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Council approves third-party fraud risk assessment for city operations
Summary
City will hire 65th North Group for a citywide fraud risk and internal-control assessment at a cost of $35,175 to identify gaps and recommend prioritized policy and control changes.
The council approved a contract with 65th North Group to perform a fraud risk and internal-control assessment across city departments; the motion passed 5-0 and the contract price is $35,175.
Finance director Matt (presenter) told the council the engagement follows an RFP that generated nine proposals. Staff interviewed top candidates and recommended 65th North Group for a review of policies, procedures and internal controls across the organization, including interviews with departments and written recommendations for policy and implementation prioritization.
Matt said the city has no knowledge of fraud in its operations and that the assessment is proactive. He described work staff already completed to strengthen controls (adding approvers in Tyler and restricting single-person ACH/wire capability) and said the consultant will review cybersecurity and software controls as part of the assessment if requested.
City Manager Jolene and others noted that routine financial audits are statistical and do not always detect fraud; managers cited industry statistics on fraud detection latency and the importance of layered internal controls. Council approved the contract and directed staff to complete the engagement, preferably before the start of the 2024 annual audit in late April.
