Wednesday, March 23, 2022
1:00 PM
City of Fresno
Council Chamber, City Hall, 2600 Fresno Street, Fresno , California In Person and/or Electronic
Fresno City Council Finance and Audit Committee
Chair - Nelson Esparza
Vice Chair - Tyler Maxwell
Boardmember Miguel Arias
Meeting Minutes
Special Meeting
March 23, 2022Fresno City Council Finance
and Audit Committee
Meeting Minutes
The City of Fresno Finance and Audit Committee met in special session at 1:00 P.M. in the Council Chamber of City Hall on March 23, 2022.
1:06 P.M. Roll Call
Chair Nelson Esparza, Board Member Tyler Maxwell, and
Board Member Miguel Angel Arias
Present 3 -
Approval of the Agenda
On motion of Committee Member Arias, seconded by Chair Esparza, the Agenda was APPROVED. The motion carried by the following vote:
Aye: Chair Esparza, Board Member Maxwell and Board Member Arias
3 -
ID 22-507 Notice of Special Meeting- Signed
Approval of Minutes
ID 22-508 Approval of the Minutes of the February 23, 2021, Fresno City Council Finance and Audit Committee Regular Meeting.
City Manager White noted the her title should have been listed as "Assistant City Manager" in the draft Finance and Audit Committee minutes of February 23, 2021.
Chair Esparza motioned to approve the minutes with the correction requested by City Manager White.
APPROVED AS AMENDED
On motion of Chair Esparza, seconded by Vice-Chair Maxwell, that the above Minutes be APPROVED AS AMENDED. The motion carried by the following vote:
Aye: Chair Esparza, Board Member Maxwell and Board Member Arias
3 -
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March 23, 2022Fresno City Council Finance
and Audit Committee
Meeting Minutes
Open Session
ID 22-506 Discuss and consider direction concerning City audits.
Chair Esparza stated the goal of the special meeting was to provide clear direction to the Fresno City Council during that body's discussion of audits schedule for March 24, 2022.
The Committee made opening remarks stating the call for an audit made by a single Councilmember was politically motivated and too narrowly focused to be a proper audit. Each member supported an audit of all city finances, including those of all elected officials, by an independent auditor. The remarks touched on the need for improved transparency of City finances and restoring public trust. The hard work and professionalism of the city auditors was recognized. Interest was expressed in developing the scope of a more compressive audit driven by accounting standards as opposed to politics.
Controller Lima, City Manager White and Mayor Dyer responded to Committee questions. For the record, Member Arias stated the documents used to make claims of inappropriate spending were provided to him the day before the meeting.
The Committee discussed the Controller's office. The office utilized a risk assessment in making audit determinations. The risk assessment method was the recognized standard practice for internal audits. The benefits of an audit team that did not respond to political pressure was discussed.
Controller Lima stated his office would not make legal determinations or judgments of fraud, but would ask if submitted expenses were for a city purpose.
The Committee discussed city credit cards and reimbursements. There were 79 credit cards authorized by the Controller's office and between 12 and 14 were assigned to Council offices. A few hundred employees received reimbursements for training and travel. The number of issued credit cards jumped from 50 to 79 in the last few years. A large part of the increase was due to Council offices and Fire Department requests for credit cards. Council offices had no credit cards until five years ago. A market City of Fresno ***Subject to Mayoral Veto Page 3
March 23, 2022Fresno City Council Finance
and Audit Committee
Meeting Minutes
shift toward credit cards and away from checks was mentioned.
The estimated cost of audits was discussed. Controller Lima explained that audits get more expensive when the scope is large and when additional years are added. He estimated an audit of all credit cards, every transaction and backup material, over the previous 10 years, would cost between $300,000 and $400,000. He estimated the cost for an audit of Councilmember credit cards and reimbursements over the past 5 years to be between $100,000 and $250,000.
Chair Esparza felt a comparative analysis of all Council spending for the last five years (when Council Offices had credit cards) and the five years prior to that (when there were no Council credit cards) would be helpful for context.
The Committee discussed the purpose of audits and past audits of city departments. Member Arias stated audits were meant to identify problems and to make recommendations. Professional staff would implement changes based on the recommendations and improvements should be seen over time. The 2019 audits of the Police Department, Fire Department and Parking Division were used to demonstrate the purpose of audits.
The Committee discussed the definition of "city business" and how it may have shifted over the years. City Manager White stated current policies had been in place for many years and incorporated a conservative notion of "city business." The conservative notion was that city business benefited the city as a business entity. Current thinking recognized "city business," as something broader than the conservative definition. She recognized an audit could lead to a policy discussion and updates that would be implemented by the administration. While she recognized the likelihood of changes, the City Manager wanted to ensure all employees were adhering to Administrative Orders 1-4 and 1-9 as they were currently written.
Expenses that crossed the older conservative notion and the newer broader notion of "City business" could be reviewed by a third party.
The timing of the proposed audit and the potential phases in the process City of Fresno ***Subject to Mayoral Veto Page 4
March 23, 2022Fresno City Council Finance
and Audit Committee
Meeting Minutes
were discussed.
Adjournment
Chair Esparza adjourned the meeting at 2:32 P.M.
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