Section 308:  Annual Evaluation of Internal Financial Controls

(a) On or before September 1 of every year, the Comptroller shall conduct an annual evaluation of the City's internal financial controls.  In the course of that review, the Comptroller shall conduct a thorough review of the efficacy of the City's internal financial controls and their operation and meet with the City's independent auditors to review the design and operation of the City's internal financial controls.

(b) The Comptroller shall submit a written Annual Report of his findings to the City Council and the Financial Reporting Oversight Board on or before January 1 of every year, and such Annual Report shall be docketed for an open session hearing of the City Council within thirty (30) days thereafter.  Accompanying such Annual Report shall be a certification signed by the Comptroller, certifying that he:

(1) is responsible for establishing and maintaining the City's internal financial controls;

(2) has designed and enforced such internal financial controls to ensure that material information relating to the City and its departments, offices, agencies, and affiliated "related entities" as defined by law, is made known to the Comptroller by others within the City and its departments, offices, agencies, and affiliated "related entities," particularly during the period in which the Annual Report required by this section is being prepared;

(3) has evaluated the effectiveness of the City's internal financial controls as of a date within 90 days prior to the Annual Report;

(4) has presented in the Annual Report his conclusions about the effectiveness of his internal controls based on such evaluation as of that date;

(5) has disclosed to the City's independent auditors and the Financial Reporting Oversight Board all significant deficiencies in the design or operation of internal controls that could adversely affect the City's ability to accurately and completely record, process, summarize, and report financial data;

(6) has identified for the City's independent auditors any material weaknesses in internal controls and any fraud, whether or not material, that involves management or other employees who have a significant role in the City's internal controls; and

(7) has indicated in the Annual Report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of his evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Section 309:  Comprehensive Annual Financial Report and other Financial Disclosures

(a)  On or before December 1 of each year, the Comptroller shall issue a Comprehensive Annual Financial Report [CAFR] for the City, provided that the Comptroller may issue the CAFR no later than 60 days after this date if necessary to assure its quality and accuracy.  The CAFR shall conform to applicable federal, state and professional accounting standards governing such financial reports for local governments. The CAFR shall accurately and completely report on the overall financial health of the City, and account for the revenues, expenses, liabilities, and balances of all City accounts and funds for the fiscal year covered.

(b)  In connection with the issuance of the CAFR, the Comptroller shall certify in writing that to the best of his knowledge, as of its date:

(1) the information contained in the CAFR fairly presents, in all material respects, the financial condition and results of operations of the City as of, and for, the periods presented in the CAFR; and

(2) the CAFR including all footnotes, does not make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

(c)  In connection with offerings of securities of the City or "related entities" as defined by law, the Comptroller shall certify in writing that to the best of his knowledge, as of the date of the offering documents or other relevant disclosure materials, the information contained in those sections of such offering documents or disclosure materials for which the Comptroller is primarily responsible:

(1) that the information fairly presents, in all material respects, the financial condition and results of operations of the City;

(2) that the information, including all footnotes, does not make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and

(3) that the financial statements and other financial information from the CAFR included in such offering documents or disclosure materials fairly present in all material respects the financial condition and results of operations of the City as of, and for, the periods presented in the CAFR.

No offering of securities of the City shall be made without first receiving the Comptroller's certification as required by this Charter.

(d)  Immediately upon completion of the City's Comprehensive Annual Financial Report [CAFR] the Comptroller shall submit that report to the City Council, and such report shall be docketed from an open session hearing of the City Council within thirty (30) days thereafter, and the hearing shall not be continued for any reason except for an emergency as reasonably determined by the Mayor. 

Section 310:  Financial Reporting Oversight Board

(a) There is hereby created a Financial Reporting Oversight Board consisting of three members.  The members shall be appointed by the Comptroller and confirmed by the City Council.  Each of the members shall be a person of high moral character and integrity with extensive academic or professional experience in the fields of finance, accounting, or law, with at least one expert in accounting and at least one expert in federal securities law.  The members shall not be members of related entities as defined by law or any other board or commission of the City of San Diego .

(b) The members shall serve terms of four years and each member shall serve until a successor is duly appointed and confirmed.  No later than 60 days after the effective date of this Article, the Mayor and the Council shall make interim appointments to the Board.  These interim appointments shall be replaced no later than March 1, 2007 by appointment by the elected Comptroller and confirmation by the Council. 

(1) Of the members appointed by the Comptroller initially, one member shall serve a term of two years, and one member shall serve a term of three years, such that the terms of not more than one member shall expire in any year.  The expiration date of all terms shall be March 1.  During March of each year, the Comptroller may designate one member as Chairperson; however, in the absence of such designation, the Board shall on or after April 15, select a Chairperson from among its members.

(2) Any vacancy shall be filled for the unexpired term of the member whose place becomes vacant.  If any member misses three meetings in a calendar year without being excused by the Board, that member's Board position shall be deemed immediately vacated without further action by the Board or the City Council.  The Board shall have no authority to restore such member to a position deemed vacated.  Absences may be excused by unanimous vote of the remaining members of the Board.

(c)  The Financial Reporting Oversight Board shall:

(1)  Adopt rules consistent with the law for the government of its business and procedures, provided that such rules shall specify that a quorum shall at all times consist of at least two members;

(2)  Meet periodically but no less than every three (3) months, and in separate meetings with the Comptroller, the City's Independent Auditor, and the representatives of other bodies to be designated by ordinance.  The Board's meetings shall be subject to state open meetings laws applicable to local legislative bodies.

(3)  Establish procedures to receive and respond to any complaints or concerns regarding accounting, internal controls, or auditing matters, including procedures for the confidential and anonymous submission by employees of any such complaints or concerns.

(4)  Review and evaluate the annual report on the Comptroller's evaluation of internal controls and the Consolidated Annual Financial Report and provide to the Mayor, City Council and Comptroller any comments or recommendations it may have on those documents.

(5)  Review and evaluate the procedures, diligence, ability, and work product of the outside auditor and report annually to Mayor, City Council and Comptroller on its findings and any recommendations it may have.

(6)  Review and evaluate the City's exercise of its obligations under federal and state securities laws with respect to securities issued by the related entities as defined by law, and provide to the Mayor, City Council and Comptroller any comments or recommendations it may have.

(7) Conduct such other studies, reviews, and public hearings on matters relating to or connected with the City's financings, disclosures, audits, and internal financial controls and procedures as it shall be directed by the Comptroller or requested by Mayor or City Council, and report on its findings, together with such recommendations as the Board shall deem appropriate, to the Mayor, City Council and Comptroller.

(d)  The City Attorney, the Comptroller, and the all other City officers and employees shall fully cooperate with the Financial Reporting Oversight Board and provide such assistance and resources as are reasonably necessary to allow it to carry out its responsibilities.  In the City's Annual Budget, in addition to budgeting sufficient internal staff resources, the Comptroller shall propose an expenditure of funds sufficient to engage such independent counsel or other independent advisers to assist the Board in carrying out its responsibilities as the Board shall reasonably request.  The City Council shall appropriate monies as proposed by the Comptroller sufficient to meet these needs.

Section 311:  Selection of Independent Auditors

(a) In selecting an independent auditor for the City, the Comptroller shall consult with the Financial Reporting Oversight Board regarding its recommendations relating to appropriate expertise, experience, responsibility, and other factors on which candidates will be solicited and evaluated.

(b) The Board shall review and evaluate all proposals received for the independent auditor to the City, and shall recommend three candidates to the Comptroller.  The Comptroller shall select one of these candidates to serve as the independent auditor. 

(1) The City Council may approve or reject the Comptroller's selection, but the City Council shall not substitute a candidate of its own choice.

(2) In the event that the City Council rejects the recommendation of the Comptroller, he shall select another candidate recommended by the Board, or, in his sole discretion, provide for the issuance of a new Request for Proposals to encourage additional candidates to submit proposals.

Section 320:  Independence of the Auditor-Comptroller

(a)  The Comptroller shall be the Auditor and Chief Fiscal Officer of the City.  The Comptroller shall exercise supervision over all accounts, and accounts shall be kept showing the financial transactions of all Departments of the City upon forms prescribed by him and approved by the Council.  He shall submit to the Council at least monthly a summary statement of revenues and expenses for the preceding accounting period, detailed as to appropriations and funds in such manner as to show the exact financial condition of the City and of each Department, Division and office thereof. 

(b)  Th e Comptroller shall perform the duties of a City Performance Auditor, responsible to the people of San Diego for monitoring the performance and efficiency of the government of the City of San Diego .  The Comptroller shall establish and maintain a Performance Audit Unit in the Comptroller's Office to ensure the City's financial integrity, and improve the overall performance and efficiency of City government. 

(c)  No contract, agreement, or other obligation for the expenditure of public funds shall be entered into by any officer of the City and no such contract shall be valid unless the Comptroller shall certify in writing that there has been made an appropriation to cover the expenditure and that there remains a sufficient balance to meet the demand thereof.  He shall perform the duties imposed upon City Auditors and Comptrollers by the laws of the State of California , and such other duties as may be imposed upon him by the Charter and ordinances of the City Council.  He shall prepare and submit to the Mayor or City Council such information as shall be required for the preparation of an annual budget. 

(d)  Commencing with the year 2006, a Comptroller shall be elected by the people for a term of four (4) years.  In the year 2006, the municipal election for Comptroller shall be conducted on November 7, 2006.  If no candidate receives a majority of the votes cast at that election, a runoff election shall be conducted on December 19, 2006, provided that no write-in votes shall be permitted or counted in that runoff election.  Thereafter, the municipal primary election for the office of Comptroller shall be held on the same date in each election year as the California State primary election, and the general municipal election for this office shall be held on the same date as the California State general election for that year. 

(e)  Notwithstanding any other provision of this Charter and commencing with the election held in 2006, no person may serve more than two consecutive four-year terms as Comptroller.  If for any reason a person serves a partial term as Comptroller in excess of two years, that partial term shall be considered a full term for purposes of this term limit provision. 

(f)  The Comptroller shall supervise the departments, offices and functions of the City Treasurer, Budget and Management Services (with the exception of preparing the annual budget), City Optimization Program, Bond Issuance and Repayment, Real Estate Assets and Risk Management as identified in the Fiscal Year 2006 budget, and the successors to such offices and departments.  He shall appoint the Treasurer and other chief executives of all such departments and offices and may, in his sole discretion, remove the Treasurer and such chief executives.  He shall appoint, and may remove at his sole discretion, an audit manager.  He shall appoint other subordinates subject to the Civil Service provisions of this Charter.

(g)  The Comptroller shall serve on the Retirement Board of Administration in lieu of "the City management employee in the administrative service" specified in Section 144(f) of this Charter.  

(h)  The salary of the Comptroller and the budget for the Departments, offices and functions overseen by the Comptroller shall be fixed by the Council and set forth in the annual Appropriations ordinance.   Should the Council not appropriate sufficient funds for the Comptroller to carry out the financial management and performance management functions outlined in this Charter, the Comptroller has the right to debit internal service fees from the appropriations accounts of City Departments for the performance of those services, provided that such fees do not exceed the actual costs to the Comptroller of providing these services.  The City Council may reject or revise the Comptroller's imposition of internal management fees by a three-fourths vote of all of the members of the Council.   

(i)  To maintain independence of the Comptroller, the salary of the Comptroller shall not be decreased during a term of office and the annual salary of the first elected Comptroller shall not be less than the salary of the Comptroller as set forth in the 2005 fiscal year budget.  City officers and personnel shall not carry out nor shall any expenditure for outside services be made to perform any of the duties and functions assigned to the Comptroller without the prior written consent of the Comptroller.