TO: RULES AND OPEN FROM: Joe Rois,
GOVERNMENT COMMITTEE City Auditor
SUBJECT: Monthly Report of Activities for DATE: August 7, 2024 June and July 2024
RECOMMENDATION
Approve the Auditor’s Office Monthly Report of Activities for the months of June and July 2024.
SUMMARY OF RESULTS
Charter Section 8.05(e) requires the City Auditor to submit a monthly report to the City Council of our activities, findings, and recommendations. This report summarizes reports issued, other activities, assignments in process, and the status of the City Auditor’s Fiscal Year (FY) 2023-24 Work Plan during the months of June and July 2024.
Activities During the Months of June and July:
1. Presented to the San José - District 6 Leadership Group about the City Auditor’s Office and results from the Annual Report on City Services.
2. Finalized internal procedures for the appropriate use of Generative Artificial Intelligence in the context of audits.
3. Finalized the annual engagement letter and work plan for the upcoming annual financial audits and agreed upon procedures conducted by Macias Gini & O’Connell (MGO).
Information on the status of the City Auditor’s FY 2023-24 Work Plan is attached. On behalf of the Auditor’s Office, I would like to express my appreciation to City staff for their cooperation and assistance during our reviews.
Joe Rois
City Auditor
Attachment
RULES COMMITTEE AGENDA: 8/14/2024
ITEM: B.3
RULES AND OPEN GOVERNMENT COMMITTEE
8-7-24
Monthly Report of Activities for June and July 2024
Status of the City Auditor’s FY 2023-24 Audit Work Plan As of June and July 2024
Objective Status Issuance
Date
Assignments Completed
1. Integrated Waste
Management Inspection
Programs
Evaluation of the Integrated Waste Management
(IWM) Enforcement Program’s service delivery. (IWM
ranked high on the Citywide risk assessment; open
audit request related to IWM)
Completed September
2023
2. Performance measure
review (Housing
Department)
Recurring projects to assess the validity and
usefulness of performance metrics by City
departments, programs, or City Service Areas. This
work is intended to be ongoing to augment the Annual
Services Report and assist the Administration to
enhance the City’s performance management systems
in alignment with the “Outcome, Equity Indicators, and
Performance Management” City Roadmap initiative.
(Councilmembers have made requests about the
City’s performance measurement and management in
prior years)
Completed September
2023
3. Semi-annual audit
recommendation status
report
Report on the implementation status of all open audit
recommendations as of June 30 and December 31,
2023. Completed
September
2023 &
March
2024
4. Semi-annual compliance
review of the City’s
investment program
(contracted audit service)
The City’s investment policy requires semi-annual
compliance audits of the City’s investment portfolio.
The City’s outside financial statement auditor, Macias, Gini & O’Connell (MGO), will conduct agreed-upon
procedures to test for compliance as of June 30, 2023,
and December 31, 2023.
Completed
September
2023 &
April 2024
5. Office of Retirement
Services
Audit to cover, at a minimum, the following areas: 1.
Identifying internal process controls for financial
activities such as accounting, purchasing, and
contracting; 2. Identifying policies and procedures
around information systems and security; 3.
Compliance with City policies for financial activities, information systems and security, and other relevant
administrative functions; and 4. A comparison of
governance structures of other pension plans,
including board oversight of management’s
administrative functions and responsibilities. (Added to work plan at August 9 meeting of the Rules Committee
based on request from the Mayor and two
Councilmembers)
Completed
Interim
Report -
October
2023
Second
report –
April 2024
6. Biennial peer review for
FYs 2021-22 and 2022-23
(contracted audit service)
The City Charter requires a performance audit of the
Office of the City Auditor be conducted at least once
every two years. To fulfill this requirement, the Office participates in the Association of Local Government
Auditors’ peer review program. The last peer review
was conducted in 2021.
Completed October
2023
RULES AND OPEN GOVERNMENT COMMITTEE
8-7-24
Monthly Report of Activities for June and July 2024
Objective Status Issuance
Date
7. Annual audits of voterapproved bond and parcel
tax measures (contracted
audit service)
The independent certified public accounting firm
Macias Gini & O’Connell LLP (MGO) will conduct
audits of the Branch Library Bond Projects Fund, the
Parks and Recreation Bond Projects Fund, the Library
Parcel Tax Fund, and the Public Safety and
Infrastructure (“Measure T”) Bond Fund satisfying the
City’s obligation for guaranteed annual audits.
Completed October
2023
8. Annual performance review
of Team San Jose and the
Convention and Visitors
Bureau
Annual review to determine whether Team San Jose
met their performance metrics as of June 30, 2023. Completed November 2023
9. Building permitting Assess the timeliness of the building permit process for single-family residential additions or alterations, including accessory structures. (Request by
Councilmember)
Completed November
2023
10. Compliance review of San
José Clean Energy’s risk
management practices
(contracted audit service)
MGO will conduct tests of San José Clean Energy
(SJCE) investment and risk management practices to
ensure compliance with the City’s Energy Risk
Management Policy and Energy Risk Management
Regulations as of FY Ended June 30, 2023.
Completed November
2023
11. Annual Report on City
Services 2022-23
16th annual report providing data about the cost,
quality, quantity, and timeliness of City services. The report incorporates existing performance
measurement data, showing ten-year historical trends,
a variety of comparisons to other cities, and the results of a resident survey. The Office will also maintain an
online dashboard of CSA dashboard measures.
Completed December
2023
12. Non-management
employee performance
appraisals
“% of Non-Management Employee Performance
Appraisals Completed on Schedule” is a dashboard
performance measure in the Adopted Operating
Budget’s Strategic Support City Service Area.
According to data provided to the City Auditor’s Office for the Annual Services Report, just 52 percent of nonmanagement employees had on-time performance appraisals in FY 2020-21. (Open audit request and
the Lead and Manage the Organization core service
ranked high on the Citywide risk assessment)
Completed February
2024
13. Language Accessibility Assess City communications for compliance with the City’s Language Access Policy (now the Language
Equity Policy and Guidelines). (CMO’s Lead and
Manage the Organization core service ranked high on
the Citywide risk assessment)
Completed March
2024
RULES AND OPEN GOVERNMENT COMMITTEE
8-7-24
Monthly Report of Activities for June and July 2024
Objective Status Issuance
Date
14. Annual external financial
audit and single audit
(contracted audit service)
The City Charter requires an annual audit of the City’s financial transactions. MGO will conduct the annual
audits of the Annual Comprehensive Financial Reports
of the City and the Airport. MGO will also conduct
audits of the financial statements of the Successor
Agency to the Redevelopment Agency, Convention
Center, Deferred Compensation, Tier 3 Defined
Contribution Plan, Voluntary Employee Beneficiary
Association (VEBA), Metropolitan Transportation
Commission (MTC) grant compliance, South Bay
Water Recycling, San José Clean Energy (SJCE), and
the Single Audit (including Airport passenger facility
charges and customer facility charges). An audit of
expenditures under a California Violence Intervention
& Prevention Grant was added in November 2023.
Completed
September
2023 –
March
2024
Assignments in Process
15. Encumbrances Review encumbrances for compliance with the City’s Encumbrance Policy (CPM 5.1.12). The General Fund
had a $53 million Encumbrance Reserve in the FY
2023-24 Proposed Operating Budget. This is nearly
40 percent higher than five years ago. (Outstanding
request from a resident)
In process
September
2024
(projected)
16. San José Animal Care and
Services
(Added on October 11,
2023)
Audit covering various aspects of Animal Care and
Services’ operations and comparisons against industry
standards, as directed by the Mayor and multiple
Councilmembers. (Added to the work plan by the
Rules Committee on October 11, 2023)
In process
October
2024
(projected)
17. Tenant Protection
Ordinance
Review the assessment and use of Tenant Protection
Ordinance fees. (Councilmember request) In process
October
2024
(projected)
18. Access to and use of
critical services by
traditionally marginalized
communities
Assess and provide recommendations related to
departmental efforts around progress on Racial Equity
Action Plans, resources available for equity-related
work, collection of data on participants or parties
impacted by services, and/or other related areas.
(Mayor provided direction to explore an audit scope in
this area in the March 2023 Budget Message)
Update: The Office intends this to be a series of audits focusing on different programs or services provided by
the City. The first project will focus on neighborhood
blight programs within BeautifySJ in the Department of
Parks, Recreation and Neighborhood Services.
In process
November
2024
(projected)
RULES AND OPEN GOVERNMENT COMMITTEE
8-7-24
Monthly Report of Activities for June and July 2024
Objective Status Issuance
Date
Assignments Not Yet Started
19. Park in-lieu fees Assessment of collection, tracking, and use of park inlieu fees. (Outstanding requests from resident and former Mayor)
Not
started TBD
20. Police overtime follow up
report
Assess controls around overtime in the Police
Department. This is a follow up to the City Auditor’s
2016 Police Overtime and 2021 Police Staffing,
Expenditures, and Workload audits. (Outstanding audit
request)
Not
started TBD
The City Auditor’s Fiscal Year 2023-24 Work Plan is online at:
https://www.sanjoseca.gov/your-government/appointees/city-auditor/annual-work-plans