REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
title
Action on the Santa Clara Stadium Authority (SCSA) Auditor Appointment (Stadium Authority)
Report
BACKGROUND
On June 15, 2016, the Santa Clara County Civil Grand Jury issued a report entitled “The City of Santa Clara, The Santa Clara Stadium Authority, Levi's Stadium and Measure J” that included a recommendation to “modify the duties of the Finance Director/Treasurer/Auditor position as described in the Joint Exercise of Powers Agreement Establishing the Santa Clara Stadium Authority (JPA) Agreement”. The SCSA Board accepted the recommendation.
On June 27, 2017, the City Council acting on behalf of the City, the Successor Agency and Bayshore North Project Enhancement Authority, approved the Third Amendment to the Joint Exercise of Powers Agreement (Amended JPA Agreement), amending Section 3.11, Treasurer and Auditor, to separate duties of the Stadium Finance Director/Treasurer/Auditor function into two positions - Stadium Authority Treasurer and Stadium Authority Auditor. Per the Amended JPA Agreement, the Auditor of the Stadium Authority shall be designated by appointment and/or by contract by the Stadium Authority Board. The Stadium Authority Board appointed Auditor’s sole duty is to “designate such independent auditing responsibility as it deems necessary including but not limited to making arrangements with a certified public accountant or firm of certified public accountants for the annual independent audit of accounts and records of the Stadium Authority.” This means that there is a minimum set of actions required for the Auditor, e.g., fiscal audits, and there is authority to perform additional reviews as deemed needed. Additionally, the JPA provides that the records and the accounts of the Stadium Authority shall be audited annually by an independent certified public accountant (CPA) designated by the Executive Director (Section 6.2 Audit).
DISCUSSION
At the March 19, 2018 Stadium Authority Ad-Hoc Audit Committee, staff presented the attached report (see Attachment 1). In this report, staff discussed the annual financial audits through an external accounting firm and its scope. For any audit beyond the annual financial audit, such as management and auditing of records and performance, current resources are not adequate. Previously, the Board relied on staff assigned to the Stadium Authority that were not trained or credentialed in proper audit processes and policies, and were assigned to both the role of processing the transactional fiduciary responsibilities, as well as tasked with auditing the performance of those transactions.
Based on the JPA agreement provisions, staff discussed two options for the appointment of the Stadium Authority Auditor. The Board could appoint a City employee to serve as the Stadium Authority Auditor, who would oversee the contract of the external financial auditor or any other auditor. The second option is for the Board to contract with an auditing firm or a person, who in turn would oversee the contract of the external auditor or any other auditor.
The Fiscal Year 2018/19 Santa Clara Stadium Authority Adopted Budget includes $100,000 in contractual dollars. This allocation is in addition to the funding for the financial auditor. By appointing a City employee to serve in the function of the Stadium Authority Auditor, the Board preserves the full budgetary allocation for actual audit work vs. hiring an auditing firm. Therefore, after an extensive discussion at the March 19 Stadium Authority Ad-Hoc Audit Committee, the Committee unanimously recommended to the Board to direct the Executive Director to bring forward for the Board’s consideration the appointment of a City employee serving as a Stadium Authority appointee to the position of Stadium Authority Auditor.
If the Board approves the Committee’s recommendation, the Executive Director will recommend that the Assistant Treasurer be appointed as the Stadium Authority Auditor. The position is currently being recruited for and the recruiting firm would select potential candidates who have auditing experience.
The appointed Auditor will function as a liaison to the Board regarding all Stadium Authority audits including but not limited to developing an audit program; administer the external auditor(s)’ contract(s); and track audit recommendations.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The FY 2018/19 Stadium Authority Adopted Budget includes $100,000 for audit work. If the Board approves the appointment of a City employee serving as a Stadium Authority appointee, the full allocation for audits will be available to perform Stadium Authority audits. If the Board directs the Executive Director to bring forward for the Board’s consideration criteria and selection process for the appointment of a firm or person to assume the role of Auditor of the Stadium Authority, it is anticipated that some of the $100,000 will be used to contract with such a firm or person and therefore reduce the capacity to conduct audits.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
ALTERNATIVES
1) Direct the Executive Director to bring forward for the Board’s consideration the appointment of a City employee serving as a Stadium Authority appointee to the position of Stadium Authority Auditor.
2) Direct the Executive Director to bring forward for the Board’s consideration criteria and selection process for the appointment of a firm or person to assume the role of Auditor of the Stadium Authority.
3) Any other action by the Board.
RECOMMENDATION
Recommendation
Alternative 1):
Direct the Executive Director to bring forward for the Board’s consideration the appointment of a City employee serving as a Stadium Authority appointee to the position of Stadium Authority Auditor.
Staff
Prepared by: Walter C. Rossmann, Chief Operating Officer
Reviewed by: Brian Doyle, General Counsel
Approved by: Deanna J. Santana, Executive Director
ATTACHMENTS
1. March 19, 2018 Stadium Authority Ad-Hoc Audit Committee Report