By: Libi Uremovic, July 22, 2014 | Original Article at Patch.com
The following changes were made to the Beaumont GAAP Audit.
Auditors’ Report Page 2 Emphasis of Matter: The Auditors added the line “..the City’s Governmental Activities had a deficit in unrestricted net position of $32,707,527..” and references Note 19.
Page 60 Note 19 Financial Condition and Management Plan: “The City’s Governmental Activities had a deficit unrestricted net position of $32,707,527 and General Fund had a deficit unassigned fund balance of $6,866,481 at June 30, 2013. It is uncertain whether the $21,500,000 advance to the Beaumont Successor Agency will be collected due to the dissolution of the Redevelopment Agency. It is uncertain if the City will be able to reduce the deficit without additional revenue sources or expenditure cuts. In addition, the City does not currently have the financial resources to pay the WRCOG TUMF settlement in the amount of $42,994,879 plus interest and fees. On June 2, 2014, the City Council authorized its trial counsel to file an appeal when such a Judgment has been filed by the Court. See note 14 for further detail.”
In fiscal year 2013 the City was $40 Million over budget, received a $43 Million judgment, and has $21.5 listed as an asset that will have to be removed.
Management’s Response:
The City is aware of the deficit unassigned fund balance and has implemented a hiring freeze over the last year along with analyzing all expenditures with department heads. Staff is working with the State of California Finance Department on the repayment of loans made to the former Redevelopment Agency of the City of Beaumont.”
The Management’s Response was the same in 2012. A hiring freeze and eliminating street lights will not generate tens of millions in needed revenue. It was concluded in the July 15, 2014 Beaumont Council Meeting that Council and Staff do not need to analyze expenditures and the State is not going to reimburse the City for an illegal activity.
Financial Statements consist of the Audit, the Internal Controls Report, and the Management’s Discussion. The Management’s Discussion is supplied by the City’s Management and is supposed to be presented to Council and the Public at the same time as the Audit and Internal Controls Report.
The City has never filed a Management Discussion with the Financial Statements.