City of Sacramento
Budget and Audit Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00303 4/4/2023 Discussion Item 7.
City Auditor’s Proposed Work Plan for Fiscal Year 2023/24 File ID: 2023-00303
Location: Citywide
Recommendation: Pass a Motion: 1) accepting the City Auditor’s Proposed Work Plan for Fiscal Year (FY) 2023/24; and 2) forwarding to the City Council for final approval.
Contact: Jorge Oseguera, City Auditor, (916) 808-7270, [email protected], Office of the City Auditor
Presenter: Jorge Oseguera, City Auditor, (916) 808-7270, [email protected], Office of the City Auditor
Attachments:
1-Description/Analysis
2-City Auditor’s Proposed Work Plan for Fiscal Year 2023/24 Description/Analysis
Issue Detail: The mission of the Office of the City Auditor is to provide a catalyst for improvements of municipal operations, promote credible, efficient, effective, fair, focused, transparent, and a fully accountable City Government. The Office of the City auditor conducts performance audits, research, analysis projects, and is responsible for managing the City’s Whistleblower Hotline. City Code Section 2.18.030 requires that the City Auditor submit an annual work plan to the City Council for approval. This report sets forth the City Auditor’s Annual Work Plan for FY2023/24.
The proposed work plan includes an audit of the Recycling and Solid Waste Division. The Auditor’s Office would require a budget augmentation of approximately $150,000-$200,000 from the Solid Waste Fund in order to contract with a third-party vendor to perform this audit. · The Recycling and Solid Waste Division is responsible for recycling and refuse collection, yard waste collection, household hazardous waste collection, household junk pickup, street
File ID: 2023-00303 4/4/2023 Discussion Item 7.
sweeping, illegal dumping cleanup, and landfill post-closure maintenance and monitoring. One -time funding for the Recycling and Solid Waste Division Audit would allow us to contract with a third-party vendor, managed by our office, to complete this audit.
Project Supported Amount Funding Type Funding Source
Audit of the Recycling and
Solid Waste Division
$150,000 -
$200,000
One-Time Cost Solid Waste Fund
Policy Considerations: The City Auditor’s presentation of the annual work plan is consistent with the Mayor and City Council’s intent to have an independent audit, research, and analysis function for the City of Sacramento.
Economic Impacts: None.
Environmental Considerations: None.
Sustainability: None.
Commission/Committee Action: None.
Rationale for Recommendation: This staff report provides the Budget and Audit Committee with an opportunity to approve the City Auditor’s annual work plan or to provide comments and feedback before it is presented to the City Council.
Financial Considerations: The costs of the audits listed in the proposed FY2023/24 Work Plan will be funded out of the Office of the City Auditor FY2023/24 budget.
Local Business Enterprise (LBE): None.
INSIDE
Our Mission
Performance Audit Plan
Cannabis Compliance Audit Plan
DOU Audit Plan
Research & Analysis Work Plan
Whistleblower Investigative Audits
Audit Selection Process
Auditor’s Authority
2023/24 WORK PLAN
Office of the City Auditor
OUR MISSION
The Office of the City Auditor is an essential element of the City of Sacramento's public accountability. Our mission is “To provide a catalyst for improvements of municipal operations, promote credible, efficient, effective, fair, focused, transparent, and a fully accountable City Government.“
The Office of the City Auditor provides independent, objective, and reliable information regarding the City's ability to meet its goals and objectives, and establish an adequate system of internal controls. In many cases, this involves verifying compliance with laws and regulations, assessing the efficiency and effectiveness of the City's operations, and identifying internal control weaknesses and failures.
City Code Section 2.18.030 requires that the City Auditor submit an Annual Work Plan to the City Council for approval. This report sets forth the City Auditor’s Annual Work Plan for FY 2023/24.
Our risk-based work plan is designed using a combination of qualitative and quantitative measures. By considering a wide variety of information sources, the intent is to submit to the City Council for its approval a work plan that promotes fairness and ensures the City Auditor’s Office will continue to be value-added for the City of Sacramento by focusing its resources on areas with the highest audit potential.
The results of this process form the basis for the City Auditor’s Annual Work Plan.
In anticipation of Council requests for analysis and information, we have reserved some of our Office’s resource capacity so we can respond to those requests in a timely manner.
I am pleased to present you the Proposed Annual Work Plan for FY 2023/24. My team and I look forward to providing the City Council and the public with recommendations on improving the efficiency and effectiveness of City operations.
Sincerely,
City Auditor
Jorge Oseguera
FY2023/24 Work Plan | Office of the City Auditor | Sacramento, CA PERFORMANCE AUDITS (4 FTE)
Audits in Progress
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA Fire
Department
Emergency Medical
Services
This audit will evaluate service delivery and general EMS operations to determine if adequate controls are in place to ensure efficient and effective performance.
Police
Department
Evidence and
Property Division
This audit will determine whether appropriate controls exist over property and evidence room inventory including intake, disposition, storage, preservation, and security.
Citywide Assessments of
Revenues and
Expenses Associated
with the City’s
COVID-19 Response
These assessments will help the City prepare for Federal or State audits of the City’s use of emergency funding. We will provide proactive and real-time assistance in complying with regulatory requirements, securing reimbursements, tracking disaster recovery costs, and evaluating whether funds are being used efficiently and effectively.
Human
Resources
Complaint
Investigation and
Resolution Practices
The City’s complaint investigation and resolution process involves allegations of workplace discrimination, harassment, and employee wrongdoing. We will partner with the Office of Public Safety Accountability to evaluate the City’s complaint intake, investigation, resolution, and employee discipline practices. These practices will also be assessed using a racial disparity lens.
Citywide Homeless Response The City’s response to homelessness includes a variety of departments and external stakeholders working together to implement innovative solutions to meet the needs of those experiencing homelessness. This audit will evaluate the costs and effectiveness of the Citywide response to homelessness.
Planned Audits (with anticipated start date)
Citywide Pedestrian Safety
(September 2023)
One of the City’s most important responsibilities is to ensure the safety of residents and visitors. With regard to the safety of pedestrians—some of the most vulnerable users of the City’s roadways—this responsibility has grown even more critical in recent years. The objective of this audit is to evaluate the enforcement, education, and engineering of the City’s
programs responsible for pedestrian safety
Community
Development
Department
Planning Division
(November 2023)
The Planning Division provides permit services to customers seeking a building permit. This audit will review compliance with applicable laws and regulations, evaluate efficiency of application submittal and permit review cycle operations, and assess permit review programs such as the Expedited Plan Review program.
PERFORMANCE AUDITS
Planned Audits, Continued from Previous Page
Public Works
Department
Recycling & Solid
Waste
($150,000)
The Recycling and Solid Waste Division is responsible for recycling and refuse collection, yard waste collection, household hazardous waste collection, household junk
pickup, street sweeping, illegal dumping cleanup, and
landfill post-closure maintenance and monitoring. This audit would be paid for by Solid Waste Funds and contracted out to a third-party vendor.
Community
Development
Department
Animal Care Services
(June 2024)
The City’s Animal Care Services Division provides animal care services including sheltering, adoption, community outreach, code enforcement, and abuse investigations. This audit will assess compliance with applicable laws and
evaluate shelter practices aimed at protecting the health, safety and welfare of shelter animals, staff, volunteers, and the public.
Sacramento
Police
Department
Operations Division –
Budgeting
(October 2024)
The Police Department is responsible for maintaining public order and safety, enforcing the law, and preventing,
detecting, and investigating criminal activities. Given the potential benefits and concerns associated with overtime management, this audit will assess management of
overtime and evaluate SPD’s measures to ensure that all overtime is appropriate and properly justified.
Council
Requests
Council
Requests
In anticipation of Council requests for analysis and
information, we have reserved some of our resource
capacity so we can respond to those requests in a timely manner.
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA CANNABIS CONTINUOUS MONITORING (1FTE)
Office of
Cannabis
Management
Cannabis
Policymaking,
Education and
Outreach
The Office of Cannabis Management (OCM) develops cannabis policy and provides education and outreach in the City of Sacramento. This review will continuously monitor new cannabis policy and OCM’s education and outreach efforts.
Finance
Department
Cannabis
Business
Operations Tax
(CBOT)
Cannabis businesses pay a four percent business tax on monthly gross receipts. This review will continuously monitor monthly tax payments made by cannabis businesses and industry compliance with the CBOT program.
Community
Development
Department
Cannabis Code
Enforcement
Activities
The Cannabis Code Enforcement Unit (CCEU) assists the Office of Cannabis Management with the enforcement of commercial
cannabis regulations. This review will continuously monitor the CCEU’s enforcement activities.
Cannabis Activities scheduled for Continuous Review
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA The Cannabis Auditor performs ongoing monitoring of the five key areas listed below.
Office of
Cannabis
Management
Business
Permitting
The Office of Cannabis Management manages the business
permitting process for cannabis businesses in the City. This review will continuously monitor the efficiency and effectiveness of the permitting processes.
Office of
Cannabis
Management
Cannabis
Opportunity
Reinvestment
and Equity
(CORE) Program
The CORE program was created to assist individuals who face barriers to entering the cannabis industry due to historical disparate enforcement of cannabis crimes. This review will continuously evaluate the effectiveness of the City’s social equity program.
Cannabis Activities that Have Already Received an Initial Review
CANNABIS COMPLIANCE WORK
Police
Department
Illegal Cannabis
Cultivation
(February 2024)
Unlicensed and criminal cannabis activity continues to run rampant throughout the state. This audit will evaluate the City’s ongoing efforts to crack down on illegal cannabis grow
operations.
Office of
Cannabis
Management
Cannabis
Administrative
Penalty Appeal
Process
(January 2025)
A unique process has been established to conduct appeals for cannabis administrative penalties. This audit will review the efficiency and effectiveness of the cannabis administrative penalty appeal process.
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA Citywide Sacramento
Children and Youth
Health and Safety
Act - Measure L
In accordance with the Sacramento Children and Youth Health and Safety Act (Measure L), this project will fulfill the City Auditor’s responsibilities described in Measure L. Specifically, the City Auditor will calculate and publish a baseline funding amount no later than December 31, 2023. Additionally, the City Auditor will publish an audited amount of Cannabis Business Operations Tax (CBOT) and verify that the baseline funding amount was expended in the previous fiscal year by January 15th, starting in 2025.
Work in Progress
The Cannabis Auditor has developed a multi-year cannabis work plan that was approved by City Council in May 2022. In November 2022, Sacramento Voters passed Measure L, the Sacramento Children and Y outh Health and Safety Act. Measure L requires that the City Auditor to perform several tasks, including annually publishing an audited amount of Cannabis Business Operations Tax (CBOT), which is the basis for the revenue allocation for the newly established Children’s Fund.
Planned Audits (with anticipated start date)
DEPARTMENT OF UTILITIES AUDITS (1 FTE)
Planned Audits (with anticipated start date)
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA Asset
Management and
Preventative
Maintenance
(December 2023)
DOU’s infrastructure is vital to maintaining clean drinking water and other essential services. Inadequate maintenance can significantly increase the cost of this vital infrastructure. This audit will evaluate DOU’s asset replacement cycles and preventative maintenance schedules for optimization and economic impact.
Security and
Emergency
Preparedness
(March 2025)
DOU’s Security and Emergency Preparedness Unit was created to protect employees and facilities, and to better prepare DOU to respond to various types of emergencies. This audit will review security protocols and assess the department’s ability to respond to emergencies in a safe, efficient, and effective manner.
Special Projects (with anticipated start date)
Water and
Wastewater Fund
Reviews
(June 2023)
These reviews will analyze the fiscal sustainability of the Water Fund and the Wastewater Fund and forecast future revenues based on various scenarios, including potential rate increases.
Succession
Planning and
Turn-over
Analysis
(October 2024)
Due to the number of on-ongoing vacancies and anticipated retirements, it is critical that DOU be adequately prepared to address staffing challenges. This project will analyze the department’s turnover and succession planning practices and identify potential strategies for DOU to consider.
Audits in Progress
Supervisory
Control and
Data Acquisition
(SCADA)
Supervisory Control and Data Acquisition (SCADA) is a computer-based industrial control system that allows staff to remotely control operations, monitor equipment status, and analyze historical and real-time data. The audit will review authoritative guidance to determine best practices and complete a risk assessment of DOU’s SCADA practices to assess the adequacy of internal controls. It will also consider cybersecurity risks and the impacts of staffing and funding.
The DOU Auditor has developed a multi-year audit plan that includes Audits and Special Projects, with tentative start dates.
RESEARCH & ANALYSIS WORK PLAN (3 FTE)
Audits in Progress
Ethics
Commission
Ethics Commission
Assessment
The City Auditor will perform an assessment of the Ethics Commission’s ability to meet the purpose and duties established by the City Council. This may include an assessment of relevant processes and policies, review of complaint intake procedures, and a benchmark study to identify best practices.
Citywide Audit of the
Transient
Occupancy Tax
A Transient Occupancy Tax (TOT) of 12% is charged for all people who exercise occupancy at a hotel in the City of Sacramento (City Code 3.28). This audit will evaluate
compliance, enforcement, and revenue collection associated with TOT.
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA Recurring Reports (with anticipated start date)
Citywide Annual Community
Survey
(May, Annually)
This project may be used to prioritize community issues and services that respondents feel need the most improvement.
Repeating this survey annually will allow the City to identify trends and gauge whether policy changes and priorities are improving residents’ quality of life and their opinions regarding various issues and City services.
Citywide Triennial Diversity
Review of
Employment
Applications and
Separations
(June 2023)
This triennial review will assess the diversity of City job applicants, newly hired employees, and former employees as it compares to the diversity of City of Sacramento residents.
The review will also analyze trends to identify potential equity concerns.
Citywide Triennial Review of
City Employee
Diversity, Equity, and
Inclusion
(June 2024)
This triennial review will assess the diversity of City of Sacramento employees as it compares to the diversity of City of Sacramento residents. The review will also analyze trends to identify potential equity concerns. We will continue to update the City of Sacramento Gender and Ethnic Diversity Dashboard annually.
Citywide Triennial Diversity
Review of Boards,
Committees, and
Commissions
(June 2025)
This triennial review will assess the diversity of City of Sacramento boards, committees, and commissions as it
compares to the diversity of City residents. The review will also analyze trends to identify potential equity concerns.
RESEARCH & ANALYSIS WORK PLAN
Finance Audit of the Business
Operations Tax
(November 2023)
City Code 3.08 requires all businesses that operate in the City or do business with the City pay a Business Operations Tax (BOT) . The amount of the tax levied generally depends on the type of business and the business’s gross receipts. This audit will evaluate compliance, enforcement, and revenue collection associated with BOT.
Fire Audit of the Advanced
Life Support Rates,
Fees, and Charges
(December 2023)
Advanced life support (ALS) are special services designed to provide definitive prehospital emergency medical care. City Code 2.24.100 establishes that ALS rates, fees, and charges shall not exceed the City’s estimated actual cost to provide the services. This audit will evaluate compliance, enforcement, and revenue collection associated with ALS rates, fees, and charges.
Citywide Continuous Auditing
Project
(January 2024)
Continuous auditing assesses an organization’s risks, controls, and practices on an ongoing basis. This project will establish continuous auditing protocols to assess various financial and operational aspects of City government on an ongoing basis.
Council
Requests
Council
Requests
In anticipation of Council requests for analysis and information, we have reserved some of our resource capacity so we can respond to those requests in a timely manner.
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA Ad Hoc Audits (with anticipated start date)
WHISTLEBLOWER INVESTIGATIVE AUDITS (ALL STAFF)
Citywide 145 Whistleblower
Investigative Audits
Based on historical trends, we anticipate receiving
approximately 145 whistleblower tips in FY2023/24. We will report the results of these investigative audits in our Semi- Annual Whistleblower Hotline Activity Reports.
Projected WhistleblowerReports
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA Cases in Progress (as of February 1, 2023)
Citywide 55 Whistleblower
Investigative Audits
Open whistleblower investigative audits include: contested City charges, wasteful practices, fraud, insufficient action by City, payroll/timecard issues, theft of goods/services, and violate City policy/local/state/federal law.
Historic Information (as of February 1, 2023)
AUDIT SELECTION PROCESS
The City Auditor’s Work Plan is developed on an annual basis; however, the City Council may add projects to the work plan during the year and the City Auditor may propose additional work should new risks emerge.
Audit topics are selected using a combination of quantitative and qualitative factors that come from a variety of sources. Areas of risk that may be assessed when evaluating risks related to a department or division include, but are not limited to:
Annual Budget
Number of Employees
Funding Sources
Age of Programs
Fiscal Sustainability
Customer Satisfaction
Regulatory Compliance
Significant Changes
Criticality
Emerging Areas of Risk
Input from elected officials, city management, the whistleblower hotline, and the public is also taken into account when developing the annual work plan.
AUDITOR’S AUTHORITY
The City Council appoints the City Auditor to promote efficient, effective, transparent, and accountable City government. The City Auditor reports directly to City Council and has full responsibility for the direction and management of the Office of the City Auditor. The City Auditor works closely with the City Council, Budget and Audit Committee, Charter Officers, Department Directors, and Division Managers when conducting audits and evaluating programs.
The City Auditor conducts audits in accordance with Generally Accepted Government Auditing Standards (GAGAS) and provides City Council and the public with objective, timely, and accurate information about the City government. Findings and recommendations are designed to save tax dollars and improve City operations.
In November 2018, the Sacramento City Government Accountability and Efficiency Act (Measure K) was passed by voters. This established the City Auditor as a charter officer and combined the duties of the City Auditor and the Independent Budget Analyst. City Code 2.18 Office of the City Auditor outlines the office’s duties and establishes the City Auditor’s access to information.
FY 2023/24 Work Plan | Office of the City Auditor | Sacramento, CA