Internal Control Audits

The Pun Group has recorded five (5) Material Weaknesses and two (2) Significant Deficiencies in the City of Beaumont’s Internal Controls.

Internal controls are policies and procedures put in place to ensure the continued reliability of accounting systems. Without accurate accounting records, managers cannot make fully informed financial decisions, and financial reports can contain errors.

On November 5, 2015, the California State Controller’s Office issued an Administrative and Internal Accounting Controls Report Issued against the City of Beaumont. The Report outlined the City’s Internal Control failures and violations of State Laws which led to the pillaging of Beaumont.

The State’s Controller’s Office wrote in Conclusion: “We found the City of Beaumont’s administrative and internal accounting control deficiencies to be serious and pervasive; in effect, such controls are non-existent.”

The Report further states: “Of the 79 control elements evaluated pertaining to internal control components, we found 75 of 79 (95%) for which controls were considered to be inadequate and one control element that was considered no applicable.”

A few months ago the Beaumont Audit & Finance Committee proclaimed that the City was in compliance with every element of the State Controller’s Report.

On the 2018 Sewer Bond, page 45 [59/308] the City wrote: “The City believes that it is now in compliance with all 79 internal controls elements which were identified in the SCO’s report.”

The definition of Fraud: An Intentional Lie.

The Pun Group has released an Internal Control’s Report for Fiscal Year Ending June 30, 2018:

The Pun Group has recorded five (5) Material Weaknesses and two (2) Significant Deficiencies in the City of Beaumont’s Internal Controls.

Finding 2018-001 Policies and Procedures

Finding 2018-002 Establish a Comprehensive Fraud Program & Policy

Finding 2018-003 Segregation of Duties for Cash Receipts – City Hall

Finding 2018-004 Segregation of Duties for Building Permits

Finding 2018-005 Segregation of Duties for Business Licenses

Finding 2018-006 Transit Occupancy Tax

Finding 2018-007 Overhead Cost Allocation

Let’s compare the State Controller’s Report to The Pun Group’s 2018 Internal Control’s Audit and the Beaumont Staff, Council, and Board’s proclamation that they have complied with all Findings in the State Controller’s Report.

Finding 1 – Lack of Proper Accounting & Records of Bond Issuance, Fixed Assets, and Inventory

The first Finding of the State Controller’s Report is 3 pages long and includes a section on ‘Accounting for Fiscal Assets and Inventory. To this day the City continues to operate an illegal bond & construction scam that profits Lawyers, Consultants, and Developers to the detriment of the Beaumont Citizens.

Finding 2 – Questionable Use of a Seller’s Permit.

The City of Beaumont is so corrupt that they stole Sales Tax from other Cities. Although the Board of Equalization has revoked the City’s Resale License, not one person has been fired, indicted, or held accountable for this illegal activity.

Finding 3 – Questionable Agreement & Transactions with a City Vendor.

This is regarding one of three private sector companies that were operating inside of City Hall, Beaumont Electric owned by Jim and Stacy Love. To this day not one person has been fired, indicted, or held accountable. Jim & Stacy Love were not Indicted by the Riverside D.A.

Finding 4 – Lack of Adequate Oversight Over Contract Awards

The State Controllers’ Report wrote: “The found the City management failed to properly manage contract awards for purchase of supplies and personal property, procurement of professional services, and procurement of public works contracts.”

To this day the City Council has refused to hire qualified Staff. Every Staff Member hired since the Expendable Seven slithered out of town is grossly unqualified to perform their assigned tasks. To this day the City Council refuses to adhere to State and Federal Laws regarding Public Bid Contracts. To this day the City of Beaumont continues to be a pay-to-play town. To this day Taxpayer Money continues to be fulled out of Beaumont by way of phony contracts, with Council’s Approval of course.

Finding 5 – Deficiencies in Maintaining Supporting Documentation

The State Controllers’ Report breaks down this Finding into several categories. “Lack of Receipts for and Descriptions of Credit Card Purchases”, “Missing Invoices”, “Lack of Supporting Documentation over Employee Loans”, and “Lack of Sufficient Documentation Over Note Receivable with a Private Business” [Former City Councilman Castaldo’s business AC Propane]

The City made the State Controller’s Office promises such as putting Fuel Logs in the City Vehicles and scanning all Invoices and their backup documentation onto Laserfiche. None of the promises were kept.

Finding 6 – Lack of Written Administrative Policies and Procedures

Written Policies and Procedures mean nothing when the City Council and Staff refuse to follow the written policies and procedures.

Finding 7 – Fund Balance & Cash Balance Deficits and Cash Impairment

The Reports states: “Our review of the City’s General Fund year-end balances revealed that from FY 2009-10 through FY 2013-14, the balances end in material deficits.”

To this day the City’s General Fund operates a Multi-Million Deficit every year. To this day the City deposits all Taxes and Fees into the General Fund instead of restricted, interest-bearing savings accounts. Beaumont Council and Staff then pillage the money instead of building the infrastructure for which the funds were intended.

Finding 8 – Lack of Performance Evaluations and Specific Job Descriptions

“The City should establish official job descriptions that include Position Title, Chain of Command for Reporting and Supervisory Responsibilities, Description of Job Duties and Responsibilities, and Required Minimum Knowledge, Skills, Abilities, Experience, and Education to perform the duties and responsibilities.”

Mike Busch of Urban Futures was gifted the title of ‘Finance Advisor’ even after it was disclosed that Urban Futures was an associate of former City Manager Alan Kapancias and former Risk Manager James Gregg’s company ‘General Government Management Services’ [GGMS].

John Pinkney was gifted the title of City Attorney without experience in government agencies, federal bonds, and without the morals needed to represent the Citizens of Beaumont.

Melana Taylor was gifted the title of Finance Director without any experience in government books, federal bonds, or as a finance director.

Todd Parton was gifted the title of City Manager without any experience in medium-size cities or desire to operate an honest government.

Parton’s girlfriend, Kristine Ondrais-Day, has a degree in ‘Parks and Recreation’ yet she was gifted the job title of ‘Assistant City Manager’ and $1/4 Million salary for her ‘expertise’ in signing forged documents.

The Pun Group was gifted the title of Auditing Firm five days after Ken Pun hired former Stockton Finance Director Vanessa Burke who forged Beaumont’s Financial Statements while working under Urban Futures.

Finding 9 – Significant Control Deficiencies over Fiscal Functions

This section of the State Controller’s Report is five pages long and lists several issues; “Bank Reconciliations are not Prepared, Reviewed, and Approved in a Timely Manner, Lack of Segregation of Duties, Lack of Detailed Annual Budgets and Expenditure Control Mechanisms, Lack of an Audit Committee, Inadequate Controls Over Employee User Access Levels for Income and Great Plains Accounting Information Systems, and Lack of Internal Controls Over Petty Cash.”

To this day the City Council refuses to hire competent staff or to adhere to State and Federal Laws. An Audit Committee was established, but the Committee Members were hand-picked by the City Council to facilitate financial fraud.

Finding 10 – Inadequate Financial Reporting

“We found the City’s Financial Reports lacked sufficient detail.”

Beaumont can not produce ‘sufficient detail’ on its financial statements because its financial statements are forged. For example; after the Raids and State Controllers’ Report was issued the Beaumont City Council and Staff spent two years forging Infrastructure Reports. In 2017 the City of Beaumont forged $400 Million worth of Infrastructure in its Financial Statements in an attempt to cover up the $400 Million embezzled out of the City of Beaumont. The Pun Group then hired Vanessa Burke to audit the financial statements she forged. When it was disclosed that Burke forged the $400 million she proclaimed that an ‘Independent Consultant’ named Don McDougall created the forged Infrastructure assessment. McDougall was a lightbulb salesman.

The State Controller’s Report ends with a list of the 75 Internal Control Deficiencies that begins with ‘Integrity and Ethical Values’ because without honest elected and appointed officials government corruption will continue. The Beaumont City Councilmen, Board Members and Staff have proven by their actions that the only goal is to pillage of the City.

Read the State Controller’s Office Report on the City of Beaumont here: