BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Consider the March 19, 2025, Board Audit Committee Recommendation to Approve Proposed Amendments to the Board Audit Committee Audit Charter.
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RECOMMENDATION: Recommendation
Consider recommendations resulting from the March 19, 2025, Board Audit Committee meeting to:
A. Consider and Approve Proposed Amendments to the Board Audit Committee Audit Charter; and
B. Provide Further Direction as Needed.
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SUMMARY:
The Board Audit Committee (BAC) was established to assist the Board of Directors (Board), consistent with direction from the full Board, to identify potential areas for audit and audit priorities, and to review, update, plan, and coordinate execution of Board audits. On September 26, 2018, the BAC directed that an Audit Committee Charter be developed, and on August 27, 2019, the Board formally approved the BAC Audit Charter. The BAC Audit Charter was last amended by the Board at its regular meeting on May 28, 2024.
At its regular March 19, 2025, meeting, the BAC considered proposed amendments to the BAC Audit Charter and voted to recommend them to the full Board for approval. These proposed amendments are set forth below.
Recommended Changes:
Article X, Section 1 of the Charter states that the BAC shall periodically review the Audit Charter and make any recommendations to the Board for final approval. In accordance with this requirement, the following recommended changes are proposed:
First, Article VI, §7 addresses Valley Water management responses to audits and currently requires that:
Valley Water Management must review, for technical accuracy, and provide comments on any preliminary draft audit report within ten working days from issuance.
Staff has reported that in practice this ten working day deadline can sometimes be difficult to meet. As an alternative to extending this deadline (e.g., fifteen working days), the Chief Audit Executive has suggested changing the requirement to holding an exit conference with the Auditor regarding any preliminary draft report. This will allow prompt discussion of any issues that could impact the report within a reasonable time frame.
Second, Article VI, §7 also sets forth a deadline for management to review and respond to draft audit report recommendations included in Board initiated audits:
Valley Water Management must review and respond to draft audit report recommendations included in Board Initiated audits within fifteen working days from issuance of any draft audit report, unless the Auditor requires the Management response in a shorter amount of time.
In recognition of the possible exchange of information and drafts earlier in the process, it is recommended that “issuance of any draft audit report” be changed to “issuance of the final draft audit report.” This change will help to avoid any ambiguity in the process and recognizes that management is preparing a draft management response for BAC review based only on the final draft report.
Third, since Article VI, §7 of the Charter references “working days” in two places, it is recommended that the remaining reference to “days” in the Charter (Article VII, §§3-4) include the qualifier “calendar” for clarity. While the existing references to “days” in Article VII are unqualified and should therefore be interpreted to mean calendar days, adding the qualifier “calendar” will avoid any ambiguity or future questions regarding deadlines.
Fourth, Article III, §4 includes a minor grammatical correction: changing “consider” to “considers.”
These recommended amendments are all set forth in the redlined Charter (Attachment-1), and formal approval of the proposed amendments is sought from the Board.
ENVIRONMENTAL JUSTICE AND EQUITY IMPACT:
There are no environmental justice and equity impacts associated with adoption of the proposed BAC Audit Charter amendments. This action is unlikely to or will not result in adverse impacts and is not associated with an equity opportunity.
FINANCIAL IMPACT:
There is no financial impact associated with this item.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: Red-lined Board Audit Committee Charter
Attachment 2: PowerPoint
UNCLASSIFIED MANAGER: Manager
Darin Taylor, 408-630-3068