By Mary Locatelli
A funny thing happened on the way to a contract search. At the Aug. 13 council meeting, there was much discussion about the CFO unilaterally terminating a council-approved contract for an audit firm without getting approval from the council. Councilmember Whelan said it should not have happened.
So, asked Councilmember Weiss, “could I please see the contract? I would like to look at it.” The response from staff was that there was no contract. Terms were agreed annually as part of the Audit Engagement Letter. The 2022 Audit Engagement letter was dated May 24, 2022 and on page seven, refers to the firm’s proposal date of March 4, 2022.
So, thought some residents; let’s look at the Request for Proposal Process used as a basis to hire the firm. Let’s look for participation in and recommendation by the Audit Committee and review and approval by the council. Unfortunately, a review of the city website did not yield much fertile ground.
As for the Audit Committee, included on the Feb. 9, 2022 agenda was approval of minutes from the Dec. 8, 2021 meeting indicating there had been a short discussion of the RFP. There was no indication on the Feb. 9, 2022 agenda of any further discussion of the selection of auditors, and while approval of minutes of that meeting appeared on the subsequent agenda, there were no minutes attached. The next posted meeting was Sept. 29, 2022. Neither the agenda nor the minutes included discussion of the auditor selection process or an auditor recommendation.
Turning to the City Council agendas, a review from Dec. 14, 2021 through May 24, 2022 reveals a discussion of the June 2020 audit report on Dec. 14, 2021 and a discussion of a Measure LL report on May 24, 2022. But no indication that the council reviewed or approved the hiring of new auditors.
Could it be that in addition to not having a formal contract, there is no documentation of Audit Committee participation in the auditor selection process or of a recommendation to council? And there is no documented review or approval of the new auditor by council?
If you need to pause and take a break here—so did I. After months of pointing out how flawed the 2024 process to select new auditors has been—and it was—we now find the last time we selected a new auditor (in 2022) there may have been no documented process at all. Why and how is something only the council can answer—and they should.
Why were there no Audit Committee meetings between Feb. 9 and Sept. 29, 2022—a time when one of the committee’s key tasks, participating in the selection of new auditors, would have occurred? Why would the committee not have known that?
Why did staff, knowing it was changing auditors, not seek Audit Committee involvement? Why did it not bring an agenda item forward requesting council approval of the new auditors? And what mechanisms does council have to move things forward when reliance on staff is not working?
As my wise grandfather used to say, this is no way to run a railroad. It’s time for the council to reflect and ask: How could we have allowed the city to function this way? And perhaps the residents can ask themselves: Did we do enough to make our voices heard—voices that demand a government that works as intended for the benefit of all?
Dave Kiff has his work cut out for him. To paraphrase an old Mission Impossible line, his job, should he choose to accept it, is to right this ship of city. In that effort, he deserves the support and help of everyone on the council, along with that of the entire community.
Mary Locatelli was a partner at Ernst & Young, an Executive Vice President and Director of Audit and Compliance at a regional bank, had her own internal controls consulting company, and was a Deputy Director in Management and Finance at an international organization headquartered in Vienna, Austria.
