There is hereby established a City Audit Committee composed of seven members consisting of the Mayor, or his designee; the President of Council, or the Chairman of the Finance Committee as his designee; the Director of Law; one member appointed by the Mayor; and two members appointed by the President of Council. The final member, who shall serve as Chair of the City Audit Committee, shall be chosen jointly by the Mayor and Council President, shall have at least ten years experience in auditing or financial accounting, including some experience in governmental finance or auditing, and shall have no financial or contractual interest with the City of Cleveland in accordance with the ethics provisions of the Ohio Revised Code. In addition, the Chair shall not have had any duties pertaining to the audit of the City of Cleveland for at least five years prior to his appointment. In the event that the President of Council and Mayor fail to jointly select a Chair within thirty days of the vacancy of the seat, then the President of Council shall appoint a Chair. The appointed members' terms shall be two years and the term of the Chair shall be three years. The Clerk of Council shall publish the name of each member and the Chair in the City Record. The Director of Law shall designate one of his assistants to serve as Secretary of the City Audit Committee. Members of the City Audit Committee shall serve without compensation.
(Ord. No. 1957-2000. Passed 11-13-00, eff. 11-22-00, without the signature of the Mayor)
The City Audit Committee is to serve as the focal point for communication between the legislative and executive branches of the City of Cleveland, the independent auditor retained by the City, the Department of Finance, and the Division of Internal Auditing as their duties relate to financial accounting, reporting, internal controls, and compliance with applicable laws and regulations. The City Audit Committee is to assist the staff and employees of the City in fulfilling its responsibilities as to accounting policies and reporting practices of the City of Cleveland and sufficiency of auditing relative thereto. The City Audit Committee shall be the principal agent in ensuring the independence of independent auditors, the integrity of management and the adequacy of disclosures to the public. The City Audit Committee shall make recommendations to the Director of Finance relative to his selection of an independent auditor for the City pursuant to Section 127.41 of the Codified Ordinances of Cleveland, Ohio, 1976.
(Ord. No. 1957-2000. Passed 11-13-00, eff. 11-22-00, without the signature of the Mayor)
(a) The City Audit Committee shall:
(1) Review with the Director of the Department of Finance, the independent auditor, and the Commissioner of Internal Audit, the City's policies and procedures to reasonably assure the adequacy of internal control's over accounting, administration, compliance with laws and regulations and financial reporting.
(2) Have familiarity, through the individual efforts of its members, with the accounting and reporting principles and practices applied by the City in preparing its financial statements. Further, the City Audit Committee is to make, or cause to be made, all necessary inquiries of the City and the independent auditor concerning established standards of conduct and performance and deviations therefrom.
(3) Review, prior to the start of the annual audit, the scope and general extent of the independent auditor's planned examination, including its engagement letter. The auditor's fees shall be summarized by the Director of Finance for review by the City Audit Committee. The Committee's review should entail an understanding from the independent auditor of the factors considered by the auditor in determining the audit scope, including:
(a) risk characteristics of the City of Cleveland; and
(b) external reporting requirements; and
(c) quality of internal accounting, administrative and compliance controls; and
(d) extent of internal auditor's involvement with the audit examination; and
(e) other areas to be covered during the audit engagement.
(4) Review the extent of non-audit services planned to be provided by the independent auditor in relation to the objectivity and independence needed in the audit.
(5) Review with the City staff and the independent auditor, upon completion of its audit, financial results and findings prior to their finalization and dissemination to the public.
(b) The City Audit Committee is to review the City's comprehensive annual financial report, including the financial statements and footnote disclosures and supplemental disclosures required by generally accepted accounting principles, with respect to the following:
(1) Significant transactions not a normal part of the City's operations; and
(2) Selection of and changes, if any, during the year in the City's accounting principles or their application; and
(3) Significant adjustments proposed by the independent auditor; and
(4) The process used in formulating accounting estimates and the independent auditor’s conclusions regarding the reasonableness of those estimates; and
(5) Any disagreements between the independent auditor and management about matters that could be significant the City's financial statements or the auditor's report; and
(6) Difficulties encountered in the performance of the audit.
(c) The City Audit Committee shall also:
(1) Evaluate the cooperation received by the independent auditor during its audit, including its access to all requested records, data, and information and inquire of the independent auditor whether there have been any disagreements with City management that, if not satisfactorily resolved, would have caused the independent auditor to issue a nonstandard report on the City's financial statements.
(2) Discuss with the independent auditor the quality of the City's financial and accounting process and any recommendations that the independent auditor may have, including improvements to internal financial controls, controls over compliance with laws and regulations, the selection of accounting principles and management reporting systems.
(3) Review written responses to "letter of comments and recommendations" from the independent auditor and discuss with the City the status of implementation of prior period recommendations and corrective action plans.
(4) Recommend any extensions or changes in the duties of the City Audit Committee.
(5) Issue an annual report on the discharge of the duties of the City Audit Committee.
(Ord. No. 1957-2000. Passed 11-13-00, eff. 11-22-00, without the signature of the Mayor)
The City Audit Committee shall meet at least quarterly in each calendar year and as many additional times as the majority of members deems necessary in the offices of the Department of Finance at such time as it shall decide. All meetings of the City Audit Committee shall be public and the dates and attendance of the meetings shall be published by the Clerk of Council in the City Record. The Chair, however, may hold executive sessions in accordance with the provisions of the Ohio Revised Code. A simple majority of the members shall constitute a quorum for the transaction of business. Any member who is absent from three consecutive duly-called meetings shall be removed by the Chair from the City Audit Committee. In the event that a vacancy occurs during the term of any member, the appropriate appointing authority shall name a successor to serve the unexpired term. The members of the City Audit Committee may request that members of the other departments of the City be present at the meetings, as well as representatives of the independent auditor. The City Audit Committee shall keep minutes of its meetings, a copy of which shall be kept on file and available for public inspection in the Mayor's office and with the Clerk of Council.
(Ord. No. 1957-2000. Passed 11-13-00, eff. 11-22-00, without the signature of the Mayor)