OAKLAND, Calif. (November 18, 2010): Today, Oakland City Auditor Courtney Ruby released the Community and Economic Development Agency (CEDA) Loan Receivables Performance Audit, which revealed that the Administration had lost track of $14 million dollars in loan receivables and deferred revenue, failed to properly record loans that had been authorized to be converted to grants more than 10 years ago, and operates a flawed system to record homebuyer loans.

"Citizens and the City Council must know that the Administration is properly accounting for residents' tax dollars, especially during these challenging economic times when every dollar counts," said Ruby. "It's only because of this audit that we now know $14 million in loan receivables and its deferred revenue will never be realized and must now be written off. The greater issue is what else is the Administration unaware of on the City's books."

The CEDA Loan Receivables Performance Audit focused on loans issued by the City with outstanding receivable balances during fiscal years 2006-2009 and that were funded by local taxpayer dollars through the Redevelopment Agency's Tax Increment Fund, as well as the General Fund. The audit calls into question larger concerns regarding the dependability of the City's financial system to produce relevant and reliable information that decision makers require. Additionally, the audit recommends that the City's financial statement auditors increase their internal controls testing in the receivables area.

In its response to the audit, the Administration skirted its responsibilities by alleging that the audit exaggerates its findings and by falsely asserting that there is no correlation between historic loans and current loan practices. The Administration calls this unrealized deferred revenue irrelevant, despite the fact that $14 million constitutes approximately 35% of CEDA's locally funded loan portfolio.

"The Administration's dismissal of the issues raised in this audit is more alarming than the audit's findings themselves," said Ruby. "In a time when we are laying off personnel and cutting back on valuable residential services, how can $14 million be irrelevant? Quite simply, the Administration's response is appalling."

ABOUT OAKLAND CITY AUDITOR RUBY

City Auditor Courtney A. Ruby, CPA, CFE, took office in January 2007 and was re-elected November 2, 2010. Earlier audits reviewed the City's hiring practices, public campaign financing, funding for children and youth services, library services fund, emergency medical services and paramedic services funds, Public Works Agency, and the grant management for the Measure Y Violence Prevention Programs. Performance audits of accounts receivable for PWA Illegal Dumping Abatement Program, the Fox Theater Renovation Project, American Recovery and Reinvestment Act compliance, Accounts Payable, and Measures M and N are also in progress. In March 2010, an Association of Local Government Auditors peer review team found the Office of the City Auditor met the highest government standards in performance auditing. Visit www.oaklandauditor.com to learn more about Oakland's Office of the City Auditor.

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