June 4, 2024
Finance Department
DATE: June 4, 2024
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 Audit Supplemental Update
FINANCIAL IMPACT: No Fiscal Impact
PREVIOUS COUNCIL
ACTION:
December 20, 2022
May 2, 2023
June 27, 2023
July 11, 2023
October 17, 2023
April 16, 2024
STATEMENT OF THE
ISSUE:
California State Auditor’s 2021-806-Audit Corrective
Action Plan, June 2024 Supplemental Update
RECOMMENDED ACTION:
RECEIVE a report regarding the City’s Corrective Action Plan update to State Audit No. 2021-806 – City
Manager’s Office/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.
AGENDA
REPORT
June 4, 2024
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 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 the following updates thus far:
May 2023 (Six Months Update)
June 2023 (Supplemental Update)
November 2023 (Six Months Update)
May 2024 (Six Months Update)
City’s Corrective Action Plan Supplemental June 2024 Update
With regards to the Operations recommendations number 9 and 10 listed below:
9. Review/Update Contract Compliance Documentation Process
10. Review/Update Contract Compliance Checklist
June 4, 2024
The City further refined its procurement processes and implemented a revised Contract Checklist and Contract Amendment Checklist in May 2024. The revised Checklists have additional sections for Federally Funded Contracts and fields on Contract Start and End Dates in accordance with Richmond Municipal Code Sections 2.52.100 and 2.52.370.
The Finance Department also continues to offer procurement training(s) to the City staff, which are also available via video stream on the City’s website. Below is the list of recently conducted trainings:
Training Date
Conducted
Overview of the City's Purchasing Process Training 21-Jul-22 MUNIS Requisition Entry Training - Entry-Level 4-Aug-22 MUNIS Contract Entry Training - Entry-Level 11-Aug-22
MUNIS Contract Change Order - Entry-Level 15-Sep-22
Contracts and Insurance Basics [Video] / [Download PPT] 5-Dec-22 Contract/PO calendar year closing process [Video] 13-Dec-23 Procurement - Fiscal Year End Closing Process [PDF] / [Video] 26-Mar-24
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
Next Steps
City staff will continue to monitor and revise the City’s financial policies and procedures on an ongoing basis.
DOCUMENTS ATTACHED:
Attachment 1 – State Audit Supplemental Update June 2024