Report 2023-133 Recommendation 8 Responses

Report 2023-133: City of Anaheim: It Has Not Properly Managed Tourism-Related Contracts and Millions of Dollars in Related Funds (Release Date: January 2024)

Recommendation #8 To: Anaheim, City of

To ensure that the city of Anaheim receives adequate consideration for all of its professional services contracts, the city should implement contract monitoring practices sufficient to ensure that it receives all of the deliverables agreed to in any contract's scope of work. Further, the city should assess whether it received adequate consideration for the 2019 economic development contract or the 2020 shop-and-dine-local contract; if the city finds that it did not receive adequate consideration, then the city should explore its restitution mechanisms under contract law to obtain a return of those funds.

1-Year Agency Response

The city has updated its contract monitoring regulation, including ensuring complete receipt of the deliverables specified in the agreements.

The city's Audit Division has completed its inquiry into the two contracts with the Anaheim Chamber of Commerce and has issued the inquiry results. In concurrence with the State Auditor's findings, it was concluded that the Anaheim Chamber of Commerce had not provided all of the contracts' key deliverables.

The value of the uncompleted deliverables was estimated, and the city is currently exploring options to recover these funds.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

The city of Anaheim has implemented contract monitoring processes to ensure that it receives all of the deliverables agreed to in any contract's scope of work and completed an inquiry into the two contracts with the Anaheim Chamber of Commerce (Chamber) we reference in our report. The inquiry concluded that the city did not receive adequate consideration for the services contracted with the Chamber and recommended that the City Attorney's Office explore options for recovering the value of uncompleted deliverables.

6-Month Agency Response

The city's Audit Division has completed its inquiry into the two contracts with Anaheim Chamber of Commerce and is in the process of examining the findings from this inquiry. The division has prepared an initial draft that is currently being reviewed. The final report on the inquiry results and our recommended plan of action will be released after this review process is complete.

The preliminary findings indicate that the Anaheim Chamber of Commerce is having difficulty providing all the key deliverables outlined in the two contracts. While they made partial progress by developing some aspects of the program and have some documentation to support this work, their records are incomplete and their accounting methods limit our ability to fully track their completed work.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Last month the City's Audit Division began a full review of the two agreements and materials that were provided by the Anaheim Chamber of Commerce. The Audit Division has completed its initial review and is now moving into phase two of their review.

On March 20, 2024, the city's Audit division sent a notification letter to the Anaheim Chamber of Commerce requesting records pertinent to agreements dated June 4, 2019 and October 1, 2020. Next steps will be to review any supportive documentation that reveals the Chamber actually completed all the deliverables for the agreements in question. We know they provided some services, but we are hoping to identify and confirm completion of far more.

The City's goal is to complete this inquiry and review within a few weeks. The timing is dependent on the Chamber making documentation available to us. The City has an in-person meeting scheduled with the Chamber on Wednesday, April 3rd.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2023-133

Agency responses received are posted verbatim.