City of Feb 2 8 2023 City Manager's Office

The City has not taken sufficient steps to improve the City's financial risk profile as recommended by its retained internal auditor. Response: Disagree. While the City agrees that the internal auditor's recommendations should be implemented, the Grand Jury Report provides an inaccurate view of the City's "financial risk profile." The City has implemented financial controls to protect against fraud, waste and abuse, including the following: • In December 2014, the City implemented a new enterprise resources planning ("ERP") software, New World. The transition to New World improved internal controls on procurement by establishing multi-layered approvals to prevent fraud, waste, and abuse. • In conjunction with the upgrade of the City's ERP software in 2014, the City incorporated a decentralized accounting structure to enhance segregation of purchasing and financial duties. • Since 2014, the City has hired 4.5 additional full-time equivalent staff to improve segregation of duties and internal controls. • The City implemented a Council-approved Fraud, Waste and Abuse Program in Fall 2022. • The City submitted eight of the nine financial policies listed in the high-risk category for review by the internal auditor as reported to the Audit Committee on November 28, 2022. The City presented the ninth policy to the internal auditor for review by January 2023. The City expects all nine policies will be finalized for approval by June 30, 2023. In addition, the December 14, 2022 Grand Jury Report, "Show Me the Money", confirmed that the City is in compliance with its financial reporting requirements. The City disagrees with the Grand Jury Report's characterization of these measures as not "sufficient." Nevertheless, the City agrees that implementation of City's Internal Audit Workplan should be prioritized, as reflected in the above response and the City's responses to the recommendations below.