Overview:
An accounting firm hired by the city identified five areas for proposed audits: procurement, human resources, grants management, municipal utilities and Measure A financial oversight.
Stockton’s internal auditors have identified widespread risks involving government contracting, employee hiring, grant management and financial oversight, raising concerns about problems that could affect city services and public accountability.
UHY Inc., the accounting firm Stockton hired in April to conduct its internal audits, outlined the findings in a citywide risk assessment. The City Council will review the proposed plan for fiscal year 2027 on Tuesday.
The assessment comes after years of scrutiny surrounding Stockton’s financial management, including payroll errors, questions about consulting contracts and concerns regarding the oversight of voter-approved Measure A sales tax revenue.
UHY identified five areas for proposed audits: procurement, human resources, grants management, municipal utilities and Measure A financial oversight. Procurement ranked as the highest priority.
The firm developed its assessment through interviews with directors of all 19 city departments, two deputy city managers and City Manager Johnny Ford. Auditors also reviewed financial and operational information, previous audit results and departmental questionnaires.
The assessment did not include a detailed testing of internal controls. Instead, it identified potential risks and areas requiring closer examination.
In its report, UHY concluded that the city’s most significant risks were systemic rather than confined to individual departments.
Contracting and hiring concerns
Procurement emerged as the highest-priority area after city departments described contracting procedures as lengthy, heavily reliant on manual processes and subject to inconsistent requirements.
According to the assessment, departments reported that multiple approval layers and extended reviews could delay projects and make it difficult to respond to operational needs. Some also described differences in documentation requirements depending on which employee handled a request.
A proposed procurement audit would examine whether the city awards contracts through competitive processes, obtains proper authorization, maintains documentation and follows contracting policies.
The recommendation follows previous questions about Stockton’s contracting practices.
In March, two consulting contracts totaling $198,000 came under scrutiny after city officials acknowledged they had not received City Council approval, despite exceeding the city’s $100,000 oversight threshold.
One agreement involved a proposed examination of city finances that was never completed. The City Council’s Audit Committee subsequently referred the contracts to the California State Controller’s Office for review.
The assessment also identified human resources as a priority after departments reported that lengthy recruitment and onboarding processes made it harder to attract and retain qualified employees. It also warned that hiring delays could prolong vacancies, increase workloads for existing employees and contribute to burnout.
The proposed audit also would examine payroll procedures, employee departures and payments to workers and benefits providers.
Stockton’s payroll system has previously faced scrutiny.
In April 2025, city officials disclosed more than 5,000 payroll errors dating back to 2023, resulting in more than $1.6 million in retroactive payments to underpaid employees and over $100,000 in late fees.
City officials subsequently reported progress in correcting payroll problems and strengthening internal controls.
Measure A oversight raises concerns
The proposed audit plan also calls for examining the city’s management of Measure A, the three-quarter-cent sales tax approved by Stockton voters in 2013 to support public safety and other municipal services.
UHY’s assessment says members of the Measure A Citizens’ Advisory Committee have expressed concerns about receiving timely and reliable financial information necessary to oversee the tax revenue.
The report also notes that the city provides limited recurring financial information to the committee beyond annual procedures performed by independent auditors.
The proposed audit would review how the city records, classifies, documents and reports Measure A revenue and spending. It also would assess whether financial controls help ensure the city uses the money for authorized purposes.
The concerns are not new.
In October 2025, the Measure A committee gave city officials 90 days to answer 21 questions about how the city oversees and spends the tax revenue, including how much money goes toward police staffing.
According to UHY’s report, the City Council’s Audit Committee requested the review, which would focus on financial controls and reporting rather than a financial statement audit.
Risks extend beyond proposed audits
Although the plan recommends five audits, UHY identified potential risks across other city departments, including the City Clerk’s Office and the Office of Public Transparency, Information and Communication, known as OPTIC.
The assessment assigned the City Clerk’s Office a medium-high compliance risk, citing the growing volume of California Public Records Act requests and the office’s responsibilities for meeting records, public notices and election administration.
Auditors identified potential consequences, including missed deadlines, incomplete records searches and improper disclosures or the withholding of information. The assessment also referenced leadership changes and the temporary absence of the city clerk.
The findings come during another period of transition for the office.
Katherine Roland resigned as city clerk in September, following months of disputes involving City Hall leadership and allegations of election interference.
Her interim replacement, Bonnie Paige, announced Thursday that she would resign effective Nov. 6, less than six weeks after returning to the position she held from 2011 to 2017.
UHY also identified medium-high reputational risks within OPTIC, citing the public visibility of city communications and concerns about decentralized oversight of official websites and social media accounts.
The assessment found that some content appeared on city websites and social media accounts without prior review or approval.
OPTIC also faced an outside investigation into how city officials established and funded the office.
An investigation released earlier this year found no substantiated violations of city law or policy but raised concerns about the procedures used to establish the department and hire employees.
The proposed audit plan does not include reviews of the City Clerk’s Office or OPTIC.
State investigation remains separate
The new assessment comes as Stockton has also faced an examination of its financial controls by the California State Controller’s Office.
State investigators began their review in January, examining procedures intended to safeguard public money, ensure accurate financial reporting and detect potential errors or fraud.
In June, Stockton Chief Financial Officer Gilbert Garcia told the Audit Committee that state officials had substantially completed most of their work. At the time, no completion date for the findings had been announced.
The citywide assessment prepared by UHY is separate from that investigation.
According to Tuesday’s City Council agenda, the proposed internal audit plan would be funded through the city’s existing contract with UHY.
If approved, the plan would establish the areas the firm intends to examine during fiscal year 2027. Any significant changes would be brought back for review and approval.