(a) Subject to the City Charter, city council oversight of general and administrative matters pertaining to the department of internal audit may be delegated as appropriate. The city council or its delegatee may assign signature authority for routine administrative matters to the city manager or his or her designee. The department of internal audit shall be subject to the budgetary, personnel and general administrative regulations of the city as established by the city manager. The internal auditor may appeal an administrative determination of the city manager to the city council or its delegatee.
(b) The department of internal audit shall have the following duties and responsibilities.
(1) No less than 30 days prior to the beginning of each fiscal year, the department of internal audit shall submit an annual audit plan to the city council or its delegatee for review and comment.
a. 1. The plan shall be based on:
i. Requests from city council, city manager's office and department heads;
ii. A risk assessment of all city activities which shall be performed by the internal audit department each year prior to the completion of the annual audit plan;
iii. Suggestions from internal audit department staff based on their knowledge of city activities or observations made during the performance of other audits; and
iv. Other relevant criteria agreed to by the city council or its delegatee and the city internal auditor.
2. The annual audit plan shall include a block of unassigned hours (the number to be approved by city council) which shall be used to perform special audits, investigations and/or projects requested by city council and/or city manager.
b. The annual audit plan may be amended during the year, following notification of the city council and due provision for comment.
c. If the city internal auditor determines there is serious concern regarding fraud, abuse or illegality, or that the scope of an audit in progress should be expanded as the result of any findings, the city internal auditor is authorized to initiate spontaneously and conduct, or expand the scope of, an audit beyond that approved in the audit plan. Any changes made under this provision shall be communicated to the city council or its delegatee as soon as feasible, but not later than its next scheduled meeting.
(2) The department shall conduct the following types of audits, varying in scope as required, on an ongoing basis.
a. Financial-related audits. The department shall conduct financial-related audits of all city activities, designed to evaluate whether:
1. The entity is maintaining effective control over revenues, expenditures, assets and liabilities and financial operations;
2. The entity is properly accounting for resources, liabilities and operations;
3. The entity is using accounting methods and procedures which conform to established policies, practices and guidelines; and/or
4. The official financial statements fairly present the financial results of operations and the financial position of the entity.
b. Compliance audits. The department shall conduct compliance audits of all city activities, designed to evaluate whether:
1. All activities are properly authorized;
2. All activities required by law or policy are being carried out;
3. The management system provides the capacity for adequate control of compliance with applicable laws and policies; and/or
4. Operations actually conform to applicable laws and policies.
c. Contractor/vendor audits. The department shall conduct financial-related and compliance audits of contractors and vendors doing business with the city to determine whether materials furnished, work performed and/or prices charged accord with the terms of the contracts involved.
d. Electronic data processing audits. The department shall conduct audits of the electronic data processing activities of the city.
(3) The department shall conduct performance audits of all city activities. The department shall conduct special audits, investigations and projects at the request of the city council or the city manager.
a. Performance audits. The department shall conduct performance audits of all city activities, designed to determine:
1. Whether the audited entity is managing or utilizing its resources, including public funds, personnel, property, equipment and space in an economical and efficient manner;
2. The causes of inefficiencies or uneconomical practices, such as problems or inadequacies in organizational structures, management information systems, internal or administrative procedures, purchasing policies and/or in allocation of personnel, resources and equipment; and
3. Whether the desired results are being achieved.
b. Special audits. The department shall conduct special audits, investigations and projects when requested to do so by the city council or the city manager, with the scope of same to be determined by the request.
(4) The department shall participate in the planning, design, development, implementation and operation of major computer systems in the city to evaluate whether:
a. Adequate controls are incorporated in the systems;
b. Thorough system testing is performed at appropriate stages;
c. System documentation is complete and accurate; and/or
d. The needs of user entities are met.
(5) The department shall notify the city council or its delegatee when audits in progress identify areas which may require the use of additional resources (city staff from other departments or outside consultants) to address serious operational problems.
(c) In the performance of its duties, the department of internal audit shall have access to all books and records of all departments, agencies and programs of the city and to all officers, agents or employees of the city.
(d) All city contracts and subcontracts shall contain a "right to audit" clause. This clause shall provide that the city and the city internal auditor shall have access to and the right to examine all necessary books, papers, documents, records and personnel of parties who contract with the city or who subcontract under a city contract. NECESSARY BOOKS, PAPERS, DOCUMENTS, RECORDS AND PERSONNEL are those which pertain to city contracts and subcontracts and are required to evaluate compliance with the terms of those contracts and subcontracts.
(Ord. 24030-02-2020, § 1, passed 2-4-2020)