Chapter 7.11
Spokane Auditor*

Sections:

7.11.010 Preamble.

7.11.020 Office of Spokane Auditor.

7.11.030 Audit Committee.

7.11.040 Standards.

7.11.050 Assistants and Employees.

7.11.060 Scope of Audits.

7.11.070 Audit Schedule.

7.11.080 Special Audits.

7.11.090 Records.

7.11.100 Access to Employees, Records and Property.

7.11.110 Agency Response.

7.11.120 Audit Reports to City Council.

7.11.130 Report of Irregularities.

7.11.140 Annual Report.

7.11.150 Audit Follow-Up.

7.11.160 Contract Auditors, Consultants and Experts.

7.11.170 Quality Assurance Reviews.

7.11.180 Severability.

* The codification of Ord. C32674, passed August 14, 2000, effective September 13, 2000, as amended by Ord. C32737, passed October 30, 2000, effective November 29, 2000, as contained in SMC chapter 7.11 was not approved by the city council.

7.11.010 Preamble.

A.  Whereas government auditing independently reviews, evaluates and reports on the financial condition, the accuracy of financial record keeping, compliance with applicable laws, policies, guidelines and procedures, and efficiency and effectiveness of operations; and

B.  Whereas management and employees in the public sector are responsible for taxpayer use of public resources and should be held accountable for their use; and

C.  Whereas it is vital that government exercise its power and perform its duties in compliance with law, policy, and established procedures and apply good judgment and sound management practices; and

D.  Whereas the independence and public accountability of the auditor can be assured by provision of an independent, legislatively ratified auditor.

7.11.020 Office of Spokane Auditor.

The office of Spokane auditor (“auditor” or “Spokane auditor”) is hereby established. The auditor shall be appointed by the city council, however, the audit committee will be asked to evaluate and make recommendations regarding each candidate.

A.  The auditor shall be knowledgeable in performance and financial auditing, public administration, and government financial and fiscal practices.

B.  The auditor, during his or her term of employment, shall not have other employment either within or without the city and shall not participate in the political affairs of the City of Spokane.

C.  The auditor shall possess adequate professional proficiency for the job, demonstrated by relevant certification such as CIA (certified internal auditor) or CPA (certified public accountant) with at least five years’ experience in the field of government auditing, performance auditing, evaluation or analysis auditing, or equivalent experience. The auditor shall have a bachelor’s degree in accounting, business administration, or public administration or related field. If financial statement audits are performed, the auditor must be a CPA. The auditor shall maintain his or her professional certification during his or her employment as auditor.

D.  The auditor shall be initially employed for a period of two years, unless removed for cause by a vote of at least five members of the city council.

7.11.030 Audit Committee.

A.  An audit committee shall be established consisting of five or seven members to recommend individuals to the city council for selection as auditor and to consult with the auditor regarding establishment of audit schedule, audit progress, audit follow-up, special needs; and shall work to assure maximum coordination between the work of the auditor and the needs of the city council and external auditors, if any.

B.  Audit committee members shall be appointed by the city council which members shall have experience in business, whether for profit or not for profit, accounting or finance and efforts shall be made to ensure broad representation from the community.

C.  All appointees shall be independent of City of Spokane management and administrative service.

D.  The city council shall appoint at least one of its members to serve on the committee as a nonvoting liaison member.

E.  Audit committee members shall be appointed by the city council to staggered two-year terms and shall not serve more than two consecutive two-year terms.

F.  Audit committee members shall serve without compensation or reimbursement.

G.  Subject to review in July 2002, the audit committee will meet at least quarterly, holding special meetings as needed.

H.  Members must be residents of the City of Spokane.

7.11.040 Standards.

The auditor and the auditor’s office shall adhere to government auditing standards in conducting its work and shall be considered independent as defined by those standard.

7.11.050 Assistants and Employees.

A.  The auditor’s office shall be provided a separate budget (subject to available resources) sufficient to carry out the responsibilities and functions established in this chapter.

B.  The auditor shall establish an organizational structure appropriate to carrying out the responsibilities and functions of this chapter.

C.  The auditor shall have the power to appoint, employ, and remove such assistants, employees and personnel as deemed necessary for the efficient and effective administration of the affairs of the office.

7.11.060 Scope of Audits.

The auditor shall have authority to conduct financial, performance or other audits of all departments, offices, boards, activities and agencies of the entity in order to independently and objectively determine whether:

A.  Activities and programs being implemented have been authorized by City Charter or code, state law or applicable federal law or regulations;

B.  Activities and programs are being conducted as prescribed by the city council to accomplish the objectives intended by City Charter or code, state law or applicable federal law or regulations;

C.  Activities or programs efficiently and effectively serve the purpose intended by City Charter, city law, state law or applicable federal law or regulations;

D.  Activities and programs are being conducted and funds expended in compliance with applicable laws;

E.  Revenues are being properly collected, deposited and accounted for;

F.  Resources, including funds, property and personnel, are adequately safeguarded, controlled and used in an effective and efficient manner;

G.  Financial and other reports are being provided that disclose all information that is required by law, that is necessary to ascertain the nature and scope of programs and activities and that is necessary to establish a proper basis for evaluating the programs and activities;

H.  There are adequate operating and administrative procedures and practices, systems or accounting internal control systems and internal management controls which have been established by management; or

I.  There are indications of fraud, abuse or illegal acts which need further investigation.

7.11.070 Audit Schedule.

A.  At the beginning of each calendar year, the auditor shall submit a one- to three-year audit schedule to the audit committee and city council for review and comment. The schedule shall include the proposed plan for auditing departments, offices, boards, activities, subcontractors and agencies for the period. This schedule may be amended during the period after review with audit committee the city council. Additionally, the auditor may spontaneously initiate and conduct any other audit deemed necessary.

B.  In the selection of audit areas and audit objectives, the determination of audit scope and the timing of audit work, the auditor should consult with federal and state auditors and external auditors, if any, so that the desirable audit coverage is provided and audit effort is properly coordinated.

7.11.080 Special Audits.

In the event the auditor receives a request to perform a special audit not included in the annual audit schedule, the auditor may amend, in auditor’s judgment, the annual audit schedule to allow for such special audit.

7.11.090 Records.

The auditor shall retain for three years (or longer if so directed by state law, City Charter, city law, or judgment of the auditor), a complete file of each audit report and each report of other examinations, investigations, surveys and reviews made by the auditor. The file should include audit workpapers and other supportive material directly pertaining to the audit report.

7.11.100 Access to Employees, Records and Property.

A.  All officers and employees of City of Spokane shall furnish the auditor with unrestricted access to employees, information and records (including automated data) within their custody regarding powers, duties, activities, organization, property, financial transactions, contracts and methods of business required to conduct an audit or otherwise perform audit duties. In addition, they shall provide access for the auditor to inspect all property, equipment and facilities within their custody. If such officers or employees fail to produce the aforementioned access and/or information, the auditor may initiate a search to be made and exhibits to be taken from any book, paper or record of any such official or employee, or outside contractor or subcontractor, except as governed by statute. Further, all contracts with outside contractors and subcontractors shall provide for auditor access to all financial and performance related records, property, and equipment purchased in whole or in part with governmental funds and facilities.

B.  The auditor shall not publicly disclose any information received during an audit that is considered confidential or proprietary in nature by any local, state or federal law or regulation.

7.11.110 Agency Response.

A final draft of the audit report will be forwarded to the audited agency or department and the mayor for review and comment regarding factual content before it is released. The agency or department must respond in writing and specifying agreement with audit findings and recommendations or reasons for disagreement with findings and/or recommendations, plans for implementing solutions to issues identified and a timetable to complete such activities. The response must be forwarded to the auditor within thirty days or such other reasonable period of time as determined by the auditor, whichever is longer. The auditor will include the agency’s response in the report. If no response is received, the auditor will note that fact in the transmittal letter and will release the audit report.

7.11.120 Audit Reports to City Council.

A.  Each audit shall result in a written report containing relevant background information, findings and recommendations.

B.  The auditor shall submit each audit report to the city council and shall retain a copy as a permanent record. A copy shall also be filed with the city clerk and the Spokane public library.

7.11.130 Report of Irregularities.

If during an audit, the auditor becomes aware of abuse or illegal acts or indications of such acts that could affect the city or any department thereof, the auditor shall report the irregularities to the audit committee, the city council and the mayor. If it appears that the irregularity is criminal in nature, the auditor shall (immediately) notify the Spokane County prosecuting attorney, the Washington State Auditor and the Washington State Attorney General.

7.11.140 Annual Report.

The auditor shall submit an annual report to the city council within thirty days after the calendar/fiscal year indicating audits completed, major findings, corrective actions taken by administrative managers, and significant findings which have not been fully addressed by management.

7.11.150 Audit Follow-Up.

The auditor shall follow up on audit recommendations, as practical, to determine if administrative managers are implementing corrective action. The auditor may request periodic status reports from audited entities regarding actions taken to address reported deficiencies and audit recommendations.

7.11.160 Contract Auditors, Consultants and Experts.

A.  Within budget limitations, the auditor may obtain the services of certified public accountants, qualified management consultants, or other professional experts necessary to perform the auditor’s duties. An audit that is performed by contract must be conducted by persons who have no financial interests in the affairs of the governmental unit or its officers.

B.  The auditor and audit committee may play a key role in the selection of any City of Spokane outside independent auditor.

7.11.170 Quality Assurance Reviews.

A.  The audit activities of the auditor’s office shall be subject to quality review in accordance with applicable government auditing standards by a professional, nonpartisan objective group utilizing guidelines endorsed by National Association of Local Government Auditors (N.A.L.G.A.). At the direction of the audit committee. A copy of the written report of this independent review shall be furnished to the city council.

B.  The quality control review shall determine compliance with government auditing standards and the quality of the audit effort and reporting, including:

1.   general standards such as staff qualifications, due professional care, and quality assurance;

2.   fieldwork standards such as planning, supervision, and audit evidence; and

3.   reporting standards such as report content, presentation, and timeliness.

C.  The local government shall reimburse the costs of the quality control review team from funds budgeted in the auditor’s budget or other in-kind support.

7.11.180 Severability.

Should any section, paragraph, sentence, clause or phrase of this chapter, or its application to any person or circumstance, be declared unconstitutional or otherwise invalid for any reason, or should any portion of this chapter be preempted by state or federal law or regulation, such decision or preemption shall not affect the validity of the remaining portions of this chapter or its application to other persons or circumstances.