City Council's Internal Audit Function

The Argus Leader article regarding the City Clerk function also addressed the City Council's internal audit function. "Rich Oksol, the city’s lead internal auditor, suggested that it might be time to make some changes in the charter that guides the city’s internal audit unit. That unit was formed five years ago following revelations that the administration had spent money not appropriated by the council."


City Charter, Section 2.10 Independent audit states:

The city council shall provide for an independent annual audit of all city accounts and may provide for more frequent audits as it deems necessary. Such audits shall be made by a certified public accountant or firm of such accountants who have no personal interest, direct or indirect, in the fiscal affairs of the city government or any of its officers. The council may, without requiring competitive bids, designate such accountant or firm annually or for a period not exceeding three years, but the designation for any particular fiscal year shall be made no later than 120 days before the expiration of such fiscal year. If the state makes such an audit, the council may accept it as satisfying the requirements of this section.

There is no reference to the "city's internal audit unit" in City Charter. Actually, this section specifically addresses an annual audit or any other other audits deemed necessary performed by an outside independent audit firm.

City Ordinance, Chapter 2, Article II, Sec. 2-54. Department of finance states:

(a) There is hereby created for the city a department of finance.

(b) The department of finance shall be managed and directed by the city finance officer, who shall be appointed as provided by the charter, and who shall file a bond in the amount of $250,000.00.

(c) The city finance officer shall perform all the duties of the city auditor and city treasurer, as provided by law in the South Dakota Codified Laws and in the ordinances of the city.

(d) All references made in the South Dakota Codified Laws and the City Code to the city auditor and city treasurer shall be construed to mean the city finance officer.

City Ordinance, Chapter 2, Article XIII Audit Committee, Section 2-133 states:

The committee shall annually develop an audit program for the ensuing year. The audit program will be submitted to the city council for approval. The committee shall be authorized to hire an independent lead auditor as necessary. The lead auditor will report to the chair of the audit committee with a secondary reporting responsibility to the city clerk. Audit reports will be reviewed by the committee and subsequently shall be submitted to the mayor and the city council. The audit committee shall approve annual audit protocols for the auditors. The committee shall also receive reports from the auditors and shall make recommendations to the mayor and city council of changes in the city's financial practices.

The fact is City Charter does not guide the city's internal audit unit. City Ordinance, specifically Chapter 2 Administration guides the Council's Audit Committee who oversees the lead auditor. There is no reference to an "internal audit unit." Actually, City Charter states the city finance officer shall perform all the duties of the city auditor, not the Council's Audit Committee or the Lead Auditor position under the city council organization.

Here again, similar to the evolution of the "city clerk position" the internal audit unit has evolved and grown in duties and functions. It certainly seems that the City Charter is in conflict with city ordinance regarding the city's audit function and the council's internal audit unit.

Maybe that's area for the new Charter Revision Commission to research and address as a matter of business when they convene in the future. There appears to be a conflict between the City Charter and City ordinance.