Hi, corwin so nice to hear your hi, corwin smaings . Aings oorsmirs missours nevada dance peerng. Welcome to the thursday november 5th meeting of the government audits and oversight. Supervisor gor gordthank you tos committees clerk, john carroll carol, and i would like to thank sfgov tv for staffing this meeting. In order to protect the Board Members and public, the board of supervisors legislative chamber and Committee Room are closed. This precaution is taken to all state and federal orders and declarations and directives. Committee members will be participating in this meeting to the same extent as if they were physically present in our board chamber. Public comment will be available for each item on this agenda. Both San Francisco cable channel 26 and sfgov tv. Org have a number across the korean. Screen. 4156550001. After youve dialed that number and connected to the call, youll be prompted to enter a meeting i. D. The i. D. Is 1465657778. After youve entered the meeting i. D. , youll be prompted to press the pound symbol twice, and after so, wul be connected to the meeting. Youre line will be muted at that time and in listening mode only. When your item of interest comes up, dial star, followed by 3, to be added to the speaker line. A system prompt will indicate that you have raised your hand at that point. Please wait until the system indicates youve been unmuted, and you can begin your comments. Best practices are to speak clearly and slowly, as im attempting to do, and to turn down your television or radio or streaming device. Everyone must account for potential time delays between live coverage and streaming. Alternatively, you may submit your Public Comment on any of the matters on todays agenda by emailing me, john carroll carol, and im the clerk of the government audits and oversight. My email address is jo john. Carroll sfgov. Org. I will include it in the legislative to which your item is responsive. And your written comments may be sent by the postal service. And the address is 1d goodlet place, room 244, San Francisco, california, 94102. And finally, mr. Chair, items acted upon day will appear on the agenda of november 17th, 2020, unless otherwise state. Chairman that is correct, mr. Clerk. Before we begin, i just wanted to note a few things on the order and form of this agenda. I intend to call item 12 out of order, after item three, and to call all of the m. O. U m. O. U. Related items in open session. Item 13 was noted for possible closed session discussion because it contains terms for the settlement of agreement. That settlement should be discussed enclosed session, if we have questions about it. But that is the only portion of this meeting that would be held enclosed session. There will be public discussion and comment for all of the m. O. U. S. With that, can you please call item number one. Clerk yes. Agenda one is an ordinance amending the code to require notification to prequalified contractors and written documentation of contractors selection from prequalified list, and written documentation for work assigned under as needed professional services contract. And to require the controller to audit such selection documentation. Members of the public who wish to provide Public Comment, call the Public Comment number 4156550001. Enter todays meeting i. D. 146657778. And press the pound symbol twice to connect to the meeting, and press the star key followed by the number 3. Please wait until the system indicates you have been unmuted. You may begin your comments. Mr. Chair. Chairman thank you, supervisor stefani for sponsoring and joining us for this item. The floor is yours. Thank you for scheduling this item again today. I know we heard it on october 1st, and i want to thank you, too, for adding your famous o names as cosponsors. And that was just a technical clich. I know you have a very long meeting today, so im going to very brief. This proposal will amendment the administrative code to close to loopholes that the former director of public works used to direct contracts to recipients, without documentation, evaluation, or oversight. This is drafted to respond to recommendation number four in the city auditors public work. It creates a new, strict set of rules governing the use of prequalified contracting tools, and as needed, professional services contract, which Gave Department heads broad discretion to direct certain types of contracts to specific individuals, which were, obviously as we have seen, ripe for abuse. The city will now be required to solicit these contracts publicly, through a competitive solicitation, evaluate bids using consistent criteria, justify their selection and maintain the documentation for an audit. Unless there are any questions, i would request that you move this to the full board with a positive recommendation. Chairman thank you so much, supervisor stefani. Before we go to Public Comment, colleagues, do you have any remarks or questions . Seeing none, why dont we go to Public Comment. Mr. Clerk, are there any callers on the line . Clerk thank you, mr. Chair. The operator is checking to see if we have any callers in the cue. Please let us know if there are any callers that are already. For those who are already connected to the meeting, please press star, followed by the 3, if you wish to speak for agenda item number one. You will hear a prompt that informs you that your line has been unmuted. For those who are watching our meeting on cable channel 26 or through sfgov tv. Org, if you wish to speak, call in now. By dialing 4156550001. I. D. 1465657778. Press the pound symbol twice. Then press star, followed by 3, to enter the cue to speak. Could you let us know if we have any callers for agenda item number one . Mr. Chair, there are no callers in the cue. Chairman thank you. Operations, and mr. Clerk. Public comment is now closed. Closed colleagues, i would like to move we send this item to the full board with positive recommendation. Clerk the motion offered by cha chair mar. [roll call] clerk mr. Chair, there are three yeas. Chairman mr. Clerk, can you please call item 2 . Clerk agenda 2 rejected ordinance 16220 temporarily protect workers from adverse action if they test positive for covid19, or have previously isolated or are isolated from symptoms, and protect applicants from is discrimination if they test positive for covid19, if theyre isolating or quarantined, due to covid19 symptoms or exposure. Members who wish to provide Public Comment should call the Public Comment number, 4156550001. Enter the meeting i. D. 1465657778. Press the pound symbol twice, and then press the star key, followed by the number 3. Please wait until the system indicates that youve been unmuted and you may begin your comments. And finally one more thing, mr. Chair, im in receipt of a memo requested that this matter be considered as a Committee Report during next weeks november 10th board of supervisors meeting. Chairman thank you. I would like to welcome paul moge to speak on this item on behalf of supervisor ronan. The floor is yours. Thank you, supervisors. Ill keep my remarks brief. This is simply an reactment ordinance, which will be safeguards against firing an employee. It extends protection to workers who are unable to work because they test positive for covid19 or must quarantine because of covid19 symptoms. Supervisor ronan introduced this, and it was a u. C. Health study that revealed that the fear of losing income or ployment because of a covid positive diagnosis and the need to quarantine was discouraging a large number of workers from wanting to go through the testing. This piece of ep legislation was enacted in early september. I indescernable or who requested time awe because they tested positive for covid. Any worker whos rights are violated under this emergency ordinance, can file a report, which has the authority to investigate violation, or order appropriate remedies like reinstating the worker or paying for lost wages, or charging an employer additional penalties for any violation that has occurred. With the assurance that a positive covid diagnosis a worker cannot be fired from their job, this will encourage workers to get tested, so they can contribute to our citys broader outgoing recovery effort. In addition to reenacting this emergency ordinance, were asking for a permanent resolution, even after the citys declared state of emergency is lifted, since this will likely continue well after the shelter in place orders are lifted. With that, im ready for any questions. Chairman thank you so much for all of your work on this, along with your boss. It is just an extremely important workers rights and emergency measure. Thank you so much. Colleagues, do you have any questions for remarks before we go to Public Comment . Mr. Clerk, are there any callers on the line . Clerk thank you, mr. Chair. Operations will check to see if we have any callers who are in the cue who wish to speak for this item, agenda item the number 2. Mr. Cue, let us know if we have any callers that are ready. Please press star, followed by the 3. For those already on hold in the cue, please continue to wait until youre prompted to begin. You will hear a prompt that informs you that your line has been unmuted. For those watching our meeting through sfgov tv. Org, if you wish to speak, please call in now, by dialing 415655, 0001. The i. D. 1465657778. Press the pound symbol twice followed by star 3. Have we received any callers . I have one caller in the cue. Hi, this is magic haltman, and thank you, paul, for bringing this forward from hillarys office. It is so important. And i just want to voice my highest support for protecting our people. Thank you very much. Clerk thank you for your comments. Mr. Cue, can you connect us to the neck caller next callf there is someone on the line. Mr. Chair, that completes the callers. Chairman hearing no further callers, Public Comment is closed. I would like to recommend move that we send this item to the full board with positive recommendation as a Committee Report to the november 10th meeting of the board of supervisors. Mr. Clerk, can you please call roll. [roll call] id like to be added as a cosponsor. Yea. Clerk noted. Mr. Chair, there are three yeas. Chairman thank you. Mr. Clerk, can you please call item number 3. Clerk yes. Agenda three is a hearing to receive and review external auditors comprehensive management report. Endings june 30th, 2019, and external aud tit plans is required under the charter. 4156550001. And enter the meeting i. D. , 146, 5657778. Press the pound symbol twice to connect to the meeting, and then press the star key, followed by the number 3. Mr. Chair . Chairman thank you. This annual hearing was part of the reason that the government audits and oversight was formed. Today well hear from the citys external auditors on their findings for fiscal year 2019and fiscal 2020. A number of city staff are here and available for questions, with representatives from the m. T. A. , p. U. C. , and from the controllers office. Is there anything you would like to say at the start of this hearing. Thank you, mr. Chair. I can brief the introduce the item and turn it over to the citys external auditors to present to you. A bit of background, every physical yeafiscal year in thisy has two book ends, with a financial plan, the budget, what we hope will occur for that fiscal year, and then it concludes with what actual occurred financially. We present those in Financial Statements, and then consolidate them into what we call the comprehensive annual financial report, cafr. Those are then audited by firms external to the city to ensure they accurately reflect the citys Financial Condition for that fiscal year. So you are here today to hear from the citys audit firms. Annie louie from m. G. O. , to talk through their observations and findings. And then they will present their audit plans for fiscal year 2020, because were closing the books. I believe the auditors are prepared to present. Chairman thank you so much, mr. Rosenfield. I would just like to welcome our external auditors, annie louie, who is a partner at m. G. O. , and lisa avis, the managing director of kpmg. You have the floor. Thank you very much. Good morning. Again, we appreciate the opportunity to be here. I want to share our presentation here, and so we have both kpmg and m. G. O. Presently today, but our joint presentation will cover the various aspects needed here. So if you could just please let me know if my screen chairwoman yes, we can see it. Okay, you can see the presentation there. Okay. Thank you. So this meeting here im sorry. Im having a little bit of technical difficulties this meeting is to cover the audit results for 2019, and the audit plan and strategy for 2020. So as you can see, there are 43 slides here. Were not going to go through all 43 slides. I just want to highlight a couple of the key slides with the rest of the information you have in your packet for review. Slide two here talks about the scope of the audit that we ask ternal auditors conducted this year. We have the Financial Statement audits, audited by m. G. O. , and those audited by kpmg on the right side. And they have consisted over the past several years. Slide three here is the results of m. G. O. s audits. It says m. G. O. , but for all of the Financial Statement audits across the board, we have the Financial Statements received, and opinions, or what we call unmodified opinions, meaning that the Financial Statement balance is where we present the results and operations of the respective entities that you saw on the previous slide. As part of our audit results, we also cover any corrective actions taken on any findings noted in the prior period. So annie, did you just want to touch on this slide here, slide four . Thank you, lisa. Good morning, everybody. This particular finding is from the 2017 18 audit, where we noted certain deficiencies over the financial reporting, and the main cost of this was the citys conversion from the Legacy FinancialManagement System to peoplesoft system. We note the areas of improvement, and im happy to report that based on the audit for 18 19, that the corrected actions have been implemented. Thank you, annie. Im going to jump to slide seven here. So as we review the Financial Statements, as management is preparing the Financial Statements, it is not uncommon for management to find adjustment to numbers presented, and they make a determination as to whether those identified are material or significant enough to adjust the existing balances theyve presented. For example, on slide seven here, this has the various column where the various entities are audited by kpmg, and there were similar adjustments for the audits by m. G. O. They would affect the pension and expenses as they were originally reported. Soso the pension liability was calculated in 2016, and oped was calculated in 2018. Each year there are new factors that come into play, and those estimates are more finetuned to adjust for the large liabilities for pensions and oped that are on the books. When calculating the updated amount for the 2018 audit, there were some factors that were not included in those calculations, and these are the net effects of those calculations here. Management determined that they were not material, and we concurred. The Department Still received an opinion, but we just wanted to show the impact of those amounts that were not recorded. As part of our audit, we are required to report any controlled deficiencies noted. So there was one adjustment, and that was material. And it was brought tw to our attention by the p. U. C. Management. Back in 2016, there was an agreement that was entered with another city agency as it relates to the central shop transactions that were taking place. And there was a lack of communication among various departments, but this resulted in 35 million of assets being doubled booked on the waste water enterprise Financial Statement. So management, again, identified it, brought it to our attention. They wanted to be transparent in their Financial Statements, so management corrected the prior periods balances. And as a result, the numbers that were stated as of 2018 and 2019 were corrected. However, because of the deficiency here, we issued a material correction over this. It was a oneoff transaction for the p. U. C. Entities, and they have transactions to address these similar oneoff transactions. The next finding was a single audit over the m. T. A. Program. When we test cash draws from the federal government, we found there were some controls that were lacking over the reviews taking place before those draws so there has been a lot of turnover at m. T. A. With the various retirements that have taken place. As a result of the deficiencies we found, there was approximately 1. 5 of costs that were draw1. 5 million of costs thatwee not allowable. M. T. A. Has corrected that to make their balance and account whole again. So i want to go ahead and jump forward to i hope i dont make you dizzy here, but on slide 22 here, and slide 23, these are the teams that we have coming into the 2020 audit, which is well under way. Again, we said these are results for 2019, and the audit plan for 2020, but we have the continuity of both teams. And jumping forward to slide 24 here, this is our audit timeline. And we actually have several reports that will be going out in the next couple of weeks. And, again, the team is working hard to try to make those deadlines. So i know you have a very full agenda, and im not going to go through all 43 slides, but i just wanted to highlight those key items. Annie, is there anything else you would like to touch on . No. Youve covered it very well. Thank you. Thank you, lisa. Okay. Thank you. Mr. Chairman . Chairman supervisor peskin, go ahead. I would like to draw a little more into the rather troubling finding about the inappropriate spending of federal dollars and determine whether or not there are any other instances of that, and to what extent the audit looked at other federal drawdowns. Yes. So i can start with that question, and then i can turn it over to m. T. A. As part of the a