October 17, 2023
Finance Department
DATE: October 17, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager – Internal Services
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Subject:
State Auditor’s Recommendations Corrective Action Plan
November 2023 Update
FINANCIAL IMPACT: No Fiscal Impact
PREVIOUS COUNCIL
ACTION:
December 20, 2022, May 2, 2023, June 27, 2023, July 11, 2023.
STATEMENT OF THE
ISSUE:
California State Auditor’s 2021-806-Audit Corrective
Action Plan, November 2023 Update
RECOMMENDED ACTION:
RECEIVE a report regarding the City’s Corrective Action Plan update to State Audit No. 2021-806 – Finance
Department (Andrea Miller 510-620-6790/Mubeen Qader
510-412-2077).
DISCUSSION:
On April 4, 2022, the City of Richmond was notified by the California State Auditor regarding an audit of the City as approved by the Joint Legislative Audit Committee on June 30, 2021. The State Auditor’s local audit program identifies and supports local government agencies that might be at high risk based upon analysis of the City’s audited financial statements. Richmond’s risk assessment began in February 2021 based upon the City’s June 2020 financial statements.
The audit was initiated in May 2022 and was completed and published on November 10, 2022. During the audit process, the State Auditor held meetings with City staff AGENDA
REPORT
October 17, 2023
members to review and discuss many aspects of the City’s financial management procedures and protocol. In compliance with the State Auditor’s request, City staff members provided complete access to the City’s financial data and systems.
State Auditor Recommendations:
At the conclusion of the audit, the State Auditor formalized eleven (11) recommendations that the City has grouped into three broad areas: (1) Budget Strategy, (2) Housing Authority Administration, and (3) Operations, as summarized below:
Budget Strategy
1. Review/Update Fund Balance Reserve Policy
2. Identify Contingent Budget Balancing Options
3. Expand 5-Year Financial Projection Model with Risk Scenarios
4. Review/Update Pension Funding Policy
5. Review/Update OPEB Funding Policy
6. Update Workforce/ Position Analysis
Housing Authority Administration
7. Complete Housing Authority Recovery Agreement Actions
8. Execute Housing Authority/ City Administration Agreement
Operations
9. Review/Update Contract Compliance Documentation Process
10. Review/Update Contract Compliance Checklist
11. Review/Update Fee Schedule Policy
In response to the State Auditor’s report, and after the City Council’s review on December 20, 2022, the City provided a Corrective Action Plan on December 21, 2022.
California Code of Regulations, Title 2, Section 61140 requires submitting subsequent updates every six months from the issuance of the State Audit report. The City submitted its first six months Corrective Action Plan update in May 2023 and a supplemental update in June 2023.
City’s Corrective Action Plan November 2023 Update
City staff implemented all the state audit recommendations by June 30, 2023, and the City submitted a supplemental Corrective Action Plan update to the State Auditor’s Office on June 30, 2023. Recommendation number 6, Workforce Analysis, is the only pending item on the Corrective Action Plan which is due in June 2024. The City has commissioned Raftelis, a third-party consultant, to implement the workforce analysis recommendation and anticipates the recommendation will be implemented by June 2024.
The full California State Auditor’s report regarding the City of Richmond is available on the weblink here: https://www.auditor.ca.gov/reports/2021-806/index.html
October 17, 2023
Next Steps
City staff will continue to work with Raftelis in completing the workforce analysis and will present it to the City Council upon its completion by Spring/Summer of 2024.
DOCUMENTS ATTACHED:
Attachment 1 – State Audit Corrective Action Plan November 2023 Update