Risk Assessment – Identifies and analyzes the risks facing the City as it seeks to achieve its objectives. This assessment provides the basis for prioritizing and developing appropriate internal controls to eliminate or reduce risks. Control Activities – This component represents the actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system. Information and Communication – This component is comprised of the control structure that provides for identification, capture, and exchange of information both within the City and with external parties. Monitoring – These are the processes managers establish and operate to assess the execution and quality of internal control activities over time and to promptly resolve the findings of audits and other reviews. The Internal Control Framework serves as the underpinning of the City’s internal controls. Management is responsible for the design, implementation, and maintenance of internal control over financial reporting, and is responsible for evaluating the effectiveness of internal control. The City Council is responsible for ensuring that management fulfills its internal control responsibilities. The California State Controller’s Office has published Internal Control Guidelines applicable to local governments, which incorporate internal control standards and best practices established by COSO and the Government Finance Officers Association (GFOA). The State Controller’s Internal Control Guidelines shall be utilized by management to establish, maintain and monitor the effectiveness of internal control. The City has developed standards of conduct that outline the City’s commitment to integrity and ethical values, demonstrates a commitment to competence that includes a process for attracting, developing and retaining employees, and outlines mechanisms to hold individuals accountable for performance. To demonstrate the City’s commitment to the Internal Control Framework, the City Manager and Finance Director shall annually acknowledge in writing to the City’s independent auditor of management’s responsibility for the design, implementation, and maintenance of internal control.
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