City Council
Staff Report
Report Type: CONSENT CALENDAR
Lead Department: City Auditor
Meeting Date: June 18, 2024
Report #:2406-3161
TITLE
Recommend City Council Approval of Various Task Orders with Baker Tilly for Internal Audit Services 1) Extend deadline for FY 2024 Task Orders Task 1: Citywide Risk Assessment, Task 2: Preparation of Annual Audit Plan, Task 3: Selection of External Financial Auditor and Annual Audit Coordination, 2) Execute New FY 2025 Task 5: Preparation of Quarterly Reports, Annual Status Reports, Provision of City Hotline and Other Ongoing Office Administrative Functions, and 3) Amend the budget for FY 2024 Task Orders as Recommended by the Policy & Services Committee; CEQA Status – Not a Project.
RECOMMENDATION
The Policy & Services Committee recommends City Council approval of the following:
1. Extend the deadline from June 30, 2024 to December 31, 2024 for FY2024 Task Orders still underway:
a. FY2024: Task 1: Citywide Risk Assessment
b. FY2024: Task 2: Preparation of Annual Audit Plan
c. FY2024: Task 3: Selection of External Financial Auditor and Annual Audit Coordination
2. A new FY2025 Task 5 to commence on July 1, 2025 to support ongoing audit reporting and administrative activities: Task 5: Preparation of Quarterly Reports, Annual Status Reports, Provision of City Hotline and Other Ongoing Office Administrative Functions; and
3. Amend FY2024 Task Orders to realign authorized budget with a net zero impact overall:
a. FY2024: Task 6: Evaluation and Benchmarking reduced by $20,000, b.FY2024: Task 5: Preparation of Quarterly Reports, Annual Status Report, Provision of City Hotline, and Other Ongoing Office Administrative Functions increased by $20,000.
BACKGROUND
The Policy & Services Committee received information from Baker Tilly relating to various Task Order changes at its June 11, 2024 meeting (Staff Report 2405-31051). The Committee unanimously recommend that the City Council approve the proposed changes.
In accordance with our agreement with the City, Baker Tilly is required to conduct recurring activities each year. Those recurring activities include the following tasks outlined in our agreement. •Task 1: Citywide Risk Assessment
•Task 2: Preparation of Annual Audit Plan
•Task 3: Selection of External Financial Auditor and Annual Audit Coordination •Task 5: Preparation of Quarterly Reports, Annual Status Reports, Provision of City Hotline and Other Ongoing Office Administrative Functions
Various audit specific task orders are approved annually in alignment with the Annual Council Approved Audit Workplan. Task Orders approved by the Council are executed by the Policy & Services Committee Chair as the Project Manager for the Baker Tilly contract as stipulated in the contract terms.
ANALYSIS
The Office of the City Auditor (OCA), as recommended by the Policy & Services Committee is seeking City Council approval of three types of changes to task orders. 1)Recommended Extension of Time (Attachment A)
FY2024 Task Orders are underway but not complete and currently are authorized through June 30, 2024. The recommended amendment would extend the term six months to December 31, 2024 for the task orders below. No change in budget is requested, this extension will enable work underway to continue that was impacted by the change in City Auditor role. •FY2024: Task 1: Beginning with year 1 and continuing at a minimum every other year thereafter, prepare a citywide risk assessment following the same review and approval requirements described in Task 2. The risk assessment process will be the primary determinant of subsequent audit activity.
•FY2024: Task 2: Prepare an annual audit plan for review by the City Manager and appropriate City Council Committee(s), and approval by the City council, that identifies preliminary objectives of each audit to be performed, the schedule for each audit, and the estimated not to exceed resources and costs for each audit. The city Auditor shall consult with the city Attorney as necessary when developing audit plans. The annual audit plan will be largely based on the risk assessment required in Task 1. •FY2024: Task 3: Selection of an External Financial Auditor and Annual Audit Coordination. 1 Policy & Services Committee, June 11, 2024; Agenda Item #2, Staff Report #2405-3105, https://portal.laserfiche.com/Portal/DocView.aspx?id=73097&repo=r-704298fc&searchid=e5144979-4e5c-42a1- 98d2-98f23d590231
2)New Task Orders for FY2025 (Attachment B)
To begin work in FY 2025, approval of the Task 5 commencing on July 1, 2025, ending June 30, 2025, will ensure support of ongoing audit reporting and administrative activities. Specifically, Task 5 is “Preparation of Quarterly Reports, Annual Status Reports, Provision of City Hotline and Other Ongoing Office Administrative Functions.” The work will include the review and preparation of quarterly and annual reports, the provision of the City Hotline, and other administrative functions.
It will verify the reports for accuracy, timeliness, completeness, and compliance with standards and regulations. The City Hotline's effectiveness, efficiency, and compliance, including responsiveness and user satisfaction, will be evaluated. Administrative functions will be assessed for efficiency, effectiveness, and compliance.
3)Amend FY2024 Task Orders to realign authorized budget with a net zero impact overall (Attachment C)
In reconciling actual activity during the transition of both staffing and the fiscal year, realignment of budgeted levels between task orders is recommended. No change in overall FY 2024 spending authority is recommended, however, this better aligns with the cost of these tasks respectively.
The Office of the City Auditor would like to transfer unused funds from Task 6: Evaluation and Benchmarking in the amount of $20,000 and reallocate these funds to Task 5: Preparation of Quarterly Reports, Annual Status Report, Provision of City Hotline, and Other Ongoing Administrative Functions.
FISCAL/RESOURCE IMPACT
Work recommended in these tasks is within both the approved scope and compensation of the contract with Baker Tilly and funding levels in the FY2024 and FY2025 Operating Budget for the Office of the City Auditor.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because contracting for auditing services is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).
ATTACHMENTS
Attachment A: Time Extension FY24 Task Orders 1, 2, & 3 Attachment B: FY25 Task 5: Preparation of Reports, City Hotline, & Other Tasks Attachment C: Budget Alignment FY24 Task Orders 5 & 6
APPROVED BY:
Kate Murdock, City Auditor