Draft Minutes of January 9, 2020 Meeting

D R A F T
MINUTES
AUDIT COMMITTEE
CITY HALL, CONFERENCE ROOM 3A 
5850 W. GLENDALE AVE.
GLENDALE, ARIZONA 85301
JANUARY 9, 2020
2:00 P.M.
 
1.
CALL TO ORDER
The Chair, Councilmember Hugh, called the meeting to order at 2:05 p.m.
 
2.
ROLL CALL
Present: 
Raymond Malnar, Councilmember   
  
Ian Hugh, Councilmember   
  
Lauren Tolmachoff, Councilmember   
  
Irene Avalos, Member   
  
Rusty Simmons, Member   
  
Kevin Phelps, City Manager, Ex-officio Non-voting Member   
  
Lisette Camacho, Budget and Finance Director, Ex-officio Non-voting Member   
Also Present: Emmanuel Ogutu, Internal Audit Program Manager 
Jean Moreno, Director, Department of Organizational Performance 
James Gruber, Deputy City Attorney 
3.
CITIZEN COMMENTS
No members of the public were present. No comments.
 
4.
APPROVAL OF THE MINUTES
Councilmember Tolmachoff motioned to approve the Audit Committee minutes of
the December 5, 2019 meeting as written.  Councilmember Malnar made the second.
 Motion carried unanimously.  
 
 
5.
PROCUREMENT OF CONTRACTED FIRMS
Mr. Ogutu gave a detailed presentation, which included the following: 
The City Code requires that this Committee consider several firms to help in
executing the annual audit plan. 
Staff worked with the Procurement Department and on November 14th, a Request
for Statement of Qualifications (RSOQ) was issued through the City’s website, which
was open for the weeks and closed on December 6, 2019.  Five vendors submitted
standards and provided recommendations to the Mayor and City Council and all were
found the meeting the necessary requirements.

The five firms were:  Securance LLC, Protiviti Inc., Moss Adams, Henry & Horne, and
Heinfeld Meech.
Mr. Ogutu announced that staff is recommending the following: 
All five vendors to be included on a Qualified Vendors List.
The Qualified Vendors List to be valid for up to 4 years.
Staff will issue a Request for Quote (RFQ) to the Qualified Vendors to execute eight
audits in the FY2020 Audit Plan.
The RFQ process will follow the City’s procurement requirements.
Work to begin immediately following completion of the RFQ process.
Staff can issue a new RSOQ process to add more qualified vendors to the list at any
time.
 
Mr. Ogutu shared that Staff is seeking an Audit Committee recommendation to the City
Council to approve the proposed Qualified Vendors List for a period not to exceed four
years.
 
Councilmember Tolmachoff noted that Securance only conducts technology audits.  Mr.
Ogutu confirmed and stated that Securance is a specialized firm in conducting technology
audits, which is part of the internal audit program and they are highly qualified to conduct
technology audits.  Councilmember Tolmachoff asked if Securance would be used
exclusively for technology audits.  Mr. Ogutu replied in the positive. 
 
Mr. Simmons asked if it would be more efficient to have Protiviti or Moss Adams do all of
the audits, perhaps to get one price for all of the audits.  Mr. Ogutu stated that this may
have to be considered.  Mr. Ogutu relayed that these last six months of the fiscal year will
serve as a good test to see how they respond when we issue a request for quotations.  Mr.
Ogutu added that if in the future it is going to be more beneficial to use one or two, staff will
bring that consideration back to the Committee. 
 
Councilmember Tolmachoff asked how it would be determined which vendor will do which
audits.  Mr. Ogutu replied that that is the initial process and once the list of firms is
approved, staff will develop a comprehensive statement of work for each of the eight
audits.  Then, a request for quotes will be sent to all of these firms for any or all of the eight
audits and their responses will be evaluated.
Councilmember Tolmachoff motioned to recommended Council approval of the five
internal audit vendors for the RFQ process as follows: Securance LLC, Protiviti Inc.,
Moss Adams, Henry & Horne, and Heinfeld Meech. Councilmember Malnar made the
second.  Motion carried unanimously.
 
6.
USE OF TECHNOLOGY TO LEVERAGE AUDITS
Mr. Ogutu commented that Committee-member Simmons had requested a presentation on
the use of audit software. 
 
Mr. Ogutu reported the following: 
The City Code requires the Committee to evaluate each audit for compliance with
professional standards.
IIAP Administrative policy requires IIAP to consider use of software to increase
efficiency.
Both IIA and GAGAS standards encourages audit organizations to consider use of
audit software in the audit process.
Staff has been in talks with several audit software and will narrow the options down

to one or two providers. 
The cost for FY2020 and FY2021 can be absorbed in existing budget.
Mr. Ogutu presented a slide listing the benefits of using Audit Management Software,
including quick audit turnaround, the audit program is able to test 100% of transactions,
integrates daily workflow, easier to extract data, and tracks status of recommendation
implementation.
 
Mr. Simmons noted software support and upgrades would be needed and asked if the City
technology team would be able to handle this or if the City would have to buy a package
from the vendor.  Mr. Ogutu explained that in his conversation with two of the vendors, they
are putting together proposals in which the software will be hosted through cloud and will
be web-based. 
 
7.
AUDIT PROGRAM GENERAL UPDATE
Mr. Ogutu shared a general update of the Audit Plan Progress, which included the
following: 
FY 2020 has twelve audits planned.
Eight of these will be contracted to third-party providers once the list is approved by
the Council.
Four audits are being conducted internally by the IIAP Manager, Mr. Ogutu.  Mr.
Ogutu has already completed one, which was an independent review of the City
Code.  He will present the draft report to the Committee in the Executive Session.  As
for the remaining three audits, one is in process and two have not yet been started. 
A chart detailed the Status of Audit plan implementation was presented.
 
Mr. Ogutu presented information in response to Committee-member Avalos’ question at
the last meeting.  
Committee-member Avalos had noticed that the Audit Plan included “ASTA”
compliance audit and requested more information on this item
Mr. Ogutu had the Audit Plan corrected to reflect “AZSTA” – Arizona Sports and
Tourism Authority.
The City has a contractual obligation related to sales tax rebate to AZSTA.
This will be a compliance audit in FY21 of that contractual obligation between the
City, AZSTA, and Arizona Cardinals executed November 2004.
 There were no questions. 
 
8.
COMMITTEE COMMENTS AND SUGGESTIONS
No Comments.
 
9.
FUTURE MEETINGS
Mr. Ogutu announced that the next regular meeting of the Audit Committee was scheduled
for Thursday, February 6, 2020 at 2:00 p.m.; not February 3 as indicated on the agenda. 
 
Councilmember Tolmachoff asked if the Committee would continue meeting monthly.  Mr.
Ogutu relayed that it is required that staff is seeking direction from the Committee
regarding future meetings.  Mr. Ogutu stated that the Committee is to meet at least once a
quarter, if there are agenda items.
 
Councilmember Malnar inquired about the agenda topics for next month’s meeting. 
Mr. Ogutu replied that the industry practice is to have quarterly meetings.  Mr. Ogutu
explained that the work of this Committee is to review draft reports and when there is a
report to review, it would be better to have a meeting sooner rather than waiting for a

three-month period. Mr. Ogutu anticipated the current audit that he is working, the Revenue
Audit, will take about six weeks to complete. 
 
Mr. Phelps commented it was good for the Committee to meet early on to go get the
systems and programs in place.  Mr. Phelps recommended meeting quarterly in the future,
such as the first month of the quarter and using August for the third quarter, October for the
fourth quarter.  Mr. Phelps stated that special meetings could be called as needed. 
 
Councilmember Tolmachoff suggested the last month of the quarter: March, June,
September. 
 
Mr. Phelps said this timeline would put a meeting in December which can be a tough
month, however, the Committee should schedule according to its benefit. 
 
Councilmember Malnar agreed with once a quarter, and more can be called as needed.
 
Mr. Simmons asked if there was any requirement in the charter that requires Audit
Committee approval within a certain timeline.  Mr. Ogutu replied in the negative. 
 
Councilmember Malnar stated that the Committee would want to be timely, however.  Mr.
Ogutu agreed.
 
Ms. Avalos asked if the quarterly review would include the status of responses to audit
findings and audits to review as well.  Mr. Ogutu replied in the positive. 
 
Councilmember Tolmachoff reiterated Mr. Phelps’ quarterly suggestion of April and August
for the quarterly meetings.  No opposition was voiced.
 
 
10.
MOTION TO CALL FOR AND ENTER INTO EXECUTIVE SESSION
Councilmember Tolmachoff motioned to enter into Executive Session at 2:31 p.m.
Councilmember Malnar made the second.  The motion carried unanimously.
 
11.
EXECUTIVE SESSION
Executive Session was held.
 
12.
ADJOURNMENT
The Chair, Councilmember Hugh confirmed there were no further comments and
adjourned the meeting at 2:41 p.m.
 
 
The Audit Committee meeting minutes of _____, 2020 were submitted and
approved this ____ day of ____, 2020.
____________________________________
Emmanuel Ogutu
Internal Audit Program Manager