COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Controllers Office

DATE:

January 20, 2003

BOARD MEETING DATE:

February 4 , 2003

TO:

Honorable Board of Supervisors

FROM:

Controller Tom Huening

SUBJECT:

Establishment of an Audit Committee for the County of San Mateo

Recommendation

Adopt a resolution to establish an Audit Committee for the County of San Mateo.

Background

The County of San Mateo (County) has an opportunity to establish an Audit Committee whose primary purpose is to independently oversee the audit of the County's financial statements required by the Government Code . The establishment of an Audit Committee is recommended by the Government Finance Officers Association (GFOA).

Discussion

San Mateo County has a tradition of leadership in the implementation of policies and procedures that uphold the best practices in public service. The formation of an Audit Committee will honor this tradition, improve current practices and provide an additional measure of independence to the existing process. In recent years, the importance of Audit Committees has come to be recognized in both the public and private sectors.

The Audit Committee would serve as a committee of the Board of Supervisors and advise and recommend to the Board. An Audit Committee's duties would be to meet at least once each year to independently oversee the external audit, assist in the resolution of audit findings and conclude with an annual written report to the Board of Supervisors and management. The Audit Committee shall also participate in the selection of the County's independent auditor and the contracting for any significant non audit engagements.

An Audit Committee should be comprised of members who are financially literate and who collectively possess general knowledge of accounting, auditing, financial reporting and finance, and who are able to understand and resolve issues raised by the independent audit of financial statements. It will enhance the independence of the external auditor and, ultimately, the reliability of the financial statement. Consistent with the GFOA guidelines, we recommend that the Audit Committee of San Mateo County be comprised of two members of the Board of Supervisors, or their designees and the County Manager, or his/her designee.

Vision Alignment

The establishment of an Audit Committee for the County of San Mateo furthers the commitment of a responsive, effective and collaborative government. It specifically relates to Vision Goal Number 20: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain and Vision Goal Number 22: County and local governments effectively communicate, collaborate and develop strategic approaches to issues affecting the entire County.

Fiscal Impact

There is no fiscal impact.