After five months without a city auditor, the Stockton City Council’s Audit Committee approved a Request for Proposal (RFP) to hire a new internal firm to handle city finances.
The City Council will address the committee’s recommendation for approval during an upcoming meeting. However, Mayor Christina Fugazi was not aware of the city auditor vacancy until a council meeting in August.
Vice Mayor Jason Lee, who chairs the Audit Committee, focused on filling the city auditor position, established in the city charter, as the committee pushes for stronger accountability.
“We simply want to look at departments or things that come across our attention and make sure that we are functioning properly as the charter and the city policies and every other regulation says we should be operating,” Lee said.
Greg Kirkpatrick, the city’s environmental and sustainability officer, traced the timeline of the position at a recent committee meeting. He explained the auditor position was in-house from November 1994 until October 2012, when the sole auditor retired amid reorganization following the 2011 bankruptcy.
“When the city was sort of in the midst of its (reorganization) post-bankruptcy phase, they decided to do a study and see how many other cities contract out their auditing services,” Kirkpatrick said. “They found that several other cities had done that, and lots were moving that direction.”
The auditing firm Moss Adams won the initial competitive RFP in March 2013, conducting a risk assessment that flagged the city’s exposure as “high” and internal controls as “substantially weak,” with a roadmap for fixes, according to city documents.
Re-awarded in 2019 after a second RFP yielded only two qualified bids, the firm handled annual plans, ethics hotline oversight, fraud probes and special projects until it received a notice in February that its termination would be effective May 7.
“Since that time, the city has not had either an internally employed city auditor or a contracted firm performing this critical function,” Kirkpatrick said.
The current RFP scope aligns with charter duties, requiring audit firms to demonstrate capabilities in annual risk-based planning, performance audits for efficiency and compliance, hotline administration, internal control assessments, special investigations, and consultation.
“Every year they would present to you all toward the beginning of the calendar year, a plan for what they will do,” Kirkpatrick said. “It’s essentially their scope of work for the upcoming fiscal year.”
The environmental and sustainability officer added that the auditing firm would maintain the ethics hotline and ensure it is functioning correctly.
“Assessing controls across all of our operations, making sure that we are taking proactive measures to ensure that our policies prevent people from being able to commit fraud in the first place,” Kirkpatrick said. “We want to avoid it all together, if possible. So just making sure all of our policies are up to date, that they’re effective, that we’re following best practice.”
Lee brought attention to Moss Adams’ transition memos, and the lack of a thorough staff review and summary provided upon their contract termination in May.
“I do remember, in looking at the report briefly, there were some recommendations around the Administrative Services Department and payroll, I believe,” Lee said. “I just want to make sure that we’re not dropping the ball on anything.”
He requested that the city manager’s office prepare a concise summary for the Audit Committee outlining key recommendations, implementations and any urgent actions needed, to be ready for the next audit committee meeting.
Kirkpatrick assured that the transition memos would serve as a “starting point” for the new auditor when they are hired, with staff diving deeper during the RFP process.
Lee also expressed interest in eventually hiring an in-house auditor for quicker access, however budget constraints have kept it off the table.
The hiring process is expected to roll out quickly, according to Kirkpatrick. He expects to review proposals in late November and present a recommendation for a new auditing firm by December or early 2026.
Staff will score the proposals on qualifications, approach, experience, and the $421,000 annual budget, which has remained consistent since the fiscal year 2011-12, before committee review and full council approval.
The committee voted in favor of the scope of work and RFP for internal auditing services. The city council will discuss the committee’s recommendation for full approval in an upcoming meeting.
The city auditor vacancy has shown to affect City Council conduct as well.
Mayor Christina Fugazi was not aware of the city auditor vacancy until a council meeting in August, during discussion on an investigation into a diversion of funds from Stockton’s diversity, equity and inclusion program.
“We’re all professionals, we can act accordingly, and for the most part, we’ve done it this evening,” Fugazi said. “I would ask that this would also happen at the Audit Committee with our auditor, that is a consultant for us currently. Correct?”
Fugazi asked if there was a consulting auditor. Acting City Manager Will Crew confirmed to the mayor there was no current auditor contract.
At that point Stockton had been without a city auditor for over three months.
Fugazi quickly redirected the conversation to the DEI investigation. Councilmember Brando Villapudua motioned to hire an independent auditor for the investigation. Councilmember Mariela Ponce seconded the motion.
Lee motioned for the Audit Committee to conduct the investigation themselves, seconded by Councilmember Michael Blower.
An independent auditor would use taxpayer resources, according to Lee. He said he feels the money could be put to better use.
Blower agreed with Lee, citing a Brown Act investigation (which governs how public bodies conduct meetings) from years prior. He said it cost the city around $40,000, with limited results.
Fugazi said she agrees with Blower, but she is concerned about trust.
Villapudua asked City Attorney Lori Asuncion which members on the Audit Committee, and Asuncion reminded the councilmember that the committee consisted of Lee, Blower and Councilmember Michele Padilla.
“Knowing what’s going on here, I just don’t trust it,” Villapudua said.
Ultimately, the council decided to conduct the investigation in-house, rather than hiring an outside firm.