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CC 07-01-2025 Item No. 14 FY 2025-26 Internal Audit Work Plan_Staff PresentationCC 07-1-2025 Item No. 14 FY 2025-26 Internal Audit Work Plan Presentation City of Cupertino FY25-26 Internal Audit Program City Council Meeting July 1, 2025 2 Internal Audit Overview •The City retained Baker Tilly (Moss Adams) to serve as the designated Internal Auditor and conduct projects focusing on: •Risks •Internal controls •Efficiency and effectiveness •Best practices •Compliance •Work is being completed under appropriate industry standards (IIA, GAGAS, AICPA) 3 Internal Audit Program Components Internal Audit Plan Risks Internal Controls Compliance Performance Accounting and financial reporting, assessment management, capital programs, compliance, economics and funding, fraud, governance, human resources, internal controls, maintenance and operations, management, operations and service delivery, organization and staffing, processes and procedures, procurement, public safety,, risk management, and technology Ci t y Fu n c t i o n s In t e r n a l A u d i t Co m p o n e n t s An n u a l Pl a n Risk Assessment Results 4 R ISK C ATEGORY O VERALL R ISK L EVEL Funding and Economics High Capital Improvement Program Moderate to High Compliance and Financial Reporting Moderate to High Human Resources Moderate to High Planning and Strategy Moderate to High Asset Management Moderate Governance Moderate Internal Controls Moderate Management and Leadership Moderate Operations and Service Delivery Moderate Organization and Staffing Moderate Policies and Procedures Moderate Procurement and Contracting Moderate Reputation and Public Perception Moderate Risk Programs Moderate Accounting and Finance Low to Moderate Ethics and Fraud, Waste, and Abuse Low to Moderate Information Technology Low to Moderate Public Safety and Security Low to Moderate 5 Program Review •Enterprise Risk Assessments •Internal Controls Projects Completed •Performance/Efficiency Projects Completed •Policies Reviewed •Recommendations Delivered •Ethics Hotline Reports Received •Recommendations Validated in FY25 2021, 2024 3 6 139 52 33 reports 45 6 Recommended FY25-26 Internal Audit Projects 1.Council-Wide Policy Review Inventory (already approved by City Council): Review and provide recommendations to align council policies with best practices (16 weeks, $40,000) 2.City-Wide Internal Controls Review: Conduct a review of the City’s internal controls framework in key areas that are deemed important to protecting City assets and resources (16 weeks, $45,000) 3.Investment/Cash Flow Policy Review/Recommendation: Review and provide best practices recommendations over the City’s Investment/Cash Flow policy (8 weeks, $10,000) 4.Ongoing Internal Audit Services: Attend Audit Committee and Council meetings, prepare status reports, recommendation validation, manage internal audit program, and monitor FWA hotline ($25,000) 7 This material appearing in this presentation is for information purposes only and is not legal or accounting advice. Communication of this information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accounting-client relationship. Although these materials may have been prepared by professionals, they should not be used as a substitute for professional services. If legal, accounting, or other professional advice is required, the services of a professional should be sought. Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structu re and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA f irm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not license d CPA firms.