| ITEM #: 3. DATE: 06/16/2025 AI #:2633 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | INTERNAL AUDIT PROGRAM UPDATE AND REPORT ON A PAYROLL AND TIMEKEEPING ASSESSMENT |
| STAFF PRESENTER(S): | Jared Askelson, Finance Director |
Summary
Council will receive an update on the Internal Audit Program and review of the Payroll and Timekeeping Assessment. (Jared Askelson, Finance Director)
FISCAL IMPACT
There is no fiscal impact at this time.
BACKGROUND AND PREVIOUS ACTIONS
The FY2025-2028 Strategic Plan included 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 modifying the duties of the current Audit Subcommittee to include internal audit program functions. During the Council retreat, staff received feedback and on February 24, 2025, the council adopted the revised policy and guidelines for the Audit Committee and established an internal audit program. The new code provides guidance on the administrative reporting structure, auditing standards, annual reports and the scope of duties for the City Auditor, as well as the purpose and duties of the Audit Committee.
Since the Council action to begin the program, the Audit Committee has met on three occasions. On April 9, the Committee established their bylaws (Attachment A), elected officers, and reviewed the interim audit plan (Attachment B). The May 12 meeting saw discussion on the first audit report, the Payroll & Timekeeping Assessment (Attachment C) included for review with this work session item. This was followed by a meeting on June 11, where the audit report for the Capital Improvement Risk Management Follow-Up was presented and reviewed. This second report will be presented as a part of the work session item discussing the Progress Update on Capital Improvement Plan (CIP) Program Enhancements.
The Payroll & Timekeeping Assessment was kicked off by a third-party consultant in November 2024, involving stakeholders throughout the organization. The assessment included twelve recommendation themes that were reviewed, and in total, there are 70 specific recommendations. Management responses to the recommendations and the planned execution timelines (Attachment D) were presented with the assessment at the May 12 Audit Committee meeting.
Since the Council action to begin the program, the Audit Committee has met on three occasions. On April 9, the Committee established their bylaws (Attachment A), elected officers, and reviewed the interim audit plan (Attachment B). The May 12 meeting saw discussion on the first audit report, the Payroll & Timekeeping Assessment (Attachment C) included for review with this work session item. This was followed by a meeting on June 11, where the audit report for the Capital Improvement Risk Management Follow-Up was presented and reviewed. This second report will be presented as a part of the work session item discussing the Progress Update on Capital Improvement Plan (CIP) Program Enhancements.
The Payroll & Timekeeping Assessment was kicked off by a third-party consultant in November 2024, involving stakeholders throughout the organization. The assessment included twelve recommendation themes that were reviewed, and in total, there are 70 specific recommendations. Management responses to the recommendations and the planned execution timelines (Attachment D) were presented with the assessment at the May 12 Audit Committee meeting.
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, which 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 work session is intended to enhance the transparency of the internal audit program by providing an update to the City Council on the progress of the program to date and presenting the first audit report reviewed by the Audit Committee.
Attachments
- Attachment A - Audit Committee Bylaws
- Attachment B - Interim Audit Plan
- Attachment C - Payroll & Timekeeping Assessment
- Attachment D - Management Responses
- Staff Presentation