Finance Committee
November 24, 2025

AGENDA

FINANCE/AUDIT COMMITTEE

SPECIAL MEETING NOTICE
NOVEMBER 24, 2025
PUBLIC MEETING 3:00 P.M.

Members
Victor M. Gordo, Mayor
Tyron Hampton, District 1
Rick Cole, District 2
Gene Masuda, District 4
STAFF
Vic Erganian, Acting Director of Finance
Arnold Lee, Chief Assistant City Attorney
Gloria Acevedo, Recording Secretary

MISSION STATEMENT
The City of Pasadena is dedicated to delivering exemplary municipal services, responsive to our entire community and consistent
with our history, culture, and unique character.

In compliance with the Americans with Disabilities Act of 1990, Assistive Listening Devices are available from the City Clerk’s Office with a 24-hour advance notice.

Please call (626) 744-4124 to request use of a listening device.

Language translation services are available for this meeting by calling (
626)744-4124 at least 24 hours in advance.

Habrá servicio de interpretación disponible para éstas juntas llamando al (626)744-4124 por lo menos con 24 horas de anticipación.

Meet
ings are broadcast live on cable Channel 3 and on the Internet at http://pasadena.granicus.com/mediaplayer.php?camera_id=2&publish_id=9 an d https://www.pasadenamedia.org/watch/ (Click on Video Streamlining on the right side of the screen).

I
tems on the agenda may not be called in order listed. Agendas and supporting documents are available on the Internet at
https://www.cityofpasadena.net/commissions/city-council-finance-committee/ Mat
erials related to an item on this Agenda submitted to the Finance/Audit Committee after distribution of the agenda packet will be posted online and listed as: “Supplemental Agenda Material Received after the Posting of the agenda”

PUBLIC COMMENT AT THE FINANCE/AUDIT COMMITTEE SPECIAL MEETING FOR NOVEMBER 24, 2025, AT 3:00 P.M. WILL BE ACCEPTED IN-PERSON AND BY VIDEOCONFERENCE/TELECONFERENCE.

Link to City Meeting Policy:
cityofpasadena.net/CityCouncilMeetingPolicy

TO VIEW A LIVE STREAM OF THE MEETING:

http://pasadena.granicus.com/MediaPlayer.php?publish_id=9 AND

WWW.PASADENAMEDIA.ORG

In order to facilitate public participation at meetings the City will accept public comment in the following manner:

1. Whether participating in-person or virtually at the meeting, members of the public may provide public comment by submitting a speaker card prior to the start of public comment on that item, at the following webpage:
www.cityofpasadena.net/commissions/public-comment/
If a public comment speaker wishes to speak on more than one agenda item, please indicate which items on the online form (multiple item speakers will be handled according to the process posted on the agenda and as specified in the City meeting policy). Public comments are limited to 3 minutes each, and the Chair and Committee may limit this time if reasonable under the circumstances.

2. In-person Meeting Participation: Complete an online speaker card at the following website: www.cityofpasadena.net/commissions/public-comment/ After submitting a public speaker card, members of the public may attend the meeting in-person by coming to the Pasadena City Council Chamber, Room S249 at City Hall at the date and start-time of the posted meeting.

Virtual Meeting Participation: For virtual participants, you may attend by connecting to the meeting using a computer, other electronic device, or by telephone. Please review the agenda to identify the published start time for the meeting and connect to the meeting just prior to, or at the start of the meeting.

To participate in public comment for an item and to be recognized to speak, it is required that the speaker login to the meeting using the same name or telephone number used on the Speaker Card form. This will allow City staff to locate and promote the speaker into the meeting when it is time for their public comment.

Participants’ phone calls to the Committee meeting will be recorded as part of the Committee meeting. By staying on the line and making public comment during the Committee meeting by phone, you are agreeing to have your phone call recorded. Following is the connectivity information for virtual participation:

Computer or electronic devices, join the meeting at: cityofpasadena.net/cczoom Telephone only dial-in: 1-669-900-6833, Meeting ID: 161 482 446

3. Speaker Card Help Line: If a public comment speaker needs assistance in completing a speaker card, please call the City Clerk’s Office at: (626) 744-4124.

Help line will open 30 minutes prior to the posted start time of the meeting.

4. Members of the public may submit correspondence of any length prior to the start of the meeting, at the following email address:

[email protected]

Correspondence will be forwarded to the Committee prior to the start of the meeting, posted online, and made part of the legislative record for the item.

LIVESTREAM WITH CAPTIONING IS AVAILABLE AT WWW.PASADENAMEDIA.ORG, AND ALSO AT WWW.CITYOFPASADENA.NET/COMMISSIONS/AGENDAS,

IF YOU NEED A REASONABLE MODIFICATION OR ACCOMMODATION PURSUANT

TO THE AMERICANS WITH DISABILITIES ACT

BECAUSE YOU ARE UNABLE TO PARTICIPATE ELECTRONICALLY AS SET FORTH ABOVE, CONTACT THE CITY CLERK’S OFFICE
AS SOON AS POSSIBLE AT (626) 744-4124 OR
[email protected].

SPECIAL MEETING
AGENDA

FINANCE/AUDIT COMMITTEE
NOVEMBER 24, 2025
Public Meeting: 3:00 P.M.

Council Chamber, Pasadena City Hall
100 North Garfield Avenue, Room S249
The Finance
Committee may take action within its authority on
any item listed on this agenda as it deems appropriate following consideration and discussion of the matter.

PUBLIC MEETING - 3:00 P.M.

ROLL CALL
PUBLIC COMMENT – LIMITED TO ITEMS ON THIS SPECIAL MEETING

AGENDA AND WILL BE HEARD AT THE TIME THE ITEM IS

CONSIDERED

APPROVAL OF MINUTES

NEW BUSINESS

1. AUTHORIZ

E THE CITY MANAGER TO EXECUTE AGREEMENTS TO
ACCEPT A CALIFORNIA PROPOSITION 47, COHORT 5, GRANT IN THE AMOUNT OF $4,498,269 FOR PASADENA'S HOME DIVERSION

PROGRAM AND TO ENTER INTO AGREEMENTS TO EFFECTUATE THE

SCOPE OF WORK FOR THE GRANT, AMEND THE CITY

ATTORNEY/CITY PROSECUTOR DEPARTMENT'S FISCAL YEAR
2026 OPERATING BUDGET AND ADD 1.0 LIMITED-TERM FTE

2. AUTHORIZ

E THE CITY MANAGER TO ENTER INTO A CONTRACT TO
LEASE PURCHASE TWO (2) MISSION-EQUIPPED HELICOPTERS AND

TO ENTER INTO TWO FIVE-YEAR SERVICE CONTRACTS WITH CNC
TECHNOLOGIES, LLC, IN AN AMOUNT NOT TO EXCEED $12,574,760 AND AMEND THE POLICE DEPARTMENT’S FISCAL YEAR 2026
OPERATING BUDGET BY APPROPRIATING $4,000,000 FROM THE
ASSET FORFEITURE FUND (207)

2 3. DIRECT THE CITY ATTORNEY TO PREPARE AN ORDINANCE WITHIN 60 DAYS AMENDING CHAPTER 10.46 OF THE PASADENA MUNICIPAL

CODE UPDATING THE POLICE TOWING FRANCHISE PROCESS
SYSTEM

4. AUTHORIZ

E THE CITY MANAGER TO ENTER INTO AN AGREEMENT

WITH THE CALIFORNIA BOARD OF STATE AND COMMUNITY
CORRECTIONS FOR $2,000,000 AND RECOGNIZE AND APPROPRIATE $300,000 TO THE FISCAL YEAR 2026 PUBLIC HEALTH DEPARTMENT

OPERATING BUDGET FOR THE PASADENA OUTREACH RESPONSE
TEAM EXPANSION ("PORT-E") PROGRAM

5. AUTHORIZ

E THE CITY MANAGER TO ENTER INTO CONTRACT

AGREEMENTS WITH THE CALIFORNIA DEPARTMENT OF

TRANSPORTATION (CALTRANS) TO ACCEPT LOCAL HIGHWAY
SAFETY IMPROVEMENT PROGRAM (HSIP) CYCLE 12 FUNDS IN THE AMOUNT OF $610,110; $324,630 FOR THE INSTALLATION OF

RECTANGULAR RAPID FLASHING BEACONS AT THE INTERSECTIONS

OF VILLA STREET AT CHESTER AVENUE, ARROYO BOULEVARD AT

SECO STREET, AND BELLEFONTAINE STREET AT FAIRMOUNT
AVENUE; AND $285,480 FOR THE INSTALLATION OF A ONE-HALF MILE

BIKE FACILITY ON UNION STREET BETWEEN ARROYO PARKWAY
AND ST. JOHN AVENUE

6. QUARTERL
Y INVESTMENT REPORT ENDING SEPTEMBER 30, 2025

INFORMATION ONLY
Information only items contain no staff recommendations. The committee may, however, take action within its authority relating to informational items on the agenda as it deems appropriate following consideration and discussion of the matter.

7. FINAL RE
PORT ON WORKERS’ COMPENSATION AUDIT: MEDICAL AND
SETTLEMENT PAYMENT ACCURACY HIGH; TEMPORARY DISABILITY

AND SALARY-CONTINUANCE PROCESSING NEEDS CLARIFICATION

8. INTERNAL

AUDIT STATUS UPDATE

ADJOURN

NEW BUSINESS
ITEM 1

1. AUTHORIZE THE CITY MANAGER TO EXECUTE AGREEMENTS TO ACCEPT A CALIFORNIA PROPOSITION 47, COHORT 5, GRANT IN THE AMOUNT OF $4,498,269 FOR PASADENA'S HOME DIVERSION PROGRAM AND TO

ENTER INTO AGREEMENTS TO EFFECTUATE THE SCOPE OF WORK FOR

THE GRANT, AMEND THE CITY ATTORNEY/CITY PROSECUTOR
DEPARTMENT'S FISCAL YEAR 2026 OPERATING BUDGET AND ADD 1.0

LIMITED-TERM FTE

NEW BUSINESS
ITEM 2

2. AUTHORIZE THE CITY MANAGER TO ENTER INTO A CONTRACT TO LEASE PURCHASE TWO (2) MISSION-EQUIPPED HELICOPTERS AND TO ENTER

INTO TWO FIVE-YEAR SERVICE CONTRACTS WITH CNC TECHNOLOGIES, LLC, IN AN AMOUNT NOT TO EXCEED $12,574,760 AND AMEND THE POLICE DEPARTMENT’S FISCAL YEAR 2026 OPERATING BUDGET BY APPROPRIATING $4,000,000 FROM THE ASSET FORFEITURE FUND (207)

TAXPAYER PROTECTION AMENDMENT
Under the provisions of the City of Pasadena Taxpayer Protection Amendment ("Taxpayer Protection Act"), the Contractor/Organization will be considered a "recipient of a public benefit." The full provisions of the Taxpayer Protection Act are set forth in Pasadena City Charter, Article XVII. Under the Taxpayer Protection Act, City public officials who approve this Contract are prohibited from receiving specified gifts, campaign contributions or employment from Contractor for a specified time. As well, if this Contract is to be approved by the City Council, Councilmembers or candidates for Council are prohibited from receiving campaign contributions during the time this Contract is being negotiated. This prohibition extends to individuals and entities that are specified and identified in the Taxpayer Protection Act and includes Contractor/Organization and its trustees, directors, partners, corporate officers and those with more than a 10% equity, participation, or revenue interest in Contractor/Organization. Contractor/Organization understands and agrees that: (A) Contractor/Organization is aware of the Taxpayer Protection Act; (B) Contractor/Organization will complete and return the forms provided by the City in order to identify all of the recipients of a public benefit specified in the Taxpayer Protection Act; and (C) Contractor/Organization will not make any prohibited gift, campaign contribution or offer of employment to any public official who negotiated and/or approved this Contract.

Rev.07.10.2007
Disclosure Pursuant to the
City of Pasadena Taxpayer Protection Amendment
Pasadena City Charter, Article XVII

Contractor/Organization hereby discloses its trustees, directors, partners, officers, and those with more than 10% equity, participation, or revenue interest in Contractor/Organization, as follows:

(If printing, please print legibly. Use additional sheets as necessary.)

1. Contractor/Organization Name:

2. Type of Entity:
□ non-government □ nonprofit 501(c)(3), (4), or (6)

3. Name(s) of trustees, directors, partners, officers of Contractor/Organization:

4. Names of those with more than a 10% equity, participation or revenue interest in Contractor/Organization:

Prepared by: ________________________________

Title: ______________________________________

Phone:

Date: ______________________________________

CNC Technologies, LLC
Eric Weidner – Managing Partner
Ron Magocsi – Managing Partner / CTO
Alex Giuffrida – Managing Partner
Oracle Aero Partners, LLC (Principal: Eric Weidner) – 16% Mark Technologies, LLC (Principal: Ron Magocsi) – 42%
Owen Capital, LLC (Principal: Alex Giuffrida) – 42%
Babette Schrank
Operations Manager
530 559 4919
11/15/2025

NEW BUSINESS
ITEM 3

3. DIRECT THE CITY ATTORNEY TO PREPARE AN ORDINANCE WITHIN 60 DAYS AMENDING CHAPTER 10.46 OF THE PASADENA MUNICIPAL CODE

UPDATING THE POLICE TOWING

FRANCHISE PROCESS SYSTEM

Agenda Report
TO: Honorable Mayor and City Council
THROUGH: Finance Committee
FROM: Police Department
November 24, 2025
SUBJECT: DIRECT THE CITY ATTORNEY TO PREPARE AN ORDINANCE WITHIN 60 DAYS AMENDING CHAPTER 10.46 OF THE PASADENA

MUNICIPAL CODE UPDATING THE POLICE TOWING FRANCHISE

PROCESS SYSTEM
RECOMMENDATION:

It is recommended that the City Council:

1. Find that the actions proposed herein are not a "project" subject to the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 21065;and

2. Direct the City Attorney to prepare an ordinance within 60 days that amends Chapter 10.46 of the Pasadena Municipal Code and updates the police towing franchise process as described in this Agenda Report.

BACKGROUND:

In January 1997, the City Council adopted the Police Vehicle Towing Franchise System as described in Pasadena Municipal Code (PMC), Chapter 10.46 (Attachment A). The purpose of that ordinance is to provide standards and procedures for the granting of non-exclusive franchises for providing vehicle towing, vehicle impounds, post collision street sweeps and vehicle storage services to the Pasadena Police Department (PPD) and the City.

On November 25, 2024, city council voted to amend chapter 10.46 of the PMC to avoid annually seeking applications in favor of a three-year franchise award without the option of annual
renewals. The general purpose of the amendment was to reduce the amount of time spent on the publication and renewal of applications while still allowing City Council to review the tow franchise system.

MEETING OF _____ _ AGENDA ITEM NO. ____ _

NEW BUSINESS
ITEM 4

4. AUTHORIZE THE CITY MANAGER TO ENTER INTO AN AGREEMENT WITH

THE CALI

FORNIA BOARD OF STATE AND COMMUNITY CORRECTIONS FOR
$2,000,000 AND RECOGNIZE AND APPROPRIATE $300,000 TO THE FISCAL YEAR 2026 PUBLIC HEALTH DEPARTMENT OPERATING BUDGET FOR THE PASADENA OUTREACH RESPONSE TEAM EXPANSION ("PORT-E")

PROGRAM

Authorization to Enter into an Agreement with BSCC
November 24, 2025

BACKGROUND:

To better meet the needs of Pasadena's homeless population, the Pasadena Public Health Department ("Department"), in partnership with the Pasadena Fire Department ("PFD"), launched the Pasadena Outreach Response Team ("PORT") in 2019. PORT provides field-based engagement, advocacy, and support to individuals experiencing homelessness, living with chronic �ealth conditions, and/or affected by mental health or substance use disorders. The program employs a multidisciplinary, cross-sector model that pairs a case manager or social worker with a firefighter and a peer navigator to deliver proactive, coordinated interventions before crises occur.

In July 2021, the Department expanded PORT by adding a second team, which provides case management services and responds to 9-1-1 dispatch calls involving individuals experiencing homelessness. In September 2022, PORT integrated a registered nurse with funding from a previous Proposition 47 grant. In FY 2025, PORT responded to 484 calls for service, reducing the need for law enforcement response to non-criminal concerns.

Criminal justice involvement remains a major risk factor for homelessness. According to the Prison Policy Initiative, formerly incarcerated individuals are nearly 10 times more likely to experience homelessness than the general population. People with behavioral health conditions, such as mental illness or substance use disorders, also face a heightened risk of justice-system involvement, further increasing their vulnerability to homelessness. Based on this data, the Department has pursued opportunities to expand the work of PORT to better serve justice-involved individuals experiencing homelessness.

In October 2025, the Department was awarded $2,000,000 through the Proposition 47 Grant administered by the BSCC. If approved, the grant will support PORT's operations and service enhancements through June 30, 2029. The Department recommends recognizing and appropriating $300,000 of the grant award in FY 2026 to support the start-up costs of this program expansion, including procurement of a mobile outreach vehicle and contracted clinical/nursing services. The remaining grant funding will be appropriated through the budget process in each of the remaining fiscal years.

NEW BUSINESS
ITEM 5

5. AUTHORIZE THE CITY MANAGER TO ENTER INTO CONTRACT AGREEMENTS

WITH THE CALIFORNIA DEPARTMENT OF TRANSPORTATION (CALTRANS)

TO ACCEPT LOCAL HIGHWAY SAFETY IMPROVEMENT PROGRAM (HSIP) CYCLE 12 FUNDS IN THE AMOUNT OF $610,110; $324,630 FOR THE

INSTALLATION OF RECTANGULAR RAPID FLASHING BEACONS AT THE

INTERSECTIONS OF VILLA STREET AT CHESTER AVENUE, ARROYO

BOULEVARD AT SECO STREET, AND BELLEFONTAINE STREET AT
FAIRMOUNT AVENUE; AND $285,480 FOR THE INSTALLATION OF A ONE-

HALF MILE BIKE FACILITY ON UNION STREET BETWEEN ARROYO PARKWAY AND ST. JOHN AVENUE

NEW BUSINESS
ITEM 6

6. QUAR
TERLY INVESTMENT REPORT ENDING SEPTEMBER 30, 2025

City of Pasadena
Quarterly Investment Report
Quarter Ending 09/3
0/2025
Prepared by the Department of Finance
Treasury Division
Attachment A

Quarterly Investment Report
I. Pooled Investment Portfolio
II. Capital Endowment Portfolio
III. Power Reserve Portfolio
IV. Miscellaneous Portfolios
V. Investments Held by Trustees
VI. PARS Section 115 Trust

I. Pool
ed Investment Portfolio

CITY OF PASADENA
Treasurer's Pooled Investment Portfolio
Vicken Erganian
City Treasurer
September 2025

PORTFOLIO COMPLIANCE
The Treasurer's investment portfolio is in compliance with the California Government Code Section 53601 and the City's Investment Policy approved by the City Council on June 9, 2025. The holdings in the investment pool are in compliance with the current investment policy statement. Further information on compliance issues can be obtained by calling the City of Pasadena Treasurer's Office. A complete copy of the monthly investment report on the investment portfolio including a detailed listing of each investment, is available by calling the Treasurer's office at (626)744-4422.

PORTFOLIO STRUCTURE AS OF 09/30/2025

TYPE MARKET VALUE PERCENT
Money Market - Collateralized 1,272 0.00%
Municipal Bonds 58,298,383 7.22%
Corporate Bonds 126,564,996 15.68%
Federal Agencies 382,573,834 47.40%
US Treasury Securities 54,701,120 6.78%
Supranationals 9,957,775 1.23%
Money Market-CAMP 168,937,964 20.93%
Money Market Fund-US Bank 3,414,808 0.42%
LAIF 1,388,388 0.17%
Cash in Bank 1,305,957 0.16%
TOTALS: 807,144,497 100.00%
Accrued Interest Receivable 4,131,021
GRAND TOTAL: 811,275,519
PORTFOLIO LIQUIDITY AS OF 09/30/2025
Percent of
Aging Interval Par Value Portfolio
0-30 Days 237,048,389 29.00%
31 days - 1 Year 167,498,000 20.49%
1 - 2 Years 52,010,000 6.36%
2 - 3 Years 62,420,000 7.64%
3 - 4 Years 59,500,000 7.28%
4 - 5 Years 236,790,000 28.96%
Over 5 Years 2,281,924 0.28%
TOTAL: 817,548,313 100.00%
Sep-25 Aug-25 Jul-25 Jun-25 May-25 Apr-25
Month-End Market Value 811,275,519 795,431,847 803,670,678 815,652,671 828,152,380 814,025,210 Modified Duration 1.88 1.69 1.74 1.83 1.86 1.75
Weighted Average Maturity 2.10 1.94 1.94 2.03 2.07 1.96 Current Book Yield to Maturity 3.662% 3.562% 3.548% 3.578% 3.570% 3.429% Effective Yield - Year to Date 3.540% 3.520% 3.520% 3.280% 3.250% 3.230% Interest Earned 2,109,983 2,085,179 2,199,020 2,232,042 2,221,880 2,226,356 Fiscal Year To Date Interest Earned 6,394,183 4,284,200 2,199,020 25,362,375 23,130,333 20,908,453 Fair Value Change Gain/(Loss) 542,470 2,421,366 (141,864) 1,771,366 (649,110) 1,568,783 Fiscal Year To Date change in fair value 2,821,973 2,279,502 (141,864) 16,206,501 14,435,135 15,084,246 Total Fiscal YTD Earnings 9,216,156 6,563,702 2,057,156 41,568,876 37,565,468 35,992,699

PORTFOLIO STATISTICS
MMF-Collateral

0.00%
Muni

7.22%
Corp Bond

15.68%
Fed Agency

47.40%
US Treasury

6.78%
Supranationals

1.23%
Money Market-
CAMP

20.93%
Money Market
Fund-US Bank

0.42%LAIF

0.17%
Cash in Bank

0.16%
1

YTM
365

Par Value Book Value
Maturity
Date
Stated
RateMarket Value
September 30, 2025
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
Monthly for Pool
Days to
MaturityMoody'sCUSIP Investment #
Purchase
Date
LAIF

4.190Local Agency Investment Fund864 1,122,155.50 1,122,155.50 4.1901,122,155.50SYS864 1

4.190LAIF-COVID Relief Funds Acct14053 266,232.99 266,232.99 4.190266,232.99SYS14053 1 1,388,388.491,388,388.491,388,388.491,388,388.49Subtotal and Average 4.190 1 Money Market Fund-CAMP

4.421California Asset Management Pr13824 168,937,963.91 168,937,963.91 4.360168,937,963.91SYS13824 1 168,937,963.91168,937,963.91168,937,963.91146,514,236.30Subtotal and Average 4.421 1 Collateralized Money Market

3.700EAST WEST BANK13067 1,271.73 1,271.73 3.7001,271.73SYS13067 1 1,271.731,271.731,271.731,271.73Subtotal and Average 3.700 1 Money Market Fund-US Bank

0.0002010 Reserve W/US Bank14319 3,414,808.10 3,414,808.103,414,808.10SYS14155 1 3,414,808.103,414,808.103,414,808.103,414,808.10Subtotal and Average 0.000 1 Municipal Bonds

1.181City of Arcadia13881 750,000.00 750,000.00 12/01/20251.18211/12/2020 746,619.75 Aaa039063AE2 61

3.877SANTA CLARA VALLEY WATER DISTR14103 3,000,000.00 3,000,000.00 06/01/20263.88009/24/2024 3,001,494.00 Aa180168AGX9 243

5.738LOS ANGELES CA UNIF SCH DIST14027 1,975,000.00 1,974,486.28 05/01/20275.72010/20/2023 2,034,650.93 Aa2544646A77 577

4.788UNIVERSITY OF CA REVENUE BONDS14072 3,000,000.00 2,844,344.03 05/15/20271.31605/13/2024 2,889,858.00 Aa291412HGF4 591

4.508UNIVERSITY OF CA REVENUE BONDS14074 5,000,000.00 4,748,034.88 05/15/20271.31605/17/2024 4,816,430.00 Aa291412HGF4 591

3.977Fremont Unified School Distri14088 3,975,000.00 3,779,758.73 08/01/20271.11308/29/2024 3,785,710.50 Aa2357155BA7 669

4.630CITY OF LOS ANGELES14077 3,000,000.00 3,072,395.14 09/01/20276.00007/09/2024 3,125,832.00 Aa2544351RM3 700

4.524California ST Public Works14174 2,000,000.00 2,000,000.00 04/01/20284.52504/17/2025 2,018,234.00 Aa313068XNT2 913

5.190City of Corona Revenue Bond14036 2,500,000.00 2,310,144.47 05/01/20281.86311/29/2023 2,372,752.50 AA+21969AAG7 943

4.421LOS ANGELES CA UNIF SCH DIST14182 2,000,000.00 2,000,000.00 07/01/20284.42305/13/2025 2,031,158.00 Aa2544647KY5 1,004

4.130ANAHEIM CA UNION SCH DIST14200 3,120,000.00 3,191,368.95 08/01/20285.00006/24/2025 3,220,701.12 Aa1032591VS5 1,035

4.753San Jose Redevelopment Agency14078 2,700,000.00 2,587,972.88 08/01/20283.12506/26/2024 2,635,380.90 AA798170AL0 1,035

3.925California St Health Facs Fing14093 5,000,000.00 5,211,590.30 09/01/20295.12509/03/2024 5,245,310.00 Aa213063EBP0 1,431

3.708STATE OF CALIFORNIA GO BONDS14128 4,500,000.00 4,726,764.00 10/01/20295.10010/01/2024 4,681,381.50 Aa213063D2W7 1,461

4.449California ST Public Works14142 8,890,000.00 8,819,285.98 11/01/20294.23011/01/2024 8,887,030.74 Aa313068XNN5 1,492

4.390UNIVERSITY OF CA REVENUE BONDS14186 5,000,000.00 4,429,617.78 05/15/20301.61405/15/2025 4,523,915.00 Aa291412HGG2 1,687

3.000PCOC Debt-General Fund14076 2,281,923.73 2,281,923.73 06/05/20343.00006/05/2024 2,281,923.73 AaaSYS14076 3,169 57,727,687.1558,298,382.6758,691,923.7357,710,006.80Subtotal and Average 4.279 1,131 Portfolio PASD
APData Updated: SET_POOL: 10/09/2025 17:42
Run Date: 10/09/2025 - 17:42
Report Ver. 7.3.11
2

YTM
365

Par Value Book Value
Maturity
Date
Stated
RateMarket Value
September 30, 2025
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
Monthly for Pool
Days to
MaturityMoody'sCUSIP Investment #
Purchase
Date
Federal Agency Issues - Coupon

0.600FED HOME LOAN MORTAGE CORP13873 10,000,000.00 10,000,000.00 10/15/20250.60010/15/2020 9,986,330.00 Aa13134GWYS9 14

0.625FED HOME LOAN MORTAGE CORP13877 10,000,000.00 10,000,000.00 10/27/20250.62510/27/2020 9,974,230.00 Aa13134GW3X2 26

0.600FED HOME LOAN MORTAGE CORP13878 5,000,000.00 5,000,000.00 10/27/20250.60010/27/2020 4,987,465.00 Aa13134GW5P7 26

0.600FED HOME LOAN MORTAGE CORP13874 10,000,000.00 10,000,000.00 10/28/20250.60010/28/2020 9,973,770.00 Aa13134GW3F1 27

0.600FED HOME LOAN MORTAGE CORP13876 5,000,000.00 5,000,000.00 10/28/20250.60010/28/2020 4,986,700.00 Aa13134GW3Z7 27

0.600Federal Farm Credit Bank13888 10,000,000.00 10,000,000.00 11/24/20250.60011/24/2020 9,948,060.00 Aa13133EMHF2 54

0.690FED HOME LOAN MORTAGE CORP13886 5,000,000.00 5,000,000.00 11/25/20250.62511/25/2020 4,973,370.00 Aa13134GXCS1 55

0.719FED HOME LOAN MORTAGE CORP13891 5,000,000.00 5,000,000.00 11/26/20250.65011/30/2020 4,973,470.00 Aa13134GXFA7 56

0.550Federal Home Loan Bank13900 5,000,000.00 5,000,000.00 02/12/20260.55002/12/2021 4,938,715.00 Aa13130AKVR4 134

0.625Federal Home Loan Bank13905 5,000,000.00 5,000,000.00 02/17/20260.62502/17/2021 4,938,165.00 Aa13130AL3S1 139

0.750Federal Home Loan Bank13907 5,000,000.00 5,000,000.00 02/24/20260.75002/24/2021 4,936,610.00 Aa13130ALCV4 146

0.630Federal Home Loan Bank13906 5,000,000.00 5,000,000.00 02/26/20260.63002/26/2021 4,932,895.00 Aa13130ALB94 148

0.844Federal Farm Credit Bank13911 10,000,000.00 9,999,832.22 03/02/20260.84003/02/2021 9,875,280.00 Aa13133EMSK9 152

0.800Federal Home Loan Bank13908 5,000,000.00 5,000,000.00 03/04/20260.80003/04/2021 4,934,255.00 Aa13130ALEY6 154

0.800Federal Home Loan Bank13909 5,000,000.00 5,000,000.00 03/10/20260.80003/10/2021 4,932,800.00 Aa13130ALFS8 160

1.000Federal Home Loan Bank13910 4,875,000.00 4,875,000.00 03/23/20261.00003/23/2021 4,809,850.50 Aa13130ALGJ7 173

0.940Federal Farm Credit Bank13960 5,000,000.00 5,000,000.00 09/28/20260.94009/28/2021 4,869,610.00 Aa13133EM6E7 362

1.000Federal Home Loan Bank13953 5,000,000.00 5,000,000.00 09/30/20261.00009/30/2021 4,868,730.00 Aa13130ANYN4 364

1.250Federal Home Loan Bank13964 5,000,000.00 5,000,000.00 10/28/20261.25010/28/2021 4,871,745.00 Aa13130APDQ5 392

4.330Federal Farm Credit Bank14105 5,000,000.00 5,000,000.00 09/10/20274.33009/12/2024 5,000,000.00 Aa13133ERSM4 709

4.329Federal Farm Credit Bank14106 5,000,000.00 5,000,000.00 09/10/20274.33009/16/2024 5,000,000.00 Aa13133ERSM4 709

4.700FED HOME LOAN MORTAGE CORP14204 1,900,000.00 1,900,000.00 11/26/20274.70006/26/2025 1,899,686.50 Aa13134HAF40 786

4.500Federal Home Loan Bank14049 5,000,000.00 5,000,000.00 01/12/20284.50001/12/2024 4,999,355.00 Aa13130AYFT8 833

4.500Federal Home Loan Bank14172 5,000,000.00 5,000,000.00 04/03/20284.50004/14/2025 5,000,130.00 Aa13130B5SB5 915

4.650Federal Home Loan Bank14193 7,700,000.00 7,700,000.00 05/26/20284.62505/28/2025 7,693,855.40 Aa13130B6J72 968

4.600Federal Home Loan Bank14197 5,000,000.00 5,000,000.00 06/09/20284.60006/09/2025 5,005,770.00 Aa13130B6N69 982

4.650FED HOME LOAN MORTAGE CORP14205 7,500,000.00 7,500,000.00 06/30/20284.65007/08/2025 7,499,160.00 Aa13134HBXN6 1,003

4.500Federal Home Loan Bank14178 5,000,000.00 5,000,000.00 10/16/20284.50004/24/2025 4,994,505.00 Aa13130B5Z35 1,111

4.830Federal Home Loan Bank14147 5,000,000.00 5,000,000.00 12/04/20284.83012/04/2024 5,007,310.00 Aa13130B3T52 1,160

4.688Federal Farm Credit Bank14196 5,000,000.00 5,000,000.00 02/13/20294.69006/06/2025 5,006,795.00 Aa13133ER3L3 1,231

4.600Federal Home Loan Bank14170 5,000,000.00 5,000,000.00 03/27/20294.60003/27/2025 5,007,960.00 Aa13130B5MV7 1,273

4.304Federal Home Loan Bank14129 10,000,000.00 9,998,402.00 09/26/20294.30009/30/2024 9,962,270.00 Aa13130B2UT0 1,456

4.600Federal Farm Credit Bank14136 5,000,000.00 5,000,000.00 10/15/20294.60010/15/2024 4,992,810.00 Aa13133ERXP1 1,475

4.500Federal Farm Credit Bank14201 5,000,000.00 5,000,000.00 01/02/20304.50007/02/2025 5,011,250.00 Aa13133ETNA1 1,554

5.000FED HOME LOAN MORTAGE CORP14160 5,000,000.00 5,000,000.00 01/14/20305.00001/14/2025 5,002,305.00 Aa13134HA2C6 1,566

4.530Federal Farm Credit Bank14225 10,000,000.00 10,000,000.00 02/25/20304.53009/08/2025 9,998,970.00 Aa13133ETUM7 1,608

4.520Federal Farm Credit Bank14173 5,000,000.00 5,000,000.00 04/09/20304.52004/09/2025 5,005,135.00 Aa13133ETCF2 1,651

4.550Federal Home Loan Bank14180 5,000,000.00 5,000,000.00 05/06/20304.55005/06/2025 4,990,515.00 Aa13130B64J2 1,678 Portfolio PASD
APData Updated: SET_POOL: 10/09/2025 17:42
Run Date: 10/09/2025 - 17:42
3

YTM
365

Par Value Book Value
Maturity
Date
Stated
RateMarket Value
September 30, 2025
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
Monthly for Pool
Days to
MaturityMoody'sCUSIP Investment #
Purchase
Date
Federal Agency Issues - Coupon

4.750Federal Home Loan Bank14183 5,000,000.00 5,000,000.00 05/13/20304.75005/13/2025 4,993,360.00 Aa13130B65K8 1,685

4.482Federal Farm Credit Bank14223 3,861,000.00 3,861,000.00 05/20/20304.49009/05/2025 3,854,969.12 Aa13133ETUP0 1,692

4.570Federal Home Loan Bank14202 5,000,000.00 5,000,000.00 07/08/20304.57007/08/2025 5,012,325.00 Aa13130B6V60 1,741

4.741FED HOME LOAN MORTAGE CORP14206 7,500,000.00 7,500,000.00 07/15/20304.75007/30/2025 7,508,205.00 Aa13134HBYB1 1,748

4.899FED HOME LOAN MORTAGE CORP14207 5,000,000.00 5,000,000.00 07/15/20304.90007/30/2025 5,001,630.00 Aa13134HBZK0 1,748

4.500Federal Home Loan Bank14212 5,000,000.00 5,000,000.00 08/06/20304.50008/14/2025 4,978,930.00 Aa13130B7G40 1,770

4.330Federal Farm Credit Bank14209 10,000,000.00 10,000,000.00 08/12/20304.33008/12/2025 10,019,680.00 Aa13133ETSU2 1,776

4.650Federal Home Loan Bank14218 5,000,000.00 5,000,000.00 08/14/20304.62508/28/2025 4,979,805.00 Aa13130B7LM4 1,778

4.340Federal Home Loan Bank14211 5,000,000.00 5,000,000.00 08/20/20304.34008/20/2025 5,005,565.00 Aa13130B7FJ8 1,784

4.560FED HOME LOAN MORTAGE CORP14215 7,500,000.00 7,500,000.00 08/20/20304.56008/20/2025 7,509,817.50 Aa13134HBH61 1,784

4.523Federal Farm Credit Bank14227 6,680,000.00 6,680,000.00 08/26/20304.53009/09/2025 6,670,928.56 Aa13133ETVA2 1,790

4.600Federal Home Loan Bank14216 5,000,000.00 5,000,000.00 08/28/20304.60008/28/2025 4,978,965.00 Aa13130B7KB9 1,792

4.400Federal Home Loan Bank14228 10,000,000.00 10,000,000.00 09/04/20304.40009/16/2025 9,941,680.00 Aa13130B7RB2 1,799

4.250Federal Home Loan Bank14229 10,000,000.00 10,000,000.00 09/04/20304.25009/16/2025 9,940,040.00 Aa13130B7RX4 1,799

4.375Federal Home Loan Bank14231 10,000,000.00 10,000,000.00 09/04/20304.37509/16/2025 9,956,350.00 Aa13130B7S39 1,799

4.300FED HOME LOAN MORTAGE CORP14224 10,000,000.00 10,000,000.00 09/05/20304.30009/05/2025 9,958,250.00 Aa13134HBL90 1,800

4.200Federal Home Loan Bank14220 5,000,000.00 5,000,000.00 09/09/20304.20009/09/2025 4,970,135.00 Aa13130B7N34 1,804

4.300FED NATIONAL MORTGAGE ASSN14221 7,000,000.00 7,000,000.00 09/10/20304.30009/10/2025 6,994,491.00 Aa13136GAR76 1,805

4.500Federal Home Loan Bank14234 5,000,000.00 5,000,000.00 09/17/20304.50009/30/2025 4,993,695.00 Aa13130B7WV2 1,812

4.250Federal Home Loan Bank14226 10,000,000.00 10,000,000.00 09/23/20304.25009/23/2025 9,995,730.00 Aa13130B7QC1 1,818

4.250Federal Home Loan Bank14232 9,530,000.00 9,530,000.00 09/23/20304.25009/23/2025 9,525,930.69 Aa13130B7QC1 1,818

4.300FED HOME LOAN MORTAGE CORP14233 10,000,000.00 10,000,000.00 09/26/20304.30009/26/2025 9,993,520.00 Aa13134HBS69 1,821 384,044,234.22382,573,834.27384,046,000.00380,809,401.97Subtotal and Average 3.308 1,110 Treasury Securities - Coupon

4.929U.S. TREASURY14068 5,000,000.00 4,989,969.79 03/31/20264.50004/11/2024 5,015,860.00 Aa191282CKH3 181

0.924US TREASURY13963 5,000,000.00 4,992,252.97 08/31/20260.75009/24/2021 4,866,555.00 Aa191282CCW9 334

4.019U.S. TREASURY14140 10,000,000.00 9,950,595.87 09/30/20263.50010/22/2024 9,979,220.00 Aa191282CLP4 364

4.030U.S. TREASURY14198 5,000,000.00 4,987,667.68 05/31/20273.87506/09/2025 5,018,165.00 Aa191282CNE7 607 24,920,486.3124,879,800.0025,000,000.0029,750,083.53Subtotal and Average 3.583 370 Corporate Bonds - Coupon

5.030Microsoft Corporation14073 4,000,000.00 3,993,544.24 11/03/20253.12505/15/2024 3,995,804.00 Aaa594918BJ2 33

0.825JP MORGAN13898 5,000,000.00 5,000,000.00 12/22/20250.82512/22/2020 4,953,220.00 A148128GY53 82

1.388BANK OF AMERICA CORP13923 5,000,000.00 4,987,945.15 01/26/20260.75003/25/2021 4,887,165.00 A106048WK82 117

0.752BANK OF NEW YORK MELLON13901 5,000,000.00 4,999,967.43 01/28/20260.75002/02/2021 4,944,180.00 A106406RAQ0 119

0.718APPLE INC13902 5,000,000.00 4,999,696.61 02/08/20260.70002/08/2021 4,942,550.00 Aaa037833EB2 130

1.250BANK OF AMERICA CORP13934 5,000,000.00 5,000,000.00 05/28/20261.25005/28/2021 4,882,610.00 A106048WM31 239 Portfolio PASD
APData Updated: SET_POOL: 10/09/2025 17:42
Run Date: 10/09/2025 - 17:42
4

YTM
365

Par Value Book Value
Maturity
Date
Stated
RateMarket Value
September 30, 2025
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
Monthly for Pool
Days to
MaturityMoody'sCUSIP Investment #
Purchase
Date
Corporate Bonds - Coupon

1.263BANK OF AMERICA CORP13945 3,623,000.00 3,621,382.52 06/25/20261.20007/21/2021 3,549,949.45 A106048WM64 267

1.155ROYAL BANK OF CANADA13958 6,250,000.00 6,249,744.70 07/14/20261.15009/22/2021 6,113,762.50 A178016EZT7 286

1.365Credit Suisse New York13961 5,000,000.00 4,995,278.21 08/07/20261.25009/24/2021 4,887,700.00 Aa222550L2G5 310

5.433Toyota Motor Credit Corp14033 5,000,000.00 4,998,295.83 11/20/20265.40011/20/2023 5,079,900.00 A189236TLD5 415

5.214Met Life Glob Funding I14043 1,060,000.00 1,039,232.30 12/18/20263.45012/18/2023 1,053,211.76 Aa359217GBY4 443

4.789MUTUAL OF OMAHA GLOBAL14155 4,000,000.00 4,031,767.37 04/09/20275.35011/22/2024 4,068,288.00 A162829D2D1 555

4.854Amazon.com Inc14080 5,000,000.00 4,852,037.82 08/22/20273.15007/03/2024 4,946,480.00 A1023135BC9 690

4.132Johnson & Johnson14048 5,000,000.00 4,871,296.33 01/15/20282.90001/10/2024 4,914,005.00 Aaa478160CK8 836

5.125JP MORGAN14055 5,000,000.00 5,000,000.00 01/26/20285.12501/26/2024 5,011,580.00 Aa246632FTS4 847

4.452US BANCORP14169 5,000,000.00 4,934,287.14 04/26/20283.90003/12/2025 4,991,995.00 A391159HHS2 938

4.550US BANCORP14188 3,000,000.00 3,000,000.00 05/13/20284.55005/13/2025 3,011,208.00 A391159XCK9 955

4.014Eli Lilly & Co14217 5,000,000.00 4,997,634.33 10/15/20284.00008/22/2025 5,009,290.00 Aa3532457DB1 1,110

5.330MUTUAL OF OMAHA GLOBAL14040 4,500,000.00 4,514,934.22 12/12/20285.45012/12/2023 4,654,152.00 A162829D2B5 1,168

4.000CISCO SYSTEMS INC14101 5,000,000.00 5,129,043.48 02/26/20294.85009/06/2024 5,131,570.00 A117275RBR2 1,244

3.975BRISTOL MYER14110 5,000,000.00 4,900,905.17 07/26/20293.40009/26/2024 4,876,165.00 A2110122CP1 1,394

4.750MUTUAL OF OMAHA GLOBAL14137 3,000,000.00 3,000,000.00 10/15/20294.75010/15/2024 3,044,628.00 A162829D2E9 1,475

5.000US BANCORP14168 3,000,000.00 3,000,000.00 03/12/20305.00003/12/2025 3,003,471.00 A391159XBH7 1,623

4.315NEW YORK LIFE GL14210 5,329,000.00 4,611,731.52 08/07/20301.20008/07/2025 4,621,516.63 Aa164952WDS9 1,771

4.700US BANCORP14213 5,000,000.00 5,000,000.00 08/14/20304.70008/14/2025 5,004,310.00 A291159XDM4 1,778

4.320WELLS FARGO BANK14214 5,000,000.00 5,000,000.00 08/14/20304.32008/14/2025 5,005,840.00 Aa295004HAH1 1,778

4.115Merck & Co Inc14222 5,000,000.00 5,007,631.56 09/15/20304.15009/15/2025 5,005,355.00 Aa358933YBQ7 1,810

4.300JPMORGAN CHASE FINANCIAL14230 5,000,000.00 5,000,000.00 09/16/20304.30009/16/2025 4,975,090.00 Aa246632FVW2 1,811 126,736,355.93126,564,996.34127,762,000.00121,882,997.01Subtotal and Average 3.477 861 Treasury Discounts -Amortizing

4.366US TREASURY14203 10,000,000.00 9,976,746.75 10/21/20254.19006/27/2025 9,977,530.00 Aa1912797RD1 20

4.293US TREASURY14208 10,000,000.00 9,929,269.75 12/02/20254.12008/06/2025 9,933,000.00 Aa1912797RR0 62

4.214US TREASURY14219 10,000,000.00 9,907,145.20 12/23/20254.04508/27/2025 9,910,790.00 Aa1912797RY5 83 29,813,161.7029,821,320.0030,000,000.0042,084,002.94Subtotal and Average 4.291 55 Supranationals

0.647INTL BK RECON & DEVELOP13903 5,000,000.00 5,000,000.00 02/10/20260.65002/10/2021 4,938,150.00 Aaa459058JS3 132

4.750INTL BK RECON & DEVELOP14084 5,000,000.00 5,000,000.00 07/30/20294.75007/30/2024 5,019,625.00 Aaa45906M5K3 1,398 10,000,000.009,957,775.0010,000,000.0011,759,978.77Subtotal and Average 2.699 765 Portfolio PASD
APData Updated: SET_POOL: 10/09/2025 17:42
Run Date: 10/09/2025 - 17:42
5

YTM
365

Par Value Book Value
Stated
RateMarket Value
September 30, 2025
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management
Monthly for Pool
Days to
MaturityMoody'sCUSIP Investment #
Purchase
Date
795,315,175.63 809,242,355.96 3.662 768805,838,540.51 806,984,357.54Total and Average Portfolio PASD
APData Updated: SET_POOL: 10/09/2025 17:42
Run Date: 10/09/2025 - 17:42
6

COMPLIANCE REPORT
Pooled Investment Portfolio
As of 09/30/25
Diversification Credit Quality Maturity
Portfolio State Gov't Portfolio Portfolio Credit Quality Portfolio % of total Code limits compliance Credit Quality per Gov Code compliance Maturity Collateralized Money Market 0.00% 100% In compliance 102% Collateral 102% Collateral In compliance In compliance Certificates of Deposit 0.00% 30% In compliance n/a n/a In compliance In compliance Municipal Bonds 7.22% 100% In compliance Aaa/Aa3/Aa2/Aa1/A2/AA+/AA-/AAA/AA A or better In compliance In compliance US Treasury Securities 6.78% 100% In compliance Aa1 Aa1/Aaa In compliance In compliance Corporate Bonds 15.68% 30% In compliance* Aaa/Aa1/Aa2/Aa3/A1/A2/A3 A or better In compliance In compliance Amortized Zero Cpn Bonds 0.00% 30% In compliance* Aa1/A1/A2/A3 A or better In compliance In compliance Federal Agency Issues 47.40% 100% In compliance Aa1 Aa1/Aaa In compliance In compliance Supranationals 1.23% 30% In compliance Aaa AA or better In compliance In compliance Commercial Paper 0.00% 100% In compliance P-1 (Short-term)/A1/Aa1 P-1 (Short-term) In compliance In compliance Money Market-CAMP 20.93% 100% In compliance n/a n/a In compliance In compliance Money Market Fund-US Bank 0.42% 100% In compliance n/a n/a In compliance In compliance LAIF 0.17% 100% In compliance n/a n/a In compliance In compliance Cash 0.16% 100% In compliance Collateralized Collateralized In compliance In compliance 100.00%
Portfolio Value 811,275,519
7

INVESTMENTS IN ISSUERS REPRESENTING OVER 5%

OF THE POOL PORTFOLIO
September 30, 2025
Market Value % of Total
FHLB 186,097,947 22.94%
FHLMC 104,227,909 12.85%
FFCB 85,253,488 10.51%
Total Fed Agencies 382,573,835 47.16%
OTHER PORTFOLIO INVESTMENTS 428,701,683 52.84%
Total Investments 811,275,519 * 100.00%
note: * Includes Cash in Bank and Accrued Interest Receivable 8

Pooled Portfolio - Total Return Performance
ICE BofA Pooled
1-3 Index Portfolio
2005 Annual 1.746 2.073
2006 Annual 4.195 4.474
2007 Annual 6.706 5.736
2008 Annual 4.649 3.474
2009 Annual 3.784 3.398
2010 Annual 2.322 1.806
2011 Annual 1.540 1.490
2012 Annual 1.467 1.788
2013 Annual 0.696 0.417
2014 Annual 0.777 1.321
2015 Annual 0.671 1.087
2016 Annual 1.284 0.713
2017 1st quarter 0.393 0.440
2nd quarter 0.303 0.419
3rd quarter 0.342 0.380
4th quarter -0.182 -0.059

0.856 1.180
2018 1st quarter -0.185 -0.097
2nd quarter 0.291 0.269
3rd quarter 0.354 0.431
4th quarter 1.166 1.038

1.626 1.641
2019 1st quarter 1.219 0.963
2nd quarter 1.480 1.054
3rd quarter 0.700 0.593
4th quarter 0.606 0.590

4.005 3.200
2020 1st quarter 1.590 0.495
2nd quarter 1.215 0.962
3rd quarter 0.274 0.287
4th quarter 0.227 0.236

3.306 1.980
2021 1st quarter -0.028 -0.467
2nd quarter 0.063 0.437
3rd quarter 0.088 0.085
4th quarter -0.533 -0.638
-0.4 10 -0.583
2022 1st quarter -2.580 -2.910
2nd quarter -0.625 -0.842
3rd quarter -1.503 -1.713
4th quarter 0.890 0.821
-3.818 -4.644
2023 1st quarter 1.480 1.599
2nd quarter -0.341 0.995
3rd quarter 0.781 1.000
4th quarter 2.640 2.230

4.560 5.824
2024 1st quarter 0.450 0.934
2nd quarter 0.988 1.141
3rd quarter 2.940 2.047
4th quarter 0.011 0.703

4.389 4.825
2025 1st quarter 1.610 1.324
2nd quarter 1.258 1.179
3rd quarter 1.207 1.179
4th quarter

4.075 3.682
Yield Fiscal YTD
Pooled Portfolio YTM 3.57%
State Treasurer's LAIF yield 4.21%
2 Year Average US Treasury yield 3.49%
9

CITY POOLED PORTFOLIO
Portfolio Management
Distribution of Investments By Type - Historic
(By Market Values)
In %
Fiscal Year Total
June June June June June June June June June 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Investment Type 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2026 2026 2026 Money Market 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Money Market Collateralized 3.97 3.54 1.59 11.73 6.76 0.00 0.00 0.00 0.00 0.00 Municipal Bonds 5.80 5.78 4.33 4.72 7.70 5.96 4.25 5.34 8.10 7.22 Corporate Bonds - Coupon 17.12 15.47 20.78 22.50 16.62 13.97 11.02 11.64 12.53 15.68 Agency CMOs/Mortgage Backed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Federal Agency Issues - Coupon 55.86 60.37 54.14 34.00 47.35 48.79 57.84 52.89 53.24 47.40 Repurchase Agreements 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 L.A.I.F. 9.07 6.47 7.29 11.66 16.47 4.00 0.19 0.18 0.17 0.17 Cash 0.44 0.43 0.45 0.34 0.53 0.31 0.06 0.03 0.17 0.16
Treasury Securities 2.99 3.26 3.71 2.37 3.66 7.46 7.11 8.68 8.58 6.78 Treasury Securities Disc 0.00 0.00 0.00 0.00 0.00 1.54 1.48 0.00 0.00 0.00 Supranationals 3.76 4.49 5.89 8.24 0.80 3.73 4.27 4.68 4.03 1.23 Bank Notes 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Federal Agency Discount 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Commerical Paper - Disc (Amortizing) 0.99 0.00 0.82 0.00 0.00 1.55 2.97 4.04 0.93 0.00 Money Market Fund-US Bank 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.42 0.42 Amortized Zero Cpn Bonds 0.00 0.00 0.00 0.00 0.00 0.77 0.00 0.00 0.00 0.00 Certificates of Deposit 0 0.00 0.19 1.00 0.00 0.00 0.20 0.19 0.17 0.00 0.00 Money Market-CAMP 0.00 0.00 0.00 3.89 0.12 11.72 10.61 12.36 11.83 20.93 Muni Variable Rate 0.00 0.00 0.00 0.54 0.00 0.00 0.00 0.00 0.00 0.00 Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 10

II. C
apital Endowment Portfolio

CITY OF PASADENA
Capital Endowment Portfolio
Vicken Erganian
City Treasurer
September 2025

PORTFOLIO COMPLIANCE
The Treasurer's investment portfolio is in compliance with the California Government Code Section 53601 and the City's Investment Policy approved by the City Council on June 9, 2025. The holdings in the investment pool are in compliance with the current investment policy statement. Further information on compliance issues can be obtained by calling the City of Pasadena Treasurer's Office. A complete copy of the monthly investment report on the investment portfolio including a detailed listing of each investment, is available by calling the Treasurer's office at (626)744-4422.

PORTFOLIO STRUCTURE AS OF 09/30/2025

TYPE MARKET VALUE PERCENT
Money Market - CAMP 1,540,144 100.00%
TOTALS: 1,540,144 100.00%
Accrued Interest Receivable 5,520
GRAND TOTAL: 1,545,663
PORTFOLIO LIQUIDITY AS OF 09/30/2025
Percent of
Aging Interval Par Value Portfolio
0-30 Days 1,540,144 100.00%
31 days - 1 Year - 0.00%
1 - 2 Years - 0.00%
2 - 3 Years - 0.00%
3 - 4 Years - 0.00%
4 - 5 Years - 0.00%
Over 5 Years - 0.00%
TOTAL: 1,540,144 100.00% -

PORTFOLIO STATISTICS
Sep-25 Aug-25 Jul-25 Jun-25 May-25 Apr-25
Month-End Mkt Value 1,545,663 1,540,144 1,534,404 1,528,677 2,070,702 2,066,425 Modified Duration 0.00 0.00 0.00 0.00 2.13 2.20
Weighted Average Maturity 0.00 0.00 0.00 0.00 2.28 2.41 Current Book Yield to Maturity 4.421% 4.471% 4.471% 4.461% 4.681% 4.688% Effective Yield - Year to Date 4.390% 4.410% 4.410% 3.310% 3.180% 3.040% Interest Earned 5,520 5,739 5,728 7,702 7,937 7,896 Fiscal Year To Date Interest Earned 16,986 11,467 5,728 66,675 58,973 51,037 Fair Value Change Gain/(Loss) - - - 273 (3,659) 1,209 Fiscal Year To Date change in fair value - - - 35,384 35,111 38,771 Total Fiscal YTD earnings 16,986 11,467 5,728 102,060 94,085 89,807 MMF -
CAMP,
100.00%
11

YTM
365

Par Value Book Value
Maturity
Date
Stated
RateMarket Value
September 30, 2025
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management

CAPITAL ENDOWMENT
Days to
MaturityMoody'sCUSIP Investment #
Purchase
Date
Money Market Fund-CAMP

4.421California Asset Management Pr14111 1,540,143.57 1,540,143.57 4.3601,540,143.57SYS14111 1 1,540,143.571,540,143.571,540,143.571,539,952.26Subtotal and Average 4.421 1 1,539,952.26 1,540,143.57 4.421 11,540,143.57 1,540,143.57Total and Average Portfolio PASD
APData Updated: FUNDSNAP: 10/09/2025 18:22
Run Date: 10/09/2025 - 18:22
Report Ver. 7.3.11
12

COMPLIANCE REPORT
Capital Endowment Portfolio
As of 09/30/25
Diversification Credit Quality Maturity
Portfolio State Gov't Portfolio Portfolio Credit Quality Portfolio % of total Code limits compliance Credit Quality per Gov Code compliance Maturity Collateralized Money Market 0.00% 100% In compliance 102% Collateral 102% Collateral In compliance In compliance Money Market-CAMP 100.00% 100% In compliance n/a n/a In compliance In compliance Corporate Bond 0.00% 30% In compliance** A or better In compliance In compliance Federal Agency Issues 0.00% 100% In compliance** Aa1/Aaa In compliance In compliance 100.00%
Portfolio Value 1,545,663
**Compliance is measured based on the City's total investments which include the Pooled portfolio as well as the Power Reserve Fund. 13

INVESTMENTS IN ISSUERS REPRESENTING OVER 5%

OF THE CAPITAL ENDOWMENT PORTFOLIO
September 30, 2025
Market Value % of Total
Total - 0.00%
OTHER PORTFOLIO INVESTMENTS 1,545,663 100.00%
Total Investments 1,545,663 * 100.00%
note: * Includes Accrued Interest Receivable
14

CAPITAL ENDOWMENT
Portfolio Management
Distribution of Investments By Type - Historic
(By Market Values)
In % Fiscal Year Total
June June June June June June June June June 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Investment Type 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2026 2026 2025 Money Market - Collateralized 1.80 0.75 0.03 1.10 3.10 3.38 0.00 0.00 0.00 0.00 Federal Agency Issues - Coupon 0.00 0.00 0.00 0.00 0.00 96.62 95.44 94.45 0.00 0.00 Corporate Bonds - Coupon 0.00 99.25 99.97 98.90 96.90 0.00 0.00 0.00 0.00 0.00 Municipal Bonds 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 L.A.I.F. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Certificate of Deposit 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Federal Agency Discount 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Treasury Securities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Agency CMOs/Mortgage Backed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Commerical Paper - Disc (Amortizing) 98.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Asset Backed Securities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Mutual Funds 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Money Market - CAMP 0.00 0.00 0.00 0.00 0.00 0.00 4.56 5.55 100.00 100.00 Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 15

III. Power Reserve Portfolio

CITY OF PASADENA
Power Reserve Portfolio
Vicken Erganian
City Treasurer
September 2025

PORTFOLIO COMPLIANCE
The Treasurer's investment portfolio is in compliance with the California Government Code Section 53601 and the City's Investment Policy approved by the City Council on June 9, 2025. The holdings in the investment pool are in compliance with the current investment policy statement. Further information on compliance issues can be obtained by calling the City of Pasadena Treasurer's Office. A complete copy of the monthly investment report on the investment portfolio including a detailed listing of each investment, is available by calling the Treasurer's office at (626)744-4422.

PORTFOLIO STRUCTURE AS OF 09/30/2025

TYPE MARKET VALUE PERCENT
Municipal Bonds 1,971,202 4.36%
Federal Agencies 25,985,634 57.48%
L.A.I.F. 47,396 0.10%
Money Market-CAMP 17,203,748 38.05%
TOTALS: 45,207,980 100.00%
Accrued Interest Receivable 231,200
GRAND TOTAL: 45,439,180
PORTFOLIO LIQUIDITY AS OF 09/30/2025
Percent of
Aging Interval Par Value Portfolio
0 - 30 days 17,251,144 33.23%
31 days - 1 Year 2,000,000 3.85%
1 - 2 Years - 0.00%
2 - 3 Years 6,000,000 11.56%
3 - 4 Years - 0.00%
4 - 5 Years - 0.00%
Over 5 Years 26,666,667 51.36%
TOTAL: 51,917,811 100.00%

PORTFOLIO STATISTICS
Sep-25 Aug-25 Jul-25 Jun-25 May-25 Apr-25
Month-End Market Value 45,439,180 45,066,973 44,762,359 44,807,154 44,233,368 44,604,428 Modified Duration 4.41 4.43 4.46 4.54 4.54 4.69
Weighted Average Maturity 5.97 6.04 6.12 6.18 6.25 6.32 Current Book Yield to Maturity 2.658% 2.672% 2.665% 2.659% 2.660% 2.670% Effective Yield - Year to Date 2.630% 2.620% 2.620% 2.570% 2.560% 2.560% Interest Earned 112,955 115,025 114,687 112,329 114,277 112,180 Fiscal Year To Date Interest Earned 342,667 229,713 114,687 1,308,375 1,196,046 1,081,769 Fair Value Change Gain/(Loss) 259,252 189,589 (159,497) 461,457 (485,337) 150,477 Fiscal Year To Date change in fair value 289,344 30,092 (159,497) 1,234,595 773,138 1,258,475 Total Fiscal YTD Earnings 632,012 259,805 (44,810) 2,542,970 1,969,184 2,340,244 Money Market-
CAMP

1.03%
Fed Agency

57.48%
LAIF

0.10%
Municipal
Bonds

4.54%
16

YTM
365

Par Value Book Value
Maturity
Date
Stated
RateMarket Value
September 30, 2025
Portfolio Details - Investments
Average
BalanceIssuer
Portfolio Management

POWER RESERVE FUND
Days to
MaturityMoody'sCUSIP Investment #
Purchase
Date
LAIF

4.190Local Agency Investment Fund6184 47,395.96 47,395.96 4.19047,395.96SYS6184 1 47,395.9647,395.9647,395.9647,395.96Subtotal and Average 4.190 1 Money Market Fund-CAMP

4.421California Asset Management Pr14063 17,203,748.21 17,203,748.21 4.36017,203,748.21SYS14063 1 17,203,748.2117,203,748.2117,203,748.2117,200,832.62Subtotal and Average 4.421 1 Municipal Bonds

2.560LA County Redevelopment TABs13553 2,000,000.00 1,997,023.96 09/01/20262.37508/25/2016 1,971,202.00 Aa254465AGS5 335 1,997,023.961,971,202.002,000,000.001,996,893.20Subtotal and Average 2.560 335 Federal Agency Issues - Coupon

1.230Federal Farm Credit Bank13946 6,000,000.00 6,000,000.00 08/02/20281.23008/02/2021 5,604,210.00 Aa13133EMX80 1,036

1.230Federal Farm Credit Bank13890 5,000,000.00 5,000,000.00 11/25/20301.23011/25/2020 4,371,095.00 Aa13133EMHN5 1,881

1.850Federal Home Loan Bank13788 1,666,667.00 1,666,667.00 04/08/20321.85004/08/2020 1,416,408.62 Aa13130AJEA3 2,381

2.000Federal Home Loan Bank13904 10,000,000.00 10,000,000.00 02/25/20362.00002/25/2021 7,758,270.00 Aa13130AL3X0 3,799

2.000Federal Farm Credit Bank13875 10,000,000.00 10,000,000.00 10/15/20402.00010/15/2020 6,835,650.00 Aa13133EMCV2 5,493 32,666,667.0025,985,633.6232,666,667.0032,666,667.00Subtotal and Average 1.733 3,444 51,911,788.77 51,917,811.17 2.658 2,18045,207,979.79 51,914,835.13Total and Average Portfolio PASD
APData Updated: FUNDSNAP: 10/09/2025 18:09
Run Date: 10/09/2025 - 18:09
Report Ver. 7.3.11
17

COMPLIANCE REPORT
Power Reserve Portfolio
As of 09/30/25
Diversification Credit Quality Maturity
Portfolio State Gov't Portfolio Portfolio Credit Quality Portfolio % of total Code limits compliance Credit Quality per Gov Code compliance Maturity Collateralized Money Market 0.00% 100% In compliance 102% Collateral 102% Collateral In compliance In compliance Municipal Bonds 4.36% 100% In compliance Aa2 A or better In compliance In compliance Corporate Bonds 0.00% 30% In compliance A or better In compliance In compliance Federal Agency Issues 57.48% 100% In compliance Aa1 Aa1/Aaa In compliance In compliance Money Market-CAMP 38.05% 100% In compliance n/a n/a In compliance In compliance LAIF 0.10% 100% In compliance n/a n/a In compliance In compliance 100.00%
Portfolio Value 45,439,180
18

INVESTMENTS IN ISSUERS REPRESENTING OVER 5%

OF THE POWER RESERVE PORTFOLIO
September 30, 2025
Market Value % of Total
FHLB 9,174,679 20.19%
FFCB 16,810,955 37.00%
Total Fed Agencies 25,985,634 57.19%
OTHER PORTFOLIO INVESTMENTS 19,453,546 42.81%
Total Investments 45,439,180 * 100.00%
note: * Includes Accrued Interest Receivable
19

Power Reserve Portfolio - Total Return Performance
ICE BofA Power
5-7 Index Reserve
2003 Annual 4.214 3.940
2006 Annual 4.184 4.540
2007 Annual 7.656 6.960
2008 Annual 4.610 3.683
2009 Annual 3.784 3.714
2010 Annual 1.113 1.206
2011 Annual 1.555 2.547
2012 Annual 1.467 3.027
2013 Annual -0.143 -0.184
2014 Annual 2.446 2.688
2015 Annual 1.574 1.364
2016 Annual 2.050 -0.393
2017 1st quarter 0.773 0.830
2nd quarter 0.873 0.803
3rd quarter 0.567 0.515
4th quarter -0.398 0.071

1.815 2.219
2018 1st quarter -0.890 -0.702
2nd quarter 0.013 0.284
3rd quarter 0.188 0.048
4th quarter 1.812 1.987

1.123 1.617
2019 1st quarter 2.245 1.538
2nd quarter 2.530 1.704
3rd quarter 1.196 0.877
4th quarter 0.430 0.460

6.401 4.579
**2020 1st quarter 1.594 0.950
2nd quarter 1.215 0.625
3rd quarter 0.274 0.249
4th quarter 0.227 0.249

3.31 2.073
2021 1st quarter -1.178 -2.549
2nd quarter 0.634 3.715
3rd quarter -0.037 -0.554
4th quarter -0.896 -0.015
-1.477 0.597
2022 1st quarter -5.970 -6.886
2nd quarter -3.282 -4.182
3rd quarter -4.420 -5.972
4th quarter 1.918 0.454
-11.754 -16.586
2023 1st quarter 2.980 2.517
2nd quarter -1.230 -0.212
3rd quarter -1.916 -2.378
4th quarter 5.827 6.459

5.661 6.386
2024 1st quarter -0.464 -0.452
2nd quarter 0.470 0.895
3rd quarter 5.210 4.140
4th quarter -2.940 -2.083

2.276 2.500
2025 1st quarter 3.183 2.894
2nd quarter 2.049 1.05
3rd quarter 1.763 1.412
4th quarter

6.995 5.356
Yeld Fiscal YTD
Power Reserve YTM 2.65%
State Treasurer's LAIF yield 4.21%
2 Year Average Treasury yield 3.49%
Index changed to ICE BofA 5-7 in 2022
20

POWER RESERVE FUND
Portfolio Management
Distribution of Investments By Type - Historic
(By Market Values)
In % Fiscal Year Total
June June June June June June June June June 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Investment Type 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2026 2026 2026 Money Market - Collateralized 0.02 4.34 2.58 32.06 0.08 0.00 0.00 0.00 0.00 0.00 Municipal Bonds 7.00 6.92 6.02 3.43 3.93 4.50 4.56 4.48 4.39 4.36 Federal Agency Issues - Coupon 79.82 82.96 85.12 51.22 57.67 75.33 72.13 70.30 57.69 57.48 L.A.I.F. 0.24 0.24 0.26 0.00 32.77 18.69 0.11 0.11 0.11 0.10 Corporate Bonds - Coupon 12.92 5.54 6.02 13.29 5.56 0.00 0.00 0.00 0.00 0.00 Certificate of Deposit 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Federal Agency Discount 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Treasury Securities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Agency CMOs/Mortgage Backed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Commerical Paper - Disc (Amortizing) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Asset Backed Securities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Mutual Funds 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Money Market - CAMP 0.00 0.00 0.00 0.00 0.00 1.48 23.21 25.12 37.82 38.05 Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 21

IV. Miscellaneous Portfolios

Fund Coupon Yield Maturity Face Value Cost Per Book Market Value City of Pasadena-Housing Succesor Agency
Money Mkt CAMP 4.360% 4.421% 10/1/2025 $2,634,730.07 $2,634,730.07 $2,634,730.07 LAIF 4.190% 4.190% 10/1/2025 $1.64 $1.64 $1.64
Weighted Average Maturity = 1 day $2,6 34,731.71 $2,634,731.71 $2,634,731.71 2002 Electric Revenue Reserve Fund
Money Mkt CAMP 4.360% 4.421% 10/1/2025 $4,038,998.25 $4,038,998.25 $4,038,998.25 Weighted Average Maturity = 1 day $4,038,998.25 $4,038,998.25 $4,038,998.25 Annandale Assessment District
Municipal Bonds-Annandale Assessment 6.000% 6.000% 9/2/2040 $823,835.00 $823,835.00 $823,835.00 Weighted Average Maturity = 15.14
2012
A Electric Parity Reserve Fund
Money Mkt CAMP 4.360% 4.421% 10/1/2025 $715,121.88 $715,121.88 $715,121.88 Weighted Average Maturity = 1 day $715,121.88 $715,121.88 $715,121.88 Miscellaneous Funds
September 30, 2025

22

Fund Coupon Yield Maturity Face Value Cost Per Book Market Value Miscellaneous Funds
September 30, 2025
2013A Electric Parity Reserve Fund
Money Mkt CAMP 4.360% 4.421% 10/1/2025 $6,884,845.38 $6,884,845.38 $6,884,845.38 Weighted Average Maturity = 1 day $6,884,845.38 $6,884,845.38 $6,884,845.38 2016A Electric Revenue Refunding Reserve
Money Mkt CAMP 4.360% 4.421% 10/1/2025 $2,769,038.70 $2,769,038.70 $2,769,038.70 Weighted Average Maturity = 1 day $2,769,038.70 $2,769,038.70 $2,769,038.70 2020A Water Refund Revenue Bonds Project
LAIF 4.190% 4.190% 10/1/2025 $5,039.74 $5,039.74 $5,039.74 Weighted Average Maturity = 1 day $5,039.74 $5,039.74 $5,039.74 2021A Water Refund Revenue Bonds Project
LAIF 4.190% 4.190% 10/1/2025 $15,600.83 $15,600.83 $15,600.83 Money Mkt CAMP 4.360% 4.421% 10/1/2025 $1,347.98 $1,347.98 $1,347.98 Weighted Average Maturity = 1 day $16,948.81 $16,948.81 $16,948.81 GRAND TOTAL: $17,888,559.47 $17,888,559.47 $17,888,559.47

23

V. Investments Held by Trustees

Schedule of Funds Held by Trustees

CITY OF PASADENA
For Period Ending 9/30/2025 Market Yield 4.04%
Maturity 10/01/25
$ Amount
Trustee/Officer Issue Name Shares/Par Cost Market Maturity % Maturity Date Investment Value Value Date Yld
US Bank 2025 City of Pasadena GOB (Central Library Project) Ilse Vlach Good Faith Deposit- Series 2025 Account #292895000 (213) 615-6051 First American Fund Inc Treasury OF Cusip 31846V542 - - - 10/01/25 0.00% Adriana Marshall Interest Fund- Series 2025 Account #292895101 (213) 615-6033 First American Fund Inc Treasury OF Cusip 31846V542 311,460.59 311,460.59 311,460.59 10/01/25 3.97% US Treasury Bills Cusip 912797PM3 4,875,000.00 4,726,060.63 4,803,630.00 02/19/26 4.16% US Treasury Notes Cusip 91282CLH2 4,875,000.00 4,854,433.59 4,875,146.25 08/31/26 3.75% US Treasury Notes Cusip 91282CMP3 1,955,000.00 1,959,047.46 1,966,690.90 02/28/27 4.13% Capital Project Fund- Series 2025 Account #292895103
First American Fund Inc Treasury OF Cusip 31846V542 20,398.25 20,398.25 20,398. 25 10/01/2 5 3.97% Project Fund- Series 2025 Account #292895104
First American Fund Inc Treasury OF Cusip 31846V542 4,048,386.75 4,048,386.75 4,048, 386.75 10/01/2 5 3.97% US Treasury Notes Cusip 912826L9 9,500,000.00 9,347,480.47 9,426,565.00 03/31/26 2.25% US Treasury Notes Cusip 91282CHH7 11,000,000.00 11,000,859.38 11,025,520.00 06/15/26 4.13% US Treasury Notes Cusip 91282CLP4 13,500,000.00 13,397,167.97 13,471,515.00 09/30/26 3.50% US Treasury Notes Cusip 91282CME8 16,500,000.00 16,550,273.44 16,606,425.00 12/31/26 4.25% US Treasury Notes Cusip 91282CMV0 21,500,000.00 21,447,929.69 21,563,855.00 03/31/27 3.88% FHLM Cusip 3134HBQZ7 10,000,000.00 10,000,000.00 10,005,000.00 05/19/27 4.50% US Treasury Notes Cusip 91282CEW7 15,500,000.00 15,277,792.97 15,399,560.00 06/30/27 3.25% FHLB Cusip 3130B6J31 10,000,000.00 10,000,000.00 10,015,500.00 08/20/27 4.27% US Treasury Notes Cusip 91282CLL3 14,000,000.00 13,818,984.38 13,935,460.00 09/15/27 3.38% US Treasury Notes Cusip 91282CGC9 20,000,000.00 19,967,968.75 20,110,200.00 12/31/27 3.88% US Treasury Notes Cusip 91282CGT2 17,000,000.00 16,856,562.50 17,004,590.00 03/31/27 3.63% FHLB Cusip 313B5EY8 10,000,000.00 10,000,000.00 10,010,100.00 05/22/28 4.40% US Treasury Notes Cusip 91282CCH2 6,000,000.00 5,527,500.00 5,629,920.00 06/30/28 1.25% US Treasury Notes Cusip 91282CCY5 11,700,000.00 10,704,585.94 10,912,941.00 09/30/28 1.25% US Treasury Notes Cusip 91282CJR3 8,700,000.00 8,630,671.88 8,727,492.00 12/31/28 3.75% COI- Series 2025 Account #292895105
First American Fund Inc Treasury OF Cusip 31846V542 - - - 10/0 1/2 5 4.20% Total 210,985,245.59 208,447,564.64 209,870 ,355.74 US Bank 2024A Rose Bowl Pasadena PFA Lease Revenue Bonds Ilse Vlach Interest Fund- Series 2024A Account #290083000 (213) 615-6051
Adriana Marshall Principal Fund- Series 2024A Account #2900083001 (213) 615-6033 Fidelity Govt Protfolio CI Cusp:316175108 107.26 107.26 107.26 10/01/25 4.03% COI Fund- Series 2024A Account #2900083002
Cash - - - 10/0 1/2 5 0.00%
Total 107.26 107.26 107.26
Amy Green 2024A Electric Revenue Refunding Bonds
(213)630-6204 Bond Fund-2024A Account #00016123
Lena Chan DREFUS GOVT CM INST 289 Cusip: X9USDDGCM 2.44 2.44 2.44 10/01/25 4.06% (213) 630-6253
Total 2.44 2.44 2.44

24

Schedule of Funds Held by Trustees

CITY OF PASADENA
For Period Ending 9/30/2025 Market Yield 4.04%
Maturity 10/01/25
$ Amount
Trustee/Officer Issue Name Shares/Par Cost Market Maturity % Maturity Date Investment Value Value Date Yld
BNY 2021A Water Revenue Refunding Bonds
Amy Green COI-2021A Account #209092
(213)630-6204 Cash - - - 10/01/25 0.00%
Lena Chan Debt Service-2021A Account #209093
(213) 630-6253 Cash - - - 10/01/25 0.00%
Reserve-2021A Account #209094
DREFUS GOVT CM INST 289 Cusip: X9USDDGCM 915,110.72 915,110.72 915,110 .72 10/01/2 5 4.06% Cash - - - 10/01/25 0.00%
Total 915,110.72 915,110.72 915,110 .72
BNY 2020A Water Revenue Refunding Bonds
Amy Green COI-2020 Account #746583
(213)630-6204 Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS - - - 10/01/25 4.04% Lena Chan DEBT SERVICE-2020 Account #746585
(213) 630-6253 Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS - - - 10/01/25 4.04% Total - - -
2020AB POB Bonds
BNY POB COI-2020B Account #220413
Amy Green BlackRock Treasury Turst Dollars 63 Cusip: X9USDBTRD - - - 10/01/25 3.92% (213)630-6204 POB Bond Fund-2020B Account #220414
Lena Chan Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 140.69 140.69 140.69 10/01/25 4.04% (213) 630-6253 POB Bond Fund-2020B Account #220415
Blackrock Tresus Trust Dollar 11 Cusip: X9USDBTRO 468.31 468.31 468.31 10/ 01/2 5 3.75% POB Principal-2020B Account #220416
Blackrock Tresus Trust Dollar 11 Cusip: X9USDBTRO 344.04 344.04 344.04 10/ 01/2 5 3.75% POB Principal-2020A Account #765997
Blackrock Tresus Trust Dollar 11 Cusip: X9USDBTRO 344.04 344.04 344.04 10/ 01/2 5 3.75% POB Bond Fund-2020A Account #765990
Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 229.86 229.86 229.86 10/ 01/2 5 4.04% POB Bond Fund-2020A Account #765996
Blackrock Tresus Trust Dollar 11 Cusip: X9USDBTRO 1,023.42 1,023.42 1,023. 42 10/01/2 5 3.75% Total 2,550.36 2,550.36 2,550. 36
US Bank 2018AB Rose Bowl Pasadena PFA Lease Revenue Bonds Ilse Vlach Interest Fund- Series 2018A Account #248882000 (213) 615-6051 Fidelity Govt Protfolio CI Cusp:316175108 936.29 936.29 936.29 10/01/25 4.03% Adriana Marshall Costs of Issuance- Series 2018A Account #248882002 (213) 615-6033 Fidelity Govt Protfolio CI Cusp:316175108 - - - 10/01/25 4.03% Interest Fund- Series 2018B Account #248882100
Fidelity Govt Protfolio CI Cusp:316175108 94.00 94.00 94.00 10/ 01/2 5 4.03% Principal Fund- Series 2018B Account #248882101
Fidelity Govt Protfolio CI Cusp:316175108 895.24 895.24 895.24 10/ 01/2 5 4.03%

25

Schedule of Funds Held by Trustees

CITY OF PASADENA
For Period Ending 9/30/2025 Market Yield 4.04%
Maturity 10/01/25
$ Amount
Trustee/Officer Issue Name Shares/Par Cost Market Maturity % Maturity Date Investment Value Value Date Yld
Costs of Issuance- Series 2018B Account #248882102
Fidelity Govt Obl Fd Cl D 316175108 - - - 10/0 1/2 5 4.03% Total 1,925.53 1,925.53 1,925. 53
2017A Water Revenue Bonds
BNY Debt Service-2017A Account #948165
Amy Green Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS - - - 10/01/25 4.04% (213)630-6204 Reserve Fund-2017A Account #948269
Lena Chan Federal Home Loan Banks Cusip: 3130AL3S1 1,050,000.00 1,050,000.00 1,037,011.50 02/17/26 0.63% (213) 630-6253 DREYFUS CUSIP:X9USSGCM 55,337.25 55,337.25 55,337.25 10/01/25 4.18% Total 1,105,337.25 1,105,337.25 1,092, 348.75
US Bank 2016A Rose Bowl Pasadena PFA Lease Revenue Bonds Ilse Vlach Interest Fund- Series 2016A Account #264433000 (213) 615-6051 Fidelity Govt Protfolio CI Cusp:316175108 215,803.41 215,803.41 215,803.41 10/01/25 4.03% Principal Fund- Series 2016A Account #264433001
Fidelity Govt Protfolio CI Cusp:316175108 6,077.13 6,077.13 6,077. 13 10/01/2 5 4.03% Adriana Marshall
Insurance & Condemnation Fund- Series 2016A Account
#264433002
(213) 615-6033 Fidelity Govt Obl Fd Cl D 316175108 0.19 0.19 0.19 10/01/25 4.03% Cost of Issuance- Series 2016A Account #264433003
First American Govt Obl Fd Cl D 31846V401 - - - 10/0 1/2 5 4.03% Total 221,880.73 221,880.73 221,880 .73
BNY Pasadena 2015A COPS Bond
Amy Green COPS Base Rental-2015A Account #336964
(213)630-6204 Cash Balance - - - 10/01/25 0.00%
Lena Chan Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS - - - 10/01/25 4.04% (213) 630-6253 Total - - -
BNY Pasadena Water Revenue 2010AB
Amy Green 2010 A Parity Reserve Account #286245
(213)630-6204 DREYFUS CUSIP:X9USSGCM 45,008.47 45,008.47 45,008.47 10/01/25 4.06% Lena Chan Federal Home Loan Bank CUSIP:3130AL3S1 1,350,000.00 1,350,000.00 1,333,300.50 02/17/26 0.63% (213) 630-6253 Cash - - - 10/01/25 0.00%
2010 B Parity Reserve Account #286248
DREYFUS CUSIP:X9USSGCM 12,564.91 12,564.91 12,564. 91 10/01/2 5 4.06% Federal Home Loan Bank CUSIP:3130AL3S1 300,000.00 300,000.00 296,289.00 02/17/26 0.63% Cash - - - 10/01/25 0.00%
Total 1,707,573.38 1,707,573.38 1,687, 162.88
US Bank 2010 Rose Bowl Pasadena PFA Lease Revenue Bonds Ilse Vlach Interest Fund (S631591)
(213) 615-6051 Fidelity Instl Mm Fds Government I CUSIP:316175108 249.59 249.59 249. 59 10/ 01/2 5 4.03%

26

Schedule of Funds Held by Trustees

CITY OF PASADENA
For Period Ending 9/30/2025 Market Yield 4.04%
Maturity 10/01/25
$ Amount
Trustee/Officer Issue Name Shares/Par Cost Market Maturity % Maturity Date Investment Value Value Date Yld
Lindsey K Tonsfeldt Cash - - - 10/01/25 0 .00%
(651) 466-5114 Principal Fund (S631592)
[email protected] Fidelity Instl Mm Fds Government I CUSIP:316175108 3.57 3.57 3.57 10/01/25 4.03% Bond Reserve Fund (S631593)
Federal Home Loan Bank Funds CUSIP: 3130ALBD5 - - - 02/25/41 2 .15% Fidelity Instl Mm Fds Government I CUSIP:316175108 324,882.42 324,882.42 324,882.42 10/01/25 4.03% Cash - - - 10/01/25 0.00%
Total 325,135.58 325,135.58 325,135. 58
Computershare Corporate Trust PPFA (Paseo Colorado Parking Facilities) 2008 Tracy Mason Bond Fund Account #23200100
(213) 253-7536 Allspring Government Money Market Service 60,659.94 60,659.94 60,659.94 10/01/25 3.73% (667)786-1241 Cash - - - 10/01/25 0.00%
Reserve Fund Account #23200101
teresalynn.mason1@computershFHLB Cusip: 3130APVC6 2,000,000.00 2,000,000.00 1,946,860.00 12/01/26 1.38% Kushina White Well Fargo Advantage Government Money Market Service - - - 10/01/25 0.01% (682)352-3476 Cost of Issuance Fund Account #23200103
(667)786-1241 Well Fargo Advantage Government Money Market Service - - - 10/01/25 0.00% [email protected] 2,060,659.94 2,060,659.94 2,007,5 19.94 BNY Pasadena 2006,2008,2015 COP Reserves
Amy Green Reserve Account #281635
(213)630-6204 Federal Home Loan Banks CUSIP:3130AKKQ8 4,950,000.00 4,950,000.00 4,333,279.50 12/23/30 1.25% Lena Chan Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 234,364.64 234,364.64 234,364.64 10/01/25 4.04% (213) 630-6253 Cash - - - 10/01/25 0.00%
Total 5,184,364.64 5,184,364.64 4,567,6 44.14
Pasadena 2008AB COPS, 15A Parity Reserve
BNY Reserve Fund #281207
Amy Green Federal Home Loan Banks CUSIP:3130AKKQ8 1,325,000.00 1,325,000.00 1,159,918.25 12/23/30 1.25% (213)630-6204 Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 62,734.03 62,734.03 62,734.03 10/01/25 4.04% Lena Chan Cash Balance - - -
(213) 630-6253 Total 1,387,734.03 1,387,734.03 1,222,6 52.28 BNY Pasadena 2008A COPS
Amy Green Base Rental Fund #281732
(213)630-6204 Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 288,231.25 288,231.25 288,231.25 10/01/25 4.04% Lena Chan Cash Balance - - - 0.00%
(213) 630-6253 Interest Fund #281733
Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 60.31 60.31 60.31 10/0 1/25 4 .04% Letter of Credit #281734
Bank of America CUS: S86494570 1.00 1.00 1.00 03/3 1/25 0 .00% Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 14.06 14.06 14.06 10/01/25 4.04% Total 288,306.62 288,306.62 288,306. 62

27

Schedule of Funds Held by Trustees

CITY OF PASADENA
For Period Ending 9/30/2025 Market Yield 4.04%
Maturity 10/01/25
$ Amount
Trustee/Officer Issue Name Shares/Par Cost Market Maturity % Maturity Date Investment Value Value Date Yld
BNY Pasadena Conf Ctr 2006AB
Amy Green Reserve Fund #281722
(213)630-6204 Federal Home Loan Banks CUSIP:3130AJRH4 10,800,000.00 10,800,000.00 7,557,840.00 06/29/40 2.07% Lena Chan Federal Home Loan Banks CUSIP:3130AKKQ8 270,000.00 270,000.00 236,360.70 12/23/30 1.25% (213) 630-6253 Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 859,019.22 859,019.22 859,019.22 10/01/25 4.04% Cash Balance - - - 01/0 0/0 0 0.00%
Total 11,929,019.22 11,929,019.22 8,653, 219.92 BNY Pasadena Water Revenue 2003
Amy Green Parity Reserve Account #281651
(213)630-6204 Federal Home Loan Banks CUSIP: 3130AL3S1 1,000,000.00 1,000,000.00 987,630.00 02/17/26 0.63% Lena Chan DREYFUS GOVT CM INST 289 CUSIP: X9USDDGCM 39,580.96 39,580.96 39,580.96 10/01/25 4.06% (213) 630-6253 Cash - - - 10/01/25 0.00%
Total 1,039,580.96 1,039,580.96 1,027, 210.96
BNY COPS Parity Reserve Fund(2006A, and 2008ABC COP)
Amy Green Certificate Reserve #281143
(213)630-6204 Federal Home Loan Banks CUSIP: 3130AKKQ8 2,025,000.00 2,025,000.00 1,772,705.25 12/23/30 1.25% Lena Chan Goldman Fincl Sq Govt Instl 465 CUSIP:X9USDGLDS 95,878.17 95,878.17 95,878.17 10/01/25 4.04% (213) 630-6253 Cash - - - 10/01/25 0.00%
(In aggegrate with 2006A, Total Funds 2,120,878.17 2,120, 878.17 1,868, 583.42 and 2008ABC COP reserve)
SCPPA SCPPA Investments
Atif Haji Datoo SCPPA Project Stabilization Fund
(213) 367-4668 Fidelity Inst MMKT GOVT 57CUSIP:X9USDFIN 331,300.04 331,300.04 331,300.04 10/01/25 4.05% Fidelity Inst MMKT GOVT 57CUSIP:X9USDFIN 1,125,403.27 1,125,403.27 1,125,403.27 10/01/25 4.05% US Bancorp Cusip 91159XBZ7 3,000,000.00 3,000,000.00 3,004,620.00 04/29/30 5.20% Federal Home Loan Mortgage Corp CUSIP: 3134HAU43 1,000,000.00 997,500.00 1,000,660.00 12/18/209 4.63% - - - 0.00%
Total 5,456,703.31 5,454,203.31 5,461, 983.31
TOTAL FUND BALANCE 244,732,115.73$ 242,191,934.78$ 239,213 ,700.58$

28

VI. PARS Section 115 Trust

City of Pasadena
PARS Section 115 Trust
For the Month Ended September30, 2025
Pension Account 6746056200
Mayket Value Book Value
Beginning Balance 14,539,317.33 14,071,399.36
Activity
Contributions 0.00 0.00
Disbursements 0.00 0.00
Total 0.00 0.00
Net Investment Income
Dividends 55,056.72 55,056.72
Interest 1,699.97 1,699.97
Other Income 0.00 0.00
Change in Accrued Income (35.64) (35.64)
Total Investment Income 56,721.05 56,721.05
Net Change in Unrealized Gain/Loss 186,669.77 0.00
Realized Gain/Loss 0.00 0.00
Total Mayket Value Adjustment 186,669.77 0.00
Trust Fees (2,981.63) (2,981.63)
PARS Fee (Net of Depository Earnings) (2,693.18) (2,693.18) Unreconciled Difference 0.00 0.00
Total (5,674.81) (5,674.81)
Ending Balance 14,777,033.34 14,122,445.60
1 Year Inception To Date
Investment Return (Inception-To-Date as of 09/30/2025) 6.84% 5.10% BenchMayk Return (PARS Moderately Conservative) 6.84% 5.18% Asset Allocation
Market Value Percentage
Cash and Equivalents 513,109.40 3.47%
Equity 4,616,741.78 31.24%
Fixed Income 9,645,517.83 65.27%
Accrued Income 1,664.33 0.01%
Total 14,777,033.34 100.00%
Account Manager:

Kyra Clarke
3121 Michelson Dr 3rd Fl
Irvine, CA 92612
949-224-7214, [email protected]
Cash and Equivalents

3.47%
Equity

31.24%
Fixed Income

65.27%
Accrued Income

0.01%
29

City of Pasadena
PARS Section 115 Trust
For the Month Ended September30, 2025
Post Employments Benefits Trust 6746056201
Mayket Value Book Value
Beginning Balance 2,754,432.87 2,664,869.73
Activity
Contributions 0.00 0.00
Disbursements 0.00 0.00
Total 0.00 0.00
Net Investment Income
Dividends 10,438.04 10,438.04
Interest 281.64 281.64
Other Income 0.00 0.00
Change in Accrued Income (9.99) (9.99)
Total Investment Income 10,709.69 10,709.69
Net Change in Unrealized Gain/Loss, Fee Receipts & Deliveries Net 35,435.26 0.00 Realized Gain/Loss 0.00 0.00
Total Mayket Value Adjustment 35,435.26 0.00
Trust Fees (567.30) (567.30)
PARS Fee (Net of Depository Earnings) (510.21) (510.21) Unreconciled Difference 0.00 0.00
Total (1,077.51) (1,077.51)
Ending Balance 2,799,500.31 2,674,501.91
1 Year Inception To Date
Investment Return (Inception-To-Date as of 9/30/2025) 6.84% 5.21% BenchMayk Return (PARS Moderately Conservative) 6.84% 5.24% Asset Allocation
Marrket Value Percentage
Cash and Equivalents 82,914.96 2.96%
Equity 881,382.10 31.48%
Fixed Income 1,834,931.60 65.54%
Accrued Income 271.65 0.01%
Total 2,799,500.31 100.00%
Account Manager:

Kyra Clarke
3121 Michelson Dr 3rd Fl
Irvine, CA 92612
949-224-7214, [email protected]
Cash and Equivalents

2.96%
Equity

31.48%
Fixed Income

65.54%
Accrued Income

0.01%
30

INFORMATION
ONLY ITEM 7

7. FINAL REPORT ON WORKERS’ COMPENSATION AUDIT: MEDICAL AND SETTLEMENT PAYMENT ACCURACY HIGH; TEMPORARY DISABILITY AND

SALARY-CONTINUANCE PROCESSING NEEDS CLARIFICATION

Office of the City Manager
1 TO Finance/Audit Committee
FROM Ani Antanesyan, Internal Audit Manager
SUBJECT Final Report on Workers’ Compensation Audit: Medical and Settlement Payment Accuracy High; Temporary Disability and Salary-Continuance Processing Needs Clarification
DATE November 24, 2025
RECOMMENDATION This report is for information only. The Finance/Audit Committee may, however, take action relating to this item as it deems appropriate following consideration and discussion of the matter.

Background:

As part
of the FY 2025/2026 Internal Audit Plan, Internal Audit hired TAP International, Inc., a woman-owned firm with an office in Pasadena to evaluate the following related to the City’s Workers’ Compensation program:

1. Is t
he administration of Findings and Awards, Stipulations with Award, and Compromise and Release settlements consistent with the corresponding documentation for each claimant?

2. Are expenses for medical and related treatment adequately supported by appropriate documentation?

3. Are supplemental disability benefits for employees on leave—including premium pay and pro-rated overtime—accurately calculated and administered in accordance with the City’s Workers’ Compensation Policy, applicable Memoranda of Understanding (MOUs), and Salary Resolutions?
When an empl
oyee is injured or becomes ill due to a work-related condition, Workers’ Compensation insurance provides coverage for reasonable and necessary medical expenses, as well as compensation for lost wages, when applicable. This coverage applies to both minor incidents and more serious injuries.

The City
has contracted with its current Third-Party Administrator (TPA) since 2021 to review, process, and pay workers’ compensation claims. Before most of these payments occur, however, a City-contracted medical bill reviewer evaluates invoices submitted by claimants to determine whether the charges align with contracted rates or are otherwise reasonable. The TPA then processes the recommended payments for medical services and related expenses.

For contested claims, the TPA facilitates the implementation of negotiated and legally determined settlements, which include Findings and Awards, Stipulations with Award, and Compromise and Release agreements. These types of workers’ compensation settlements may involve direct payments to claimants and/or the provision of medical or related services, some for the remainder of their lives. For eligible claimants, the TPA and the City’s Payroll Office calculate Temporary Disability or Salary Continuance payments allowed under California Labor Code Sections §4453 and §4850.

TAP Int
ernational applied multiple methods of analysis to conduct this audit. To address the first two audit objectives, 54 settlements involving Findings and Awards, Stipulations with Award, and Compromise and Release Awards were randomly selected and reviewed. Furthermore,

Office of the City Manager
2 source documents were reviewed verifying alignment with the amounts paid, and ensuring compliance with the terms specific in final documentation. Additionally, to address the second audit objective, 221 claims were randomly selected and reviewed to assess the adequacy of documentation supporting medical and related treatment expenses. To address the third objective, 13 claims were judgmentally selected to assess accuracy and policy compliance.

Audit F
indings and Recommendations:

TAP Int
ernational identified three findings and four recommendations which when implemented will strengthen the internal controls over this program. The City Manager’s Risk Management Division staff agree to all the recommendations and will be implementing them. The audit report and the management response are included as Attachment A to this memo.

The audit f
indings demonstrate that the City’s TPA consistently administered settlement documentation and correctly paid claimants’ bills related to medical services, however, there is a need for standardized methodology and routine oversight of the Workers’ Compensation Temporary Disability and Salary-Continuance payments, and stronger controls are needed over the mileage reimbursement process.

These findi
ngs recommend 1) developing and documenting calculation policies for Temporary Disability and Salary-Continuance Payments under Labor Code Sections §4453 and §4850, 2) requiring the TPA to perform independent audits over Temporary Disability and Salary- Continuance Payments in the next contract and performing periodic reconciliations of the Salary-Continuance Payments between the TPA and the City’s payroll wage remittances to confirm accuracy and compliance with established policy, 3) conducting training on the computation of workers’ compensation calculations with staff from Payroll, Risk Management, and the City’s TPA, and 4) examining the feasibility of establishing a timeframe for claimants to submit mileage reimbursement forms and to provide documentation to substantiate the reimbursement.

Attachm
ents (1):

Attac
hment A – Final Report on Workers’ Compensation Audit: Medical and Settlement Payment Accuracy High; Temporary Disability and Salary-Continuance Processing Needs Clarification

City of Pasadena
Work
ers’ Compensation Audit:

Medical and Settlement Payment
Accuracy High; Temporary
Disability and Salary-Continuance
Processing Needs Clarification
Final
Report
Novemb
er 10, 2025
Appendix A

Page | 1
Contents
REPORT HIGHLIGHTS ................................ ................................ ................................ .................. 2 Why The Review Was Conducted ................................ ................................ .......................... 2 How The Review Was Conducted ................................ ................................ .......................... 2 What Was Found ................................ ................................ ................................ .................. 2 Recommendations ................................ ................................ ................................ ................ 3 BACKGROUND INFORMATION ................................ ................................ ................................ .... 5 Workers’ Compensation Program Overview ................................ ................................ .......... 6 Audit Objectives, Scope, and Methodology ................................ ................................ ........... 8 KEY RESULTS ................................ ................................ ................................ .............................. 12 Finding 1: The City’s TPA consistently administered settlement documentation ................... 12 Finding 2: The City’s TPA correctly paid claimants’ bills related to medical services .............. 12 Finding 3: Need for standardized methodology and routine oversight of Workers’ Compensation Temporary Disability and Salary-Continuance payments ............................... 14 Appendix A: City of Pasadena Response to the Audit Recommendations ................................ ... 16

Page | 2

REPORT HIGHLIGHTS
Why The Review Was Conducted
The City of Pasadena (City), in its efforts to
monitor risk, contracted with TAP
International to review the accuracy of
payments issued for various types of
workers’ compensation claims. During the
audit period between January 1, 2024, and
March 12, 2025, over 22,000 workers’
compensation-related transactions totaling
approximately $16.85 million were
processed by the City’s third-party
administrator (TPA).

How The Review Was Conducted
TAP International selected a statistically
representative sample of:
• 54 claims associated with
settlements. These types of
settlements included:
o Findings and Awards,
o Stipulations with Awards,
and
o Compromise and Release
settlements
• 221 claims for medical or related
services provided to claimants or
providers
We separately reviewed the calculations for
13 Temporary Disability and Salary-
Continuance payments, as authorized by
California Labor Code Sections
§4453 and
§4850.

What Was Found
First, the City’s TPA consistently
administered settlements related to Findings
and Awards, Stipulations with Award, and
Compromise and Release settlements
reviewed during the audit, providing the City
with a high level of assurance that the TPA
processed these types of payments
correctly.

Second, the TPA accurately reimbursed
medical providers, vendors, and claimants
for submitted bills. We estimate that 95
percent to 99 percent of medical bill
reimbursements were processed accurately
during the audit period—exceeding the
industry benchmark of 95 percent. We
noted the City should strengthen internal
controls by requiring the timely submission
of mileage reimbursement claims by
claimants.

Third, the audit identified the need to clarify
the City’s workers’ compensation policy,
particularly regarding program
implementation and methods for calculating
Temporary Disability and Salary-Continuance
payments.

We offer four recommendations to the
Deputy City Manager to enhance the
administration of the workers’
compensation program.

Page | 3
Recommendations

1. Develop and Document Calculation Policies
a) The Deputy City Manager should establish a written policy, or update the current Workers’ Compensation Policy, defining how Temporary Disability and Salary- Continuance Payments under Labor Code Sections §4453 and §4850 benefits must be calculated, including which earnings to apply or not to apply for public safety employees (regular vs. total compensation, overtime, and premiums pays) and the applicable timeframe for computing payments.
b) The policy should be reviewed and approved by legal counsel and formally adopted by Risk Management, Payroll, and Finance, and integrated into the City’s workers’ compensation procedures, including an illustration of the process workflow, identifying payment review controls.
c) The Deputy City Manager should assign responsibility for computing Salary- Continuance payments to either the Payroll Office or the TPA, not both. d) The Deputy City Manager should develop and implement clear communication protocols to ensure a single source of calculations is used for salary-continuance payments to claimants.

2. Enhance Oversight and Quality Control
a) The Deputy City Manager, in the next contract with a TPA, should include a requirement for the TPA to conduct an independent audit to determine whether payments are calculated accurately based on City Policy. b) The Deputy City Manager should implement periodic reconciliations of wage continuance payments between the TPA and City payroll wage remittances to confirm accuracy and compliance with established policy; any discrepancies identified should be documented, investigated, and corrected promptly.

3. Enhance Training and Communication
a) The Deputy City Manager should conduct training on computing workers’ compensation calculation to staff in Finance including Payroll, Risk Management, and the City’s TPA.
b) The City’s Risk Manager should establish a communication protocol to ensure all parties are informed of updates or changes to calculation procedures.

4. Strengthen Internal Controls for Payment Processing
a) The Deputy City Manager, in coordination with the City Attorney, should examine the feasibility of establishing a timeframe for claimants to submit mileage

Page | 4
reimbursement forms and to provide documentation showing proof that dates of mileage incurred coincide with dates of services received.

Pag e | 5

BACKGROUND

INFORMATION

HOW THE REVIEW WAS

CONDUCTED

Page | 6

BACKGROUND INFORMATION
Workers’ Compensation Program Overview
When an employee is injured or becomes ill due to a work-related condition, workers’ compensation insurance provides coverage for reasonable and necessary medical expenses, as well as compensation for lost wages, when applicable. This coverage applies to both minor incidents and more serious injuries.

Under California Labor Code §3700, cities are permitted to establish and administer their own Workers’ Compensation programs. As a self-insured entity, the City of Pasadena may retain legal, medical, and administrative consultants to support and manage its program.

As shown in Figure 1, the City of Pasadena contracts with multiple vendors to administer its Workers’ Compensation Program.

Figure 1: City’s Workers’ Compensation Program
The C
ity has contracted with its current TPA since 2021 to review, process, and pay medical claims. Before most of these payments occur, however, a City-contracted medical bill reviewer evaluates each invoice to determine whether the charges align with contracted rates or are otherwise reasonable. The TPA then processes the recommended payments for medical services and related expenses.

For contested claims, the TPA facilitates the implementation of negotiated and legally determined settlements, which include Findings and Awards, Stipulations with Award, Compromise and Release agreements. These types of workers’ compensation settlements may City of Pasadena Workers’
Compensation Program
Risk
Management
Division
Third-Party
Administrator
(1)
Third-Party
Bill Reviewer
(1)
Medical Providers and Vendors
(550+)
Payroll Office

Page | 7
involve direct payments to claimants and/or the provision of medical or related services, some for the remainder of their lives.

For eligible claimants, the TPA and the City’s Payroll Office calculates Temporary Disability or Salary Continuance payments allowed under California Labor Code Sections §4453 and §4850.

Workers’ Compensation Activity
The City’s TPA processed 22,364 transactions totaling approximately $16.85 million during the audit period, as shown in Figure 2.

About 340 city employees had active claims during the audit period, representing approximately 18 percent of the City’s workforce.

Figure 2: Total Workers’ Compensation Claim Related Costs, Jan. 2024 to Mar. 2025 Primary Expenses Amount Paid
Medical Expense Reimbursements to Claimants 224,352
Medical Expenses Paid to Vendors 6,572,879
Settlements: Findings & Award, Stipulations with Award, Compromise and Release
1,981,228
Temporary Disability 3,379,988
Salary-Continuance (Public Safety) 2,325,234
Other Indemnity 785,753
Legal Expenses 742,301
Other Workers' Compensation-Related Expenses* 841,836
Total $16.85 million
* Fees for Consultant, Interpreter, Investigation, Utilization Review, Subrogation, Bill Review, etc.

During our review period, the City’s Police Department had the highest workers’ compensation costs, followed by the Fire Department, whose expenses were significantly lower, as shown in Figure 3.

Figure 3: Top 10 Departments for Workers’ Compensation Claim Related Costs, Jan. 2024 to Mar. 2025
City Department Total Expenses –All
Claim Types
Payments to
Providers
Payments to Claimants*
Police 9,084,836 3,873,383 5,330,209
Fire 3,961,250 2,502,825 1,529,974
Water & Power 1,325,929 657,831 670,989
Public Works 996,393 504,593 493,003
Parks, Recreation and Community
Services
363,931 256,820 127,476
Health Department 303,470 217,070 86,400

Page | 8
Finance 184,655 101,030 83,626
Planning Department 167,933 166,605 1,386
Housing Department 151,542 100,241 56,455
City Manager 101,958 101,958 -
Top Injuries Occurring Among City Claimants
City employees can incur many different types of injuries, ranging from minor sprains to being struck by motor vehicles. As shown in Figure 4, the top 10 types of injuries among claimants receiving workers’ compensation benefits include cumulative injuries, falls, and slips.

Claims must establish a clear link between the employee’s work and the injury or illness. Since the date of injury, the number of lost workdays across injury types has ranged from 6,547 to 83,793.

Figure 4: Top 10 Injuries Reported on Workers’ Compensation Claims, Jan. 2024 to Mar. 2025 Type of Injury Sum of Temporary Disability
Days*

1. Cumulative injury/illness NOC** 83,793

2. Strain injury by lifting 36,337

3. Fall, slip on same level 30,407

4. Strain, repetitive motion, Carpal Tunnel 30,259

5. Strain injury by pushing/pulling 17,117

6. Strain injury, NOC** 10,784

7. Twisting 9,613

8. Strain injury using tool 8,311

9. Motor vehicle misc. 7,203

10. Struck by motor vehicle 6,547
* Temporary Disability Days
** Not Otherwise Classified (NOC)

Audit Objectives, Scope, and Methodology
Given the volume of transactions processed in connection with workers’ compensation claims, the City contracted with TAP International to assess to determine the following:

1. Is the administration of Findings and Awards, Stipulations with Award, and Compromise and Release settlements consistent with the corresponding documentation for each claimant?

Page | 9

2. Are expenses for medical and related treatment adequately supported by appropriate documentation?

3. Are supplemental disability benefits (payroll true-ups) for employees on leave— including premium pay and pro-rated overtime—accurately calculated and administered in accordance with the City’s Workers’ Compensation Policy, applicable Memoranda of Understanding (MOUs), and Salary Resolutions?
Scope
Our audit period covered January 2024 through March 2025 and focused on various types of Workers’ Compensation transactions, as described in Figure 5.

Figure 5: Types of Workers’ Compensation Claims Reviewed Claim type Description Settlements: Findings and Award,
Stipulations with Award, and
Compromise and Release
Findings & Award (F&A): A written decision by a workers' compensation administrative law judge about a case, including payments and future care that must be provided.

Stipulation with Award: A settlement of a case where the parties agree on the terms of an award. This is the document the judge signs to make the award final.

Compromise and Release (C&R): A type of settlement in which the claimant receives a lump sum payment and becomes responsible for paying for future medical care.

Medical Benefits The method by which healthcare providers receive remuneration for administering treatment to injured employees. This procedure is regulated by specific laws and regulations to ensure medical services are essential, accurately billed, and equitably reimbursed.

Temporary Disability and Wage
Continuation Payments
For public safety employees, California Labor Code §4453 and §4850 entitles fire and police department employees to temporary disability benefits and full wage continuances.

For non-safety employees, claimants are entitled to temporary disability payments in accordance with state requirements (§4453), and if permitted under collective bargaining agreements, wage continuances.

Our review did not assess the tax implications for claimants or the financial impact on the City resulting from these discrepancies, nor did it evaluate the accuracy of the total amount (gross or net wages) paid to claimants.

Page | 10
To address the first two audit objectives, we selected a statistically representative sample of workers’ compensation payment transactions processed during the audit period, providing a 95 percent confidence level that the results can be projected to the broader population (34,691 transactions) from which the sample was drawn.

Specifically, we randomly selected and reviewed 54 claim settlements involving Findings and Awards, Stipulations with Award, and Compromise and Release awards. Activities included:
• Reviewing source documents and verifying alignment with the amounts paid • Ensuring compliance with the terms specified in final documentation We randomly selected and reviewed 221 claims to assess the adequacy of documentation supporting medical and related treatment expenses. Activities included:
• Reviewing source bills and verifying charges against payments made by the TPA. • Confirming the eligibility of expenses for reimbursement and assessing the presence and effectiveness of internal controls to ensure payment accuracy.

To address Temporary Disability and Salary-Continuances, we judgmentally selected 13 claims to assess accuracy and policy compliance. Activities included:
• Evaluating the City’s Payroll and TPA’s methodology for calculating Temporary Disability and Salary-Continuance payments under California Labor Code Sections §4453 and
§4850.
• Independently recalculating workers’ compensation payment amounts and comparing results to those computed by the Payroll Office and the TPA. • Assessing alignment of the prescribed methodology for calculating workers’ compensation payments with the City’s workers’ compensation policy and applicable MOUs.

We had to rely on view only access to review the TPA’s methods for calculating Temporary Disability and Salary-Continuance payments. These methods were shown on calculation worksheets uploaded to their system or contained in the notes pages on selected screens.

We conducted this audit in accordance with the Institute of Internal Auditors professional auditing standards, referred to as the Red Book. These standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit. objectives. A draft report was provided to the City’s Risk Management Department for review and comment. See Appendix A for its response.

Page | 11

KEY RESULTS

Page | 12

KEY RESULTS
Finding 1: The City’s TPA consistently administered settlement documentation The City’s TPA accurately administered payments and benefits awarded under 54 settlements related to Findings and Awards, Stipulations with Award, and Compromise and Release agreements reviewed in our sample, in a manner consistent with the supporting documentation. This provides a high level of confidence that these types of payments and benefits were likely processed accurately across the broader population of 120 claims settled during the 14-month audit period. 1
In addition, the TPA appropriately applied internal controls for these types of settlements by ensuring the following:
• The City reviewed and authorized all Stipulations with Award and Compromise and Release agreements with claimants prior to final settlement • Archived documentation showing the history of each case was maintained • Partial payments were monitored to ensure they did not exceed the settlement amount Finding 2: The City’s TPA correctly paid claimants’ bills related to medical services California Labor Code and the California Code of Regulations, administered through the Division of Workers’ Compensation (DWC) governs reimbursement for medical expenses related to job- related injurie. Labor Code §4600 requires employers to provide all medical treatment that is reasonably required to cure or relieve the effects of the injury. This includes:
• Physician visits
• Physician services
• Hospital services
• Surgery
• Prescription drugs
• Laboratory services
• Physical therapy
• Medical devices and transportation (if necessary)
While the City’s Workers’ Compensation Policy does not explicitly define the types of medical services eligible for reimbursement, the TPA adheres to applicable requirements under the California Labor Code when processing claims. The TPA also includes reimbursement for alternative medical treatment, such as acupuncture, which is consistent with state law.

1The 120 claims $1.98 million. Some individual claimants may have multiple awards.

Page | 13
The TPA correctly processed 97 percent of the bills we reviewed, providing a satisfactory level of assurance that the City's contractor accurately paid between 95 to 99 percent of the broader population of 13,258 payments—meeting the industry standard of 95 percent for medical bill payment accuracy.

The City’s contractor, responsible for reviewing medical and related service bills, applies reimbursement standards established by the State of California, including the Official Medical Fee Schedule (OMFS), which defines maximum reasonable fees. Reimbursements must align with these schedules unless an alternate agreement exists with the claimant and/or the claimant’s legal representative.

Under Labor Code §4603.2, the City is required to pay undisputed medical bills within 60 working days of receipt. Of the 221 bills reviewed, 220 were paid or refunded by the payee by their due date. The remaining bill, which was in dispute between the TPA and a provider, was resolved after 72 months following a refund on a prior overpayment.

Workers who pay out-of-pocket for authorized treatment or transportation may request reimbursement; however, they must submit documentation to support the requested payment.

Among the six bills that contained exceptions, four involved mileage reimbursements.

Documentation supporting these payments could not be found. The TPA explained that a former adjuster processed the reimbursements without uploading the mileage documentation into the system.

While the absence of documentation for these four cases is not significant within the context of our sample, similar documentation gaps are likely present across the broader population of claims.

For the remaining two claims, while the TPA correctly paid the mileage advance amounts requested by the claimants’ legal representatives, it did not reimburse the requested parking fees. TPA officials explained that in such cases, claimants have the option to include parking expenses on the mileage claim form.
2 We also identified additional internal control issues, as follows:
• The Mileage Reimbursement Form does not require claimants to submit documentation confirming that the medical appointment occurred. Adding this requirement would reduce the burden on the TPA to verify the accuracy of mileage and travel expense claims—something we found no evidence of in the files reviewed. Total travel expenses reimbursed across the broader population of claims amounted to $87,734, which, over 2 We did not verify whether the claimant submitted a claim for reimbursement of parking expenses because there was not an efficient method to find the claim without delaying this audit.

Page | 14
multiple years, can aggregate to a larger level of expenses without sufficient controls over their payment.
• The
form also does not specify a deadline for submitting mileage reimbursement requests, as the City has not established one. We identified multiple mileage claims that reported trips spanning more than a year, which created significant challenges in verifying their accuracy.

Other internal controls related to medical expense reimbursements, implemented by the TPA, functioned as intended. These include:
• Verifying the active business status of providers requesting reimbursement • Identifying potential duplicate payments
• Monitoring, identifying, and requesting refunds on overpayments Finding 3: Need for standardized methodology and routine oversight of Workers’ Compensation Temporary Disability and Salary-Continuance payments Under California Labor Code §4453, public employers are required to base temporary disability payments on an employee’s actual average weekly earnings, not exceeding one year, with adjustments reflecting state-established maximum benefit rates. California Labor Code §4850 (commonly referred to as Salary-Continuance) authorizes public safety personnel to receive full wages in lieu of Temporary Disability payments.

California Labor Code §4850 also allows self-insured agencies, such as the City of Pasadena, discretion in determining the period of pay used in the calculations and the types of pay to include in the wages—such as premium pay, overtime, holiday pay, and other applicable compensation.

The City’s workers’ compensation policy and the City’s collective bargaining agreements do not define how to calculate Temporary Disability (TD) or Salary-Continuance payments. Specifically, these documents do not provide a standardized formula or specify which components of pay should be included in the workers’ compensation calculations. Without precise city policy direction, multiple interpretations occurred.

In practice, both the City’s TPA and Payroll Office calculate Temporary Disability (TD) and Salary- Continuance amounts for public safety claimants using different methods. The TPA follows guidance issued by the Risk Management Office, while Payroll independently performs its own calculations and issues payments to police and fire claimants without fully coordinating with Risk Management.

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Each party applies distinct methodologies—for example, using either all compensation earned over the prior year or the current pay period, and determining whether to include premium pay, voluntary or mandatory overtime as part of, or in addition to, the workers’ compensation payment amounts. Both parties report that their calculations are accurate. Risk Management, which oversees the workers’ compensation program, does not conduct periodic reviews of these calculations to verify their accuracy.
3 We could not fully reconcile either party’s workers’ compensation calculations because Payroll records a single non-taxable wage continuance amount for safety claimants, rather than separating Temporary Disability (TD) and Salary-Continuance amounts as required by state reporting guidelines. The TPA, in accordance with guidance from the City’s Risk Management Office, uses other approaches depending on if the claimant is a fire or police employee. This combined effect creates an elevated risk of overpayments or underpayments to public safety claimants. Strengthening policy definitions, establishing a standardized methodology for benefit calculations, consolidating responsibility for those calculations, and instituting periodic reviews would improve compliance assurance, reduce inefficiencies, and create a clear audit trail for all benefit computations.
3 Non-safety claimants were not included in our analysis because 77 percent of workers compensation payments were for fire and police employees.

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Appendix A: City of Pasadena Response to the Audit Recommendations PASADENA CITY MANAGER’S OFFICE
RISK MANAGEMENT/WORKERS’ COMPENSATION DIVISION

MEMORANDUM
TO: Ani Antanesyan, Internal Audit Manager
FROM: Matthew Howard, Workers’ Compensation Supervisor
CC: Alex Souto, Deputy City Manager
DATE: November 7, 2025
RE: Response to Workers’ Compensation Audit Recommendations Risk M
anagement is committed to administering its workers’ compensation program in accordance with the California Labor Code, applicable regulations and internal policies. The following outlines the City’s response to the recommendations provided:

1. Develop and Document Calculation Policies
a–b. Policy Development and Adoption
Risk Management agrees that a comprehensive written policy is essential for consistent and lawful administration of Temporary Disability (TD) and Salary-Continuance benefits under Labor Code §§ 4453 and 4850. The City will:
• Update its existing Workers’ Compensation Policy to define the methodology for calculating TD and salary-continuance benefits, including:
• Clarification of which earnings are included (e.g., base pay, overtime, premium pay) in accordance with Labor Code § 4453 and § 4850 • Specification of the applicable timeframe for calculating average weekly earnings.
• Ensure the policy is reviewed by the City Attorney in conjunction with Workers Compensation counsel and formally adopted by Risk Management and Finance. • Integrate the policy into the City’s workers’ compensation procedures and internal payment review controls.

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c–d. As
signment of Responsibility and Communication Protocols
To eliminate redundancy and ensure accountability:
• The Deputy City Manager will designate the TPA as the responsible party for Temporary disability calculations and the City’s Finance/Payroll office for Salary Continuation payments.

2. Enhance Oversight and Quality Control
a. TPA Audit Requirement
Risk Management will include a provision in its next TPA contract requiring an independent audit of benefit calculations to ensure compliance with City policy and Labor Code requirements. This aligns with the audit standards set forth by the Division of Workers’ Compensation Audit & Enforcement Unit under Labor Code §§ 129 and 129.5
b. Reconciliation of Payments
Risk Management will conduct periodic reconciliations between TPA-issued payments and City payroll records. Any discrepancies will be documented, investigated, and corrected promptly, in accordance with best practices and audit expectations.

3. Enhance Training and Communication
a. Training
The Deputy City Manager will coordinate training sessions for staff in Finance (including Payroll), Risk Management, and the TPA. Training will cover:
• Calculation of TD and salary-continuance benefits.
• Legal requirements under Labor Code §§ 4453 and 4850. • Internal procedures and documentation standards.
b. Communication Protocol
The Deputy City Manager will establish a communication protocol to ensure timely dissemination of updates or changes to calculation procedures across all departments and the TPA.

4. Strengthen Internal Controls for Payment Processing
a. Mileage Reimbursement Timeframes and Documentation
In coordination with Workers’ Compensation counsel, the Deputy City Manager will evaluate the feasibility of implementing a submission deadline for mileage reimbursement forms. This may include:
• Requiring claimants to submit mileage forms within the same calendar year of the incurred travel.

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• Requiring documentation that verifies mileage dates align with medical service dates, consistent with Labor Code § 4600 and DWC guidelines Conclusion
Risk Management is committed to ensuring that its workers’ compensation program is administered with transparency, consistency, and in full compliance with applicable laws and internal policies. These actions will enhance operational efficiency, reduce risk, and ensure fair treatment of injured employees.

INFORMATION
ONLY ITEM 8

8. INTERNAL AUDIT STATUS UPDATE

Internal Audit Status Update
City of Pasadena | Internal Audit
To: Finance/
Audit Committee
From: Ani Antanesyan, Internal Audit Manager
Subject: Internal Audit Status Update
Date: November 24, 2025
Recommendation: Staff recommends that the Finance/Audit Committee approve the items in Appendix C and D.

The Inst
itute of Internal Auditors Global Internal Audit Standards (Global Audit Standards) requires the Internal Audit Manager to periodically report to the Finance/Audit Committee and Senior Management on the Internal Audit function’s performance relative to its plan. This status update to the Finance/Audit Committee contains the following updates:

1. Status
of the Internal Audit Plan

2. Advisory Projects and Other Value-Added Services

3. Advisory Roles

4. Status of Open Audit Recommendations

5. Summary of Fraud Hotline Issues

6. Results of Internal Quality Assessments

7. Periodic Communications Required by Audit Standards

8. External Audits Received by the City

1. Statu
s of the Internal Audit Plan
The Audit
Committee approved the 2-year Internal Audit Plan for FY 2025 and FY 2026 at the October 28, 2024 meeting. The Global Audit Standard 9.4 requires that the Internal Audit Manager create an internal audit plan that supports the achievement of the organization’s objectives and base it on a documented assessment of the organization’s strategies, objectives, and risks. The audit plan with the status of each audit is included in Appendix A. The completed and in progress audits are summarized below.
a. Comple
ted Projects
Project # Audit Title Date Completed Audit Plan #
24-PW-001 Audit of Fleet Management Practices December 11, 2024 1 2026-01 Follow-Up Audit on Embezzlement
Internal Control Reports August 18, 2025 5
Outsourced
Workers’ Compensation Audit: Medical
and Settlement Payment Accuracy
High; Temporary Disability and Salary-
Continuance Processing Needs
Clarification
November 10, 2025 2

Internal Audit Status Update
City of Pasadena | Internal Audit
b. In Pr
ogress Projects
Audit Title Audit Objective Audit Plan #
Payroll Audit Review the internal controls and processes for the payroll system. 4
Street
Pavement
Maintenance
Program
Evaluate the department’s processes to manage and repair the City’s streets. 7

2. Adviso
ry Projects and Other Value-Added Services
a. Bus Fl
eet Alternatives Analysis
At th
e request of the City Manager, Internal Audit conducted an advisory review of the City’s Department of Transportation’s projected cost estimates for the different bus type alternatives including battery electric, fuel cell electric, and renewable natural gas. The objective of this review was to conduct an independent review of the general cost comparison developed by the Department of Transportation (DOT) for the City of Pasadena’s electrification plans of its bus fleet. The scope of the analysis focused on assessing the current general cost comparison developed by DOT for accuracy.

Based on
the review, Internal Audit made several recommendations to enhance the existing general cost comparison.
b. Inform
al Review of Department of Information Technology’s Implementation of Tyler Munis Revenue Management
At th
e request of the Applications Information Technology Manager, assisted with identification of risks associated with proposed workflows for new Tyler Munis Revenue Management functionality. The objective was to agree on Revenue Management workflows that provided appropriate internal controls.
c. Info
rmal Review of Fleet Management FY 2026 Cost Model
At th
e request of Public Works’ Budget Administrator, assisted with the update of the Fleet Management cost model. The objective of this assistance was to develop a cost model that captured direct and indirect fuel, labor, materials, and subcontract rates and provided a more accurate basis for cost allocation to customer departments. The updated cost model was implemented for FY 2026.

Internal Audit Status Update
City of Pasadena | Internal Audit

3. Adviso
ry Roles
• Risk
Management Committee (Ani Antanesyan, Steven Andersen)
• Pasadena Water and Power Risk Committee (Steven Andersen1, Ani Antanesyan)

3. Stat
us of Open Audit Recommendations
At th
e beginning of the fiscal year, there were 44 open audit recommendations. During this period ended June 30, 2025, 36 recommendations were added from reports issued during the year. During FY 2025, 52 audit recommendations were completed by departments.

There are
28 open audit recommendations as of June 30, 2025 from the following ten audits:

Audit
Year Audit Title Priority
Ranking Department Type of
Audit
# of Open
Recommendations
2017 Contract Compliance Review 2 Public
Health External 2
2018 Jackie Robinson Community Center
Internal Controls Review 1
Human
Resources/
PRCS
Internal 1
2019 Grants Management Audit 1 Finance Outsourced 2
2023
LA County Program Review of
Children’s Health Outreach,
Enrollment, Utilization, and Retention
Services
2 Public
Health External 1
2023
Program Audit of the City of
Pasadena as Program Administrator
of the Foothill Workforce Development
Board
2 City
Manager Outsourced 1
2023
Public Health Program Review of
Emergency Preparedness and
Response Services
2 Public
Health External 1
2024 Audit of Fleet Management Practices 1/2 Public
Works Internal 13
2024
LA County Contract Monitoring
Review of Emergency Preparedness
and Response Services
2 Public
Health External 1
2024 LA County Program Review of Black
Infant Health Program Services 2 Public
Health External 3
2024
CA Dept of Public Health Monitoring
Visit of Public Health/Women, Infants
and Children Division
2 Public
Health External 3
1 In Acting Internal Audit Manager role through May 2025.

Internal Audit Status Update
City of Pasadena | Internal Audit

4. Sum
mary of Fraud Hotline Issues
There w
ere 103 submissions to the Fraud Hotline for the year ended June 30, 2025. Investigations were completed for 89 complaints as of June 30, 2025. Of the 103 complaints, 29 were received through the voicemail line, one was submitted through the City Manager’s website, and 73 were submitted through the Fraud Hotline online form.

Exhibi
t 1 shows the departments that were asked to investigate and resolve the submissions received during the year.

Exhibi
t 1: Number of Fraud Hotline Submissions Investigated by City Departments during FY2025

5. Result
s of Internal Quality Assessments
The Glo
bal Audit Standards require that an annual internal quality self-assessment evaluating compliance to the audit standards be completed by the Internal Audit division. The Global Audit Standards also require the findings to be reported to Senior Management and the Audit Committee.

The annual self-assessment was completed on October 2, 2025 and is included as Appendix B in this report.
53 30
6 3 3 2 2 2 1 1
0 10
20 30
40 50
60 Human
Resources
Internal Audit Housing Police Dept Transportation Public Works City Attorney Water & Power
Finance Planning &
Community
Development
Number of Submissions
Lead Department

Internal Audit Status Update
City of Pasadena | Internal Audit

6. Pe
riodic Communications Required by Audit Standards
A. Inter
nal Audit Framework
The Glo
bal Audit Standards require that Internal Audit review our Internal Audit Framework periodically, present it to management and obtain Audit Committee approval.

The Int
ernal Audit Framework was originally presented and approved by the Finance/Audit Committee on January 25, 2016. The latest revision to the Internal Audit Framework was presented and approved at the October 28, 2024 Audit Committee meeting. The Internal Audit Framework was revised this year to comply with updated Standards and is attached in Appendix C.

B. Inter
nal Audit Strategy
The Glo
bal Audit Standards require that Internal Audit develop and implement a strategy for the internal audit function that supports the strategic objectives and success of the organization and aligns with the expectations of the Finance/Audit Committee, Senior Management, and other key stakeholders.

The curr
ent Internal Audit Strategy is attached in Appendix D.

C. Independe
nce of Internal Audit Activity
The Glo
bal Audit Standards require Internal Audit to report annually on organizational independence. Organizational independence is achieved if the Internal Audit Manager reports to a level within the City that allows the internal audit activity to fulfill its responsibility.

Consis
tent with the Internal Audit Framework, Internal Audit reports to the City Manager through the Deputy City Manager. Therefore, we are organizationally independent and in compliance with this standard.

D. Human,
Financial and Technological Resource Requirements
The Glo
bal Audit Standards require that the Internal Audit division communicate the internal audit activity’s plans and resource requirements to Senior Management and the Finance/Audit Committee. The FY 2026-27 Internal Audit Plan and resource requirements will be presented in a separate Finance/Audit Committee report.

7. Extern
al Audits Received by the City
To confor
m to the newly released Global Audit Standards, Internal Audit is in the process of reviewing all external audits received by City Departments. Internal Audit plans to utilize the external audit reports and findings to coordinate the assurance provided Citywide and to reduce duplication effort.

As a result of this effort, Internal Audit will discontinue following-up on recommendations from external audits as part of its audit follow-up process starting September 30, 2025.

Internal Audit Status Update
City of Pasadena | Internal Audit
Appendix
A: Status of Progress on Internal Audit Plan FY 2025/2026 Appendix B: Internal Quality Self-Assessment as of October 2, 2025 Appendix C-1: Internal Audit Framework with Revisions
Appendix C-2: Internal Audit Framework
Appendix D: Internal Audit Strategy

FY 2025/2026 Status on Progress of Internal Audit Plan Appendix A Plan
# Title Audit Objective Area Status
Assurance Engagements
1 Audit of Fleet
Management Practices
Review City internal controls
and performance related to
fuel management, and vehicle
repair and maintenance.

Public Works Completed
December 11,
2024
2 Final Report on Workers’
Compensation Audit:

Medical and Settlement
Payment Accuracy High;
Temporary Disability and
Salary-Continuance
Processing Needs
Clarification
Evaluate internal controls of
the Third-Party Administrator
for Workers’ Comp claims.

City
Manager/ERM
Completed
(outsourced)
November 10,
2025
3 Information Technology
System Access
Review access management
policies and practices, as well
as current user access, of key
City applications.

DoIT
Water & Power
Other
Departments -
TBD
In Progress
Anticipated
completion date is
April 2025.
4 Payroll Audit Review the internal controls
and processes for the payroll
system.

Finance
Human
Resources
In Progress
Anticipated
completion date is
January 2025.
5 Follow-up Audit on
Embezzlement Internal
Control Reports
Selectively follow-up on
departments’ implementation
of recommendations issued by
KPMG and the Internal Control
Task Force subsequent to the
embezzlement to ensure the
underlying risk/issue has been
mitigated.

City Manager
DoIT
Finance
Human
Resources
Public Works
Water & Power
Completed
August 18, 2025
6 Building and Safety
Inspections of City
Facilities
Review policies and processes
in place to ensure existing
facilities owned or fully
controlled by the City are
regularly inspected in
accordance with state and
local requirements.

Planning
Fire
Other
Departments –
TBD
Not Started
7 Street Pavement
Maintenance Program
Evaluate the department’s
processes to manage and
repair the City’s streets.

Public Works In Progress
(outsourced)
Antici
pated
completion date is
January 2025.

FY 2025/2026 Status on Progress of Internal Audit Plan Appendix A 8 Water & Power’s
Customer Refunds,
Rebates and Other
Assistance Programs
Review operational controls for
the refunds, rebates, and
assistance programs.

Water & Power Not Started
Consulting Activities
1 Fraud Hotline
Monitoring, Maintenance
and Marketing
Continuous monitoring,
response/referral, and
maintenance of fraud
allegations reported to the
City’s online reporting and
telephone hotline database.

Additionally, distribute
materials to promote
awareness of the fraud hotline.

Citywide Ongoing
2 System Implementation
Advisory Reviews
Providing ad hoc internal
control reviews/discussions of
ongoing system
implementation plans including
Land Management
System/EnerGov, Water and
Power Customer Information
System, and other department
systems that collect revenue
or process financial
transactions. Anticipate
additional implementation
projects during the year.

Citywide Ongoing
3 Other Ongoing Advisory
Activities
Providing ad-hoc advisory
services for management
including internal control
reviews, process reviews,
formal training, and other
value-added services.

Citywide As needed/based
on resource
availability

1 Internal Audit Status Update
City of Pasadena | Internal Audit
Appendix B
To: Miguel Márquez, City Manager
Alex Souto, Deputy City Manager
From: Ani Antanesyan, Internal Audit Manager
Subject: Required Annual Internal Quality Self-Assessment of Internal Audit’s Conformance with Institute of Internal Auditors’ Global Internal Audit Standards
Date: October 2, 2025
Executive Summary
On Januar
y 9, 2025, the new Global Internal Audit Standards (GIAS), released by the Institute of Internal Auditors (IIA), became effective worldwide. The GIAS guide the professional practice of internal auditing, are principle-based, and serve as a basis for evaluating and elevating the quality of the internal audit function. The GIAS contain five domains, where Domain I, establishes the Purpose of Internal Auditing and Domains II through V with 15 Principles, guide the effective execution of internal auditing. Each Principle is supported by standards that contain requirements, considerations for implementation, and examples of evidence of conformance. To ensure our function aligns with these new requirements, Internal Audit has completed a self-assessment of our quality and conformance.

As manda
ted by GIAS Standard 8.3, we are communicating the results of this internal quality assessment to the Audit Committee and senior management. This communication includes our function's conformance with the Standards and its achievement of performance objectives. It also addresses our compliance with relevant laws and regulations and outlines our plans to address any identified deficiencies and opportunities for improvement.

The prima
ry objective of this self-assessment is to provide the City Manager with the results of the first internal self-assessment against the newly released GIAS. The assessment also serves to evaluate our effectiveness in fulfilling our mandate, as outlined in the Internal Audit Framework, and to identify opportunities to enhance our operation and strategic value to the City of Pasadena.

Opini
on as to Conformance with the Global Internal Audit Standards It is
my overall opinion that the Internal Audit function has reached General Achievement of the Global Internal Audit Standards. For a detailed list of conformances with individual Standards, see Quality Assessment Evaluation Summary following this memo.

The IIA’
s Quality Assessment Manual1 provides a 4-point achievement (conformance) rating scale:
• Full Achi
evement – the internal audit function is fully achieving all 15 principles and the Purpose of Internal Auditing.
1 Quality Assessment Manual, 2024 Edition, published by the Institute of Internal Auditors.

2 Internal Audit Status Update
City of Pasadena | Internal Audit
Appendix B
• General Achievement – the internal audit function is not fully achieving at least one principle or aspect of Domain I but is achieving the Purpose of Internal Auditing. • Parti
al Achievement – the internal audit function is not fully achieving at least one principle or aspect of Domain I, and the impact is significant enough to rate the function’s overall achievement as partially achieving. The Chief Audit Executive may not include in final reports that engagements were performed in conformance with the Standards if the overall achievement conclusion is partial achievement.
• Nonachievement
– the internal audit function is not fully achieving at least one principle, and the impact is significant enough to rate the function’s overall conclusion as nonachievement.

Scope and Met
hodology
To prepar
e for the internal self-assessment, Internal Audit has performed an update of its operation to achieve conformance with the newly released GIAS. This included updating all internal audit assurance and advisory engagement working papers encompassing audit planning, risk assessment, fieldwork, engagement communication components as well as post- audit follow-up procedures. Internal Audit has also updated its internal policies, procedures, and methodologies to conform to the GIAS, revised the Internal Audit Framework, and established a new Internal Audit Strategy, a new tracking tool for open audit recommendations, and new report formats for assurance and advisory engagements.

Summar
y of Observations and Recommendations
Three standards are rated in the self-assessment as Generally Achieving the intent of the standards instead of Fully Achieving. These are summarized into the two areas below:
• Standard 40
and 41 – These standards relate to the roles of the Audit Committee and Senior Management in positioning the Internal Audit function to ensure it can effectively fulfill its mandate, and to authorize the appointment, removal, performance evaluation, and remuneration of the Internal Audit Manager. It is my overall opinion that the established reporting relationship enables the function and the Internal Audit Manager to successfully meet the standards, fulfill their mandate, and achieve the Purpose of Internal Auditing.
• Standard 79
– This standard relates to the budgeting process for the Internal Audit activity. Currently, as part of the updated Internal Audit Framework, Internal Audit will communicate any resource insufficiency to achieving the Internal Audit Plan to Senior Management and the Audit Committee. Internal Audit’s budget, however, is approved as part of the general Citywide budgeting process instead of directly approved by the Audit Committee. It is my overall opinion that the current budgeting process does not impede the Internal Audit Activity in fulfilling its mandate and achieving the Purpose of Internal Auditing.

3 Internal Audit Status Update
City of Pasadena | Internal Audit
Appendix B
Quality Assessment Evaluation Summary
(F/A = Full Achievement, G/A = General Achievement, P/A = Partial Achievement, N/A = Nonachievement, NA = Not Applicable) Principle/Standard F/A G/A P/A N/A NA
Domain II: Ethics and Professionalism
Principle 1 Demonstrate Integrity
Standard 1.1 Honesty and Professional Courage
1 Internal auditors must perform their work with honesty and professional courage.

Inte
rnal auditors must be truthful, accurate, clear, open, and respectful in all professional relationships and communications, even when expressing skepticism or offering an opposing viewpoint.

Internal auditors must not make false, misleading, or deceptive statements, nor conceal or omit findings or other pertinent information from communications.

Internal auditors must disclose all material facts known to them that, if not disclosed, could affect the organization's ability to make well-informed decisions.

Internal auditors must exhibit professional courage by communicating truthfully and taking appropriate action, even when confronted by dilemmas and difficult situations.

The ch
ief audit executive must maintain a work environment where internal auditors feel supported when expressing legitimate, evidence-based engagement results, whether favorable or unfavorable.

X
Standard 1.2 Organization's Ethical Expectations
2 Internal auditors must understand, respect, meet, and contribute to the legitimate and ethical expectations of the organization and must be able to recognize conduct that is contrary to those expectations.

Internal auditors must encourage and promote an ethics-based culture in the organization. If internal auditors identify behavior within the organization that is inconsistent with the organization's ethical expectations, they must report the concern according to applicable policies and procedures.

X
Standard 1.3 Legal and Ethical Behavior
3 Internal auditors must not engage in or be a party to any activity that is illegal or discreditable to the organization or the profession of internal auditing or that may harm the organization or its employees.

Internal auditors must understand and abide by the laws and/or regulations relevant to the industry and jurisdictions in which the organization operates, including making disclosures as required. If internal auditors identify legal or regulatory violations, they must report such incidents to individuals or entities that have the authority to take appropriate action, as specified by laws, regulations, and applicable policies and procedures.

X

4 Internal Audit Status Update
City of Pasadena | Internal Audit
Appendix B
Principle/Standard F/A G/A P/A N/A NA
Principle 2 Maintain Objectivity
Standard 2.1 Individual Objectivity
4 Internal auditors must maintain professional objectivity when performing all aspects of internal audit services. Professional objectivity requires internal auditors to apply an impartial and unbiased mindset and make judgments based on balanced assessments of all relevant circumstances.

Inte
rnal auditors must be aware of and manage potential biases.

X
Standard 2.2 Safeguarding Objectivity
5 Internal auditors must recognize and avoid or mitigate actual, potential, and perceived impairments to objectivity.

Internal auditors must not accept any tangible or intangible item, such as a gift, reward, or favor, that may impair or be presumed to impair objectivity.

Internal auditors must avoid conflicts of interest and must not be unduly influenced by their own interests or the interests of others, including senior management or others in a position of authority, or by the political environment or other aspects of their surroundings.

When performing internal audit services:
• Internal auditors must refrain from assessing specific activities for which they were previously responsible. Objectivity is presumed to be impaired if an internal auditor provides assurance services for an activity for which the internal auditor had responsibility within the previous 12 months.
• If the internal audit function is to provide assurance services where it had previously performed advisory services, the chief audit executive must confirm that the nature of the advisory services does not impair objectivity and must assign resources such that individual objectivity is managed. Assurance engagements for functions over which the chief audit executive has responsibility must be overseen by an independent party outside the internal audit function.
• If internal auditors are to provide advisory services relating to activities for which they had previous responsibilities, they must disclose potential impairments to the party requesting the services before accepting the engagement.

The chief audit executive must establish methodologies to address impairments to objectivity. Internal auditors must discuss impairments and take appropriate actions according to relevant methodologies.

X

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Standard 2.3 Disclosing Impairments to Objectivity
6 If objectivity is impaired in fact or appearance, the details of the impairment must be disclosed promptly to the appropriate parties.

If internal auditors become aware of an impairment that may affect their objectivity, they must disclose the impairment to the chief audit executive or a designated supervisor. If the chief audit executive determines that an impairment is affecting an internal auditor's ability to perform duties objectively, the chief audit executive must discuss the impairment with the management of the activity under review, the board, and/or senior management and determine the appropriate actions to resolve the situation.

If an impairment that affects the reliability or perceived reliability of the engagement findings, recommendations, and/or conclusions is discovered after an engagement has been completed, the chief audit executive must discuss the concern with the management of the activity under review, the board, senior management, and/or other affected stakeholders and determine the appropriate actions to resolve the situation.

If the objectivity of the chief audit executive is impaired in fact or appearance, the chief audit executive must disclose the impairment to the board.

X
Principle 3 Demonstrate Competency
Standard 3.1 Competency
7 Internal auditors must possess or obtain the competencies to perform their responsibilities successfully. The required competencies include the knowledge, skills, and abilities suitable for one's job position and responsibilities commensurate with their level of experience. Internal auditors must possess or develop knowledge of The IIA's Global Internal Audit Standards.

Internal auditors must engage only in those services for which they have or can attain the necessary competencies.

Each internal auditor is responsible for continually developing and applying the competencies necessary to fulfill their professional responsibilities. Additionally, the chief audit executive must ensure that the internal audit function collectively possesses the competencies to perform the internal audit services described in the internal audit charter or must obtain the necessary competencies.

X
Standard 3.2 Continuing Professional Development
8 Internal auditors must maintain and continually develop their competencies to improve the effectiveness and quality of internal audit services. Internal auditors must pursue continuing professional development including education and training.

Practicing internal auditors who have attained professional internal audit certifications must follow the continuing professional education policies and fulfill the requirements applicable for their certifications.

X

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Principle 4 Exercise Due Professional Care
Standard 4.1 Conformance with Global Internal Audit Standards 9 Internal auditors must plan and perform internal audit services in accordance with the Global Internal Audit Standards.

The internal audit function's methodologies must be established, documented, and maintained in alignment with the Standards. Internal auditors must follow the Standards and the internal audit function's methodologies when planning and performing internal audit services and communicating results.

X
10 If the Standards are used in conjunction with requirements issued by other authoritative bodies, internal audit communications must also cite the use of the other requirements, as appropriate.

X
11 If laws or regulations prohibit internal auditors or the internal audit function from conforming with any part of the Standards, conformance with all other parts of the Standards is required and appropriate disclosures must be made.

X
12 When internal auditors are unable to conform with a requirement, the chief audit executive must document and communicate a description of the circumstance, alternative actions taken, the impact of the actions, and the rationale. Requirements related to disclosing nonconformance with the Standards are described in Standards

8.3 Quality, 12.1 Internal Quality Assessment, and 15.1 Final Engagement Communication.

X
Standard 4.2 Due Professional Care
13 Internal auditors must exercise due professional care by assessing the nature, circumstances, and requirements of the services to be provided, including:
• The organization's strategy and objectives.
• The interests of those for whom internal audit services are provided and the interests of other stakeholders.
• Adequacy and effectiveness of governance, risk management, and control processes.
• Cost relative to potential benefits of the internal audit services to be performed. • Extent and timeliness of work needed to achieve the engagement's objectives. • Relative complexity, materiality, or significance of risks to the activity under review. • Probability of significant errors, fraud, noncompliance, and other risks that might affect objectives, operations, or resources.
• Use of appropriate techniques, tools, and technology.

X
Standard 4.3 Professional Skepticism

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Principle/Standard F/A G/A P/A N/A NA
14 Internal auditors must exercise professional skepticism when planning and performing internal audit services.

To exercise professional skepticism, internal auditors must:
• Maintain an attitude that includes inquisitiveness.
• Critically assess the reliability of information.
• Be straightforward and honest when raising concerns and asking questions about inconsistent information.
• Seek additional evidence to make a judgment about information and statements that might be incomplete, inconsistent, false, or misleading.

X
Principle 5 Maintain Confidentiality
Standard 5.1 Use of Information
15 Internal auditors must follow the relevant policies, procedures, laws, and regulations when using information. The information must not be used for personal gain or in a manner contrary or detrimental to the organization's legitimate and ethical objectives.

X
Standard 5.2 Protection of Information
16 Internal auditors must be aware of their responsibilities for protecting information and demonstrate respect for the confidentiality, privacy, and ownership of information acquired when performing internal audit services or as the result of professional relationships.

Internal auditors must understand and abide by the laws, regulations, policies, and procedures related to confidentiality, information privacy, and information security that apply to the organization and internal audit function.

Considerations specifically relevant to the internal audit function include:
• Custody, retention, and disposal of engagement records. • Release of engagement records to internal and external parties. • Handling of, access to, or copies of confidential information when it is no longer needed.

Internal auditors must not disclose confidential information to unauthorized parties unless there is a legal or professional responsibility to do so.

Internal auditors must manage the risk of exposing or disclosing information inadvertently.

The chief audit executive must ensure that the internal audit function and individuals assisting the internal audit function adhere to the same protection requirements.

X
Domain III: Governing the Internal Audit Function
Principle 6 Authorized by the Board
Standard 6.1 Internal Audit Mandate

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17 The chief audit executive must provide the board and senior management with the information necessary to establish the internal audit mandate. In those jurisdictions and industries where the internal audit function's mandate is prescribed wholly or partially in laws or regulations, the internal audit charter must include the legal requirements of the mandate.

X
18 To help the board and senior management determine the scope and types of internal audit services, the chief audit executive must coordinate with other internal and external assurance providers to gain an understanding of each other's roles and responsibilities.

X
19 The chief audit executive must document or reference the mandate in the internal audit charter, which is approved by the board. X
20 Periodically, the chief audit executive must assess whether changes in circumstances justify a discussion with the board and senior management about the internal audit mandate. If so, the chief audit executive must discuss the internal audit mandate with the board and senior management to assess whether the authority, role, and responsibilities continue to enable the internal audit function to achieve its strategy and accomplish its objectives.

X
21 Essential Conditions - Board
• Discuss with the chief audit executive and senior management the appropriate authority, role, and responsibilities of the internal audit function. • Approve the internal audit charter, which includes the internal audit mandate and the scope and types of internal audit services.

X
22 Essential Conditions - Senior Management
• Participate in discussions with the board and chief audit executive and provide input on expectations for the internal audit function that the board should consider when establishing the internal audit mandate.
• Support the internal audit mandate throughout the organization and promote the authority granted to the internal audit function.

X
Standard 6.2 Internal Audit Charter
23 The chief audit executive must develop and maintain an internal audit charter that specifies, at minimum, the internal audit function's:
• Purpose of Internal Auditing.

X
24 • Commitment to adhering to the Global Internal Audit Standards. X 25 • Mandate, including scope and types of services to be provided, and the board's responsibilities and expectations regarding management's support of the internal audit function.

X
26 • Organizational position and reporting relationships. X 27 The chief audit executive must discuss the proposed charter with the board and senior management to confirm that it accurately reflects their understanding and expectations of the internal audit function.

X

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28 Essential Conditions - Board
• Discuss with the chief audit executive and senior management other topics that should be included in the internal audit charter to enable an effective internal audit function.
• Approve the internal audit charter.
• Review the internal audit charter with the chief audit executive to consider changes affecting the organization, such as the employment of a new chief audit executive or changes in the type, severity, and interdependencies of risks to the organization.

X
29 Essential Conditions - Senior Management
• Communicate with the board and chief audit executive about management's expectations that should be considered for inclusion in the internal audit charter.

X
Standard 6.3 Board and Senior Management Support
30 The chief audit executive must provide the board and senior management with the information needed to support and promote recognition of the internal audit function throughout the organization.

X
31 The chief audit executive must coordinate the internal audit function's board communications with senior management to support the board's ability to fulfill its requirements.

X
32 Essential Conditions - Board
• Champion the internal audit function to enable it to fulfill the Purpose of Internal Auditing and pursue its strategy and objectives.
• Work with senior management to enable the internal audit function's unrestricted access to the data, records, information, personnel, and physical properties necessary to fulfill the internal audit mandate.
• Support the chief audit executive through regular, direct communications. • Demonstrate support by:
- Specifying that the chief audit executive reports to a level within the organization that allows the internal audit function to fulfill the internal audit mandate. - Approving the internal audit charter, internal audit plan, budget, and resource plan. - Making appropriate inquiries of senior management and the chief audit executive to determine whether any restrictions on the internal audit function's scope, access, authority, or resources limit the function's ability to carry out its responsibilities effectively.
- Meeting periodically with the chief audit executive in sessions without senior management present.

X
33 Essential Conditions - Senior Management
• Support recognition of the internal audit function throughout the organization. • Work with the board and management throughout the organization to enable the internal audit function's unrestricted access to the data, records, information, personnel, and physical properties necessary to fulfill the internal audit mandate.

X
Principle 7 Positioned Independently
Standard 7.1 Organizational Independence

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34 The chief audit executive must confirm to the board the organizational independence of the internal audit function at least annually. This includes communicating incidents where independence may have been impaired and the actions or safeguards employed to address the impairment.

X
35 The chief audit executive must document in the internal audit charter the reporting relationships and organizational positioning of the internal audit function, as determined by the board.

X
36 The chief audit executive must discuss with the board and senior management any current or proposed roles and responsibilities that have the potential to impair the internal audit function's independence, either in fact or appearance. The chief audit executive must advise the board and senior management of the types of safeguards to manage actual, potential, or perceived impairments.

X
37 When the chief audit executive has one or more ongoing roles beyond internal auditing, the responsibilities, nature of work, and established safeguards must be documented in the internal audit charter. If those areas of responsibility are subject to internal auditing, alternative processes to obtain assurance must be established, such as contracting with an objective, competent external assurance provider that reports independently to the board.

X
38 When the chief audit executive's non-audit responsibilities are temporary, assurance for those areas must be provided by an independent third party during the temporary assignment and for the subsequent 12 months. Also, the chief audit executive must establish a plan to transition those responsibilities to management.

X
39 If the governing structure does not support organizational independence, the chief audit executive must document the characteristics of the governing structure limiting independence and any safeguards that may be employed to achieve this principle.

X

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40 Essential Conditions - Board
• Establish a direct reporting relationship with the chief audit executive and the internal audit function to enable the internal audit function to fulfill its mandate. • Authorize the appointment and removal of the chief audit executive. • Provide input to senior management to support the performance evaluation and remuneration of the chief audit executive.
• Provide the chief audit executive with opportunities to discuss significant and sensitive matters with the board, including meetings without senior management present.
• Require that the chief audit executive be positioned at a level in the organization that enables internal audit services and responsibilities to be performed without interference from management.
• Acknowledge the actual or potential impairments to the internal audit function's independence when approving roles and responsibilities for the chief audit executive that are beyond the scope of internal auditing.
• Engage with senior management and the chief audit executive to establish appropriate safeguards if chief audit executive roles and responsibilities impair or appear to impair the internal audit function's independence. • Engage with senior management to ensure that the internal audit function is free from interference when determining its scope, performing internal audit engagements, and communicating results.

X
41 Essential Conditions - Senior Management
• Position the internal audit function at a level within the organization that enables it to perform its services and responsibilities without interference, as directed by the board.
• Recognize the chief audit executive's direct reporting relationship with the board. • Engage with the board and the chief audit executive to understand any potential impairments to the internal audit function's independence caused by non-audit roles or other circumstances and support the implementation of appropriate safeguards to manage such impairments.
• Provide input to the board on the appointment and removal of the chief audit executive.
• Solicit input from the board on the performance evaluation and remuneration of the chief audit executive.

X
Standard 7.2 Chief Audit Executive Qualifications
42 The chief audit executive must help the board understand the qualifications and competencies of a chief audit executive that are necessary to manage the internal audit function. The chief audit executive facilitates this understanding by providing information and examples of common and leading qualifications and competencies.

X
43 The chief audit executive must maintain and enhance the qualifications and competencies necessary to fulfill the roles and responsibilities expected by the board. X

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44 Essential Conditions - Board
• Review the requirements necessary for the chief audit executive to manage the internal audit function, as described in Domain IV: Managing the Internal Audit Function.
• Approve the chief audit executive's roles and responsibilities and identify the necessary qualifications, experience, and competencies to carry out these roles and responsibilities.
• Engage with senior management to appoint a chief audit executive with the qualifications and competencies necessary to manage the internal audit function effectively and ensure the quality performance of internal audit services.

X
45 Essential Conditions - Senior Management
• Engage with the board to determine the chief audit executive's qualifications, experience, and competencies.
• Enable the appointment, development, and remuneration of the chief audit executive through the organization's human resources processes.

X
Principle 8 Overseen by the Board
Standard 8.1 Board Interaction
46 The chief audit executive must provide the board with the information needed to conduct its oversight responsibilities. This information may be specifically requested by the board or may be, in the judgment of the chief audit executive, valuable for the board to exercise its oversight responsibilities.

X
47 The chief audit executive must report to the board and senior management:
• The internal audit plan and budget and subsequent significant revisions to them. X 48 • Changes potentially affecting the mandate or charter. X 49 • Potential impairments to independence. X
50 • Results of internal audit services, including conclusions, themes, assurance, advice, insights, and monitoring results. X
51 • Results from the quality assurance and improvement program. X 52 There may be instances when the chief audit executive disagrees with senior management or other stakeholders on the scope, findings, or other aspects of an engagement that may affect the ability of the internal audit function to execute its responsibilities. In such cases, the chief audit executive must provide the board with the facts and circumstances to allow the board to consider whether, in its oversight role, it should intervene with senior management or other stakeholders.

X

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53 Essential Conditions - Board
• Communicate with the chief audit executive to understand how the internal audit function is fulfilling its mandate.
• Communicate the board's perspective on the organization's strategies, objectives, and risks to assist the chief audit executive with determining internal audit priorities. • Set expectations with the chief audit executive for:
- The frequency with which the board wants to receive communications from the chief audit executive.
- The criteria for determining which issues should be escalated to the board, such as significant risks that exceed the board's risk tolerance. - The process for escalating matters of importance to the board. • Gain an understanding of the effectiveness of the organization's governance, risk management, and control processes based on the results of internal audit engagements and discussions with senior management.
• Discuss with the chief audit executive disagreements with senior management or other stakeholders and provide support as necessary to enable the chief audit executive to perform the responsibilities outlined in the internal audit mandate.

X
54 Essential Conditions - Senior Management
• Communicate senior management's perspective on the organization's strategies, objectives, and risks to assist the chief audit executive with determining internal audit priorities.
• Assist the board in understanding the effectiveness of the organization's governance, risk management, and control processes.
• Work with the board and the chief audit executive on the process for escalating matters of importance to the board.

X
Standard 8.2 Resources
55 The chief audit executive must evaluate whether internal audit resources are sufficient to fulfill the internal audit mandate and achieve the internal audit plan. If not, the chief audit executive must develop a strategy to obtain sufficient resources and inform the board about the impact of insufficient resources and how any resource shortfalls will be addressed.

X
56 Essential Conditions - Board
• Collaborate with senior management to provide the internal audit function with sufficient resources to fulfill the internal audit mandate and achieve the internal audit plan.
• Discuss with the chief audit executive, at least annually, the sufficiency, both in numbers and capabilities, of internal audit resources to fulfill the internal audit mandate and achieve the internal audit plan.
• Consider the impact of insufficient resources on the internal audit mandate and plan.
• Engage with senior management and the chief audit executive on remedying the situation if the resources are determined to be insufficient.

X

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57 Essential Conditions - Senior Management
• Engage with the board to provide the internal audit function with sufficient resources to fulfill the internal audit mandate and achieve the internal audit plan. • Engage with the board and the chief audit executive on any issues of insufficient resources and how to remedy the situation.

X
Standard 8.3 Quality
58 The chief audit executive must develop, implement, and maintain a quality assurance and improvement program that covers all aspects of the internal audit function. The program includes two types of assessments:
• External assessments.
• Internal assessments.

X
59 At least annually, the chief audit executive must communicate the results of the internal quality assessment to the board and senior management. The results of the external quality assessments must be reported when completed. In both cases, such communications include:
• The internal audit function's conformance with the Standards and achievement of performance objectives.
• If applicable, compliance with laws and/or regulations relevant to internal auditing. • If applicable, plans to address the internal audit function's deficiencies and opportunities for improvement.

X
60 Essential Conditions - Board
• Discuss with the chief audit executive the quality assurance and improvement program, as outlined in Domain IV: Managing the Internal Audit Function. • Approve the internal audit function's performance objectives at least annually. • Assess the effectiveness and efficiency of the internal audit function. Such an assessment includes:
- Reviewing the internal audit function's performance objectives, including its conformance with the Standards, laws and regulations; ability to meet the internal audit mandate; and progress towards completion of the internal audit plan. - Considering the results of the internal audit function's quality assurance and improvement program.
- Determining the extent to which the internal audit function's performance objectives are being met.

X
61 Essential Conditions - Senior Management
• Provide input on the internal audit function's performance objectives. • Participate with the board in an annual assessment of the chief audit executive and internal audit function.

X
Standard 8.4 External Quality Assessment
62 The chief audit executive must develop a plan for an external quality assessment and discuss the plan with the board. The external assessment must be performed at least once every five years by a qualified, independent assessor or assessment team. The requirement for an external quality assessment may also be met through a self- assessment with independent validation.

X

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63 When selecting the independent assessor or assessment team, the chief audit executive must ensure at least one person holds an active Certified Internal Auditor® designation.

X
64 Essential Conditions - Board
• Discuss with the chief audit executive the plans to have an external quality assessment of the internal audit function conducted by an independent, qualified assessor or assessment team.
• Collaborate with senior management and the chief audit executive to determine the scope and frequency of the external quality assessment. • Consider the responsibilities and regulatory requirements of the internal audit function and the chief audit executive, as described in the internal audit charter, when defining the scope of the external quality assessment.
• Review and approve the chief audit executive's plan for the performance of an external quality assessment. Such approval should cover, at a minimum:
- The scope and frequency of assessments.
- The competencies and independence of the external assessor or assessment team. - The rationale for choosing to conduct a self-assessment with independent validation instead of an external quality assessment.
• Req
ui
re receipt of the complete results of the external quality assessment or self- assessment with independent validation directly from the assessor. • Review and approve the chief audit executive's action plans to address identified deficiencies and opportunities for improvement, if applicable. • Approve a timeline for completion of the action plans and monitor the chief audit executive's progress.

X
65 Essential Conditions - Senior Management
• Collaborate with the board and the chief audit executive to determine the scope and frequency of the external quality assessment.
• Review the results of the external quality assessment, collaborate with the chief audit executive and board to agree on action plans that address identified deficiencies and opportunities for improvement, if applicable, and agree on a timeline for completion of the action plans.

X
Domain IV: Managing the Internal Audit Function
Principle 9 Plan Strategically
Standard 9.1 Understanding Governance, Risk Management, and Control Processes 66 To develop an effective internal audit strategy and plan, the chief audit executive must understand the organization's governance, risk management, and control processes.

X

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67 To understand governance processes, the chief audit executive must consider how the organization:
• Establishes strategic objectives and makes strategic and operational decisions. • Oversees risk management and control.
• Promotes an ethical culture.
• Delivers effective performance management and accountability. • Structures its management and operating functions.
• Communicates risk and control information throughout the organization. • Coordinates activities and communications among the board, internal and external providers of assurance services, and management.

X
68 To understand risk management and control processes, the chief audit executive must consider how the organization identifies and assesses significant risks and selects appropriate control processes. This includes understanding how the organization identifies and manages the following key risk areas:
• Reliability and integrity of financial and operational information. • Effectiveness and efficiency of operations and programs. • Safeguarding of assets.
• Compliance with laws and/or regulations.

X
Standard 9.2 Internal Audit Strategy
69 The chief audit executive must develop and implement a strategy for the internal audit function that supports the strategic objectives and success of the organization and aligns with the expectations of the board, senior management, and other key stakeholders.

The internal audit strategy must include a vision, strategic objectives, and supporting initiatives for the internal audit function.

X
70 The chief audit executive must review the internal audit strategy with the board and senior management periodically. X
Standard 9.3 Methodologies
71 The chief audit executive must establish methodologies to guide the internal audit function in a systematic and disciplined manner to implement the internal audit strategy, develop the internal audit plan, and conform with the Standards. The chief audit executive must evaluate the effectiveness of the methodologies and update them as necessary to improve the internal audit function and respond to significant changes that affect the function. The chief audit executive must provide internal auditors with training on the methodologies.

X
Standard 9.4 Internal Audit Plan

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72 The chief audit executive must create an internal audit plan that supports the achievement of the organization's objectives.

The chief audit executive must base the internal audit plan on a documented assessment of the organization's strategies, objectives, and risks. This assessment must be informed by input from the board and senior management as well as the chief audit executive's understanding of the organization's governance, risk management, and control processes. The assessment must be performed at least annually.

The internal audit plan must:
• Consider the internal audit mandate and the full range of agreed-to internal audit services.
• Specify internal audit services that support the evaluation and improvement of the organization's governance, risk management, and control processes. • Consider coverage of information technology governance, fraud risk, the effectiveness of the organization's compliance and ethics programs, and other high- risk areas.
• Identify the necessary human, financial, and technological resources necessary to complete the plan.
• Be dynamic and updated timely in response to changes in the organization's business, risks operations, programs, systems, controls, and organizational culture.

X
73 The chief audit executive must review and revise the internal audit plan as necessary and communicate timely to the board and senior management:
• The impact of any resource limitations on internal audit coverage. • The rationale for not including an assurance engagement in a high-risk area or activity in the plan.
• Conflicting demands for services between major stakeholders, such as high-priority requests based on emerging risks and requests to replace planned assurance engagements with advisory engagements.
• Limitations on scope or restrictions on access to information.

X
74 The chief audit executive must discuss the internal audit plan, including significant interim changes, with the board and senior management. The plan and significant changes to the plan must be approved by the board.

X
Standard 9.5 Coordination and Reliance
75 The chief audit executive must coordinate with internal and external providers of assurance services and consider relying upon their work. X 76 If unable to achieve an appropriate level of coordination, the chief audit executive must raise any concerns with senior management and, if necessary, the board. X 77 When the internal audit function relies on the work of other assurance service providers, the chief audit executive must document the basis for that reliance and is still responsible for the conclusions reached by the internal audit function.

X
Principle 10 Manage Resources
Standard 10.1 Financial Resource Management

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78 The chief audit executive must manage the internal audit function's financial resources.

The chief audit executive must develop a budget that enables the successful implementation of the internal audit strategy and achievement of the plan. The budget includes the resources necessary for the function's operation, including training and acquisition of technology and tools. The chief audit executive must manage the day-to-day activities of the internal audit function effectively and efficiently, in alignment with the budget.

X
79 The chief audit executive must seek budget approval from the board. The chief audit executive must communicate promptly the impact of insufficient financial resources to the board and senior management.

X
Standard 10.2 Human Resources Management
80 The chief audit executive must establish an approach to recruit, develop, and retain internal auditors who are qualified to successfully implement the internal audit strategy and achieve the internal audit plan.

The chief audit executive must strive to ensure that human resources are appropriate, sufficient, and effectively deployed to achieve the approved internal audit plan.

Appropriate refers to the mix of knowledge, skills, and abilities; sufficient refers to the quantity of resources; and effective deployment refers to assigning resources in a way that optimizes the achievement of the internal audit plan.

X
81 The chief audit executive must communicate with the board and senior management regarding the appropriateness and sufficiency of the internal audit function's human resources. If the function lacks appropriate and sufficient human resources to achieve the internal audit plan, the chief audit executive must determine how to obtain the resources or communicate timely to the board and senior management the impact of the limitations. (See also Standard 8.2 Resources.)
X
82 The chief audit executive must evaluate the competencies of individual internal auditors within the internal audit function and encourage professional development.

The chief audit executive must collaborate with internal auditors to help them develop their individual competencies through training, supervisory feedback, and/or mentoring. (See also Standard 3.1 Competency.)
X
Standard 10.3 Technological Resources
83 The chief audit executive must strive to ensure that the internal audit function has technology to support the internal audit process. The chief audit executive must regularly evaluate the technology used by the internal audit function and pursue opportunities to improve effectiveness and efficiency.

X
84 When implementing new technology, the chief audit executive must implement appropriate training for internal auditors in the effective use of technological resources.

X
85 The chief audit executive must collaborate with the organization's information technology and information security functions to implement technological resources properly.

X

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86 The chief audit executive must communicate the impact of technology limitations on the effectiveness or efficiency of the internal audit function to the board and senior management.

X
Principle 11 Communicate Effectively
Standard 11.1 Building Relationships and Communicating with Stakeholders 87 The chief audit executive must develop an approach for the internal audit function to build relationships and trust with key stakeholders, including the board, senior management, operational management, regulators, and internal and external assurance providers and other consultants.

The chief audit executive must promote formal and informal communication between the internal audit function and stakeholders, contributing to the mutual understanding of:
• Organizational interests and concerns.
• Approaches for identifying and managing risks and providing assurance. • Roles and responsibilities of relevant parties and opportunities for collaboration. • Rel
eva
nt regulatory requirements.
• Significant organizational processes, including financial reporting.

X
Standard 11.2 Effective Communication
88 The chief audit executive must establish and implement methodologies to promote accurate, objective, clear, concise, constructive, complete, and timely internal audit communications. X
Standard 11.3 Communicating Results
89 The chief audit executive must communicate the results of internal audit services to the board and senior management periodically and for each engagement as appropriate. The chief audit executive must understand the expectations of the board and senior management regarding the nature and timing of communications.

The results of internal audit services can include:
• Engagement conclusions.
• Themes such as effective practices or root causes.
• Conclusions at the level of the business unit or organization.

X
90 Engagement Conclusions
The chief audit executive must review and approve final engagement communications, which include engagement conclusions, and decide to whom and how they will be disseminated before they are issued. If these duties are delegated to other internal auditors, the chief audit executive retains overall responsibility. The chief audit executive must seek the advice of legal counsel and/or senior management as required before releasing final communications to parties outside the organization, unless otherwise required or restricted by laws and/or regulations.

X

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91 Themes
The findings and conclusions of multiple engagements, when viewed holistically, may reveal patterns or trends, such as root causes. When the chief audit executive identifies themes related to the organization's governance, risk management, and control processes, the themes must be communicated timely, along with insights, advice, and/or conclusions, to the board and senior management.

X
92 Conclusions at the Level of the Business Unit or Organization The chief audit executive may be required to make a conclusion at the level of the business unit or organization about the effectiveness of governance, risk management, and/or control processes, due to industry requirements, laws and/or regulations, or the expectations of the board, senior management, and/or other stakeholders. Such a conclusion reflects the professional judgment of the chief audit executive based on multiple engagements and must be supported by relevant, reliable, and sufficient information.

When communicating such a conclusion to the board or senior management, the chief audit executive must include:
• A summary of the request.
• The criteria used as a basis for the conclusion, for example a governance framework or risk and control framework.
• The scope, including limitations and the period to which the conclusion pertains. • A summary of the information that supports the conclusion. • A disclosure of reliance on the work of other assurance providers, if any.

X
Standard 11.4 Errors and Omissions
93 If a final engagement communication contains a significant error or omission, the chief audit executive must communicate corrected information promptly to all parties who received the original communication.

Significance is determined according to criteria agreed upon with the board.

X
Standard 11.5 Communicating the Acceptance of Risks
94 The chief audit executive must communicate unacceptable levels of risk.

When
the chief audit executive concludes that management has accepted a level of risk that exceeds the organization's risk appetite or risk tolerance, the matter must be discussed with senior management. If the chief audit executive determines that the matter has not been resolved by senior management, the matter must be escalated to the board. It is not the responsibility of the chief audit executive to resolve the risk.

X
Principle 12 Enhance Quality
Standard 12.1 Internal Quality Assessment

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95 The chief audit executive must develop and conduct internal assessments of the internal audit function's conformance with the Global Internal Audit Standards and progress toward performance objectives.

X
96 The chief audit executive must establish a methodology for internal assessments, as described in Standard 8.3 Quality, that includes:
• Ongoing monitoring of the internal audit function's conformance with the Standards and progress toward performance objectives.
• Periodic self-assessments or assessments by other persons within the organization with sufficient knowledge of internal audit practices to evaluate conformance with the Standards.
• Communication with the board and senior management about the results of internal assessments.

X
97 Based on the results of periodic self-assessments, the chief audit executive must develop action plans to address instances of nonconformance with the Standards and opportunities for improvement, including a proposed timeline for actions. The chief audit executive must communicate the results of periodic self-assessments and action plans to the board and senior management.

X
98 Internal assessments must be documented and included in the evaluation conducted by an independent third party as part of the organization's external quality assessment.

X
99 If nonconformance with the Standards affects the overall scope or operation of the internal audit function, the chief audit executive must disclose to the board and senior management the nonconformance and its impact.

X
Standard 12.2 Performance Measurement
100 The chief audit executive must develop objectives to evaluate the internal audit function's performance. The chief audit executive must consider the input and expectations of the board and senior management when developing the performance objectives.

X
101 The chief audit executive must develop a performance measurement methodology to assess progress toward achieving the function's objectives and to promote the continuous improvement of the internal audit function.

X
102 When assessing the internal audit function's performance, the chief audit executive must solicit feedback from the board and senior management as appropriate. X 103 The chief audit executive must develop an action plan to address issues and opportunities for improvement. X
Standard 12.3 Oversee and Improve Engagement Performance 104 The chief audit executive must establish and implement methodologies for engagement supervision, quality assurance, and the development of competencies. • The chief audit executive or an engagement supervisor must provide internal auditors with guidance throughout the engagement, verify work programs are complete, and confirm engagement workpapers adequately support findings, conclusions, and recommendations.

X
105 • To assure quality, the chief audit executive must verify whether engagements are performed in conformance with the Standards and the internal audit function's methodologies.

X

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106 • To develop competencies, the chief audit executive must provide internal auditors with feedback about their performance and opportunities for improvement. X 107 The extent of supervision required depends on the maturity of the internal audit function, the proficiency and experience of internal auditors, and the complexity of engagements.

X
108 The chief audit executive is responsible for supervising engagements, whether the engagement work is performed by the internal audit staff or by other service providers. Supervisory responsibilities may be delegated to appropriate and qualified individuals, but the chief audit executive retains ultimate responsibility.

X
109 The chief audit executive must ensure that evidence of supervision is documented and retained, according to the internal audit function's established methodologies. X Domain V: Performing Internal Audit Services
Principle 13 Plan Engagements Effectively
Standard 13.1 Engagement Communication
110 Internal auditors must communicate effectively throughout the engagement. X 111 Internal auditors must communicate the objectives, scope, and timing of the engagement with management. Subsequent changes must be communicated with management timely.

X
112 At the end of an engagement, if internal auditors and management do not agree on the engagement results, internal auditors must discuss and try to reach a mutual understanding of the issue with the management of the activity under review. If a mutual understanding cannot be reached, internal auditors must not be obligated to change any portion of the engagement results unless there is a valid reason to do so.

Internal auditors must follow an established methodology to allow both parties to express their positions regarding the content of the final engagement communication and the reasons for any differences of opinion regarding the engagement results.

X
Standard 13.2 Engagement Risk Assessment
113 Internal auditors must develop an understanding of the activity under review to assess the relevant risks. For advisory services, a formal, documented risk assessment may not be necessary, depending on the agreement with relevant stakeholders.

X

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Principle/Standard F/A G/A P/A N/A NA
114 To develop an adequate understanding, internal auditors must identify and gather reliable, relevant, and sufficient information regarding:
• The organization's strategies, objectives, and risks relevant to the activity under review.
• The organization's risk tolerance, if established.
• The risk assessment supporting the internal audit plan. • The governance, risk management, and control processes of the activity under review.
• Applicable frameworks, guidance, and other criteria that can be used to evaluate the effectiveness of those processes.

Internal auditors must review the gathered information to understand how processes are intended to operate.

Internal auditors must identify the criteria that management uses to measure whether the activity is achieving its objectives.

X
115 Internal auditors must identify the risks to review by:
• Identifying the potentially significant risks to the objectives of the activity under review.
• Considering specific risks related to fraud.
• Evaluating the significance of the risks and prioritizing them for review.

When internal auditors have identified the relevant risks for an activity under review in past engagements, only a review and update of the previous engagement risk assessment is required.

X
Standard 13.3 Engagement Objectives and Scope
116 Internal auditors must establish and document the objectives and scope for each engagement.

Internal auditors must consider whether the engagement is intended to provide assurance or advisory services because stakeholder expectations and the requirements of the Standards differ depending on the type of engagement.

X
117 The engagement objectives must articulate the purpose of the engagement and describe the specific goals to be achieved, including those mandated by laws and/or regulations.

X
118 The scope must establish the engagement's focus and boundaries by specifying the activities, locations, processes, systems, components, time period to be covered in the engagement, and other elements to be reviewed, and be sufficient to achieve the engagement objectives.

X

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119 Scope limitations must be discussed with management when identified, with a goal of achieving resolution. Scope limitations are assurance engagement conditions, such as resource constraints or restrictions on access to personnel, facilities, data, and information, that prevent internal auditors from performing the work as expected in the audit work program.

If a resolution cannot be achieved with management, the chief audit executive must elevate the scope limitation issue to the board according to an established methodology.

X
120 Internal auditors must have the flexibility to make changes to the engagement objectives and scope when audit work identifies the need to do so as the engagement progresses.

X
121 The chief audit executive must approve the engagement objectives and scope and any changes that occur during the engagement. X
Standard 13.4 Evaluation Criteria
122 Internal auditors must identify the most relevant criteria to be used to evaluate the aspects of the activity under review defined in the engagement objectives and scope. X 123 For advisory services, the identification of evaluation criteria may not be necessary, depending on the agreement with relevant stakeholders. X 124 Internal auditors must assess the extent to which the board and senior management have established adequate criteria to determine whether the activity under review has accomplished its objectives and goals. If such criteria are adequate, internal auditors must use them for the evaluation. If the criteria are inadequate, internal auditors must identify appropriate criteria through discussion with the board and/or senior management.

X
Standard 13.5 Engagement Resources
125 When planning an engagement, internal auditors must identify the types and quantity of resources necessary to achieve the engagement objectives.

Internal auditors must consider:
• The nature and complexity of the engagement.
• The time frame within which the engagement is to be completed. • Whether the available financial, human, and technological resources are appropriate and sufficient to achieve the engagement objectives.

X
126 If the available resources are inappropriate or insufficient, internal auditors must discuss the concerns with the chief audit executive to obtain the resources. X Standard 13.6 Work Program
127 Internal auditors must develop and document an engagement work program to achieve the engagement objectives. X
128 The engagement work program must be based on the information obtained during engagement planning, including, when applicable, the results of the engagement risk assessment.

X

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129 The engagement work program must identify:
• Criteria to be used to evaluate each objective.
• Tasks to achieve the engagement objectives.
• Methodologies, including the analytical procedures to be used, and tools to perform the tasks.
• Internal auditors assigned to perform each task.

X
130 The chief audit executive must review and approve the engagement work program before it is implemented and promptly when any subsequent changes are made. X Principle 14 Conduct Engagement Work
Standard 14.1 Gathering Information for Analyses and Evaluation 131 To perform analyses and evaluations, internal auditors must gather information that is:
• Relevant - consistent with engagement objectives, within the scope of the engagement, and contributes to the development of engagement results. • Reliable - factual and current. Internal auditors use professional skepticism to evaluate whether information is reliable. Reliability is strengthened when the information is:
- Obtained directly by an internal auditor or from an independent source. - Corroborated.
- Gathered from a system with effective governance, risk management, and control processes.
• Sufficient - when it enables internal auditors to perform analyses and complete evaluations and can enable a prudent, informed, and competent person to repeat the engagement work program and reach the same conclusions as the internal auditor.

X
132 Internal auditors must evaluate whether the information is relevant and reliable and whether it is sufficient such that analyses provide a reasonable basis upon which to formulate potential engagement findings and conclusions.

X
133 Internal auditors must determine whether to gather additional information for analyses and evaluation when evidence is not relevant, reliable, or sufficient to support engagement findings. If relevant evidence cannot be obtained, internal auditors must determine whether to identify that as a finding.

X
Standard 14.2 Analyses and Potential Engagement Findings 134 Internal auditors must analyze relevant, reliable, and sufficient information to develop potential engagement findings. X
135 For advisory services, gathering evidence to develop findings may not be necessary, depending on the agreement with relevant stakeholders. X

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136 Internal auditors must analyze information to determine whether there is a difference between the evaluation criteria and the existing state of the activity under review, known as the "condition."
Internal auditors must determine the condition by using information and evidence gathered during the engagement.

A difference between the criteria and the condition indicates a potential engagement finding that must be noted and further evaluated. If initial analyses do not provide sufficient evidence to support a potential engagement finding, internal auditors must exercise due professional care to determine whether additional analyses are required.

X
137 If additional analyses are required, the work program must be adjusted accordingly and approved by the chief audit executive. X
138 If internal auditors determine that no additional analyses are required and there is no difference between the criteria and the condition, the internal auditors must provide assurance in the engagement conclusion regarding the effectiveness of the activity's governance, risk management, and control processes.

X
Standard 14.3 Evaluation of Findings
139 Internal auditors must evaluate each potential engagement finding to determine its significance. When evaluating potential engagement findings, internal auditors must collaborate with management to identify the root causes when possible, determine the potential effects, and evaluate the significance of the issue.

X
140 To determine the significance of the risk, internal auditors must consider the likelihood of the risk occurring and the impact the risk may have on the organization's governance, risk management, or control processes.

X
141 If internal auditors determine that the organization is exposed to a significant risk, it must be documented and communicated as a finding. X
142 Internal auditors must determine whether to report other risks as findings, based on the circumstances and established methodologies. X
143 Internal auditors must prioritize each engagement finding based on its significance, using methodologies established by the chief audit executive. X Standard 14.4 Recommendations and Action Plans
144 Internal auditors must determine whether to develop recommendations, request action plans from management, or collaborate with management to agree on actions to:
• Resolve the differences between the established criteria and the existing condition. • Mitigate identified risks to an acceptable level.
• Address the root cause of the finding.
• Enhance or improve the activity under review.

X
145 When developing recommendations, internal auditors must discuss the recommendations with the management of the activity under review. X 146 If internal auditors and management disagree about the engagement recommendations and/or action plans, internal auditors must follow an established methodology to allow both parties to express their positions and rationale and to determine a resolution.

X

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Standard 14.5 Engagement Conclusions
147 Internal auditors must develop an engagement conclusion that summarizes the engagement results relative to the engagement objectives and management's objectives. The engagement conclusion must summarize the internal auditors' professional judgment about the overall significance of the aggregated engagement findings.

X
148 Assurance engagement conclusions must include the internal auditors' judgment regarding the effectiveness of the governance, risk management, and/or control processes of the activity under review, including an acknowledgment of when processes are effective.

X
Standard 14.6 Engagement Documentation
149 Internal auditors must document information and evidence to support the engagement results. The analyses, evaluations, and supporting information relevant to an engagement must be documented such that an informed, prudent internal auditor, or similarly informed and competent person, could repeat the work and derive the same engagement results.

X
150 Internal auditors and the engagement supervisor must review the engagement documentation for accuracy, relevance, and completeness. The chief audit executive must review and approve the engagement documentation.

X
151 Internal auditors must retain engagement documentation according to relevant laws and/or regulations as well as policies and procedures of the internal audit function and the organization.

X
Principle 15 Communicate Engagement Results and Monitor Action Plans Standard 15.1 Final Engagement Communication
152 For each engagement, internal auditors must develop a final communication that includes the engagement's objectives, scope, recommendations and/or action plans if applicable, and conclusions.

X
153 The final communication for assurance engagements also must include:
• The findings and their significance and prioritization. • An explanation of scope limitations, if any.
• A conclusion regarding the effectiveness of the governance, risk management, and control processes of the activity reviewed.

X
154 The final communication must specify the individuals responsible for addressing the findings and the planned date by which the actions should be completed. X 155 When internal auditors become aware that management has initiated or completed actions to address a finding before the final communication, the actions must be acknowledged in the communication.

X
156 The final communication must be accurate, objective, clear, concise, constructive, complete, and timely, as described in Standard 11.2 Effective Communication. X 157 Internal auditors must ensure the final communication is reviewed and approved by the chief audit executive before it is issued. X

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158 The chief audit executive must disseminate the final communication to parties who can ensure that the results are given due consideration. X 159 If the engagement is not conducted in conformance with the Standards, the final engagement communication must disclose the following details about the nonconformance:
• Standard(s) with which conformance was not achieved.
• Reason(s) for nonconformance.
• Impact of nonconformance on the engagement findings and conclusions. X Standard 15.2 Confirming the Implementation of Recommendations or Action Plans 160 Internal auditors must confirm that management has implemented internal auditors' recommendations or management's action plans following an established methodology, which includes:
• Inquiring about progress on the implementation.
• Performing follow-up assessments using a risk-based approach. • Updating the status of management's actions in a tracking system.

The extent of these procedures must consider the significance of the finding.

X
161 If management has not progressed in implementing the actions according to the established completion dates, internal auditors must obtain and document an explanation from management and discuss the issue with the chief audit executive.

The chief audit executive is responsible for determining whether senior management, by delay or inaction, has accepted a risk that exceeds the risk tolerance.

X

1 Internal Audit Framework
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Appendix C-1 Formatted: Font: Bold
Introduction
The City of Pasadena (City) maintai ns an audit function that reports to the City Manager’s Office with responsibility to report its activities to the City Manager and City Council through the Audit Committee. This Framework formalizes the responsibilities, reporting lines, and protocols of Internal Audit within the structure of the City. It establishes Internal Audit’s objectives and provides for uninhibited and complete authority to fulfill its objectives. This Framework defines the purposemission, scope, commitment to quality, authority and accountability, independence and responsibility of the City’s Internal Audit division.

Purpose Mission
The City’s Internal Audit division provides highly reliable, independent, objective and risk-based assurance, advice, insight, and foresight and consulting services designed to add value and improve City operations. The Internal Audit division accomplishes this by bringing a systematic, disciplined approach to evaluating and recommending improvements to the effectiveness and efficiency of risk management, controls, and governance processes.

Scope
The scope of assurance and consulting work performed by the City’s Internal Audit division is to determine whether the City’s network of risk management, control and governance processes as designed and represented by management, is adequate and functioning to ensure:
• Risks are appropriately identified and managed.
• Significant financial, managerial, and operating information is accurate, reliable and timely.
• The process to acquire resources is economical, resources are used efficiently and are adequately protected.
• Programs, plans, and projects are operated within the fiduciary standards and regulatory requirements, are compliant with City policies and stated objectives are achieved. • Quality service and continuous improvement are fostered within the City’s control process
• Significant legislative or regulatory issues impacting the City are recognized, addressed appropriately, and interaction with governance groups occurs. • Employees’ actions are in compliance with policies, standards, procedures, and applicable laws and regulations.
• Contractors are meeting contract requirements in conformance with applicable laws, regulations, policies, procedures, and best practices.
• Existing policies and procedures are appropriate, updated and being followed.

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• Opportunities for improving management control, streamlining processes, and improving public perception are implemented.

Commitment to Quality
California Gover nment Code Section 1236 states that all city, county, city and county and district employees that conduct audits or that conduct audit activities of those respective agencies shall conduct their work under the general and specified standards prescribed by the Institute of Internal Auditors’ Global Internal Audit Standards and Topical Requirements (Standards) or the Government Auditing Standards issued by the Comptroller General of the United States, as appropriate. As a government entity that must comply with this Government Code Section, the City will adopt the Institute of Internal Auditors’ Standards for its internal audits. The City’s Internal Audit division will adhere to the following professional standards and codes:
• City of Pasadena Employee Code of Conduct/Ethi cs
• The Standard s produced by the IIA and published in the Global Iinternal Audit Standards and Topical Requirements;
• The professional and ethical standards issued by the American Institute of Certified Public Accountants (AICPA) for attestation engagements. • The professional and ethical standards issued by ISACA and published as the Information Systems Auditing Standards for Information Technology assurance engagements.
• City of Pasadena Internal Audit Policies Manual
The City’s Internal Audit division commits to providing world-class service through timely, unbiased, value-added assurance and advisory services. The Standards defines these as:
• Assurance Services: Serv ices through which internal auditors perform objective assessments to provide assurance. Examples of assurance services include compliance, financial, operational/performance, and technology engagements. Internal auditors may provide limited or reasonable assurance, depending on the nature, timing, and extent of procedures performed.
• Advisory Servi
ces: Services through which internal auditors provide advice to an organization’s stakeholders without providing assurance or taking on management responsibilities. The nature and scope of advisory services are subject to agreement with relevant stakeholders. Examples include advising on the design and implementation of new policies, processes, systems, and products; providing forensic services; providing training; and facilitating discussions about risks and controls. “Advisory services” are also known as “consulting services”.

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Additionally, the Internal Audit division may undertake other engagements that may be investigations related to allegations of fraud (from the Fraud Hotline or other reporting mechanisms), or pertain to legal, personnel, or other issues of a sensitive nature. Due to the unique nature and needs of these engagements, Internal Audit may not conduct work in conformance with Standards or may use other applicable standards if more appropriate to the nature of the engagement.

The Internal Audit division will work as a team with City employees to improve processes and meet st
rategic goals and objectives. The division will enhance the services we provide by continuously improving our audit activities.

Authority and Accountability
The City’s Internal Audit division reviews all departments, programs, functions, systems, contracts and activities for the City based on the approved audit plan or specific requests approved by the City Manager and/or City Council.

The Internal Audit division is authorized to:
• Have full, free and unrestricted access to all relevant information, functions, operations, systems, property, personnel, and other relevant materials necessary to accomplish its work. All employees will cooperate fully in making available material or information requested by Internal Audit or any external auditors managed by the Internal Audit division. Access to contracted third parties will be handled in accordance with contractual terms. The Internal Audit division will maintain confidentiality of all information provided subject to Public Records and State requirements. Documents provided to the Internal Audit division will be handled in the same prudent manner as by those employees normally accountable for them;
• Allocate Internal Audit, co-sourced, or outsourced resources, set audit frequencies, select audit subjects, determine scope of work, and apply the techniques required to accomplish audit objectives; and
• Obtain the necessary assistance of personnel in functions where audits are being performed, as well as other specialized services from external consultants.

The Internal Audit division is not authorized to:
• Initiate or approve accounting transactions external to Internal Audit; or • Direct the activities of any employee not part of Internal Audit except to the extent such employees have been appropriately assigned to auditing teams.

The Internal Audit divis
ion, in the discharge of duties, is accountable to the City Manager’s Office and the City Council through the Audit Committee to:

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• Report significant issues related to the processes for controlling the activities, including potential improvements to those processes, and periodically provide information concerning such issues until the issue is fully resolved, • Confirm to the Audit Committee the organizational independence of the internal audit function at least annually,
• Report and seek approval from the City Manager and the Audi t Committee regarding any changes to the Internal Audit Framework, and Internal Audit Strategy, and • Provide periodic information on the status and results of the annual audit plan, the progress of management action plans on open audit recommendations, and a summary of status on issues reported through the Fraud, Waste and Abuse Hotline.

Reporting on Open Audi t Recommendations
Internal Audit will perform quarterly follow-up on completed audits to ensure that the recommendations are implemented in a timely manner. As part of reporting on the status of open recommendations to the Audit Committee, Internal Audit will notify the Department Director when any of the following conditions are met, and request that they attend and discuss the status of open audit recommendations at the next Audit Committee meeting:
• The audit recommendation is found to be “not implemented”. This means the action plan was not completed.
• The recommendation has been outstanding for two years since the original audit report was issued.
• The recommendation has been outstanding for three years since the original audit report was issued.

Additionally, Internal Audit will report the status of any open Priority 1 audit recommendations that are not implemented to the Audit Committee.

Independence
The City’s Internal Audit division is independent of the activities it reviews. Specifically, Internal Audit staff may not review for a minimum of one year, areas where they were responsible for the design or operation of an area. Internal Audit staff is responsible for maintaining their independence and integrity in all services they provide.

All Internal Audit activities shall remain free from interference relative to matters of audit select
ion, scope, procedures, frequency, timing, or report content to maintain independence and objectivity. The Internal Audit Manager shall report any impairment to independence, or unjustified restriction or limitation to audit selection, scope, procedures, frequency, timing, or report content as well as any safeguards that may be employed to achieve independence promptly to the City Manager and City Council through the Audit Committee.

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As a means of ensuring independence, the Internal Audit Manager will report to the City Manager’s Office. This structure permits the rendering of impartial and unbiased judgment essential to the proper conduct of audits.

Responsibil
ities
The Internal Audit division is responsible for:
• Annually, dDevelopi ng and executing a flexible risk-based audit plan including any risks and control concerns identified by management and/or City Council; and submitting that plan to the City Manager and City Council through the Audit Committee for review and approval.
• Preparing or updating the annual agency-wide r isk assessment and incorporating the results into the annual audit plan.
• Implementing the annual audit plan, as approved, including as appropriate, any special tasks or projects requested by management.
• Communicating the i mpact of human resource, financial resource and technology limitations on the internal audit plan to the City Manager and Audit Committee. • Conducting objective and constructive assurance services. • Providing advisory services that do not impair Internal Audit’s independence and fall within the scope outlined in the Framework.
• Reporting results of internal audit services, including conclusions, themes, assurance, advice, insights, and monitoring results significant audit findings in compliance with the Internal Audit Policies Manual to the City Manager’s Office, and the City Council through the Audit Committee.
• Providing management with adequate time to respond to audit findings and include management
’s response in the audit report.
• Following up on audits to ensure agreed-upon recom mendations corrective actions have been implemented and provide periodic follow-up reports. • Presenting periodi c quarterly reports to the City Manager and Audit Committee highlighting progress on the Audit Plan.
• Maintaining a professional audit division wit h sufficient knowledge, skills, experience and professional certifications to meet the requirements of this Framework. • Conducting objective and constructive assurance services; • Advisory can be provided as long as the services do not impair Internal Audit’s independence and fall within the scope outlined in the Framework; • Exercising due professional care in all of Internal Audit’s work products. • Conducting all work in a professional manner.

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• Coordinating with internal and external providers of assurance services and consider relying upon their work. Coordinating external audits of the City of Pasadena; • Considering external auditors and regulators’ scopes of work, as appropriate, for the purpose of providing optimal audit coverage at a reasonable overall cost; and • Coordinating the investigation with the City Attorney’s Office or Human Resources Department for all issues reported through the Fraud, Waste and Abuse Hotline in compliance with City of Pasadena’s Fraud Prevention, Reporting and Investigation Policy.
• Summarizing and reporting to the City Manager and City Council the resolution of all issues received through the Fraud, Waste and Abuse Hotline. • Performing an internal quality assessment of the Internal Audit function, and reporting results, annually, to the City Manager and the Audit Committee. • Developing a plan for an external quality assessment and ensuring that it is performed at least once every five years by a qualified, independent assessor or assessment team, and reporting results, upon, completion, to the City Manager and the Audit Committee. • Developing and maintaining the Internal Audit Strategy that includes a vision, strategic objectives and supporting initiatives for the Internal Audit function and periodically submit it for review and approval to the City Manager and the Audit Committee.

Management is responsible for:
• Participating in dis cussions with the Audit Committee and Internal Audit and providing input on expectations for the Internal Audit function that the Audit Committee should consider when establishing the Internal Audit mandate.
• Supporting and championing Internal Audit’s authority and purpose, including ensuring that it has unrestricted access to the data, records, information, personnel, and physical properties necessary to fulfill its mandate.
• Positioning the Internal Audit division at a level in the organization that enables it to perform its services and responsibilities without interference. • Acknowledging Internal Audit’s direct access to the Audit Committee. • Reviewing with the Audit Committee the position of the Internal Audit Manager, including necessary qualifications, experience, competencies, performance and renumeration. • Engaging with the Audit Committee to provide the Internal Audit division with sufficient resources to fulfill the Internal Audit mandate and the Internal Audit plan. If the resources are determined to be insufficient, work with the Audit Committee to remedy the situation. • Providing input on the Internal Audit function’s performance objectives, accomplishments and impact.
• Maintaining an effective system of internal controls, documenting policy and procedures, and ensuring information is accurate, timely and reliable.; • Complying with policies and procedures;

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• Cooperating fully with auditors during discharge of their duties including prompt reply to the Internal Audit division’s requests and recommendations; and • Providing a response to audit findings and recommendations; • Assuring timely implementation of agreed-upon cor rective actions to audit recommendations.

The Internal Audit Framework may be modified as a written document executed by all of the participating parties. The Internal Audit Framework will be effective upon execution and will continue indefinitely until it is modified.

IN WITNESS WHEREOF, the parties hereto have caused this Inter nal Audit Framework to be executed by their proper officers and thereunto duly authorized, as of October 28,November, 24, 20254.
________________________ ________________________
MIG
UEL MÁRQUEZ VICTOR GORDO
City Manager Mayor/Audit Committee Chairman
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Appendix C-2
Introduction
The City of Pasadena (City) maintains an audit function that reports to the City Manager’s Office with responsibility to report its activities to the City Manager and City Council through the Audit Committee. This Framework formalizes the responsibilities, reporting lines, and protocols of Internal Audit within the structure of the City. It establishes Internal Audit’s objectives and provides for uninhibited and complete authority to fulfill its objectives. This Framework defines the purpose, scope, commitment to quality, authority and accountability, independence and responsibility of the City’s Internal Audit division.

Purpose
The City’s Internal Audit division provides highly reliable, independent, objective and risk-based assurance, advice, insight, and foresight designed to add value and improve City operations.

The Internal Audit division accomplishes this by bringing a systematic, disciplined approach to evaluating and recommending improvements to the effectiveness and efficiency of risk management, controls, and governance processes.

Scope
The scope of assurance and consulting work performed by the City’s Internal Audit division is to determine whether the City’s network of risk management, control and governance processes as designed and represented by management, is adequate and functioning to ensure:
• Risks are appropriately identified and managed.
• Si
gnificant financial, managerial, and operating information is accurate, reliable and timely.
• The process to acquire resources is economical, resources are used efficiently and are adequately protected.
• Programs, plans, and projects are operated within the fiduciary standards and regulatory requirements, are compliant with City policies and stated objectives are achieved. • Quality service and continuous improvement are fostered within the City’s control process
• Significant legislative or regulatory issues impacting the City are recognized, addressed appropriately, and interaction with governance groups occurs. • Employees’ actions are in compliance with policies, standards, procedures, and applicable laws and regulations.
• Contractors are meeting contract requirements in conformance with applicable laws, regulations, policies, procedures, and best practices.
• Existing policies and procedures are appropriate, updated and being followed. • Opportunities for improving management control, streamlining processes, and improving public perception are implemented.

2 Internal Audit Framework
City of Pasadena | Internal Audit
Appendix C-2
Commitment to Quality
California Government Code Section 1236 states that all city, county, city and county and district employees that conduct audits or that conduct audit activities of those respective agencies shall conduct their work under the general and specified standards prescribed by the Institute of Internal Auditors’ Global Internal Audit Standards and Topical Requirements (Standards) or the Government Auditing Standards issued by the Comptroller General of the United States, as appropriate. As a government entity that must comply with this Government Code Section, the City will adopt the Institute of Internal Auditors’ Standards for its internal audits. The City’s Internal Audit division will adhere to the following professional standards and codes:
• City of Pasadena Employee Code of Conduct/Ethics
• The Standards produced by the IIA and published in the Global Internal Audit Standards and Topical Requirements;
• The professional and ethical standards issued by the American Institute of Certified Public Accountants (AICPA) for attestation engagements. • The professional and ethical standards issued by ISACA and published as the Information Systems Auditing Standards for Information Technology assurance engagements.
• City of Pasadena Internal Audit Policies Manual
The City’s Internal Audit division commits to providing world-class service through timely, unbiased, value-added assurance and advisory services. The Standards defines these as:
• Assurance Services: Serv
ices through which internal auditors perform objective
assessments to provide assurance. Examples of assurance services include compliance, financial, operational/performance, and technology engagements. Internal auditors may provide limited or reasonable assurance, depending on the nature, timing, and extent of procedures performed.
• Advisory Servi
ces: Services through which internal auditors provide advice to an organization’s stakeholders without providing assurance or taking on management responsibilities. The nature and scope of advisory services are subject to agreement with relevant stakeholders. Examples include advising on the design and implementation of new policies, processes, systems, and products; providing forensic services; providing training; and facilitating discussions about risks and controls. “Advisory services” are also known as “consulting services”.

Additionally, the Internal Audit division may undertake other engagements that may be inves
tigations related to allegations of fraud (from the Fraud Hotline or other reporting mechanisms), or pertain to legal, personnel, or other issues of a sensitive nature. Due to the unique nature and needs of these engagements, Internal Audit may not conduct work in

3 Internal Audit Framework
City of Pasadena | Internal Audit
Appendix C-2
conformance with Standards or may use other applicable standards if more appropriate to the nature of the engagement.

The Internal Audit division will work as a team with City employees to improve processes and meet strategic goals and objectives. The division will enhance the services we provide by continuously improving our audit activities.

Authority and Accountability
The City’s Internal Audit division reviews all departments, programs, functions, systems, contracts and activities for the City based on the approved audit plan or specific requests approved by the City Manager and/or City Council.

The Internal Audit division is authorized to:
• Have full, free and unrestricted access to all relevant information, functions, operations, systems, property, personnel, and other relevant materials necessary to accomplish its work. All employees will cooperate fully in making available material or information requested by Internal Audit or any external auditors managed by the Internal Audit division. Access to contracted third parties will be handled in accordance with contractual terms. The Internal Audit division will maintain confidentiality of all information provided subject to Public Records and State requirements. Documents provided to the Internal Audit division will be handled in the same prudent manner as by those employees normally accountable for them;
• Allocate Internal Audit, co-sourced, or outsourced resources, set audit frequencies, select audit subjects, determine scope of work, and apply the techniques required to accomplish audit objectives; and
• Obtain the necessary assistance of personnel in functions where audits are being performed, as well as other specialized services from external consultants.

The Internal Audit division is not authorized to:
• Initiate or approve accounting transactions external to Internal Audit; or • Direct the activities of any employee not part of Internal Audit except to the extent such employees have been appropriately assigned to auditing teams.

The Internal Audit division, in the discharge of duties, is accountable to the City Manager’s Office and the City Council through the Audit Committee to:
• Report significant issues related to the processes for controlling the activities, including potential improvements to those processes, and periodically provide information concerning such issues until the issue is fully resolved, • Confirm to the Audit Committee the organizational independence of the internal audit function at least annually,

4 Internal Audit Framework
City of Pasadena | Internal Audit
Appendix C-2
• Report and seek approval from the City Manager and the Audit Committee regarding any changes to the Internal Audit Framework, and Internal Audit Strategy, and • Provide periodic information on the status and results of the annual audit plan, the progress of management action plans on open audit recommendations, and a summary of status on issues reported through the Fraud, Waste and Abuse Hotline.

Reporting on Open Audit Recommendations
Internal Audit will perform quarterly follow-up on completed audits to ensure that the recommendations are implemented in a timely manner. As part of reporting on the status of open recommendations to the Audit Committee, Internal Audit will notify the Department Director when any of the following conditions are met, and request that they attend and discuss the status of open audit recommendations at the next Audit Committee meeting:
• The audit recommendation is found to be “not implemented”. This means the action plan was not completed.
• The recommendation has been outstanding for two years since the original audit report was issued.
• The recommendation has been outstanding for three years since the original audit report was issued.

Additi
onally, Internal Audit will report the status of any open Priority 1 audit recommendations that are not implemented to the Audit Committee.

Independence
The City’s Internal Audit division is independent of the activities it reviews. Specifically, Internal Audit staff may not review for a minimum of one year, areas where they were responsible for the design or operation of an area. Internal Audit staff is responsible for maintaining their independence and integrity in all services they provide.

All Internal Audit activities shall remain free from interference relative to matters of audit selection, scope, procedures, frequency, timing, or report content to maintain independence and objectivity. The Internal Audit Manager shall report any impairment to independence, or unjustified restriction or limitation to audit selection, scope, procedures, frequency, timing, or report content as well as any safeguards that may be employed to achieve independence promptly to the City Manager and City Council through the Audit Committee.

As a means of ensuring independence, the Internal Audit Manager will report to the City Manager’s Office. This structure permits the rendering of impartial and unbiased judgment essential to the proper conduct of audits.

5 Internal Audit Framework
City of Pasadena | Internal Audit
Appendix C-2
Responsibilities
The Internal Audit division is responsible for:
• Annually, developing and executing a flexible risk-based audit plan including any risks and control concerns identified by management and/or City Council; and submitting that plan to the City Manager and City Council through the Audit Committee for review and approval.
• Preparing or updating the annual agency-wide risk assessment and incorporating the results into the annual audit plan.
• Implementing the annual audit plan, as approved, including as appropriate, any special tasks or projects requested by management.
• Communicating the impact of human resource, financial resource and technology limitations on the internal audit plan to the City Manager and Audit Committee. • Conducting objective and constructive assurance services. • Providing advisory services that do not impair Internal Audit’s independence and fall within the scope outlined in the Framework.
• Reporting results of internal audit services, including conclusions, themes, assurance, advice, insights, and monitoring results in compliance with the Internal Audit Policies Manual to the City Manager’s Office, and the City Council through the Audit Committee. • Providing management with adequate time to respond to audit findings and include management’s response in the audit report.
• Following up on audits to ensure agreed-upon recommendations have been implemented and provide periodic follow-up reports.
• Presenting periodic reports to the City Manager and Audit Committee highlighting progress on the Audit Plan.
• Maintaining a professional audit division with sufficient knowledge, skills, experience and professional certifications to meet the requirements of this Framework. • Exercising due professional care in all of Internal Audit’s work products. • Conducting all work in a professional manner.
• Coordinating with internal and external providers of assurance services and consider relying upon their work. Coordinating the investigation with the City Attorney’s Office or Human Resources Department for all issues reported through the Fraud, Waste and Abuse Hotline in compliance with City of Pasadena’s Fraud Prevention, Reporting and Investigation Policy.
• Summarizing and reporting to the City Manager and City Council the resolution of all issues received through the Fraud, Waste and Abuse Hotline. • Performing an internal quality assessment of the Internal Audit function, and reporting results, annually, to the City Manager and the Audit Committee.

6 Internal Audit Framework
City of Pasadena | Internal Audit
Appendix C-2
• Developing a plan for an external quality assessment and ensuring that it is performed at least once every five years by a qualified, independent assessor or assessment team, and reporting results, upon, completion, to the City Manager and the Audit Committee. • Developing and maintaining the Internal Audit Strategy that includes a vision, strategic objectives and supporting initiatives for the Internal Audit function and periodically submit it for review and approval to the City Manager and the Audit Committee.

Management is responsible for:
• Participating in discussions with the Audit Committee and Internal Audit and providing input on expectations for the Internal Audit function that the Audit Committee should consider when establishing the Internal Audit mandate.
• Supporting and championing Internal Audit’s authority and purpose, including ensuring that it has unrestricted access to the data, records, information, personnel, and physical properties necessary to fulfill its mandate.
• Positioning the Internal Audit division at a level in the organization that enables it to perform its services and responsibilities without interference. • Acknowledging Internal Audit’s direct access to the Audit Committee. • Reviewing with the Audit Committee the position of the Internal Audit Manager, including necessary qualifications, experience, competencies, performance and renumeration. • Engaging with the Audit Committee to provide the Internal Audit division with sufficient resources to fulfill the Internal Audit mandate and the Internal Audit plan. If the resources are determined to be insufficient, work with the Audit Committee to remedy the situation. • Providing input on the Internal Audit function’s performance objectives, accomplishments and impact.
• Maintaining an effective system of internal controls, documenting policy and procedures, and ensuring information is accurate, timely and reliable.

The Internal Audit Framework may be modified as a written document executed by all of the participating parties. The Internal Audit Framework will be effective upon execution and will continue indefinitely until it is modified.

IN WITNESS WHEREOF, the parties hereto have caused this Internal Audit Framework to be executed by their proper officers and thereunto duly authorized, as of November, 24, 2025. ________________________ ________________________
MIG
UEL MÁRQUEZ VICTOR GORDO
City Manager Mayor/Audit Committee Chairman

1 Internal Audit Strategy
City of Pasadena | Internal Audit November 24, 2025
Introduction
The City of Pasadena (City) maintains an audit function that reports to the City Manager’s Office, with responsibility to report its activities to the City Manager and City Council through the Audit Committee.

This strategy helps guide the Internal Audit division’s evolution in providing assurance and advisory services to support the success of the City of Pasadena.

Vision
The City’s Internal Audit division is the business intelligence arm that provides accurate, complete, highly reliable, risk-based, timely and objective assurance, advice, insight and foresight to City Management and the Audit Committee to assist in making data-informed decisions.

Strategic Objectives
The Internal Audit division will focus on the following to achieve its vision in the next 5 years:
1 Promote Full Range of Audit
Services Guided by Strategic
Partnerships
Provide high-impact, forward-looking and diversified assurance and advisory services that enhance business processes, and guide decision-making based on collaborative partnerships with clients. 2 Establish Data Analytics
Program to Deliver High-
Value Business Insight and
Innovate Processes through
Tech
Augment the traditional audit cycle by establishing a data analytics program that can provide data-based business insight through real- time assurance. Modernize the risk assessment process by making it more data-driven and quantifiable, enabling focus on highest risk areas. Continuously adopt and leverage new tech to automate and streamline our processes.
3 Deliver Actionable,
Stakeholder-Focused
Insights
Redesign reporting to provide clear, concise, and customized business insight that directly addresses the specific needs and priorities of our target audiences.
4 Drive Excellence through
Standardized Consulting
Practices
Formalize and refine our consulting engagement processes to ensure quality, maximize efficiency, and deliver repeatable, high- value results.
5 Cultivate a High-Performing
Team with Strategic Co-
Sourcing
Invest in targeted professional development to equip our staff with the specialized skills needed to successfully execute our strategic vision and leverage external consultants to complement in-house expertise to address highly specialized or emerging risks. 6 Strengthen Key Partnerships
Collaborate closely with ERM1 and DoIT2 to align efforts, synchronize data, and leverage technology for greater efficiency and strategic value.
1 Enterprise Risk Management
2 Department of Information Technology
Appendix D

2 Internal Audit Strategy
City of Pasadena | Internal Audit November 24, 2025
Supporting Initiatives
Strategic Objective 1
o Create customized audit workpapers integrating Global Internal Audit Standards using available Microsoft products; incorporate Generative AI tools to augment the engagement risk assessment process.
o Promote knowledge of the full range of Internal Audit services in addition to comprehensive audits, including, focused operational reviews; front-end internal control design services; data quality reviews; data analysis; data analytics dashboards; KPI methodology reviews; process improvement workshops; user experience surveys; organization-wide studies; financial reviews, and internal control reviews.
o Perform regular check-ins with clients to discuss findings and manage expectations.

Strat
egic Objective 2
o Obtain data over risk areas with well-established criteria, such as overtime, accounts payable, procurement, payroll and develop continuous data analytics audits and risk assessments. o Establish an audit risk universe by incorporating the City’s financial, business unit and strategic objectives and other data to make the annual Citywide risk assessment process more quantitative.
o Utilize reliable data to analyze general business trends and provide business insight to City Management.
o Incorporate data visualizations into the final audit products, and use data to enable review of 100% of data population to reduce reliance on sampling. o Update the Fraud Hotline and Recommendation Follow-Up tracking to new Microsoft tools to reduce time spent on these activities, among other projects.

Strat
egic Objective 3
o Update the audit report to a new modern-reader friendly format to enhance legibility.

Strat
egic Objective 4
o Create customized consulting report, and document best practices for consulting engagements.

Strat
egic Objective 5
o Develop professional development plans for Internal Audit staff. o Continue utilizing outside consultants to augment traditional audit cycle by filling in skill gaps.

Strat
egic Objective 6
o Periodically meet with ERM staff to collaborate in identifying and quantifying enterprise risks, discuss mitigation strategies and coordinate risk-based data analysis efforts. o Regularly meet with DoIT staff to review operational data needs, and to coordinate implementation of new technological tools.
________________________ ________________________
MIGUEL MÁRQUEZ VICTOR GORDO
City Manager Mayor/Audit Committee Chairman