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Home My WebLink AboutAC 7-28-2025 MinutesMINUTES CUPERTINO AUDIT COMMITTEE Monday, July 28, 2025 At 4:00 p.m. Chair Eno Schmidt called the Regular Audit Committee meeting to order at the Quinlan Conference Room, 10185 North Stelling Road. ROLL CALL Present: Chair Eno Schmidt, Vice Mayor Kitty Moore, Council Member Sheila Mohan, and Committee Member William Wong. Absent: Vice Chair Hanyan Wu. APPROVAL OF MINUTES 1.Subject: Approve Minutes of Regular Meeting on April 28, 2025 Recommended Action: Approve Minutes of Regular Meeting on April 28, 2025 Chair Schmidt opened the public comment period, and seeing no one, closed the public comment period. MOTION: Mohan moved and Moore seconded to approve the corrected April 28, 2025 Regular Audit Committee Minutes. The motion carried with the following vote: Ayes: Schmidt, Moore, Mohan, Wong. Noes: None. Abstain: None. Absent: Wu. 2.Subject: Approve Minutes of Special Meeting on May 12, 2025 Recommended Action: Approve Minutes of Special Meeting on May 12, 2025 Chair Schmidt opened the public comment period, and seeing no one, closed the public comment period. MOTION: Mohan moved and Moore seconded to approve the corrected May 12, 2025 Special Audit Committee Minutes. The motion carried with the following vote: Ayes: Schmidt, Moore, Mohan, Wong. Noes: None. Abstain: None. Absent: Wu. POSTPONEMENTS – None ORAL COMMUNICATIONS – None OLD BUSINESS – None NEW BUSINESS – Audit Committee Minutes July 28, 2025 3. Subject: INFORMATIONAL ITEM Fiscal Year 2024-25 ACFR Interim Testing Update Recommended Action: Receive the Fiscal Year 2024-25 ACFR Interim Testing Update Presenter: The Pun Group Chair Schmidt introduced Pun Group Partner Sophia Kuo, who gave a presentation. Committee Members asked questions and made comments, which staff and the presenter responded to. 4. Subject: INFORMATIONAL ITEM Receive OPEB & Pension Section 115 Trust Performance Report for Quarter Ending June 30, 2025 Recommended Action: Receive OPEB & Pension Section 115 Trust Performance Report for Quarter Ending June 30, 2025 Presenter: PARS and US Bank 4:25(10) Chair Schmidt introduced Vice President & Senior Institutional Client Portfolio Manager from PFM Asset Management Dennis Mullins, who gave a presentation. Chair Schmidt opened the public comment period, and seeing no one, closed the public comment period. Committee Members asked questions and made comments, which the presenter responded to. 5. Subject: INFORMATIONAL ITEM Receive the Treasurer's Investment Report for the Quarter Ending June 30, 2025 Recommended Action: Receive the Treasurer's Investment Report for the Quarter Ending June 30, 2025 Chair Schmidt introduced Finance Manager Jonathan Orozco and Senior Portfolio Strategist at Chandler Asset Management, Carlos Oblites, who gave a presentation. Committee Members asked questions and made comments, which staff and the presenter responded to. 6. Subject: INFORMATIONAL ITEM Receive the Internal Audit and Fraud, Waste, and Abuse programs update Recommended Action: Receive the Internal Audit and Fraud, Waste, and Abuse programs update Chair Schmidt introduced representatives from Baker Tilly, who gave a presentation. Audit Committee Minutes July 28, 2025 Committee Members asked questions and made comments, which presenters and staff responded to. 7. Subject: ACTION ITEM Discuss Audit Committee Duties, Powers, and Responsibilities Recommended Action: Provide recommendation (if any) to City Council for an Audit Committee municipal code Government Code Section 2.88.100 update Chair Schmidt introduced Finance Manager Jonathan Orozco who gave a presentation. Committee Members asked questions and made comments, which staff responded to. MOTION: Chair Schmidt moved and Moore seconded to approve the following updates to Audit Committee municipal code Government Code Section 2.88.100 •Change the name of the Committee to “Audit and Finance Committee”. •Modify the wording of current item 2.88.100(g) to read “To review city’s internal controls and internal audit reports”. •Add new item 2.88.100(i): “To review the use of artificial intelligence in the city’s financial reporting, internal control over financial reporting, risk management and compliance.” The motion carried with the following vote: Ayes: Schmidt, Moore, Mohan, Wong. Noes: None. Abstain: None. Absent: Wu. 8. Subject: ACTION ITEM Special Revenue Fund Process Audit Update Recommended Action: Receive Special Revenue Fund Process Audit Update and forward to City Council Chair Schmidt introduced representatives from Baker Tilly, who gave a presentation. Committee Members asked questions and made comments, which staff and the presenter responded to. Committee Members made the following recommendations: •Clarify and refine BMR policy language to remove ambiguity and ensure it aligns with intended use of funds. •Ensure internal audit findings are clearly explained and reflected accurately in presentations to City Council. Audit Committee Minutes July 28, 2025 •Track and verify the status of key funds (e.g., SB-1, Measure B 2016, Art In-Lieu) to confirm proper classification and use. •Update the BMR handbook to address audit findings and ripple effects into related policies. •Investigate historical fund allocations to confirm how and where those monies are currently recorded. Moore moved and Mohan seconded to forward the Special Revenue Fund Process Audit Update to City Council incorporating these recommendations. The motion carried with the following vote: Ayes: Schmidt, Moore, Mohan, Wong. Noes: None. Abstain: None. Absent: Wu. Due to time constraints, Committee Members continued the following items to the next meeting: 9. Subject: ACTION ITEM Budget Format Review Presentation and Formation of Budget Format Review Subcommittee Recommended Action: 1. Receive Budget Format Review presentation as outlined in the Budget Format Implementation Action Plan (IAP) recommendation #30 2. Form Budget Format Review subcommittee Presenter: Kristina Alfaro, Director of Administrative Services This item was continued to the next Audit Committee meeting. 10. Subject: INFORMATIONAL ITEM Receive the proposed Audit Committee 2025 Schedule and Workplan Recommended Action: Receive the proposed Audit Committee 2025 Schedule and Workplan Presenter: Jonathan Orozco, Finance Manager 5:55(5) This item was continued to the next Audit Committee meeting. STAFF AND COMMISSION REPORTS – None FUTURE AGENDA SETTING – None ADJOURNMENT At 6:03 p.m. Chair Schmidt adjourned the Regular Audit Committee Meeting. Minutes prepared by: Audit Committee Minutes July 28, 2025 Lindsay Nelson, Administrative Assistant