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Home My WebLink About _ 9.1(c)--Adopt Resolutions Re_ Audit Committee & Financial Oversight Committee GI �" Y C� F � � �- ' � ° � � i � CITY OF REDDING �� REPORT TO THE CITY COUNCIL MEETING DATE: January 20, 2026 FROM: Kari Kibler, Interim City ITEM NO. 9.1(c) Manager/Personnel Director ***APPROVED BY*** kkibler�a�cityofredding.gov � � � � � � �i� �le�, niu�im C ety\+[;�n.x�;ca'Wciacr �� }iae�tzta 1'l6l2dP2�i kkibler@cityofredding.gov SUBJECT: 9.1(c)--Consider Resol�utions for establishment of an Audit Committee and Financial Oversight Committee for the Cit of Reddin . Recommendation Authorize and approve the following: (1) Adopt Resolution establishing the City of Redding Audit Committee to provide struct�ured oversight of internal and external audit activities; and (2) Adopt Resolution establishing a City of Redding Financial Advisory Committee to provide community-informed advisory input on budget development, financial priorities, and long-term sustainability. Fiscal Impact There is no direct fiscal impact associated with adoption of the attached resolutions. Committee members serve without compensation and meetings will be supported by existing staff resources within the City Manager's Office and Finance Department. Alternative Action Council could provide alternative direction relative to the resolutions and approval of the two committees. Background/Analysis On December 2, 2025, the City Council considered Item 9.1(e), which focused on strengthening the City's financial governance framework, improving transparency, and enhancing long-term fiscal planning and accountability. During that discussion, Council expressed interest in mare formalized struetures to support: • Proactive finaneial oversight; • Independent review of audit activities and findings; and • Inereased community engagement and perspective in budget and financial policy discussions. Report to Redding City Council January 16,2026 Re: 9.1(c)--Adopt Resolutions Re:Audit Committee&Financial Oversight Committee Page 2 Item 9.1(e) highlighted the increasing complexity of municipal finance, the importance of aligning financial decisions with long-term sustainability, and the value of structured advisory bodies to assist the City Council in meeting its fiduciary responsibilities. Council direction at that time emphasized the need for clearly defined roles, strong governance practices, and advisory cominittees that complement, rather than duplicate, existing staff and Council responsibilities. In response, staff has prepared two companion resolutions for Council consideration: one establishing an Audit Committee and one establishing a Financial Advisory Committee. Together, these committees are intended to strengthen the City's overall financial governance framework. Audit Committee Resolution The City has maintained an Audit Committee since 2015 as a Brown Act committee; prior to 2015, the committee did not operate under Brown Act requirements. Currently, the Audit Committee meets at least annually to review and discuss the results of the City's annual external audit. In addition, Council Policy 425 delegates responsibility for internal audits to the City's Finance Department and requires that the results of those audits be presented to the A�udit Committee. The proposed Audit Committee resolution formalizes a focused, Council led advisory body dedicated to audit and accountability functions. It provides a mechanism to initiate and review internal audits with a dedicated reporting mechanism. Key elements include: • Clear Authority and Ro1e: The Audit Committee serves in an advisory capacity to the City Council, providing structured oversight of internal audit activities, external audit services, and audit findings, without directing staff or assuming operational authority. • Council Leadership with Limited Membership: The Committee is composed of the Mayor and Vice Mayor as voting members, ensuring direct Council involvement and accountability. The resolution also allows for the optional inclusion of up to two non- voting community members to provide additional expertise and continuity. • Continuity and Expertise: Staggered appointments and defined quali�cation criteria for community members are designed to preserve institutional knowledge and bring relevant audit, financial, or governance experience to the Committee's work. • Regular, Transparent Meetings: Publicly noticed and open to public comment, provide a predictable forum for reviewing internal audit priorities and findings, external audit fmdings and performance, external audit contract considerations, and opportunities for process improvement. • Alignment with Best Practices: The Audit Committee structure reflects best practices in municipal governance by separating audit oversight from operational management while enhancing transparency and accountability. Report to Redding City Council January 16,2026 Re: 9.1(c)--Adopt Resolutions Re:Audit Committee&Financial Oversight Committee Page 3 The Audit Committee resolution reflects the existing audit committee requirements and discussion council had under item 9.1(e) on December 2, 2025, by formalizing audit oversight regarding internal and external audit processes. Financial Advisory Committee The proposed Financial Advisory Committee (FAC) resolution establishes a broader, cominunity-facing advisory body focused on fiscal policy, budget priorities, and economic trends. Key elements include: • Advisory Role to CounciL• The FAC provides non-binding recommendations and perspectives to the City Council on budget development, financial priorities, and long-term sustainability, without decision-making authority or staff direction. • Balanced Composition: The Committee includes two Council Members appointed through the Mayor's committee assignment process and five community members appointed by Council vote. This structure balances elected-official oversight with diverse community and industry perspectives. • Industry-Based Expertise and Community Insight: Community member criteria emphasize representation from major employers, local industries, and professions that understand spending patterns, economic conditions, and the social and emotional pulse of the community. Restrictions on conflicts of interest and Council relationships preserve independence and credibility. • Term Alignment and Continuity: Four-year staggered terms aligned with Council Member terms ensure continuity while maintaining accountability and periodic renewal of inembership. • Flexible, Budget-Aligned Meeting Cadence: The FAC is designed to meet strategically, often a limited number of times, to review materials staff intends to present to the Council, evaluate priorities, and provide feedback during budget development. Meeting frequency may increase during biennial budget cycles, with the FAC authorized to recommend cadence adjustments annually. • Sunset and Evaluation: A two-year sunset review requires the Council to evaluate the FAC's effectiveness using data and outcomes, ensuring the FAC remains purposeful and aligned with Council priorities. The FAC directly supports the objectives discussed in Item 91(e) by adding structured, community-informed financial insight while maintaining clear boundaries between advisory input, staff analysis, and Council decision-making. Environmental Review This is not a project defined under the California Environmental Quality Act, and no further action is required. Report to Redding City Council January 16,2026 Re: 9.1(c)--Adopt Resolutions Re:Audit Committee&Financial Oversight Committee Page 4 Council P�ioNity/City Manager Goals • Budget and Financial Management — "Achieve balanced and stable 10-year Financial Plans for all funds." � Communication and Transparency — "Improve the quality of communication with the public and City employees to enhance knowledge and increase transparency to improve public trust." � Government of the 215t Century — "Be relevant and proactive to the opportunities and challenges of today's residents and workforce. Anticipate the future to make better decisions today." Attachments ^Draft Resolution -Audit Committee Information ^Draft Resolution - Financial Oversight Committee Information RESOLUTION NO. 2026- A RESOLUTION OF THE CITY OF REDDING CITY COUNCIL ESTABLISHING AN AUDIT COMMITTEE WHEREAS, the City Council desires to strengthen financial oversight, transparency, accountability, and risk inanagelnent through the establishment of an Audit Committee; and WHEREAS, an Audit Coinmittee provides a forum to review internal and external audit activities, recommend improvements, and ensure appropriate follow-up on�inc�ings; NOW, THEREFORE, BE IT RESOLVED by the City Gauncil that an Audit Committee is hereby established with the following authority, purpose, compositic�n, and operating provisions: 1. Authority The Audit Committee is established by and derives its authority from the City Cauncil. The Committee serves in an advisory capacity to the City Council and has no independent deci�ion-making authority unless expressly delegated by Council action. The Committ�e may request informati�n,presentations, and reports from City management, intemal audit staff, and��external auditors as necessary to fulfill its responsibilities. 2. Purpose The purpose of the Audit Committee is to: • Enhance the integrit�,transparency, and effectiveness of the City's financial reporting, internal contrals, and audit processes; • Pro�id� direction and guidance regarding internal audit function topic considerations, review findings, and when necessary reuiew and disctiss process improvements; • Review external audit service contracts, including scope, vendor selection, performance, and results; • Facilitate e��nmunication among the City Council, management,internal auditors, and external auditors; and � • Promote best practices in governance,risk management, and financial accountability. 3. Composition and Membership A. Voting Members • The Mayor and Vice Mayor shall serve as voting members of the Audit Committee. B. Non-Voting Community 1Vlembers (Optional/Advisory) • The Committee may include up to two (2) community members who serve in a non-voting, advisory capacity. • Community members shall be appointed jointly by the Mayor and Vice Mayor. • Appointments are intended to provide continuity and institutional knowledge over multiple years. • Terms should be for two years with the first term appointed by the mayor being for 3 years to provide proper staggering thereafter to ensure every other year a new committee member may be considered. C. Criteria for Community Members Community members should, to the extent practicable,possess: • Experience or education in accounting, auditing, finance, public administration, risk management, or a related field; • An understanding of governmental or public-sector�in�ncial practices; • The ability to analyze complex financial and audit information; • A commitment to ethical standards, objectivit��, and��the public interest. 4. Terms of Service • The Mayor and Vice Mayor shall serve on the Committ�e��oncurrent with their elected terms or Council designation. • Community members shall serve��terms of two (2) or for��the first appointment one of a three (3) years, as determined at appointment, t�'��facilitate staggered terms. • Community members may be reappc�inted, subject to Mayor and Vice Mayor discretion. 5. Notes and Requirements for Non-Council (Comrnunity) Members • Community members serve in an advisory,non-voting capacity only. • Members must cornply with applicable ethics laws, conflict-of-interest requirements, and disclosure nbligations. • Members shall no�have any financial or business'relationship with the City that would impair independence. • Mernb�rs may be required to ''��c�mplete ethics, audit, or governance-related training as determined by the City. 6. Staff ParticYpation • The City Manager and Director of Finance, or their designees, shall attend Committee meetings and ensure staff availabiiity to support Committee work. • Staff participation is necessary to provide information regarding audit results and financial information; staff shall not be directed by the Committee. 7. Meeting Schedule and Cadence • The Audit Committee shall annually adopt a meeting schedule. • Meetings sha11 be publicly noticed, open to the public, and provide opportunity for public comment in accordance with applicable open meeting laws. Typical Agenda Topics May Include: • Training and education related to auditing, financial oversight, and governance; • Review of internal audit plans, findings, recommendations, and process improvements; • Evaluation of modifications to internal audit practices or scope; • Review and evaluation of external audit contracts, including auditor selection, performance, feedback, and potential modifications; • Review of third-party audit reports and external audit findings, including management responses and corrective actions. 8. Reporting • The Audit Cormnittee shall report its observations, r�commendations, and activities to the City Council on a regular basis, or as otherwise requeste� by the Council. • Recommend to Council acceptance of Annual Comprehensive Financial Report (ACFR) and external audit results. I HEREBY CERTIFY that the foregoing ordinance was introduced and adopted at a regular meeting of the City Council of the City of Redding on the 20th day of January, �026,by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: MIKE LITTAU,Mayor ATTEST: FORM APPROVED: SHARLENE TIPTON,�ity Clerk CHRISTIAN M. CURTIS, City Attorney RESOLUTION NO. 2026- A RESOLUTION OF THE CITY COUNCIL ESTABLISHING A FINANCIAL ADVISORY COMMITTEE WHEREAS, The City Council desires to enhance fiscal transparency, community engagement, and long-term financial sustainability; and WHEREAS, a Financial Advisory Committee provides informed, community-based perspectives on econoinic trends, budget priorities, and financial policy considerations; NOW,THEREFORE,BE IT RESOLVED by the City Council that a Financial Advisory Committee is hereby established with the following authority, purpose, composition, and operating provisions: 1. Authority The Financial Advisory Committee (FAC) is es�ablished by and derives its authority from the City Council. The FAC serves solely in an advisory ca�aacity and sha11 provide recommendations and observations to the City CounciL The FAC shall have no independent decision-�naking authority and shall not direct City staff. The City Manager and Finance Director shall support the Committee by providing relevant financial information��naly;sis, and staffpresentations. � 2. Purpose The purpose of the Financia�Ad�isory Commi�tee is t�: • Provide advisory in�ut to the City Council on budget development, financial priorities, and long-term fiscal sust�inability; • Revie�u major financial assumptions, econornic conditions, and community trends that may impact City revenues and expenditures; • �ffer community-informed perspectives on spending priorities in relation to adopted Council goals and community needs; • Review st�ff-prepared m�terials intended for City Council consideration and provide non- binding f�edback; and • Strengthen tr�nsparency and public trust in the City's financial decision-making process. 3. Composition and Membership All Members of the FAC shall have voting rights. A. Council Members • The Committee shall include two (2) members of the City Council, appointed by the Mayor through the Council committee assignm�nt process. B. Community Members • The Committee sha11 include five (5) community members. • Each Council Member shall be encouraged to recommend qualified applicants. • Each Council Member shall provide one recommendation for inclusion on the Committee. • Community members shall be appointed by majority vote of the City Council�ollowing an open application and selection process. C. Member Quaiifications and Criteria Community members should, to the extent practicable, reflect a broad cross-section of the local economy and community perspective. Appointments made by each Council Member should consider the following as potential experience, expertise, and/or background: • Major employers or key local industries; • Healthcare,retail, hospitality, construction, insurance, ar financial services; • Financial expertise such as CPAs, CFOs, CEOs, or seniar financial professionals; and • Roles that provide insight into purchasing behavior, spending trends, and the social and economic pulse of the community. Community members must: • Have no conflict of interest or opportunity for m�netary gain related to City decisions; • Have no immediate family or household relationship with a sitting Council Member; • Be able to evaluate financial and policy issues objectively and in the public interest. 4. Terms of Service A. Council Members • Council Members sh�.l� ser�e ��.the Commi:xtee concurrent with their Council committee assignments or at the pleasure af'�he M�yor and Gity Council. B. Comrnunity Members • Communit�members shall serve four�4) year terms, staggered to align with Council Member terms for continuity and institutional knowledge. Terms of each appointed member will end one year after'�the end of the term of each council member. • Community members may be reappointed following expiration of their terms, subject to Council approval. �� 5. Notes and Requirements for Non-Council (Community) Members • Community members serve without compensation unless otherwise authorized by the City Council. • Members must comply with a11 applicable ethics laws, conflict-of inter�st requirements, and disclosure obligations. • Members shall not have financial interests, contractual r�lationships, or other affiliations that could impair independence. • Members are expected to attend meetings regularly and review materials in advance. 6. Staff Participation • The City Manager and Finance Director, or their designees, shall attend Committee meetings and ensure staff availability to support Committee work. • Staff participation is intended to facilitate information sharing and discussion; staff sha11 not be directed by the Committee. 7. Meeting Schedule and Cadence • The Financial Advisory Committee shall meet as needed, generally a limited number of times during each fiscal cycle. • Meetings inay include review of materials and presentations staff intends to bring forward to the City Council. • The Committee shall review budget priorities, community conditions, and adopted Council goals to inform advisory recommendations regarding the budget. • Meeting cadence may increase during biennia�budget developrnent years, including additional meetings aligned with the budget preparatian process. • Annually, the Committee may recommend cl�anges to its meeting cade�ce to the City Council for consideration. • All meetings shall be publicly noticed, open to the public, and include an oppt�rtunity for public comment in accordance with applicable open meeting laws. 8. Sunset Clause • The Financial Adc�iso�y Ct�mmittee sha11 be xeviewed by„the City Council after two (2) years of operation. • The review shall co�isider data,outcomes, and��overall effectiveness in meeting the Committee's purpose. • Following re�iew, the City Council may continue, modify, or dissolve the Committee by Council action. I HEREBY CERTII'Y that the foregoing ordinance was introduced and adopted at a regular meeting of the City Counci�of the City of Redding on the�Oth day of January, 2026,by the following vote: AYES: COUNCiL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBEItS: ABSTAIlY: COUNCIL MEMBERS: MIKE LITTAU,Mayor ATTEST: FORIVI APPROVED: SHARLENE TIPTON,City Clerk C�IRISTIAN M. CURTIS,City Attorney