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9/7/2021 - ITEM 9 - CONSIDERATION OF APPOINTMENTS TO THE AUDIT COMMITTEEAGENDA ITEM NO. 9 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: September 7, 2021 TO: Mayor and City Council FROM: David Carmany City Manager SUBJECT: CONSIDERATION OF APPOINTMENTS TO THE AUDIT COMMITTEE RECOMMENDATION: It is recommended that the City Council appoint three Committee Members to the City's Audit Committee to each serve a two-year term. BACKGROUND: On October 6, 2015, the City Council adopted Resolution No. 2015-73 (Attachment No. 1), which established the Audit Committee, consisting of the City Manager, the Finance Director, the City Treasurer, two City Council Members, and two members of the public, and established the procedures, rules and regulations of the Audit Committee. On May 17, 2016, the City Council adopted Resolution No. 2016-40 (Attachment No. 2) to remove the City Manager and Finance Director from the Audit Committee since they prepare the reports that are presented to the Committee. On May 15, 2018, the City Council adopted Resolution No. 2018-60 (Attachment No. 3), which added two additional community members to the Audit Committee, such that membership increased from five members to seven members to consist of the City Treasurer, two Council Members, and four members of the public. On May 7, 2019, the City Council adopted Resolution No. 2019-31 (Attachment No. 4), renaming the previously established Audit Committee as the Finance & Audit Committee and amending the duties of the Finance & Audit Committee. On May 4, 2021, the City Council adopted Resolution 2021-33 (Attachment No. 5), renaming the Finance & Audit Committee as the Audit Committee, amending the duties of the Audit Committee, increasing the number of members of the public on the Committee from four to five members, and providing that the City Council members and City Treasurer will serve as ex-officio non -voting members of the Committee. DISCUSSION: There are a total of three (3) vacancies on the Audit Committee; two of the vacancies were created with the expiration of the terms of the seats currently held by David Lin and Donna Chia; the third vacancy was created by adoption of Resolution No. 2021-33. Committee Member Lin applied to be reappointed to the Committee. Committee Member Chia explained that at this time she is not able to continue on the Audit Committee. A total of ten applications were received; applications were forwarded to the Mayor and Council for consideration. Reappointment of the existing Committee Member David Lin may be permitted under the Audit Committee guidelines for a two-year term. OPTIONS: The City Council has the following options: 1. Appoint three members to the Committee; 2. Reopen the application period for an additional recruitment period; or 3. Provide alternative direction. Prepared by: Lisa Sherrick, Assistant City Clerk Attachments Attachment No. 1 - Resolution No. 2015-73 Attachment No. 2 - Resolution No. 2016-40 Attachment No. 3 - Resolution No. 2018-60 Attachment No. 4 - Resolution No. 2019-31 Attachment No. 5 - Resolution No. 2021-33 CITY Achieve Fiscal Sustainability and Financial Stability COUNCIL Maintain and Enhance City Facilities and Infrastructure GOALS & Enhance the City Image and Effectiveness OBJECTIVES: ATTACHMENT NO. 1 RESOLUTION NO. 2 015-73 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA ESTABLISHING THE PROCEDURES, RULES AND REGULATIONS FOR THE AUDIT COMMITTEE. WHEREAS, the City Council of the City of West Covina recognizes the importance of transparency and accountability in the administration of public resources, and the City Council is ultimately responsible for ensuring that the City of West Covina is meeting its internal control and financial reporting responsibilities; and WHEREAS, the City Council recognizes the importance of creating an Audit Committee as it is considered a financial management best practice; and WHEREAS, the formation of an Audit Committee will ensure regular and direct communication between the City's independent auditors and the City Council and will further the City Council's goals of transparency and accountability in the administration of public resources; and WHEREAS, the City Council now desires to establish an Audit Committee. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West Covina as follows: SECTION 1: AUDIT COMMITTEE RULES AND REGULATIONS 1. ESTABLISHMENT OF THE AUDIT COMMITTEE The City Council of the City of West Covina hereby establishes the City of West Covina 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 seven members: the City Manager, the Finance Director, the City Treasurer, two City Council members, and two members of the public. The two City Council members and the two members of the public will be appointed by the City Council. The City Clerk shall post and advertise the public positions and vacancies as provided for all other city commissions and committees. 4. COMPENSATION Members of the Committee shall serve without compensation. 5. TERM OF MEMBERSHIP The appointed members of the Committee shall be appointed for two (2) year terms on a staggered basis, except for the initial appointment as provided herein. For the initial appointments, one Council Member and one member of the public shall initially be appointed to serve a one year term in order to allow for the staggered terms thereafter. 6. TIME AND PLACE OF MEETINGS The Committee will meet at least once annually and shall bold other meetings on an as needed basis. All meetings of the Committee shall be held at the City Hall of the City of West Covina located at 1444 W. Garvey Ave. in the City of West Covina. 7. CONFLICT OFINTEREST All members of the Committee are subj ect to the requirements of the Conflict of Interest codes of the City of West Covina and Conflict of Interest laws of the State of California. 8. DUTIES OF THE COMMITTEE The role of the Committee is to augment management's accountability to the City Council. The Committee achieves this goal by: • Recommending the selection of the independent financial auditor for the financial statement audit; • Monitoring the progress of the financial statement audit; • Evaluating the results of the financial statement audit; • Ensuring that any control weaknesses and legal compliance violations identified in the course of the financial statement audit are promptly and effectivelyremedied; • Serving as a direct communications link between the City Council and the independent auditor; • Monitoring the adequacy of the City's internal control structure on an ongoing basis, such as cash disbursements, cash receipting, treasury transactions, etc., as examined by the internal audit function and the independent financial auditor; • Participate in meetings with the City's independent auditors and various County, State and Federal auditors as needed SECTION 2. That the City Clerk shall certify to the passage and adoption of the resolution. PASSED, APPROVED AND ADOPTED this 61h day of October, 2015. APPROVED AS TO FORM: Kimberly IYall Barlow City Attorney rick SylrW Mayor ATTEST: ��3 City Clark I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof on the 6m day of October, 2015, by the following vote of City Council: AYES: Spence, Toma, Wong, Sykes NOES: None ABSENT: Warshaw ABSTAIN: None 1 ckolas & Lewis City Clerk ATTACHMENT NO.2 RESOLUTION NO. 2 016 - 4 0 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA AMENDING THE PROCEDURES, RULES AND REGULATIONS FOR THE AUDIT COMMITTEE. WHEREAS, the City Council of the City of West Covina recognizes the importance of transparency and accountability in the administration of public resources, and the City Council is ultimately responsible for ensuring that the City of West Covina is meeting its internal control and financial reporting responsibilities; and WHEREAS, the City Council recognizes the importance of creating an Audit Committee as it is considered a financial management best practice; and WHEREAS, the formation of an Audit Committee will ensure regular and direct communication between the City's independent auditors and the City Council and will further the City Council's goals of transparency and accountability in the administration of public resources; and WHEREAS, the City Council established an Audit Committee with Resolution No. 2015- 73; and WHEREAS, the City Council now desires to remove the City Manager and Finance Director from the Audit Committee. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West Covina as follows: SECTION 1: AUDIT COMMITTEE RULES AND REGULATIONS 1. ESTABLISHMENT OF THE AUDIT COMMITTEE The City Council of the City of West Covina hereby establishes the City of West Covina 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 members: the City Treasurer, two City Council members, and two members of the public. The two City Council members and the two members of the public will be appointed by the City Council. The City Clerk shall post and advertise the public positions and vacancies as provided for all other city commissions and committees. C'1<8113319 D16MV Y_OW Members of the Committee shall serve without compensation. 5. TERM OF MEMBERSHIP The appointed members of the Committee shall be appointed for two (2) year terms on a staggered basis, except for the initial appointment as provided herein. For the initial appointments, one Council Member and one member of the public shall initially be appointed to serve a one year term in order to allow for the staggered terms thereafter. 6. TIME AND PLACE OF MEETINGS The Committee will meet at least once annually and shall hold other meetings on an as needed basis. All meetings of the Committee shall be held at the City of West Covina City Hall located at 1444 W. Garvey Ave. in the City of West Covina. 7. CONFLICT OFINTEREST All members of the Committee are subject to the requirements of the Conflict of Interest codes of the City of West Covina and Conflict of Interest laws of the State of California. 8. DUTIES OF THE COMMITTEE The role of the Committee is to augment management's accountability to the City Council. The Committee achieves this goal by: • Recommending the selection of the independent financial auditor for the financial statement audit; • Monitoring the progress of the financial statement audit; • Evaluating the results of the financial statement audit; • Ensuring that any control weaknesses and legal compliance violations identified in the course of the financial statement audit are promptly and effectivelyremedied; • Serving as a direct communications link between the City Council and the independent auditor; and • Monitoring the adequacy of the City's internal control structure on an ongoing basis, such as cash disbursements, cash receipting, treasury transactions, etc., as examined by the internal audit function and the independent financial auditor. SECTION 2. That the City Clerl, shall certify to the passage and adoption of the resolution. APPROVED AND ADOPTED on this 171 day of May, 2016. APPROVED AS TO F(�(t�O{/JRFORM:M1 &t � T+v Kimberly Hall Barlow City Attorney J/"?, J es Toma ( ' yor 1 I _-.1L-W N ckolas S. Lewis City Clerk I, HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof on the 17s' day of May, 2016, by the following vote of City Council: AYES: Johnson, Spence, Warshaw, Wu, Toma NOES: None ABSENT: None ABSTAIN: None Nickolas S, Lewis City Clerk ATTACHMENT NO.3 RESOLUTION NO. 2018-60 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA REPLACING RESOLUTION NO. 2016-40 AMENDING THE PROCEDURES, RULES AND REGULATIONS FOR THE AUDIT COMMITTEE. WHEREAS, the City Council of the City of West Covina recognizes the importance of transparency and accountability in the administration of public resources, and the City Council is ultimately responsible for ensuring that the City of West Covina is meeting its internal control and financial reporting responsibilities; and WHEREAS, the City Council recognizes the importance of creating an Audit Committee as it is considered a financial management best practice; and WHEREAS, the formation of an Audit Committee will ensure regular and direct communication between the City's independent auditors and the City Council and will further the City Council's goals of transparency and accountability in the administration of public resources; and WHEREAS, the City Council established an Audit Committee with Resolution No. 2015- 73; Changed the membership of the Audit Committee with Resolution No. 2016-40; and WHEREAS, the City Council now desires to add two additional Community Members to the Audit Committee. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West . Covina as follows: SECTION 1: AUDIT COMMITTEE RULES AND REGULATIONS 1. ESTABLISHMENT OF THE AUDIT COMMITTEE The City Council of the City of West Covina hereby establishes the City of West Covina 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 seven members: the City Treasurer, two City Council members, and four members of the public. The two City Council members and the four members of the public will be appointed by the City Council. The City Clerk shall post and advertise the public positions and vacancies as provided for all other city commissions and committees. 4. COMPENSATION Members of the Committee shall serve without compensation. 5. TERM OF MEMBERSHIP The appointed members of the Committee shall be appointed for two (2) year terms on a staggered basis, except for the initial appointment as provided herein. For the initial appointments, one Council Member and one member of the public shall initially be appointed to serve a one-year term in order to allow for the staggered terms thereafter. 6. TIME AND PLACE OF MEETINGS The Committee will meet at least once annually and shall hold other meetings on an as needed basis. All meetings of the Committee shall be held at the City of West Covina City Hall located at 1444 W. Garvey Ave. in the City of West Covina. CONFLICT OF INTEREST All members of the Committee are subject to the requirements of the Conflict of Interest codes of the City of West Covina and Conflict of Interest laws of the State of California. 8. DUTIES OF THE COMMITTEE The role of the Committee is to augment management's accountability to the City Council. The Committee achieves this goal by: • Recommending the selection of the independent financial auditor for the financial statement audit; • Monitoring the progress of the financial statement audit; • Evaluating the results of the financial statement audit; • Ensuring that any control weaknesses and legal compliance violations identified in the course of the financial statement audit are promptly and effectivcly remedied; • Serving as a direct communications link between the City Council and the independent auditor; and • Monitoring the adequacy of the City's internal control structure on an ongoing basis, such as cash disbursements, cash receipting, treasury transactions, etc., as examined by the internal audit function and the independent financial auditor. SECTION 2. That the City Clerk shall certify to the passage and adoption of the resolution. PASSED, APPROVED AND ADOPTED thi§ 1 S°i day of May, 2018. Mayor APPROVED AS TO FORM: ATTEST: Kimberly Ha Barlow Nickolas S. Lewis City Attorney City Clerk 1, HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof on the 15th day of May, 2018 by the following vote of the City Council: AYES: Toma, Warshaw, Wu, Johnson, Spence NOES: None ABSENT: None ABSTAIN: None =<i ` r Nickolas-S. Levfi City Clerk ATTACHMENT NO.4 RESOLUTION NO.2019-31 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA AMENDING THE NAME, PROCEDURES, RULES AND REGULATIONS FOR THE AUDIT COMMITTEE. WHEREAS, the City Council of the City of West Covina recognizes the importance of transparency and accountability in the administration of public resources, and the City Council is ultimately responsible for ensuring that the City of West Covina is meeting its internal control and financial reporting responsibilities; and WHEREAS, the City Council recognizes the importance of creating an Audit Committee as it is considered a financial management best practice WHEREAS, the formation of an Audit Committee will ensure regular and direct communication between the City's independent auditors and the City Council and will further the City Council's goals of transparency and accountability in the administration of public resources; and WHEREAS, the City Council established an Audit Committee with Resolution No. 2015- 73, changed the membership of the Audit Committee with Resolution No. 2016-40; and rescinded and replaced Resolution No. 2016-40 with Resolution No. 2018-60; and WHEREAS, the City Council now desires to rename the Audit Committee to the Finance & Audit Committee; and WHEREAS, the City Council now desires to expand and clarify the duties of the Finance & Audit Committee; and NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA DOES RESOLVE AS FOLLOWS: SECTION 1. FINANCE & AUDIT COMMITTEE RULES AND REGULATIONS 1. ESTABLISHMENT OF THE AUDIT & FINANCE COMMITTEE The City Council ofthe City of West Covinahereby renames the previously established City of West Covina Audit Committee as the Finance & Audit Committee. %w-ai a II. The Finance & 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; assessing 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 seven members: the City Treasurer, two City Council members, and four members of the public. The two City Council members and the four members of the public will be appointed by the City Council. The City Clerk shall post and advertise the public positions and vacancies as provided for all other city commissions and committees. 4. COMPENSATION Members of the Committee shall serve without compensation. 5. TERM OF The appointed members of the Committee shall be appointed for two (2) year terms on a staggered basis, except for the initial appointment as provided herein. For the initial appointments, one Council Member and one member of the public shall initially be appointed to serve a one-year term in order to allow for the staggered terms thereafter. 6. TIME AND PLACE OF MEETINGS The Committee will meet at least quarterly and shall hold other meetings on an as needed basis. All meetings of the Committee shall be held at the City of West Covina City Hall located at 1444 W. Garvey Ave. in the City of West Covina. 7. CONFLICT OF INTEREST All members of the Committee are subject to the requirements of the Conflict of interest codes of the City of West Covina and Conflict of Interest laws of the State of California. 8. DUTIES OF THE COMMITTEE The role of the Committee is to augment management's accountability to the City Council. The Committee achieves this goal by: • Recommending the selection of the independent financial auditor for the financial statement; • Monitoring the progress of the financial statement audit; • Evaluating the results of the financial statement audit; • Ensuring that any control weaknesses and legal compliance violations identified in the course of the financial statement audit are promptly and effectively remedied; • Serving as a direct communications link between the City Council and the independent auditor; and • Monitoring the adequacy of the City's internal control structure on an ongoing basis, such as cash disbursements, cash receipting, treasury transactions, etc., as examined by the internal audit function and the independent financial auditor. • Reviewing audit and financial consulting contracts proposed scope of work. Making recommendations for changes in scope of work if needed; • Reviewing actual revenue and expenditures compared to budget based on monthly financial reports detailed by account. The finance staff is to provide the committee with a monthly report to allow the finance department to develop accurate projections; • Reviewing projected revenue and expenditures compared to budgeted revenue and expenditures; • Reviewing the preliminary budget to determine if expected revenue or expenses (e.g. litigation, equipment replacement) are budgeted in accordance with historical trends; • Reviewing if the following objectives are being met: o Projected expenditures do not exceed budget; o Projected revenue approximates budget; o Projected revenue meets or exceeds projected expenditures; o Timely budget adjustments are prepared for projected overdrafts in expenditures; o The City Council is informed in a timely fashion if revenue or expenditures that deviate significantly from budget; • Providing quarterly reports to the City Council on the financial and audit status of the City; • Reporting to the City Council if the committee believes either: o It has found material financial information which it believes to be inaccurate or untimely; or o Projections will result in shortfalls in revenue, overdrafts in expenditures, or deficits caused by spending more than is received; • The committee ensuring that it does not make budget priority recommendations. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED this 7`h day of May, 2019. APPROVED AS TO FORM Scott E. Porter City Attorney ATTEST Carrie Gallagher --- Assistant City Clerk ATTACHMENT NO.2 West Covina Responsibilities of the Finance & Audit Committee Recommendation to the City Council by the Audit Committee April 10, 2019 The responsibilities of the Audit Committee, to be renamed the Finance & Audit Committee, will include the previously adopted responsibilities of the Audit Committee with the following additions and changes: 1. Meet at least quarterly with additional meetings scheduled at the request of a majority of the Finance & Audit Committee, the City Council, or the city staff. 2. Review audit and financial consulting contracts proposed scope of work. Make recommendations for changes in scope of work if needed. 3. Review actual revenue and expenditures compared to budget based on monthly financial reports detailed by account. A monthly report is also produced by the Finance Department in order to develop accurate projections. 4. Review projected revenue and expenditures compared to budget. 5. Review the preliminary budget to determine if expected revenue or expenses [e.g. litigation, equipment replacement] are budgeted in accordance with historical trends. 6. Review if the following objectives are being met: • Projected expenditures do not exceed budget • Projected revenue approximates budget • Projected revenue meets or exceeds projected expenditures • Timely budget adjustments are prepared for projected overdrafts in expenditures • The City Council is informed in a timely fashion if revenue or expenditures deviates significantly from budget 7. Provide quarterly reports to the City Council on the financial and audit status of the City. 8. The Finance & Audit Committee does not make budget priority recommendations. 9. The committee's final responsibility is to report to the City Council if it finds that published financial information is believed to be inaccurate, not timely, or if projections will result in shortfalls in revenue, overdrafts in expenditures, or deficits caused by spending more than is received. ATTACHMENT NO.3 RESOLUTION NO.2018-60 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA REPLACING RESOLUTION NO. 2016-40 AMENDING THE PROCEDURES, RULES AND REGULATIONS FOR THE AUDIT COMMITTEE. WHEREAS, the City Council of the City of West Covina recognizes the importance of transparency and accountability in the administration of public resources, and the City Council is ultimately responsible for ensuring that the City of West Covina is.meeting its internal control and financial reporting responsibilities; and WHEREAS, the City Council recognizes the importance of creating an Audit Committee as it is considered a financial management best practice; and WHEREAS, the formation of an Audit Committee will ensure regular and direct communication between the City's independent auditors and the City Council and will further the City Council's goals of transparency and accountability in the administration of public resources; and WHEREAS, the City Council established an Audit Committee with Resolution No. 2015- 73E Changed the membership of the Audit Committee with Resolution No. 2016-40; and WHEREAS, the City Council now desires to add two additional Community Members to the Audit Committee. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of West . Covina as follows: SECTION 1: AUDIT COMMITTEE RULES AND REGULATIONS ESTABLISHMENT OF THE AUDIT COMMITTEE The City Council of the City of West Covina hereby establishes the City of West Covina 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 seven members_ the City Treasurer, two City Council members, and four members of the public. The two City Council members and the four members of the public will be appointed by the City Council. The City Clerk shall post and advertise the public positions and vacancies as provided for all other city commissions and committees. 4. COMPENSATION Members of the Committee shall serve without compensation. 5. TERM OF MEMBERSHIP The appointed members of the Committee shall be appointed for two (2) year terms on a staggered basis, except for the initial appointment as provided herein. for the initial appointments, one Council Member and one member of the public shall initially be appointed to serve a one-year tern in order to allow for the staggered terms thereafter. G. TIME AND PLACE OF MEETINGS The Committee will meet at least once annually and shall hold other meetings on an as needed basis. All meetings of the Committee shall be held at the City of West Covina City Hall located at 1444 W. Garvey Ave. in the City of West Covina. 7. CONFLICT OF INTEREST All members of the Committee are subject to the requirements of the Conflict of Interest codes of the City of West Covina and Conflict of Interest laws of the State of California. 8. DUTIES OF THE COMMITTEE The role of the Committee is to augment management's accountability to the City Council. The Committee achieves this goal by: • Recommending the selection of the independent financial auditor for the financial statement audit; • Monitoring the progress of the financial statement audit; • Evaluating the results of the financial statement audit; • Ensuring that any control weaknesses and legal compliance violations identified in the course of the financial statement audit are promptly and effectively remedied; • Serving as a direct communications link between the City Council and the independent auditor; and • Monitoring the adequacy of the City's internal control structure on an ongoing basis, such as cash disbursements, cash receipting, treasury transactions, etc., as examined by the internal audit function and the independent financial auditor. SECTION 2. That the City Clerk shall certify to the passage and adoption of the resolution. PASSED, APPROVED AND ADOPTED thi; 15`s day of May, 2018. Mayor APPROVED AS TO FORM: ATTEST: Kimberly Hag Barlow Nickolas S. Lewis City Attorney City Clerk 1, HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof on the 15°i day of May, 2018 by the following vote of the City Council: AYES: Toma, Warshaw, Wu, Johnson, Spence NOES: None ABSENT: None ABSTAIN: None i Nickolas-S. Lein City Clerk - I, HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof on the 7`h day of May, 2019 by the following vote of the City Council: AYES: Castellanos, Lopez-Viado, Shewmaker, Wu, Johnson NOES: None ABSENT: None ABSTAIN: None ,,♦II � \M1 l� Carrie Gallagher, CMC - Assistant City Clerk ATTACHMENT NO.5 RESOLUTION NO.2021-33 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, AMENDING THE NAME, PROCEDURES, RULES AND REGULATIONS FOR THE AUDIT COMMITTEE AND RESCINDING RESOLUTION NO.2019-31 WHEREAS, California Government Code section 8546.10 authorizes the State Auditor to establish a high -risk local government agency audit program to identify, audit, and issue reports on local government agencies that are at high risk for the potential of waste, fraud, abuse, or mismanagement, or that have major challenges associated with their economy, efficiency, or effectiveness; and WHEREAS, based upon risk indicators of general hand reserves, debt burden, liquid ity, revenue trends, pension obligations, pension funding, pension costs, firture pension costs, OPEB obligations, and OPEB fianding, the California State Auditor was granted approval from the Joint Legislative Audit Committee to conduct a high -risk audit of the City of West Covina; and WHEREAS, in response to the State Auditor's December 1, 2020 report entitled "City of West Covina: Its Deteriorating Financial Situation Threatens Its Fiscal Stability and Its Ability to Provide City Services," the City Council unanimously approved aformal Financial Recovery Plan with specific timelines, monitoring, and reporting; and WHEREAS, to improve the City's long-term financial health, the City recognizes the need to monitor implementation of the Financial Recovery Plan; and WHEREAS, the City Council established an Audit Comn ittee through the adoption of Resolution No. 2015-73 in October 2015, changed the membership of the Audit Committee through the adoption of Resolution No. 2016-40 in May 2016; rescinded and replaced Resolution No. 2016-40 with Resolution No. 2018-60 in May 2018; and rescinded and replaced Resolution No. 2018-60 with Resolution No. 2019-31 in May 2019, renaming the Audit Committee as the Finance & Audit Committee; and WHEREAS, the City Council now desires to assign responsibility to the Audit Committee for mnnitoring progress in implementing the Financial Recovery Plan with State - required written updates every six months, including specific timelines and reporting; and WHEREAS, the City Council further desires to rename the Finance &Audit Committee as the Audit Committee and to clarify the duties of the Audit Committee. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. AUDIT COMMITTEE RULES AND REGULATIONS 1. ESTABLISHMENT OF THE AUDIT COMMITTEE The City Council of the City of West Covina hereby renames the previously established Finance & Audit Committee as the Audit Committee. 2. PURPOSE The Audit Committee's primary purpose is to support improving the community and to assist the City Council in discharging its responsibilities for (1) ensuring financial stability and (2) monitoring the implementation of the correcthe actions identified in the Financial Recovery Plan, approved by the City Council on April 6, 2021. 3. MEMBERSHIP AND APPOINTMENT The Audit Convnittee shall consist of five public members who will be appointed by the City Council. The City Treasurer and two City Council members shall serve as ex officio non -voting members, The City Clerk shall post and advertise the public positions and vacancies as provided for all other City commissions and committees. 4. COMPENSATION Members of the Committee shall serve without compensation. 5. TERM OF The appointed members of the Committee shall be appointed for two (2) year terms on a staggered basis, except for the initial appointment as provided herein. For the initial appointments, one Council Member and one member of the public shall initially be appointed to serve a one-year term in order to allow for the staggered terms thereafter. 6. TIME AND PLACE OF MEETINGS The Committee will meet at least quarterly. All meetings of the Committee shall be held at the City of West Covina City Hall located at 1444 W. Garvey Ave. S. in the City of West Covina. 7. CONFLICT OF INTEREST All members of the Committee are subject to the requirements of the Conflict of Interest codes of the City of West Covina and Conflict of Interest laws of the State of California. 8. HUMAN RESOURCES POLICIES All members of the Committee are subject to the requirements of all Human Resource Department policies of the City of West Covina. 9. DUTIES OF THE COMMITTEE The role of the Committee is to help improve the City's long-term financial health by (1) monitoring implementation of the Financial Recovery Plan, (2) monitoring the monthly financial reports for the purpose of reporting potential deficits, (3) reviewing the Comprehensive Annual Financial Reports, and (4) making periodic reports to the City Council. SECTION 2. This Resolution shall rescind and replace Resolution No. 2019-31, adopted by the City Council on May 7, 2019. SECTION 3. The City Clerk shall certify to the adoption of this Resolution and shall enter it into the book of original resolutions. APPROVED AND ADOPTED this 4th day of May, 2021. APPROVED AS TO FORM Thomas P. D e City Attorney •.'3!!•Mayor ATTEST ✓� U Lisa S •ick Assis City Clerk I, LISA SHERRICK, Assistant City Clerk of the City of West Covina, California, do hereby certify that the foregoing Resolution No. 2021-33 was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof held on the 4th day of May, 2021, by the following vote of the City Council: AYES: Castellanos, Diaz, Lopez-Viado, Tabatabai, Wu NOES: None ABSENT: None ABSTAIN: None r Lisa She k Assistat City Clerk