Item No. 21. Page 1 of 3
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City Council
Supplemental Report
From: Kate Murdock, City Auditor
Meeting Date: December 16, 2024
Item Number: 21
Report #:2412-3875
TITLE
SUPPLEMENTAL REPORT: Approval of Audit Reports and Task Orders: 1) ADA Compliance Audit and Recruitment & Succession Planning Audit; 2) Annual Risk Assessment and 2025 Audit Plan; 3) Task Order Execution for Remaining FY25 Tasks; and 4) Realignment of FY 2024 and FY 2025 Task Order Budgets with No Fiscal Impact as Reviewed by Policy & Services Committee; CEQA:
Not A Project
RECOMMENDATION
The following reflects a revised recommendation in alignment with the Policy & Services Committee actions on December 10, 2024 where the committee unanimously recommended Council approval of these agenda items. Changes from the original staff report have been underlined for convenience.
Policy & Services Committee and City Auditor recommend the City Council:
1) Approve the following audit reports:
a) ADA Compliance Audit 1 as recommended by the Policy & Services Committee on November 6 2024;
b) Recruitment & Succession Planning Audit 2 as recommended by the Policy & Services Committee on December 10, 2024;
c) Approve the FY 2024 annual risk assessment and 2025 audit plan as recommended by the Policy & Services Committee on December 10, 20243.
1 Policy & Services Committee, November 6, 2024, Agenda Item #2, https://portal.laserfiche.com/Portal/DocView.aspx?id=106161&repo=r-704298fc&searchid=0759e1e3-bc8f-4010- 8f4f-d598698c0cc5
2 Policy & Services Committee, December 10, 2024, Agenda Item #4, https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=6263&meetingTemplateType=2&comp iledMeetingDocumentId=12450
3 Policy & Services Committee, December 10, 2024, Agenda Item #5, https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=6663&meetingTemplateType=2&comp iledMeetingDocumentId=12450
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2) Approve execution of the following task orders:
a) Approve remaining FY2025 Task orders Attachment A:
i) FY25 Risk Assessment, FY25 Annual Audit Plan development, resulting in the FY2026 Annual Audit Plan, FY 2025 External Financial Auditor; and ii) FY 2025 Audit Plan Task Orders Task 4, sub tasks 29-34 as outlined in the audit plan in recommendation 1.c.
b) Amend FY2024 and FY2025 Audit Office operating budgets with no fiscal impact to better align with tasks performed recommended by the Policy & Services Committee on December 10, 20244
i) Amend FY2024 Task 4: Execute the Annual Audit Plan to realign the authorized budget with a net zero impact overall: Task 4.22: ADA Compliance Audit reduced by $11,000, Task 4.23: Recruitment & Succession Planning Audit increased by $3,500, Task 4.25: Emergency Preparedness/Wildfire Audit Increased by $2,000, Task 4.26:
Utility Billing increased by $3,000, and Task 4.28: Dispatch Center Assessment increased by $2,500.
ii) Amend FY2025 budget to realign the authorized budget with a net zero impact overall: Task 1: Citywide Risk Assessment reduced by $40,000, and Task 5:
Preparation of Quarterly Reports, Annual Status Reports, Provision of the City Hotline and Other Ongoing Administrative Functions increased by $40,000. 3) Direct the City Auditor to consider a Procurement Performance Audit and Customer Service Audit as part of the Fiscal Year 2026 Audit Plan Report, to be reviewed by the Policy & Services Committee.
ANALYSIS
The Policy & Services Committee reviewed three agenda items included in this consent calendar agenda item #21 on the City Council December 16, 2024 agenda. This supplemental report reflects a revision to the recommendation to:
Align with the Committee’s recommendation that City Council approve these actions. Include a recommended referral by the Committee to the City Council for direction on the coming 2026 audit plan.
The Committee held a discussion about the desire to review two topics areas in the 2026 audit work plan including procurement performance and customer service. Ultimately, the committee unanimously agreed to recommend this be referred for the City Auditor’s consideration as part of the 2026 work plan development, expected to be brought back to the Committee for review in the Spring 2025.
4 Policy & Services Committee, December 10, 2024, Agenda Item #3, https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=6541&meetingTemplateType=2&comp iledMeetingDocumentId=12450
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Recommended Task Orders for Approval:
For clarity and visibility, attached to this supplemental report are the task orders recommended to be executed, in alignment with the FY 2025 Audit Work Plan, FY 2025 annual tasks by the City Auditor (Attachment A).
Task Orders recommended for approval include the following. All task orders for FY 2025 remain in alignment with the contract terms for annual tasks, and financial authority. In total, $11,050 remain unallocated for unforeseen costs.
FY 2025 Office of the City Auditor Task Orders FY 2025 Total Cost FY25-01 Citywide Risk Assessment (recommended reduction of $40,000) $15,000 FY25-02 Annual Audit Plan $10,500
FY25-03 External Financial Auditor $25,000
FY25-05 Various Reporting & City Hotline (recommend increase of $40,000) $100,000 FY25-4.29 Purchasing Card Program $95,670
FY25-4.30 Building Permit and Inspection Fees $95,670
FY25-4.31 Junior Museum and Zoo $89,900
FY25-4.32 CSD Equipment and Materials Inventory Management 89,900 FY25-4.33 Public Safety Staffing $95,670
FY25-4.34 Follow-Up Audit Activities $59,390
Subtotal, Recommend Approval Task Orders $676,700
FY25-06 Evaluation & Benchmarking (previously approved) 21,000 Unassigned $11,050
Total City Auditor Services (Baker Tilly) Contract $708,750 FY 2024 Task Order Net Zero Realignment. These adjustments reflect a reconciliation of the actual costs to complete these audits and recommended realignment of the budget with no impact to the total cost of the FY 2024 Annual Audit Plan. The details of the task orders can be found in the December 10, 2024 Policy and Services Committee item.
FY 2024 Task Order Financial
Task 4.22: ADA Compliance Audit - $11,000
Task 4.23: Recruitment & Succession Planning Audit +$3,500 Task 4.25: Emergency Preparedness/Wildfire Audit +$2,000 Task 4.26: Utility Billing +$3,000
Task 4.28: Dispatch Center Assessment +$2,500
Total FY 2024 Cost Adjustment $0
ATTACHMENTS:
Attachment A: FY 2025 Task Orders
APPROVED BY: Kate Murdock, City Auditor