It’s not possible to prepare financial statements without first entering the data into the general ledger.
Page 4 of the S&P Rate Summary for the Beaumont 2018 Wastewater Bond states: “The wastewater system has historically maintained a strong liquidity position..”
Attached are the City’s Statements of Activities for the last four (4) audit years. Although both the City’s Population and the Sewer Fees have increased, the City recorded a decrease in Revenues on their 2015 and 2016 Financial Statements.
Fiscal year 2017 Revenues increased $300,000 from the previous year from $7.1 million to $7.4 million, but Expenses almost doubled from $6 Million in Fiscal Year 2016 to $11.1 Million in 2017.
Beaumont refuses to open a separate bank account for the Sewer money. Sewer Fees are deposited into the General Fund along with Mitigation Fees and every other special tax or fee the City receives.
The 2017 General Ledger recorded a total of $7,351,961.51 in Revenue. The 2017 Audited Financial Statements recorded $7,424,915, a difference of $72,953.49.
Also included is the Transit Statement of Activities showing a yearly increase in Expenses and a yearly decrease in Revenue since 2016 when Elizabeth Gibbs Urtiaga went from the job title of City Manager to Transit Director. Transit revenue is also deposited into the General Fund.
Incomplete General Ledger
Another obvious sign that the City of Beaumont’s 2017 Audited Financial Statements are fraudulent is because the General Ledger is incomplete and the accounting system is not set up properly.
The Fund Summary lists all of the City’s Funds with a ‘0’ beginning balance, the debits equal the credits in all of the lines and the ending balance in every account is ‘0’. There are no journal entries to close the books at the end of the fiscal year. The general ledger isn’t even properly formatted.
Financial statements are derived from the entries on the general ledger. Several pages from Beaumont’s 2017 General Ledger show that the City skipped months of journal entries. For example in the Sewer Fund:
Page 1728: ‘Accounts Payable’ is empty and ‘Accounts Payable Pending’ starts on December 8, 2016, five months after the City’s July 1st start of the fiscal year.
Page 1747: Payroll wasn’t recorded until February 3, 2017.
Pages 1753-1756: Breakdown the Sewer Employees’ salaries and deductions. The recording of the salaries stared on January 20, 2017. The recordings of the deductions start from December 20, 2016 to February 3, 2017.
Pages 1761-1762: of Beaumont’s 2017 General Ledger recorded ‘Fuel’. A total of $1,460.77 was recorded in July 2016; $1,573.04 in August; nothing in September; $6,598.25 in October; $184.99 in November; $6,176.05 in December; $2,468.82 in January; $237.50 in February; and $53.83 in March. No Fuel entries were recorded in the General Ledger for April, May, or June.
A City the size of Beaumont should have a Finance Director, three more Accountants, and 6-8 Accounting Techs. Beaumont’s Finance Director has no knowledge of government accounting or bonds nor does she have the ability to grasp the knowledge. The City refuses to hire any qualified staff.
It is not possible for The Pun Group to have audited the City’s 2017 financial statements without noticing that the data was never entered into the general ledger. It’s not possible to create financial statements without first completing the general ledger.
All Beaumont did was plug in numbers on the 2017 financial statement in order to defraud banking institutions in order to acquire more bond debt to steal.