C
ity Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01208 June 21, 2022
T
itle: City Auditor’s Whistleblower Hotline Activity Report for the October 2021 through March 2022 Period
Locat
ion: Citywide.
R
ecommendation: Pass a Motion approving the City Auditor’s Whistleblower Hotline Activity Report for the October 2021 through March 2022 Period.
C
ontact: Jorge Oseguera, City Auditor, (916) 808-7270, [email protected], Office of the City Auditor
P
resenter: None.
A
ttachments:
1-Description/Analysis
2-City Auditor’s Whistleblower Hotline Activity Report for the October 2021 through March 2022 Period
Description/Analysis
Issue Detail: According to City Code Chapter 2.18, the City Council should be kept apprised of the City Auditor’s work. The Budget and Audit Committee shall receive, review, and forward to the Council as appropriate, reports, recommendations, and updates from the City Auditor.
This report documents the City Auditor’s Whistleblower Hotline related activity for the October 2021 through March 2022 period.
Policy Considerations: The City Auditor’s presentation of the City Auditor’s Whistleblower Hotline Activity Report is consistent with the Mayor and City Council’s intent to have an independent audit function for the City of Sacramento.
Economic Impacts: None.
Environmental Considerations: None.
Sustainability: None.
Commission/Committee Action: The Budget and Audit Committee unanimously accepted this report on May 31, 2022 and forwarded it to the full City Council for approval.
Rationale for Recommendation: This staff report provides the City Council with information that may be used to meet its responsibility to provide oversight and supervision of the City Auditor and other City departments.
Financial Considerations: The costs of the City Auditor’s Whistleblower Hotline Activity Report were funded out of the Office of the City Auditor Budget.
Local Business Enterprise (LBE): None.
City Auditor’s Whistleblower
Hotline Activity Report:
October 2021 – March 2022
Report #
2021/22-10
Jorge Oseguera
City Auditor
Investigations Division
May 2022
2 Contents
Whistleblower Infographic ................................ ................................ ................................ .......... 3 Whistleblower Hotline Program ................................ ................................ ................................ ... 4 Contact the Ci ty’s Whistleblower Hotline ................................ ................................ ................... 4 The City Auditor’s Independence, Authority, and Responsibility ................................ .................... 4 Whistleblower Procedures Prioritize High-Risk Allegations ................................ ........................... 5 Whistleblower Hotline Dashboard ................................ ................................ ............................ 6 COVID-19 and the Whistleblower Hotline ................................ ................................ .................. 6 Status of Investigations................................ ................................ ................................ ............... 6 The Number of Whistleblower Reports has Remained Steady ................................ ....................... 6 71 Cases Were Closed During the Period................................ ................................ .................... 7 Of the 71 Cases Closed During the Period, 2 Were Substantiated ................................ .................. 9 Whistleblower Infographic
4 Whistleblower Hotline Program
Contact the City’s Whistleblower H otline
City staff or members of the public may submit reports by calling the Whistleblower Hotline’s toll-free number 1-888-245-8859 or online at www.cityofsacramento.ethicspoint.com. Individuals may also submit whistleblower reports directly to any staff member in the Office of the City Auditor in person, over the phone, by voicemail, by e-mail, or by mail. Individuals who provide whistleblower information will have their identity kept confidential to the extent permitted by law unless the individual waives confidentiality in writing.
Sacramento Office of the City Auditor
915 "I" Street
Historic City Hall, 2nd floor
Sacramento, CA 95814
Office of the City Auditor Website: http://www.cityofsacramento.org/auditor/
The City Auditor’s Independence, Authority, and Responsibility The City Auditor reports directly to the Mayor and City Council, and is independent of other City departments and agencies. This independence reduces the threat of coercion, influence, or conflict of interest during whistleblower investigations.
California Government Code Section 53087.6 allows local governments to create whistleblower hotlines.
While State law sets certain requirements for establishing and managing a whistleblower hotline, local auditors have discretion in how to operate their programs.
Key points of the Government Code section and how it pertains to the City of Sacramento include the following:
• The City Auditor shall obtain approval from City Council before establishing a whistleblower hotline. This approval was obtained from the Sacramento City Council in March 2012. • The hotline is used to receive calls from people who have information regarding fraud, waste, or abuse.
• The City Auditor may refer calls received on the hotline to the appropriate government authority for review and investigation.
• During the initial review of calls received, the City Auditor (or the appropriate government authority to whom the call is referred) shall hold in confidence information disclosed through the hotline. This includes the identities of the callers disclosing information and the people identified by the callers.
• Upon receiving specific information that an employee has engaged in an improper government activity, the City Auditor may conduct an investigative audit.
5 • The identity of the people providing information that initiated the investigative audit shall not be disclosed without their written permission, unless the disclosures are to law enforcement agencies conducting criminal investigations.
• The investigative audit shall be kept confidential except to issue a report of an investigation that has been substantiated or to release findings from completed investigations that are deemed necessary to serve the interests of the public.
• The identities of individuals reporting the improper government activities and the subject employees investigated shall be kept confidential.
• The City Auditor may provide a substantiated audit report and other information (including subject employee identities) to appointing authorities for disciplinary purposes.
Whistleblower Procedures Prioritize High-Risk Allegations Due to the limited staff in the Office of the City Auditor and the Office’s chief responsibility to conduct performance audits, research, and analysis in accordance with the City Council-approved workplan, conducting full investigations of all allegations is not feasible. Instead, the City Auditor applies a risk- based approach to investigate whistleblower allegations.
As part of the whistleblower program’s intake process, we rank initial reports by risk and focus investigative efforts on those that represent the greatest risk to the City. Allegations are generally classified in one of the following categories:
High Priority
Allegations may be considered high priority if they include a safety concern, loss1 to the City of more than $75,000, criminal activity resulting in a loss of at least $400, high-level involvement, collusion of multiple wrongdoers, major department-wide issue, or need for immediate action to stop a potentially major issue. Addressing these items could take priority over other investigations and audits, at the City Auditor’s discretion.
Medium Priority
This category includes loss to the City of more than $25,000, abuse of authority, medium to low-level employee involvement, minor department-wide issues, or patterns of small problems that could become serious when summed. Some medium-priority items could be referred to a department for their review.
Low Priority
This category includes loss to the City of less than $25,000, isolated instances of time abuse, wasteful practices that would lead to limited gains in efficiencies if corrected, or allegations that lack credibility and evidence. The office would aim to investigate items in this category, but may not do so because of limited resources. However, if the same or similar issues were reported multiple times, low- priority
1 Loss could entail actual or potential loss of money, waste, or inefficiencies.
6 items may become a higher priority. Additionally, some low-priority allegations could be referred to a department for their review.
Unrelated to the City
Some allegations received through the Whistleblower Hotline do not involve City of Sacramento agencies or staff. The Office of the City Auditor investigates these allegations for any City involvement. If no City involvement can be determined, those allegations are closed as “unrelated to the City”; some allegations not related to the City are referred to other jurisdictions.
Whistleblower Hotline Dashboard
The Office of the City Auditor maintains a Whistleblower Hotline Dashboard on its public website. City Officials and the public can use this dashboard to see statistics on the types of cases received through the City’s Whistleblower Hotline, the disposition of closed cases, brief descriptions of substantiated cases, actions taken as a result of substantiated cases, and the monetary benefit of the hotline. The dashboard is updated semi-annually with the release of each Whistleblower Hotline Activity Report. The Whistleblower Hotline Dashboard can be found at:
https://www.cityofsacramento.org/Auditor/Reports/Whistleblower-Activity
COVID-19 and the Whistleblower Hotline
The Office of the City Auditor investigates reports of fraud, waste, and abuse related to the COVID-19 pandemic received through the City’s Whistleblower Hotline. As of March 31, 2022, the City’s Whistleblower Hotline has received 61 complaints related to COVID-19. For complaints that are related to employee health and safety, we refer the information to the City’s Risk Management Division. For complaints that are related to the public’s health and safety, we refer the information to Sacramento County. Any information referred to another department or agency is referred in compliance with California whistleblower regulations, which require our office protect the identity of the whistleblower.
Status of Investigations
The Number of Whistleblower Reports has Remained Steady Since the hotline’s inception in 2012, the Office of the City Auditor has received more than 1,500 reports. Use of the City Auditor’s Whistleblower Hotline grew significantly in the first few years and has been steady since 2014 as shown in Exhibit 1. The table below shows the number of allegations received per year since the program’s inception.
7 Exhibit 1: Whistleblower Allegations Received Per Year
*Denotes a partial year. Hatched area represents projected number of allegations based on number of cases received during the first quarter of 2022 . Data as of March 31 , 2022. 71 Cases Were Closed During the Period
At the beginning of the October 2021 through March 2022 reporting period, the Office of the City Auditor had 19 open cases. During that six-month period, 65 new reports were received by the hotline, and the Office of the City Auditor investigated, processed, and closed 71 cases; 13 cases remained open at the end of the reporting period. Exhibit 2 below provides information on all cases that were closed during the October 2021 through March 2022 reporting period.
Exhibit 2: 71 Cases Were Closed During the Period
Case # Primary Type of Allegation Priority Result
1043 Internal Control Issues Medium Substantiated and Referred 1093 Violate City Policy, Local, State, or
Federal Law
Low Substantiated and Referred
1171 Fraud Low Investigated and Referred
1375 Fraud Medium Unsubstantiated
1403 Employee Relations Low Resolved Prior To or During Investigation
1419 Employee Relations Low Informational Referral
1424 Employee Relations Low Informational Referral
1431 Fraud Low Unsubstantiated
1432 Employee Relations Low Unsubstantiated
1433 Theft of Goods or Services Low Duplicate
1435 Violate City Policy, Local, State, or
Federal Law
Low Resolved Prior To or During
Investigation
1436 Violate City Policy, Local, State, or
Federal Law
Low Resolved Prior To or During
Investigation
1437 Conflict of Interest Low Unsubstantiated
8 1439 Employee Relations Low Informational Referral
1440 Unrelated to the City Unrelated to
the City
Unrelated to the City
1441 Wasteful Practice Low Unsubstantiated
1442 Insufficient Action by City Low Unsubstantiated
1443 Employee Relations Low Resolved Prior To or During Investigation
1444 Unrelated to the City Unrelated to
the City
Unrelated to the City
1445 Insufficient Action by City Low Unsubstantiated
1446 Unrelated to the City Unrelated to
the City
Unrelated to the City
1447 Unrelated to the City Unrelated to
the City
Unrelated to the City
1448 Insufficient Action by City Low Unsubstantiated
1449 Violate City Policy, Local, State, or
Federal Law
Low Unsubstantiated
1450 Employee Relations Low Unsubstantiated
1451 Payroll and Timecard Issues Low Unsubstantiated
1452 Abuse of Position or Authority Low Informational Referral 1453 Employee Relations Low Resolved Prior To or During Investigation
1456 Not Enough Information Provided Low Not Enough Information Provided 1457 Safety and Sanitation Issues Low Unsubstantiated
1458 Not Enough Information Provided Low Not Enough Information Provided 1460 Unrelated to the City Unrelated to
the City
Unrelated to the City
1461 Employee Relations Low Informational Referral
1462 Safety and Sanitation Issues Low Duplicate
1463 Employee Relations Low Resolved Prior To or During Investigation
1464 Unrelated to the City Unrelated to
the City
Unrelated to the City
1465 Payroll and Timecard Issues Low Unsubstantiated
1466 Fraud Low Investigated and Referred
1467 Unrelated to the City Unrelated to
the City
Unrelated to the City
1468 Information Request Low Unsubstantiated
1469 Employee Relations Low Unsubstantiated
1470 Wasteful Practice Low Not Enough Information Provided 1472 Corruption, Bribery, and Kickbacks Low Resolved Prior To or During Investigation
1474 311 Low Informational Referral
1475 Contested City Charges Low Resolved Prior To or During Investigation
9 1476 Unrelated to the City Unrelated to
the City
Unrelated to the City
1478 Unrelated to the City Unrelated to
the City
Unrelated to the City
1479 Not Enough Information Provided Low Not Enough Information Provided 1480 311 Low Informational Referral
1482 Not Enough Information Provided Low Not Enough Information Provided 1483 Employee Relations Low Informational Referral
1484 Unrelated to the City Unrelated to
the City
Unrelated to the City
1485 Conflict of Interest Low Unsubstantiated
1486 Not Enough Information Provided Low Not Enough Information Provided 1487 Violate City Policy, Local, State, or
Federal Law
High Informational Referral
1489 Unrelated to the City Unrelated to
the City
Unrelated to the City
1490 Unrelated to the City Unrelated to
the City
Unrelated to the City
1491 Employee Relations Low Unsubstantiated
1492 Violate City Policy, Local, State, or
Federal Law
Low Unsubstantiated
1493 Violate City Policy, Local, State, or
Federal Law
Low Unsubstantiated
1494 Unrelated to the City Unrelated to
the City
Unrelated to the City
1495 Employee Relations Low Unsubstantiated
1496 Safety and Sanitation Issues High Informational Referral 1497 Information Request Low Not Enough Information Provided 1498 311 Low Informational Referral
1499 Employee Relations Low Informational Referral
1500 Not Enough Information Provided Low Not Enough Information Provided 1501 Unrelated to the City Unrelated to
the City
Unrelated to the City
1503 Theft of Goods or Services Low Informational Referral 1505 311 Low Resolved Prior To or During
Investigation
1506 Employee Relations Low Unsubstantiated
Of the 71 Cases Closed During the Period, 2 Were Substantiated For cases that are substantiated, the Office of the City Auditor requests departments to report back on actions taken as a result of our investigations and any recommendations made in the investigative audit within 60 days of receiving the completed investigative audit report. Of the 71 cases that were closed during the October 2021 through March 2022 reporting period, 2 allegations were substantiated. Exhibit 3 below provides a brief summary of the 2 substantiated cases during the period and the actions reported by the responsible department.
10 Exhibit 3: 2 Allegations Were Substantiated During the Period Case # Case Summary Department Response
1043 We received allegations that Youth, Parks, and
Community Enrichment's Parks Maintenance Division
lacked sufficient internal controls over inventory. We
substantiated that their policies were not sufficient, and staff could not account for the location of more than
$34,000 worth of equipment. Additionally, we
substantiated that their inventory policies should be
updated, documented, and training provided to staff.
The Youth, Parks, and
Community Enrichment
Department plans to implement
various controls over their
inventory including:
inventorying small power
equipment, creating formal
policies and procedures,
implementing a computer-based
asset tracking system, ensuring
assets have unique
identification numbers, and
performing periodic inventory
counts.
1093 We received an allegation that an employee from the Department of Utilities received a certification without meeting the required number of hours. The investigation found that the employee was short the hours at the time of the certification, due to a misunderstanding of City time reporting codes, but had received the hours by the time the investigation began. We referred this case to the Department of Utilities for further review.
The Department of Utilities
reported the receipt of a
complaint letter regarding this
issue to the certifying agency.
The department followed the
certifying agency’s investigation
and reported progress to the
Auditor’s office to
resolution. Additionally, the
department updated standard
operating procedures to prevent
this error from recurring.