Tom Butt
  E-Mail Forum – 2021  
  < RETURN  
  Auditing the City of Richmond
July 25, 2021

In a letter from the state auditor dated July 14, 2021, the city attorney was warned to, “notify the appropriate staff that, in anticipation of the audit, they should not make any changes to any records or files that may be relevant to the scope of the audit.. They should not destroy, alter reclassify, or backdate files of records, regardless of their format.”

The scope of the audit includes the following:

Local High Risk Proposal—City of Richmond. The audit by the California State Auditor will provide independently developed and verified information related to the city of Richmond (Richmond). The audit's scope will include, but not be limited to, the following activities:

  1. Review and evaluate the laws, rules, and regulations significant to the audit objectives.
  2. Evaluate Richmond's current financial condition and ability to meet its short-term and long-term financial obligations while continuing to provide services to its residents.
  3. Identify the causes of Richmond's financial challenges and determine whether the city has developed an adequate plan for addressing those challenges. This will include assessing the city's efforts to improve its financial condition by increasing revenue and reducing expenditures.
  4. Determine whether Richmond's budgeting processes align with best practices. In addition, evaluate the city's procedures and underlying assumptions for projecting future revenue and expenditures, and determine whether the projections result in balanced budgets and accurate financial forecasts.
  5. Assess Richmond's process for setting, increasing, or decreasing fees or rates to ensure that it complies with applicable laws, rules, regulations, and best practices. For a selection of these fees and rates, determine whether they cover the city's costs of providing services.
  6. Evaluate Richmond's efforts to address the deficiencies its external auditors identified in their reports for fiscal year 2018-19 and earlier years and those the Inspector General identified in its 2016 report related to the Richmond Housing Authority.
  7. Review and assess any other issues that are significant to the audit
Unfortunately, the City of Richmond is taking a lot of financial risks that should be looked at by an independent auditor. See Joint Legislative Audit Committee Votes to Direct State Audit of the City of Richmond, July 1, 202.

Contributing to those risks are actions by the city attorney and city manager to engage outside legal firms for unspecified tasks without complying with the Charter and Municipal Code limit for contracts in excess of $10,000 without City Council authority, a clear abuse of power.

The other problem we have is that the RPA City Council members have become a proxy for City employee unions SEIU Local 1021 and IFPTE Local 21, Instead of bargaining with them in the interest of the people of Richmond, they have become their advocates, cutting deals that will put Richmond deeper into the type of financial challenges that precipitated the state audit.

Finally, in 2005, the City Council passed an ordinance, Chapter 2.74, Internal Auditor, that was intended to provide internal financial and performance audits to the City Council as a check against any city manager or staff abuse of power or incompetence. Shortly after its adoption, City Manager Bill Lindsay proposed an alternate approach, hiring independent consultants to perform on one to three departments or functions each year. He reasoned that using subject matter experts rather than a generalist auditor would yield more useful results. Dozens of such audits were performed, and an example would be the audit of the Port of Richmond, which pointed out horrible management practices.

With our most recent city manager, we have neither an internal auditor nor selected departmental audits by experts.

The City is running amok, and the state auditor is set to help us find out why.