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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Auditor
Meeting Date: May 12, 2025
Report #:2504-4585
TITLE
Approve the Office of the City Auditor Quarterly Report for the Period of October - December 2024
RECOMMENDATION
The Policy & Services Committee and the Office of the City Auditor recommend City Council approve the results of the Office of the City Auditor Quarterly Report for the Period of October through December 2024.
BACKGROUND
The City of Palo Alto’s (City) contract with Baker Tilly Advisory Group, LP (Baker Tilly) outlines six tasks for administering the City Auditor function. As part of Task 5 – Various Reporting & City Hotline, Baker Tilly provides quarterly status reports on audit progress and completion, as well as progress on other tasks to City Council.
Task 6 – Evaluation and Benchmarking, tasks the City Auditor with conducting a benchmarking assessment of audit activities and costs against other comparable cities.
ANALYSIS
The internal audit activities from October – December 2024 are listed below by task as set forth in Baker Tilly’s agreement with the City:
•Task 1 – Citywide Risk Assessment
The Citywide Risk Assessment was completed in November and presented to the Policy & Services Committee and City Council in December 2024.1 •Task 2 – Preparation of the Annual Audit Plan
1 Policy & Services Committee Meeting 12/10/2024 Staff Report 2411-3841
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The FY2025 Audit Plan was approved by City Council in December 2024.2 •Task 3 – Selection of External Financial Auditor and Annual Audit Coordination The City’s external auditor, Macias Gini & O’Connell, LLP (MGO) completed the FY2024 Financial Statement Audit and Annual Comprehensive Financial Report (ACFR)3 also known as the Single Audit and presented the results at the December 3, 2024 Finance Committee meeting. MGO issued a clean opinion on each audit report and reported no findings within the Agreed-Upon Procedures report.
•Task 4 – Execute Annual Audit Plan
Presented two audit reports to the Policy & Services Committee:
ADA Compliance on November 6, 20244
Recruitment & Succession Planning Audit on December 10, 20245 Several Audits from the FY2024 Audit Plan were in reporting in the 2nd quarter of FY2025 including:
Grant Management Audit (Task Order 4.24)
Emergency Preparedness Audit (Task Order 4.25)
Utility Billing Audit (Task Order 4.26)
Payment Card Industry Data Security Standards Audit (Task Order 4.27) Dispatch Center Program Assessment (Task Order 4.28)
•Task 5 – Periodic Reporting, Hotline Monitoring, and Other Administrative Functions No hotline allegations were received during this period. One hotline allegation was closed with no remediation needed. One hotline allegation is still being investigated.
The City Auditor’s Office provided the FY2025, Q1 update on October 8, 2024.6 Baker Tilly participated in various meetings including City Council, Executive Leadership, Agenda Planning, and Committee Meetings.
2 Staff Report 2411-3841
3 Staff Report 2404-2912
4 Staff Report 2409-3476
5 Staff Report 2410-3633
6 Staff Report 2409-3519
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•Task 6 – Evaluation and Benchmarking
The City Auditor began a Benchmarking Assessment7 of audit activity costs. The results of this work were presented as part of this Quarterly Status presentation.
At the March 11, 2025 Committee meeting, Policy & Services Committee members requested additional information about cities closer in size to Palo Alto. The table below consolidates the information provided in the original presentation as well as information on the additional cities of Cupertino, Menlo Park, Mountain View, Sunnyvale and Santa Clara.
Comparative Audit Activity Information for FY2024
FISCAL/RESOURCE IMPACT
The Quarterly Status Report does not have a resource impact and is included as part of the annual Office of the City Auditor budget.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the audit activities do not involve any commitment to any specific project which may result in a potentially significant 7 Based on information publicly available on city websites.
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physical impact on the environment. CEQA Guidelines section 15378(b)(4). Council action on this item is not a project as defined by CEQA because the audit activities do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).
ATTACHMENTS
Attachment A: Office of the City Auditor Quarterly Report for FY25, Q2 APPROVED BY:
Kate Murdock, City Auditor