GASB 63 Superseded GASB 39 and Debt is NEVER an Asset
Beaumont’s Slideshow to Justify Forged 2015 Audit was Debunked 7 Hours Before the Council Meeting
The entire point of ‘Accounting’ is to account for the money. Money is black and white. General Accounting Standards Board (GASB) sets the laws of accounting and once those laws are set – there is no debate. Accountants must follow the law. The only option an Accountant has when asked to do anything that violates the law and that is to walk out the door.
One option for an Accountant: Walk Out the Door.
And of course basic State and Federal Laws regarding Fraud, Forgery, and Aiding and Abetting Government Corruption apply, but there are additional laws governing certain occupations like lawyers and accountants.
The City of Beaumont has acquired over $300 Million in CFD Municipal Bond Debt without Voter Approval as required by California State Laws. The City circumvented State Laws by forming two Joint Powers Authorities; the Beaumont Finance Authority (BFA) and the Community Facilities District (CFD).
The Beaumont Finance Authority acquired the Bond Debt then ‘sold’ the Bond Debt to the Community Facilities District; minus the Administration Fees skimmed off the top of every bond by the Staff.
The BFA was only a broker for the bond debt; the Staff made a fee for the transaction, but there was no Asset acquired for BFA, they simply sold the Debt to the CFD.
For example: A person wants a $1,000 bank loan to buy a car, but can’t get the loan themselves. Another loaner agrees to get the $1,000 loan in their name, then sell the money to the person for a $100 fee. The person gets $900, the loaner gets $100, and the bank gets payments with interest.
To record the transaction on their financial statements; the person with the loan either records the $900 or the Car/Asset he purchased.
The loaner records the $100 profit he made on the transaction, but there is no Asset for him – the loaner was only a broker; a middleman that facilitated the transactions for a profit, not to acquire an asset for themselves.
Beaumont is attempting to record their Bond Debt as an Asset.
On August 15, 2017, Beaumont Finance Director Melana Taylor presented a Slide-Show to justify classifying the City’s Debt as an Asset and to explain why the Audit was altered after it was Presented and Approved by Council.
Taylor presented a slide with one box labeled ‘CFD Fund’ with ‘Liability’ written under the box, and an Arrow pointing to another box labeled ‘BFA Fund’ with ‘Asset’ written under it.
First of all; the Bonds transferred from the BFA to the CFD, not from the CFD to the BFA. But more importantly, as the Auditing Firm of Van Lant and Fankhanel stated: “it wasn’t appropriate to show your own Debt as an Asset.”
The Debt is never an Asset. Never.
Taylor then used GASB 14 and GASB 39 as justification for the forged transactions.
That’s some bad timing. I had submitted the correct procedure and quoted GASB 63, which supersedes GASB 14 and GASB 39 earlier in the day.
Melana Taylor stated in the Council Meeting that “it was the Auditors’ idea” to Alter and Forge Beaumont’s Financial Statements after they were Approved by Council.
When asked why it took six weeks from the time the 2015 Audit was Approved by Council and when the Auditors signed the Audit; Taylor explained that was how long it took for she and the Auditors to come to an agreement.
The Auditors job is to be independent, not in collusion with the City.
Quote of the night was when Julio Martinez asked Taylor about where the Assets that were created with the bond debt were recorded. Taylor stated something like ‘the Assets were built, the money is gone’.
But that didn’t answer the question of where the Assets are recorded on the Financial Statements. The answer is; when they exist the Infrastructure is recorded on the Statement of Net Position under ‘Assets’. But when all the money is stolen there are no Assets to record.
If Councilman Martinez will remember; ‘Council Approved’ an Infrastructure ‘Certificate of Completion’ verifying that yes, all of the Infrastructure listed on the Bonds was completed. Public Works Director Amer Jakher and slime ball City Manager Richard Warne personally verified that all three Fire Stations, Roads, and the ‘state of the art’ Recycled Water Facility was complete.
And since Lloyd White’s Staff has never lied to him – since the Raids – it must be true.
And Councilman Nancy Carroll who was the one that conspired with Staff to illegally hired the Accounting Firm and set up the phony Audit and Finance Committee – had nothing to say. She never opened her mouth except to vote ‘yes’. Imagine that.
When asked why the altered 2015 Audit was never brought back to Council for Approval; Beaumont City Manager Todd Parton called the 2015 Audit ‘special’.
Yes, it is a very special Audit. An Audit Forged two years after the close of the books is a new record low, even for the City of Beaumont.
Note 15 was also added to the 2015 Audit after it was approved by Council, but City Attorney Pinkney didn’t want to talk about that.
Taylor also proclaimed that the 2016 Audit will be presented in September, which is in two weeks. There is no need waste the Taxpayers’ money on a 2016 Audit or Financial Statements prepared by Van Lant Fankhanel that will be just as Forged as the 2015 Audit.
Forging Financial Statements only works until the Financial Statements are Audited. Once the forgery is exposed it can’t be covered up or continued. Attempting to cover up and continue the crimes only makes it worse.