BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Consider the November 19, 2025, Board Audit Committee Recommendation for Performance Audits to include in the 2026 Annual Audit Plan; Approve the 2026 Annual Audit Plan; and Provide Further Direction to Staff and the Chief Audit Executive as Needed.
End
RECOMMENDATION: Recommendation
Consider the November 19, 2025, Board Audit Committee Recommendation for Performance Audits to include in the 2026 Annual Audit Plan:
A. Approve the 2026 Annual Audit Plan; and
B. Provide further direction to staff and the Chief Audit Executive as needed.
Body
SUMMARY:
The purpose of this agenda item is to present and discuss the 2026 Annual Audit Plan, as recommended to the Board by the Board Audit Committee (BAC), and to obtain Board approval of the proposed audit topics and auditor assignments for the 2026 Annual Audit Plan.
According to the BAC Audit Charter, the BAC shall assist the Board, consistent with direction from the full Board, by identifying potential areas for audit and audit priorities, and to review, update, plan and coordinate execution of Board audits (Article I, Paragraph 4); make recommendations to the full Board for the selection of all Auditors to perform audits in the approved Annual Audit Plan (Article VI, Paragraph 1); and submit its recommended Annual Audit Plan to the full Board for consideration and direction by November 30 of each year (Article III, Paragraph 7.2).
To develop the proposed audit plan, the Board’s Chief Audit Executive (CAE) conducted a risk assessment beginning in FY 2023 to identify key areas of risk that could be considered for auditing. The 2023 Risk Assessment Final Report dated November 2023 (Attachment 1) is attached for reference. The Risk Assessment includes heat maps of Santa Clara Valley Water District’s (Valley Water) operational areas based on risk impact (low, moderate, and high risk). The results of the risk assessment included input from Valley Water’s Board of Directors (the Board), executives, and management, and was used to help develop the proposed 2024-2026 Audit Plan, which is included as Appendix B of Attachment 1.
At the August 20, 2025 BAC meeting, the CAE began discussion of potential audit topics and the process and schedule for completing the proposed Annual Audit Plan for the full Board’s consideration. At the November 19, 2025 BAC meeting, the Committee approved the following four audit topics to be included in the 2026 Annual Audit Plan.
1. Risk Assessment: Develop the 2026 Risk Assessment, pursuant to Section 7.4 of the BAC Charter, for the purpose of identifying and prioritizing potential audit topics, and informing future audit plans.
Proposed Assignment: The Chief Audit Executive
Anticipated Start: To be determined following the selection of the next CAE
2. Asset Management: Review and evaluate Valley Water’s infrastructure maintenance programs, encompassing various elements related to operations and maintenance, including assessing Valley Water’s methods for developing and maintaining asset inventories. This will include evaluating:
• Valley Water’s methods and approach to determining the condition of existing assets.
• Practices related to scheduling predictive and preventative maintenance, monitoring maintenance backlogs, work order scheduling.
• The extent to which Valley Water relies on outsourced service providers to augment in-house resources, and how well inventories are planned, maintained, and optimized to enhance overall operational efficiencies.
• The use of asset management software or systems to extend the lifespan of critical infrastructure while minimizing operational costs.
Proposed Assignment: Plante Moran
Anticipated Start: Calendar Year 2026, Q1
3. Pacheco Reservoir Expansion Project: Conduct a project closeout audit to evaluate whether best practices were followed during each phase of the project until the termination of the project.
Proposed Assignment: Sjoberg Evashenk Consulting
Anticipated Start: Calendar Year 2026, Q3
4. Investigations Process: Evaluate the effectiveness, efficiency, and integrity of Valley Water’s processes for investigating allegations of employee, Board officer, and Board member misconduct. Specifically, the audit will assess whether investigations processes:
• Adhere to applicable laws, policies, collective bargaining agreements, and ethical standards governing workplace investigations.
• Maintain appropriate separation of duties and independence in the handling of investigations involving management, senior leadership, or board members.
• Ensure that investigations are initiated, conducted, and resolved in a timely manner.
• Apply consistent standards, procedures, and outcomes across similar cases.
• Maintain clear roles, responsibilities, and reporting lines for HR staff, investigators, management, and legal counsel, including appropriate mechanisms for supervisory and board oversight.
• Ensure that case records are accurate, complete, and securely maintained.
• Ensure implementation of recommendations and identify systemic issues or patterns of misconduct.
• Are consistent with the practices of other public, private, and non-profit organizations, including the complaint intake, investigation process, and outcomes of investigations.
Proposed Assignment: Baker Tilly Advisory Group
Anticipated Start: Calendar Year 2026, Q2
ENVIRONMENTAL JUSTICE IMPACT:
The Annual Audit Plan is not subject to environmental justice analysis. The Annual Audit Plan serves as a tool for communicating audit priorities as determined by the BAC and the Board of Directors.
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: 2023 Risk Assessment Final Report.
UNCLASSIFIED MANAGER: Manager
Darin Taylor, 408-630-3068