REPORT TO AUDIT COMMITTEE
SUBJECT
Title
Accept the City Auditor’s Office Report on the Audit of the City’s Building Permitting Process
Report
BACKGROUND
Per Section 900 of the City Charter, the City Auditor’s duties and responsibilities include conducting in-depth financial and performance audits, overseeing the City’s performance management system, auditing and approving all bills, invoices, payrolls, demands or charges against the City government before payment and, with the advice of the City Attorney, making reports to the City Council as to the regularity, legality and correctness of such claims, demands or charges. The City Auditor’s Office conducts its work under the auditing standards prescribed by the Institute of Internal Auditors (IIA). The IIA International Standards for the Professional Practice of Internal Auditing (Standards) requires the City Auditor’s Office to “establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization’s goals” and consider the input from senior management and a governing board.
The role of the Audit Committee (Committee) is to provide oversight of the City’s financial reporting processes, internal controls, and independent auditors. The city entered into a contract with Baker Tilly US, LLP to perform the City’s annual risk assessment and using the results of that work, provide recommended projects to make up the audit work plan on an ongoing basis.
DISCUSSION
During the risk assessment, the Auditor’s Office and Baker Tilly rated the building permitting process as high risk based on inherent risks and specific information gathered, including:
• Higher frequencies of customer complaints for slow processing
• Departmental vacancies and turnover due to failed recruitment in a competitive field
• New system implementation
• Volatile revenue
• Increased compliance risk associated with changing building code
• Ineffective fee management
Accordingly, the Auditor’s Office partnered with Baker Tilly to perform an internal audit of the building permitting process. The objectives of this audit were to:
1) Determine whether the internal controls for the building permitting processes are adequately designed and operating effectively to ensure compliance with the City Code and other regulations.
2) Determine whether adequate mechanisms are in place to ensure that the building permitting process is efficient and provides timely customer service.
3) Determine whether the internal controls over billing and collections of permitting fees and fines are adequately designed and operating effectively to ensure financial accountability.
Attached is the City Auditor’s Office report containing the analysis, results and recommendations from the audit.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
Costs associated with the preparation of this report were included in the City’s FY 2023/24 and 2024/25 Adopted Operating Budget.
COORDINATION
This report has been coordinated with the City Manager’s Office.
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.
RECOMMENDATION
Recommendation
Accept the City Auditor’s Office Report on the Audit of the City’s Building Permitting Process and recommend that this report be forwarded for note and file to the full Council at a future Joint Council and Authorities Concurrent and Stadium Authority Meeting.
Staff
Reviewed and Approved by: David Noce, Audit Manager
ATTACHMENT
1. City Auditor’s Office - Audit of Building Permitting Process