March 27, 2023 — Fresno City Council Finance and Audit Committee
Documented by Josef Sibala
Here’s what you need to know:
- During the March 27 Fresno City Council Finance and Audit Committee meeting, Principal Internal Auditor Kriti Agrawal said that Internal Audit assessed the adequacy of controls regarding wireless device assignment, oversight and use. The total amount of wireless expenses to be audited is $4.3 million.
- Committee Member Miguel Arias asked for a breakdown of units of wireless devices and their usage in each department.
- Finance Director Santino Dasini said the understatement of federal expenditures in the State and Local Fiscal Recovery Fund schedule was solely due to the change in accounting standards.
- City Manager Georgeanne White clarified that the finance department did not artificially increase the city’s reserves through the American Rescue Plan Act (ARPA) funds.
Follow-up questions:
- When will the audit of other departments start?
- What will be the outcome of the audit of the wireless services?
The Scene
According to its website, the Fresno City Council Finance and Audit Committee shall act in an advisory capacity to the council relating to the city’s financial affairs, excluding matters relating to the annual budget.
The duties of the committee may include but are not limited to the following: reviewing and providing an analysis of city audits, revenues, investments, debts and bonds; and reviewing and making recommendations to the council relating to the city’s policies, procedures, management and control of city finances.
On Tuesday, March. 27, the meeting was held at 2:30 p.m. in the Council Chambers at City Hall, 2nd Floor, 2600 Fresno St., Fresno, CA 93721
Fresno City Council Finance and Audit Committee present:
- Chair Nelson Esparza
- Vice Chair Tyler Maxwell
- Committee Member Miguel Arias
Others Present:
- Finance Director Santino Dasini
- Principal Internal Auditor Kriti Agrawal
- City Manager Georgeanne White
Discussions/Actions
The board (3-0) approved the minutes of the Fresno City Council Finance and Audit Committee Special Meeting of Oct. 28, 2022,
Open session includes the following:
A. (ID 23-543) Update on existing audits (reported by Principal Internal Auditor Kriti Agrawal)
Two existing audits are the Airports Department, with a scoping period from July 1, 2019, to January 31, 2022, and Wireless Communication, with a scoping period from Oct. 1, 2018, to June 30, 2021.
Internal Audit initially reviewed the Airports Department’s process by interviewing management and staff, examining policies and procedures, and reviewing expenditures and contracts.
The Airports Department recently hired an assistant director for operations.
Internal Audit recommended Airports Audit be revisited in 12 months.
Committee Member Miguel Arias asked whether there is enough staff to audit the Airports Department. Agrawal said the Finance Department would wait for December, allowing enough data for the audit.
White said the finance position in the Airports Department is open. She said the audit would start in September 2023.
Internal Audit assessed the adequacy of controls regarding wireless device assignment, oversight, and use. The total amount of wireless expenses to be audited is $4.3 million.
Arias asked for a breakdown of units of wireless devices and their usage in each department.
B. (ID 23-544) Overview of Risk Assessment process reported by Finance Director Santino Dasini.
Department directors, assistant directors and council members complete a seven-question survey.
Internal Audit Division streamlined the process; the survey is delivered via Teams Forms for the quick response and efficient tracking.
Additional characteristics used to conduct the risk assessment:
- Full-time employees
- Budgeted revenues
- Budgeted expenses
One point adjustment based on years since the division was audited. A risk assessment matrix generates the order and rank for each department and division.
The top 10 highest-risk scores are as follows:
- Public Utilities Water (87)
- Public Works Construction Management (86)
- Public Works Landscape Maintenance (85)
- Police Patrol (84)
- Public Utilities Solid Waste (84)
- Transportation Capital Projects/Operations (84)
- Public Utilities Wastewater Management (83)
- Transportation Support Services/Customer Experience (82)
- Planning and Development Long Range Planning (81)
- Planning and Development Building & Safety (81)
The proposed audit work plan consists of the following:
- Information Services Department is under fieldwork
- Finance Department – Administration Evaluation of Internal Controls
- RFP Interviews being conducted
- Parks, After School, Recreation and Community Services (PARCS) – Administration has not started an audit
- Airports – Administration has not started an audit
- Public Utilities has not started an audit
- Public Works – Construction Management has not started an audit
Committee Member Miguel Arias asked Finance Director Santino Dasini to audit the homeless housing fund.
He requested an efficiency and effectiveness report on the homeless housing fund.
C. (ID 23-545) 2022 Annual Comprehensive Financial Report (ACFR) reported by Dasini
The Annual Comprehensive Financial Report (ACFR) is a set of financial statements which conform to the accounting requirements established by the Governmental Accounting Standards Board (GASB).
The report must be audited by an independent auditor using generally accepted government auditing standards. 2022 ACFR covers the fiscal year that ended June 30, 2022
Financial highlights (amounts in thousands) are as follows:
General Fund All Funds
- Total Revenues: $407,557 $1,152,777
- Total Expenses $374,375 $927,471
- Total Assets $171,644 $4,869,028
- Total Liabilities $43,779 $1,588,277
- Net Positions as of June 30, 2021 $102,943 $2,605,916
- Net Positions as of June 30, 2022 $104,691 $2,831,22
A new accounting standard is Governmental Accounting Standards Board (GASB) Standard No. 87. This statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract.
According to the audit, opinions on the financial statements and federal compliance are unmodified since there were no material misstatements.
The governmental activities beginning net position was restated by $3.9 million.
Before GASB 84, custodial funds were not required to be included in the fiduciary fund statements.The staff has since corrected and included it with reporting in the fiscal year 2022.
During the review of the Schedule of Expenditures of Federal Awards (“Schedule”) provided by the city, city federal expenditures for the Emergency Rental Assistance Program, passed through the state for $12,239,896, were excluded from the schedule.
Federal expenditures in the schedule for the State and Local Fiscal Recovery Fund were understated by $14,391,754. Dasini said the understatement of federal expenditures in the State and Local Fiscal Recovery Fund schedule was solely due to the change in accounting standards.
White clarified that the Finance Department did not artificially increase the city’s reserves through the American Rescue Plan Act (ARPA) funds.
The meeting ended at 5 p.m. The next board meeting will be on Tuesday, March 28 at 5 p.m.
If you believe anything in these notes is inaccurate, please email us at fresnodocs@fresnoland.org with “Correction Request” in the subject line.
