letter<\/a>, the office said its fiscal monitoring had identified \u201cissues in which a MEDA employee made unauthorized expenses and engaged in self-dealing.\u201d<\/p>\nThe letter did not explain what constituted the alleged self-dealing. Neither document specified how much money was involved or when the alleged activity began. The audit stopped short of describing the activity as a crime.<\/p>\n
According to the audit, MEDA told auditors it was reviewing the activity, that it had sought insurance coverage, that it had referred the matter to local officials and that it had brought in a temporary outside IT vendor. It also said it was tightening vendor verification and requiring conflict-of-interest disclosures.<\/p>\n
In an emailed response to Mission Local, MEDA said its insurer paid out the amount covered by insurance. It did not disclose the size of the payment or the value of the unauthorized purchases.<\/p>\n
It also said an independent auditor found that no unauthorized expenses were charged to public or private grants.<\/p>\n
In an Oct. 22 interview, MEDA representatives, including Granados, declined to identify the employee.\u00a0<\/p>\n
In an emailed statement, MEDA spokesperson Juan Mesa wrote, \u201cMEDA reported this matter to the appropriate authorities because we believe we are the victim of a crime. MEDA has taken numerous internal measures to help ensure this does not occur again.\u201d<\/p>\n
When asked in an Oct. 22 interview which authorities MEDA had notified, Will Reisman, the organization\u2019s PR representative, responded, \u201cThe appropriate ones.\u201d\u00a0<\/p>\n
He declined to say whether the organization had filed a police report.<\/p>\n
History of audit warnings<\/p>\n
Because MEDA receives substantial federal funding, it must undergo annual independent audits.\u00a0<\/p>\n
From 2021 through 2024, auditors repeatedly identified \u201cmaterial\u201d weaknesses, finding that MEDA\u2019s accounting procedures were insufficient to catch and correct errors before auditors reviewed them.<\/p>\n
Despite those problems, MEDA received \u201cunmodified\u201d audit opinions, meaning auditors concluded they fairly represented the nonprofit\u2019s finances after corrections were made.<\/p>\n
MEDA attributed the problems to finance staff turnover and, in 2024, a transition to new systems. It said it had expanded its accounting staff and improved those systems.<\/p>\n
Auditors subsequently noted the issues had been cleared, but the Sept. 30 audit then identified the alleged purchasing misconduct.\u00a0<\/p>\n
Asked whether the alleged employee misconduct should raise concerns about MEDA\u2019s internal controls, Granados maintained that the organization\u2019s safeguards had improved over time.<\/p>\n
\u201cEvery year, they have become stronger,\u201d he said.<\/p>\n
City presses for financial reforms<\/p>\n
On Oct. 19, San Francisco Controller Greg Wagner notified MEDA of its \u201cTier 3\u201d designation, the city\u2019s highest-risk category for nonprofit contractors. He cited 10 unresolved issues.<\/p>\n
The findings stemmed from fiscal monitoring involving four city departments that fund MEDA. The controller\u2019s concerns included missing documentation for expenses billed to the city and questionable subcontractor payments, among others.\u00a0<\/p>\n
MEDA did not directly say whether the expenses and payments flagged by city monitors had been corrected.\u00a0<\/p>\n
It said it was working through the controller\u2019s response process and that it would be \u201cpremature to comment further\u201d while the review remained open.<\/p>\n
In its Oct. 19 letter, the controller\u2019s office warned that \u201cthe financial and organizational health of Mission Economic Development Agency may be at risk,\u201d citing a potential need for oversight by the city.<\/p>\n
Asked whether MEDA agreed with the city\u2019s findings, Granados said he had focused on addressing the problems rather than disputing them.<\/p>\n
\u201cFor us, it hasn\u2019t been about disagreeing,\u201d he said. \u201cIt has been more of an approach about problem-solving and collaborating with the controller and with those agencies in resolving these issues.\u201d<\/p>\n
But the October letter was not the city\u2019s first intervention.\u00a0<\/p>\n
Granados said his efforts to strengthen MEDA\u2019s financial controls had begun months before the Tier 3 designation. In April, he developed a work plan that the controller\u2019s office turned into a corrective action plan in May.<\/p>\n
The plan, obtained by Mission Local, said gaps in MEDA\u2019s invoicing prevented city monitors from confirming that the nonprofit had adequate safeguards against conflicts of interest and improper purchasing. The controller\u2019s October letter reiterated those concerns.\u00a0<\/p>\n
\u201cMEDA did not provide the required supporting documentation for invoiced expenses and there were a number of questionable expenses and related subcontractor payments,\u201d the letter reads.<\/p>\n
The plan called for 10 improvements, including better documentation of credit-card charges and petty-cash spending, more reliable employee time records and improved expense tracking. It also flagged issues with MEDA\u2019s cash reserves and recommended stronger revenue forecasting. MEDA said that, as of Aug. 31, it had 12 months of runway.<\/p>\n
The city\u2019s plan also recommended \u201cExecutive Financial Leadership Coaching\u201d and financial-controls training so staff and leadership can \u201cquickly see and understand financial health to make better and faster decisions.\u201d\u00a0<\/p>\n
During the Oct. 22 interview, Granados said the city arranged for coaching with the consulting firm BDO.\u00a0<\/p>\n
In a subsequent written response, MEDA said it had resolved seven of the concerns identified by the city in May and October, including \u201call concerns related to potential Tier 3 designation,\u201d but did not specify which.<\/p>\n
Granados disputed that MEDA had already been formally placed in Tier 3, describing the designation as proposed. The controller\u2019s letter, however, states that the office \u201chas designated MEDA to Tier 3,\u201d while also providing an opportunity for reconsideration.<\/p>\n
Granados said MEDA\u2019s programs had continued operating without interruption.\u00a0<\/p>\n
\u201cOur clients have not felt any of this,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"An independent audit of the Mission Economic Development Agency, a 53-year-old affordable housing nonprofit with a portfolio of…\n","protected":false},"author":2,"featured_media":509815,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[1011,82474,1556,125390,5466,101,103,102,104,106,105],"class_list":["post-509814","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-francisco","tag-housing","tag-meda","tag-mission","tag-mission-economic-development-agency","tag-nonprofits","tag-san-francisco","tag-san-francisco-headlines","tag-san-francisco-news","tag-sf","tag-sf-headlines","tag-sf-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/509814","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=509814"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/509814\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/509815"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=509814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=509814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=509814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}