|Chronicle's Chip Johnson on
November 8, 2002
Outing Richmond problems seems to be
emerging as a weekly pastime for Chronicle columnist Chip Johnson (see
story at the end of this E-FORUM). Last week it was Chief Samuels; this
week it is Assistant City Manager for Finance, Anna Vega.
What is the background of this latest accusation? Every year the City undergoes an independent audit. Since the fiscal year ends on June 30, the audit should be completed by the end of the calendar year. The preliminary audit is generally produced in the late summer. This year, the 2002 preliminary audit, which listed a number of “concerns,” surfaced on June 30, 2002. Before it was “officially” circulated to City Council members, it was mailed anonymously with a cover sheet marked “Check the background and credentials of Finance Director Anna Vega. Her inexperience could account for all of the problems.” The preliminary audit summary included 10 pages of “audit concerns.”
On September 10, 2002, the City Council received the “official” audit summary, marked, as you might guess “CONFIDENTIAL.” An accompanying memo from Anna Vega explained that the preliminary audit began on May 28, 2002, and was to be completed by July 3, 2002. The normal procedure is for the auditors to discuss their findings with Vega and her staff. During these discussions, some items of concern were resolved, and further discussions ensued with Finance Chair Gary Bell and Mayor Anderson.
The final audit typically indicates that a number of preliminary “concerns” have been resolved, either through the provision of additional information or a detailed plan to cure the deficiencies in the future. It is only when the final audit is issued, probably in a couple of months, that we will have a clear picture of just what kind of shape Richmond’s financial house is really in.
The bottom line, in my opinion, is that Richmond continues to improve its financial management practices. To her credit, Anna Vega inherited an obsolete financial computer system and years of sub-standard accounting practices, and she took the City through an excruciating transformation to a state-of-the-art SAP system. When I first came on the City Council in 1995, the finances were so scrambled, it took over a year to complete the annual audit. Now, a least, we have cut that in half. You may also remember the Brad Baxter firing debacle, where the ensuing investigation revealed drawers of checks worth tens of thousands of dollars stashed away in the Park and Rec Department for months. We have come a long way since then. We remain, however, far behind many of our peers in financial management, much of it due not to the Finance Department, but to other departments and individuals who have failed to embrace the power of the new system and have failed to utilize accepted methods of municipal financial management and City policies, particularly in the management of outside contracts with consultants, construction contractors, etc.
This is not to totally exonerate the Finance Department. The City Council has granted and funded for Ms. Vega every resource and every staff position she has requested. For myself, excellence is not too much to expect, and you cannot expect excellence if you don’t provide the necessary resources. Performance, however, remains mediocre in many areas. Most recently, I cited the failed statutory responsibility of the finance director to update fees for services and taxes on a quarterly basis. This has cost the City millions, and still has not been implemented.
I criticize Richmond government a lot, but I stay with this job because I am an optimist and I see great possibilities ahead and a lot of good people in City government.
For now, I am off to China for ten days on my first “trade mission,” to our sister city, so this will be the last E-FORUM for a couple of weeks. I will be bonding with fellow tradesmen and travelers, Isiah Turner, Anna Vega, Irma Anderson, Mindell Penn and Nat Bates. If you want to know what’s going on in town, better call Chip Johnson. I appreciate his interest in our city – just spell our name right – Richmond by the Bay.
“Richmond's cash flow in disarray”
San Francisco Chronicle, November 8, 2002
If the results of an internal audit conducted by Richmond is a barometer of bureaucratic efficiency, residents should be plenty worried.
Caporicci & Larson, an independent auditing firm retained by the city, presented a 10-page document that laid out an abysmal track record of failing to maintain controls on cash, budgets, payroll and capital assets.
The report was leaked to public officials and The Chronicle earlier this week.
It noted the existence of multiple policies in the purchasing and accounts payable division, but there was no evidence that any of the policies were actually followed or had ever been approved by the City Council.
In some cases, department heads had "received services from vendors without having any contract or agreement and without the approval of City Council," auditors concluded.
The audit found that some department heads signed contracts with vendors for just under $10,000, the amount that would require council approval.
As a result of the inconsistent policies, auditors will review each of the 117 city contracts valued over $100,000, said Anna Vega, the city's finance director.
And while there were about 15 areas identified for improvement, Vega said her biggest concern was on contracts negotiated outside the finance agency.
"I know how we operate in finance, but I'm not so sure what the agencies are doing," she said.
In the human resources division, for instance, auditors found that pay periods were not recorded in the city's general ledger, raising concerns about underestimating labor costs and the city's tax liability.
And while the report may foretell economic doom and gloom, it has apparently had little or no effect on most city officials.
Richmond is poised for a big change. With more than $130 million in capital projects planned, $30 million in federal grant funds to renovate hundreds of blighted houses and apartments and work at the historic Ford plant under way, the city must get its finances in order to show that it can complete the turnaround.