1:10:05] So that substitute motion more second actually.

[1:10:08] Yeah.

[1:10:08] We've had a nice discussion.

[1:10:10] Have that I like this motion a lot.

[1:10:13] Any other final comments? Let's take a vote.

[1:10:17] Oh sorry.

[1:10:18] I shall move the substitute motion.

[1:10:22] Good question.

[1:10:22] I'm the substitute motion.

[1:10:24] There were two amendments, right.

[1:10:27] And more second.

[1:10:28] Those three amendments.

[1:10:30] First is purview and secondly is at direction to staff.

[1:10:35] And that direction was amended.

[1:10:38] So there were three amendments on the on the asset.

[1:10:43] The second motion. Well you could also

[1:10:47] you could also just

[1:10:49] have to type all that out. Yeah. All right.

[1:10:52] Just just make a new motion that include all that.

[1:10:55] So which you prefer removes the name notion again and then just have this.

[1:11:01] So this will be the main motion.

[1:11:03] So and it'll probably read better in the minutes that you don't

[1:11:07] want.

[1:11:08] We'll just do a substitute motion

[1:11:13] which include the second motion with the three amendments.

[1:11:18] No no no no we want to

[1:11:20] you want to withdraw your main motion which had all those amendments.

[1:11:23] Okay.

[1:11:24] You're you're going to create a new main motion

[1:11:27] with Colleen's simplified, limited to tracking the recommendations

[1:11:32] of the audit committee per the charter or by direction of Council,

[1:11:36] the simplified one.

[1:11:37] And just put that in and then in the meeting minutes,

[1:11:40] because you don't have to put the original motion in the minutes.

[1:11:44] You just have this one. Don't need

[1:11:47] that okay.

[1:11:48] So cows moving in more

[1:11:51] and remove the civil grand jury recommendations

[1:11:54] from the audit committee recommendation tracking report

[1:11:57] limited to tracking recommendations that are within the

[1:12:02] under the purview of the Audit Committee, per its charter

[1:12:05] for as directed by counsel.

[1:12:09] Is that should that

[1:12:11] include direct staff to bring back the no.

[1:12:14] Okay. That's okay.

[1:12:16] Well we probably all that now okay. Yeah.

[1:12:18] So the previous motion was withdrawn.

[1:12:21] So you don't need to put that.

[1:12:23] Thank you.

[1:12:24] Save all the time for the minutes.

[1:12:27] All right.

[1:12:28] Let's take a vote on that as

[1:12:31] just stated.

[1:12:32] All in favor are I opposed?

[1:12:36] No. It's unanimous of us here.

[1:12:37] Thanks, everyone. I think we came to a nice resolution.

[1:12:39] And you can put that as a footnote down here on our report.

[1:12:42] Whatever our motion was that we so succinctly have in the minutes now.

[1:12:47] Great.

[1:12:48] I think we're still at the point where,

[1:12:52] well, I guess we're finished with this item.

[1:12:54] This was an informational item on which we corrected or we made a motion.

[1:12:58] So thank you for the presentation.

[1:13:03] I went a little longer than I anticipated, but now I think we're

[1:13:06] into the next part of your presentation, which is item six.

[1:13:10] Yes. Which has received the grants management internal control review.

[1:13:14] Final report. Yes.

[1:13:16] Yeah. So this is really exciting.

[1:13:18] I'm going to go to the executive summary just to kind of point out

[1:13:22] some of the highlights of the report.

[1:13:23] And then I'll open the floor for questions.

[1:13:25] So you know this was really to assess the internal controls over

[1:13:31] grant management activities for the city, really looking

[1:13:35] specifically for compliance with policies and procedures

[1:13:39] as well as best practices.

[1:13:42] So we really looked at the application, the review,

[1:13:47] the administrative and reporting processes related to grant management processes.

[1:13:52] This actually took place in June through October of 2025.

[1:13:58] So that's important just to remember that, you know, some of these recommendations

[1:14:03] might have already been mitigated by the city,

[1:14:06] you know, thinking about how

[1:14:09] how much total grants the city has, it's pretty substantial.

[1:14:13] So looking at, you know, fiscal year 24, for example,

[1:14:17] 25% of the program revenues related to grants.

[1:14:22] So this is a very material balance

[1:14:24] for the city and something that's really important.

[1:14:28] So going down

[1:14:30] to the second page you will see that

[1:14:33] we do like to highlight things that are going really well.

[1:14:37] And the city is doing really well.

[1:14:39] I'll call out a couple of these.

[1:14:41] So one you know looking at departments,

[1:14:45] it looks like they have really organized folders for all this information,

[1:14:49] grant documentation, making sure that it's recorded

[1:14:53] that they have the record retention rights on it, as well as audit readiness,

[1:14:57] which is so important, as you know, for your,

[1:15:00] you know, external auditors as well as when pesky internal auditors come.

[1:15:05] So really nicely done.

[1:15:07] Also another one to highlight segregation of these really appear to be in practice

[1:15:11] in invoice reviews approvals, reducing that

[1:15:15] risk of errors or unauthorized transactions,

[1:15:18] which is something to really highlight for the city.

[1:15:21] And also, you know, there are the appears to be really good

[1:15:25] hand off lists to help mitigate controls.

[1:15:28] You know, if there was any risks of staff turnover, you know,

[1:15:32] everyone has an understanding of what needs to be done in this process.

[1:15:36] So great job to the city.

[1:15:39] But like you know, most cities there are some opportunities for improvement.

[1:15:45] And if you go to page number three, this lists out

[1:15:49] nine areas that I wanted to highlight in the report.

[1:15:53] But obviously there's details below and there's other recommendations below.

[1:15:57] So looking at these high level, you know really making sure

[1:16:01] to have standard grant management policies and procedures and continuity plans.

[1:16:07] So we talk about,

[1:16:08] you know, really having that hand off to maintain grant management activities.

[1:16:13] What if there is staff absences, transitions, that sort of thing,

[1:16:16] making sure

[1:16:17] that there is a centralized grant opportunity identification and monitoring.

[1:16:21] So when we were looking at multiple departments within the city,

[1:16:26] there were sometimes different ways

[1:16:30] that different departments are identifying and monitoring these grants.

[1:16:34] And so really having a holistic approach across the city

[1:16:37] really helps make sure everyone is an under agreement

[1:16:40] and the process is continuous throughout

[1:16:43] a couple other things, making sure that everyone,

[1:16:48] you know that there's segregation of duties across departments.

[1:16:51] So we did see, you know, some areas that had great segregation of duties,

[1:16:55] others, you know, that might have staff

[1:16:59] staff issues, not have enough staff, that sort of thing

[1:17:02] that could lead to the potential of, you know, some segregation of duty issues.

[1:17:07] Looking at this again,

[1:17:11] just making sure that there's consistent internal control,

[1:17:14] internal reviews and approval processes for grant reporting.

[1:17:17] As you all know, grant reporting can be very cumbersome.

[1:17:21] And there's a lot of different things.

[1:17:23] So making sure that, you know, the city really is crossing the T's

[1:17:28] and dotting the eyes, so to speak, in making

[1:17:31] sure that they are doing the appropriate grant reporting.

[1:17:36] It's a lot of information.

[1:17:38] And so I think to really make the best of your time,

[1:17:42] I'll open up for any questions or comments that you all have.

[1:17:48] Why don't we do around here

[1:17:50] any clarifying questions from the committee members?

[1:17:56] I'm kind of wondering how,

[1:17:58] but one of the, one of the problems that we see that grants are being

[1:18:03] applied for, and then we kind of find out about that after the fact.

[1:18:10] And has that been improved upon, like.

[1:18:17] For instance, there was a grant for.

[1:18:20] It was some artificial intelligence

[1:18:25] virtual reality program, and it was about $100,000

[1:18:30] that was given to the city to create this VR.

[1:18:33] You have the virtual reality headset, but that didn't it didn't like

[1:18:38] go through the council and it and it got kind of put on to like a

[1:18:44] work program, special project.

[1:18:47] But all the money came from outside.

[1:18:49] Did use some staff time.

[1:18:50] But is there something in the process now that would be different

[1:18:55] so that that could rise to the level of getting to the council,

[1:18:58] because that's

[1:18:58] a substantial amount of money, and then the city is supposed

[1:19:02] to be continuing, like using this VR thing.

[1:19:07] It was the one with decarbonization

[1:19:11] of your house, with your changing out your appliances and stuff.

[1:19:14] And it had Cooper in it.

[1:19:15] I don't know if you ever tried it out. So.

[1:19:17] So there was one for McLellan wrench, and that's another one

[1:19:23] that was much smaller. There is another one.

[1:19:25] I didn't know that. Yeah.

[1:19:26] So they're supposed to have it out, like at our festivals and whatnot

[1:19:31] for people to check out to last year in might have been two years ago.

[1:19:37] Oh, yeah.

[1:19:38] So you put on the virtual reality

[1:19:40] headset outside in the library field for the green.

[1:19:44] What is that?

[1:19:45] Oh, you need the it needs a headset to work, right?

[1:19:49] Right.

[1:19:49] And you would see Cooper, and then you would be asked,

[1:19:52] you know, like, where can you make changes and give different questions about.

[1:19:56] You'd be walking around a house and changing out the appliances for like

[1:20:01] a gas

[1:20:01] stove for something, their induction heating type of thing.

[1:20:05] That's as an example.

[1:20:07] So is there anything in the system that would keep that from happening?

[1:20:13] And maybe what I add to it.

[1:20:16] So the there is and we just took this

[1:20:20] to council a month or two ago is the grant policy.

[1:20:23] And so it kind of provided some guardrails as to what would be going to council.

[1:20:27] And I think if I were correctly one of the the

[1:20:31] emphasis on what would be taken or the pursuit of grants

[1:20:35] is the amount of staff time required to essentially to pursue.

[1:20:40] And so it's the short of what of what what kind of what it boils down to.

[1:20:44] So if it's going to be heavy staff time to to pursue this.

[1:20:49] The idea is it would go to council for approval.

[1:20:52] Now if it's nominal or it's essentially not much.

[1:20:57] I think that the pursuit of the grant would not require it to go to council.

[1:21:01] However, I think there are some thresholds that would require council

[1:21:04] to approve the grant and one of the other bits,

[1:21:09] and you'll see it as one of the findings is it ultimately would also require

[1:21:13] the city manager's approval or their designee on any grant.

[1:21:19] So can we maybe use those as case study.

[1:21:24] And so these are the grant in the past.

[1:21:28] And whether the new policy how would the new policy would apply for this?

[1:21:34] I think that would help us to understand

[1:21:39] how the new policy would work,

[1:21:42] maybe whether any adjustment is needed.

[1:21:47] One one more area.

[1:21:50] So the SV hopper, they and I don't know if this I don't

[1:21:53] recall it going to council, but there has been an application

[1:21:57] for two different kinds of grants to extend that.

[1:22:01] But I don't recall us having a discussion about it on the on the council agenda.

[1:22:06] And those are significant amounts of grants.

[1:22:08] And, you know, I'm pretty sure it's over $1 million.

[1:22:13] Then we can organize our, our, our comments here in

[1:22:18] I guess some of them are process related.

[1:22:21] And there's some recent development, I guess was the policy that would

[1:22:24] Jonathan's referring to.

[1:22:26] Is that part of your incorporated?

[1:22:28] Did you finish this study before that? Yes.

[1:22:31] So if you look, our very first finding was around policies and procedures,

[1:22:35] and I think that was an administrative policy,

[1:22:37] Jonathan, that you have been working on, is that correct?

[1:22:40] No, that one was a council council policy.

[1:22:43] So we we have not reviewed this like I mentioned,

[1:22:46] this, this report actually, you know, we finished our testing

[1:22:50] and the report was the draft was initially in October of last year.

[1:22:55] So it's been a while since we have worked on this area.

[1:22:59] What I want to say, we do have a follow up, you know,

[1:23:03] when we get to the next fiscal year, internal audit work plan

[1:23:07] for this type of thing, which is kind of what I would maybe into to the extent

[1:23:11] you've done a certain amount of work and there's a number of recommendations.

[1:23:15] And when I look at the city staff response, it's basically

[1:23:19] since this report was finished

[1:23:20] or the work was done, there's been a grants analyst been hired

[1:23:24] who presumably is doing all kinds of policy and implementation things.

[1:23:29] And that leads into this, I guess, proposal that we have

[1:23:33] in the next agenda item.

[1:23:34] So we're sort of

[1:23:36] what I'm trying to do is figure out how we can take the benefits

[1:23:40] of what we see in front of us, but then recognize we've got another item

[1:23:43] potentially where we could address some of the.

[1:23:46] Almost both of your questions in

[1:23:50] some sense, are like follow ons to the scoping of that follow on project.

[1:23:55] So sounds to so how do we.

[1:23:57] I don't know if you guys see where I'm going here,

[1:23:59] but we've got we can get rid of this item I don't want to say get rid of,

[1:24:02] but how does city city staff is responding saying basically there's a new person

[1:24:06] in all of these recommendations are being reevaluated.

[1:24:11] Is that correct?

[1:24:13] I feel somewhat I think that's the general

[1:24:16] or at least our position

[1:24:19] that the

[1:24:21] that the new grants analyst has addressed, or that there's a process in place

[1:24:25] that addresses most of these levels, think we could accept this item.

[1:24:29] And then on the next agenda item drew in more deeply

[1:24:33] as to what follow on items makes sense.

[1:24:36] I'm curious that this says it's an action

[1:24:39] item and six.

[1:24:43] It seems more informational, right?

[1:24:45] But I'm also wondering so this is going to go to council.

[1:24:49] So the staff report should have some mention

[1:24:53] about how this report was generated at this time.

[1:24:57] And the city's already been implementing the recommendation.

[1:25:00] So the things the original report.

[1:25:03] Yeah that's it's important.

[1:25:05] But we've made excise changes so that the council doesn't get confused by it.

[1:25:11] And then also include that grant policy

[1:25:13] to as a reminder that we had already done that.

[1:25:17] So maybe we should have an item that says what you just said as our

[1:25:24] we handle this sometimes through a staff report.

[1:25:26] And Jonathan could include that the committee

[1:25:28] discussed this report, received it and forward it to city council.

[1:25:32] But with the caveats that the mayor has just listed.

[1:25:36] Have a question for the consultant?

[1:25:40] Okay. Clarifying questions. We're still on those actually.

[1:25:42] And then I don't let me forget we got to go to the public.

[1:25:45] So from.

[1:25:46] So this report was down last year.

[1:25:49] And I do wonder

[1:25:53] how did you collect information to create this report.

[1:25:58] For example, those issues with grants were have observed.

[1:26:03] And it seems you are not aware of those.

[1:26:07] So I wonder what kind of process

[1:26:11] you had used to create this report.

[1:26:15] Maybe there are people

[1:26:18] you should have interviewed but you didn't show.

[1:26:24] Maybe the report should even be

[1:26:28] delayed so

[1:26:29] you can collect more complete information

[1:26:33] before making this recommendation.

[1:26:36] Do you want me to take a step up or do you want to?

[1:26:39] You can you can start and then I can okay, I can add my $0.02.

[1:26:43] I have two other examples of things didn't work before.

[1:26:47] So this the testing period was again at the beginning of fiscal year 2526.

[1:26:53] And that's what they tested. But since then

[1:26:56] or concurrently, there were some changes occurring within the city.

[1:27:00] One with the the with the hiring of the grant analyst.

[1:27:05] And so as the report was being generated, being

[1:27:10] essentially circulated within the city for review,

[1:27:15] which was delayed a bit due to staff turnover and the review process.

[1:27:19] So that's what delayed the report itself.

[1:27:22] And so it still retained the original testing period.

[1:27:25] But changes had already begun. Right.

[1:27:27] And that was part of the our response.

[1:27:30] You only tested

[1:27:33] any grants that's being applied

[1:27:36] for during those periods or being

[1:27:41] not necessarily applied but reviewed.

[1:27:43] Right.

[1:27:44] It could be a combination of grants that were in progress.

[1:27:48] Right.

[1:27:48] If we're like CDBG, that's a year round and continual grant.

[1:27:52] Right.

[1:27:53] And so as they're testing that

[1:27:56] we could be early on in the year, may or may not have a lot of invoices,

[1:28:01] but if it's a grant that's kind of

[1:28:03] crossing a specific time period, they could be testing that that way.

[1:28:07] So again, their testing period was a couple months, right?

[1:28:11] That they're only looking at one specific time.

[1:28:13] But there could be other things more different.

[1:28:16] And the report was generated based off of that testing window.

[1:28:20] So if there were things happened before that testing window

[1:28:25] and that we

[1:28:29] we need a policy recommendation

[1:28:32] for those grants, they cannot they are not included.

[1:28:36] So how can we include those in

[1:28:40] is it possible to revise the report to include.

[1:28:47] Things that we think could be improved on.

[1:28:50] And they have a revised report.

[1:28:53] So a couple of things I want to remind you.

[1:28:56] This report is not even from this past fiscal year.

[1:28:59] It was from the fiscal year before that.

[1:29:01] So really we're looking at an item that was from fiscal year 25.

[1:29:05] So I agree with Jonathan.

[1:29:08] This is a report and a, you know, a point of time.

[1:29:12] And we really need to move forward and think, you know,

[1:29:15] what is the future for the city?

[1:29:17] I think, you know,

[1:29:18] I do think that what your comments are valid, and I think

[1:29:21] that I would really lean into that next agenda item,

[1:29:25] which is talking about our internal audit plan for 27.

[1:29:29] And you can be specific in maybe that scope of work

[1:29:33] and saying, you know, these are specific.

[1:29:36] Not only do we want you to follow up on the findings of this,

[1:29:39] but there are specific other areas that council or this committee,

[1:29:44] you know, is concerned with that we would like to include in that scope

[1:29:48] and that be a new report for the next fiscal year.

[1:29:53] And I guess in

[1:29:53] the chime in on that, there is a description in this report

[1:29:57] that you're asking us to complete receive today

[1:30:03] on pages four and five that talks about your scope and methodology.

[1:30:07] So maybe that addresses some of the vice mayor comments,

[1:30:12] even though I agree that we should be looking at what's the current

[1:30:15] situation, what the current analyst and what do we expect would be helpful

[1:30:20] for city's internal controls or operations from a future perspective?

[1:30:25] So I'd suggest that we received this report and maybe leave it at that.

[1:30:30] And city council city staff can have do whatever because they're not forwarding

[1:30:34] at the city council necessarily as our action item and then dive

[1:30:38] right into the next item on our agenda, which will address maybe more deaths.

[1:30:43] What you're bringing up, Vice Mayor,

[1:30:45] I think it does say in the executive summary.

[1:30:52] That the internal control review took place

[1:30:56] between June and October 2025.

[1:31:00] That's a very short amount of time.

[1:31:03] So if your testing is only for those few months.

[1:31:08] So of course it's not going to capture

[1:31:13] the problems we have seen over the years and the

[1:31:16] you would not have captured things we need improve on.

[1:31:20] Right.

[1:31:21] So that actually so that's how long the project took place.

[1:31:25] So the scope of our project was for fiscal year 25.

[1:31:30] So the project only we worked on this project

[1:31:35] from June 25th through October of 2025.

[1:31:40] But the scope so what the grant management process

[1:31:44] that we looked with in the city was for fiscal year 25.

[1:31:48] So it was for a year

[1:31:51] or so before 2025.

[1:31:54] So it's one year, a snapshot of one year

[1:31:59] from July 2024

[1:32:02] to June 2025.

[1:32:06] That's correct.

[1:32:07] That's not clear from your executive summary.

[1:32:12] Okay.

[1:32:15] I would kind of suggest

[1:32:16] that we could form a subcommittee to talk about

[1:32:20] to test the grant concerns against the new policy,

[1:32:24] and what result would happen now

[1:32:27] if if those were being suggested or pursued,

[1:32:32] what would be different with a new policy

[1:32:35] and just do that as an offline project?

[1:32:39] So yeah.

[1:32:40] So I'd like to mention two other

[1:32:44] major grants that

[1:32:47] the city staff apply to.

[1:32:50] Maybe the subcommittee can consider.

[1:32:53] I don't want a country short because those are super ideas

[1:32:55] that really would fit better.

[1:32:57] Maybe in our work plan or in the next item.

[1:33:02] Seven both.

[1:33:03] Both of your comments, I think, are very relevant for those two items.

[1:33:07] Maybe a way to solve this.

[1:33:09] One is the read in the staff response to just about every one

[1:33:13] of the recommendations, based on

[1:33:17] what this period was covered, is basically

[1:33:20] there's been a grants manager hired that is now everything is superseded.

[1:33:26] So I hate to say it, but it's the time has progressed forward

[1:33:29] and we didn't get this report or it couldn't be finalized or whatever.

[1:33:32] So to some extent we could receive this report and highlight that management.

[1:33:38] Management's response is

[1:33:41] that there's all kinds of policy and personnel changes

[1:33:47] and that we as a committee.

[1:33:48] Then my response to that is, let's address that in item seven and eight,

[1:33:53] that your motion, because it's I don't know, get a motion necessarily.

[1:33:57] It's sort of clarifying the reception of the report.

[1:34:00] But we could yeah.

[1:34:01] If you want to make a motion so moved.

[1:34:03] Okay.

[1:34:04] Is there a second which would be me

[1:34:07] I knew motion so I can second pair of seconds.

[1:34:11] I would like to request a change though

[1:34:14] on the executive summary didn't make it clear.

[1:34:18] This is a review of only the fiscal

[1:34:21] year 2025, which is on

[1:34:26] from June from July 2024.

[1:34:30] It's not a review of all of the grants management.

[1:34:35] So if we can make that clear in the title of the report

[1:34:38] and then in the executive summary of the report, then I can accept it.

[1:34:43] Otherwise I think it's confusing.

[1:34:46] Vice mayor, it's in the first paragraph is actually a summary

[1:34:49] on the first page.

[1:34:53] It just says that the review took place

[1:34:58] during that time, but it didn't say the data

[1:35:01] they used for the review is for fiscal year 2025.

[1:35:07] They only look at the grants that's being processed

[1:35:10] or in progress during those times.

[1:35:13] Okay, so I think it's super clear, but.

[1:35:21] I didn't say a review of One Year of Rent.

[1:35:25] I think it's clear to because there's a lot of scope.

[1:35:28] And again, I really want to put this in the mirror.

[1:35:31] So I guess we

[1:35:35] we don't have any public comment.

[1:35:37] We skipped over that and went to a motion

[1:35:39] I just to get our little procedural thing going.

[1:35:42] We didn't skip anybody because there was no one who had raised their hands.

[1:35:45] So I think we have a motion and why don't we just vote on it and see where it goes?

[1:35:51] So all in favor of the motion chair?

[1:35:54] I'm sorry.

[1:35:55] May I the motion.

[1:35:56] And also I just wanted to clarify.

[1:36:00] So okay, let me just read what I.

[1:36:03] Yeah.

[1:36:04] To receive the grants management internal control review final report

[1:36:08] with the understanding that the management's

[1:36:10] response notes that subsequent policy, personnel

[1:36:14] and organizational changes have superseded many of the report's findings.

[1:36:19] And to address those changes further under item seven and eight,

[1:36:23] I think that reflects, Jonathan.

[1:36:25] You have a slight modification. Yes.

[1:36:27] And not just just seven. Correct.

[1:36:30] Okay.

[1:36:31] Okay.

[1:36:32] Mayor, is that reflective of what?

[1:36:34] Yeah, I think so.

[1:36:35] So is the is the committee making a recommendation

[1:36:39] to forward the report to council or is that automatic?

[1:36:42] Well, it's not automatic and it is in our recommended action.

[1:36:46] But we can always modify our action.

[1:36:47] But I'm happy to forward it based on this motion as a clarifying

[1:36:52] thing.

[1:36:53] So why don't we vote on the motion first and then address.

[1:36:57] Do you want that in the motion is what you suggest I guess.

[1:36:59] Well it's part of the recommended action is money clarity if you want to vote

[1:37:02] if you want to, and the to

[1:37:06] amend the motion to forward the report to city Council.

[1:37:09] Great.

[1:37:10] But I so second agree or whatever that's required.

[1:37:12] All right.

[1:37:13] All in favor of that is so nicely reread to us.

[1:37:16] I and he opposed oppose okay.

[1:37:20] And there's only three of us so okay.

[1:37:23] Very good.

[1:37:24] And I appreciate the patience and discussion on this that there's

[1:37:27] a lot of issues that we brought up.

[1:37:29] And I see that we're running a bit later than I anticipated.

[1:37:32] Can we.

[1:37:33] Is everybody available to maybe address seven.

[1:37:37] And I don't want you to have to come up third day.

[1:37:43] It's a city staff.

[1:37:45] Can we stay for a little bit longer while we go into item seven or.

[1:37:50] We don't need that.

[1:37:51] It's not like counselor.

[1:37:52] Yeah. Motion. Just keep going, okay? Okay.

[1:37:55] I still, I am sensitive to the clock and we can always defer that we have that

[1:37:59] I have that authority I guess.

[1:38:01] So let's move on to our item seven action item

[1:38:04] 20 2627 Internal Audit Work program review.

[1:38:08] And we'd like to receive that and forward to City Council as our action item.

[1:38:13] And over to Baker Tilly.

[1:38:16] Thank you.

[1:38:17] All right.

[1:38:17] This is very exciting talking about what we can do for the next fiscal year.

[1:38:21] So just a reminder of what we do at Baker Tilly.

[1:38:25] We serve as a designated internal auditor for the city.

[1:38:29] And we're really focusing on these areas risk, internal controls,

[1:38:34] efficiency and effectiveness, best practices and then compliance.

[1:38:38] Our work is always completed under the appropriate industry standards.

[1:38:43] So that IEA looking at government accounting standards as well as the AICPA.

[1:38:51] All right.

[1:38:51] So what what is the role of an internal auditor.

[1:38:55] I think this is always something really important to look at.

[1:38:58] You know, we are an independent function that really helps

[1:39:03] kind of look at the achievements and objectives of the city.

[1:39:06] And so if you look at this, this, you know,

[1:39:10] illustration, it's showing you how we have communication

[1:39:13] with both the governing bodies.

[1:39:15] So city council this audit committee here as well as management.

[1:39:20] And so it really shows that there is that third communication

[1:39:24] and then all the communication lines really making sure

[1:39:28] that we are separate from your external audit.

[1:39:31] And so, you know, you see that at the very right hand

[1:39:35] side of this illustration showing that, you know,

[1:39:38] your external assurance providers.

[1:39:40] So for your external auditor,

[1:39:41] the punk group, they are separate from this, this action.

[1:39:47] So going into our internal audit program,

[1:39:50] how do we come up with an internal audit program to present to you all today?

[1:39:55] There's many components.

[1:39:57] You know, the enterprise risk assessment, which we do, you know,

[1:40:01] every 3 to 5 years getting input

[1:40:05] from employees and residents, as well as performance metrics for cities.

[1:40:10] We also look at general opportunities.

[1:40:12] So risk controls compliance and performance.

[1:40:16] And then last but not least that tracking and reporting.

[1:40:19] So that validation report that we talked about earlier today

[1:40:22] looking at those findings and recommendations, the Fraud

[1:40:26] and Abuse hotline, that would be another thing

[1:40:29] looking at implementation that the city is,

[1:40:32] you know, has been doing as well as that validation that we talked about.

[1:40:36] So that is those inputs really make up

[1:40:40] our internal audit program and what we present to you all.

[1:40:45] So this is just another illustration kind of talking.

[1:40:48] Just again what we talked about just now looking at the internal audit program

[1:40:53] and really just how it umbrellas all the different

[1:40:57] components as well as city functions.

[1:40:59] So we're not just looking at the finance department.

[1:41:03] We look at other areas, other departments within the city.

[1:41:06] So a really holistic approach just to kind of highlight what has the city done.

[1:41:13] You know, we've had two enterprise risk assessments.

[1:41:16] So both in 2021 and 2024.

[1:41:20] We are currently in a citywide

[1:41:23] internal control review that we talked about earlier today.

[1:41:26] And we've also had some performance.

[1:41:29] So looking at the efficiency and effectiveness.

[1:41:31] So those performance audits we've had five over the years policies reviewed.

[1:41:38] We have looked at over 147 policies to remind you,

[1:41:43] we did a city council review this past fiscal year, as well as we are

[1:41:48] looking at the investment cash flow policy also with the city.

[1:41:53] You all know this.

[1:41:54] There is, you know, some recommendations delivered.

[1:41:57] I look at this number and I can tell you it is incorrect because we know now

[1:42:01] that 79 also includes

[1:42:04] the external audit as well as the civil grand jury reports.

[1:42:09] So that is not correct.

[1:42:10] But we have delivered, you know, many recommendations.

[1:42:16] And there have been 39 ethics hotline reports received over the years.

[1:42:22] And, you know, in fiscal year 26, we were able to validate

[1:42:27] seven recommendations.

[1:42:29] So kind of an idea of what we do with our time.

[1:42:36] This also just kind of shows you the different departments.

[1:42:38] And like I mentioned, it's not just looking

[1:42:40] at the finance department or the administrative services as a whole,

[1:42:45] but really we have dabbled in public works, we've done enterprise projects.

[1:42:51] So looking at, you know, the enterprise risk assessments, internal control review,

[1:42:54] city manager's office and public works over

[1:42:57] our time.

[1:43:01] Next are right.

[1:43:03] So this is the the big discussion item.

[1:43:08] So these are the potential projects

[1:43:11] that we have identified for this fiscal year.

[1:43:16] What I will say is that

[1:43:20] we have $120,000 currently budgeted in this fiscal year.

[1:43:26] We are bringing forth right now $230,000 of projects.

[1:43:30] So obviously there's some pick and choose or, you know,

[1:43:34] if there's other other potential products or projects that this committee

[1:43:38] wants to bring up or identify for management.

[1:43:42] That's obviously open as well.

[1:43:45] So first one code enforcement.

[1:43:47] So the 311 response time review.

[1:43:49] So evaluating the city's code enforcement complaint response process,

[1:43:54] really focusing on response times staffing availability and service delivery

[1:44:00] a property tax review.

[1:44:02] So inventory property tax revenues and compared to relevant legislation

[1:44:07] and agreements to identify opportunities to improve the understanding

[1:44:11] of those distributions, county service delivery and intergovernmental funding.

[1:44:18] So there has been also talks about the investment cash flow review.

[1:44:22] So you know that this past the school year we looked at the actual policy.

[1:44:26] So taking that policy and looking at the current processes

[1:44:30] that the city has and making sure that those align with the policy,

[1:44:34] making sure that it's, you know, cohesive and fluid in efficiency study.

[1:44:41] So evaluating the efficiency

[1:44:43] and effectiveness of the city's permitting process, really identifying

[1:44:47] opportunities to streamline workflows, reduce

[1:44:50] process times, customer service

[1:44:53] and overall service delivery that grant management follow up.

[1:44:58] Something that we kind of talked about.

[1:44:59] So this you know, this one we had really scoped around looking

[1:45:04] at those individual recommendations from that report and really digging deeper

[1:45:08] into making sure that the city had completed those recommendations.

[1:45:12] You know, obviously, room for suggestions by vice mayor about potential,

[1:45:18] you know, other opportunities for that scope, the recruitment and retention study

[1:45:23] that's really assessing the city's recruitment and retention practices,

[1:45:26] it really identifying opportunities to improve hiring efficiency,

[1:45:31] the and really the city's ability to attract and retain

[1:45:35] those qualified employees and making sure that there's long

[1:45:39] term organizational stability for the city.

[1:45:43] The last

[1:45:44] two, that's the program management and recommendation validations.

[1:45:48] Those two kind of go hand in hand with each other and or really what we do

[1:45:53] on a quarterly basis with you all, as well as looking at the fraud

[1:45:58] and abuse hotline and validating those recommendations

[1:46:01] when it comes time.

[1:46:06] Thank you

[1:46:06] for the introduction to the report.

[1:46:10] And we we've all had well, we've all reflected on these.

[1:46:14] Comet.

[1:46:15] My introductory introductory comments here are.

[1:46:20] Internal audit is a key function that the city hasn't

[1:46:23] had prior to six or so years ago.

[1:46:27] I think it's a fundamental element, I think within

[1:46:32] a good, good practice for cities.

[1:46:35] And it was a response in part to the deportation and embezzlement

[1:46:40] that occurred.

[1:46:41] And so it in my memory

[1:46:45] and very happy to see that there is an internal audit function.

[1:46:48] So it's not limited only to the financial elements

[1:46:51] that Baker Tilly has pointed out here.

[1:46:54] It's also can be operational.

[1:46:56] So that's very exciting as well.

[1:46:59] My clarifying question after my introduction is how much input

[1:47:04] did were you taking from prior audit committee discussions

[1:47:10] over the past year or and or city staff input?

[1:47:15] That's a great question and definitely looked at,

[1:47:19] you know, what we have talked about reflected

[1:47:21] what we've talked about over the past year here at the audit committee.

[1:47:25] We also met with Jonathan and his team, as well

[1:47:29] as the city manager's team as well, to kind of talk about those inputs.

[1:47:33] But, you know, thinking about the overarching

[1:47:36] looking at the enterprise risk assessment, that's a huge tool that our team uses to

[1:47:40] help utilize what would be really relevant,

[1:47:42] what are potentially high risk areas that we had identified,

[1:47:46] you know, prior years that the city might want to look into

[1:47:51] their clarifying questions.

[1:47:54] Question.

[1:47:55] Well, so trying to prioritize this list

[1:48:01] because this this is not this is put in order of the cost almost.

[1:48:06] Or were you trying to share this as a priority or how did it end up?

[1:48:10] You know, I would say it's I don't think that there's any priority.

[1:48:16] It was just kind of a list of projects.

[1:48:18] And I don't think we really even have a it's not any order

[1:48:22] other than the last two are kind of things that we

[1:48:26] we have to have program management so that one and then the validation

[1:48:30] or recommendation validation is something that the committee in the city

[1:48:34] has always encouraged.

[1:48:36] Okay. And we're budgeted at 120,000.

[1:48:39] But we can go we can go higher than that.

[1:48:42] And then council can knock some things off.

[1:48:44] I'm wondering with the investment cash flow review,

[1:48:48] if staff feels comfortable with the cash flow policy that we have right now.

[1:48:53] Because I saw that you did like you moved the money to get it down

[1:48:56] to the 5 million in that operating account and you're using it.

[1:49:01] So to me, it's this is a problem that you are

[1:49:05] have have kind of for the present time.

[1:49:10] It's kind of solved in my opinion.

[1:49:11] So I would say no to that one.

[1:49:14] Do you have a thought on that.

[1:49:15] Is that something.

[1:49:16] But or for this list, are there things that you strongly

[1:49:20] interested in because I can come up with for that, like permitting 311

[1:49:25] property tax and recruitment that that I would be interested in.

[1:49:30] I'm not sure if the recruitment part is, is particularly necessary

[1:49:36] at this particular time, because we've just had a lot of

[1:49:41] a number of hires, but the permitting,

[1:49:44] we hear a lot about that, a lot about three, one one.

[1:49:48] And then the property tax review,

[1:49:52] I can I can share

[1:49:55] what this is about.

[1:50:00] Which is

[1:50:01] because it has to go to our sheriff's contract.

[1:50:05] We're well.

[1:50:08] But it goes into the tariffs contract and trying to figure out

[1:50:13] the actual numbers that are coming to the city, because I'm able to estimate.

[1:50:18] But I need help with some of these because the property tax embed

[1:50:22] some other taxes in it and sales

[1:50:24] tax, it's not super clear where it's all getting distributed.

[1:50:28] And and I don't want to be when we're doing our negotiations saying falsehoods.

[1:50:35] The county.

[1:50:37] But I am saying that they get over 100 million from Cupertino each year.

[1:50:42] And that's something that we need to have.

[1:50:44] It can't be. I'm generating this number.

[1:50:47] That's which is why I, I would definitely support

[1:50:50] looking at the property tax distribution item,

[1:50:54] but were there some favorites in in the list?

[1:50:58] Yeah, I will say that the recruitment and retention study, that was something

[1:51:02] that the city manager's office or city manager had requested current.

[1:51:07] Okay.

[1:51:07] And I think three three, one one and permitting were also pretty

[1:51:12] strong contenders is so I,

[1:51:18] I wonder whether for property tax review.

[1:51:27] Is this a corporate

[1:51:29] for the Baker Tilly to do this study or.

[1:51:33] It's something really our

[1:51:37] lobbyist lobbyist has been doing that study. No.

[1:51:42] So they don't.

[1:51:43] So the Baker Tilly has this expertise

[1:51:47] study property tax.

[1:51:50] So Colleen I'm going to lean on you on this one.

[1:51:53] Sure.

[1:51:54] So we do have folks in our public sector

[1:51:57] financial operations group who can provide advisory on this.

[1:52:01] I would say from an internal audit perspective.

[1:52:04] We actually talked about this with the chair last week.

[1:52:07] It's right on the line because it deals with policy

[1:52:10] a little bit more than it deals with maybe

[1:52:14] operations or the type of work that internal audit typically does.

[1:52:18] And so while we do have the capability to do the work,

[1:52:22] we want to be pretty careful,

[1:52:23] as your internal auditor about how the information is used.

[1:52:27] And we also need to be a little bit thoughtful.

[1:52:31] The county of Santa Clara is not currently a Baker Tilly client,

[1:52:35] but the housing Authority, I believe is.

[1:52:38] So we want to be thoughtful about independence as well.

[1:52:40] So we would want to scope this really carefully with you

[1:52:43] should you, the committee choose to do this.

[1:52:47] And I understand, mayor, that this is a priority of yours.

[1:52:49] So if we did choose to move forward, we'd want to sit down and

[1:52:53] scope out in detail with you so that we both feel comfortable with that.

[1:52:57] I think that's maybe a clarifying question for me

[1:53:00] is I look at these as high level priority items.

[1:53:04] Once we we get the list agreed upon here as a committee, that we

[1:53:10] then are sending back to city staff and internal audit to scope more,

[1:53:14] as well as forwarding up to city council for the budgeting look.

[1:53:19] So I think there's a lot of behind the scenes scoping.

[1:53:22] We can call it scoping, I guess to the extent

[1:53:26] any committee member maybe has an interest in that, we could

[1:53:30] either set up a subcommittee which can consist of that one

[1:53:33] committee member, or we can have up to two of us depending,

[1:53:37] or I take direction from city staff to since

[1:53:42] there's a number of projects here and we can't, I don't think internal audit

[1:53:46] can do many of these without information and support from the city staff.

[1:53:50] So to the extent we're scoping things, I would presume city staff's got a big

[1:53:55] input into

[1:53:56] what can be done and when can it be done and who's doing it and things like that.

[1:54:01] So how do you suggest maybe this unfold and remind us

[1:54:05] how this is unfolded in prior years? So

[1:54:09] the the top

[1:54:11] is from what the mayor had pointed out as her top projects.

[1:54:16] It looks like it's distributed across the city,

[1:54:19] that it's not heavy on one particular department.

[1:54:23] Right? Code enforcement

[1:54:25] being a seed, recruitments probably going to be more along.

[1:54:29] Community resources

[1:54:31] permitting kind of crosses both seed and public work.

[1:54:35] So there might be a little more of a challenge there.

[1:54:38] But I'm sure Pauline and Chelsea would be able to work around

[1:54:44] scheduling to ensure that there's not too much overlap there, right?

[1:54:49] Yeah. Okay.

[1:54:49] I don't want to speak for you guys, but yeah, so there would be

[1:54:52] less of a draw on that, that one particular department.

[1:54:56] And then if the the committee wanted to pursue one of the others

[1:55:02] is probably closer to the finance,

[1:55:04] whether that's the property tax or the grants management

[1:55:08] or even the cash flow of the account, the committee wanted to pursue that one.

[1:55:12] So as far as a from a staff

[1:55:17] workload, I don't think that's as much of an issue.

[1:55:20] Again, at the end of the day, if you pursue most of these or just even

[1:55:26] those top three, you are looking to have a budget adjustment needed, right?

[1:55:32] Because I think with those top three plus the recommended validations,

[1:55:36] we're looking at about 180 I believe.

[1:55:39] So we would have request a council to bring an additional 60 plus

[1:55:43] if you wanted to add

[1:55:44] either one or the other three, which would be property tax permitting,

[1:55:47] I'm sorry, property tax and cash flow review or the grant management follow up.

[1:55:52] If there was a another item that you wanted, a

[1:55:56] follow up or additional item, whether that's I think.

[1:56:00] Chair.

[1:56:03] You know we we discussed possibly the

[1:56:06] a a report of sorts to be provided

[1:56:11] in terms of the fund balance or appropriate fund balance.

[1:56:14] Conversations with Chelsea and Colleen have been more along the lines.

[1:56:19] It's probably going to be more of a management report

[1:56:22] rather than a full blown project on the previous.

[1:56:29] No. And so that was just

[1:56:33] I'm sorry, that's not on here, because it's not really.

[1:56:35] From conversations with Colleen and Chelsea, it's not so much of a project.

[1:56:40] It's more it would be closely to a report to kind of, hey, this is best practice,

[1:56:45] this portfolio and whatnot, kind of something along the lines.

[1:56:48] And there would be obviously there would be some sort of calling.

[1:56:54] Correct me if I'm wrong.

[1:56:55] It's more of a some research kind of best practice.

[1:56:58] Not so much.

[1:56:59] What is the city doing and how should a city.

[1:57:01] Because a lot of that's really policy that's driving that.

[1:57:04] Yeah. And just a follow up.

[1:57:05] We would most of our recommendations,

[1:57:07] all of our recommendations are going to come be based off of the guidance.

[1:57:11] So that's why we really said, you know looking at the guidance

[1:57:16] we could put that in a report.

[1:57:17] But is that really beneficial in regard

[1:57:21] to the the study that's not on this list.

[1:57:24] Correct. Verify that.

[1:57:25] So I think we're still trying to get clarifying questions.

[1:57:28] So you have a question vice Mayor.

[1:57:30] So the other question is regarding

[1:57:34] the permitting efficiency study. So

[1:57:39] I think

[1:57:40] one of the work programs this year has been

[1:57:45] permitting streamlining, and the Planning Commission is already working on it

[1:57:51] towards the end of their review and

[1:57:55] going to be streamlining.

[1:57:57] So I assume they already done some study.

[1:58:01] If they are doing the policy change

[1:58:04] modification on that. So

[1:58:09] so I'm not sure.

[1:58:13] So this permitting efficiency

[1:58:15] are you going to look at in 2026 year data.

[1:58:20] And then but then that's we they

[1:58:24] probably we are probably going to already change things next year.

[1:58:29] So how is I think this is something we really need

[1:58:34] maybe last year.

[1:58:36] So they sure about the timing of that.

[1:58:40] Okay.

[1:58:40] Let's see the city staff have a comment on I guess you're more attuned.

[1:58:45] This is really a scoping thing.

[1:58:46] Is this something you already worked with, the planning about the timing of.

[1:58:51] Yeah, no.

[1:58:53] The permitting.

[1:58:54] It's actually that your top contenders actually came from city manager's office,

[1:58:58] which was the code enforcement response time review

[1:59:02] along with permitting efficiency, setting the recruitment and retention study.

[1:59:06] That was the city manager's office recommendations.

[1:59:11] And so whether that has kind of shifted

[1:59:14] a little bit due to the Planning Commission involvement.

[1:59:20] Probably at the

[1:59:20] end of the day that I'm not sure.

[1:59:23] Well, in terms of testing and what period it's going to cover.

[1:59:28] Look to Colleen.

[1:59:29] Yeah, we I mean, we can we can work with the city on that.

[1:59:32] So, you know, depending on the scheduling of when we do that project,

[1:59:36] that's something that we always work with city management on, as well

[1:59:40] as really defining the scope and timing, the time frame that we're looking into.

[1:59:46] You know that those are all really refined.

[1:59:49] Once we get an idea of what projects to be working on.

[1:59:53] So in this situation, let's say there are some adjustments to the workflow.

[1:59:57] And that occurs in the first half of the fiscal year.

[2:00:00] Maybe Baker Tilly can do the review in the second half

[2:00:03] to see how that's being implemented.

[2:00:07] If that that's direction.

[2:00:08] Right. Question.

[2:00:11] It does seem like the recommendation

[2:00:15] validations is something that we do want to continue.

[2:00:19] Like we have to ask to have that.

[2:00:21] Yeah. Go on.

[2:00:22] And what is exactly this the program management again I'm sorry.

[2:00:26] So that's, you know, having me here right now, doing our monthly updates

[2:00:32] with Jonathan and team to talk about project status,

[2:00:35] reviewing the fraud and abuse hotline, making sure, monitoring that,

[2:00:39] creating these reports, that sort of thing.

[2:00:42] That seems almost like the recommendation validation

[2:00:46] like like you need to continue that.

[2:00:50] Right. Those two.

[2:00:51] And that's so typically those two are we almost combined.

[2:00:55] You know we've done in prior years.

[2:00:56] And just those are kind of the the ones that we have to do okay.

[2:01:01] It's like a base. Yes.

[2:01:03] So we would end up if you went with recruitment three on one

[2:01:06] and permitting you're at 140 and then so 170 out of the 270.

[2:01:14] So you could still send it to council with that even though it's above the 120.

[2:01:20] I don't know if property tax could be done by a combination

[2:01:25] of HDL and city staff.

[2:01:27] And Jason,

[2:01:30] you know, and how perfect do those numbers need to be in order to advocate?

[2:01:34] So for Colleen's question about what the numbers are going to be used for,

[2:01:38] it'll be used for advocacy for the city.

[2:01:43] So we have this disparity between the amount of property

[2:01:46] tax our city gets versus other cities.

[2:01:50] We're much lower for the property tax that we get back.

[2:01:52] And that's really the the crux of the matter is to

[2:01:57] to see what we can do to advocate for the city moving forward long term

[2:02:02] through some sort of legislative change in Sacramento, if at all possible, or.

[2:02:10] If there's anything we can do about that.

[2:02:12] So that's why the numbers need to be defensible.

[2:02:16] But I'm not sure if Baker Tilly's the right

[2:02:22] entity to do that.

[2:02:24] And if you feel comfortable knowing what we're going to be using the numbers for,

[2:02:31] I have some thoughts.

[2:02:33] And I first

[2:02:36] and foremost, you're reliant on county data, right?

[2:02:40] The county is the ultimate tax collector.

[2:02:43] And so you will be relying on county data for all of this analysis

[2:02:47] and what is available to you.

[2:02:48] And ideally everything is available publicly.

[2:02:52] But the reliance in cooperation with

[2:02:55] the county is going to be really important through this process as well.

[2:02:59] It may

[2:03:01] it may be worthwhile for you all to consider who

[2:03:03] you would like to be involved in that just from that perspective,

[2:03:07] because your relationship with the county is really important, right?

[2:03:10] It's not limited to just this, but you have to work together on many items.

[2:03:14] So I would recommend talking maybe with the city manager

[2:03:17] and with the finance director a little bit more about how you'd like to go

[2:03:22] about the work before you engage someone to to do it.

[2:03:28] We certainly can do that analysis in our professional standards,

[2:03:32] and we're not allowed to advocate for our clients.

[2:03:34] But we can make your recommendations or we can provide data.

[2:03:39] Okay.

[2:03:42] So my question is what's most useful here?

[2:03:45] This is both for the committee and staff and internal auditors.

[2:03:49] We all of these projects in some sense, we don't have a budget constraint

[2:03:54] because we can, as the mayor indicated, and all of these up and say, you know,

[2:04:00] if you think of some more, add those to or

[2:04:04] we could try to delete some of these or

[2:04:08] some other hybrid approach.

[2:04:10] So how do we make the rest of our meaning of fishing here?

[2:04:13] I know we had a great discussion on grant management follow up, and there's

[2:04:16] probably lots of follow up items that we could specify in the scoping.

[2:04:21] And vice mayor had some really good comments that we don't want to forget that

[2:04:25] she had them, but I'm not sure if this is the

[2:04:28] maybe we if we said we wanted to move forward with grant management follow up,

[2:04:32] then we need some more input and city staff would assemble that scoping

[2:04:35] and maybe solicit the vice mayor's comments.

[2:04:38] I'm just talking out loud here.

[2:04:39] I'm trying to figure a way to move forward with this.

[2:04:42] Do we really want to delete any of these items?

[2:04:44] Is there an app that's one way to go about it? I'm not.

[2:04:47] I don't have an appetite to delete any of them.

[2:04:49] Since I've removed budget constraint and the personnel constraint, you could.

[2:04:55] Thoughts, right.

[2:04:55] You could prioritize the only one that I could see potentially getting removed

[2:05:00] to see cash flow review investment and cash flow review at this time.

[2:05:05] But if by investment we mean talking about reserves,

[2:05:10] if that's if that could be assumed to be embedded in that item, then maybe

[2:05:15] add that word into the project description to get the best practices on reserves.

[2:05:22] Because I have been wanting to hear that.

[2:05:26] So so that was the only one that I could remove.

[2:05:29] But if you add in the reserves even more than I really want it.

[2:05:33] Yeah.

[2:05:34] And then you could, we could

[2:05:37] prioritize, but also like, like recommended

[2:05:40] validations and program management.

[2:05:42] Seems like that has to move forward.

[2:05:44] So I would put that on the top of the list

[2:05:47] as these are these two were deemed necessary.

[2:05:51] And then I and then we could

[2:05:54] prioritize recruitment 311 or permitting

[2:05:58] and just give a prioritized list to the council.

[2:06:02] And and they can discuss it with the entire list though available.

[2:06:07] Sure. I like that idea. Yeah.

[2:06:08] So before we go too much into talking about that, we're still showing.

[2:06:13] Why don't we just.

[2:06:14] Are there any comments from the public?

[2:06:18] Didn't hear I see.

[2:06:20] No, no probably or and we have great.

[2:06:23] So they come late. So

[2:06:26] yeah sure.

[2:06:27] Now we can maybe move a motion to if you want.

[2:06:30] So the recording of grant management follow up.

[2:06:34] It says follow up on outstanding recommendations.

[2:06:39] Assess how the city has made so.

[2:06:43] But so here you are referring to the grants management final report.

[2:06:49] The recommendations made their correct.

[2:06:52] So based on the one year review right.

[2:06:56] There is a lot of really great recommendations.

[2:07:00] They're already on.

[2:07:04] Right.

[2:07:04] And so you were saying

[2:07:05] does this project involve follow up on those recommendations.

[2:07:08] Does that.

[2:07:10] So that project will be working

[2:07:15] with the city staff to implement those recommendations.

[2:07:20] That's in that report.

[2:07:21] Right.

[2:07:22] So doing it really doesn't mean the council has to approve

[2:07:27] those recommendations rather than just receive the report,

[2:07:31] because those recommendations, I think some of them are

[2:07:35] pretty involved in terms of implementation and staff.

[2:07:41] The report

[2:07:45] will be forwarded to council and believe council's

[2:07:49] action is just to receive the report,

[2:07:53] as that's how it's been in the past.

[2:07:55] Okay.

[2:07:56] But then

[2:07:59] so the staff will decide, I guess, some priority

[2:08:04] on what the recommendation is to implement and how.

[2:08:09] Maybe if I could outline how follow up on that,

[2:08:12] maybe all the recommendations in that report

[2:08:14] would go into the equivalent of the 79 number that we saw.

[2:08:18] And then staff will talk with internal audit,

[2:08:20] and some of the things will go away because of the new

[2:08:25] grant management analyst

[2:08:26] that's been brought on, the new policy that's apparently out there.

[2:08:29] And then the internal audit would evaluate

[2:08:31] whether those two facts are actually true, and then they would put it

[2:08:34] in the resolution column.

[2:08:36] Is that how you would envision it?

[2:08:39] That is one way.

[2:08:40] Yes, absolutely.

[2:08:42] You know, I know Vice Mayor, you had other areas that you wanted to look into.

[2:08:47] So that's I mean, the these are potential,

[2:08:50] you know, obviously we can mold them to what is most beneficial for the city

[2:08:56] and what management thinks they can take on.

[2:09:01] Does that help?

[2:09:03] Yeah.

[2:09:04] So I guess go back to what we talked about

[2:09:09] some earlier grants that

[2:09:12] we had concerns on.

[2:09:16] So that may.

[2:09:20] Require some case study on

[2:09:24] how they those come about.

[2:09:26] One example is the augmented reality app.

[2:09:29] And I think another example is the city.

[2:09:33] We received a grant

[2:09:36] to redevelop the heart of the city plan, which the council never requested,

[2:09:42] but the city got almost $500,000

[2:09:46] grant, I think 450. And.

[2:09:52] By the same grant

[2:09:54] we could have applied for other things it could have gotten approved on.

[2:09:59] Then at that time, the council didn't

[2:10:02] see the need to redo the heart of the city plan,

[2:10:07] so eventually didn't

[2:10:11] didn't receive, didn't, I think, accept the grant.

[2:10:15] So that's a wasted effort because there wasn't a

[2:10:20] it wasn't synchronized with the Council biology at that time.

[2:10:25] And and another example is

[2:10:30] the ATP active transportation plan

[2:10:32] that grants for we were being presented.

[2:10:36] All this project is funded

[2:10:39] by this particular grant.

[2:10:43] Therefore we have to move forward with the project.

[2:10:48] Otherwise we will lose the great.

[2:10:50] It's always been like that, right?

[2:10:51] The other one was also we already got the grant.

[2:10:54] You have to approve the project.

[2:10:56] So the ATP, we kind of we move forward with that.

[2:11:01] But the same type of grant could also be applied to other

[2:11:09] project in the city.

[2:11:11] It doesn't have to be used for this particular project.

[2:11:15] So this has been a way

[2:11:18] that the grant approval is driving

[2:11:22] council priority rather than the other way around.

[2:11:27] I'm, you know, one recommendation I might make if

[2:11:30] if the committee is interested in that project.

[2:11:33] Sounds like, you know, with this new policy that has been

[2:11:37] developed and implemented, we could take a look at that policy

[2:11:42] and test it against certain grants to make sure that the process and,

[2:11:47] you know, all the way to council approval is is done appropriately.

[2:11:53] And we can see the process laid out against this new policy to make sure that,

[2:11:59] you know, these instances that you're you're talking about.

[2:12:02] Don't happen again.

[2:12:04] Or is there something that could slip through the cracks?

[2:12:06] Yeah.

[2:12:07] If we can have some case studies, this case is

[2:12:11] the new process would have handled this way.

[2:12:14] That would be helpful.

[2:12:16] And another example is

[2:12:20] the BMR grant that went.

[2:12:23] This is actually BMR fees.

[2:12:25] So this is not great.

[2:12:27] I'm not sure where it's applied but the BMI fees

[2:12:31] has been used of to pay for legal fees.

[2:12:37] That's not related exactly to below market rate

[2:12:41] and for newspaper subscription.

[2:12:44] And the public has brought this up to us.

[2:12:48] So. This

[2:12:52] is probably not Grant.

[2:12:55] But then it's a.

[2:12:57] Way how how we use

[2:13:01] different funds for different function.

[2:13:05] I think another example was I think we had we had

[2:13:10] there was some issue with a hot grant that we somehow did not report properly.

[2:13:16] That was right.

[2:13:18] That was resolved.

[2:13:20] But then

[2:13:21] with the current process, prevent us from

[2:13:26] making the same mistake again.

[2:13:28] So maybe staff has some comments you bring up.

[2:13:33] So we recently had a special revenue fund project,

[2:13:38] and that addressed the concerns you had with the BMR,

[2:13:42] which the new process has been essentially a lot of it ultimately was staffing.

[2:13:47] Training and whatnot.

[2:13:52] But yeah, so that one has been put to rest.

[2:13:55] We have a implemented a process to address that, that that issue,

[2:14:02] basically administrative overhead

[2:14:03] is going to getting paid for from the general fund.

[2:14:07] So BMR is just going towards building

[2:14:11] BMR rather than having all this other

[2:14:14] administrative stuff pulling from that.

[2:14:17] There's been a lot more restrictions and even director oversight

[2:14:23] of that specific fund to ensure that nothing slips

[2:14:26] between the cracks, that it's more what we're allowing to or what

[2:14:31] expenses are funneling through into that fund is are actually more restricted.

[2:14:36] Although the the handbook is

[2:14:39] could be more inclusive administratively.

[2:14:43] We've restricted what actually goes to that. Okay.

[2:14:46] So I think the hot green is probably related to CDBG grant.

[2:14:50] Correct.

[2:14:50] And so that will also go through

[2:14:54] the same process or the different part that I believe it's a separate process

[2:14:59] because it's kind of different rules apply to CDBG.

[2:15:03] However it is managed by the same individuals.

[2:15:07] So and Nikki.

[2:15:11] He's quite knowledgeable with CDBG.

[2:15:14] And so I'm quite.

[2:15:18] Confident in his his abilities to ensure that the expenses

[2:15:21] that are allocated to that fund are appropriate.

[2:15:26] Yes. There.

[2:15:27] Thank you.

[2:15:28] So I did run this through Claude

[2:15:32] and asked Claude to prioritize the list

[2:15:37] in order of importance.

[2:15:38] And they did it based on fiduciary risk, financial materiality, how directly

[2:15:44] each ties to active city priorities and came up with the investment cash flow

[2:15:49] first to last investment cash flow review for 35, they said.

[2:15:53] Highest fiduciary risk category safeguarding public funds.

[2:15:57] This is the kind of audit that protects against fraud, mismanagement, exposure

[2:16:01] and is often treated as core recurring due diligence.

[2:16:04] Number two, and I would argue who should do this?

[2:16:07] But it was the property tax review directly

[2:16:10] complements your ongoing EB eight allocation.

[2:16:14] US and BLS swap work this audit could formalize

[2:16:17] and validate the analysis

[2:16:19] you're already doing informally and has real revenue implications.

[2:16:23] I don't think they're overstating that, but three permitting efficiency study

[2:16:27] highest fee

[2:16:27] but permitting delays have direct economic development and revenue consequences.

[2:16:31] Developer relations, fee capture, staff time, high visibility

[2:16:35] and high potential return on investment for recruitment and retention.

[2:16:39] Study 45,000 work workforce risk affects every other city function.

[2:16:44] Turnover and vacancy costs compound over time.

[2:16:47] This is foundational to organizational capacity.

[2:16:50] Then 311 response time review important for service

[2:16:54] delivery and public trust, but lower financial risk than the above.

[2:16:59] Grant management follow up compliance driven grantor requirements

[2:17:03] clawback risks but scoped as a follow up rather than a new risk area.

[2:17:07] And then the last two were the program management and validations.

[2:17:10] But they said program management necessary overhead to keep the audit

[2:17:14] function running.

[2:17:15] Recommended validation lowest cost

[2:17:18] largely administrative tracking of prior findings important for accountability.

[2:17:23] So in mind

[2:17:25] AI like cloth tend to give you a recommendation

[2:17:29] based on your past questions, which is why?

[2:17:33] Why? Yeah, those are on top.

[2:17:36] So it's.

[2:17:36] Oh but I haven't asked about the other one.

[2:17:38] These other things are all new, but I think I know it tend to bias

[2:17:43] based on what they know about you

[2:17:46] does that to me, but of my own accord.

[2:17:50] I went into the net property tax 311 and permitting

[2:17:54] and then add Rec validation and program that create a new account

[2:17:58] and ask again, yeah, we'll have a recommendation.

[2:18:03] I think we can also look at process.

[2:18:05] Or there's one element of process.

[2:18:07] We'd be here a lot later tonight if we hadn't had a tracking

[2:18:11] of our comments over the past year in our various meetings.

[2:18:14] So it's not that it's just this meeting that we're talking about.

[2:18:17] There's there's other projects that got excluded.

[2:18:19] There's there's, you know, we've settled on this, this list.

[2:18:22] So there's still the scoping element for each one of them.

[2:18:25] I think maybe we might want to make a note for the following year

[2:18:29] that whenever we get to the next item, which we won't probably tonight,

[2:18:33] but the the work plan that we have, that's when we've often said, well, wouldn't it

[2:18:37] be good if we could do this or that?

[2:18:39] And I know you've raised a few of those over the past year,

[2:18:42] so I'm very happy that we're at this stage.

[2:18:44] I think we're at the point where we could maybe keep the I don't hear anyone

[2:18:48] really having an appetite to remove items on here,

[2:18:51] but maybe the priority of them is something in doubt.

[2:18:54] We could maybe get consensus on that.

[2:18:57] I'm not even sure that's helpful, though.

[2:18:59] The city council is going to probably want to come fresh at this list

[2:19:03] if we forward it, and.

[2:19:05] But you two are both on the council.

[2:19:08] Is it helpful for us to come up with a priority in some way?

[2:19:12] And then does that have weight with the city council?

[2:19:16] I mean, the two of you would then well supported, I suppose.

[2:19:20] Well, you have two that are automatic, so you only have six to prioritize.

[2:19:24] Property tax review gets a question mark for who's best to do that.

[2:19:30] So you could remove it or just put it to the side and say

[2:19:34] this, this one, we're not sure how best to handle it.

[2:19:37] Well, I think we can keep it and then say city staff and internal audit.

[2:19:41] And of course, any other people that have input, like the mayor

[2:19:45] would then come up

[2:19:46] with a little bit more scoping before it would go to city council.

[2:19:49] I would think some more work on where I see us having our value

[2:19:54] here is saying we could list these items, all of them right now,

[2:19:58] for example, and then say the top five from our perspective, our

[2:20:03] top four.

[2:20:03] And then but all of them are valuable.

[2:20:05] And more scoping is going to come from internal audit

[2:20:09] and city staff before it gets to city council.

[2:20:13] And then even more scoping might come at city council

[2:20:16] saying, well, they want you guys want more Committee does.

[2:20:19] How about that as an approach. So keep property tax in there.

[2:20:22] But it needs some more scoping.

[2:20:23] So Colleen is happy and you're happy.

[2:20:26] And city staff stop okay.

[2:20:28] So could should we each say what our top.

[2:20:31] Why don't you propose and then we'll just your disagree.

[2:20:36] Just I've got the recruitment property tax 311 and permitting.

[2:20:40] I am fine with those but. Okay.

[2:20:43] But it's mayor.

[2:20:44] You got one that you prefer to elevate.

[2:20:46] Is it a this is a priority checked

[2:20:49] which is my my go to.

[2:20:52] On so puts permitting efficiency first code enforcement

[2:20:59] second property tax review third

[2:21:02] grant management follow up and investment

[2:21:06] cash flow and recruitment and retention study.

[2:21:10] So it's like totally different priorities.

[2:21:18] Well do you support that priority or can we

[2:21:22] maybe I do think property tax review might be best to handle the separately

[2:21:28] because we need those numbers for different purpose.

[2:21:33] It's not really for all.

[2:21:36] It's really for advocacy. So

[2:21:40] so what I'm hearing you are saying the number that would be defensible.

[2:21:44] Right.

[2:21:44] So it might be best to what I'm hearing.

[2:21:48] We can probably group the permitting recruitment and be one one

[2:21:51] as your top three.

[2:21:52] Not any particular order followed by grant.

[2:21:58] At least some of the comments is probably Grant followed by investment cash.

[2:22:03] And then lastly property tax with the

[2:22:08] the the last two being

[2:22:12] automatic.

[2:22:14] Okay.

[2:22:15] So the

[2:22:17] for recruitment and retention,

[2:22:21] I think the mayor initially also

[2:22:24] didn't think that's important. Right.

[2:22:27] That one is also it's the lowest in my list

[2:22:32] except the tomb and program management.

[2:22:35] So which were wondering

[2:22:39] this is a person public works or public works.

[2:22:42] It needs that some stabilization seems

[2:22:46] I think that's a very important one right there.

[2:22:50] So I can I can agree with the permitting recruitment and 311 in the top group.

[2:22:56] And we could present it that way.

[2:22:57] You know this is our top this this is a must have program management.

[2:23:02] And then we have just break it into a tier

[2:23:05] one and tier two tier one permitting recruitment and 311

[2:23:10] because it's because our the manager is asking for recruitment.

[2:23:13] I would say if she's identified that

[2:23:16] we should probably support her on that and then go with the grant investment

[2:23:19] and property tax and just call it tier two, in no particular order.

[2:23:23] And have that identified is that these are not in order.

[2:23:26] This is our first upper group and our lower group and then our automatic group.

[2:23:34] We like that approach.

[2:23:36] I can get behind it okay. Thanks, mayor.

[2:23:39] You're not. It sounds like it.

[2:23:40] All right, so why don't we have a motion that I do have a question

[2:23:45] still about the recruitment and retention.

[2:23:49] This seems to.

[2:23:51] This is good.

[2:23:52] This is not a typical internal audit function.

[2:23:55] It overlaps with HR.

[2:23:57] That's something I think that

[2:24:02] the city's the HR

[2:24:05] department has been doing over the years.

[2:24:08] Right.

[2:24:09] So how would this be different if you recover it.

[2:24:14] Yeah.

[2:24:15] If your called Chelsea's presentation asking is not just internal

[2:24:18] controls, it's also performance efficiency and effectiveness.

[2:24:21] So our goal is to help out across the city based on its highest risk areas.

[2:24:27] Our enterprise risk assessment did identify this as a higher risk area

[2:24:31] and than it was requested by the city manager.

[2:24:33] But our scope is by

[2:24:35] any part of city operations that could increase the city's risk.

[2:24:39] And your ability to recruit and retain employees is certainly an area

[2:24:43] of operational risk.

[2:24:45] And every time there's turnover, it costs the city money to.

[2:24:48] Yeah, but then do you have the expertise in this area?

[2:24:53] Yes. Yeah we do.

[2:24:54] We've done dozens of HR related public sector studies.

[2:24:58] Have you done any recruitment.

[2:25:01] Yes, yes.

[2:25:02] Your company does recruitment.

[2:25:05] We don't do recruitment itself.

[2:25:07] We do assessments of performance, efficiency and effectiveness

[2:25:13] related to what the city's goals are and best practice.

[2:25:17] But we have folks on our team who are actually retired

[2:25:21] or former municipal human resources directors.

[2:25:26] Okay, great. Why don't we

[2:25:30] try to get

[2:25:31] a motion here that would like on the tears

[2:25:35] and to city Council that we're supportive of these.

[2:25:38] And of course more detail is available and will likely be available

[2:25:42] before presentation.

[2:25:44] So I move that we create two tiers.

[2:25:48] And these are in no particular order within the tier that we have

[2:25:52] the permitting, the recruitment and 311 in considered tier one.

[2:25:58] Tier two would be the grants investment, cash flow and property tax.

[2:26:03] And then we will have the

[2:26:05] I don't know how to identify it, but the automatic baseline

[2:26:09] items would be project management and recommendation validation.

[2:26:15] Those are required.

[2:26:18] So these are really automatic authentic.

[2:26:21] Yeah they must must be included.

[2:26:25] Must have.

[2:26:26] Well I second it since okay.

[2:26:29] Yeah.

[2:26:30] Then we can discuss our motion.

[2:26:32] We've got a motion I think that was clear.

[2:26:33] Do we need to reread it back. We're good.

[2:26:36] Okay, I like it.

[2:26:37] Any other thoughts to add?

[2:26:40] Carrie, you are you receiving the report and forwarding it to the city council?

[2:26:45] Yes, with our comment.

[2:26:47] The motion as amended,

[2:26:50] the tier, the tiered.

[2:26:52] I guess we're forwarding the report with the tears that are in the motion.

[2:26:55] Won't be sure to include that as part of the staff report.

[2:26:57] Perfect. Yeah. All right.

[2:26:59] Good clarification. All right.

[2:27:01] All in favor of this motion? I

[2:27:05] so, the three of us. All right. Thank you.

[2:27:07] We do have one more item which we can just maybe scurry

[2:27:11] really quickly through, which is the Excel sheet.

[2:27:14] And thank you, Colleen and Chelsea, for leading us through.

[2:27:18] Sorry. It's gotten a little bit later than we all anticipated.

[2:27:21] You had to come back two times,

[2:27:22] but the poor vice mayor here and didn't had even more trouble.

[2:27:26] So thank you everyone.

[2:27:28] And our last sheet is we keep track of this.

[2:27:31] So again, I think it fits in well with this last internal audit

[2:27:34] discussion we had.

[2:27:35] The idea is as we come up with things, we can have a subcommittee

[2:27:39] or we can suggest internal audit, do it.

[2:27:43] And I'm much more in favor of of settling on the internal audit for city staff

[2:27:47] can actually do reports itself.

[2:27:48] So a number of them are forthcoming.

[2:27:50] So any changes that anyone has to this.

[2:27:54] Thanks Jonathan for keeping it. I out

[2:27:57] obviously that we see this every meeting.

[2:27:59] So I'd suggest we just move forward.

[2:28:02] But more studies certainly welcome by everybody.

[2:28:07] All right one recommendation.

[2:28:08] We've already for next October 26th.

[2:28:11] You've already received the citywide control o citywide control review.

[2:28:15] Excuse me I'm not seeing.

[2:28:17] Yeah, that's correctly I thought there was a statewide policy.

[2:28:19] We're good. Right.

[2:28:21] Yeah. All right.

[2:28:22] So nice on that happiness

[2:28:25] overview. Oh, yeah.

[2:28:27] Public comment on our item eight.

[2:28:29] I totally forgot the last person.

[2:28:32] Hopefully we do we have any.

[2:28:34] That's all right.

[2:28:35] On that happy note.

[2:28:36] Thanks everybody.

[2:28:37] We are concluded.

[2:28:39] The motion for that is our mother.

[2:28:40] No we don't to motion on it.

[2:28:42] Just we accept it as an information item and receive it.

[2:28:46] But often we have many guests on it.

[2:28:49] So we are adjourned.

[2:28:51] Okay. And we can look to

Audit Committee July 28, 2026

Agenda

Transcript