A City Council committee is considering creating an Office of the Auditor at City Hall after an accounting firm long tasked with serving as Stockton’s financial watchdog resigned this month.
On Feb. 3, Moss Adams, one of the country’s largest accounting firms with an office in Stockton, terminated its agreement to serve as Stockton’s internal auditor effective May 7 in a letter to an assistant city manager, according to a copy reviewed by Stocktonia.
“We will collaborate with the City Manager’s Office and City Attorney’s Office to transition work in progress,” the letter said.
The letter revealed no information about why the firm resigned. A partner at the firm did not return calls for comment.
First hired by the City Council in 2013 and again in 2019 through a competitive process, according to public council documents, Moss Adams had broad responsibility for reviewing city bank accounts, transactions, and accounting procedures as well as city departments’ performance.
It’s a critical role given Stockton’s experience with bankruptcy in 2012, and slow road to fiscal health in recent years.
The City Council voted unanimously in May to extend Moss Adams’ contract through June 2026, citing the company’s experience auditing other cities and its large team of specialized auditors, a contract amendment shows.
The city paid Moss Adams $421,000 a year, the amendment shows, and gave the firm a chance to extend the deal up to two years.
In a report shared before the May vote, city staff warned about ousting Moss Adams as auditor. “With the current list of projects in progress, it would be both cost prohibitive and operationally damaging to stop work and transition to a new contractor,” the report said.
“The City does not have, and would not be able to provide, the level of staffing and professional experience that Moss Adams brings to the City.”
But now, with Moss Adams gone, some City Council members are considering creating an Office of the Auditor internally. The council’s Audit Committee is scheduled to discuss the matter at 4:30 p.m. Wednesday at City Hall.
Led by District 6 Councilmember Jason Lee, the Audit Committee is a three-member body with the power to appoint the city auditor. District 1 Councilmember Michele Padilla and District 3 Councilmember Michael Blower are also members.
The idea of establishing an internal Auditor’s Office isn’t new: the auditor was a city official from the office’s establishment in 1994 until the latest auditor retired in 2012, a document attached to Wednesday’s council agenda shows.
Depending on the outcome of Wednesday’s discussion, the committee could send the question to the full City Council for a vote, the document states.
But the auditor question isn’t the only shake-up among city finance officials in recent weeks.
As of Friday, Stockton’s interim Chief Financial Officer and a second high-level finance official were no longer working for the city.
“The only thing we can tell you is they’re no longer with the city,” spokesperson Connie Cochran said.
The departures of former interim CFO and deputy city manager Jay Kapoor and former assistant CFO Queen Gray mark the second and third known exits of top city officials since the new City Council forced out former City Manager Harry Black in January.
Interim City Manager Steve Colangelo sent no response by deadline regarding the reasons for the separations.
Kapoor made no comment on his separation in a phone call this week. Gray could not be reached.
For his part, Kapoor would have been central to the creation of Stockton’s annual budget, typically drafted in spring and approved in summer, according to longtime District 2 Councilmember Dan Wright. The budget amounted to nearly $1 billion last year.
“He was the guy in charge, along with the City Manager. They present the draft budget to the council to either approve or amend,” said Wright, who was termed out of office on Jan. 1 of this year.
“It’s kind of obvious; they’re kind of drawing a road map,” he said of the new administration. “It would seem to me they have some plans to really really change how we spend the budget.”