HomeMy WebLinkAboutAC 07-28-2026 Youtube and Zoom TranscriptWEBVTT
1
00:17:50.570 --> 00:17:51.350
Conf. Room A: Earth.
2
00:17:52.620 --> 00:17:59.200
Conf. Room A: If we're live, then I'll call the, special meeting of the
Audit Committee on July 28th.
3
00:17:59.420 --> 00:18:04.100
Conf. Room A: You know, to order, and… City staff, can we have a roll
call?
4
00:18:04.640 --> 00:18:09.409
Conf. Room A: Vice Mayor Xiao? Here. Mayor Moore? Here. Here.
5
00:18:12.930 --> 00:18:13.930
Conf. Room A: Super.
6
00:18:14.640 --> 00:18:21.379
Conf. Room A: Okay, so everybody, who's watching live and, in person,
we've had,
7
00:18:21.490 --> 00:18:28.190
Conf. Room A: a bit of a scramble here, but we're excited to have our
meeting, and we'll get started.
8
00:18:29.390 --> 00:18:40.990
Conf. Room A: Are there any oral communications, that you see virtually?
I don't see anyone in the room here. Chair, I see new requests virtually,
and your request personally. Thank you.
9
00:18:41.160 --> 00:18:44.910
Conf. Room A: So we'll move to the consent calendar, then.
10
00:18:45.020 --> 00:18:49.200
Conf. Room A: And there's 3 items on our agenda in there, and I have,
11
00:18:49.610 --> 00:18:52.140
Conf. Room A: A bit of experience, and we've got,
12
00:18:52.440 --> 00:19:00.629
Conf. Room A: I should introduce the Vice Mayor here. We're lucky to have
a quorum, and the Vice Mayor is representing,
13
00:19:00.700 --> 00:19:09.080
Conf. Room A: Ray Wong as an alternate, I think is the way it works, so
thank you very much for fitting us into your schedule so we can have our
meeting here.
14
00:19:09.080 --> 00:19:24.079
Conf. Room A: We're handling consent items, and we can ask questions if
we have a question, otherwise, no, we can't deliberate unless we pull an
item. So, I do have a question on the second item to get us started, but
I don't want to pull it
15
00:19:24.120 --> 00:19:36.950
Conf. Room A: I think it's a simple enough one, in regard to… Dennis,
thank you very much for adding page 16 of 33 in the PDF. Dennis is a
representative of
16
00:19:37.040 --> 00:19:46.620
Conf. Room A: U.S. Bank, thanks for attending. But the page 16 is an
attribution of,
17
00:19:46.860 --> 00:20:01.460
Conf. Room A: I suppose our dip… the city's different achievement versus
the index, and it's very nice to have that in there. I wondered if, as
elucidating for a minute or two, you could just explain
18
00:20:01.470 --> 00:20:09.690
Conf. Room A: A bit about how that table works, and primarily there's an
attribution on the
19
00:20:10.090 --> 00:20:26.969
Conf. Room A: The commodity line shows a positive 0.45% attribution, even
though both portfolios have a zero allocation to commodities. And that
maybe is a springboard for maybe briefly explaining how that works.
20
00:20:30.820 --> 00:20:32.349
Dennis S Mullins: Well, sure, thank you.
21
00:20:32.830 --> 00:20:37.790
Dennis S Mullins: that… The simple explanation for that is by… is that,
22
00:20:39.740 --> 00:20:43.539
Dennis S Mullins: In the old benchmark, we had the 2% allocation to the
23
00:20:43.700 --> 00:20:49.380
Dennis S Mullins: to the, commodity benchmark. So, if you look at the,
well, let me walk you through this real quick.
24
00:20:49.690 --> 00:20:53.430
Dennis S Mullins: Here's the benchmark composition in the upper left-hand
corner.
25
00:20:53.680 --> 00:21:01.460
Dennis S Mullins: So… For stocks, we use the MSCI All-Country World
Index. For bonds, we use the Bloomberg Aggregate.
26
00:21:01.780 --> 00:21:14.580
Dennis S Mullins: There's an S&P Global REIT index for real estate, and
then that next one says S&P GSCI. That's the Commodity Index. That stands
for S&P Goldman Sachs Commodity Index.
27
00:21:15.250 --> 00:21:20.140
Dennis S Mullins: And then the last one is, a 3-month T-bill index for
the cash.
28
00:21:20.990 --> 00:21:32.180
Dennis S Mullins: And remember, the index… idea of the index is to, is…
the best quote I ever saw was, it should represent the pond from which we
are fishing for investments. So.
29
00:21:32.570 --> 00:21:37.169
Dennis S Mullins: It represents the entire,
30
00:21:37.310 --> 00:21:42.639
Dennis S Mullins: Global, public investment opportunity set.
31
00:21:43.670 --> 00:21:55.620
Dennis S Mullins: The next column you'll see is as of 7-1 of 26, we have
a new benchmark that's in your most recently updated investment policy.
It is very close to the old benchmark, just a tiny little change.
32
00:21:56.350 --> 00:22:08.460
Dennis S Mullins: But the old benchmark is the second column, and since
that runs through June 30, that's the one we're using here. So we're
using a benchmark of 63% and a CI All Country World Index.
33
00:22:08.650 --> 00:22:16.489
Dennis S Mullins: 29% bonds, 5% REITs, 2% commodities, GSCI, and 1% cash.
34
00:22:16.860 --> 00:22:20.280
Dennis S Mullins: Now, to answer your question, the reason.
35
00:22:23.460 --> 00:22:24.020
Conf. Room A: Yup.
36
00:22:24.340 --> 00:22:28.170
Dennis S Mullins: It was beneficial because commodity performance down.
37
00:22:29.550 --> 00:22:30.260
Dennis S Mullins: Yep.
38
00:22:31.740 --> 00:22:38.069
Conf. Room A: Dennis, I'm not sure we heard your complete sentence. I
might… could you repeat what you just said? My apologies.
39
00:22:38.440 --> 00:22:44.419
Dennis S Mullins: Oh, sure. The reason it was, beneficial, to performance
40
00:22:44.580 --> 00:22:50.100
Dennis S Mullins: To not own any commodities is because in the quarter,
and this whole chart right here is for the one quarter.
41
00:22:51.880 --> 00:23:00.640
Dennis S Mullins: Because during the quarter, it would have reduced
performance, it would have detracted from performance if we had owned
commodities.
42
00:23:03.310 --> 00:23:05.120
Dennis S Mullins: So we picked up a little bit.
43
00:23:05.380 --> 00:23:06.610
Dennis S Mullins: So…
44
00:23:06.870 --> 00:23:13.229
Dennis S Mullins: So the way that… let's go over to the pension box. The
way that the attribution report works…
45
00:23:14.500 --> 00:23:20.150
Dennis S Mullins: Is… there's a column for selection, and this is the
effect on the performance
46
00:23:20.590 --> 00:23:24.270
Dennis S Mullins: For whether or not you had,
47
00:23:24.880 --> 00:23:28.740
Dennis S Mullins: You, you had investments in that, in that category.
48
00:23:31.170 --> 00:23:41.689
Dennis S Mullins: And did they, the whole idea of selection, did your
selections do better than the benchmark, or worse? And so you can see…
49
00:23:41.830 --> 00:23:48.100
Dennis S Mullins: What we do is, for the top line there, the stocks, we
take the return of your stocks.
50
00:23:48.710 --> 00:23:52.250
Dennis S Mullins: Minus the return of the benchmark, and you can see the
selection
51
00:23:53.290 --> 00:23:58.189
Dennis S Mullins: The selection attribution on that top line was minus
.31. That means
52
00:23:59.140 --> 00:24:03.769
Dennis S Mullins: That means the benchmark did a little bit better than
what we selected.
53
00:24:05.390 --> 00:24:07.179
Dennis S Mullins: The next column is weighted.
54
00:24:07.420 --> 00:24:09.680
Dennis S Mullins: And… and that represents… did…
55
00:24:09.790 --> 00:24:14.969
Dennis S Mullins: If you were overweighted in an investment that did
really well, that would be beneficial, and so…
56
00:24:15.450 --> 00:24:25.099
Dennis S Mullins: If you were underweighted in an investment category
that did very poorly, that would be beneficial. And then the opposite of
those two would be a detraction.
57
00:24:26.030 --> 00:24:28.550
Dennis S Mullins: There's an interaction.
58
00:24:28.830 --> 00:24:34.699
Dennis S Mullins: component, I'm not gonna get into the math of that, but
then there's a portfolio total.
59
00:24:34.960 --> 00:24:37.039
Dennis S Mullins: And that portfolio total is…
60
00:24:37.280 --> 00:24:45.629
Dennis S Mullins: The stocks in your portfolio did a little bit below
what the stocks in the benchmark did in total, so minus .23%.
61
00:24:46.080 --> 00:24:53.570
Dennis S Mullins: If you add up that column, portfolio total, it comes to
0.26, or 26 basis points.
62
00:24:54.070 --> 00:25:02.480
Dennis S Mullins: And then if you go down below, under total portfolio
return for the quarter, you'll see net return was 10.11% for the
portfolio.
63
00:25:02.670 --> 00:25:11.130
Dennis S Mullins: The benchmark was 9.85, the variance was 0.26, and so
that box up there explains the variance.
64
00:25:11.650 --> 00:25:15.759
Dennis S Mullins: So, good news is, we outperformed the benchmark just a
little bit.
65
00:25:16.340 --> 00:25:18.749
Dennis S Mullins: And then the box shows HAL.
66
00:25:19.100 --> 00:25:30.319
Dennis S Mullins: And to kind of sum this up in plain language, I put a
little paragraph down below, slight positive, and this applies to both
portfolios, by the way, because they're managed almost identically.
67
00:25:31.470 --> 00:25:37.599
Dennis S Mullins: Slight positive variance in the quarter from both
bonds… I'm sorry, from bonds due to high yield exposure.
68
00:25:38.240 --> 00:25:45.759
Dennis S Mullins: The benchmark does not include high-yield exposure. The
portfolio does, so there's a little bit of a mismatch, intentional
mismatch.
69
00:25:45.890 --> 00:25:47.870
Dennis S Mullins: And it paid off in the quarter.
70
00:25:50.060 --> 00:25:58.209
Dennis S Mullins: Real Estate Deluxe, The real estate portfolio total
number was… was positive. 9 basis points.
71
00:25:58.540 --> 00:26:04.089
Dennis S Mullins: And global infrastructure, we did a little better
there, so that was additive.
72
00:26:04.840 --> 00:26:07.520
Dennis S Mullins: Stocks slightly underperformed.
73
00:26:08.080 --> 00:26:14.149
Dennis S Mullins: Performance of stocks was helped, however, by our
allocation to small cap, which is not in the index.
74
00:26:15.450 --> 00:26:16.470
Dennis S Mullins: then…
75
00:26:17.530 --> 00:26:26.509
Dennis S Mullins: I mentioned in here, large stocks were up 15%, small
stocks were up 21, so that's why it was beneficial to have some small
stocks.
76
00:26:27.250 --> 00:26:32.340
Dennis S Mullins: Detracting from stock performance was our slight
underweight to emerging markets.
77
00:26:32.670 --> 00:26:37.780
Dennis S Mullins: So, the benchmark for stocks is the MSCI All-Country
World Index.
78
00:26:38.290 --> 00:26:43.170
Dennis S Mullins: I'm replicating that with several mutual funds, one for
U.S. stocks.
79
00:26:43.320 --> 00:26:47.489
Dennis S Mullins: One for developed foreign stocks, one for emerging
foreign stocks.
80
00:26:47.750 --> 00:26:54.819
Dennis S Mullins: And my percentages are always a little off, because
it's very difficult to replicate that exactly.
81
00:26:55.620 --> 00:26:59.560
Dennis S Mullins: And so that explains why we're off the benchmark just a
little bit.
82
00:27:00.770 --> 00:27:13.899
Conf. Room A: Nope, I think that's… that's great, Dennis. I just wanted
to highlight your question. My question you've answered, fully, and I
wanted to highlight it. Thank you very much, and I expect that we'll…
we'll have many more
83
00:27:14.310 --> 00:27:20.760
Conf. Room A: chances to interact with this, in future quarters, so
thanks again for working it through for us.
84
00:27:20.870 --> 00:27:36.239
Conf. Room A: Yeah, any other questions for clarification on the consent
items in all three? Thank you. I was wondering, Jonathan, if you had a
chance to look at my questions that I sent in, regarding…
85
00:27:36.520 --> 00:27:44.100
Conf. Room A: having, the 115 and OPEB have pretty much the same
percentage in equities.
86
00:27:46.640 --> 00:28:03.000
Conf. Room A: So the… I think that one of the questions that you had is,
is there a shorter horizon for pension versus, OPEB? In short, I don't
think there's necessarily, because you're… we look from the perspective
of a retiree, right, pensions kind of
87
00:28:03.140 --> 00:28:17.040
Conf. Room A: would be long-term, right? Same thing with OPEB. However,
what the… the use of those pensions versus… or how we're able to utilize
a trust for the pension versus OPEB could be strategic… are strategically
different.
88
00:28:17.040 --> 00:28:27.189
Conf. Room A: from the OPEC perspective, and I think you highlighted it,
is on a downturn of an economy, if the pension didn't perform well, and
to maintain a…
89
00:28:27.190 --> 00:28:39.639
Conf. Room A: in a desired level of, funding status, we can draw on that
pension, and provide it to CalPERS to help pay for our unfunded accrued
liability, or UAL.
90
00:28:39.640 --> 00:28:55.679
Conf. Room A: Whereas with the OPEB, we can… and this is conversations
I've been having with Tina, and a third party would be to assess, our…
use it similarly, but, as of today, we're a bit overfunded, so if we need
to draw
91
00:28:55.680 --> 00:29:10.310
Conf. Room A: on it to assist with, a budget constraints, right? And so
we can draw on that to help pay for our recovery benefits. And so there…
you can use them similarly, but for different purposes, and there's
different restrictions on
92
00:29:10.310 --> 00:29:21.099
Conf. Room A: Both, both in terms of reporting on our financials, and,
and, and, but the method where the investment policies are essentially
the same. We have the same
93
00:29:21.350 --> 00:29:23.529
Conf. Room A: Investment strategies for both.
94
00:29:23.830 --> 00:29:35.499
Conf. Room A: Could you explain, if there was a downturn and CalPERS
wanted to raise our contribution? Does that… is that…
95
00:29:35.740 --> 00:29:47.710
Conf. Room A: What happens? Helpers would have to… it has to hit a
certain, threshold before they can assess whether they want to change
their,
96
00:29:47.710 --> 00:30:08.389
Conf. Room A: discount rate, which would then ultimately change how much
this… each agency would have to be contributing, because then, in turn,
that'll also change our… your fund status, right? And so… but that goes
through a full process that needs to go to their board, they need to
approve it and whatnot, and then it gets kind of trickled down. And it's
not immediate, usually there's, like, a two-year
97
00:30:08.390 --> 00:30:19.609
Conf. Room A: period in which it goes into effect. So it gives agencies
enough time to essentially shift a little bit and kind of understand how
that adjustment to the discount rate will affect their funding status.
98
00:30:19.610 --> 00:30:27.209
Conf. Room A: Okay, and the other question I had was the $19 million jump
in the general fund,
99
00:30:27.210 --> 00:30:41.350
Conf. Room A: What was going on there? There's, actually, I had Richard
look into this for me, and I have some, some data points here, but I'd
like him to take a stab at this one first. We're going to the
Treasurer's, report there, Matt? Yeah.
100
00:30:41.450 --> 00:30:45.059
Conf. Room A: Item 3 on the consent, calendar.
101
00:30:47.070 --> 00:30:47.950
Conf. Room A: Richard?
102
00:30:48.180 --> 00:30:49.729
Richard Wong: Hi, yeah, hi, everyone.
103
00:30:49.990 --> 00:30:57.540
Richard Wong: So, OPEB had an increase in 2.6 million, as far as, From
prior quarter.
104
00:30:57.830 --> 00:31:04.280
Richard Wong: And property tax, the balance there is a total of $7
million received.
105
00:31:04.470 --> 00:31:11.129
Richard Wong: In the fourth quarter, And that's a $1.2 million increase
from Q3.
106
00:31:11.690 --> 00:31:18.920
Richard Wong: For sales tax, we had a balance of, $7 million received.
107
00:31:19.220 --> 00:31:24.510
Richard Wong: in the fourth quarter, with a $1.1 million increase from
Q3.
108
00:31:25.030 --> 00:31:34.129
Richard Wong: And the annual, excess ERAF receipt came through… In the
fourth quarter.
109
00:31:34.350 --> 00:31:36.980
Richard Wong: And that was for $1.3 million.
110
00:31:37.720 --> 00:31:42.569
Richard Wong: And the last, major receipt we had to make up the $19
million.
111
00:31:42.680 --> 00:31:48.289
Richard Wong: is PG&E's franchise fee, which is an annual receipt, for
$1.4 million.
112
00:31:50.430 --> 00:32:05.289
Conf. Room A: So, in short, there was about $40 million in revenue that
the city generated last quarter versus the $20 million, just specifically
for the general fund, that it expensed. Now.
113
00:32:05.290 --> 00:32:18.599
Conf. Room A: kind of, we're starting to accrue back as we're at year-
end, so some of those numbers are going to be shifting a little bit as we
kind of move away, but from a cash perspective, we saw almost twice as
much revenue for that one quarter versus expenditures, is the short.
114
00:32:19.190 --> 00:32:29.240
Conf. Room A: So will that, when it goes to the Council, can that be
added into the report? Okay, we'll adjust the report to reflect that,
that additional detail.
115
00:32:29.350 --> 00:32:30.230
Conf. Room A: It creates…
116
00:32:30.410 --> 00:32:38.540
Conf. Room A: And thank you for adding the CALFIT. I think it's under
consent. It is, it's in the Treasurer's report.
117
00:32:38.710 --> 00:32:41.310
Conf. Room A: Any other clarifying questions?
118
00:32:44.060 --> 00:32:48.050
Conf. Room A: Being none, are there any comments from the public?
119
00:32:49.220 --> 00:32:51.070
Conf. Room A: I see none in this room.
120
00:32:52.360 --> 00:33:07.050
Conf. Room A: Chair, I see no requests to speak virtually, and we have no
requests in person. Excellent, thank you for that. So, I would welcome a
motion. More, I moved, the consent calendar.
121
00:33:07.300 --> 00:33:13.829
Conf. Room A: Excellent, we've got a second, and we've got a motion. I'm
not going to repeat that.
122
00:33:14.030 --> 00:33:17.350
Conf. Room A: Any further comments on the motion?
123
00:33:17.500 --> 00:33:22.700
Conf. Room A: I… let's take a vote. All in favor, aye. Aye. Aye.
124
00:33:22.860 --> 00:33:26.960
Conf. Room A: Unanimous of the three in the room, and thank you very
much.
125
00:33:27.090 --> 00:33:36.359
Conf. Room A: And Chair, for the record, in addition to Councilmember
Wong being absent, Committee Member Wong is also absent. Oh, yeah, thank
you for that. True.
126
00:33:36.750 --> 00:33:49.849
Conf. Room A: Okay, so moving on to new business, our Item 4 is an
informational item received the fiscal year 2025-26 Act for Interim Room
Testing Update.
127
00:33:49.930 --> 00:33:59.189
Conf. Room A: And I think, we're gonna go right to, the pun group, or…
Richard will introduce the pun group. Richard will introduce, thank you,
Richard Wong.
128
00:33:59.800 --> 00:34:06.820
Richard Wong: Yeah, hi. So, we are in year 4 of our 5-year contract with
our external auditors, the Pun Group.
129
00:34:06.930 --> 00:34:23.079
Richard Wong: Our interim audit started in May, and Sophia here, the Pun
Group's assurance partner, is here today to provide an update on our
fiscal year 25-26 act for interim audit testing, and to answer any
questions you may have.
130
00:34:23.860 --> 00:34:24.190
Sophia Kuo: Thank you.
131
00:34:24.199 --> 00:34:26.079
Conf. Room A: Thank you. Welcome, Sophia.
132
00:34:26.080 --> 00:34:40.349
Sophia Kuo: Thank you, good evening, committee chair, and then, community
members, and also the city's management. Again, this is Sophia from the
Penn Group. I'm the engagement partner for the city's Audit, and, thank
you for having me here today.
133
00:34:40.350 --> 00:34:57.069
Sophia Kuo: So, like Richard mentioned, I would like to give an update on
where we are at for fiscal year 25-26 audit. So, he also mentioned, we
started intern field work back in May, and with the focuses on the
evaluating the city's internal control. So…
134
00:34:57.390 --> 00:35:19.019
Sophia Kuo: over the significant transaction cycles, that includes
financial reporting, so we evaluate the manual journal entry process,
bank reconciliation process, and also the city's budget process as well,
and also the revenue collection, cash receipt process, procurement,
expenditures, as well as payroll, and then HR-related functions.
135
00:35:19.320 --> 00:35:43.689
Sophia Kuo: And, again, we started the fieldwork in late May, and then we
completely… we substantially completed our interim fieldwork around the
June timeframe, with no observations or findings to report. And I also
would like to take this opportunity to briefly discuss the new Gatsby
pronouncements that would be effective for
136
00:35:43.690 --> 00:35:48.739
Sophia Kuo: For fiscal year 25-26, and it will be impacting the financial
statements that
137
00:35:48.740 --> 00:35:51.510
Sophia Kuo: will be presented to you in November.
138
00:35:51.510 --> 00:35:57.449
Sophia Kuo: And, the first one is Gatsby 103, Financial Reporting Model
Improvements.
139
00:35:57.490 --> 00:36:02.990
Sophia Kuo: And the second one is Gatsby 104, disclosure of Certain
Capital Assets.
140
00:36:03.040 --> 00:36:18.080
Sophia Kuo: So, we have been working with the city's management to
determine the impact of these two Gatsby pronouncements. The Gatsby 103
is relatively higher than Gatsby 104. So, the biggest changes, impacts
on…
141
00:36:18.140 --> 00:36:22.340
Sophia Kuo: are on the MDNA management discussion and analysis.
142
00:36:22.520 --> 00:36:47.070
Sophia Kuo: So, because of the change, the city's management will need to
rewrite and reorganize the MDNA with only 5 components required by the
standard. So, component number one is overview of the financial
statements, show how the financial statements flow through from fund
statement to government Y, and also the no disclosure, and required
supplementary information, supplementary
143
00:36:47.070 --> 00:36:49.860
Sophia Kuo: How the financial statement look like.
144
00:36:49.880 --> 00:36:56.999
Sophia Kuo: And the second component is the financial statement
summaries. The third one is the detailed analysis of the
145
00:36:57.490 --> 00:37:06.789
Sophia Kuo: The transaction happened during the year, with a focus on the
current year operations, instead of only focusing on the dollar amount or
percentage changes.
146
00:37:06.970 --> 00:37:13.899
Sophia Kuo: The fourth component is the significant capital assets and
long-term financing activities.
147
00:37:13.900 --> 00:37:38.209
Sophia Kuo: And the fifth one is the currently known facts decision and
long-term, and conditions, such as the new labor negotiation, if any, and
also the maybe potential pension discount rate changes. If that happens,
it also needs to be discussed in the MDNA. And other than MDNA changes,
another two significant changes from this,
148
00:37:38.210 --> 00:37:39.450
Sophia Kuo: Upon announcements.
149
00:37:39.530 --> 00:37:52.590
Sophia Kuo: The first one, another one is the proprietary fund operating
and non-operating revenue expenses classification to present a statement
of revenue, expenses, and changes in fund balance, properly.
150
00:37:53.040 --> 00:38:07.210
Sophia Kuo: And another one is adding, adding a column on the budgetary
comparison schedule, include, including the variances between original
and final budget, and…
151
00:38:07.330 --> 00:38:31.259
Sophia Kuo: And another change on the budgetary comparison schedule is to
provide notes with the significant variances on the original budget, and
then final budget, and also the final budget, and then the final result.
So, to provide explanations why those significant variances happen during
the year. In terms of Gatsby 104,
152
00:38:31.420 --> 00:38:48.449
Sophia Kuo: The anticipated impact of Gasby 104 on the City's financial
statements is expected to be minimum, but we will continue to evaluate
the implementation and then to determine whether any potential impacts as
part of our year-end audit process.
153
00:38:48.490 --> 00:39:00.590
Sophia Kuo: So, overall, we remain on track to begin our year-end
fieldwork in late September, which is consistent with our schedule in
prior years.
154
00:39:00.590 --> 00:39:07.009
Sophia Kuo: Assuming that we receive the trial balance and also all the
requested audit documentation as planned.
155
00:39:07.010 --> 00:39:28.649
Sophia Kuo: And there are no significant issues during the audit. We
anticipate to provide a draft of the effort to the committee for review
due in the second half of November, and so that we can meet and present
in late November or early December, depending on everybody's
availability.
156
00:39:28.770 --> 00:39:37.890
Sophia Kuo: And this will conclude my update for fiscal year 25-26 Audit.
I will be happy to answer any questions that you may have.
157
00:39:38.590 --> 00:39:44.720
Conf. Room A: Thank you, Sophia. Let me ask the committee, any… anyone
have a clarifying question?
158
00:39:46.550 --> 00:39:48.190
Conf. Room A: I always have some, but…
159
00:39:48.830 --> 00:40:01.190
Conf. Room A: You guys get to go first. Okay, I'm curious what… what they
mean by… and is it GASB 103 or 104 that wants to, have information about
the original and final budget?
160
00:40:01.340 --> 00:40:06.000
Conf. Room A: changes? So, which one is it, and what does that actually
mean?
161
00:40:07.260 --> 00:40:24.230
Sophia Kuo: So, the original schedule, we, we… I mean, the original
schedule shows the original adopted budget and final budget, and there,
there is a column for variance column, compared the, final budget to the,
final result.
162
00:40:24.230 --> 00:40:36.079
Sophia Kuo: And then, because of this new change, we need to add an
additional column to show the variance from the original budget to the
final budget during the year. The city might have budget amendments.
163
00:40:36.080 --> 00:40:47.309
Sophia Kuo: And the mid-year budget adjustments, so this is a new
requirement. There's additional column need to be added to calculate the
difference between the original budget and final budget.
164
00:40:51.220 --> 00:40:53.789
Sophia Kuo: On the financial… it's also on the presentation.
165
00:40:55.570 --> 00:41:02.040
Conf. Room A: As I remember, the MD&A had quite a bit on those changes
anyways, didn't it, Jonathan?
166
00:41:02.430 --> 00:41:13.689
Conf. Room A: So, this doesn't really… maybe the city was providing
additional information that was above the minimal requirement? No, the
MD&A,
167
00:41:13.910 --> 00:41:32.759
Conf. Room A: had various components that, well, historically, was kind
of followed a very somewhat rigid structure, and so every year we would
have to at least meet those requirements, at least to present it to GEO
for Wade and ensure that it's, to get the, certificate of excellence or
achievement,
168
00:41:32.820 --> 00:41:35.000
Conf. Room A: So they're,
169
00:41:35.290 --> 00:41:48.369
Conf. Room A: as Sophia stated, so there's quite a bit of a difference as
to how rigid the structure was to what it's going to be now, and there's
just more… there's going to be more analysis, rather than just
170
00:41:48.370 --> 00:42:08.049
Conf. Room A: telling a story, right? That's what we're… they really want
to… instead of saying, these numbers changed from 10 million to 15
million, we're like, well, why? Why did it change? And so, the question
is going to be kind of further, why did something happen, and why did
that happen? So, the MDNA is more of a storytelling.
171
00:42:08.140 --> 00:42:10.939
Conf. Room A: As to, rather than kind of just strictly
172
00:42:11.290 --> 00:42:15.739
Conf. Room A: this number went to this number. And so it's gonna be quite
a change.
173
00:42:15.830 --> 00:42:33.249
Conf. Room A: from, prior years. So that's going to be a work in
progress, between here and in November as far as kind of several
different iterations and kind of back and forth between staff and the
auditors to make sure that we're meeting the requirements as outlined by
GFOA.
174
00:42:33.390 --> 00:42:35.739
Conf. Room A: Or the Gatsby. Follow along.
175
00:42:36.010 --> 00:42:44.609
Conf. Room A: So would that include if you had, like, a change in
revenue, that you'd have to explain that? Certainly.
176
00:42:44.830 --> 00:42:46.569
Conf. Room A: Right, like, fully…
177
00:42:47.490 --> 00:42:59.519
Conf. Room A: So, obviously it would be, major changes. I mean, if it's
probably, like, a 10% change for revenue, that's quite a change, right,
from year over year.
178
00:42:59.520 --> 00:43:15.370
Conf. Room A: Now, we… I'm not sure to what extent do we need to include,
budget to actuals in that situation, but, because that's, as we know now,
one of the biggest variances that we're going to see next year, or for
last year, is going to be sales taxes, right?
179
00:43:15.370 --> 00:43:20.269
Conf. Room A: And I think, kind of going into the detail, even though we
don't want to keep bringing up CDTFA,
180
00:43:20.360 --> 00:43:24.589
Conf. Room A: It's still a, kind of, we're seeing some of the…
181
00:43:24.850 --> 00:43:33.039
Conf. Room A: How that's affected the city, and it will continue to
affect the city until we've kind of normalized it, and it might take a
couple more years before we see that.
182
00:43:34.040 --> 00:43:47.870
Conf. Room A: But, Sophia, can you, please answer which GASB
pronouncement, would, require the city to include the variance, column in
the budget to actuals, or Budget to…
183
00:43:48.530 --> 00:43:52.879
Sophia Kuo: This is Gatsby 103, the, financial reporting model
improvements.
184
00:43:54.300 --> 00:43:56.519
Conf. Room A: Vice Mayor, you've got a question?
185
00:43:56.910 --> 00:43:58.120
Conf. Room A: Still…
186
00:43:58.570 --> 00:44:16.490
Conf. Room A: This item has no, attachment, right? And you mentioned the
presentation, so I'm… is that available? It's just a verbal presentation,
or an update to the Audit. Oh, so there is usually no written…
187
00:44:16.590 --> 00:44:27.979
Conf. Room A: Because it's a lot of information, right? Or, it would be
nice to have a written update, because I can't remember all
188
00:44:28.380 --> 00:44:39.010
Conf. Room A: everything. And then, a very basic question. So, this
update is a testing update for Ekvar.
189
00:44:39.120 --> 00:44:45.439
Conf. Room A: For internal control, what exactly you are doing for
testing?
190
00:44:48.300 --> 00:45:01.910
Sophia Kuo: So, during, interim field work, that's the, like I mentioned
earlier, it's our internal control evaluation phase. So it's based on our
risk assessment. We identify significant transaction cycles.
191
00:45:01.910 --> 00:45:09.669
Sophia Kuo: And, like, so we evaluate the financial reporting process,
that includes how the city processes bank reconciliation.
192
00:45:09.670 --> 00:45:12.800
Sophia Kuo: And also how the city processes cash receipts.
193
00:45:12.840 --> 00:45:16.469
Sophia Kuo: And also the payroll, how it was done, and…
194
00:45:16.500 --> 00:45:24.679
Sophia Kuo: And also how the procurement was executed, and all the way to
the invoice process, and until the cash, the check cleared.
195
00:45:24.680 --> 00:45:43.220
Sophia Kuo: So that's the… that's… that's what we call internal control
and intern field… intern field work. So that's what we… we test… we pick
some… we got pop… we got, we… we got all our population, and then we pick
samples, and we… and then we work with the city to get the support to
complete our testing.
196
00:45:43.600 --> 00:45:44.990
Conf. Room A: Okay.
197
00:45:46.590 --> 00:45:54.919
Conf. Room A: Okay, my question is, we've had a change in finance
directors, and, you know, congratulations to our new,
198
00:45:54.930 --> 00:46:08.320
Conf. Room A: one who's sitting in the room here, Jonathan, but I… I want
to ask you, it's been a smooth transition, I presume, or you would have,
highlighted some… some whatever non-smooth elements would have arisen?
199
00:46:09.060 --> 00:46:21.429
Sophia Kuo: I, I think, we have… I have… I personally have been working
with, Jonathan since we started this contract, and then, the first year…
the first year, because changing of new auditors, and then…
200
00:46:21.670 --> 00:46:46.620
Sophia Kuo: And then there were some hiccups, and then… so the first
year, it took a little bit longer than what we anticipated, and then
after… after the first year, the second year went really smoothly, and I
think even… even with the transition and also the change that happened at
the city, our intern really went really smoothly. That's why I can… I can
be here today to present, and then there was really no finding and no
observations from our intern
201
00:46:46.620 --> 00:46:48.540
Sophia Kuo: internal control evaluation phase.
202
00:46:49.030 --> 00:46:56.389
Conf. Room A: Great, thank you. All right, I don't see any comments from
the public in the room. Are there any virtual?
203
00:46:56.680 --> 00:47:02.199
Conf. Room A: Moved here. Thank you. All right, why don't we move to a
motion?
204
00:47:02.330 --> 00:47:12.510
Conf. Room A: We don't actually have a motion, I think it's an
information item, so we'll accept it as an information item. Thank you,
Sophia, and good luck on the rest of your work. We'll see you in
November.
205
00:47:12.510 --> 00:47:13.610
Sophia Kuo: Thank you.
206
00:47:15.380 --> 00:47:31.910
Conf. Room A: So, on to item 5 on our agenda, also an informational item,
and a number of internal audit, ones here we're going to have in
sequence. This one is to receive the internal audit and the fraud, waste,
and abuse programs update, and…
207
00:47:32.430 --> 00:47:38.210
Conf. Room A: I guess Baker Tilly's gonna go right in, or do we have a
staff comment? Yeah, I think they can…
208
00:47:38.290 --> 00:48:02.869
Conf. Room A: Take your credit, Alex. Great. Thank you, Chelsea. Right,
wonderful. Well, I will get us started. Great news, looking at the Grant
Management Internal Control Review, this is going to be presented to you
all today. This was the last item for fiscal year 24-25, and that has
been finalized. So, really good news there. So then, looking at fiscal
year 25-26 Internal Audit Program.
209
00:48:02.870 --> 00:48:15.580
Conf. Room A: The investment cash flow policy review recommendation. So
this is still going, back and forth with City Management. I hope to have
an update with you all in October on that one.
210
00:48:15.580 --> 00:48:31.200
Conf. Room A: And then the citywide internal control review. This one, we
have been really busy at work, lots of different requests going back and
forth, but I do believe that we will have a report to provide you all in
the October timeframe for that.
211
00:48:31.590 --> 00:48:54.939
Conf. Room A: Of course, there is that ongoing internal audit services,
that's what we do, why I'm here today, and also involves our fraud,
waste, and abuse hotline. So going on to page number 2, you will see that
there were no, no complaints that were received this time frame. But we
do have those 8
212
00:48:54.940 --> 00:49:14.860
Conf. Room A: open reports still. I do want to say that those are still
under the city attorney's review, but I have met with the city attorney
as well as the city manager, and I think that there's going to be some
new verbiage in the city, fraud, waste, and abuse policy that they're
reviewing, so that hopefully these are going to be closed soon.
213
00:49:16.050 --> 00:49:19.670
Conf. Room A: Any questions before I move on to the validation report?
214
00:49:21.440 --> 00:49:24.699
Conf. Room A: I guess as a question, it,
215
00:49:24.890 --> 00:49:40.090
Conf. Room A: it would be helpful for me if we could title this second
page Fraud, Waste, and Abuse Report. Okay. And I don't know if that's
inconvenient or whatever, but a lot of these get posted on the website,
and it's not…
216
00:49:40.200 --> 00:49:43.769
Conf. Room A: Maybe intuitive to people that aren't familiar with this.
217
00:49:43.980 --> 00:49:46.119
Conf. Room A: That this is representing that.
218
00:49:46.230 --> 00:49:49.290
Conf. Room A: we can easily get that fixed. Thank you.
219
00:49:49.780 --> 00:50:01.109
Conf. Room A: All right, any questions before moving on to the validation
report piece of our ongoing internal audit services? Looks like we're
good. Perfect. If you could bring up, actually, the PowerPoint.
220
00:50:04.650 --> 00:50:21.890
Conf. Room A: What, what you'll find is there were no validation,
recommendations that we validated this quarter, and so I thought it would
be a good reminder to, you know, why we're doing this process, and really
what this serves.
221
00:50:36.680 --> 00:50:37.930
Conf. Room A: Alright.
222
00:50:39.790 --> 00:51:03.159
Conf. Room A: Perfect. So, going on to the second page, really, what is
this program and the thing that we involve, the ongoing internal audit
services? So this is a crucial step in the audit process, because believe
it or not, it breaks my heart to say this, but sometimes reports are put
on the wayside with management, right? So they get reports, they get
recommendations, and nothing comes out of those recommendations.
223
00:51:03.160 --> 00:51:27.080
Conf. Room A: So this is a really great, mechanism and tool for the city
to make sure that they're held accountable for making sure that they're
effectively implementing those corrective actions, in the identified
audit issues. So, what are we doing during this time? We're always
reviewing documentation and evidence provided by the city to help
remediate those recommendations. We will…
224
00:51:27.080 --> 00:51:40.309
Conf. Room A: talk to relevant stakeholders for clarification, any
confirmation needed, and we really assess what steps the city has taken
to make sure that they have remedied those recommendations.
225
00:51:40.380 --> 00:51:53.790
Conf. Room A: And it… so, once again, why do we do this? Why is this a
healthy practice? It helps improve corrective actions, making sure
everyone's accountable, and really supports that continuous improvement
that the city is always looking for.
226
00:51:54.120 --> 00:51:56.580
Conf. Room A: So, next slide.
227
00:51:57.130 --> 00:52:14.150
Conf. Room A: So, back in fiscal year 25-26, we had 79 recommendations.
We have validated 54 recommendations in our time here with the city, and
there is still 25, that were open.
228
00:52:14.150 --> 00:52:23.959
Conf. Room A: This is really important, though, because, when talking to
the city right before we were going to provide this information to,
229
00:52:24.010 --> 00:52:47.799
Conf. Room A: for this audit committee, there are 16 open recommendations
that the city says that they have completed in July. So, I am really
hopeful that next, quarter, I'm gonna have a lot to report in this area.
So, 16 recommendations, I mean, then we'll only have 9 left for this,
this entire thing, which is great. So next slide.
230
00:52:47.800 --> 00:52:56.849
Conf. Room A: This just kind of shows you those 25 open areas, and like I
mentioned, we will have 16 remedied.
231
00:52:56.850 --> 00:52:59.469
Conf. Room A: Hopefully, by the next quarter.
232
00:53:00.320 --> 00:53:02.390
Conf. Room A: Any questions on that?
233
00:53:03.140 --> 00:53:04.630
Conf. Room A: Any questions?
234
00:53:05.400 --> 00:53:16.779
Conf. Room A: comments, great. Yeah, I'm excited. I do have a question in
terms of the… the… it's great news that the 16, that's,
235
00:53:16.850 --> 00:53:27.940
Conf. Room A: unexpected from my side. There's… there's been some that
are… went back to 2022, or… it's not… it's… my question is.
236
00:53:27.940 --> 00:53:42.920
Conf. Room A: I wonder if the 16 is going to address all the really old
ones, or if it doesn't, if staff could work with you to maybe figure out
a footnote that would indicate that maybe later in 2027,
237
00:53:42.940 --> 00:53:48.829
Conf. Room A: The really old ones, if there are any that aren't covered
by the 16, when they might get addressed.
238
00:53:49.600 --> 00:54:14.509
Conf. Room A: And I think if you look at that last slide, and I'm sorry
to keep on doing that to you, Janet, but that last slide does show… so
staff did want to take that consideration. I think that was something
that you had mentioned last time. And so the staff… what they have shown
you is the expected completion date by quarter. So they're saying that
by… This did look new to me. Yes. Yes, so this will… this kind of helps
illustrate when those,
239
00:54:14.510 --> 00:54:16.969
Conf. Room A: findings will be remedied. So let's…
240
00:54:16.970 --> 00:54:23.040
Conf. Room A: So if you could help me then dive a little deeper, like,
for example, on this other detail report, there was…
241
00:54:23.260 --> 00:54:33.450
Conf. Room A: four… well, I don't want to go into the details, but there
were five that were in 2022. How would we use this report to see whether
those are in the,
242
00:54:33.980 --> 00:54:36.450
Conf. Room A: 16, or remain to be.
243
00:54:36.450 --> 00:54:55.129
Conf. Room A: Those… you don't see that here, but as Chelsea was saying,
we can probably, provide an updated report that kind of dials in on any
outstanding of the 9 potential ones that are still outstanding, what
period they are relayed to, and so you'd see, essentially, this, and…
244
00:54:55.130 --> 00:55:05.189
Conf. Room A: With the… that specific recommendation. Yeah, fantastic.
Yeah, I think next time, when an update is provided, it will be great to
have
245
00:55:05.260 --> 00:55:11.270
Conf. Room A: The list that's already verified, and especially the list
that's open.
246
00:55:11.290 --> 00:55:23.169
Conf. Room A: Because I don't know where to start or even ask, because I
don't know what these recommendations are. And also, I do wonder, when…
247
00:55:23.170 --> 00:55:31.690
Conf. Room A: We do a report, we do a recommendation, and then we start
to implement. A lot of times, we find out there might be an adjustment.
248
00:55:31.690 --> 00:55:37.890
Conf. Room A: needed for… for those recommendations. So, do you…
249
00:55:38.290 --> 00:56:00.690
Conf. Room A: do those kind of re-evaluation in the middle of the
implementation? That's a great question. So, obviously, processes, things
change, right, from a recommendation from fiscal year 22. So, absolutely,
we're going to take that into consideration. And I do believe, Colleen,
please feel free to jump in here, but I do believe that, you know,
sometimes a recommendation
250
00:56:00.690 --> 00:56:06.820
Conf. Room A: Might no longer be valid, and in that case, that is
something that we would just remove from the listing at that time.
251
00:56:06.820 --> 00:56:25.689
Colleen Rozillis: Yeah, correct. A great example is, if the city
reorganizes, a recommendation related to a process or a responsibility
might not be relevant, so then we would close that, and we would call it
administrative closure, but it would… it would come off of the list for
you all, and it would be closed. We wouldn't just close things, kind of.
252
00:56:25.690 --> 00:56:41.159
Colleen Rozillis: hey, it's been too long, let's close it, we want to
work with the city on the appropriate answer, but we definitely do take
those things into consideration. Ideally, everything is implementable and
practical, because we work with staff on the front end, but things do
come up over time.
253
00:56:42.010 --> 00:56:52.969
Conf. Room A: Yeah, so if there could be a list of validated
recommendations, what do we have done for each of them, that would be
nice.
254
00:56:53.140 --> 00:57:05.749
Conf. Room A: You're talking about column C? Column C, yeah. Could you
expand a bit on what your suggestion is? Sorry. Like, the recommendation
of…
255
00:57:05.910 --> 00:57:13.219
Conf. Room A: Doing something, and then maybe a comment on what you have
verified on the city have implemented.
256
00:57:13.350 --> 00:57:31.490
Conf. Room A: Yes, so when… when we do… Obviously, you'll have those. We
do, and so, you know, this quarter, there wasn't any recommendations that
had been validated. When this report is presented, when there are
recommendations validated, they talk about what had happened. So what…
257
00:57:31.490 --> 00:57:34.480
Conf. Room A: What was validated? What were we able to validate?
258
00:57:35.740 --> 00:57:40.870
Conf. Room A: At that time. So, you mean if I look into a previous audit.
259
00:57:41.020 --> 00:57:58.049
Conf. Room A: Meeting. Right. That will be there. Correct. It'll talk
about what… what… what the actual recommendation was that we were able to
validate. It might be… okay, it might be nice if there is a cross-
reference, like, the last time
260
00:57:58.050 --> 00:58:01.169
Conf. Room A: The, the, the valid recommendation was at…
261
00:58:01.390 --> 00:58:09.769
Conf. Room A: reported in the Audit Committee on what date. That way,
people can look for it if they want to. Okay.
262
00:58:10.250 --> 00:58:17.729
Conf. Room A: And then it would be nice, for the… to have a list of the
open recommendations, yeah.
263
00:58:25.020 --> 00:58:26.150
Conf. Room A: Good.
264
00:58:26.560 --> 00:58:50.940
Conf. Room A: May we have the, that report that, the PowerPoint that you
just shared? I don't see it online. Also, is there a landing page, would
I find it under budgets to… I remember that there used to be the
collection of all the, Moss Adams Baker Tilly reports. They were all
together on some webpage, but I know that we've reworked the website, so…
265
00:58:52.390 --> 00:58:57.459
Conf. Room A: I don't know how to pull that up, and perhaps… I did see
some of them before we had our…
266
00:58:57.460 --> 00:59:19.999
Conf. Room A: Commissioner-Mayor Meeting a couple weeks ago, so there is
an internal audit section. I'm not sure it's been completely updated, so
it's a great comment, Mayor, that maybe not all internal audit reports
are posted there, because there have been a number in 2026, and maybe
there have been some reorganization. Yeah, if you go down below, the
audit plans are there.
267
00:59:20.000 --> 00:59:22.490
Conf. Room A: And then the final reports, I think we might…
268
00:59:22.530 --> 00:59:24.039
Conf. Room A: How do I get to that?
269
00:59:24.140 --> 00:59:28.040
Conf. Room A: Cupertino… Yeah, usually the oil just…
270
00:59:28.390 --> 00:59:36.250
Conf. Room A: Mine didn't, it didn't… Take you to it. Go ahead and click
on Finance. Go to Financial Reports, and then there's an Internal Audit
subsection.
271
00:59:36.600 --> 00:59:38.300
Conf. Room A: Okay…
272
00:59:38.890 --> 00:59:46.829
Conf. Room A: So if I landed on the main page… I'm starting on the main
page of the website. Our city?
273
00:59:47.680 --> 00:59:49.740
Conf. Room A: Okay.
274
00:59:50.550 --> 00:59:52.079
Conf. Room A: And then under finance…
275
00:59:53.740 --> 01:00:10.259
Conf. Room A: So, if I just do a search on the CT homepage for internal
audit, I don't get that. I get a bunch of… Yeah, sometimes the search
isn't the greatest, so if you go to your… Yeah, so if you go to your
city.
276
01:00:10.900 --> 01:00:14.339
Conf. Room A: Yes, and then under Departments, if you scroll down, you go
to finance.
277
01:00:14.940 --> 01:00:16.400
Conf. Room A: Couple more down, there we go.
278
01:00:16.880 --> 01:00:20.060
Conf. Room A: And then if you click a couple more over…
279
01:00:20.270 --> 01:00:22.089
Conf. Room A: Oh, no, there, there we are.
280
01:00:22.830 --> 01:00:37.020
Conf. Room A: Okay, so I was wanting to see the Baker-Tilley report with
all of these recommendations. There was one that you had, it was several,
maybe 30, 30 pages long, and it was a, it was a,
281
01:00:37.090 --> 01:00:48.770
Conf. Room A: All in a table. Really small thought. Lots of
recommendations. I think it's the one that would have all of these
recommendations on it.
282
01:00:49.020 --> 01:00:57.679
Conf. Room A: This one had a vast majority of them. Yeah, this is a
monster… This is the E… this is the ERA. So, I'm thinking that you're…
you're wanting…
283
01:00:57.960 --> 01:01:03.460
Conf. Room A: all the recommendations. I… Colleen, do you know if we
have… I don't know if we've…
284
01:01:03.540 --> 01:01:14.900
Conf. Room A: provided a report with all the recommendations. We keep
track of them, you know, in our own database, but we don't have a report
that we've provided the city with all those recommendations.
285
01:01:14.920 --> 01:01:22.670
Conf. Room A: altogether. Okay, so for instance, is I was looking…
wanting to know what the four old
286
01:01:22.670 --> 01:01:28.029
Conf. Room A: Civil Grand Jury 2022 recommendations are.
287
01:01:28.030 --> 01:01:43.579
Conf. Room A: Because I'm curious if some of them have been… just already
fixed. And it's been, like, 4 years since that report came out, and the
people have all changed. So I don't know where, like, where can I find
it?
288
01:01:44.900 --> 01:01:50.000
Conf. Room A: what the recommendations were. That may not have been part
of the internal audit.
289
01:01:50.440 --> 01:01:52.950
Conf. Room A: Reports. Is there a separate…
290
01:01:53.280 --> 01:02:00.470
Conf. Room A: We saw you… so, at that time, if so, for instance, if there
were 6 findings, and 2 had been…
291
01:02:00.790 --> 01:02:08.899
Conf. Room A: resolved. At that time, we would tell you that there was 2
resolved, but we wouldn't tell you the 4 that would be open still, right,
Colleen?
292
01:02:09.460 --> 01:02:22.800
Colleen Rozillis: Right, this… honestly, this is a… it's a staff function
to close the findings, and we track whether the recommendations have been
implemented, so I think it will be up to staff how much detail they would
want
293
01:02:23.070 --> 01:02:35.820
Colleen Rozillis: to provide to you. For example, the budget process
review that we did, once those findings… once we have said they're
validated, you could look at that entire report and say, this is closed.
294
01:02:35.820 --> 01:02:58.949
Colleen Rozillis: But we can work with staff to provide a little bit more
detail in our presentation about what's remaining. And it would be up to
staff whether they might want to keep a master log available to the
public of the audit findings. We show you in the report kind of a high
level, because it would be a very, very long report with a lot of detail
to have the language of each recommendation
295
01:02:58.990 --> 01:03:02.269
Colleen Rozillis: Provided, and to keep that log over time.
296
01:03:03.080 --> 01:03:05.639
Colleen Rozillis: So we're trying to make it higher level for the
committee.
297
01:03:05.880 --> 01:03:21.960
Conf. Room A: Well, as a council member, and we have members of the
public who are not always supportive of the council, that having that
four items back from 2022 on this report could be used by
298
01:03:21.960 --> 01:03:41.520
Conf. Room A: someone to come up to a council meeting and say, look,
there's four things that still haven't been taken care of from 2022, and
we'll… we will know nothing about what these 4 items are, which make us
look really bad. So I would like to be able to,
299
01:03:41.550 --> 01:03:56.019
Conf. Room A: kind of risk management, that… that, potential, situation.
You can… we've seen it before, where these reports have been misused, to
abuse people,
300
01:03:56.980 --> 01:04:11.519
Colleen Rozillis: Yeah, that's completely understandable. So we'll work
with staff on the format and content so that you have some more detail
without it being an overwhelming amount of paperwork that then the city's
gotta print out and publish every quarter.
301
01:04:11.770 --> 01:04:35.520
Conf. Room A: Yeah, yeah, and it's been… it was… so I'm really glad to
see the language talking about the process improvement here, and I think
that's really important, and we've turned around a good number of the
residents to view this as a positive, and… but it has been used to both
insult the council and insult staff at times, and so we want to get
everybody on the same page.
302
01:04:35.520 --> 01:04:46.259
Conf. Room A: For the positive results that this is having on the city,
and try to limit those opportunities for it to be,
303
01:04:46.430 --> 01:04:48.180
Conf. Room A: mischaracterized.
304
01:04:49.450 --> 01:05:05.569
Conf. Room A: Okay, so, so originally there were 79 recommendations,
right? Correct. So is there a document that… I'm assuming that's a
document the Council has approved, with the 79 recommendations?
305
01:05:05.570 --> 01:05:20.129
Colleen Rozillis: That would be, every report that we issue adds to the
denominator of the recommendation, so it's not a static number. 79, we
probably started with fewer than 79 when we began the validation process.
306
01:05:20.220 --> 01:05:21.360
Conf. Room A: And every…
307
01:05:21.660 --> 01:05:30.240
Colleen Rozillis: Every report that is completed then adds additional
recommendations, so we validate, and the percentage, the number will
change over time.
308
01:05:30.240 --> 01:05:46.719
Conf. Room A: You keep updating the… Right. Oh, that's why it's hard to
find one document that has all… So, for example, after the grant or grant
management is presented to you all, then we would add those to the list.
Does that make sense?
309
01:05:46.720 --> 01:05:56.260
Conf. Room A: Oh, I see. So you'll probably see it at the very bottom,
under Special Revenue Fund Progress, Process Review, you'll see another
line, 2026.
310
01:05:56.630 --> 01:05:58.340
Conf. Room A: Grant management.
311
01:05:58.510 --> 01:06:03.250
Conf. Room A: So, it's not there yet, but maybe next quarter you'll see
that with the…
312
01:06:03.380 --> 01:06:18.780
Conf. Room A: X number of recommendations. Oh, I see, okay. This is a
very helpful report, let me re-emphasize, because it includes not only
internal audit, it includes other recommendations, for example, from the
external auditor.
313
01:06:19.030 --> 01:06:20.630
Conf. Room A: As I understand it.
314
01:06:22.310 --> 01:06:28.770
Conf. Room A: So, the special revenue fund process, or a single audit?
Maybe the single audit is an example.
315
01:06:28.900 --> 01:06:45.760
Conf. Room A: So this one, I believe it's still a function of the
internal audit. All these reports were provided by… Okay, so I
misunderstood then. I thought this was… there was a comprehensive report
I get from you guys, I thought, that's got all the recommendations that
you're tracking.
316
01:06:46.310 --> 01:06:48.620
Conf. Room A: So, it's only internal audit.
317
01:06:48.620 --> 01:06:51.259
Colleen Rozillis: That's not correct. This includes, two grade.
318
01:06:51.260 --> 01:06:51.780
Conf. Room A: Enjoyable.
319
01:06:51.780 --> 01:06:56.590
Colleen Rozillis: reports, as well as a single audit finding that the
city received in 2022.
320
01:06:56.590 --> 01:07:15.779
Conf. Room A: So the single audit would be the external… Correct.
…previous auditors, and then the grand jury, of course, is the grand
jury. So that's what I thought this was a more comprehensive document,
not that, you know, internal audit's going to come up with most of the
recommendations we would expect, but so what's the basis of capturing a
recommendation, then?
321
01:07:16.030 --> 01:07:35.150
Conf. Room A: since we've got 3 different sources right now, it makes
sense to me to have external audit, internal audit. I guess I wouldn't
have expected a grand jury anyways, but… so that's fine, I get it. Is
there… are there any other sources that you guys typically look at when
you go into a municipal situation, or…
322
01:07:36.120 --> 01:07:56.009
Conf. Room A: Sure. Which is great for us as a committee, this is great
for us to see what's out there, what's being looked at. I think it's a…
it's… maybe we're not giving it as much credit as it deserves. It's
quite… quite a nice thing to close the loop, so to speak, which I really
like this report. But any others, Colleen, that come to mind? Are we… is
that the typical
323
01:07:56.010 --> 01:07:57.470
Conf. Room A: Source of everything.
324
01:07:57.670 --> 01:08:14.169
Colleen Rozillis: This is pretty typical. This was a management decision
at the time we established this program, to go back and include the grand
jury reports. We would typically include internal and external audit, and
if the city were to receive findings from
325
01:08:14.170 --> 01:08:37.030
Colleen Rozillis: another auditor, for example, HUD, or, or another
federal agency that came in, you could include those two, just for
transparency's sake, there was a decision made to include the grand jury.
I would say our clients are kind of 50-50 on whether they include grand
jury findings or not in this, but it does daylight whether the city is
making movement on
326
01:08:37.060 --> 01:08:42.949
Colleen Rozillis: Recommendations from external bodies, and that's what
the committee chose at the time.
327
01:08:43.500 --> 01:08:55.690
Conf. Room A: And there was… that reminds me then, wasn't there a finding
in one of the grants during the COVID era that, so that was a special
report from the external auditors, probably.
328
01:08:55.689 --> 01:09:09.009
Conf. Room A: I think… I do believe it's that 2022 single out, so it's
second to the bottom. Okay, okay, yeah, great. Okay. Yeah, but I still…
it's… yeah, I think it's nice to include a grand jury.
329
01:09:09.010 --> 01:09:12.910
Conf. Room A: But we had another civical injury report this year.
330
01:09:13.120 --> 01:09:19.890
Conf. Room A: So, would that be added? I'm curious, but then I do think
that we…
331
01:09:20.029 --> 01:09:29.340
Conf. Room A: We should have a document with all the 79 recommendations,
even if they are… being adjusted, but…
332
01:09:29.430 --> 01:09:47.249
Conf. Room A: I assume you do have at least some point. Right. Yeah, we
can work with management, like, we'll have… we'll have an update for the
next quarter. I wonder if maybe you could… the internal auditors could
work with city staff and come back with maybe a suggestion on how to
handle it, because there seems like there's a…
333
01:09:47.420 --> 01:10:06.240
Conf. Room A: potential for a lot of material, and we want to make sure
we're getting maybe a summary report, and then we can go into detail when
we see something. And you've also raised the issue of maybe the public
has a different interest than this committee, so possibly one solution to
address what you're talking about is you guys could come up with a
334
01:10:06.440 --> 01:10:14.490
Conf. Room A: A proposal for us next… next quarter in conjunction with
this report to say how you would handle, or…
335
01:10:14.960 --> 01:10:26.380
Conf. Room A: I'm just throwing it out, because as a committee, we…
Mayor, maybe… Yeah, it doesn't have to be one… just to clarify, it
doesn't… you don't have to create a whole new document
336
01:10:26.380 --> 01:10:38.880
Conf. Room A: for this. Just, that would be nice to have a list of 79,
and then maybe it's 5 different documents, and then just say, okay, if
each one is from which document, then at least…
337
01:10:38.880 --> 01:10:39.720
Conf. Room A: there is…
338
01:10:39.790 --> 01:10:52.170
Conf. Room A: a place people can look for information. That's good
enough. Mayor, you have… Thank you for mentioning the Silver Grand Jury.
So, this year, we've had 3.
339
01:10:52.170 --> 01:11:06.050
Conf. Room A: Cupertino is named in three, so the first was, with regards
to remote teleconferencing, convenience versus compliance. We had a VTA
one, and then Popples.
340
01:11:06.540 --> 01:11:18.420
Conf. Room A: So, unfortunately, we've got 3 more to add, and we've been
working on the first one. We're working on all 3. The first one is really
in process, and it will,
341
01:11:18.420 --> 01:11:29.610
Conf. Room A: ultimately get into our, Council Procedures Manual. We'll
have to have a discussion about that probably in November to make some
adjustments there.
342
01:11:30.190 --> 01:11:33.919
Conf. Room A: But I… I guess it would get added onto your…
343
01:11:34.300 --> 01:11:51.270
Conf. Room A: the reports list, perhaps? Maybe it comes back to my
question of clarification, which was, can we maybe have a little text on
the bottom that says, reports… what is the universe of total
recommendations? And it comes from, I guess we're saying.
344
01:11:51.290 --> 01:11:54.879
Conf. Room A: The past, the decision was civil juries
345
01:11:54.950 --> 01:11:58.959
Conf. Room A: Internal audit recommendations, external audit
recommendations.
346
01:11:59.190 --> 01:12:10.309
Conf. Room A: And that way, everybody knows those are city staff, then,
when internal audit may not be aware of everything. City staff would have
a triggering process to identify these.
347
01:12:12.370 --> 01:12:27.600
Conf. Room A: I'm not thinking of a very extensive, but some kind of note
on here that I never thought of would be helpful. I didn't realize there
was a decision made in prior years, for example, so that's helpful to
know that we're continuing the work of prior committees that we can build
on.
348
01:12:27.940 --> 01:12:35.739
Conf. Room A: Okay, I think we should move on from this item, probably,
if we can. Any other burning questions, or we got our stuff addressed?
349
01:12:36.050 --> 01:12:55.229
Conf. Room A: So we could vote to, or choose to recommend that we no
longer include the civil grand juries here, because that's being handled
at a council level. And then it's kind of duplicative if we're analyzing
and having our consultant analyze the same civil grand jury.
350
01:12:55.390 --> 01:12:58.729
Conf. Room A: Let's see if there's any comments from the public.
351
01:12:58.960 --> 01:13:03.499
Conf. Room A: And then we can maybe go to a motion, even though this is
an informational item.
352
01:13:04.830 --> 01:13:10.899
Conf. Room A: Chair, I see no request to speak. Fantastic. I'm thinking,
you know, maybe we could…
353
01:13:11.060 --> 01:13:15.429
Conf. Room A: Talk some more and have a motion, or we can… whatever you…
354
01:13:15.790 --> 01:13:27.909
Conf. Room A: I take direction from… it sounds like a great idea to, you
know, address what we're going to include on this, reaffirm what's been
in here in the past, or remove some. It could be a nice time to do that.
355
01:13:28.510 --> 01:13:31.929
Conf. Room A: City staff have any comments on your opinion?
356
01:13:32.410 --> 01:13:51.310
Conf. Room A: Ultimately, this is a report that goes to the audit
committee, so if you all want to remove or include additional, by
including, maybe it's the external audit findings, if there are any, so…
which I think would be more relevant for this body. Right. We can
certainly do that.
357
01:13:51.890 --> 01:14:08.999
Conf. Room A: Yeah, I can see lots of other committees or institutions
that maybe make complaints, so I don't know that this is appropriate for
us, necessarily. Colleen, do you have some experience? You said some
cities do add civil jury comments, so is that widespread, do you think,
anecdotally, or…
358
01:14:10.720 --> 01:14:26.629
Colleen Rozillis: It really depends on how, how grand jury complaints are
handled. I would agree with the mayor's comment that because these are
handled at the council level, it is a little bit redundant. It just
depends on how you all want to handle it, but,
359
01:14:26.630 --> 01:14:36.929
Colleen Rozillis: Typically, the Council says, here's how we plan to
respond, management implements, comes back to Council and says, we
responded this way, and then we would validate at the same time.
360
01:14:38.950 --> 01:14:48.499
Conf. Room A: Right, so I… getting rid of redundancy, I'm all in favor
of. I mean, we… I don't… Vice Mayor, I don't think we,
361
01:14:48.550 --> 01:14:56.830
Conf. Room A: had control over what was being done at that time. At what
time? Oh, adding… Oh yeah, and it was used as a tool.
362
01:14:56.830 --> 01:15:12.549
Conf. Room A: I really… I didn't add… I really didn't think it's bad to
include a civil grand jury, because it's nice to see, oh, 4 was
implemented, and 4's still open. I'm curious what's still open.
363
01:15:12.610 --> 01:15:27.470
Conf. Room A: But on the other hand, not all the recommendation from
grand jury has to do with, audit, or finance, right? For… so does it make
sense to include recommendations that
364
01:15:27.780 --> 01:15:35.280
Conf. Room A: may not have to do with finance, and also, a lot of times,
not a lot, there may be some.
365
01:15:35.300 --> 01:15:52.859
Conf. Room A: 50%, I think, of the recommendations we disagree with, so
it doesn't mean they… because the grand jury… civil grand jury consists
of people who have never been elected official. They make
recommendations, but then they don't even know how city works.
366
01:15:52.920 --> 01:15:58.640
Conf. Room A: And so I don't think their recommendation, is always.
367
01:15:59.020 --> 01:16:07.979
Conf. Room A: a good recommendation. So, I… I don't know if these 8 are
those 8 that's reasonable.
368
01:16:08.130 --> 01:16:12.450
Conf. Room A: That we have accepted, or the regulation that's…
369
01:16:12.980 --> 01:16:15.859
Conf. Room A: directly from the Seagro Grand Jury, so that's…
370
01:16:16.010 --> 01:16:23.159
Conf. Room A: Would be my concern, with taking an external recommendation
without
371
01:16:23.590 --> 01:16:28.280
Conf. Room A: Our own validation on whether those recommendations are
372
01:16:28.280 --> 01:16:50.900
Conf. Room A: suitable for Cupertino. Yeah, I think that goes to my
observation, is typically these kinds of reports are stuff this committee
has input or control over, and so internal audit reports into both the
City Council and the Audit Committee, is the way that's structured. Same
way, basically, for the external auditor, so it makes perfect sense to me
that
373
01:16:50.900 --> 01:16:53.500
Conf. Room A: This committee would have input on
374
01:16:53.670 --> 01:16:58.450
Conf. Room A: The reports coming back to the committee, whereas we have
no
375
01:16:58.580 --> 01:17:18.439
Conf. Room A: real direction with the… I could see where the city
attorney has input, I would hope or expect, on these kinds of things, but
that… we would… we would get input from either the external auditors
saying this is a significant enough issue, it shows up in the ACR, and
you guys could be aware of it, or we see it in the footnote, or…
376
01:17:18.490 --> 01:17:41.869
Conf. Room A: internal auditor does a project and then brings it up for
us, but separately, I mean, there's… we could probably imagine other
organizations that have comments for approval that may be coming to the
city that we have no real… it doesn't seem to fit within our purview, but
I can see where it could, if we extend it and City Council says, why
don't you watch over it, so…
377
01:17:41.870 --> 01:18:02.689
Conf. Room A: I'm happy to have a motion that clarifies what we think
this is. We can either do it through city staff consulting with maybe the
city attorney can get involved, or whatever you think, or we can… we can
take a vote here and just say, let's… let's stick it with internal audit
and external auditors, which report indirectly to this committee and
other groups that don't.
378
01:18:02.830 --> 01:18:15.159
Conf. Room A: Okay, so I'll make a motion that we remove civil grand jury
recommendations from this report, and then if there is any
379
01:18:15.160 --> 01:18:26.930
Conf. Room A: financial relate to the issue that's recommended from the
ZRA grand jury, we will rely on… I think this council… the city manager
or city attorney will
380
01:18:27.090 --> 01:18:38.100
Conf. Room A: can refer them to the internal auditor, who can then
recommend an appropriate way to integrate those into the cities.
381
01:18:38.250 --> 01:18:40.750
Conf. Room A: Process.
382
01:18:40.780 --> 01:18:49.179
Conf. Room A: Bye. More seconds, yeah, and I, like, here, I don't want to
talk about the pothole issue here and at Council.
383
01:18:49.180 --> 01:19:02.519
Conf. Room A: I don't want to talk about ETA here and at Council, or even
the Council Procedures Manual that we're going to have to go through,
that it's very redundant. People can come to the Council meeting and make
their input there, rather than
384
01:19:02.520 --> 01:19:18.570
Conf. Room A: taking up our precious time of it, so I agree. Yeah, so
maybe, like, show me the money, maybe that item is relevant to this
committee, and then I'm sure that the staff will bring that to the
committee, together with Baker City.
385
01:19:18.570 --> 01:19:34.560
Conf. Room A: Yeah. My input on this might be, first, I can ask, again,
city staff, or I think the city manager's office is represented in our
committee here as well, but again, to me, it's what does this committee
have authority over?
386
01:19:34.560 --> 01:19:44.479
Conf. Room A: And I'm happy to take responsibility for things, but I
didn't realize this was a decision, maybe, that had been in scope a
number of years ago.
387
01:19:45.600 --> 01:19:53.229
Conf. Room A: I… personally, all the things you said, I'm not sure we can
rely on the city staff bringing us issues. I think that's part of the…
388
01:19:53.550 --> 01:20:14.239
Conf. Room A: nice loop being closed here. There's a formal report given
by the external auditors or internal auditors, and they have
recommendations, and we're going to go soon to a new item that's got a
series of them, and then they get on this report, and then they're either
addressed, city staff either agrees with them, or they don't, and then at
some point, there's a resolution. Whereas things we don't have control
over, it…
389
01:20:14.240 --> 01:20:20.279
Conf. Room A: I don't see how this loop gets closed easily. So maybe we
simplify the motion to just say.
390
01:20:20.280 --> 01:20:27.309
Conf. Room A: We removed the Civocal injury report. Unless City Council
wants to put it back in our purview or something.
391
01:20:27.310 --> 01:20:38.280
Conf. Room A: They can pick and choose and direct items. So you're
withdrawing your first, your main motion. This is, the new main motion.
The new motion that we removed.
392
01:20:38.280 --> 01:20:52.029
Conf. Room A: civil grand jury recommendations from the Audit
Recommendation Report. More tracking report, yeah. Okay, and then, we've
got a motion, and we can discuss it.
393
01:20:52.030 --> 01:21:13.679
Conf. Room A: Now, again, I'd like to clarify that that motion is because
we're clarifying what this audit committee has purview over as we
understand it. Okay, so can I, amend the motion to say that we are
removing civil grand jury recommendations from the Audit Recommendation
Tracking Report
394
01:21:13.680 --> 01:21:17.320
Conf. Room A: Because it's not in the purview of this committee.
395
01:21:17.820 --> 01:21:18.590
Conf. Room A: Yeah.
396
01:21:19.190 --> 01:21:43.389
Conf. Room A: That's closer to what I want. I always have to… Would you
like to reprace the motion? I'm just looking at it. Maybe you can
rephrase the motion. Well, maybe… I always draw my motion, you can… No,
no, no, no, no, that's not what I mean. I think just simply relying on
the fact that, like, if there was a report like Show Me the Money, that
the Council, if… while we're talking about it, we could direct staff
397
01:21:43.390 --> 01:21:49.019
Conf. Room A: to… bring this to the Audit Committee if we felt that the
Audit Committee had, some…
398
01:21:49.020 --> 01:22:00.620
Conf. Room A: inputs that would be helpful. Yeah. But that does not need
to be part of the solution, it's just what the Council is willing to do.
Yeah.
399
01:22:00.960 --> 01:22:20.140
Conf. Room A: So is the motion clear? I do believe it's clear. Just to
add a bit to it, the… and it's later on our agenda, is the Internal Audit
Work Program. Seeing that that is going to Council in September, maybe
that's the opportunity Council can take to add
400
01:22:20.330 --> 01:22:40.299
Conf. Room A: a civil grand jury report to the validation, as a follow-
up, or as a work program item to ensure that, one, that it's been seen
through. So if there is a civil grand jury report, like, show me the
money, right? It's… maybe it's within the purview of this body to review
and make sure that
401
01:22:40.450 --> 01:22:44.060
Conf. Room A: It's been addressed, and maybe the council can make that
decision.
402
01:22:44.370 --> 01:22:49.230
Conf. Room A: At the time when we take the work program for
consideration.
403
01:22:50.850 --> 01:23:05.959
Conf. Room A: Okay, but we can still be making that recommendation to the
Council about this, at this time. Okay. Well, I think we can remove it if
we choose from this report, but that's fine, too, if we can. No, I'm just
saying for future, right? If you, let's say we remove them now.
404
01:23:06.010 --> 01:23:21.879
Conf. Room A: from all future reports. If there is a future civil
grandeur report that you want Baker Tilly or internal auditors to review
to ensure that it's been validated, we can include it as part of that
validation process, or during that… the annual review of our work plan.
405
01:23:21.970 --> 01:23:26.469
Conf. Room A: You mean have that emerge at this level, you're saying?
406
01:23:27.220 --> 01:23:36.490
Conf. Room A: Yeah, I would say probably from the direction from Council
down. Okay, so that is, oh, the same as what I was anticipating, yeah.
Okay. Okay.
407
01:23:36.620 --> 01:23:56.340
Conf. Room A: Where am I at? I guess we've got a motion. May I clarify
that Mullins accepted the child's amended motion? Can you read it back?
The amendment is purview of the… because it is not within the purview of
the Audit Committee. I wasn't sure… Audit Committee…
408
01:23:56.930 --> 01:24:01.319
Conf. Room A: Recommendation tracking report, because it's not in the
purview of the committee.
409
01:24:01.740 --> 01:24:11.170
Conf. Room A: It may not be. If it wasn't, then why have we been doing
it? If it wasn't in our purview, why have we been doing it? So…
410
01:24:11.770 --> 01:24:13.420
Conf. Room A: I would… I would…
411
01:24:13.610 --> 01:24:21.020
Conf. Room A: Question, if that was… and it seems to be more of an
observational statement rather than the motion.
412
01:24:21.020 --> 01:24:37.720
Conf. Room A: You mean the reason for the motion? Yeah, yeah, and I'm not
entirely sure, because it's been our practice that we've been doing this.
Why are we now saying that it's not working? I think it's important to
include that in the motion per chair's recommendation.
413
01:24:37.770 --> 01:24:40.560
Conf. Room A: To clarify, it's not…
414
01:24:40.590 --> 01:25:05.059
Conf. Room A: within the purview of the committee. That was before I
heard the mayor's comment, which makes perfect sense as well. I honestly
think maybe we could handle this in another way, which is, again, I'm not
trying to push it off into a committee, but possibly internal auditors
and staff can go back in consultation with all the various parties that
415
01:25:05.280 --> 01:25:11.529
Conf. Room A: And ask, what should be the scope of the total
recommendation column?
416
01:25:11.850 --> 01:25:17.649
Conf. Room A: And we can take that choice with emotion here, or we can
ask further input.
417
01:25:17.780 --> 01:25:18.870
Conf. Room A: I guess.
418
01:25:19.540 --> 01:25:26.529
Conf. Room A: Well, I can accept… Is there an appetite? I can accept the
friendly amendment, even though I question it.
419
01:25:26.700 --> 01:25:43.799
Conf. Room A: Okay, so you accept the friendly amendment to add this,
because this is not in purview of the Audit Committee, right? So do we
want to amend that to also include the chair's comment about
420
01:25:44.190 --> 01:25:52.310
Conf. Room A: Direct staff to bring back universe of…
421
01:25:53.030 --> 01:25:58.440
Conf. Room A: Reports that we are taking to… for the total
recommendations.
422
01:25:58.600 --> 01:26:01.630
Conf. Room A: I'm happy with that. Yeah, I think so? Okay.
423
01:26:02.070 --> 01:26:03.090
Conf. Room A: Accept.
424
01:26:03.680 --> 01:26:06.580
Conf. Room A: top staff may not want to.
425
01:26:06.860 --> 01:26:07.220
Colleen Rozillis: But I…
426
01:26:07.220 --> 01:26:08.080
Conf. Room A: It's like that project.
427
01:26:08.080 --> 01:26:10.079
Colleen Rozillis: Could I make a quick suggestion?
428
01:26:10.080 --> 01:26:12.880
Conf. Room A: Yeah, please, we're working as a team here.
429
01:26:12.880 --> 01:26:25.380
Colleen Rozillis: I know that… I know that the committee, charter is not
maybe set in stone at the moment, but it would probably be easily covered
if the motion just referenced
430
01:26:25.380 --> 01:26:43.560
Colleen Rozillis: reports that are under the purview of the committee is
outlined in its charter or directed by Council. So that would cover, for
example, if a grand jury report came to Council, there were items that
you wanted to refer to the audit committee, you could do that in the, the
required responses.
431
01:26:43.560 --> 01:26:50.209
Colleen Rozillis: To the grand jury, and that would cover the universe
without us then being able to,
432
01:26:50.340 --> 01:26:55.299
Colleen Rozillis: Put everything into the tracking report that could
possibly be relevant.
433
01:26:55.300 --> 01:26:58.730
Conf. Room A: Yeah, I like that wording, actually. I think…
434
01:26:58.790 --> 01:27:05.919
Conf. Room A: For the motion, it's not defining what's the universe, it's
asking, directing the staff.
435
01:27:05.960 --> 01:27:20.740
Conf. Room A: to make a recommendation to the committee, here is what we
should consider. And the staff can then say, okay, the universe is, per
the charge of the committee, right? So that's okay.
436
01:27:21.880 --> 01:27:25.130
Conf. Room A: Right, which I don't think we need to modify the motion.
437
01:27:27.220 --> 01:27:28.610
Conf. Room A: Do you think?
438
01:27:29.320 --> 01:27:40.499
Conf. Room A: what Colleen said sounded very succinct and to what I was
driving at, so I'm… I don't mean to be annoying here.
439
01:27:40.690 --> 01:27:45.029
Conf. Room A: Could you repeat that? Yeah. Possibly? Colleen?
440
01:27:45.190 --> 01:27:47.270
Colleen Rozillis: Sure, it would be,
441
01:27:47.890 --> 01:27:57.330
Colleen Rozillis: limited to tracking recommendations that are within
the… under the purview of the Audit Committee per its charter, or as
directed by Council.
442
01:27:57.670 --> 01:28:12.239
Conf. Room A: Yeah, I… Okay, accept that. Yes. Good. So we've got
substitute motion, more second. Excellent. Yeah. We've had a nice
discussion. I like this motion a lot. Any other final comments? Let's
take a vote.
443
01:28:12.530 --> 01:28:17.580
Conf. Room A: Sorry, did I write Chao move, the substitute motion?
444
01:28:17.580 --> 01:28:40.649
Conf. Room A: Good question. Yeah, the substitute motion, there were two
amendments, right? No, three amendments. First is the purview, second is
add direction to staff, and that direction was amended. So there were
three amendments. On the name. On the… the second motion.
445
01:28:40.650 --> 01:28:42.670
Conf. Room A: Well, you could also…
446
01:28:43.450 --> 01:28:57.989
Conf. Room A: You could also just with… so she doesn't have to type all
that out. Yeah, or I can just make a new motion that includes all that.
So remove… Whichever you prefer. Remove the main motion again, and then
just have this, so…
447
01:28:58.200 --> 01:29:03.580
Conf. Room A: this will be the main motion. So, and it'll probably read
better in the minutes that we don't have this.
448
01:29:03.680 --> 01:29:13.030
Conf. Room A: Wow. So, we'll just do a substitute motion, which include
the second motion with the three amendments.
449
01:29:13.560 --> 01:29:34.070
Conf. Room A: No, no, no, no, you want to, you want to withdraw your main
motion, which had all those amendments. Okay, oh. You're going to create
a new main motion with Colleen's simplified, limited to tracking the
recommendations of the Audit Committee per the Charter or Bidirectional
council, the simplified one, and just…
450
01:29:34.200 --> 01:29:42.689
Conf. Room A: put that in, and then in the meeting minutes, because you
don't have to put the original main motion in the minutes, you just have
this one.
451
01:29:42.840 --> 01:29:57.429
Conf. Room A: But, so, okay, so child's moving and more… Second. Remove
the civil grand jury recommendations from the Audit Committee
recommendation tracking report, limited to tracking recommendations that
are within the
452
01:29:58.050 --> 01:30:03.630
Conf. Room A: Under the purview of the Audit Committee, per its charter,
or as directed by Council.
453
01:30:05.110 --> 01:30:22.810
Conf. Room A: Is that… Oh, should that include direct staff to bring back
the… no? Okay, that's okay. No, we've gone beyond that now. Okay. So the
previous motion was withdrawn, so you don't need to put that. Okay, thank
you. Save all the time for the minutes. Super.
454
01:30:23.340 --> 01:30:26.269
Conf. Room A: All right, let's take a vote on that as,
455
01:30:26.390 --> 01:30:30.129
Conf. Room A: Just stated. All in favor? Aye.
456
01:30:30.390 --> 01:30:47.870
Conf. Room A: Aye. Any opposed? No, it's unanimous of us here. Thanks,
everyone. I think we came to a nice resolution, and you can put that as a
footnote down here on our report, whatever our motion was that we so,
succinctly have in the minutes now. Great. I think we're still at the
point where
457
01:30:48.020 --> 01:31:06.200
Conf. Room A: Well, I guess we're finished with this item. This was an
informational item on which we corrected, or we made a motion. So, thank
you for the presentation. It went a little longer than I anticipated, but
now I think we're into the next part of your presentation, which is item
6.
458
01:31:06.430 --> 01:31:12.229
Conf. Room A: Yes. Which has received the Grants Management Internal
Control Review final report. Yes.
459
01:31:12.660 --> 01:31:23.329
Conf. Room A: Yeah, so this is really exciting. I'm going to go to the
executive summary just to kind of point out some of the highlights of the
report, and then I'll open the floor for questions. So, you know.
460
01:31:23.330 --> 01:31:34.999
Conf. Room A: This was really to assess the internal controls over grant
management activities for the city, really looking specifically for
compliance with policies and procedures.
461
01:31:35.000 --> 01:31:54.359
Conf. Room A: as well as best practices. So we really looked at the
application, the review, the administrative and reporting processes
related to grant management processes. This actually took place in June
through October of 2025.
462
01:31:54.360 --> 01:32:04.550
Conf. Room A: So, that's important just to remember that, you know, some
of these recommendations might have already been mitigated by the city.
You know, thinking about
463
01:32:04.550 --> 01:32:23.519
Conf. Room A: how much total grants the city has, it's pretty
substantial, so looking at, you know, fiscal year 24, for example, 25% of
the program revenue is related to grants. So this is a very material
balance for the city, and something that's really important.
464
01:32:24.230 --> 01:32:29.380
Conf. Room A: So, going down to the second page, you will see that
465
01:32:29.400 --> 01:32:46.449
Conf. Room A: we do like to highlight things that are going really well,
and the city is doing really well. I'll call out a couple of these. So
one, you know, looking at departments, it looks like they have really
organized folders for all this information.
466
01:32:46.450 --> 01:33:11.400
Conf. Room A: grant documentation, making sure that it's record… that
they have record retention rights on it, as well as audit readiness,
which is so important, as you know, for your, you know, external
auditors, as well as when pesky internal auditors come. So, really nicely
done. Also, another one to highlight, segregation of fees really appeared
to be in practice in invoice reviews, approvals, reducing that risk
467
01:33:11.400 --> 01:33:35.119
Conf. Room A: of errors or unauthorized transactions, which is something
to really highlight for the city. And also, you know, there are… there
appears to be really good handoff lists to help mitigate controls. You
know, if there was any risks of staff turnover, you know, everyone has an
understanding of what needs to be done in this process. So, great job to
the city.
468
01:33:35.120 --> 01:34:00.000
Conf. Room A: But like, you know, most cities, there are some
opportunities for improvement, and if you go to page number 3, this lists
out 9 areas, that I wanted to highlight in the report, but obviously
there's details below and there's other recommendations below. So looking
at these high-level, you know, really making sure to have standard grant
management policies.
469
01:34:00.000 --> 01:34:05.599
Conf. Room A: policies and procedures and continuity plans. So we talk
about, you know, really
470
01:34:05.610 --> 01:34:12.759
Conf. Room A: Having that handoff to maintain grant management
activities, what if there are staff absences, transitions, that sort of
thing.
471
01:34:12.760 --> 01:34:28.140
Conf. Room A: Making sure that there is a centralized grant opportunity
identification and monitoring. So, when we were looking at multiple
departments within the city, there were sometimes different ways that
different departments are
472
01:34:28.140 --> 01:34:34.960
Conf. Room A: Identifying and monitoring these grants, and so really
having a holistic approach across the city really helps make sure that
473
01:34:34.960 --> 01:34:41.560
Conf. Room A: everyone is in under agreement, and the process is
continuous throughout. A couple other things…
474
01:34:41.820 --> 01:35:00.339
Conf. Room A: Making sure that everyone, you know, that there's
segregation of duties across departments, so we did see, you know, some
areas that had great segregation of duties, others, you know, that might
have staff, staff issues, not have enough staff, that sort of thing that
could lead to the potential
475
01:35:00.340 --> 01:35:04.620
Conf. Room A: of, you know, some segregation of duty issues.
476
01:35:05.140 --> 01:35:22.550
Conf. Room A: looking at this again, just making sure that there's
consistent internal reviews and approval processes for grant reporting.
As you all know, grant reporting can be very cumbersome, and there's a
lot of different things, so making sure that, you know, the city really
is
477
01:35:22.550 --> 01:35:26.239
Conf. Room A: crossing the T's and dotting the I's, so to speak.
478
01:35:26.240 --> 01:35:30.610
Conf. Room A: In making sure that they are doing the appropriate grant
reporting.
479
01:35:30.660 --> 01:35:36.060
Conf. Room A: It's a lot of information, it's, and so I, I think…
480
01:35:36.370 --> 01:35:42.679
Conf. Room A: to really make the best of your time, I'll open up for any
questions or comments that you all have.
481
01:35:43.870 --> 01:35:46.079
Conf. Room A: Why don't we do a round table here?
482
01:35:46.580 --> 01:35:50.569
Conf. Room A: Any, clarifying questions from the committee members?
483
01:35:52.600 --> 01:36:09.239
Conf. Room A: I'm kind of wondering how… but one of the… one of the
problems that we've seen is that grants are being, like, applied for, and
then we kind of find out about that after the fact, and has that been…
484
01:36:09.390 --> 01:36:17.350
Conf. Room A: Improved upon, like… For instance, there was a grant for,
485
01:36:17.500 --> 01:36:29.979
Conf. Room A: it was some art… what was it, artificial inten… a virtual
reality, a program. It was about $100,000 that was given to the city to
create this VR,
486
01:36:30.170 --> 01:36:40.260
Conf. Room A: you'd have the virtual reality headset. But that didn't… it
didn't, like, go through the council, and it… and it got kind of put on…
onto, like, a,
487
01:36:40.320 --> 01:36:50.789
Conf. Room A: work program, special project, but all the money came from
outside. It did use some staff time, but is there something in the
process now that would be
488
01:36:50.830 --> 01:37:02.859
Conf. Room A: different, so that that could rise to the level of getting
to the Council, because that's a substantial amount of money, and then
the city is supposed to be continuing, like, using this VR,
489
01:37:02.990 --> 01:37:11.789
Conf. Room A: Thing. It was the one with the decarbonization of your
house with your… changing out your appliances and stuff, and it had
Cooper in it.
490
01:37:11.790 --> 01:37:32.960
Conf. Room A: I don't know if you ever tried it out, so… No. So… There
was one for McClellan Ranch. And that's another one. That was much
smaller. So there is another one? I didn't know that. Yeah, so they're
supposed to have it out, like, at our festivals and whatnot, for people
to check out. Last year? It might have been 2 years ago.
491
01:37:33.030 --> 01:37:45.170
Conf. Room A: Oh. Yeah, so you would put on the virtual reality headset
outside in the library field for the green… what is our… Oh, you need the
headset. It needs the headset to work. Right.
492
01:37:45.170 --> 01:37:56.610
Conf. Room A: Right, and you would see Cooper, and then you would be
asked, you know, like, where can you make changes, and you have different
questions about… he'd be walking around a house and changing out the
appliances for, like,
493
01:37:56.610 --> 01:38:08.409
Conf. Room A: Get rid of the gas stove for something, their induction
heating type of thing. That's as an example. So, is there anything in the
system that would keep that from happening?
494
01:38:09.180 --> 01:38:13.279
Conf. Room A: And maybe what I add to… so the…
495
01:38:13.590 --> 01:38:27.270
Conf. Room A: there is, and we just took this to Council a month or two
ago, is the grant policy, and so it kind of provided some guardrails as
to what would be going to Council, and I think, if I remember correctly,
one of the, the,
496
01:38:27.270 --> 01:38:42.480
Conf. Room A: emphasis on what would be taken, or the pursuit of grants,
is the, amount of staff time required to, essentially, to pursue. And so
it's… it's the short of what it… of what… what kind of what it boils down
to. So, if it's going to be heavy.
497
01:38:42.480 --> 01:39:02.070
Conf. Room A: staff time to pursue this, the idea is it would go to
Council for approval. Now, if it's nominal or it's essentially not much,
I think that the pursuit of the grant would not require it to go to
Council. However, I think there are some thresholds that would require
Council to approve
498
01:39:02.070 --> 01:39:03.170
Conf. Room A: the grant.
499
01:39:03.500 --> 01:39:14.869
Conf. Room A: And one of the other bits, and you will see it as one of
the findings, is it ultimately would also require the city manager's
approval, or their designee on any grant.
500
01:39:15.130 --> 01:39:35.099
Conf. Room A: So can we maybe use those as case study? And so these are
the grants, in the past, and whether the new policy… how the new policy
would apply for this? I think that would help us, to understand the
501
01:39:35.220 --> 01:39:42.850
Conf. Room A: How the new policy would work, maybe whether any adjustment
is needed.
502
01:39:43.220 --> 01:40:02.249
Conf. Room A: One… one more area, so the SV Hopper, the… and I don't know
if this… I don't recall it going to Council, but there has been an
application for two different kinds of grants, to extend that, but I
don't recall us having a discussion about it on the… on the Council
agenda.
503
01:40:02.250 --> 01:40:09.420
Conf. Room A: And those are significant amounts of grants, and, you know,
I'm pretty sure it's so… over a million dollars.
504
01:40:09.520 --> 01:40:15.699
Conf. Room A: Maybe we can organize our comments here, and I guess some
of them are…
505
01:40:15.720 --> 01:40:35.389
Conf. Room A: process-related, and there's some recent development, I
guess, was the policy that what Jonathan's referring to, was that part of
your incorporated… did you finish this study before that? Yes, so if you
look, our very first finding was around, policies and procedures, and I
think that was an administrative policy, Jonathan, that you have been
506
01:40:35.390 --> 01:40:39.900
Conf. Room A: working on, is that correct? No, that one was a council.
Oh, council policy. So…
507
01:40:39.930 --> 01:41:03.889
Conf. Room A: We, we have not reviewed this. Like I mentioned, this, this
report actually, you know, we finished our testing, and the report was…
the draft was initially at October of last year, so it's been a while
since we have worked on this area. What I want to say, we do have a
follow-up, you know, when we get to the next fiscal year internal audit
work plan for this
508
01:41:04.010 --> 01:41:22.910
Conf. Room A: type of thing. Which is kind of what I was reading into, to
the extent you've done a certain amount of work, and there's a number of
recommendations, and when I look at the city staff response, it's
basically, since this report was finished, or the work was done, there's
been a grants analyst who've been hired, who presumably is doing all
kinds of
509
01:41:23.500 --> 01:41:27.739
Conf. Room A: policy and implementation things, and that leads into this,
I guess.
510
01:41:27.880 --> 01:41:31.469
Conf. Room A: Proposal that we have in the next agenda item, so we're
sort of…
511
01:41:31.580 --> 01:41:42.559
Conf. Room A: what I'm trying to do is figure out how we can take the
benefits of what we see in front of us, but then recognize we've got
another item, potentially, where we could address some of the…
512
01:41:42.580 --> 01:41:51.109
Conf. Room A: Almost both of your questions, in some sense, are like
follow-ons to the scoping of that follow-on project.
513
01:41:51.110 --> 01:42:08.780
Conf. Room A: So… so how do we… I don't know if you guys see where I'm
going here, but we got… we can get rid of this item. I don't want to say
get rid of, but how does city… city staff is responding, saying basically
there's a new person, and all of these recommendations are being re-
evaluated. Is that correct?
514
01:42:08.820 --> 01:42:16.939
Conf. Room A: I feel… Somewhat. I think that's the general, or at least
our position, that the,
515
01:42:16.940 --> 01:42:31.470
Conf. Room A: that the new grants analyst has addressed, or that there's
a process in place that addresses most of these… I almost think we could
accept this item, and then on the next agenda item, drill in more deeply
as to what follow-on items
516
01:42:31.590 --> 01:42:48.099
Conf. Room A: Makes sense. I'm curious that this says it's an action
item, and, 6. It seems more informational, right. But I'm also wondering,
like, so this is going to go to Council, so the staff report should have
517
01:42:48.200 --> 01:43:03.540
Conf. Room A: some mention about how this report was generated at this
time, and the city's already been implementing the recommendations, so
the things that… the original report, yeah, that's… it's important, but
we've made XYZ changes so that…
518
01:43:03.540 --> 01:43:14.290
Conf. Room A: the Council doesn't get confused by it, and then also
include that grant policy, too, as a reminder that we had already done
that.
519
01:43:14.290 --> 01:43:32.159
Conf. Room A: So maybe we should have an item that says what you just
said, as our… we handle this sometimes through a staff report, and
Jonathan could include that the committee discussed this report, received
it, and forwarded it to City Council, but with the caveats that the Mayor
has just listed.
520
01:43:32.210 --> 01:43:45.219
Conf. Room A: I have a question for the consultant. Okay, clarifying
questions, we're still on those, actually, and then don't let me forget,
we gotta go to the public. So, from… so this report was done last year.
521
01:43:45.430 --> 01:43:48.440
Conf. Room A: And, I do wonder…
522
01:43:49.220 --> 01:43:59.439
Conf. Room A: how did you collect information to create this report? For
example, those issues with grants we have observed.
523
01:43:59.590 --> 01:44:12.670
Conf. Room A: And it seems you are not aware of those. So, I wonder what
kind of process you had used to create this report. Maybe…
524
01:44:12.840 --> 01:44:23.060
Conf. Room A: There are people you should have interviewed, but you
didn't, so maybe the report should even be
525
01:44:23.910 --> 01:44:28.689
Conf. Room A: Delayed, so you can collect more complete information.
526
01:44:28.900 --> 01:44:31.550
Conf. Room A: Before making this recommendation.
527
01:44:32.460 --> 01:44:35.069
Conf. Room A: Do you want me to take a step up, or do you want to…
528
01:44:35.110 --> 01:44:46.259
Conf. Room A: You can… you can start, and then I can… Okay. I can add my
two cents. Because I have two other examples of things didn't work
before. So, the testing period was…
529
01:44:46.260 --> 01:44:59.400
Conf. Room A: again, at the beginning of fiscal year 25-26, and that's
what they tested. But since then, or inconcurrently, there were some
changes occurring within the city. One, with the, the, the,
530
01:44:59.400 --> 01:45:18.529
Conf. Room A: with the hiring of the grants analyst. And so, as the
report was being generated, being, essentially circulated within the city
for review, which was delayed a bit, due to staff turnover and the review
process. So that's what delayed the report itself.
531
01:45:18.570 --> 01:45:34.880
Conf. Room A: And so it still retained the original testing period, but
changes had already began, right? And that was part of the response. So
you were saying, you only tested, any grants that's being applied, for
during those periods?
532
01:45:35.000 --> 01:45:36.490
Conf. Room A: well, being…
533
01:45:37.020 --> 01:45:53.020
Conf. Room A: Not necessarily a slide, but review, right, it could be a
combination of grants that were in progress, right? If we're, like, CDBG,
that's a year-round and continual grant, right? And so, as they're
testing that,
534
01:45:53.020 --> 01:46:05.159
Conf. Room A: we could be early on in the years, you know, may or may not
have a lot of invoices, but if it's a grant that's kind of crossing a
specific time period, they could be testing that… that one. So again,
their testing period was
535
01:46:05.620 --> 01:46:11.769
Conf. Room A: A couple months, right? They're only looking at one
specific time, but there could be other things more important.
536
01:46:12.240 --> 01:46:15.970
Conf. Room A: And the report was generated based off of that testing
window.
537
01:46:16.310 --> 01:46:28.120
Conf. Room A: So if there were things happened before that testing
window, and that we… we need a policy recommendation.
538
01:46:28.520 --> 01:46:34.900
Conf. Room A: For those grants, they cannot… they are not included, so
how can we include those?
539
01:46:35.120 --> 01:46:45.219
Conf. Room A: Is it possible to revise the report to include, Things that
we think
540
01:46:45.260 --> 01:47:01.489
Conf. Room A: could be improved on, and then have a revised the report.
So, a couple things. I want to remind you, this report is not even from
this past fiscal year. It was from the fiscal year before that. So,
really, we're looking at an item that was from fiscal year 25.
541
01:47:01.490 --> 01:47:13.219
Conf. Room A: So I agree with Jonathan. This is a report and a, you know,
a point of time, and we really need to move forward and think, you know,
what is the future for the city?
542
01:47:13.220 --> 01:47:27.370
Conf. Room A: I think, you know, I do think that what your comments are
valid, and I think that I would really lean into that next agenda item,
which is talking about our internal audit plan for 27, and you can be
specific
543
01:47:27.370 --> 01:47:44.720
Conf. Room A: in maybe that scope of work and saying, you know, these are
specific… not only do we want you to follow up on the findings of this,
but there are specific other areas that Council or this committee, you
know, is concerned with that we would like to include in that scope.
544
01:47:44.720 --> 01:47:47.990
Conf. Room A: And that be a new report for the next fiscal year.
545
01:47:48.750 --> 01:48:00.089
Conf. Room A: I guess, and to chime in on that, there is a description in
this report that you're asking us to complete… receive today on pages
546
01:48:00.090 --> 01:48:19.809
Conf. Room A: 4 and 5 that talks about your scope and methodology. So,
maybe that addresses some of the Vice Mayor's comments, even though I
agree that we should be looking at what's the current situation with the
current analyst, and what do we expect would be helpful for cities and
internal controls or operations from a future
547
01:48:19.810 --> 01:48:20.950
Conf. Room A: perspective.
548
01:48:21.150 --> 01:48:45.559
Conf. Room A: So I'd suggest that we receive this report, and maybe leave
it at that, and City Council… City staff can do whatever, because we're
not forwarding it to City Council, necessarily, as our action item, and
then dive right into the next item on our agenda, which will address
maybe in more depth what you're bringing up, Vice Mayor. I think the… it
does say in the executive summary.
549
01:48:46.930 --> 01:48:56.100
Conf. Room A: Oh. That the internal control review took place between
June and October 2025.
550
01:48:56.350 --> 01:49:08.529
Conf. Room A: That's a very short amount of time. So if your testing is
only for those few months, so, of course, it's not going to capture
551
01:49:08.610 --> 01:49:26.760
Conf. Room A: the problems we have seen over the years, and you would not
have captured things we need improve on. Right, so that actually… so
that's how long the project took place. So the scope of our project was
for fiscal year 25.
552
01:49:26.760 --> 01:49:44.429
Conf. Room A: So the project only… we worked on this project from June 25
through October of 2025, but the scope… so what the grant management
process that we looked within the city was for fiscal year 25.
553
01:49:44.580 --> 01:49:46.959
Conf. Room A: So it was for a year.
554
01:49:47.230 --> 01:50:06.939
Conf. Room A: Also, before 2025. So it's one year, a snapshot of one year
from July 2024 to June 2025. That's correct. That's not clear from your
executive summary.
555
01:50:08.250 --> 01:50:09.330
Conf. Room A: Okay.
556
01:50:10.500 --> 01:50:16.480
Conf. Room A: I would kind of suggest that we could form a subcommittee
to talk about,
557
01:50:16.480 --> 01:50:34.839
Conf. Room A: to test the grant concerns against the new policy, and what
result would happen now if those were being suggested or pursued? What
would be different, with a new policy? And… and just do that as an
offline project.
558
01:50:35.270 --> 01:50:41.830
Conf. Room A: Yeah, so I'd like to mention two other major grants that
559
01:50:42.160 --> 01:50:56.800
Conf. Room A: The city staff has applied, too, maybe the subcommittee can
consider. I don't want to cut you short, because those are super ideas
that really would fit better, maybe, in our work plan, or in the,
560
01:50:56.950 --> 01:51:12.210
Conf. Room A: Next, item 7. Both of your comments, I think, are very
relevant for those two items. Maybe a way to solve this one is the red…
the staff response to just about every one of the recommendations based
on
561
01:51:12.760 --> 01:51:19.599
Conf. Room A: What this, period was covered is basically there's been a
grants manager hired that is
562
01:51:19.720 --> 01:51:36.920
Conf. Room A: now everything has superseded, so I hate to say it, but
it's… it's just time has progressed forward, and we didn't get this
report, or it couldn't be finalized, or whatever. So, to some extent, we
could receive this report and highlight that management step…
management's response is
563
01:51:36.920 --> 01:51:46.700
Conf. Room A: That there's all kinds of policy and personnel changes, and
that we as a committee then, my response to that is.
564
01:51:46.700 --> 01:52:03.309
Conf. Room A: Let's address that in items 7 and 8. Is that your motion? I
don't need a motion, necessarily. It's sort of clarifying the reception
of the report, but we could, yeah, if you want to make a motion. So
moved. Okay. Is there a second? Which would be me.
565
01:52:03.380 --> 01:52:21.389
Conf. Room A: I… New motion, so I can second it. Okay. Paris seconds it.
I would like to request a change, though. The executive summary didn't
make it clear. This is a review of only the fiscal year 2025, which is,
566
01:52:22.370 --> 01:52:37.810
Conf. Room A: from June… from July 2024. It's not a review of all of the
city's grants management. So if we can make that clear in the title of
the report, and then in the executive summary of the report.
567
01:52:38.230 --> 01:52:48.260
Conf. Room A: then I can accept it. Otherwise, I think it's confusing.
Vice Mayor, it's in the first paragraph of the executive summary on the
first page.
568
01:52:49.550 --> 01:52:52.730
Conf. Room A: It just says that the review took place.
569
01:52:53.620 --> 01:52:58.569
Conf. Room A: Right. During that time. Right. But it didn't say the data
they used.
570
01:52:58.680 --> 01:53:02.720
Conf. Room A: For the review is for fiscal year 2025.
571
01:53:02.890 --> 01:53:14.759
Conf. Room A: So they only look at the grids that's being processed or in
progress during those times. Okay, so I think it's super clear, but,
572
01:53:16.160 --> 01:53:30.600
Conf. Room A: I didn't say so, only a review of one year of rent. I think
it's clear, too, because there's a lot of scope, and again, I really want
to put this in the mirror. So I guess we…
573
01:53:31.020 --> 01:53:46.530
Conf. Room A: We don't have any public comment. We skipped over that and
went to a motion, just to get our little procedural thing going. We
didn't skip anybody because there was no one who had raised their hand.
So I think we have a motion, and why don't we just vote on it, and…
574
01:53:46.620 --> 01:53:56.870
Conf. Room A: see where it goes. So, all in favor of the motion? Chair,
I'm sorry, may I clarify the motion? And, also, I just wanted to clarify,
so…
575
01:53:57.350 --> 01:54:03.290
Conf. Room A: Okay, well, let me just read what I… yeah, to receive the
grants management internal
576
01:54:03.290 --> 01:54:18.759
Conf. Room A: Control Review Final Report with the understanding that the
management's response notes that subsequent policy, personnel, and
organizational changes have superseded many of the report's findings, and
to address those changes further under items 7 and 8.
577
01:54:19.310 --> 01:54:25.710
Conf. Room A: I think that reflects… Jonathan, you have a slight
modification? Just 7, not 8. Just… just 7? Correct.
578
01:54:26.940 --> 01:54:27.860
Conf. Room A: Okay.
579
01:54:28.240 --> 01:54:47.660
Conf. Room A: Mayor, is that reflective of what… yeah, I think so, so… Is
the… is the committee making a recommendation to forward the report to
Council, or is that automatic? Well, it's not automatic, and it is in our
recommended action, but we can always modify our action, but I'm happy to
forward it based on this motion as a clarifying
580
01:54:47.800 --> 01:54:50.240
Conf. Room A: thing, so…
581
01:54:50.240 --> 01:55:12.480
Conf. Room A: Why don't we vote on the motion first, and then address
the… do you want that in the motion, is what you suggest? Well, it's part
of the recommended action. I just wanted clarity. If you want to vote… if
you want to, amend the motion to, forward the report to City Council.
Great, and I so second agree, or whatever, if that's required. All right,
all in favor of that, as so nicely re-read to us.
582
01:55:12.480 --> 01:55:13.639
Conf. Room A: Aye. Aye.
583
01:55:13.700 --> 01:55:19.949
Conf. Room A: Any opposed? Opposed. Okay, and there's only 3 of us, so,
okay, very good.
584
01:55:19.950 --> 01:55:34.639
Conf. Room A: I appreciate the patience and discussion on this, that
there's a lot of issues that we brought up, and I see that we're running
a bit later than I anticipated. Can we… is everybody available to maybe
address, 7 and…
585
01:55:34.640 --> 01:55:45.860
Conf. Room A: I don't want you to have to come a third day or something.
City staff, can we stay here for a little bit longer while we go into
Item 7, or…
586
01:55:45.920 --> 01:55:59.879
Conf. Room A: We don't need to… It's not like Council or the motion, we
just keep going. Okay. Okay, I still… I am sensitive to the clock, and we
can always defer that. We have that… I have that authority, I guess. So
let's move on to our Item 7 action item.
587
01:56:00.210 --> 01:56:11.179
Conf. Room A: 2026-27 Internal Audit Work Program Review, and we'd like
to receive that and forward to City Council as our action item, and over
to
588
01:56:11.310 --> 01:56:34.479
Conf. Room A: Baker Tilly. Thank you. Alright, this is very exciting,
talking about what we can do for the next fiscal year. So just a reminder
of what we do at Baker Tilly. We serve as a designated internal auditor
for the city, and we're really focusing on these areas. Risk, internal
controls, efficiency and effectiveness, best practices, and then
compliance.
589
01:56:34.560 --> 01:56:45.720
Conf. Room A: Our work is always completed under the appropriate industry
standards, so the IIA, looking at government accounting standards, as
well as the AICPA.
590
01:56:47.090 --> 01:57:05.620
Conf. Room A: All right, so what, you know, what is the role of an
internal auditor? I think this is always something really important to
look at. You know, we are an independent function, that really helps kind
of look at the achievements and objectives of the city, and so if you
look at this, this, you know.
591
01:57:05.930 --> 01:57:30.479
Conf. Room A: illustration. It's showing you how we have communication
with both the governing bodies, so city council, this audit committee
here, as well as management. And so there… it really shows that there is
that third communication, and then all the communication lines, really
making sure that we are separate from your external audit. And so, you
know, you see that at the very
592
01:57:30.480 --> 01:57:38.559
Conf. Room A: Right-hand side of this illustration showing that, you
know, your external assurance providers, so for your external auditor,
the punk group.
593
01:57:38.560 --> 01:57:41.440
Conf. Room A: They are separate from this… this action.
594
01:57:42.990 --> 01:58:00.390
Conf. Room A: So, going into our internal audit program, you know, how do
we come up with an internal audit program to present to you all today?
There's many components, you know, the enterprise risk assessment, which
we do, you know, every 3 to 5 years,
595
01:58:00.390 --> 01:58:23.579
Conf. Room A: getting input from employees and residents, as well as
performance metrics for cities. We also look at general opportunities, so
risk, controls, compliance, and performance. And then last but not least,
that tracking and reporting. So, that validation report that we talked
about earlier today, looking at those findings and recommendations, the
fraud, waste, and abuse hotline.
596
01:58:23.580 --> 01:58:39.770
Conf. Room A: That would be another thing, looking at implementation that
the city is, you know, has been doing, as well as that validation that we
talked about. So, that is… those inputs really make up our internal audit
program and what we present to you all.
597
01:58:41.190 --> 01:59:04.789
Conf. Room A: So, this is just another illustration, kind of talking,
just again, what we talked about just now, looking at the internal audit
program, and really just how it umbrellas all the different, components,
as well as city functions. So we're not just looking at, you know, the
finance department, we look at other areas, other departments within the
city. So a really holistic approach.
598
01:59:05.130 --> 01:59:29.520
Conf. Room A: Just to kind of highlight what has the city done, you know,
we've had two enterprise risk assessments, so, both in 2021 and 2024. We
are currently in a citywide internal control review that we talked about
earlier today. And we've also had some performance, so looking at the
efficiency and effectiveness, so those performance audits, we've had
599
01:59:29.520 --> 01:59:48.950
Conf. Room A: 5 over the years, policies reviewed. We have looked at over
147 policies. To remind you, we did a City Council review this past
fiscal year, as well as we are looking at the investment cash flow
policy, also with the city.
600
01:59:49.450 --> 02:00:10.360
Conf. Room A: You all know this, there was, you know, some
recommendations delivered. I look at this number, and I can tell you it
is incorrect, because we know now that 79 also includes the external
audit, as well as the civil, grand jury reports, so that is not correct.
But we have delivered, you know.
601
02:00:10.600 --> 02:00:25.100
Conf. Room A: many recommendations. And there have been 39 ethics,
hotline reports received over the years. And, you know, in fiscal year
26, we were able to validate 7 recommendations.
602
02:00:25.770 --> 02:00:29.520
Conf. Room A: So, kind of an idea of what we do with our time.
603
02:00:31.780 --> 02:00:46.180
Conf. Room A: This also just kind of shows you the different departments,
and like I mentioned, it's not just looking at the finance department or
the administrative services as a whole, but really we have dabbled in
public works, we've done enterprise
604
02:00:46.180 --> 02:00:54.629
Conf. Room A: projects, so looking at, you know, the enterprise risk
assessments, internal control review, city manager's office, and public
works over our time.
605
02:00:57.610 --> 02:01:10.989
Conf. Room A: Next. All right. So this is, the… the big discussion item.
So these are the, potential projects that we have identified for this
fiscal year.
606
02:01:11.390 --> 02:01:15.410
Conf. Room A: What I will say is that…
607
02:01:15.570 --> 02:01:20.610
Conf. Room A: We have $120,000 currently budgeted
608
02:01:20.610 --> 02:01:40.859
Conf. Room A: In this fiscal year, we are bringing forth right now
$230,000 of projects, so obviously, there's some pick and choose, or, you
know, if there's other… other potential products or projects that this
committee wants to bring up or identify for management, that's obviously
open as well.
609
02:01:40.860 --> 02:01:55.289
Conf. Room A: So first one, code enforcement, so the 311 response time
review, so evaluating the city's code enforcement complaint response
process, really focusing on response times, staffing availability, and
service delivery.
610
02:01:56.330 --> 02:02:13.480
Conf. Room A: A property tax review, so inventory, property tax revenues,
and compared to relevant legislation, and agreements to identify
opportunities to improve the understanding of those distributions, county
service delivery, and intergovernmental funding.
611
02:02:14.080 --> 02:02:31.969
Conf. Room A: So, there has been also talks about the investment cash
flow review. So, you know that this past fiscal year, we looked at the
actual policy, so taking that policy and looking at the current processes
that the city has and making sure that those align with the policy,
making sure that it's
612
02:02:32.060 --> 02:02:34.329
Conf. Room A: You know, cohesive and fluid.
613
02:02:34.860 --> 02:02:51.929
Conf. Room A: A permitting efficiency study, so evaluating the efficiency
and effectiveness of the city's permitting process, really identifying
opportunities to streamline workflows, reduce process times, customer
service, and overall service delivery.
614
02:02:52.710 --> 02:03:06.290
Conf. Room A: that grant management follow-up, something that we kind of
talked about. So this, you know, this one we had really scoped around
looking at those individual recommendations from that report, and really
digging deeper into making sure that the city had
615
02:03:06.290 --> 02:03:16.930
Conf. Room A: completed those recommendations, you know, obviously room
for suggestions by Vice Mayor about potential, you know, other
opportunities for that scope.
616
02:03:17.370 --> 02:03:38.389
Conf. Room A: The recruitment and retention study, that's really
assessing the city's recruitment and retention practices, really
identifying opportunities to improve hiring efficiency, the… and really
the city's ability to attract and retain those qualified employees, and
making sure that there's long-term organizational stability for the city.
617
02:03:39.470 --> 02:03:59.459
Conf. Room A: The last two, that's program management and recommendation
validations. Those two kind of go hand-in-hand with each other, and are
really what we do on a quarterly basis with you all, as well as looking
at the fraud, waste, and abuse hotline, and validating those
recommendations, when it comes time.
618
02:04:01.990 --> 02:04:14.670
Conf. Room A: Thank you for the, introduction to the report, and we've
all had, well, we've all reflected on these comments. My introductory… my
introductory comments here are.
619
02:04:14.740 --> 02:04:27.230
Conf. Room A: Internal audit is a key function that the city hasn't had
prior to 6 or so years ago, I think. It's a fundamental element, I think,
within
620
02:04:27.550 --> 02:04:37.419
Conf. Room A: Yeah, good, good practice for, cities, and it was a
response, in part, to the, depulcation and embezzlement that occurred.
621
02:04:37.480 --> 02:04:52.649
Conf. Room A: And so, in my, memory, am very happy to see that there is
an internal audit function, so it's not limited only to the financial
elements that, Baker Tilly has pointed out here. It's also can be
operational.
622
02:04:52.650 --> 02:05:02.909
Conf. Room A: So, that's very exciting as well. My clarifying question
after my introduction is, how much input did… were you taking from
623
02:05:02.910 --> 02:05:11.339
Conf. Room A: prior audit committee, discussions over the past year, or…
and or city staff, input.
624
02:05:11.340 --> 02:05:30.740
Conf. Room A: That's a great question, and, definitely looked at, you
know, what we have talked about, reflected what we've talked about over
the past year, here at the Audit Committee. We also met, with Jonathan
and his team, as well as the City Manager's team, as well, to kind of
talk about those inputs. But, you know, thinking about
625
02:05:30.740 --> 02:05:45.469
Conf. Room A: the overarching looking at the enterprise risk assessment,
that's a huge tool that our team uses to help utilize what would be
really relevant, what are potentially high-risk areas that we had
identified, you know, prior years that the city might want to look into.
626
02:05:46.900 --> 02:05:47.830
Conf. Room A: Bigger.
627
02:05:47.830 --> 02:06:11.480
Conf. Room A: Clarifying questions? Clarifying questions. Well, so,
trying to prioritize, this list, because this, this is not… this is put
in order of the cost, almost? Or were you trying to share, share this as
a priority, or how… how did it end up in… You know, I… I would say it's,
I don't think that there's any…
628
02:06:11.480 --> 02:06:17.440
Conf. Room A: priority. It was just kind of a list of… of projects, and I
don't think we really even have a… it's not…
629
02:06:17.450 --> 02:06:36.969
Conf. Room A: any order, other than the last two are kind of things that
we… we have to have program management, so that one, and then the
validation, or recommendation validation, is something that this… the
committee and the city has always encouraged. Okay, and we're budgeted at
$120,000, but we can go
630
02:06:37.020 --> 02:07:01.199
Conf. Room A: we can go higher than that, and then Council can knock some
things off. I'm wondering, with the investment cash flow review, if,
staff feels comfortable with the cash flow policy that we have right now,
because I saw that you did, like, you moved the money to get it down to
the $5 million in that operating account, and you're using CalFit. So, to
me, it's our… this is a problem that you are
631
02:07:01.410 --> 02:07:05.300
Conf. Room A: Have… have kind of… It… for the…
632
02:07:05.300 --> 02:07:24.260
Conf. Room A: present time, it's kind of solved, in my opinion. So I
would say no to that one. Do you have a thought on that? Is that
something… or for this list, are there things that you strongly are
interested in? Because I can come up with four that I… like, permitting,
311, property tax, and recruitment, that
633
02:07:24.330 --> 02:07:42.179
Conf. Room A: that I would be interested in. I'm not sure if the
recruitment part is particularly necessary at this particular time,
because they've… we've just had a lot of… a number of hires. But the
permitting, we hear a lot about that.
634
02:07:42.180 --> 02:07:48.219
Conf. Room A: A lot about 311, and then the property tax review,
635
02:07:48.550 --> 02:07:55.690
Conf. Room A: I can… I can share what this is about, Hmm.
636
02:07:56.060 --> 02:08:08.790
Conf. Room A: Which is… it has to go to our sheriff's contract. We were
wealthy. But it goes into the sheriff's contract and trying to figure out
637
02:08:08.790 --> 02:08:25.549
Conf. Room A: the actual numbers that are coming to the city, because I'm
able to estimate, but I need help with some of these, because the
property tax embeds some other taxes in it, and sales tax, it's not super
clear where it's all getting distributed, and…
638
02:08:25.630 --> 02:08:32.370
Conf. Room A: And I don't want to be, when we're doing our negotiations,
saying falsehoods to the county.
639
02:08:32.850 --> 02:08:50.080
Conf. Room A: But I am saying that they get over $100 million from
Cupertino each year, and that's something that we need to have. It can't
be, I'm generating this number, that's… which is why I would definitely
support, looking at the property tax distribution item.
640
02:08:50.150 --> 02:09:02.059
Conf. Room A: But are… were there some favorites in… in the list? Yeah, I
will say that the recruitment and retention study, that was something
that the city manager's office, or city manager, had requested.
641
02:09:02.060 --> 02:09:10.669
Conf. Room A: Current? Okay. And I think 311 and permitting were also
pretty strong contenders.
642
02:09:10.920 --> 02:09:22.100
Conf. Room A: Yeah. So, I… I wonder whether, for property tax review,
643
02:09:23.470 --> 02:09:31.229
Conf. Room A: Is this appropriate for the Baker Tilly to do this study,
or it's something really…
644
02:09:33.020 --> 02:09:37.019
Conf. Room A: Lobbyist, Lobbyist has been doing that study.
645
02:09:37.170 --> 02:09:48.890
Conf. Room A: No, no, so… No, they don't. So, the Bakefield Tealey has
this expertise to study property tax? So, Colleen, I'm gonna lean on you
on this one.
646
02:09:49.610 --> 02:10:09.309
Colleen Rozillis: Sure, so we do have folks in our, public sector
financial operations group who can provide advisory on this. I would say
from, an internal audit perspective, I actually talked about this with
the chair last week, it's right on the line because it deals with policy
a little bit more than it deals with maybe
647
02:10:09.310 --> 02:10:15.010
Colleen Rozillis: Operations, or the type of work that internal audit
typically does.
648
02:10:15.010 --> 02:10:31.759
Colleen Rozillis: And so, while we do have the capability to do the work,
we want to be pretty careful as your internal auditor about how the
information is used. And, we also need to be a little bit thoughtful. The
County of Santa Clara is not currently a Baker Tilly client, but
649
02:10:31.760 --> 02:10:48.559
Colleen Rozillis: The, Housing Authority, I believe, is, so we want to be
thoughtful about independence as well. So we would want to scope this
really carefully with you, should, you, the committee, choose to do this.
And I understand, Mayor, that this is a priority of yours, so if we did
choose to move forward, we'd want to sit down and
650
02:10:48.560 --> 02:10:52.470
Colleen Rozillis: Scope out in detail with you so that we both feel
comfortable with that.
651
02:10:53.680 --> 02:10:59.460
Conf. Room A: I think that's a… maybe a clarifying question for me, is I
look at these as high-level
652
02:10:59.600 --> 02:11:05.110
Conf. Room A: Priority items, once we get the list, agreed upon here as a
committee.
653
02:11:05.110 --> 02:11:20.429
Conf. Room A: that we then are sending back to city staff an internal
audit to scope more, as well as forwarding up to City Council for the
budgeting look. So I think there's a lot of behind-the-scenes, scoping.
We can call it scoping, I guess.
654
02:11:20.430 --> 02:11:33.780
Conf. Room A: To the extent any committee member maybe has an interest in
that, we could either set up a subcommittee, which can consist of that
one committee member, or we can have up to two of us, depending
655
02:11:33.780 --> 02:11:47.299
Conf. Room A: or I take direction from city staff, too, since there's a
number of projects here, and we can't… I don't think internal audit can
do many of these without information and support from the city staff, so…
656
02:11:47.300 --> 02:11:57.690
Conf. Room A: to the extent we're scoping things, I would presume city
staff's got a big input into what can be done, and when can it be done,
and who's doing it, and things like that, so…
657
02:11:57.690 --> 02:12:03.179
Conf. Room A: How do you suggest maybe this unfold? And remind us how
this has unfolded in prior years.
658
02:12:03.830 --> 02:12:06.890
Conf. Room A: So, the, the top…
659
02:12:07.260 --> 02:12:27.169
Conf. Room A: is from what the mayor had, pointed out as her top
projects, it looks like it's distributed across the city, that it's not
heavy on one particular department, right? Okay. Code enforcement being
the CDD, recruitment's probably going to be more along human resources.
660
02:12:27.360 --> 02:12:37.189
Conf. Room A: permitting kind of crosses both CDD and Public Works, so
there might be a little more of a challenge there, but I'm sure,
661
02:12:37.300 --> 02:12:52.190
Conf. Room A: Colleen and Chelsea would be able to work around, the
scheduling to ensure that there's not too much overlap there. Am I right?
Yep. Okay, I don't want to speak for you guys, but yeah. And so there
would be less of a draw on that one particular department.
662
02:12:52.280 --> 02:13:10.619
Conf. Room A: And then if the account… the committee wanted to pursue one
of the others, it's probably being closer to the finance, whether that's
the property tax, or the grants management, or even the cash flow, if the
account… if the committee wanted to pursue that one. So as far as a… from
my…
663
02:13:10.700 --> 02:13:17.619
Conf. Room A: Staff, workload, I don't think that's as much of an issue.
664
02:13:18.130 --> 02:13:33.530
Conf. Room A: again, at the end of the day, if you pursue most of these,
or just even those top 3, you are looking to have a budget adjustment
needed, right? Because I think with those top three, plus the recommended
validations, we're looking at about…
665
02:13:33.580 --> 02:13:48.089
Conf. Room A: 180, I believe, so we would have to request the Council to…
for an additional 60 plus if you wanted to add either one of the other
three, which would be property tax permitting… I'm sorry, Property Tax
Investment Cash Flow Review or the grant management follow-up.
666
02:13:48.140 --> 02:13:53.789
Conf. Room A: Or if there was a… another item that you wanted a follow-
up, or…
667
02:13:53.960 --> 02:13:56.240
Conf. Room A: Conditional item, whether that's, I think.
668
02:13:56.440 --> 02:14:01.540
Conf. Room A: Chair, you know, we, we discussed possibly the.
669
02:14:01.540 --> 02:14:21.289
Conf. Room A: a report of sorts to be, provided in terms of the fund
balance or appropriate fund balance, conversations with, Chelsea and
Colleen have been more along the lines that it's probably going to be
more of a management report rather than a full-blown, project.
670
02:14:21.340 --> 02:14:23.990
Conf. Room A: On those previous.
671
02:14:25.140 --> 02:14:42.750
Conf. Room A: Oh. And so that, that, that was just… I'm sorry. That's not
on here, because it's not really from, conversations with, Colleen and
Chelsea. It's not so much of a project, it's more… it would be closely to
a report to kind of, hey, this is best practices per GFOA and whatnot.
672
02:14:43.030 --> 02:14:59.770
Conf. Room A: kind of something along the lines, and there would be…
obviously, there would be some sort of… and Colleen, correct me if I'm
wrong, it's more of a… some research kind of best practice, not so much
what is the city doing, and how should a city… because a lot of that's
really policy that's driving that.
673
02:15:00.520 --> 02:15:11.530
Conf. Room A: Yeah, and just to follow up, we would… most of our
recommendation… or all of our recommendations are going to come… be based
off of the GFOA guidance, so that's why we really said, you know, looking
at the GFOA guidance.
674
02:15:12.140 --> 02:15:17.640
Conf. Room A: We could put that in a report, but is that really
beneficial? But in regard to the…
675
02:15:17.740 --> 02:15:33.019
Conf. Room A: the study that's not on this list, just to clarify that.
So, I think we're still trying to get clarifying questions, so you have a
question, Vice Mayor? So, the other question is, regarding the permitting
efficiency study.
676
02:15:33.290 --> 02:15:39.890
Conf. Room A: So… I think one of the work programs this year has been
677
02:15:40.060 --> 02:15:50.330
Conf. Room A: permitting streamlining, and the Planning Commission is
already working on… it's towards the end of that, their review, and
678
02:15:50.600 --> 02:16:04.149
Conf. Room A: going to be streamlining, so I assume they already done
some study, if they are doing the policy change modification on that. So…
679
02:16:04.400 --> 02:16:07.429
Conf. Room A: So I'm not sure…
680
02:16:08.730 --> 02:16:17.250
Conf. Room A: So this permitting efficiency, are you going to look at,
then, 2026 year data, and then…
681
02:16:17.890 --> 02:16:24.880
Conf. Room A: But then that's… we… they prob… we are probably going to
already change things next year.
682
02:16:25.030 --> 02:16:31.860
Conf. Room A: So how is… I think this is something where you really need,
maybe last year.
683
02:16:32.690 --> 02:16:46.900
Conf. Room A: So I'm a little unsure about the timing of that. Okay,
let's see if the city staff have a comment on… I guess you're more in
tune. This is really a scoping thing. This is something you already
worked with the planning about the timing of.
684
02:16:47.120 --> 02:17:06.709
Conf. Room A: Not yet. No, the permitting efficiency… actually, your top
contenders actually came from City Manager's Office, which was the code
enforcement response time review, along with, permitting efficiency study
and the recruitment and Retention Study. That was the City Manager's
Office recommendations.
685
02:17:06.750 --> 02:17:14.739
Conf. Room A: And so, whether that has kind of shifted a little bit due
to the Planning Commission's involvement,
686
02:17:15.580 --> 02:17:18.270
Conf. Room A: And probably at the end of the day, that,
687
02:17:18.760 --> 02:17:21.299
Conf. Room A: I'm not sure, well, in terms of
688
02:17:21.480 --> 02:17:35.180
Conf. Room A: testing and what period it's going to cover? Look to
Colleen. Yeah, we… I mean, we can… we can work with the city on that. So,
you know, depending on the scheduling of when we do that project, that's
something that we always work with city management on.
689
02:17:35.180 --> 02:17:44.059
Conf. Room A: As well as, you know, really defining the scope and timing…
the time frame that we're looking into, you know, that… those are all…
690
02:17:44.059 --> 02:17:48.900
Conf. Room A: Really refined once we get an idea of what projects to be
working on.
691
02:17:49.230 --> 02:18:01.729
Conf. Room A: So in this situation, let's say there is some adjustments
to the workflow, and that occurs in the first half of the fiscal year.
Maybe, Baker Teely can do the review in the second half to see how that's
being implemented.
692
02:18:02.850 --> 02:18:05.080
Conf. Room A: If that… that's direction, right?
693
02:18:05.660 --> 02:18:22.409
Conf. Room A: It does seem like the recommendation validations is
something that we do want to continue. Like, we have to ask to have that
go on. And what is exactly this… the program management again? I'm sorry.
694
02:18:22.410 --> 02:18:43.350
Conf. Room A: So that's, you know, having me here right now, doing our
monthly updates with Jonathan and team to talk about project status,
reviewing the fraud, waste, and abuse hotline, making sure… monitoring
that, creating these reports, that sort of thing. That seems almost like
the recommendation validation, like, like.
695
02:18:43.350 --> 02:18:54.469
Conf. Room A: you need to continue that. Right, those two, and that's… so
typically, those two are, we almost combine, you know, and we've done in
prior years, and just those are…
696
02:18:54.680 --> 02:19:13.610
Conf. Room A: kind of the ones that we have to do. Okay, that's like a
basic thing. Yes, so we would end up… if you went with Recruitment 311
and permitting, you're at 140, and then, so 170 out of the 270. So you
could still send it to Council with that
697
02:19:13.940 --> 02:19:25.600
Conf. Room A: even though it's above the 120, I don't know if property
tax could be done by a combination of HDL and city staff and Jason,
698
02:19:25.840 --> 02:19:27.520
Conf. Room A: You know, and how…
699
02:19:27.580 --> 02:19:36.789
Conf. Room A: perfect do those numbers need to be in order to advocate?
So, for Colleen's question about what the numbers are going to be used
for, it'll be used for
700
02:19:36.820 --> 02:19:51.389
Conf. Room A: advocacy for the city. So we have this disparity between
the amount of property tax our city gets versus other cities. We're much
lower for the property tax that we get back, and that's really the
701
02:19:51.450 --> 02:20:05.810
Conf. Room A: the crux of the matter is to see what we can do to advocate
for the city moving forward, long-term, through some sort of legislative
change in Sacramento, if at all possible, or,
702
02:20:06.240 --> 02:20:17.259
Conf. Room A: if there's anything we can do about that. So that's why the
numbers need to be, defensible. But I'm not sure if Baker Tilly's the
right
703
02:20:18.360 --> 02:20:25.940
Conf. Room A: entity to do that, and if you feel comfortable knowing what
we're going to be using the numbers for.
704
02:20:27.060 --> 02:20:31.640
Colleen Rozillis: I have some thoughts, and I… I…
705
02:20:32.190 --> 02:20:39.130
Colleen Rozillis: First and foremost, you're reliant on county data,
right? The county is the ultimate tax collector.
706
02:20:39.160 --> 02:20:56.899
Colleen Rozillis: And so you will be relying on county data for all of
this analysis and what is available to you, and ideally everything is
available publicly, but the reliance and cooperation with the county is
going to be really important through this process as well. It may…
707
02:20:57.520 --> 02:21:07.360
Colleen Rozillis: it may be worthwhile for you all to consider who you
would like to be involved in that, just from that perspective, because
your relationship with the county is really important, right? It's not
limited to just
708
02:21:07.430 --> 02:21:18.570
Colleen Rozillis: this, but you have to work together on many items. So I
would, recommend talking maybe with the city manager and with the finance
director a little bit more about how you'd like to go
709
02:21:18.590 --> 02:21:33.769
Colleen Rozillis: about the work before you, engage someone to do it. We
certainly can do the analysis. In our professional standards, we're not
allowed to advocate for our clients, but we can make you recommendations,
or we can provide data.
710
02:21:35.720 --> 02:21:36.380
Conf. Room A: Okay.
711
02:21:37.830 --> 02:21:53.380
Conf. Room A: So, my question is, what's most useful here? This is both
for the committee and staff and internal auditors. We… all of these
projects do… in some sense, we don't have a budget constraint, because we
can, as the mayor indicated.
712
02:21:53.600 --> 02:21:59.470
Conf. Room A: bend all of these up, and say, you know, if you think of
some more, add those, too.
713
02:21:59.860 --> 02:22:04.449
Conf. Room A: Or, we could try to delete some of these, or…
714
02:22:04.670 --> 02:22:23.499
Conf. Room A: some other hybrid approach, so how do we make the rest of
our meeting efficient here? I know we had a great discussion on grant
management follow-up, and there's… there's probably lots of follow-up
items that we could specify in the scoping, and Vice Mayor had some
really good comments that we don't want to forget that she had them, but
I'm not sure this is the…
715
02:22:23.500 --> 02:22:37.810
Conf. Room A: maybe we… if we said we wanted to move forward with grant
management follow-up, then we need some more input, and city staff would
assemble that scoping and maybe solicit the Vice Mayor's comments. I'm
just talking out loud here, I'm trying to figure a way to move forward
with this.
716
02:22:38.100 --> 02:22:49.429
Conf. Room A: Do we really want to delete any of these items? Is there an
app… that's one way to go about it. I'm not… I don't have an appetite to
delete any of them, since I've removed budget constraint and the
personnel constraint.
717
02:22:49.560 --> 02:23:06.220
Conf. Room A: Thoughts? Right, you could prioritize. The only one that I
could see potentially getting removed is the cash flow review, investment
and cash flow review at this time. But if in… by investment we mean
talking about reserves.
718
02:23:06.220 --> 02:23:21.969
Conf. Room A: if that's… if that could be assumed to be embedded in that
item, then maybe add that word into the project description, to get the
best practices on reserves, because I've been wanting to hear that,
719
02:23:22.170 --> 02:23:23.190
Conf. Room A: So…
720
02:23:23.290 --> 02:23:32.729
Conf. Room A: So that was the only one that I could remove, but if you
add in the reserve, then I really want it, yeah. And then you could… we
could,
721
02:23:32.880 --> 02:23:47.779
Conf. Room A: prioritize, but also, like, like recommended validations
and program management seems like that has to move forward, so I would
put that on the top of the list, as these are… these two are deemed
necessary.
722
02:23:47.800 --> 02:23:54.430
Conf. Room A: and then I… and then we could prioritize recruitment 311 or
permitting,
723
02:23:54.660 --> 02:24:12.689
Conf. Room A: and just give a prioritized list to the Council, and they
can discuss it. With the entire list, though, available. Sure, I like
that idea. So, before we go too much into talking about that, we're
still, showing… why don't we just… are there any comments from the
public?
724
02:24:13.950 --> 02:24:31.409
Conf. Room A: Sure, I see no… Right, sometimes they come late. So, one
more question. Yeah, sure, now we can, maybe move a motion, too, if you
want. So, regarding the grant management follow-up, it says.
725
02:24:31.410 --> 02:24:35.689
Conf. Room A: Follow up on outstanding recommendations and assess.
726
02:24:35.690 --> 02:24:38.539
Conf. Room A: progress the city has made.
727
02:24:38.690 --> 02:24:57.800
Conf. Room A: So, so here you are referring to the grants management
final report, the recommendations made there? Correct. So… Based on the
one-year review, right? There is a lot of really great, recommendations
there already.
728
02:24:57.870 --> 02:25:06.719
Conf. Room A: Right, and so you were saying, does this project involve
follow-up on those recommendations? Does that… So that…
729
02:25:06.970 --> 02:25:14.540
Conf. Room A: project will… the… Working with the city staff to implement
those recommendations.
730
02:25:14.950 --> 02:25:27.190
Conf. Room A: That's in that report? Right, so doing a really… Doesn't
that mean the Council has to approve those recommendations rather than
just receive the report?
731
02:25:27.540 --> 02:25:30.890
Conf. Room A: Because those recommendations, I think some of them are…
732
02:25:31.200 --> 02:25:36.039
Conf. Room A: Pretty involved, in terms of implementation and stuff.
733
02:25:40.490 --> 02:25:48.010
Conf. Room A: The report will be, forwarded to Council, and I believe
Council's action is just to receive the report.
734
02:25:49.280 --> 02:25:52.190
Conf. Room A: As that's how it's been in the past. Okay.
735
02:25:52.410 --> 02:25:58.110
Conf. Room A: But then, so it will… the staff will decide
736
02:25:58.570 --> 02:26:04.010
Conf. Room A: I guess some priority on what the recommendation is to
implement, and how.
737
02:26:05.030 --> 02:26:14.279
Conf. Room A: Maybe if I could outline how… follow up on that, maybe all
the recommendations in that report would go into the equivalent of the 79
number that we saw.
738
02:26:14.280 --> 02:26:34.170
Conf. Room A: And then staff will talk with internal audit, and some of
the things will go away because of the new grant management analyst
that's been brought on, the new policy that's apparently out there, and
then internal audit would evaluate whether those two facts are actually
true, and then they would put it in the resolution column. Is that how
you would envision it?
739
02:26:35.190 --> 02:26:41.350
Conf. Room A: That is one way, yes, absolutely. You know, I know, Vice
Mayor, you had other
740
02:26:41.560 --> 02:26:54.290
Conf. Room A: areas that you wanted to look into, so that's… I mean,
these are potential, you know, obviously we can mold them to what is most
beneficial for the city, and what management thinks they can take on.
741
02:26:57.570 --> 02:26:58.640
Conf. Room A: Does that help?
742
02:26:59.060 --> 02:27:11.360
Conf. Room A: Yeah, so I guess go back to what we talked about, some
earlier grants that, we had concerns on,
743
02:27:12.570 --> 02:27:19.490
Conf. Room A: So, that may… Require some case study,
744
02:27:20.190 --> 02:27:24.959
Conf. Room A: how they… those come about. So, one example is the
augmented reality app.
745
02:27:25.210 --> 02:27:30.060
Conf. Room A: And I think another example is, the CT re…
746
02:27:30.450 --> 02:27:35.859
Conf. Room A: received a grant to redevelop the heart of the city plan.
747
02:27:36.350 --> 02:27:46.480
Conf. Room A: which the council never requested, but the city got almost
$500,000 grant. I think $450. And…
748
02:27:48.210 --> 02:27:58.389
Conf. Room A: But the same grant, we could have applied for other things
that could have gotten approved. Then, at the time, the council didn't
749
02:27:58.720 --> 02:28:06.630
Conf. Room A: See the need to… Redo the heart of the city plan. So we
eventually… didn't…
750
02:28:07.330 --> 02:28:20.540
Conf. Room A: didn't receive… didn't, I think, accept the grant. So
that's a wasted, effort, because there wasn't, it wasn't synchronized
with the council priority at the time.
751
02:28:21.530 --> 02:28:25.220
Conf. Room A: And… and another example is,
752
02:28:25.630 --> 02:28:41.349
Conf. Room A: the ATP Active Transportation Plan, that grant for… we were
being presented, oh, this project is founded by this particular VTA
grant, therefore we have to
753
02:28:41.660 --> 02:28:43.529
Conf. Room A: Move forward with the project.
754
02:28:43.680 --> 02:28:59.670
Conf. Room A: Otherwise, we will lose the grant. It's always been like
that, right? The other one was also, we already got the grant, you have
to approve the project. So the ATP, we kind of said, we moved forward
with that. But the same type of grant
755
02:28:59.990 --> 02:29:11.029
Conf. Room A: could also be applied to other transportation projects in
the city. It doesn't have to be used for this particular project.
756
02:29:11.150 --> 02:29:15.110
Conf. Room A: So this has been a way that
757
02:29:15.540 --> 02:29:19.310
Conf. Room A: the grant approval is driving council
758
02:29:19.480 --> 02:29:22.920
Conf. Room A: Priority, rather than the other way around.
759
02:29:23.340 --> 02:29:46.630
Conf. Room A: I'm… you know, one recommendation I might make if the
committee is interested in that project, it sounds like, you know, with
this new policy that has been developed and implemented, we could take a
look at that policy and test it against certain grants to make sure that
the process and, you know, all the way to Council approval
760
02:29:46.630 --> 02:30:02.510
Conf. Room A: is done appropriately, and we can see the process laid out
against this new policy to make sure that, you know, these instances that
you're talking about don't happen again, or there's something that could
slip through the cracks.
761
02:30:02.510 --> 02:30:12.350
Conf. Room A: Yeah, if we can have some case studies, these cases, the
new process would have handled this way. That would be helpful.
762
02:30:12.560 --> 02:30:18.190
Conf. Room A: And another example, is, the BMR grant.
763
02:30:18.480 --> 02:30:24.550
Conf. Room A: Not rent. This is actually BMR fees. So this is not grant.
I'm not sure.
764
02:30:24.770 --> 02:30:28.530
Conf. Room A: where it's applied, but the BMR fees has been…
765
02:30:29.060 --> 02:30:32.660
Conf. Room A: Used to pay for legal fees.
766
02:30:32.950 --> 02:30:43.400
Conf. Room A: That's, not related exactly to below market rate, and for
newspaper subscription, and the public has brought this up to us.
767
02:30:44.810 --> 02:30:54.369
Conf. Room A: So… This is probably not rent, But then it's,
768
02:30:54.690 --> 02:31:14.459
Conf. Room A: a way how… how we use different funds for different,
functions. I think another example was, I think we had… we had… there was
some issue with the HUD grant that we somehow did not report properly.
769
02:31:14.660 --> 02:31:21.990
Conf. Room A: That was resolved, but then… Would the current process
prevent us from,
770
02:31:22.180 --> 02:31:40.260
Conf. Room A: making the same mistake again, so maybe, yeah, staff has
some comments. Yeah, you bring up… so we recently had a special revenue
fund, project, and that addressed the concerns you had with the BMR,
which the new process has been
771
02:31:40.260 --> 02:31:46.040
Conf. Room A: Essentially, a lot of it, ultimately, was staffing,
772
02:31:46.410 --> 02:31:56.290
Conf. Room A: training and whatnot. But, yeah, so that one has been put
to rest. We have implemented a process to address that, that, that issue.
773
02:31:57.400 --> 02:32:12.390
Conf. Room A: basically administrative overhead is going to… getting paid
for from the general fund, so BMR is just going towards building BMRs,
rather than having all this other administrative stuff pulling
774
02:32:12.570 --> 02:32:17.240
Conf. Room A: from that. There's been a lot more, restrictions and…
775
02:32:17.240 --> 02:32:35.050
Conf. Room A: to even director oversight of that specific fund to ensure
that, nothing slips between the cracks, that it's more, what we're
allowing to, or what expenses are funneling through into that fund is…
are actually more restricted. Although the… the handbook is…
776
02:32:35.050 --> 02:32:38.050
Conf. Room A: could… Be more inclusive,
777
02:32:38.500 --> 02:32:50.040
Conf. Room A: administratively, we've restricted what actually goes to
that fund. Okay, so I think the hard grant is probably related to CDPG
grant? Correct. And so that will also go through…
778
02:32:50.180 --> 02:33:07.319
Conf. Room A: the same process, or it's a different process? We, I
believe it's a separate process, because it's kind of… different rules
apply to CDBG. However, it is managed by the same individuals, so… and,
Nikki…
779
02:33:07.320 --> 02:33:14.579
Conf. Room A: He's, quite knowledgeable with CDBG, and so, I'm quite,
780
02:33:14.590 --> 02:33:23.040
Conf. Room A: confident in his abilities to ensure that the expenses that
are allocated to that fund are appropriate.
781
02:33:23.170 --> 02:33:28.540
Conf. Room A: Mayor. Thank you. So I did run this through Claude.
782
02:33:28.680 --> 02:33:45.040
Conf. Room A: And asked Claude to prioritize the list, in order of
importance, and they did it based on fiduciary risk, financial
materiality, how directly each ties to active city priorities, and came
up with the investment cash flow
783
02:33:45.200 --> 02:34:00.379
Conf. Room A: first to last, investment cash flow review from 35. They
said, the highest fiduciary risk category, safeguarding of public funds.
This is the kind of audit that protects against fraud, mismanagement, and
exposure, and is often treated as core recurring due diligence.
784
02:34:00.550 --> 02:34:25.499
Conf. Room A: Number two, and I would argue who should do this, but it
was the property tax review, directly complements your ongoing AV8
allocation, URAF and VLF swap work. This audit could formalize and
validate the analysis you're already doing informally and has real
revenue implications. I don't think they're overstating that, but three,
permitting efficiency study. Highest fee but permitting delays have
direct economic
785
02:34:25.500 --> 02:34:33.559
Conf. Room A: development and revenue consequences. Developer relations,
fee capture, staff time, high visibility, and high potential return on
investment.
786
02:34:33.610 --> 02:34:37.289
Conf. Room A: For recruitment and retention study, 45,000 work…
787
02:34:37.290 --> 02:34:55.390
Conf. Room A: Workforce risk affects every other city function. Turnover
and vacancy costs compound over time. This is foundational to
organizational capacity. And 311 response time review, important for
service delivery and public trust, but lower financial fiduciary risk
than the items above.
788
02:34:55.390 --> 02:35:03.310
Conf. Room A: Grant management follow-up, compliance-driven grantor
requirements, clawback risks, but scoped as a follow-up rather than a new
risk area.
789
02:35:03.310 --> 02:35:12.299
Conf. Room A: And then the last two were the program management and
validations. But they said program management, necessary overhead to keep
the audit function running.
790
02:35:12.620 --> 02:35:36.740
Conf. Room A: recommended validation, lowest cost, largely administrative
stacking of prior findings, important for accountability. Keep in mind,
AI, like, tend to give you a recommendation based on your past,
questions. Which is why… Which is why, yeah, those are on top. So it's…
Oh, but I haven't asked about the other one. These other things are all
new.
791
02:35:36.740 --> 02:35:39.379
Conf. Room A: But I think… I know, it tends to bias.
792
02:35:39.380 --> 02:35:41.980
Conf. Room A: Based on what they know about you.
793
02:35:41.980 --> 02:36:06.650
Conf. Room A: It does that to me. But of my own accord, I went with
recruitment, property tax, 311, and permitting, and then add REC
validation and program… Sometimes I create a new account and ask again.
We'll have different recommendations. I think we can also look at
process. There's one element of process. We'd be here a lot later tonight
if we hadn't had a
794
02:36:06.650 --> 02:36:25.900
Conf. Room A: tracking of our comments over the past year in our various
meetings, so it's not that it's just this meeting that we're talking
about. There's other projects that got excluded. There's, you know, we've
settled on this list, so there's still the scoping element for each one
of them. I think maybe we might want to make a note for the following
year that
795
02:36:25.920 --> 02:36:43.209
Conf. Room A: whenever we get to the next item, which we won't probably
tonight, but the work plan that we have, that's when we've often said,
well, wouldn't it be good if we could do this or that? And I know you've
raised a few of those over the past year, so I'm very happy that we're at
this stage. I think we're at the point where we could maybe
796
02:36:43.210 --> 02:36:50.959
Conf. Room A: keep the… I don't hear anyone really having an appetite to
remove items on here, but maybe the priority of them is something in
doubt.
797
02:36:50.960 --> 02:37:01.269
Conf. Room A: we could maybe get consensus on that. I'm not even sure
that's helpful, though. The City Council's going to probably want to come
fresh at this list if we forward it, and…
798
02:37:01.320 --> 02:37:15.819
Conf. Room A: But you two are both on the Council. Is it helpful for us
to come up with a priority, in some way, and then does that have weight
with the City Council? I mean, the two of you would then support it, I
suppose.
799
02:37:15.820 --> 02:37:27.259
Conf. Room A: Well, you have two that are automatic, so you only have 6
to prioritize. Property Tax Review gets a question mark for who's best to
do that, so you could
800
02:37:27.260 --> 02:37:38.279
Conf. Room A: remove it, or just put it to the side, and say, this one,
we're not sure how best to handle it. Well, I think we can keep it, and
then say city staff and internal audit, and…
801
02:37:38.280 --> 02:37:58.240
Conf. Room A: Of course, any other people that have input, like the
mayor, would then come up with a little bit more scoping before it would
go to City Council. I would think some more work on… where I see us
having our value here is saying we could list these items, all of them
right now, for example, and then say the top five, from our perspective,
are
802
02:37:58.470 --> 02:38:09.750
Conf. Room A: Our top four. And then… but all of them are valuable, and
more scoping is going to come from internal audit and city staff before
it gets to City Council.
803
02:38:09.750 --> 02:38:27.489
Conf. Room A: And then even more scoping might come at City Council,
saying, well, they want… you guys want more, the whole committee does.
How about that as an approach? So keep property tax in there, but it
needs some more scoping, so Colleen is happy, and you're happy, and city
staff's happy. Okay, so could… should we each say what our top
804
02:38:27.490 --> 02:38:38.639
Conf. Room A: Why don't you propose one, and we'll just, agree or
disagree. Just, I've got the recruitment property tax 311, and
permitting. I… well, I'm fine with those.
805
02:38:38.790 --> 02:38:55.800
Conf. Room A: But… Okay. Vice Mayor, you got one that you would prefer to
elevate among those? This is a priority, ChatGPT, which is my go-to. So
ChatGPT puts permitting efficiency first, code enforcement second.
806
02:38:55.930 --> 02:39:09.360
Conf. Room A: Property tax reveals third, grant management follow-up, and
investment cash flow, and recruitment and retention study. So it's, like,
totally different.
807
02:39:09.850 --> 02:39:14.640
Conf. Room A: Priority. Whoa.
808
02:39:16.100 --> 02:39:30.990
Conf. Room A: Do you support that priority, or can we maybe… I do think
property tax review might be best to handle, separately, because we need
those numbers for a different purpose. It's not really for…
809
02:39:31.110 --> 02:39:42.750
Conf. Room A: an audit, it's really for advocacy. So… So what I'm
hearing… You're saying the number need to be defensible, right? So it
might be best to…
810
02:39:43.150 --> 02:39:50.480
Conf. Room A: what I'm hearing, we can probably group the permitting,
recruitment, and V11 as your top three, not any particular order.
811
02:39:50.930 --> 02:40:03.259
Conf. Room A: Followed by grant… at least com… some of the comments is
probably grant, followed by investment cash, and then lastly, property
tax, with the,
812
02:40:03.710 --> 02:40:08.930
Conf. Room A: The, the last two being, Automatic.
813
02:40:09.560 --> 02:40:10.840
Conf. Room A: Okay.
814
02:40:10.940 --> 02:40:16.500
Conf. Room A: So, the… For recruitment and retention.
815
02:40:17.290 --> 02:40:20.660
Conf. Room A: I think the mayor initially also didn't…
816
02:40:21.130 --> 02:40:26.830
Conf. Room A: I think that's important, right? That one is also the… it's
the lowest…
817
02:40:27.190 --> 02:40:43.009
Conf. Room A: In my list, except the team and program management, so…
Well, which department… I'm wondering… Public Works… Needs that… Some
stabilization, it seems.
818
02:40:43.170 --> 02:41:03.070
Conf. Room A: I think that's a very important one right there. So I can
agree with the permitting, recruitment, and 311 in the top group, and we
could present it that way, you know, this is our top group, this is a
must-have program management, and then we have… just break it into a Tier
1 and Tier 2.
819
02:41:03.300 --> 02:41:17.669
Conf. Room A: Tier 1 permitting, recruitment, and 311, because it's…
because our… the manager's asking for recruitment, I would say. If she's
identified that, we should probably support her on that, and then go with
the grant investment and property tax, and just call it Tier 2.
820
02:41:17.800 --> 02:41:27.879
Conf. Room A: In no particular order, and have that identified, is that
these are not in order, this is our first upper group and our lower
group, and then our automatic group.
821
02:41:30.580 --> 02:41:34.210
Conf. Room A: I like that approach. I can get behind it. Okay. Okay.
822
02:41:34.220 --> 02:41:54.029
Conf. Room A: Vice Mayor, you're nodding, it sounds like. All right, so
why don't we have a motion that, but I do have a question, still about
the recruitment and retention. This seems to… this is, again, this is not
a typical internal audit function, it overlaps with HR.
823
02:41:54.670 --> 02:42:04.760
Conf. Room A: That's something I think the… the cities… the HR department
has been doing over the years, right?
824
02:42:04.980 --> 02:42:07.670
Conf. Room A: So, how would this be different?
825
02:42:08.600 --> 02:42:11.109
Conf. Room A: If you recall… He's appropriate. Yeah.
826
02:42:11.110 --> 02:42:27.919
Colleen Rozillis: If you recall Chelsea's presentation, our scope is not
just internal controls, it's also performance, efficiency, and
effectiveness. So, our goal is to help out across the city based on its
highest risk areas. Our enterprise risk assessment did identify this as a
higher risk area, and that it was
827
02:42:27.920 --> 02:42:35.640
Colleen Rozillis: Requested by the city manager, but our scope is quite
any part of city operations that could increase the city's risk.
828
02:42:35.640 --> 02:42:44.140
Colleen Rozillis: And your ability to recruit and retain employees is
certainly an area of operational risk, and every time there's turnover,
it costs the city money, too.
829
02:42:44.450 --> 02:42:48.469
Conf. Room A: Yeah, but then do you have the expertise in this area?
830
02:42:49.040 --> 02:42:54.550
Colleen Rozillis: Yes, yeah, we do. We've done dozens of HR-related
public sector studies.
831
02:42:54.550 --> 02:42:57.280
Conf. Room A: Have you done any recruitment?
832
02:42:57.790 --> 02:42:58.580
Colleen Rozillis: Yes, yeah.
833
02:42:58.580 --> 02:43:01.020
Conf. Room A: Your company does recruitment?
834
02:43:01.440 --> 02:43:13.560
Colleen Rozillis: We don't do recruitment itself, we do assessments of
performance, efficiency, and effectiveness related to, what the city's
goals are and best practice.
835
02:43:13.600 --> 02:43:21.560
Colleen Rozillis: But we have folks on our team who are actually, retired
or former, municipal human resources directors.
836
02:43:22.290 --> 02:43:28.800
Conf. Room A: Okay. Great. Why don't we, try to get a motion here that
would,
837
02:43:28.840 --> 02:43:49.699
Conf. Room A: I suggest, on the tiers and to City Council that we're
supportive of these, and of course, more detail is available and will
likely be available before presentation. So I move that we create two
tiers, and these are in no particular order within the tier, that we have
the permitting,
838
02:43:49.700 --> 02:44:11.030
Conf. Room A: the recruitment and 311 in… considered Tier 1. Tier 2 would
be the grants, investment, cash flow, and property tax, and then we will
have the… I don't know how to identify it, but the automatic, baseline
items, would be, project management and recommendation validation.
839
02:44:11.380 --> 02:44:20.580
Conf. Room A: Those are specifically required, so these are really
automatic. Authentic, yeah. They must… must be included.
840
02:44:20.730 --> 02:44:21.899
Conf. Room A: Must haves.
841
02:44:22.550 --> 02:44:35.499
Conf. Room A: Why don't I second it, since… Okay, yeah. Then we can,
discuss our motion. We've got a motion. I think that was clear. Do we
need to re-read it back? We're good? Okay, I like it. Any other thoughts
to…
842
02:44:35.800 --> 02:44:51.299
Conf. Room A: Ed? Chair, are you… are you receiving the report and
forwarding it to the City Council? Yes, with our comment, the motion… As
amended. The tier… the tiered… oh, I guess we're forwarding the report
with the tiers that are in the motion.
843
02:44:51.470 --> 02:45:00.580
Conf. Room A: We'll be sure to include that as part of the staff report.
Perfect. Yeah, alright. Good clarification. All right, all in favor of
this motion? Aye.
844
02:45:00.750 --> 02:45:08.819
Conf. Room A: unanimous of the three of us. All right, thank you. We do
have one more item, which we can just maybe scurry really quickly
through, which is…
845
02:45:08.990 --> 02:45:23.090
Conf. Room A: the Excel sheet, and thank you, Colleen and Chelsea, for
leading us through. Sorry it's gotten a little bit later than we all
anticipated. You had to come back two times, but the poor Vice Mayor here
had even more trouble, so…
846
02:45:23.090 --> 02:45:46.870
Conf. Room A: Thank you, everyone. And our last sheet is, we keep track
of this, so again, I think it fits in well with this last internal audit
discussion we had. The idea is, as we come up with things, we can have a
subcommittee, or we can suggest internal audit due, and I'm much more in
favor of settling on the internal audit before city staff can actually do
reports itself, so… and a number of them are forthcoming, so…
847
02:45:46.870 --> 02:45:52.020
Conf. Room A: Any changes that anyone has to this? Thanks, Jonathan, for
keeping it.
848
02:45:52.110 --> 02:46:10.939
Conf. Room A: Obviously, we see this every meeting, so, I'd suggest we
just move forward, but, more studies certainly welcomed by everybody. All
right. One recommendation I have, we've already, for next October 26th,
you've already received the citywide control… oh, citywide control
review.
849
02:46:10.940 --> 02:46:16.809
Conf. Room A: Excuse me, I'm not seeing correctly. I thought there was a
citywide policy. We're good. Right.
850
02:46:17.210 --> 02:46:26.429
Conf. Room A: Yeah, all right. This is nice. On that happy note… Oh,
yeah, public comment on our item 8, I totally forgot.
851
02:46:26.640 --> 02:46:32.550
Conf. Room A: the last person… hopefully we, do we have any? No, Chair,
never. All right, on that happy note.
852
02:46:32.550 --> 02:46:46.709
Conf. Room A: Thanks, everybody. We are concluded. There's no motion for
that? Is our motion? No, we don't do a motion on it. We accept it as an
information item and receive it, but often we have many discussions on
it. So, we are adjourned.
853
02:46:46.750 --> 02:46:49.300
Conf. Room A: Okay. And we can flash up here.
854
02:46:49.500 --> 02:46:52.830
Conf. Room A: We can talk some more, off the record.
855
02:46:53.080 --> 02:46:59.819
Conf. Room A: I'll leave, I'll see. Next time.
856
02:47:00.230 --> 02:47:00.990
Conf. Room A: Yeah, thank you.