Audit reveals costly bookkeeping errors in Oakland


March 28, 2012 4:59:02 PM PDT
The city of Oakland has been struggling financially for years, cutting police, schools, and other services. Now, there's another problem, the bookkeeping.

A 45-page audit details instances where the city paid vendors twice for the same work. In one case, a vendor was paid thousands of dollars for work he didn't perform. Oakland City Auditor Courtney Ruby says the results of her recent review of city payment practices are alarming. "A typo could throw off the invoice. So, you've entered into the system to pay an invoice and then you enter it again, adding a dash or comma or period to it, and the system pays again, and the city was not aware of the duplicate payment."

In a look back at 142,000 city payments from 2008 to 2010, auditors found 4,000 suspect payments. Of that number, they pulled 63 and found 16 of those were incorrect or duplicates, totaling $103,554. "$103,000 is a half of a police officer," Councilmember Jane Brunner says. No money was lost by the city in the audit sample because the vendors all returned it, but Brunner still has concerns. "If the city's not looking at its own checkbook, or whatever, it should be done and we should go after every single penny that has been paid duplicate and get it back," she says.

Gene Zahas owns Johnstone Supply. The city sent him duplicate or mistaken payments 8 to 10 times in a one-year period. In one case, he received a check for more than $5,000 on a quote for furnace equipment, a job his company never performed. Zahas credited the money back to the city of Oakland. "Well, I would hope so, but probably not. Some of them, it may just slip through the cracks," he said when asked if he thought every vendor would do the right thing, as he did.

In a written response to the audit, Oakland City Administrator Scott Johnson said, "The audit results present an over exaggerated and overemphasized efficiency performance, which is grossly misleading." The audit appears to show that 25 percent of the payments were mistaken, however the city administrator's office disputes that number. That said, they have put in place some checks and balances to make sure these kinds of mistakes do not happen in the future.

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