Draft audit critical of Stockton officials, accounting practices

Shuttered maritime businesses dot the landscape around the Port of Stockton.
(Luis Sinco / Los Angeles Times)

A leaked early draft of state Controller John Chiang’s audit of Stockton’s finances found that more than half of the accounting controls investigated were ineffective and that Stockton leaders had missed warning signs, according to the Stockton Record.

The Central Valley port city of 300,000, epicenter of California’s agricultural exports, filed for bankruptcy protection in June 2012, becoming California’s largest city to fail. It was the nation’s largest city to seek bankruptcy until Detroit filed for protection this month.

The audit was launched in April 2012 amid concerns over missing state financial reports and discrepancies. Officials at the time said that if the audit revealed criminal wrongdoing, the controller would refer the matter to local authorities.


One of the reasons the audit has taken more than a year is that the city of Stockton was months late in filing its annual financial report.

Jacob Roper, a spokesman for the controller’s office, said he would not comment on the report until after it was finalized. He did not give a timetable because, he said, the state was waiting for information from Stockton to finish the audit.

But Roper did say the report contained valuable information for other cities.

“The important thing is to identify risks,” he said. “This will provide a blueprint going forward for controls in good local government.”


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