HomeMy WebLinkAbout2021-07-27; City Council; Resolution 2021-186RESOLUTION NO. 2021-186
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING THE FISCAL YEAR 2021-22 INTERNAL AUDIT PLAN
WHEREAS, the city's internal audit manager performs independent and objective assurance
services to safeguard city resources and improve city operations; and
WHEREAS, the services provided may include internal audits of any city department, division,
function or program; and
WHEREAS, as required by City Council Policy No. 89, the internal audit manager has presented
a FY 2021-22 Internal Audit Plan (Attachment A) for the City Council's review and approval; and
WHEREAS, the purpose of the FY 2021-22 Internal Audit Plan is to outline internal audits and
other value-added engagements the internal audit manager proposes to conduct during the fiscal year;
and
WHEREAS, the FY 2021-22 Internal Audit Plan includes information about the bases for the audit
engagements selected, preliminary objectives and the consideration of resources; and
WHEREAS, once approved, the FY 2021-22 Internal Audit Plan will serve as the operating
roadmap for the city's internal audit manager.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That the City Council approves the FY 2021-22 Internal Audit Plan as shown in
Attachment A.
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July 27, 2021 Item #12 Page 3 of 8
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 27th day of July, 2021, by the following vote, to wit:
AYES: Hall, Blackburn, Acosta, Bhat-Patel.
NAYS: None.
ABSENT: None.
tcfra/-.//ze/
MATT HALL, Mayor
BARBARA ENGLESON, City Clerk
(SEAL)
July 27, 2021 Item #12 Page 4 of 8
Fiscal Year
2021-22
Internal Audit
Plan
July 27, 2021 Item #12 Page 5 of 8
OVERVIEW
The City of Carlsbad’s internal auditor performs independent and objective assurance services to
safeguard city resources and improve city operations. Internal audits help to mitigate risks by
recommending improvements to the city’s internal controls and governance, risk and compliance
processes. Potential audits may include any city department, division, function, or program
administered by the city.
The purpose of the annual internal audit plan (audit plan) is to outline audits and other value-added
engagements the internal auditor proposes to conduct during the fiscal year. This document serves as
the primary work plan to carry out the responsibilities of the internal auditor. The basis for the audit
plan comes from auditor observations, inquiries of management, audit requests from the City Council
and senior management, and programs or processes with inherently higher risk levels. The internal
auditor’s strategy in developing this plan seeks to identify, prioritize and manage audits important to
city operations, programs and systems.
Currently, the Internal Audit Division is comprised of one full-time internal auditor. The audit plan considers available staff hours, level of expertise and experience, estimated size and complexity of
audits, time allocated to satisfy continuing professional education requirements, time allocated to
performing audit follow-up procedures, and use of external consultants/auditors.
The audit plan is a working document. During the year, causes for changes to the audit plan may
include an increase or decrease in audit scope, additional or pressing audit requests, or an excessive
threat to auditor independence. As such, projects initiated in the current year may carry over into the
following fiscal year.
The following page identifies the list of prioritized internal audit engagements for FY 2021-22, along
with their preliminary objectives. At the beginning of each engagement, the internal auditor will
establish familiarity with the department, function or process identified for audit. During that initial
period, audit objectives may be refined and the methodology will be established.
July 27, 2021 Item #12 Page 6 of 8
Fiscal Year 2021-22 Internal Audit Engagements
Entity, Function,
Program or
Process to Audit
Type of
Engagement
Primary
Stakeholder/Audit
Lead
Preliminary Objectives
Carryover from FY 2020-21
Code
Enforcement
Internal Audit Community
Development
Department (Code
Enforcement
Division)/Internal
Audit Manager
•To assess whether the division has
reliable policies and procedures to
support effective code enforcement.
•To evaluate whether a selection of
case files from the most recent three-
year period adhere to applicable
guidelines.
•To assess whether the city uses case
data and metrics to provide
meaningful information to
management.
Transient
Occupancy Tax
Agreed Upon
Procedure
Various hotels as
determined by the
city/External audit
firm
•To determine if hotels are properly
reporting and remitting occupancy
taxes in compliance with city
ordinance.
Procurement Internal Audit Various
departments/
Internal Audit
Manager
•To assess the city’s compliance with
applicable procurement guidelines.
•To evaluate whether the city’s
procurement process is effective and
adhered to.
Vice Narcotics
Intelligence Unit
(VNIU) “Buy
Fund”
Internal Audit Police
Department/Internal
Audit Manager
•To determine whether the fund was
managed and accounted for in
accordance with authorized policies
and procedures.
New for FY 2021-22
City of Carlsbad Risk Assessment Various
departments/Internal
Audit Manager
•Perform a formal, citywide internal
audit risk assessment to identify
programs with elevated inherent risk
and opportunities for improvement.
•Prioritize internal audit
engagements for FY2022-23 based
on findings.
Fraud (Ethics)
Hotline
Program
Evaluation &
Recommendation
for
implementation
Administrative
Services
Division/Internal
Audit Manager
•Evaluate the benefits of a dedicated
fraud and ethics hotline and
reporting process.
•Present the findings and
recommendations to the City
Council.
July 27, 2021 Item #12 Page 7 of 8
No.Recommendation Mgmt. Response Department(s):Deadline:Status
1 Evaluate advance balance: To ensure the city is
appropriately recording the advances to the Golf
Course Enterprise Fund, the Finance Department
should return to the City Council by the end of
calendar year 2020 with its assessment and any
proposed changes.
Management agrees with the recommendation and analysis.
We concur with the factors highlighted in the report and
agree that the golf course advances are not likely recoverable
at this point. Therefore, the advances should no longer be
recognized as an asset for financial reporting purposes.
Management plans to continue tracking all advances and
transfers made from the General Fund to the golf course to
ensure the data is available. Management has also consulted
with its external auditors and they are in agreement with the
proposed accounting treatment. We are proposing to
eliminate the advances from our accounting records.
Finance/Steering
Committee
10/31/2021 Finance Director to
bring to City Council by
October 2021 with
recommendations.
No.Recommendation Mgmt. Response Departments:Deadline:Status
1 The Finance Department should communicate
guidance citywide about the taxability of employee
appreciation related items and gifts to ensure that
city departments give and report them in compliance
with the Internal Revenue Code.
The Finance Department will send an annual citywide email
reminding all employees and managers of the Internal
Revenue Code, with specific examples to ensure compliance,
and setup a process whereby departments report any
renumeration to employees.
Finance End of Calendar Year
2021
In progress - Obtaining
clarification on tax
codes for gifts, clothing,
etc.
2 To ensure that lodging purchases made during city
business-related travel are appropriate, the Finance
Department should update its travel guidelines and
procedures to adopt either the state or the federal
government’s annual lodging rates by geographic
location, and require employees to submit written
justification when rates must exceed these
established maximums.
The Finance Department will update the travel guidelines and
procedures to include a maximum reimbursement based on
the Federal Travel Regulations, which may be overridden with
appropriate justification and approval.
Finance End of Fiscal Year
2021-22
In progress
3 For the city to keep track of employee flight
purchases made using city funds, the Finance
Department should inventory and track unused
travel funds so they are used for city travel-related
purposes in the future.
The Finance Department will review the city’s travel
guidelines and procedures and travel reimbursement form
(travel log) and explore the feasibility of tracking unused
travel credits reimbursed to employees, and explore the
possibility of using a travel agency or require only fully
reimbursable travel purchases for future travel. The Finance
Department recognizes that many travel plans were canceled
due to COVID-19 and are exploring how to request
reimbursement from all employees who received and used a
credit due to the cancellation for personal use.
Finance End of Calendar Year
2021
In progress
Audit Recommendation Tracking
July 19, 2021
City of Carlsbad
Internal Audit: The Crossing Golf Course
Audit Recommendation Tracking
July 19, 2021
Internal Audit of City Credit Card Program (CAL-Cards)
City Of Carlsbad
Exhibit 2
July 27, 2021 Item #12 Page 8 of 8