State Controller’s Office to audit city of Beaumont
The State Controller’s Office will investigate the financial practices and reporting of Beaumont to resolve significant differences between the city’s financial transaction reporting to the Contoller’s Office and its audited financial statements, officials announced Tuesday.
“These substantial discrepancies call for a close analysis by our auditing team,” said Controller Betty T. Yee, the state’s chief fiscal officer. “Beaumont residents and businesses need to be assured that their tax dollars are being used properly.”
Beaumont has 42,000 residents.
The audit was announced just weeks after the FBI and Riverside County District Attorney’s Office served search warrants at Beaumont City Hall, the home of the city manager, and a firm (Urban Logic Consultants) that has provided contract employees as part of an investigation into the firm’s relationship with the city of Beaumont.
READ COMPLETE LETTER FROM STATE CONTROLLERS OFFICE TO THE CITY OF BEAUMONT
News Channel 3 and CBS Local 2 spoke to residents of Beaumont in April, some of whom believe the city’s relationship with Urban Logic Consultants, which goes back 20 years, is full of corruption.
Other residents have called for an overhaul of city leadership.
According to a release from the State Contoller’s Office, an initial review showed that in the 2012-13 fiscal year, the city’s total expenditures as reported to the Controller’s Office were $50 million less than in audited financial statements. The city didn’t include capital assets within its governmental activities and, as a result, failed to record depreciation expenses.
Other variances were found in total revenues, transit fares, and cash and investment funds. The Controller’s staff discovered discrepancies in both the 2012-13 and 2013-14 fiscal years, officials said in the release.
Independent auditor reports for the past two fiscal years found deficits in some funds, according to Yee. The reports questioned whether the city will be able to reduce deficits without additional revenue or cuts. The city lacks the $43 million it needs to pay a legal settlement.
Yee sent a letter to Beaumont officials on Tuesday to say the audit will initially focus on the last two fiscal years but could be expanded depending on what auditors find. It will include analysis of the administrative and financial controls of the city, including the impact of any findings on local, state, and federal programs administered by the city.
An initial conference is scheduled for late May, with field work to begin soon after.
Beaumont city officials said the city is fully committed to cooperating with the State Controller’s investigation and looks forward to clarifying the areas of concern outlined in the notification letter.
News Channel 3 and CBS Local 2 will continue to track the developments of the audit and we’ll post more details as soon as they become available.
