Santa Monica City Hall (File photo)

Given recent news that a Pasadena city employee allegedly embezzled $5 million, City Council will reconsider its current practice for auditing City Hall’s finances.

Council voted unanimously to have city officials create a report on the current practices and include information about best practices implemented in other cities.

In August, council hired Moss Adams to perform internal audits but, prior to that hiring, city officials had been without an internal auditor for about two years, city officials told council at their Tuesday meeting. An external audit is performed and discussed publicly every year. That discussion is scheduled for Feb. 10.

“I think, in light of what happened in Pasadena, it would behoove us to at least investigate and have staff come back with some recommendations on what’s the best way to handle the situation moving forward,” Mayor Pro Tempore Tony Vazquez said of the auditing process.

Councilmember Sue Himmelrich suggested the creation of an audit committee, possibly comprised of two council members and resident with accounting experience. The committee would review the annual external audit.

Councilmember Ted Winterer asked, rather than moving forward with the creation of a committee, that city officials study practices that are working in other cities.

“I’m not of the belief that there’s any mass graft or corruption in this city, but I think Councilmember Vazquez is right: They probably had the same belief in Pasadena,” he said. “I don’t know if the council audit committee in Pasadena would have caught that particular act of corruption.”

Mayor Kevin McKeown worried that committee work would replace or diminish the current practice of reviewing the external audit publicly each year.

“I would think that our interest as a council and a community is that the city’s fiscal oversight is meticulous and transparent,” he said, “and I’m not sure that going to council committee furthers those goals because then less of it is being done here in the public hearing and more is being done as committee work. And frankly, I tend to overestimate the abilities of my colleagues, but I’ve never seen any of us in a green eyeshade and I don’t know that we have the type of expertise it takes to do this kind of very complex municipal finance auditing.”

Winterer suggested an expansion of the current outreach process performed by the external auditor.

“I do know that when we have this external audit annually, that the auditor then subsequently goes out and meets with people in the community,” he said. “I happen to be the council member that was chosen to meet with them two years ago. I think that’s a great framework. Maybe we build on that. There’s a lot of possibilities. I think we should just explore them all.”

McKeown, noting City Hall’s recent Open Data initiative, which brought reams of city finance documents online for the public to view, expressed confidence in city practices.

“This city is rather infamously open in its process,” he said. “This information is there. Maybe we could make it in a more easily digestible format. I don’t know. But this is a very complex business. I don’t know that I would personally be of any use on a committee doing this.”

Winterer expressed an interest in asking the external auditors their opinion at the public meeting next month.

Additionally, city officials will file a report on the current auditing process.

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