FOAC tables Emergency Solutions Grant audit scope change after staff conflict disclosure

The Financial Oversight and Audit Committee voted unanimously to table consideration of a proposed change to the Emergency Solutions Grant (ESG) audit scope — specifically, adding a single-family owner-occupied renovation program review — to allow staff time to evaluate options for independent contractors and guardrails after an internal conflict disclosure. The motion to table passed 3-0.

Mondo Calderon, chief internal auditor, disclosed a potential conflict of interest: he said he has a "very, very, very distant relative" who works in Community Development and requested recusal from any role that could create a perception of impropriety. Calderon and FOAC members discussed options, including outsourcing this portion of the audit to an outside auditor or using on-call audit services procured through purchasing, so that department staff would not be the primary reviewer in any matter where a recusal is necessary.

Calderon said he had consulted with staff and the city attorney and recommended tabling the item while Internal Audit, general counsel and purchasing explore whether to use an outside contractor and the procurement route for on-call audit services. Committee members agreed that an independent review would add an "effective layer" of objectivity and reduce perceived conflicts.

The committee instructed staff to discuss procurement options with the purchasing department, to evaluate whether an RFP or other procurement method is appropriate, and to return with recommendations. FOAC Chair and members thanked Calderon for disclosing the relationship and for seeking a solution that preserves audit independence.

The item was tabled unanimously 3-0, and FOAC indicated it will revisit the item once staff returns with options for securing independent audit capacity or other conflict-avoidance mechanisms.