Title
2026 Audit Plan Endorsement
Presenter:
Natalie Lovell, City Auditor, Office of the City Auditor
Barry Baum, Audit Committee Member
Jim Godfrey, Audit Committee Member
Body
Summary:
The 2026 Audit Plan was prepared by the City Auditor and presented to the Audit Committee in November 2025, following a dedicated workshop with citizen members of the Committee on November 7, 2025. The Audit Committee reviewed the plan, provided feedback, and fully supports the final version being submitted for City Council endorsement.
Background:
The 2026 Audit Plan is based on a comprehensive risk assessment conducted by the City Auditor, in accordance with professional auditing standards. As part of this process, input was gathered from City Council, City Administration, Colorado Springs Utilities, Colorado Springs Airport, and other stakeholders.
A key enhancement to this year’s planning process was the collaborative preview of the draft Audit Plan with executive leadership from each of these entities. This early engagement helped ensure alignment with organizational priorities and emerging risks.
The resulting Audit Plan serves as the primary work plan for the Office of the City Auditor. Most audits will be conducted by internal staff, though funds may be allocated to external resources when specialized expertise is required.
Some audits are mandated by City Code or City Charter. In addition, the governance model for Colorado Springs Utilities requires certain external reporting responsibilities that have been delegated to the City Auditor. Elective audits are prioritized based on their risk assessment scores, with only the highest-risk items included in the 2026 Audit Plan.
Previous Council Action:
The last formal review of the Annual Audit Plan by City Council at a work occurred in 2021. Beginning in 2022, the Audit Plan was shared with Council via memorandum rather than through a formal presentation. As City Auditor, I am restoring the practice of presenting the Annual Audit Plan to City Council for review and endorsement, beginning with the 2026 Audit Plan.
Financial Implications:
The 2026 resource plan for the Office of the City Auditor was developed to ensure sufficient capacity to complete the proposed Audit Plan, while also allowing flexibility for special projects that may arise during the year. This plan was presented to the Audit Committee during the November 7 workshop, where members expressed support for the thoughtful reorganization of the office and the clear alignment of available working hours with the prioritized audit work.
The resource plan was also shared with City Council during the October 27 lunch meeting, which included the City Auditor’s Annual Required Communications. No significant changes in funding allocations were proposed for 2026, but the plan reflects a strategic deployment of staff resources based on risk and audit complexity.
One key change in the 2026 Audit Plan is the increase in audit hours dedicated to the Colorado Springs Airport, reflecting a shift in its risk profile and the need for expanded audit coverage, including the Airport Business Park. While the cost-sharing split between the City, Colorado Springs Utilities, and the Airport remains consistent with prior years, the overall cost of the audit plan has decreased. This reduction is primarily due to a lower assumed overhead rate (reduced from 20% to 17%) and a restructured staffing model that emphasizes entry-level positions, resulting in more available audit hours at lower salary levels.
City Council Appointed Board/Commission/Committee Recommendation:
The Audit Committee recommends that City Council approve the 2026 Audit Plan as presented.
Stakeholder Process:
The 2026 Audit Plan was developed with input from City Council, City Administration, Colorado Springs Utilities, Airport Administration, and other key stakeholders. This year, the City Auditor also previewed the draft plan with executive leadership to ensure alignment with organizational priorities and emerging risks. The Audit Committee, consisting of two Council Members and three citizen members, reviewed and endorsed the plan during a November 2025 workshop.
Once reviewed by City Council, the 2026 Audit Plan will be published on the City Auditor’s website.
Alternatives:
Option 1: Approve the Audit Plan as presented.
Option 2: City Council could direct the City Auditor to make modifications to the Audit Plan.
Recommended Action
Proposed Motion:
Move to endorse the 2026 Audit Plan as provided by the City Auditor and recommended by the Audit Committee.
Summary of Ordinance Language
N/A