CEDA Loan Receivables
Performance Audit
November 18, 2010
CR Crop
Office of the City Auditor
1 Frank H. Ogawa Plaza, 4th Floor
Oakland, California 94612
www.oaklandauditor.com
(510) 238-3378
Dear O
aklanders,

Today I would like to share with you the Community and Economic Development Agency (CEDA) Loan Receivables Performance Audit (click here to read report), which draws into question greater concerns about the integrity of Oakland's financial system.
The audit revealed that the Administration:
  • Lost track of $14 million in loan receivables
  • Failed to properly record loans that had been authorized to be converted to grants more than 10 years ago
  • Operates a flawed system to record homebuyer loans
The Administration's dismissal of the issues raised in this audit is more alarming than the audit's findings themselves.

I ask you and the City Council to join me in demanding absolute accountability - without equivocation or excuse.


Committed to serving you with the utmost integrity...

COURTNEY A. RUBY, CPA, CFE
City Auditor

which draws into question greater concerns about the integrity of Oakland's financial system.

The audit revealed
that the Administration:
Oakland needs tighter financial controls, report says
Read the Tribune's article on this audit...
OAKLAND -- Oakland doesn't have accounting controls in place to know how much money it has in some areas, making it appear that $14 million was owed from development loans when it was not, and the city must beef up internal controls to avoid future problems, according to an auditor's report released today... (click here to read full article)
Tree Red
NEWS RELEASE
Office of the City Auditor
City of Oakland
____________________________________________________________________________________
FOR IMMEDIATE RELEASE:
November 18, 2010

Audit Finds Oakland Lost Track of $14M in Loan Receivables and Deferred Revenue


Inadequate bookkeeping in loan receivables draws into question greater concerns about the integrity of Oakland's financial system.


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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