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HomeMy WebLinkAboutRESOLUTION 2022.1 EXHIBIT A EXHIBIT A CITY AUDITOR AND AUDIT COMMITTEE BY-LAWS BACKGROUND The Audit Committee and the City Auditor are established pursuant to Article III, Section 18 of the Charter of the City of Bremerton . City management, not the Auditor, is responsible for establishing, implementing, and maintaining the s. Management establishes control policies, processes, and practices to help the City achieve the following four objectives: 1. Effectiveness and efficiency of operations 2. Reliability of financial and management reporting 3. Compliance with laws and regulations 4. Safeguarding of assets The Audit Committee is comprised of two City Council Members and a CPA Designated by City Council, and two Bremerton Resident Members Selected by the Designated Members. The Audit Committee oversees the Auditor, who performs projects and conducts internal audits primarily of the activities of the administrative branch departments, a structure that helps maintain the Audit independence. The Audit Committee serves the public interest by providing the City Council, the Mayor, City departments, and the public with information, objective analysis, and recommendations on how best to use public resources in support of the well-being of the Bremerton residents. CITY AUDITOR RESPONSIBILITY As an objective and independent advisor, the City Auditor may perform internal audits to evaluate whether management internal controls, policies, processes, and practices are present and operating effectively, and if not, provide recommendations for improvement. As an advisor, the City Auditor is not responsible for the execution of City activities. The City Auditor may also conduct performance audits and business process reviews; perform special projects; participate in fraud investigations, and conduct post investigation fraud audits to identify control breakdowns and establish financial loss; and perform Ethics Compliance reviews per Chapter 2.96 of the Bremerton Municipal Code. The City Auditor reports directly to the Audit Committee and submits reports and approval. The Auditor may issue memos summarizing findings and/or recommendations, and draft reports directly to management. AUDIT COMMITTEE RESPONSIBILITY The Audit Committee responsibility is to assure elected City officials and management that the internal auditing of the municipality and its departments, programs and activities is performed in accordance 1 with standards for the practice of internal auditing and with professional standards of conduct. To this end, the Committee will: a) Be responsible for the appointment, retention, and oversight of the work of the City Auditor. b) Work with the Auditor to develop the Work Plan. c) Review and approve the annual budget. d) Review results of external and internal audits with specific attention to: i. Restrictions ii. Cooperation received iii. Audit findings iv. Audit recommendations e) Review and approve appropriate special audit requests. f) Review and recommend revisions to policies relating to unethical and illegal procedures. g) Ensure the City Auditor's independence of management. h) Meet regularly with the City Auditor. i) Help to assure that management is exercising due professional care. AUDIT COMMITTEE MEMBERS AND TERM Pursuant to Article III, Section 18 of the 2.18 of the Bremerton Municipal Code, there shall be an Audit Committee consisting of three designated five members as follows: a) Designated Members: Two Council Members and an independent Certified Public Accountant designated by the City Council; and b) Selected Members: Two residents of the City of Bremerton selected by the Designated Members of the Audit Committee. The designation of the Council Members to the Audit Committee shall be by the Council President. The designation of the Certified Public Accountant to the Audit Committee shall be by majority vote of the City Council. The selection of the two residents of the City of Bremerton shall be by majority vote of the Designated Members of the Audit Committee. During the first meeting following Council committee appointments, the Committee shall elect one of its Council members as Chair and another Committee member as Vice Chair, to serve until Chairs are elected the following year. The Chair, or in his or her absence the Vice Chair, will conduct the order of business at meetings, coordinate communications of the committee, and perform all other duties as specified by the Committee. Only the City Council members can approve the 2 Audit Committee members shall serve terms as follows: a)The two Council members designated by City Council shall serve until new appointments are made by Council President. b) The independent Certified Public Accountant Designated by City Council shall serve a three- year term and may re-apply to serve additional terms. The term of the independent certified public accountant shall commence upon appointment by the City Council. c) The two City of Bremerton residents selected by the Designated Members of the Audit Committee shall serve three-year staggered terms and may re-apply to serve additional terms. The term of the Resident members shall commence upon appointment by the Designated Members. If any member does not serve a full term, either by resignation or removal, a replacement shall be selected by the original appointing authority. AUDIT COMMITTEE MEMBER REMOVAL By majority vote of the entire membership of the Committee sitting as a whole, the Audit Committee may request the appointing authority of a member to remove that member from the Committee. VOTING AND CONFLICT OF INTEREST be in person or virtual. General decisions of the Committee shall be by majority vote of the voting members attending the meeting. Committee Members attending virtually may participate and vote during the meeting as if they were physically present at the meeting. A Committee member may abstain from participating and voting at will or may be requested by Committee consensus to abstain from participating and voting on issues that are subject to that member's area of control or influence. Three members are required to be in attendance to constitute a quorum for the transaction of Committee business. There shall be no voting by proxy except that any member who will be absent may prepare a written statement of position to the Chairperson in advance of any meeting to be read to the members in attendance during that meeting. CONFIDENTIALITY All Audit Committee meetings shall be conducted in conformance with the Open Public Meetings Act (RCW 42.30). Until an audit is complete and the audit report is ready for Audit Committee review and approval, Audit Committee members will be held to a strict standard of confidentiality to protect the integrity of the audit. Except for information shared in public meetings, strict confidentiality will be maintained for all audit-related communication between the City Auditor and Committee members or between individual Committee members. Confidences that relate to illegal activities shall be immediately communicated to the City Attorney and/or State Auditor. 3 REPORTING Pursuant to state law, Audit Committee meetings are open to the public.Some subject matter may be inappropriate for an open public meeting, such as incomplete audit findings which are preliminary and, therefore, inappropriate for a public meeting; or topics set forth in RCW 42.30.110(1) that should be discussed in executive session. Unless and until an audit report or memo summarizing recommendations is issued for final approval, it is essential that the City Auditor and the Audit Committee members keep all internal audit deliberations and matters confidential. As part of the audit process and at the sole discretion of the City Auditor, the City Auditor may at any time opt to share draft reports and/or analyses, or other pertinent information with appropriate City personnel. Deliberation of preliminary internal audit work may occur in informal groups of Audit Committee members, provided the group is fewer in number than a quorum. In addition to deliberating preliminary audit work, the informal work groups may review and approve preliminary audit reports before the reports are submitted to the whole committee for final review and approval. The informal group members will not discuss with other Audit Committee members matters that could result in a rolling quorum. 4