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Home My WebLink AboutOrdinance 5522 ORDINANCE NO. 5522 AN ORDINANCE TO ENACT ARTICLE XXIV AUDIT COMMITTEE AND INTERNAL AUDITOR INTO CHAPTER 33 DEPARTMENTS, BOARDS, COMMISSIONS AND AUTHORITIES OF THE CODE OF FAYETTEVILLE WHEREAS, on October 3, 2000, the City Council passed and Mayor Hanna signed Resolution No. 134-00 to establish the Audit Committee and prescribed its duties and responsibilities; and WHEREAS, the Audit Committee has admirably accomplished its vital purpose to advise the City Council and ensure all necessary audit functions, internal controls and compliance with governmental financial requirements continue to be fully achieved; and WHEREAS, this important committee and its work with the City's Internal Auditor should be enacted into the Fayetteville Code to continue the City's efforts for transparency and accountability. NOW, THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby enacts Article XXIV Audit Committee and Internal Auditor into Chapter 33 Departments, Boards, Commissions and Authorities into the Code of Fayetteville as shown below: 'XXIV Audit Committee and Internal Auditor "§33.360 Establishment and Purpose The Audit Committee which was established by Resolution No. 134-00 remains established pursuant to this Article. Its purpose remains to serve in an advisory capacity between the City Council, the independent auditor, the Internal Auditor and City Administration concerning financial accounting and reporting, audit functions, internal Page 2 Ordinance No. 5522 controls and compliance with governmental regulations. The Audit Committee shall ensure the independence of the independent auditor, the ability and responsibility of the Internal Auditor to report any concerns about finances or accounting to the Audit Committee, Administration and City Council, the integrity of the Administration and the adequacy of public disclosures. The Audit Committee shall, in conjunction with the external auditors, review the City's financial reports and information, the City's system of internal financial and accounting controls, and the City's compliance with governmental laws and regulations regarding financial matters. §33.361 Composition and Term The Audit Committee shall include one City Council member appointed by the Mayor and three citizens of Fayetteville, at least one of which shall be a Certified Public Accountant. The three citizens shall serve three year terms of office. §33.362 Meetings The Audit Committee shall meet at least three times annually, one of which must be with the independent auditor, Internal Auditor, and Administration to discuss the independent auditor's report and findings following its audit of the City. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby enacts §33.363 Responsibilities and Duties as previously required in Resolution No. 134-00 and shown in Exhibit A attached. Section 3: That the City Council of the City of Fayetteville, Arkansas hereby enacts §33.364 Internal Auditor as shown below: "§33.364 Internal Auditor. The City of Fayetteville Internal Audit Division Charter (attached) is approved and adopted. Any amendments to such Charter must be approved by the Audit Committee with the revised Charter provided to the City Clerk. The desire and intent of the City Council is that the Internal Auditor shall report directly to the City Council if the Internal Auditor believes any audit, financial or accounting issue is not being properly and timely addressed by the Audit Committee, independent auditor or administration." Page 3 Ordinance No. 5522 Section 4: That the City Council of the City of Fayetteville, Arkansas hereby revokes all previous ordinances and resolutions concerning the formation and duties of the Audit Committee to the extent that they conflict with this ordinance. PASSED and APPROVED this 4'�`day of September, 2012. APPROVED: ATTEST: F By By: .� O ELD-t�� N, Mayor SON6RA E. SMITH, City Clerk/Treasurer A"%JnI G\T Y OF��G%� s FAYETTEVILLE. ;sy9'i'kA N s per.•�'�`�� i� /••.• J '��/V fG 0 N C- �`,` EXHIBIT "A" §33.363. Responsibilities and Duties. To fulfill its responsibilities and duties the Audit Committee shall: (A) Review the Charter periodically and update as conditions dictate; (B) Serve on the review committee to select the independent auditors. On an annual basis,the committee should review and discuss with the auditors all significant relationships the auditors have with the City to determine the auditor's independence. The annual independence review should include a review of all non-audit related consulting fees for nature of services and effect on independence; a review of any and all relationships between members of the audit firm and employees of the City; the obtaining of a formal written statement from the auditors as to their compliance with professional guidelines relating to independence; and discussion with the auditors regarding the firm's own internal controls over monitoring independence; (C) Review the City's annual financial statements and related financial information, including any certification,report, opinion, or review rendered by the independent auditors and any changes in accounting principles or the application thereof, (D) Review the performance of the independent auditors. Annually, clarify with the independent auditors that the auditors are ultimately accountable to the City Council and that the City Council has ultimate power in the appointment or removal of the independent auditors; (E) Periodically consult with the independent auditors, outside the presence of management, regarding internal controls and the completeness and accuracy of the organization's financial statements and related disclosures; (F) In conjunction with the external auditors, review with financial and accounting personnel and the Internal Auditor the adequacy and effectiveness of the accounting and financial controls of the City, including controls over data processing activities and functions. Approve recommendations for the improvement of such internal control procedures; (G) Establish regular reporting to the Audit Committee by management, the Internal Auditor and the independent auditors regarding any significant judgments made in financial management's preparation of the financial statements and the view of each to the appropriateness of such judgments; and (H). Following completion of the annual audit, review with management and the independent auditors financial statements and supplemental disclosures required by generally accepted accounting principles; I. The City's Comprehensive Annual Financial Report, including the financial statements and supplemental disclosures required by generally accepted accounting principles; 2. Significant transactions not a normal part of the City's operations; 3. Selection of, and changes, if any, during the year in the City's accounting principles or their application; 4. Significant adjustments proposed by the independent auditor's conclusions regarding the reasonableness of those estimates; 5. Any disagreements between the independent auditor and management about matters that could be significant to the City's financial statements or the auditor's report; 6. Difficulties encountered in performances of the audit; 7. Evaluate the cooperation received by the independent auditor during its audit including its access to all requested records, data and information. Also, elicit the comments of management regarding the responsiveness of the independent auditor to the City's needs. Inquire as to whether there have been any disagreements with management that, if not satisfactorily resolved, would have caused the independent auditor to issue a nonstandard report on the City's financial statements. (I) Advise the City Council on any issues reported by the Internal Auditor and recommendations to improve or correct any situations brought to the Committee's attention by the Internal Auditor; (J) Perform any other activities consistent with the City's governing law, as the City Council deems necessary or appropriate. City of Fayetteville Staff Review Form City Council Agenda Items and Contracts, Leases or Agreements 9/4/2012 City Council Meeting Date Agenda Items Only Vicki D. Deaton Internal Audit Internal Audit/General Government Submitted By Division Department Action Required: Staff recommends approving the proposed ordinance, Article XXIV Audit Committee and Internal Auditor, into Chapter 33 Departments, Boards, Commissions and Authorities of the Code of Fayetteville. N/A N/A N/A Cost of this request Category/Project Budget Program Category/Project Name N/A N/A N/A Account Number Funds Used to Date Program/Project Category Name N/A N/A N/A Project Number Remaining Balance Fund Name Budgeted Item Budget Adjustment Attached od(��-,zL �/ ( Previous Ordinance or Resolution# Res 134-00 Department Director Date Original Contract Date: f L ,,�;4 --'`"'� 7'// Original Contract Number: City Attorney Date �Q.,g. Q ..�►..� 9- 17. 2aZ Finance and Internal Services Director Date Received in Ci{ = `' = + C V D Clerk's Office �IJA-I)k � - Chief of aff Date ERE Received in Mayor's Office May Date Comments: Revised January 15, 2009 a Pv THE CITY OF FAYETTEVILLE,ARKANSAS ({ W I DEPARTMENT CORRESPONDENCE ARKANSAS CITY COUNCIL AGENDA MEMO To: Mayor Lioneld Jordan and the City Council From: Vicki D. Deaton, Internal Auditor 1 Date: 8/7/12 V Subject: Proposed Ordinance to enact Article XXIV Audit Committee and Internal Auditor into Chapter 33 Department, Boards, Commissions and Authorities of the Code of Fayetteville PROPOSAL: Chapter 33 of the Code of Fayetteville details the establishment, administration, duties and responsibilities of various City boards, commissions, and committees. The Audit Committee was established in 2000 by Resolution No. 134-00. The resolution detailed the purpose, composition,meetings, and responsibilities and duties of the Audit Committee. This important committee and its work should be enacted into the Fayetteville Code to continue the City's efforts for transparency and accountability. Alderman Ferrell requested that steps be taken to document the organizational structure of the Internal Audit Division and to empower the division to report directly to the City Council if audit, financial or accounting problems are not being timely and properly addressed. The proposed ordinance includes a section which approves and adopts the City of Fayetteville Internal Audit Division Charter. The Charter details the purpose, scope, authorities, organization and independence of the division. This is intended as another layer of security to ensure accountability and transparency in the City. RECOMMENDATION: Staff recommends approving the proposed Ordinance to enact Article XXIV Audit Committee and Internal Auditor into Chapter 33 Department, Boards, Commissions and Authorities of the Code of Fayetteville. BUDGET IMPACT: The ordinance will have no impact on the City budget. ORDINANCE NO. AN ORDINANCE TO ENACT ARTICLE XXIV AUDIT COMMITTEE AND INTERNAL AUDITOR INTO CHAPTER 33 DEPARTMENTS, BOARDS, COMMISSIONS AND AUTHORITIES OF THE CODE OF FAYETTEVILLE WHEREAS, on October 3, 2000, the City Council passed and Mayor Hanna signed Resolution No. 134-00 to establish the Audit Committee and prescribed its duties and responsibilities; and WHEREAS, the Audit Committee has admirably accomplished its vital purpose to advise the City Council and ensure all necessary audit functions, internal controls and compliance with governmental financial requirements continue to be fully achieved; and WHEREAS, this important committee and its work with the City's Internal Auditor should be enacted into the Fayetteville Code to continue the City's efforts for transparency and accountability. NOW, THEREFORE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby enacts Article XXIV Audit Committee and Internal Auditor into Chapter 33 Departments, Boards, Commissions and Authorities into the Code of Fayetteville as shown below: "XXIV Audit Committee and Internal Auditor "§33.360 Establishment and Purpose The Audit Committee which was established by Resolution No. 134-00 remains established pursuant to this Article. Its purpose remains to serve in an advisory capacity between the City Council, the independent auditor, the Internal Auditor and City Administration concerning financial accounting and reporting, audit functions, internal controls and compliance with governmental regulations. The Audit Committee shall ensure the independence of the independent auditor, the ability and responsibility of the Internal Auditor to report any concerns about finances or accounting to the Audit Committee, Administration and City Council, the integrity of the Administration and the adequacy of public disclosures. The Audit Committee shall, in conjunction with the external auditors, review the City's financial reports and information, the City's system of internal financial and accounting controls, and the City's compliance with governmental laws and regulations regarding financial matters. §33.361 Composition and Term The Audit Committee shall include one City Council member appointed by the Mayor and three citizens of Fayetteville, at least one of which shall be a Certified Public Accountant. The three citizens shall serve three year terms of office. §33.362 Meetings The Audit Committee shall meet at least three times annually, one of which must be with the independent auditor, Internal Auditor, and Administration to discuss the independent auditor's report and findings following its audit of the City. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby enacts §33.363 Responsibilities and Duties as previously required in Resolution No. 134-00 and shown in Exhibit A attached. Section 3: That the City Council of the City of Fayetteville, Arkansas hereby enacts §33.364 Internal Auditor as shown below: "§33.364 Internal Auditor. The City of Fayetteville Internal Audit Division Charter (attached) is approved and adopted. Any amendments to such Charter must be approved by the Audit Committee with the revised Charter provided to the City Clerk. The desire and intent of the City Council is that the Internal Auditor shall report directly to the City Council if the Internal Auditor believes any audit, financial or accounting issue is not being properly and timely addressed by the Audit Committee, independent auditor or administrator." Section 4: That the City Council of the City of Fayetteville, Arkansas hereby revokes all previous ordinances and resolutions concerning the formation and duties of the Audit Committee to the extent that they conflict with this ordinance. PASSED and APPROVED this 41h day of September, 2012. APPROVED: ATTEST: By: By: LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer EXHIBIT "A" §33.363. Responsibilities and Duties. To fulfill its responsibilities and duties the Audit Committee shall: (A) Review the Charter periodically and update as conditions dictate; (B) Serve on the review committee to select the independent auditors. On an annual basis, the committee should review and discuss with the auditors all significant relationships the auditors have with the City to determine the auditor's independence. The annual independence review should include a review of all non-audit related consulting fees for nature of services and effect on independence; a review of any and all relationships between members of the audit firm and employees of the City; the obtaining of a formal written statement from the auditors as to their compliance with professional guidelines relating to independence; and discussion with the auditors regarding the firm's own internal controls over monitoring independence; (C) Review the City's annual financial statements and related financial information, including any certification, report, opinion, or review rendered by the independent auditors and any changes in accounting principles or the application thereof; (D) Review the performance of the independent auditors. Annually, clarify with the independent auditors that the auditors are ultimately accountable to the City Council and that the City Council has ultimate power in the appointment or removal of the independent auditors; (E) Periodically consult with the independent auditors, outside the presence of management, regarding internal controls and the completeness and accuracy of the organization's financial statements and related disclosures; (F) In conjunction with the external auditors, review with financial and accounting personnel and the Internal Auditor the adequacy and effectiveness of the accounting and financial controls of the City, including controls over data processing activities and functions. Approve recommendations for the improvement of such internal control procedures;