| ITEM #: 10. DATE: 02/24/2025 AI #:2406 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | AMEND CHAPTER 3 OF GOODYEAR CITY CODE TO ADOPT REVISED POLICY AND GUIDELINES FOR THE AUDIT COMMITTEE AND ESTABLISH CITY AUDITOR PROGRAM |
| STAFF PRESENTER(S): | Jared Askelson, Finance Director |
SUMMARY
This action creates the functions and duties of both the Audit Committee and the City Auditor in City Code. The City Code will give guidance on the administrative reporting structure, auditing standards, annual reports, and the scope of duties for the City Auditor. Additionally, the City Code will outline the purpose and duties of the Audit Committee.
STRATEGIC PLAN ALIGNMENT
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RECOMMENDATION
ADOPT ORDINANCE NO. 2025-1628 AMENDING CHAPTER 3 ADMINISTRATION OF GOODYEAR CITY CODE TO ESTABLISH A NEW SECTION, 3-1-10 CITY AUDITOR, AND NEW ARTICLE 3-18 AUDIT COMMITTEE, AUTHORIZATION OF FULL-TIME POSITION AND BUDGET AMENDMENT, THE PROVIDING FOR CORRECTIONS, SEVERABILITY; AND AN EFFECTIVE DATE. (Jared Askelson, Finance Director)
FISCAL IMPACT
The fiscal year (FY) 2025 budget includes $100,000 of one-time funds for the purposes of implementing an internal audit function within the Finance Department. This action will require a budget amendment to move $40,000 to the City Manager's Office for the purposes of hiring a City Auditor. The remaining $60,000 will be used to complete a follow-up report on the operations of the City's Capital Improvement Plan processes to review corrective actions being taken. The ongoing costs of the internal audit program are estimated to be $231,100 and will be included as a part of the FY2026 budget.
BACKGROUND AND PREVIOUS ACTIONS
The FY2025-2028 Strategic Plan includes an action item within the Fiscal Resource & Management component to evaluate the need and scope for an internal audit function. At the October 2024 Council retreat, City Council was presented with an evaluation that included recommendations to establish an internal audit program by adding the position of City Auditor and modify the duties of the current Audit Subcommittee to include internal audit program functions. During the Council retreat, staff received feedback and are now bringing forward action to implement an internal audit program.
STAFF ANALYSIS
An internal audit program assists management in maintaining an effective framework of internal controls to minimize risk for the organization. The Government Finance Officers Association provides information on best practices for establishing an internal audit program. The best practices include that the program should be formally established by appropriate legal means that include the scope of work for the program, the administrative reporting structure of the program, the submission of annual reports, and the auditing standards that will be followed.
This action will establish, through the attached ordinance (attachment A) modifying City Code, both the City Auditor position and the Audit Committee. The City Auditor will assist management in determining whether the city's network of risk management, control, and governance processes is adequate and functioning. The City Auditor will meet the government auditing standards published by the Comptroller General of the United States. The City Auditor will be appointed by and report to the City Manager and have annual reporting requirements to the Audit Committee and management. The Audit Committee will review the City Auditor's annual audit plan, ensure that audit reports are made available to City Council and the public, monitor corrective action on findings, assure the independence and standards of the audit functions, and report to City Council as appropriate. The Audit Committee will also meet with the city's external auditors regarding the city's annual comprehensive financial report, taking over those duties from the previous Audit Subcommittee.
This action will establish, through the attached ordinance (attachment A) modifying City Code, both the City Auditor position and the Audit Committee. The City Auditor will assist management in determining whether the city's network of risk management, control, and governance processes is adequate and functioning. The City Auditor will meet the government auditing standards published by the Comptroller General of the United States. The City Auditor will be appointed by and report to the City Manager and have annual reporting requirements to the Audit Committee and management. The Audit Committee will review the City Auditor's annual audit plan, ensure that audit reports are made available to City Council and the public, monitor corrective action on findings, assure the independence and standards of the audit functions, and report to City Council as appropriate. The Audit Committee will also meet with the city's external auditors regarding the city's annual comprehensive financial report, taking over those duties from the previous Audit Subcommittee.