CC Resolution No. 20-091 Establishing an Internal Audit Function as Hereinafter DescribedRESOLUTION NO. 20‐091
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
ESTABLISHING AN INTERNAL AUDIT FUNCTION AS HEREINAFTER
DESCRIBED
July 7, 2020
WHEREAS, it shall be the duty of the Internal Auditor to (1) enhance
compliance by City Departments and Officers responsible for accounting and
financial management activities with statutory requirements and accounting
standards, (2) conduct internal audits of fiscal transactions of the City including,
but not limited to, the examining and analyzing fiscal procedures and evaluating,
checking, and verifying accounts and expenditures, (3) provide other analyses of
financial and operating data as directed by the Audit Committee and City
Council, and (4) perform other such duties as the City Council and Audit
Committee may direct by ordinance; and,
WHEREAS, the mission of the Internal Auditor is to promote efficient,
effective, safe, and transparent City government operations. To fulfill this
mission, the Internal Auditor shall conduct audits and examinations of any City
department, program, service, or activity. The purpose of these audits and
examinations is to provide the Audit Committee, City Council, and City
Management with insights regarding the effectiveness and efficiency with which
City resources are employed, the adequacy of the system of internal controls,
management of risks, and compliance with City policies and procedures and
regulatory requirements.
WHEREAS, the Internal Auditor shall work under the direction of the
Audit Committee and City Council; and,
WHERAS, the Internal Auditor shall conduct internal audits in
accordance with a schedule approved by the City Council and Audit Committee
and may conduct unscheduled audits from time to time; and,
WHEREAS, the results of these audits shall be reported in writing to the
City Manager, Audit Committee, and City Council; and,
WHEREAS, in addition to the audits conducted by the Internal Auditor,
the City Council and Audit Committee shall continue to engage an independent
Resolution No. 20‐091
Page 2
certified public accounting firm to conduct an annual external audit and report
the results of this audit in writing to the City Manager, Audit Committee, and
City Council and the Internal Auditor shall coordinate, as directed by the Audit
Committee and City Council, with the External Auditor; and,
WHEREAS, the Internal Auditor annually will certify to the Audit
Committee and City Council that as a firm, and all members of the firm’s team,
providing services to the City are in full compliance with the City’s code of
ethics, which may be established or modified from time to time, and as
applicable to third‐party service providers; and,
WHEREAS, the Internal Auditor shall (1) be knowledgeable in operational
financial auditing, public administration, and public financial and fiscal
practices, (2) be a licensed certified public accountant or certified internal
auditor, (3) establish an organizational structure appropriate to carrying out the
responsibilities and functions as set forth herein; and,
WHEREAS, the Internal Auditor shall conduct operational and financial
audits and other audit work as requested by the Audit Committee and City
Council. This will include objectively determining and evaluating:
a) The soundness, adequacy, and application of accounting, financial,
and other operating controls towards promoting effective control at a
reasonable cost;
b) The extent of compliance with applicable laws and regulations and
with established policies and procedures;
c) The extent to which City assets are accounted for and safeguarded
from losses of any kind;
d) The sufficiency, validity, and reliability of accounting and statistical
data developed within the organization;
e) The economy, efficiency, and effectiveness of City departments,
programs, services, and activities; and,
WHEREAS, audits shall be conducted in accordance with relevant
standards, such as Government Audit Standards, as established by the United
States General Accounting Office, and the Standards for the Professional Practice
of Internal Auditing, established by the Institute of Internal Auditors; and,
Resolution No. 20‐091
Page 3
WHEREAS, the Internal Auditor shall (1) coordinate with an annual
external financial audit for the City with an independent certified public
accounting firm selected by the Audit Committee and City Council, (2) provide
consulting services as requested by the Audit Committee, City Council, or City
Manager to support efforts to re‐engineer operating practices and processes, (3)
provide consulting services as requested by the Audit Committee or City Council
to evaluate the accuracy and financial impact of information provided to the
Audit Committee and City Council, and (4) perform other internal audit
functions consistent with the provisions herein; and,
WHEREAS, at the beginning of each fiscal year, the Internal Auditor shall
submit an annual plan, after obtaining preliminary input, if any, from the Audit
Committee, to the City Manager. The plan shall identify the preliminary
objectives of each audit to be performed, reflecting the purpose of the audit with
a preliminary description of the areas that may be addressed, and a budget
including an expected timeline. The City Manager shall identify areas where the
City will benefit from operational and financial audits. The Internal Auditor will
review the plan with and seek advice of the City Attorney prior to submitting it
to the Audit Committee and City Council for approval. The Internal Auditor
will issue quarterly reports to the Audit Committee and City Council describing
the status and progress towards completing the audits. The annual audit plan
may be amended as appropriate during the year with the approval of the Audit
Committee and City Council; and.
WHEREAS, upon completion of the final draft of an audit report, and
prior to submission of the report to the Audit Committee and City Council, the
Internal Auditor shall transmit a copy of the report to the City Manager (or the
highest official of the audited entity), City Attorney (for legal advice relating to
disclosure of information contained in the report), and other appropriate official
as determined by the Internal Auditor; and,
WHEREAS, within five weeks after reviewing the report, the City
Manager or the highest official of the audited entity will prepare an official
written response to the findings and recommendations contained within the
report and transmit the response to the Internal Auditor; and,
WHEREAS, the report will be issued to the Audit Committee and City
Council within four weeks of receipt of the response; and,
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WHEREAS, the official written response will be included verbatim in the
audit report issued to the Audit Committee and City Council by the Internal
Auditor; and,
WHEREAS, if a response is not received within the established five weeks,
as described above, the audit report will be issued to the Audit Committee and
City Council without a management response; and,
WHEREAS, the audit report will be placed on the agenda of the next
appropriate Audit Committee meeting and/or appropriate City Council meeting
within forty‐five (45) calendar days after the audit report is issued to the Audit
Committee and City Council; and,
WHEREAS, the Internal Audit will prepare and issue an annual report
describing the status of recommendations made in completed audits. The report
will reflect the status as reported by the City Manager or the highest official of
the audited entity. The report will be issued in the first quarter of each fiscal year
for review by the Audit Committee. Further follow‐up audits will be conducted
as determined and recommended by the Internal Auditor and approved by the
Audit Committee and City Council; and,
WHEREAS, the Internal Auditor will have unrestricted access to all
sources of information, property, and personnel relevant to the performance of
an Audit Committee and City Council‐approved audit, unless prohibited by law.
Documents and information will be handled with the same prudence exercised
by those normally accountable for them and consistent with relevant standards.
To the extent possible, the Internal Auditor will accommodate an area’s daily
responsibilities when scheduling and conducting audits. Nothing in this section
shall authorize access to documents, records, and information related in any way
to the office of any elected official; and,
WHEREAS, the Internal Auditor is appointed by and reports to the Audit
Committee and City Council. The Audit Committee and City Council approves
the annual audit workplan, reviews audit report findings and recommendations,
and monitors the implementation of recommendations; and,
NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby
establishes the Internal Audit Function.
Resolution No. 20‐091
Page 5
PASSED AND ADOPTED at a regular meeting of the City Council of the
City of Cupertino this 7th day of July, 2020, by the following vote:
Vote Members of the City Council
AYES: Scharf, Paul, Chao, Sinks, Willey
NOES: None
ABSENT: None
ABSTAIN: None
SIGNED:
___________________ ________
Steven Scharf, Mayor
City of Cupertino
_________________________
Date
ATTEST:
_________________________________
Kirsten Squarcia, City Clerk
_________________________
Date
7/29/2020
7/29/2020