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HomeMy WebLinkAbout872_Part 7 Ch 7_Audit Committee CreationTulsa County Clerk- EARLENE WILSON Doc# 2006097266 Pages 5 Receipt # 879971 08/23/06 10:59:06 Fee 2 1.00 #000 8799 -111 0 02 CITY OF OWASSO, OIKLAHOMA AN ORDINANCE RELATING TO PART 7, FINANCE AND TAXATION, CHAPTER 7, AUDIT COMMITTEE AND PROCEDURES, OF THE CODE OF ORDINANCES OF THE CITY OF OWASSO, OKLAHOMA, AMENDING SAME BY ESTABLISHING AN AUDIT COMMITTEE AND ADOPTING PROCEDURES FOR THE COMMITTEE TO FOLLOW. THIS ORDINANCE AMENDS PART 7, CHAPTER 7, OF THE CITY OF OWASSO CODE OF ORDINANCES BY ADDING A NEW SECTION TO BE CODIFIED AS SECTION 7, CHAPTER 7, SECTIONS 7- 701 THROUGH 7 -716 BE IT ORDAINED BY THE COUNCIL OF THE CITY OF OWASSO, OKLAHOMA, THAT, TO -WIT: SECTION ONE (1): Part Seven, Finance and Taxation, Chapter 7, Audit Committee and Procedures, of the Code of Ordinances of the City of Owasso, Oklahoma, shall be enacted. by providing and codifying as follows: SECTION TWO (2): SECTION 7 -701 CREATION OF AUDIT COMMITTEE An audit committee is established in and for the City of Owasso. The purpose of the audit committee is to help oversee the audit of financial statements, ensure the auditor is independent of management and address control and compliance weaknesses. SECTION THREE (3): SECTION 7 -702 COMPOSITION — APPOINTMENT COMPENSATION A. The audit committee shall consist of five (5) voting members and two (2) non - voting ex- officio members. All members shall be appointed by the council and shall serve without compensation. B. The five (5) voting members shall include one city councilor and not less than one person from each of the following groups, provided, however, that one group, which may vary from time to time may be represented by not more than two (2) members: (1) Bankers, or other financial institutions; (2) Businessperson; and (3) Non - practicing certified public accountants. C. The two (2) ex- officio, non - voting members shall be the city manager and the director of finance. SECTION FOUR (4): SECTION 7 -703 QUALIFICATIONS The city councilor appointed to the audit committee shall be a city councilor who is serving the second year of the three -year term of office. If no councilor is serving the second year of the three - year term of office, the council may appoint a councilor in the third year of the term of office. If no councilor meets these qualifications, then the council may appoint another experienced councilor. However, no city councilor may succeed himself/herself on the audit committee. All other appointed members of the audit committee shall be a residents within the city fence line or own a business or be employed in the city at the time of appointment and throughout incumbency. All members of the audit committee shall be persons with knowledge of accounting, auditing and financial reporting and relevant experience such as a corporate officer, auditor, attorney or professional consultant to business, government or organizations. SECTION FIVE (5): SECTION 7 -704 TERMS OF APPOINTMENT All members of the audit committee shall be appointed for a term of three (3) years except for the city councilor who will be appointed for a one year term or until their successors shall be qualified and appointed. The appointment of members shall be for staggered terms: The five (5) voting positions on the audit committee shall be divided into seats numbered one through five. Seat No. 1 shall be held by a city councilor. The term of office for Seat No. 1 shall expire on July 1, 2007, and every July 1 st, thereafter. No city councilor may succeed himself/herself in office. Seat No. 2 maybe held by any of the remaining categories of members and shall expire on July 1, 2007, and on every third year thereafter. Seats No. 3 and 4 may be held by any of'the remaining categories of members and shall expire on July 1, 2008, and on every third year thereafter. Seat No. 5 may be held by any of the remaining categories of members and shall expire on July 1, 2009, and on every third year thereafter. SECTION SIX (6): SECTION 7 -705 VACANCIES Should a vacancy occur on the audit committee for any reason, such vacancy shall be filled for the unexpired term by an appointment by majority of the council. A vacancy shall be deemed to have occurred when an audit committee member resigns or otherwise becomes unqualified to serve. SECTION SEVEN (7): SECTION 7 -706 REMOVAL OF MEMBERS Whenever, in the sole discretion of the city council, the council believes that the best interests of the city shall be served; any appointed member of the audit committee may be removed from office by majority vote of the council. SECTION EIGHT (8): SECTION 7 -707 OFFICERS Annually, the audit committee shall elect a chairperson and a secretary who shall hold office until July 1 st the following year or until expiration of the term of appointment whichever shall first occur. In the absence of the chairperson at any meeting, the members shall select a chairperson pro tempore who shall preside over the meeting of the audit committee. SECTION NINE (9): SECTION 7 -708 MEETINGS The audit committee shall meet at least twice annually at a time and place as called by the chair. Written notice of each meeting shall be provided to all members. Special meetings of the audit committee may be called by the chairperson or any three members. Written notice of the special meeting shall be provided to all members. SECTION TEN (10): SECTION 7 -709 QUORUM Three members of the audit committee shall constitute a quorum. SECTION ELEVEN (11): SECTION 7 -710 GENERAL POWERS AND DUTIES The committee shall be responsible to: A. Recommend to the council an independent firm of certified public accountants to perform the annual audit of the city. B. Analyze and report to the council significant findings in the annual audit report and make recommendations regarding such findings. C. Make recommendations, if any, to the council regarding the following financial documents: (1) Annual financial statements, (2) Management letter submitted by the independent auditor, and (3) Response to management letter submitted by city staff. SECTION TWELVE (12): SECTION 7 -711 PROCEDURAL RULES — SUBCOMMITTEES A. The audit committee may adopt, from time to time, such rules or procedures as it may deem necessary to properly exercise its powers and duties. All such rules shall be reviewed by the city attorney as to form and legality, and shall, after adoption, be kept on file in the office of the finance director. B. The chairperson of the audit committee may form ad hoc subcommittees among its various members to research and analyze those issues which are within the committee's jurisdiction. SECTION THIRTEEN (13): SECTION 7 -712 COOPERATION OF CITY OFFICIALS The director of finance or his or her designee, the city manager or his or her designee shall attend each meeting and provide advice or assistance as requested by the audit committee. The director of finance or his or her designee shall provide clerical or other assistance as is necessary to maintain records of the audit committee proceedings. All other officers, departments and department directors of the city shall cooperate with the audit committee within the scope of the audit committee's duties. SECTION FOURTEEN (14): SECTION 7 -713 LIMITATION AND LIABILITY Neither the audit committee nor any individual member thereof shall incur any financial liability or responsibility in the name of, or on behalf of, the city by virtue of their activities as audit committee members. SECTION SECTION 7 -714 CODIFICATION The City of Owasso Code of Ordinances is hereby amended by adding a new chapter of ordinances to be codified in Part 7, Chapter 7, sections 7 -701 et. seq. SECTION SIXTEEN (16): SECTION 7 -715 REPEALER All ordinances or parts of ordinances, in conflict with this ordinance are repealed to the extent of the conflict only. SECTION SEVENTEEN (17): SECTION 7 -716 SEVERABILITY If any part or parts of this ordinance are held invalid or ineffective, the remaining portion shall not be affected but remain in full force and effect. SECTION EIGHTEEN (18): DECLARING AN EFFECTIVE DATE The provisions of this ordinance shall become effective thirty (30) days from the date of final passage as provided by state law. PASSED by the City Council of the City of Owasso, Oklahoma the th day of August 2006. Stephen Ca audella, Mayor ATTEST: Sherry Bishop, OWY Clerk (SEAL) APPRO D.as to form: Julie Lombardi, City Attorney OFFICIAL SEAL r'Ubf!s!;ed in the Owasso Reporter, Owasso, Tulsa County, Okla - homa, August 24 2006. CITY OF OWASSO, OKLAHOMA ORDINANCE NO. '672 AN OPDINANCE RELATING TO PART 7, FINANCE AND TAXATION, CHAPTER 7r;, AUDIT COMMITTEE;AND.PRO -; CE UAES,'OF:THE CODE OF ORDINANCES OF THfECrrY OF OWASSO, OKLAHOMA, AMENDING SAME BY ESTAB, L!SHING AN AUDIT COMMITTEE AND ADOPTING PROLE CURES FOR THE COMMITTEE TO FOLLOW. THIS:ORDI- vAN E AMENDS PAR T'7, CHARTER 7, OF THE CITY OF OWASSO CODE OF ORDINANCES BY ADDING ANEW SECT 0N TO BE CODIFIED AS SECTION 7, CHAPTER 7, SERONS 7 -701 THROUGH 7- 716 ? BE € T ORDAINED BY THE COUNCIL OF THE CITY OF OWASSO, OKLAHOMA, THAT, TO -WIT: SECTION ONE (1): Part Seven, ;Finance and Taxation, C'nar54er 7, Audit Committee and Procedures, of the Code of Ord's- r.Aices of the :City of Owasso, Oklahoma, shall: be: enacted: by pro- viding and codifying as follows: An audit committee is established in and for the City of Owasso. The purpose of the audit committee is to help oversee the audit of financial statements, ensure the auditor is independent of manage- ment and address control and compliance weaknesses. SECTION THREE (3}: A. The audit committee shall consist of five (5) voting members and two (2) non - voting ex- officio members. All members shall be appointed by the council and shall serve without compensation. B. The live (5) voting members shall include one city councilor and not less than one person from each of the following groups, pro- vided, however, that one group, which may vary from time to time may be represented by not more than two (2) members: (1)8 ani<e s, or other financial institutions; ;2)13us}nesspersom and (2)Non- Practicing certified public accountants. C The two (2) ex- officio, non - voting members shall be the city manager and the director of finance. SECT PON FOUR (4); The city councilor appointed to the audit committee shall be a city councilor who is serving the :second year of the three -year term: of office. If no councilor is serving the second year of the three -year term of orrice, the council may appoint a' councilor in the third year a the teen of office if no councilor meets these qualifications, then the council may appoint another experienced. councilor. However, no city councilor may succeed himself/herself on the audit commit- tee: Ail other appointed members of the audit committee shall be a resi- dents within the city fence line or own a business or be employed in the city at the time of appointment and throughout incumbency. All rnembers of the audit committee shall be persons with knowledge . of accounting, auditing and financial reporting and relevant expert once such as a corporate ; officer, auditor, attorney or professional consultant to business, government or organizations. SECTION FIVE (5): SES-TLQ 7_7Q4 TERMB QE APPO €NJ_t ENT All members of the audit committee shall be appointed for a term of three (3) years except for the city councilor who will be appointed . for one year term or until their successors shall be qualified and appointed. The appointment of members shall be for staggered terms: The five (5) voting' positions on the audit committee shall be divided into seats numbered one through five. Seat No. 1 shall be held by July, 1, 2007, and every July `1 st, thereafter. No city councilor may succeed himself /herself in office. Seat No. 2 may be field by any of he remaining categories of members and shall expire on July 1, 2007, and on every third year thereafter. Seats No. 3,and 4 may be held by any of the remaining categories of members and shall ex- pire on July 1, 2008, and on every third year thereafter. Seat No: :5 may be held by any of the remaining categories of members and shall expire on July 1, 2009, and on every third year thereafter. SECTION SIX. (6) owes unqualified to serve. SEVEN ..(7): OF MEMBERS PUBLICATION DATE(S) 08/24/06 COUNTY STATE OF OKLAHOMA OF 1, of lawful age, being duly sworn, am a legal representative of Owasso Reporter of Owasso, Oklahoma, a daily newspaper of general circulation in Tulsa,Oklahoma, a newspaper qualified to publish legal notices, advertisements and publications as provided in Section 106 of Title 25, Oklahoma Statutes 1971 and 1982 as amended, and thereafter, and complies with all other requirements of the laws of Oklahoma with reference to legal publications. That said notice, a true copy of which is attached hereto was published in the regular edition of said newspaper during the period and time of publication and not in a supplement, on the ABOVE LISTED DATE(S) Reprensentative Signature Subscribed to and sworn to me this 25th day of August 2006. Notary Public KA LEEN A DRAKE My commission Number: 06000391 Customer: CITY OF OWASSO/LEGALS CUst No: 00000779 Publisher's Fee: $ 564.00 Notary Public Oklahoma, OFFRCIAL SEAL THLEEN A. DRAKE Commission Expires 01-09,2010 expiration of the term of appointment whichever shall first occur:, in the absence of the chairperson at any meeting, the members shall select a chairperson pro tempore who shall preside over the meet ing of the audit committee. SECTION NINE (S): committee rsnall meet at least twice annually at a time and place as called; by the chair. Written notice of each meeting shall be provided to all members. Special meetings of the audit committee may called by the chair- person or any three members. Written notice of the special meet- ing shall be provided to all members. SECTION TEN (10): Three; members of the audit committee shall constitute a quorum SECTION ELEVEN (11): ECT€OfS 7 -710 GENERAL POWERS AND O T €E The committee shall be responsible to: A. Recommend to the council an independent firm of certified pub- lic accountants to perform the annual audit of the city. S. Analyze and report to the council significant findings in the an- nual audit report and make recommendations regarding such find- ings. C. Make recommendations, if any, to the council regarding the fo'- lowing financial documents: (1)Annual financial statements, ; - (2)Management letter submitted by the independent auditor, and (3) Response to management letter submitted by city staff, SECTION TWELVE (12): CTIDN 7-711 PR6� D RAL €j Qi c j;LBCPSManttrccS A, The audit committee may adopt, from time to time, such rules or procedures as it may deem necessary to properly exercise its pow - ersand. duties. All such rules shall be reviewed by:the city attorney as to form and legality, and shall, after adoption,` be kept on file in the office of the finance director. S. The chairperson of the audit committee may form ad hoc sub- committees among its various members to research and analyze those issues which are within the committee's jurisdiction. SECTION THIRTEEN (13): The director of finance or his or her designee, the city manager or his or her designee shall attend each meeting and provide advice or assistance as requested by the audit committee. The director of finance or his or her designee shall provide clerical or other assis- tance as is necessary to maintain records of the audit committee proceedings. All other officers,' departments and department direc- tors of the city shall cooperate with the audit committee within the scope of the audit committee's duties. SECTION FOURTEEN (14): SECTION 7 -7M 1JMITA1tON AND I-J&PILITY Neither the audit committee nor any individual member thereof shall incur any financial liability or responsibility in the name of, or on be- half of, the city by virtue of their activities as audit committee mem- bers. SECTION FIFTEEN (15): SECDQN 7 -714 The City of Owasso Code of Ordinances is hereby amended by adding a new chapter of ordinances to be codified in Part 7, Chap -: ter7, sections 7 -701 et. seq. SECTION SIXTEEN (16):. All ordinances or parts of ordinances, in conflict with this ordinance are repealed to the extent of the conflict only. SECTION SEVENTEEN (17): SECTION 7 -716 SEVERA ILITY If any part or parts of this ordinance are held invalid or ineffective, the remaining portion shall not be affected but remain in full force and effect, SECTION EIGHTEEN (18): DECLARING AN EFFECTIVE DATE The provisions:: of this ordinance shall become effective thirty (30) i days from the date of final passage as provided by state law. TO: HONORABLE MAYOR AND CITY COUNCII CITY OF O;. FROM: SHERRY BISHOP FINANCE DIRECTOR DATE. August 11, 2006 Audit committees play an important role in the stewardship of public sector entities. The role of the audit committee is one of independent review and oversight of financial and compliance reporting, internal controls and auditor's activities. While management has the responsibility to ensure the accuracy of financial statements and compliance with laws, regulations and agreements, it is the audit committee's function to carry out due diligence by evaluating internal as well as external information. Staff believes that mandating an audit committee for the City of Owasso would enhance the financial reporting process. In order to develop the framework for a formal audit committee, an interim audit committee was formed in April, 2006. The interim audit committee's responsibilities were to participate in the selection process for an external auditor with a recommendation to Council and to develop criteria for a formal audit committee. The interim audit committee reviewed the three best proposals and made a recommendation that Cole & Reed be the City of Owasso's external auditor. Council approved this recommendation on May 2, 2006. The staff and the interim audit committee continued to meet to review and discuss several other municipal ordinances that were instrumental in developing the proposed ordinance to create a formal audit committee. A formal audit committee should be appointed and active by November in order to meet with the external auditors to review the FY 2006 financial reports. Proposed Ordinance No. 872 provides the scope of the committee's responsibilities plus its structure and membership requirements. The responsibilities of the audit committee include: • Participate in the external auditor selection process and make a recommendation to the Council. • Review audit results and follow up on proposed corrective action of management. • Report to Council the audit committees activities and recommendations. Under this ordinance, the audit committee will consist of five (5) voting members and two (2) non - voting ex- officio members. The five voting members include one city councilor and four citizens appointed by the council. Qualifications for appointment require that the citizens be knowledgeable and have relevant experience. This ordinance requires that at least three appointees come from the banking, business and accounting professions. The members will serve a three -year term and must live in or be employed within the Owasso fence line. Again, I would like to express my thanks to the interim audit committee mernbcrs for their time and assistance. The staff looks forward to the opportunity to work with the newly created audit committee. RECOMMENDATION. Staff recommends approval of Ordinance No. 872 establishing an audit committee and adopting procedures for the committee. ATTACHMENT: Ordinance No. 872.