Comptroller's audit division unveils ERA and 2025 audit plan, prioritizes contract compliance and IT risk

Deputy Director Jennifer Pierce, representing the City Controller’s audit division, briefed the joint committees on the office’s enterprise risk assessment for fiscal 2024 and the audit plan for fiscal 2025. Pierce described a risk-driven audit program designed to “identify and manage risk proactively” and outlined 37 engagements planned for the coming year.

Pierce said the FY24 ERA reviewed department risk profiles and top enterprise risk areas; internal analysis identified roughly 146 historical processes across the city, of which 18 cross departments and divisions. The ERA highlighted five top risk areas that shaped the FY25 audit work: fleet management, grant management, contract compliance, post-implementation reviews of major information systems (including SAP ERP) and payroll-related controls.

Pierce emphasized that audits follow professional standards and the audit division’s charter. “All audit programs, work papers, and reports are prepared in accordance with the US Government Accountability Office’s Yellow Book, the Institute of Internal Auditors standards, and AICPA guidance,” she said, describing the five-step audit approach: define, plan, fieldwork, report (with management remediation plans), and follow-up.

Priority audits and rationale

- Contract compliance: Pierce flagged audits of emergency spending and a $48,000,000 package split among 11 contractors for which compliance testing and rate verification are planned. - Post-implementation audits: The division will evaluate large IT systems (including SAP) after deployment to verify objectives and controls. - Texas prompt-payment compliance: A compliance audit will assess whether the city is taking discounts and following prompt-payment practices; the division said testing could result in cost recovery.

Resources and capacity

Pierce said the number of audits the division can complete depends on staffing and specialist use; she noted the division recently added three staff members and that it completed a peer review for work from 2021–2023 with no exceptions. Council members and Pierce discussed coordination with the mayor’s efficiency study (performed by Ernst & Young) to avoid duplication. Pierce said the audit division will use EY deliverables where work papers are provided, but that EY’s effort is a consulting engagement and not an audit; the controller’s audits remain independent and will review the implementation of any management changes.

Council questions

Council Vice Mayor Pro Tem Amy Peck asked how the audit division will coordinate with the efficiency study implementation. Pierce said auditors will follow implementation timelines; where new systems are implemented she expects auditors to test system-life-cycle design decisions within the first six months or include longer-term reviews in subsequent fiscal-year plans. Councilmember Fred Flickinger asked how the audit differs from Ernst & Young’s (EY) study; Pierce reiterated that EY provides consulting and implementation planning while the audit division conducts independent validation and follow-up.

Next steps

Pierce said the audit division will continue to refine audit scope and prioritize engagements by risk ranking, availability of staff, and where consulting assistance can accelerate testing. She committed to returning audit reports to the committee as they are completed. The division also pledged to provide specific answers requested by council, including the percentage of invoices receiving prompt-payment discounts, as part of audit scoping.

Ending

The committee welcomed Pierce and congratulated the audit division on its peer-review result. No formal committee action was taken during the presentation.