City auditor reports underpayments in TOT reviews, recommends codified procedures for liability claims handling

The city's internal audit manager presented findings from a transient occupancy tax (TOT) review and an audit of the public liability claims-handling function, reporting several audit deficiencies and recommending written policies and improved internal reporting.

According to the internal audit summary, 11 establishments were tested across multiple fiscal years and the audit found approximately $253,000 in TOT underpayments across a three-year span and nearly $145,000 for fiscal year 2023–24 alone. The audit manager said municipal code requires the tax administrator to invoice establishments for underpayments, apply a 10% audit-deficiency penalty and assess interest at 1.5% per month; interest begins on the date the city discovers the deficiency.

On the liability-claims audit, the manager reported an average of about 81 claims per year, direct payments to claimants totaling roughly $643,000 over the reviewed years, and associated legal expenses about 2.5 times the direct payments. The audit found claims are generally handled in a timely manner, with most closed within one to two years. The manager identified two constructive recommendations: (1) document procedures and policies for claims handling and (2) produce regular claims-pattern reporting to city management and departments.

Internal Audit Manager Tufik Tabshuri (name given in the record) summarized the findings and recommended the council accept the audit report and its recommendations. Council members thanked the auditor and staff; a council member asked when interest begins to accrue on TOT underpayments and the auditor replied interest begins on the date the city is notified or discovers the underpayment. Staff did not record a formal roll-call vote on acceptance in the transcript excerpt; the item was presented and discussed.