Establishment of Audit Committee

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CITY OF COLTON AGENDA REPORT FOR CITY COUNCIL MEETING OF APRIL 3, 2001 TO: Honorable Mayor and City Ccil Members APPROVAL: Henry T. Garcia, City Manage FROM: Al Holliman, Finance Directo w___11 SUBJECT: Establishment of Audit Committee DATE: March 22, 2001. BACKGROUND Audit committees are relatively common for organizations of the size and complexity of the City of Colton. The City, in fact, had a formal audit committee until approximately 1997 when it ceased to function. DISCUSSIOW ANALYSIS The role of the audit committee will include evaluation of responses to requests for proposal (RFP) for audit services, making recommendations to the City Council for auditor selection, reviewing external, internal, and special audit reports, and making recommendations to the City Council and management for corrective action as a result of comments in audit reports. Because RFP's were already issued for the current annual citywide audit and solicitations were made for a separate management audit of the electric utility, the audit committee will not participate in those processes. Furthermore, because time is of the essence with respect to both of these engagements, with work needing to start in mid-April (this month), the audit committee will not be involved in making recommendations relative to hiring the auditors. However, the audit committee will receive and review the audit reports and will be involved in the RFP process in the future. Recommendations for auditor selection are contained in two separate staff reports, also on tonight's agenda. It is recommended that the audit committee be comprised of two City Council members (to be appointed at tonight's meeting), the City Manager, the City Attorney, and the Finance Director. FINANCIAL IMPACT None. ENVIRONMENTAL IMPACT None item #17