06.02 Amend Audit Committee Procedures1. SUBJECT
Resolution No. 11064 — A Resolution of the City Council of the City of Orange repealing
Resolution 9624 and amending the procedures, rules and regulations for the Audit Committee
2. SUMMARY
The City Council has expressed its desire to reconvene the Audit Committee, which has been
inactive since 2012. In June 2017, the City Clerk's office posted the vacancy notice for the
Committee pursuant to the Maddy Act. To date, the City has received two applications for the
Committee. Currently, the qualifications for the Committee include a requirement that
individuals possess a Certified Public Accountant (CPA) license. In order to expand the
qualified candidate pool without compromising its integrity, staff is recommending that non-
CPA's with relevant business experience also be considered for Committee membership.
Additionally, the City Council has requested that the City Treasurer be included as a member of
the Committee. This Resolution will implement these changes to the composition of the
Committee.
3. RECOMMENDED ACTION
Approve the Resolution.
4. FISCAL IMPACT
None.
5. STRATEGIC PLAN GOAL(S)
2a. Be a fiscally healthy community — expend fiscal resources responsibly.
4a. Provide outstanding public service — obtain, implement and evaluate public input in our
services and programs.
6. GENERAL PLAN IMPLEMENTATION
Not applicable.
7. DISCUSSION and BACKGROUND
Background
The City's Audit Committee was established in June 1997. It originally consisted of five voting
members, consisting of three citizen members, the City Manager, and the Internal Audit
Manager. In addition, two City Council members served as non - voting members. In June 2002,
the City Council added two additional citizen representatives (voting) and eliminated the two
non - voting City Council members from the Committee.
As stated in its rules and regulations, the Committee's primary purpose is to assist the City
Council in discharging its responsibilities for the overall stewardship of the City's financial
affairs. This includes reviewing financial information; ascertaining the existence and adequacy
of accounting and internal control systems and related safeguards over the City's assets; and
overseeing the audit function. Current qualifications for membership on the Committee include
residency or permanent employment within the City of Orange and the designation of Certified
Public Accountant (CPA). The Committee is required to meet at least twice annually. However,
due to an inadequate number of members, the Committee has not held a meeting since 2012.
Discussion
The City Council has expressed a desire to reconvene the Committee and requested that the City
Treasurer be added as a member of the Committee. Since the terms of the Committee members
had all expired, in June 2017, the City Council directed the City Clerk to post a vacancy notice
for the Committee pursuant to the Maddy Act. To date, the City has received two applications
for Committee membership.
In order to expand the qualified candidate pool without compromising its integrity, staff is
recommending the following changes to the rules and regulations of the Committee:
• The addition of the City Treasurer as a voting member;
• With the addition of the City Treasurer, reducing the citizen membership from five to
four;
• The elimination of the City Manager and Internal Audit Manager as voting members;
• Expanding qualifications to include non -CPA's with related business experience
ITEM 2 2/13/18
These changes will lower the number of voting members from seven to five and allow additional
members of the community to apply for membership to the Committee. The City Manager and
the Internal Audit Manager (or a designee of the City Manager in the event that the Internal Audit
Manager position is vacant) will serve as staff members of the Committee. Resolution No.
11064 replaces the current Audit Committee resolution and reflects the changes recommended
above.
8. ATTACHMENTS 77�:�
Resolution No. 11064
ITEM 2 2/13/18
RESOLUTION NO. 11064
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ORANGE REPEALING RESOLUTION 9624 AND AMENDING
THE PROCEDURES, RULES AND RI?GULATIONS FOR THE
AUDIT COMMITTEE.
WHEREAS, the City Council is dedicated to ensuring fiscal responsibility and
accountability in the overall stewardship of the City's financial affairs, and
WHEREAS, on June 11, 2002, the City Council adopted Resolution 9624,
establishing an Audit Committee and setting forth procedures, rules and regulations of the
committee.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Orange as follows:
SECTION I: REPEAL
Resolution No. 9624 is repealed in its entirety.
SECTION 2: AUDIT COMMITTEE RULES AND REGULATIONS
1. ESTABLISHMENT OF THE COMMITTEE
The City Council of the City of Orange hereby establishes the City of Orange Audit
Committee.
2. PURPOSE
The Audit Committee's primary purpose is to assist the City Council in discharging
its responsibilities for the overall stewardship of the City's financial affairs. This
will include reviewing, financial information, ascertaining the existence and
adequacy of accounting and internal control systems and related safeguards over
the City's assets: and overseeing the audit function.
3. MEMBERSHIP AND APPOINTMENT
The Audit Committee shall consist of five voting members. This shall include the
City Treasurer and four citizen representatives. The qualifications of the applicants
for the citizen representatives will be reviewed by a panel comprised of the City
Manager, Finance Director, and Internal Audit Manager Those candidates passing
the qualification review process will be presented to the City Council members.
These citizen Committee members shall then be appointed by the City Council in
CITY COUNCIL MINUTES FEBRUARY 13, 2018
END OF CONSENT CALENDAR
* * * * * * **
4. REPORTS FROM MAYOR SMITH — None
5. REPORTS FROM COUNCILMEMBERS — None
6. REPORTS FROM BOARDS, COMMITTEES, AND COMMISSIONS
6.1 Report from City Council Ad Hoc Committees related to Homelessness:
• Community Communications
• Cities and Non - profit Collaboration
• County Engagement
No reports were given.
6.2 Amending the procedures, rules and regulations for the Audit Committee. Resolution
No. 11064. (OR1800.0.27.17)
A Resolution of the City Council of the City of Orange repealing Resolution 9624 and
amending the procedures, rules and regulations for the Audit Committee.
Finance Assistant Director Katrin Bandhauer provided the staff report. She noted that
currently a CPA is required to apply and be appointed as a member of the Audit Committee.
Since the committee was reinstated, only two applications have been received. In order to
encourage more applicants, staff is recommending to change this requirement.
MOTION — Nichols
SECOND — Whitaker
AYES — Alvarez, Whitaker, Smith, Murphy, Nichols
Moved to approve Resolution No. 11064.
7. ADMINISTRATIVE REPORTS
7.1 Status of Fiscal Year 2017 -2018 budget and preliminary projections for Fiscal Year
2018 -2019 budget preparation. (C2500.E.4)
Finance Director Will Kolbow provided the staff report and answered Council's questions
regarding Ca1PERS.
MOTION — Whitaker
SECOND — Nichols
AYES — Alvarez, Whitaker, Smith, Murphy, Nichols
Moved to receive and file report.
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