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MEMORANDUM <br />City Manager/Finance <br />DATE: <br /> 12/15/2011 <br />TO: <br /> CHARTER REVIEW COMMITTEE <br />FROM: <br /> PAUL C. SUNDEEN, ASSISTANT CITY MANAGER/CFO <br />CC: <br />RE: <br /> EXTERNAL AUDITOR COMMITTEE <br />SUMMARYRECOMMENDATION: <br />The Charter Review Committee (“CRC”) has discussed a possible Charter amendment <br />relative to the creation of an Audit Committee to serve as the initial point of reporting for <br />the City’s external auditors regarding the outcome of their audit of the City’s accounts on <br />an annual basis. Staff’s recommendation to the CRC is that there is insufficient benefit <br />derived from the creation of such a committee. The current practice of reporting to the <br />City’s Finance Committee is an open process during which all interested parties can <br />attend, ask questions and comment, as desired. <br />BACKGROUND: <br />Throughout the CRC’s deliberations the suggestion has been made on several <br />occasions that “an additional set of eyes is always a good thing,” with the thought that a <br />“Citizens’ Audit Committee” would be a positive addition to the City’s current committee <br />structure. Staff agrees that greater financial transparency results in better credibility with <br />the public it serves. However, it believes that any benefit achieved by the addition of a <br />Citizens’ Audit Committee is equally available through the current structure of the <br />Finance Committee serving as the Audit Committee when needed. <br />The current structure is consistent with how the private sector establishes their audit <br />committees. Private companies create Audit Committees as a subset of the full Board of <br />Directors; private citizens are not brought in to serve in this capacity. Further, the <br />current structure allows a committee member to bring any individual they believe would <br />be helpful to adequately evaluate the report of the external auditors. Lastly, the public is <br />able to attend the current meetings and hear first-hand the findings of the external <br />auditors. All are able to receive the various reports issued by the external auditors. <br />