AC 01-22-20191.CALL TO ORDER
City of Cupe11ino
Audit Committee Special Meeting
Minutes
January 22, 2019
At 4: 12p.m., Chairman Eno Schmidt called the meeting to order at Cupe11ino City
Hall Conference Room A, 10300 ToITe Avenue, Cupe11ino CA 95014.
2.ROLL CALL
Committee Members Present: Chaiiman Eno Schmidt, Daisy Liang, Mayor Scharf,
Councilmember Paul
City Staff Present: Timm Borden, Kristina Alfaro, Zach Korach, and Mariela
Rodriguez
Absent: Jun Luther
Guests:
3.APPROVAL OF MINUTES
Councilmember Paul motioned to approve the December 11, 2018 minutes, Daisy
seconded subject to changes suggested under approval of minutes, in reference to
"washed through the income statement" and subject to committee receiving a copy of
the revised Investment Policy.
4.ORAL COMMUNICATIONS
5.OLD BUSINESS
6.NEW BUSINESS
A.Subject: Briefing on September 5, 2018 Press Release and proposed action
plan in response to alleged embezzlement by City's former Senior
Accountant.
Finance Manager, Zach Korach, provided a recap and overview of staff report on
alleged embezzlement involving f01mer city accountant, Jennifer Chang. Korach
mentioned that city met with cunent external auditors and forensic auditors and it
was verified that it was the deposit liability that got reduced and enabled the
scheme to take place. Korach continued to explain that it was not the income
statement but the balance sheet accounts that were affected. Korach mentions that
upon fund restitution the city believes that the funds be issued to the State of
California. Chaiiman Schmidt questioned whether the money be issued to the
state and presented a scenaiio in which services could have been performed by
City staff, but the deposit liability account was not reduced accordingly. Chaiiman
Schmidt requested more info1mation on quality of control changes that were
implanted in 2014 with new system. Korach explained that the city cmTently does
not have record in the system of original deposit holders. Councilmember Paul
motioned to accept staffs deb1ief on the alleged embezzlement by the former