REPORT TO COUNCIL
SUBJECT
Title
Note and File the City Auditor's Office Report on the Audit of Silicon Valley Power's Power Purchase Agreement Process
Report
BACKGROUND
Per Section 909 of the City Charter, and SCCC Section 2.29.010, 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) require the City Auditor to present the results of any audits to the Audit Committee.
DISCUSSION
In 2022, the City Auditor's Office engaged Baker Tilly US, LLP (Baker Tilly) to conduct an annual citywide risk assessment and prepare an annual audit work plan for the next five years. The risk assessment process involves identifying and measuring risks associated with the audit universe (a list of specific departments, functions, processes, programs, etc. that can be subject to an audit, i.e. auditable units). Risk is defined as "the possibility of an event or condition occurring that will have an impact on the ability of an organization to achieve its objectives." The risk rating attributed to a particular department or function reflects the theoretical potential for loss, rather than any actual loss history.
As part of the ongoing risk assessment process, the Auditor's Office and Baker Tilly rated the power purchase agreement process as high risk based on inherent risks and specific information gathered, including:
* Budget and high dollar financial commitment.
* Detailed feder...
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