LOS ANGELES -- The California State Controller’s audit of the bankrupt city of Stockton does nothing more than rehash and make conclusions about problems the city has already identified and =addressed, city officials said in a response to the report.
In the audit, released Monday, State Controller John Chiang said poor accounting practices and poor decision-making by city management were largely the cause of the city’s financial problems.
The audit took 15 months to complete and was released more than a year after the city filed for Chapter 9 bankruptcy.
“The audit is a disappointment,” said city manager Bob Deis. “It produces very little new information. Instead, it just inflames the situation and slows down Stockton’s recovery.”
The audit report attributes Stockton’s problems to poor decision-making that was ill-informed by weak accounting and fiscal management systems and ignored evidence that was available of downward fiscal trends.
Before the audit’s final release, Stockton was given 10 calendar days to prepare a response, which was reviewed by the controller’s office and included in Monday’s audit.
The city released a separate response after the release, saying the final report did not take into consideration the areas where the city disagreed with their findings, making the audit inaccurate and misleading.
“The SCO audit covers primarily ‘old’ information going back to FY 2003-2004 up to June 2011,” Stockton officials said in their response. “Much of their conclusions are two years old or more.”
City officials said the conclusions are already identified and well-documented by the city and that the audit does not take into account that the city has been aggressively addressing the issues that contributed to its current financial situation.
Stockton officials said the audit offers opinions and criticisms about management and structure without attempting to have any of the auditors interview senior managers or the city manager.
Nothing in the audit has made any significant difference in the bankruptcy filing, but if the controller had conducted the audit a decade or two ago, the city may have avoided its current fate, officials said.
Stockton’s city council has hired CPA firm Moss Adams to “assist in a more robust evaluation” of the city’s internal controls, which will be shared with the audit committee soon.