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HomeMy WebLinkAboutResolution 4156-12-2012A Resolution NO. 4156 -12 -2012 AMENDING THE CITY COUNCIL RULES OF PROCEDURE TO ESTABLISH THE AUDIT COMMITTEE AS A STANDING CITY COUNCIL COMMITTEE AND APPROVING THE COMMITTEE'S CHARTER WHEREAS, the City Council previously established the Audit and Finance Advisory Committee (the "Committee ") pursuant to Resolution No. 3417 -10 -2006, as amended by Resolution No. 3430 -11 -2006; and WHEREAS, the Audit and Finance Advisory Committee was created in response to a key recommendation by MAXIMUS, Inc., which was retained by the City in 2006 to make recommendations for improvement of the efficiency and effectiveness of financial management within the City; and WHEREAS, the general purpose of the Audit and Finance Advisory Committee is to provide advice and recommendations to the City Council with respect to critical financial and other related matters within the City; and WHEREAS, on August 11, 2009, the City Council established the Audit and Finance Advisory Committee as a standing committee with four City Council members and two citizen members pursuant to Resolution No. 3775 -08 -2009; and WHEREAS, on October 20, 2009, the City Council adopted a revised charter to govern the duties and responsibilities of the Committee pursuant to Resolution No. 3802- 10 -2009; and WHEREAS, City Council standing committees are established pursuant to the City Council Rules of Procedure; and WHEREAS, the City Council now wishes to establish the Audit Committee as a Standing City Council Committee to replace the Audit and Finance Advisory Committee and delete the requirement that the Committee have two (2) citizen appointees. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: 1. That Section 7.1 (Creation of Committees, Boards and Commissions) of the City Council Rules of Procedure be amended to read as follows: 7.1. Standing Council Committees: There shall be four standing City Council Committees: Legislative and Intergovernmental Affairs; Housing and Economic Development; Infrastructure and Transportation; and Audit. The oRTWoRnr -T membership and chairs of the standing committees shall be appointed by the Mayor. All matters discussed by the Committees shall either (a) be referred to the appropriate committee by the Mayor after presentation to the City Council at a pre- council or council meeting, if a more in -depth review and discussion by a smaller group would be beneficial, or (b) be placed on a committee agenda in accordance with this provision prior to taking the matter to the full Council. The agenda for each committee meeting shall be prepared by an appointed city official and his or her staff, as designated by the City Council. It shall be the responsibility of the Committee to provide thorough review of the matters brought before it and to provide feedback to the City Manager, or the full City Council, through either a consensus or a formal committee recommendation. All council committee meetings shall be open meetings posted in accordance with the Texas Open Meetings Act requirements. All final policy decisions shall be made by the City Council in open meetings posted in accordance with the Texas Open Meetings Act requirements. 2. That the Charter attached hereto as Attachment 1, is hereby approved and shall govern the duties and responsibilities of the Committee from the date of adoption of this Resolution until such time as the City Council may adopt a revised charter for the Committee by Resolution. 3. That Section 7.5 (Audit and Finance Advisory Committee) of the City Council Rules of Procedure is hereby repealed. 4. That Resolution No. 3775 -08 -2009 establishing the Audit and Finance Advisory Committee as a standing committee is hereby repealed. 5. That Resolution No. 3802 -10 -2009 is hereby repealed. Adopted this 11th day of December, 2012. ATTEST: Mary J. KayW, City Secretary ORT WO T T FORT WORTH Attachment I City of Fort Worth Audit Committee Charter The Audit Committee (the "Committee ") shall provide advice to the City Council with respect to oversight for financial reporting, internal controls and auditing activities. The Committee shall not have direct authority over any such matters, but may vote to recommend that the City Council take certain actions, or recommend that the City Council direct the City Manager to take certain actions. The City Council may refer appropriate matters for review by the Committee, but the Committee's oversight of such matters shall be purely advisory in nature. In accordance with the City Charter's establishment of a Manager /Council form of government, Committee members shall make all requests and direct all inquiries to the City Manager, or other designated City official assigned as staff liaison for the Committee and shall not give orders or directions to any other administrative staff subordinates. Unless otherwise indicated below or specifically requested by the City Council, the Committee shall perform or undertake the following tasks as the Committee determines, in its sole discretion, to be necessary: 1. Annually review and make recommendations with respect to the appointment of the independent auditors and the related audit fees. Review and evaluate the performance of the independent auditors and make related recommendations to the City Council. 2. Review the policies and procedures with respect to the City's elected officials and appointed officers, including the use of expense accounts, public monies, and public property, including, for example, the use of City vehicles. Consider the results of any review of these areas by the City Auditor or the independent auditors. 3. Make recommendations as to the necessity of employment of audit firms other than the principal independent auditors for services that the City or the independent auditor determines would not be appropriate for the independent auditor to perform. 4. Inquire of the City Manager's Office, the City Auditor, and the independent auditors about significant risks or exposures facing the City; assess the steps management has taken or proposes to take to minimize such risks and periodically review compliance with such steps. 5. Annually review with the independent auditor, the Finance director of the City, the City Manager's Office, and the City Auditor the audit scope and plan of the City Auditor and the independent auditors. Address the coordination of audit efforts to assure the completeness of coverage, reduction of redundant efforts, and the effective use of audit resources. 6. Review with management and the City Auditor: • Significant findings on internal audits during the year and management's responses thereto • Any difficulties the internal audit team encountered in the course of their audits, including any restrictions on the scope of their work or access to required information • Any changes required in the scope of their internal audits • The internal audit department budget and staffing • The internal audit department charter • The internal audit department's compliance with applicable standards (for example, Government Auditing Standards, or the Institute of Internal Auditors' (IIA's) Standards for the Professional Practice of Internal Auditing) 7. Review with the independent auditors and the City Auditor: • The adequacy of the City's internal controls, including but not limited to, computerized information system controls and security, cash handling, credit card transactions and electronic funds transfers • Any related significant findings and recommendations of the independent auditors and internal auditors together with management's responses thereto (See the tools "Internal Control: A Tool for the Audit Committee" and "Fraud and the Responsibilities of the Government Audit Committee" in this toolkit.) 8. Review with the City Manager's Office and the independent auditor the effect of any regulatory and accounting initiatives, such as related organizations financing structures, derivatives, or securities lending. 9. Review with the independent auditor that performs the financial statement audit: • All critical accounting policies and practices used by the City • All alternative treatments of financial information within generally accepted accounting principles that have been discussed with the City's management, the ramifications of each alternative, and the treatment preferred by the City. 10. Annually review the City's Financial Management Policy Statements for revisions and annual adoption by the City Council. 11. Review with the City Manager's Office and the independent auditors: • The City's annual financial statements, related footnotes, and management's discussion and analysis • The independent auditors' audit of the financial statements and their report thereon • The independent auditors' judgments about the quality, not just the acceptability, of the City's accounting principles as applied in its financial reporting • The independent auditors' single audit of the federal awards administered by the City and their reports thereon • Any significant changes required in the independent auditors' audit plan • Any serious difficulties or disputes with management encountered during the audit • Matters required to be discussed by Statement on Auditing Standards (SAS) No. 61, Communication With Audit Committees (AICPA, Professional Standards, vol. 1, AU sec. 380), as amended; U.S. Government Accountability Office's Government Auditing Standards; and the U.S. Office of Management and Budget's Circular A -133 related to the conduct of the audits • All significant written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences 12. Review with the City Attorney and the City Auditor legal and regulatory matters that, in the opinion of the City Manager's Office, may have a material impact on the financial statements and compliance with federal, state, and local laws and regulations. 13. Periodically review the City's code of conduct to ensure that it is adequate and up to date. Review with the City Auditor and the City Attorney the results of their review of compliance monitoring with the code of conduct. 14. Review the procedures for the receipt, retention, and treatment of complaints received by the City regarding accounting, internal accounting controls, auditing matters, or suspected fraud that may be submitted by any party internal or external to the organization. Review any complaints that might have been received, current status, and resolution if one has been reached. 15. Review procedures for the confidential, anonymous submission by the City's employees of concerns regarding questionable accounting or auditing matters, or suspected fraud. Review any submissions that have been received, the current status, and the resolution if one has been reached. 16. Review the Committee's own effectiveness as necessary, and make recommendations to the City Council regarding desired changes to this Charter. City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: , Approved on 12/11/2012 • Resolution No. 4156.12.2012 CONTINUED FROM A PREVIOUS WEEK DATE: Tuesday, December 04, 2012 LOG NAME: 1313AUDIT COMM REFERENCE NO.: G -17753 SUBJECT: Adopt Resolution Amending the City Council Rules of Procedure to Establish the Audit Committee as a Standing City Council Committee and Approving the Committee's Charter (ALL COUNCIL DISTRICTS) RECOMMENDATION: It is recommended that the City Council: 1. Adopt the attached Resolution amending the City Council Rules of Procedure to establish the Audit Committee as a standing City Council committee; and 2. Approve the attached Charter setting forth the roles and responsibilities of the Audit Committee. DISCUSSION: On October 3, 2006, (M &C G- 15432) the City Council established a five member Audit and Finance Advisory Committee (the Committee) whose function was to oversee critical financial matters within the City and to provide direct advice to the City Council and the City Manager with respect to such matters. On November 7, 2006, (M &C G- 15479) the Committee was expanded to a membership of six. On August 11, 2009, (Resolution 3775 -08 -2009) the Committee was established as a standing committee with four City Council appointees and two citizen appointees. Pursuant to the Committee Bylaws, members served a term of one year from October 1 st to the following September 30th. Since the current citizen appointee terms have expired, and at the request of the City Council, staff began evaluating the role and structure of the committee. For a more enhanced segregation of responsibilities, staff is recommending modifications to this committee, including changing the name of this committee to the "Audit Committee." Standing City Council committees are established pursuant to the City Council Rules of Procedure. Therefore, staff recommends that this committee be established as a standing City Council committee and that the requirement for two citizen appointees be deleted. Staff further recommends that this committee consist of four Council members appointed by the Mayor, which is consistent with all other standing City Council committees. In addition, staff is recommending that the Committee's Charter be approved to exclude references to pension and budget, which will remain under the purview of the entire City Council. All matters discussed and actions taken shall be in accordance with rules and procedures determined for standing City Council committees. The administration of the Audit Committee will transition from the Financial Management Services Department to the City Auditor's Office effective immediately upon approval of this Mayor and Council Communication and adoption of the attached resolution. FISCAL INFORMATION I CERTIFICATION: ...., ... ......,.,.........,.y,.....,.., ....... ,.,,, .........., ......,........— - ., Logname: 1313AUDIT COMM Page I of 2 funds. FUND CENTERS: TO Fund /Account/Centers CERTIFICATIONS: Submitted for City Manager's Office by: Originating Department Head: Additional Information Contact: FROM Fund /Account/Centers Susan Alanis (8180) Lena Ellis (8517) Darlene Allen (6132) Logname: 1313AUDIT COMM Page 2 of 2