12-19-11 CRC RPT 04 - Laserfiche WebLink

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MEMORANDUM City Manager/Finance DATE: 12/15/2011 TO: CHARTER REVIEW COMMITTEE FROM: PAUL C. SUNDEEN, ASSISTANT CITY MANAGER/CFO CC: RE: INTERNAL AUDITOR APPOINTMENT/REPORTING RESPONSIBILITY SUMMARYRECOMMENDATION: The Charter Review Committee (“CRC”) has discussed a possible Charter amendment relative to the appointment and oversight of the Internal Audit function. Staff’s recommendation to the CRC is no change to the appointment and reporting structure, but adding confirmation by the City Council of the appointment made by the City Manager. Additionally, periodic reporting to the Finance Committee of the results of its audits is recommended. BACKGROUND: The audit requirements of the City can be split into two separate functions – an external audit function and an internal audit function. The external audit function is mandated by State law and performs required financial audits in which they report as to whether the accounts of the City reasonably reflect the City’s financial position. They are required to report to a body (currently the Finance Committee) regarding the outcome of their audit work. While the scope of their work is typically the same from one municipal organization to another, they are able to provide independent, financial audit services for any additional services deemed necessary by the Finance Committee and/or City Council. The internal audit function is focused on performing audits that are either operational or compliance based. The objective is to find inefficiencies or instances of non-compliance and make recommendations to improve those conditions. Staff’s recommendation is based on its belief that the internal audit function best serves the City’s needs in the current organizational structural. It serves as a resource of the City Manager to identify areas for improvement as he endeavors to manage the City in the most cost effective and efficient manner. Under the current structure, the City Council can request the Internal Auditor to review any program or expenditure it believes merits attention.