It's Official & New Reports Released!

INDEPENDENT CITY AUDITOR. REPORTING DIRECTLY TO THE RESIDENTS.

Greetings from Acting City Auditor, Michael Houston

Dear Oaklanders,

I have officially stepped into the role of Acting City Auditor. This title is new for me, but the work and the City Auditor's Office Team are not. Since Courtney Ruby's resignation, we have been working to meet several competing deadlines. This is only the beginning of a very productive period.

We continue to progress on the audits outlined in the Annual Audit Work Plan. Accordingly, I am pleased to announce the release of two reports today: the City of Oakland's Financial Condition Audit covering the last ten fiscal years, and a review of two grants to ESO Ventures in response to a request from the City Council. High-level summaries of the reports are below.

We are also close to completing a Recommendation Follow-up Report summarizing the status of all outstanding audit recommendations issued between 2012 and 2022. We hope to publish this report by year's end. Furthermore, our Whistleblower Program Manager continues to review new whistleblower complaints, investigate fraud, waste, and abuse allegations, and is finalizing the Whistleblower Annual Report, which will be released soon. In addition to our audits and investigations, the Office is hiring a temporary Assistant City Auditor and recruiting auditors and administrative staff to fill vacancies.

Given our current workload, I am grateful to lead a Team so deeply committed to doing this critical work with the highest levels of enthusiasm, care, and professional standards.

We look forward to deepening our partnerships with Oakland residents, businesses, City employees, and other stakeholders to help us identify and audit areas of the greatest risk, interest, and concern. Please contact Dena Shupe if you would like to schedule a meeting with me.

Thank you for your continued support and trust.

New Financial Condition Report Released

The audit report on Oakland’s Financial Condition between Fiscal Years 2012-13 and 2021-22, highlights both near- and long-term financial challenges facing the City. This is the third year our Office has released a report on Oakland’s financial condition.

Initially, the impetus for a financial condition report was twofold: to provide the public and leadership with an easily digestible account of the City’s financial health, and to assist decision makers in visualizing the City’s course, considering options, and adjusting and improving the City’s long-term financial condition.

The 2021 audit articulated the financial impacts of the COVID-19 pandemic and highlighted the vulnerabilities in the City’s finances. This report assesses the City’s financial condition after the City applied cost cutting measures and received federal American Rescue Plan Act funds to counteract the financial impacts of the pandemic.

The information and recommendations in this audit are particularly relevant given the City’s recent and future financial challenges. In June, the Mayor and City Council had to close a historic $360 million budget shortfall to pass a balanced 2023-25 Adopted Biennial Budget. Today, the City continues to feel the lingering effects of the pandemic and must confront a 5-year financial forecast that projects expenditures outpacing revenues. The City should implement strategies for shoring up finances, maintaining reserves, and reducing liabilities so it can provide essential services in the future.

Click the link below to read the full audit and its recommendations.

City of Oakland's Financial Conditions Audit

Response to City Council Request Released

ESO Ventures is a for-profit, entrepreneurial support organization founded in East Oakland in 2020. The organization offers community and connection, business incubation, entrepreneurial education, coaching, and financial products for early-stage entrepreneurs.

On June 6, 2023, the Oakland City Council (City Council) approved Resolution No. 89757 C.M.S., requesting the City Auditor to provide clarity on the grant funding awarded to ESO Ventures totaling over $8 million. Specifically, the City Council requested the City Auditor determine how much of the grant funds were spent and for what uses, how much remains, and identify the status reports provided by, or about, ESO Ventures’ funding.

The report found: 1) the City ultimately did not receive or administer an $8 million State grant due to changes in the funding stream, and 2) the City paid ESO Ventures the full City grant of $75,000 without obtaining assurance that the contract terms were met.

We recommend the City Administration establish and follow protocols for informing the City Council of updates regarding significant changes to grants that are accepted and appropriated by City Council resolution, and verify that contract deliverables are met, or document reasons for not meeting them, prior to disbursing the full grant amount.

Read the details of these findings in the link below.