For Immediate Release: August 19, 2026

PRESS RELEASE

OFFICE OF THE OAKLAND CITY AUDITOR
MICHAEL C. HOUSTON, CITY AUDITOR
CONTACT: DENA L. SHUPE
(510) 238-4975 Office
dshupe@oaklandca.gov

OAKLAND, Calif. (August 19, 2026): Today the Office of the Oakland City Auditor published a report titled: Audit of Capital Improvement Program Financial Management: Implementing Comprehensive Systems, Policies, and Practices to Enhance Oversight of Capital Project Delivery.

The report details findings and recommendations from the Office’s audit of the City of Oakland’s Capital Improvement Program financial management. The Capital Improvement Program guides the City’s strategic decisions informing the construction, repair, and replacement of “capital projects,” which are long-term investments in assets such as roads, parks, and other City infrastructure that have a useful design life of at least ten years and cost at least $100,000. The City of Oakland’s Public Works and Transportation departments lead the delivery of capital projects.

The audit reviewed the City of Oakland’s efforts for ensuring the timely, appropriate, and cost-effective use of funds for completing capital projects.

The audit covered fiscal years 2022-23, 2023-24, and 2024-25. During these three years, the City spent about $330 million on capital projects from various funding sources. Measure KK – which Oakland voters approved in 2016 to fund street improvements, public facilities, and affordable housing projects – accounted for about $153 million of capital project spending during the period reviewed.

Based on a sample review of 13 capital improvement projects with 92 associated change orders, 23 on-call contracts and 26 on-call task orders, and 28 invoices and 28 payment transactions related to bond and sewer service funds, the audit concluded:

1. The City needs more comprehensive systems, policies, and practices to ensure consistency, oversight, and integrity of capital project management.
2. The City needs a streamlined and improved payment process to promote accurate, timely, and appropriate payments to contractors and subcontractors.
3. The City needs to improve its oversight of bond funds. The audit found instances in which the City processed bond payments without proper review, a transaction that was incorrectly assigned to a bond fund and one transaction that was incorrectly charged to a fund reserved only for the City’s sewer facilities. The audit also noted that the City had not yet conducted annual required audits of the use of these funds.
4. The City should develop, adopt, and update long-term capital planning. While the City’s existing short-term planning can expedite project initiation, it increases costs, extends timelines, and causes additional change orders.

The audit made 17 recommendations to the City Administration to update project management policies, train staff, develop guidance for using on-call contracts, centralize project management, and divide critical reviews between multiple staff members (rather than a single staff member). The recommendations – all of which the City Administration agreed to – also seek to strengthen financial controls over the payment process, provide transparency and oversight through management and City Council reports, and promote more thorough project planning to make the most of the City’s resources for capital improvements over the long run. As part of its semiannual audit recommendation follow-up process, the Office of the City Auditor will monitor progress on each of the recommendations, until they are implemented.

City Auditor Michael C. Houston reflected on the audit: “The audit found that there is an absence of formalized internal controls that led staff to rely on their individual professional judgment and improvised measures like policy-setting by email. The Public Works and Transportation departments need to implement and update formalized policies and procedures and establish related processes to provide assurance that capital projects are carried out consistently, and in alignment with best practices that reduce costs, support public accountability, and minimize risks for fraud.”

Houston added: “Capital projects require hundreds of millions of public dollars as well as years of planning and construction. Given the scale of these projects, even small improvements translate to millions of dollars and months if not years of efficiency gains. The audit identified opportunities for improvement in big-picture planning, as well as specific administrative steps that could be impactful to the City of Oakland and the greater community that relies on capital projects.”

The audit report’s appendix also lays out a comprehensive overview of capital project processes and compares small and local business preferences with those in place at other jurisdictions. On this, Houston stated, “Our audit reviewed work already under contract; however, City staff noted that the procurement process and the City’s small and local business enterprise requirements may contribute to high costs. This deserves a deeper review either as part of a future audit by the City Auditor’s Office, or by the forensic auditor set to review Capital Improvement Program procurement, as approved by the City Council in July.”

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You can read the full report here. Click here, to download this press release as a PDF.  The City Auditor is available for in-person, virtual, or phone interviews. Please direct questions to Director of Communications, Dena Shupe (510) 725-1363.

ABOUT OAKLAND’S CITY AUDITOR MICHAEL C. HOUSTON

A career public servant, Michael C. Houston, has been a government auditor and investigator for 18 years. He worked as a performance auditor for the City of San Jose’s independent City Auditor’s Office from 2008 to 2017 and then as the Director of Compliance and Internal Control at California State University East Bay, where he directed the audit and investigation functions between 2017 and 2019. Michael joined the Office of the Oakland City Auditor in 2019 as the Whistleblower Program Manager and was promoted to be the Assistant City Auditor in 2022. In a March 2024 Special Election, Michael was elected to complete the term of the previous City Auditor, who resigned mid-term. Michael has a Master of Public Policy degree from U.C. Berkeley, a Bachelor of Arts degree in History from Sonoma State University, and is a Certified Internal Auditor.

ABOUT THE OFFICE OF THE OAKLAND CITY AUDITOR

The Office of the Oakland City Auditor independently and objectively reviews City operations and services, and reports on their performance to the public. The Office’s audits include recommendations to management and those charged with governance and oversight, on how to improve services, reduce costs, and increase public accountability. The Office conducts performance audits in accordance with Government Auditing Standards set by the Government Accountability Office under the U.S. Comptroller General. The City Auditor’s Office operates a Whistleblower Hotline to receive and investigate allegations of fraud, waste, and abuse affecting or involving City of Oakland resources, employees, officials, or contractors. The Office also prepares financial ballot analyses for proposed legislation in accordance with the City Charter, and conducts analyses and reviews requested from the City Council.

Visit www.oaklandauditor.com to learn more about the Office of the Oakland City Auditor or view a complete list of our released audits, investigations, and annual reports.