City of Sacramento
Budget and Audit Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00762 4/9/2024 Discussion Item 4.
City Auditor’s Proposed Work Plan for Fiscal Year 2024/25 File ID: 2024-00762
Location: Citywide
Recommendation: Pass a Motion: 1) accepting the City Auditor’s Proposed Work Plan for Fiscal Year (FY) 2024/25; and 2) forwarding to the City Council for final approval.
Contact: Farishta Ahrary, Interim City Auditor, (916) 808-7266, [email protected], Office of the City Auditor
Presenter: Farishta Ahrary, Interim City Auditor, (916) 808-7266, [email protected], Office of the City Auditor
Attachments:
1-Description/Analysis
2-City Auditor’s Proposed Work Plan for Fiscal Year 2024/25 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 FY2024/25.
The proposed work plan includes an audit of the Recycling and Solid Waste Division. The work plan would require funding of approximately $150,000-$250,000 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 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
File ID: 2024-00762 4/9/2024 Discussion Item 4.
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 -
$250,000
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: This report does not have any financial impact. Once the workplan is approved the costs of the audits will be funded out of the Office of the City Auditor operating budget.
Council authority for any additional appropriation authority necessary to complete the workplan will be considered in future reports to Council.
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
2024/25 WORK PLAN
Office of the City Auditor
OUR MISSIONThe Office of the City Auditor is an essential element of the City of Sacramento'spublic accountability. Our mission is“To provide a catalyst for improvements ofmunicipal operations, promote credible, efficient, effective, equitable, fair, focused,transparent, and a fully accountable City Government.“The Office of the City Auditor provides independent, objective, and reliableinformation regarding the City's ability to meet its goals and objectives, and establishan adequate system of internal controls. In many cases, this involves verifyingcompliance with laws and regulations, assessing the efficiency and effectiveness ofthe City's operations, and identifying internal control weaknesses and failures. As partof our work, we provide recommendations to improve City services, root out impropergovernmental activities (i.e., fraud, waste, or abuse), and assess racial, gender, andethnic inequities.City Code Section 2.18.030 requires that the City Auditor submit an Annual Work Planto the City Council for approval. This report sets forth the City Auditor’s Annual WorkPlan for FY 2024/25.Our risk-based work plan is designed using a combination of qualitative andquantitative measures. By considering a wide variety of information sources, theintent is to submit to the City Council for its approval a work plan that promotesfairness and ensures the City Auditor’s Office will continue to be value-added for theCity 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 reservedsome of our Office’s resource capacity so we can respond to those requests in atimely manner.I am pleased to present you the Proposed Annual Work Plan for FY 2024/25. My teamand I look forward to providing the City Council and the public with recommendationson improving the efficiency and effectiveness of City operations.Sincerely, Farishta AhraryInterim City Auditor FY2024/25 Work Plan | Office of the City Auditor | Sacramento, CA PERFORMANCE AUDITS (4 FTE)Audits in Progress
FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA This audit will evaluate service delivery and general EMS operations to determine if adequate controls are in place to ensure efficient and effective performance.Emergency Medical ServicesFire DepartmentThis audit will determine whether appropriate controls exist over property and evidence room inventory including intake, disposition, storage, preservation, and security.Evidence and Property DivisionPolice DepartmentThe 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.Complaint Investigation and Resolution PracticesHuman ResourcesThe audit will evaluate whether the set-up of the City’s homeless data system as well as the data currently collected and reported across the homeless system to meet the objectives for achieving these respective missions and determine whether gaps exist between interdepartmental or interagency coordination that create barriers to ensuring clean and clear streets while also supporting successful exists from homelessness. Homeless Response – Part 1CitywideThe audit will evaluate whether the Sacramento Police Department’s military equipment inventory management policies and procedures comply conform with best practices, state and city laws.Military Equipment Use Policies and Inventory PracticesPolice DepartmentThe 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.Animal Care ServicesCommunity Development DepartmentPlanned AuditsThe audit will evaluate whether a sample of City contracts with homeless service providers are designed consistently and administered efficiently and effectively. Homeless Response – Part 2Citywide PERFORMANCE AUDITSPlanned Audits, Continued from Previous PageOne 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.Pedestrian Safety CitywideThe 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.Planning DivisionCommunity Development DepartmentThe 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.Recycling & Solid Waste Public Works DepartmentIn 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.Council RequestsCouncil Requests FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA
CANNABIS CONTINUOUS MONITORING (1FTE)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.Cannabis Policymaking, Education and OutreachOffice of Cannabis ManagementCannabis 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.Cannabis Business Operations Tax (CBOT)Finance DepartmentThe 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 Code Enforcement ActivitiesCommunity Development DepartmentCannabis Activities scheduled for Continuous Review FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA The Cannabis Auditor performs ongoing monitoring of the five key areas listed below.
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 Opportunity Reinvestment and Equity (CORE) ProgramOffice of Cannabis Management Cannabis Activities that Have Already Received an Initial Review
CANNABIS COMPLIANCE WORK
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.Illegal Cannabis CultivationPolice Department FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA In accordance with the Sacramento Children and Youth Health and Safety Act (Measure L), the City Auditor will annually publish an audited amount of Cannabis Business Operations Tax (CBOT) by January 15th, starting in 2025.Audited CBOT Amount for Sacramento Children’s FundCitywideThe 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.Business PermittingOffice of Cannabis ManagementWork in ProgressThe Cannabis Auditor has developed a multi-year cannabis work plan that was approved by City Council in May 2023. Planned Audits
DEP ARTMENT OF UTILITIES AUDITS (1FTE)Planned Audits
FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA The City of Sacramento aims to mitigate negative impacts such as greenhouse gas emissions, pollution, dependence on non-renewable resources, and over- or excessive use of natural resources. This audit will evaluate the feasibility of DOU operations moving to 100% electric. This will include a cost-benefit analysis of DOU’s solar power purchase agreements, evaluating use of solar shares, cost-benefit analysis of participating in SMUD’s automated demand response program, and review of the impacts of fleet electrification on department operations and emergency responses.Energy UseIn March 2020, the Citywide Innovation and Efficiency Assessment, Potential Strategies recommended third-party audits of utility invoices to potentially identify cost savings. This internal audit will analyze the utility invoices received by DOU such as electricity, telecommunications, gas, recycling, solid waste, and organic waste to determine if charges appear appropriate.Utility InvoicesDOU’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. Asset Management and Preventative MaintenanceSpecial ProjectsDue to the number of 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.Succession Planning and Turn-over Analysis Audits in ProgressThe DOU Auditor has developed a multi-year audit plan that includes Audits and Special Projects.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.Water and Wastewater Fund Reviews RESEARCH & ANAL YSIS WORK PLAN (3 FTE)Audits in ProgressThe 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. Ethics Commission AssessmentEthics CommissionA 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.Audit of the Transient Occupancy TaxCitywideThis triennial review will assess the diversity of City job applicants, hired employees (new hires, re-hires, and promotions), 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. Triennial Diversity Review of Employment Applications and SeparationsCitywide FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA Ad Hoc AuditsIn March 2020, the Citywide Innovation and Efficiency Assessment, Potential Strategies recommended third-party audits to potentially identify cost savings. In alignment with this recommendation, we will explore entering into contingency contracts with a vendor to conduct these and/or other audits to recover potential past taxes or any other monies or revenue owed to the City that were not properly attributed to the City or were not properly paid/collected and to determine potential future taxes and other monies owed to the City not previously counted.Contingency Contract AuditsCitywideIn 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.Council RequestsCouncil Requests
RESEARCH & ANAL YSIS WORK PLAN
FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA Recurring Reports
City Charter section 120(e)(1)(c) requires that by January 15thof each year, the City Auditor verifies that the baseline funding amount for the Sacramento Children’s Fund was expended in the previous fiscal year.Sacramento Children’s Fund -Baseline Funding Verification(Annually)CitywideThis 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.Biannual Community Survey (2025)CitywideThis 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.Triennial Review of City Employee Diversity, Equity, and Inclusion(2024)CitywideThis 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.Triennial Diversity Review of Boards, Committees, and Commissions(2025)CitywideThis triennial review will assess the diversity of City job applicants, hired employees (new hires, re-hires, and promotions), 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. Triennial Diversity Review of Employment Applications, Hires, and Separations(2026)Citywide WHISTLEBLOWER INVESTIGA TIVE AUDITS (ALL ST AFF)Based on historical trends, we anticipate receiving approximately 140 whistleblower tips in FY2024/25. We will report the results of these tips in our Semi-Annual Whistleblower Hotline Activity Reports.140 Whistleblower TipsCitywideProjected WhistleblowerTips FY 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA Whistleblower Tips in Progress (as of January 1, 2024)Open whistleblower tips include: insufficient action by the City, safety and sanitation issues, and unrelated to the City.3 Whistleblower TipsCitywideHistoric Information (as of January 1, 2024)
AUDIT SELECTION PROCESSThe 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:Customer Satisfaction Regulatory Compliance Significant ChangesCriticalityEmerging Areas of RiskAnnual BudgetNumber of Employees Funding SourcesAge of Programs Fiscal SustainabilityInput from elected officials, city management, the whistleblower hotline, and the public is also taken into account when developing the annual work plan.AUDITOR’S AUTHORITYThe 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 2024/25 Work Plan | Office of the City Auditor | Sacramento, CA