SCO Internal Control Audit - Cudahay

Last week the State Controller’s Office (SCO) released the copy of an internal controls audit for the City of Cudahay, CA. Click here for the audit documents. 

After reading the entire audit it became clear that many of the issues the SCO found with the City of Cudahay were the same issues I am concerned with the City of Beaumont, specifically the timeliness of the audits being released to the public. I sent an email to the SCO contact on the audit, see below. My email outlines the history involving my requests to our City Council for an Internal Controls audit and their refusals.

The SCO said they ordered the Cudahay audit in response to a request from a newly elected mayor following a major scandal involving the previous mayor and city council. Not one of our public servants on Beaumont’s City Council is interested in restoring the confidence many of us have lost after reading our own auditors concerns over the City’s internal controls. Nor are they concerned about repeated issues being raised by their own auditors about internal control insufficiency.

The city’s staff have acknowledged the problems and have offered plans to address the poor internal controls but the following year their auditors report back that the problems haven’t been fixed. We’ve been told by our council that no matter how many signatures we get on a petition, they will not order an internal controls audit.

Last year I, and others, brought this to the attention of the SCO and requested an audit by the state. Those requests, as well as my latest email received no response. I have also addressed my concerns to our County District Attorney’s office and received a phone call but no follow up action.

In my email last week to the SCO, I asked for the cost the SCO charged the City of Cudahay in order to provide us with some guidance as to what the City of Beaumont could expect to pay. I am sure it is much less than one of our council members quoted of $100,000. I hoped my suggestion that we would raise the funds to pay the SCO to do their job may generate a response, but it hasn’t.

This November, three of our Council Members are up for re-election but, considering the history of our local politics, it is unlikely we will have a majority on the new council who will feel a duty and an obligation to order an internal controls audit anytime soon. It is even more unlikely there will be anybody new to the council if the City holds back the release of the 2012-2013 audit until after this year’s election. We don’t have the luxury to sit around and wait.

Please read my email below. Then write your own and send it to Steve Mar at smar@sco.ca.gov. Feel free to copy and paste part, or all, of my email to include in yours. 

 

Steven Mar,

I just finished reviewing your report on The City of Cudahay and I was specifically interested in the Internal Controls Audit. 

I have been closely following the audits of the City of Beaumont over the last couple years and, in my opinion it is frightening how similar the issues raised in the Cudahay reports are with issues I, and others, have raised as concerns with our City Council and staff. 

Beaumont’s annual audits are taking longer and longer each year to be presented to the public. The last audit released was for fy 2011-2012 and wasn't released to the public until October 15, 2013, more than 15 months after the fiscal year closed. The audit for 2012-2013 still hasn’t been released and requests to the Council on when we can expect it have not been answered. If the trend of these reports taking longer and longer each year is followed, it is likely many of our citizens will have voted in this year's election without knowing the true financial state of our city; three of the five council members are up for re-election. 

Last year, I asked our city council to consider an Internal Controls Audit. Their response was that there was nothing that concerned them about their finances and that an Internal Controls Audit would be too costly. When another citizen asked the Mayor at the time, Roger Berg, how many signatures we would need on a petition to convince them to approve the audit, he said it didn’t matter how many signatures we were able to get, they wouldn’t authorize it. Our current Mayor, Brenda Knight, told us that since the City had already been audited by so many government agencies, including State and Federal, she was confident there was nothing to be concerned about. 

No one has performed an Internal Controls Audit. In fact, the City’s own auditor has presented reports on concerns they had with the internal controls and also noted that issues reported in the previous year’s audit’s internal controls report had not been addressed even after the City acknowledged the issues and promised to put in place a solution. 

It is clear no matter how many of our citizens have lost confidence in our City’s accounting staff, the Council will not authorize the oversight we expect. They will always argue the costs outweigh the benefits. 

There is enough concern among our community that I believe we can raise the money to pay for the audit. I noticed in the SCO’s report that the cost of the Cudahay audit was paid by the City of Cudahay. I couldn’t determine from your report what that cost was. Can you give some idea of how much the citizens of Beaumont would need to raise for the SCO to perform an Internal Controls Audit?

The history behind the politics in our town leads most of us to believe we won’t have new leadership anytime soon that will welcome the transparency we are seeking. We don’t want to wait until it’s too late or until Beaumont becomes the next front page scandal. 

I look forward to your response. 

Thank you for your time and consideration, 

Lloyd White 

Citizen of Beaumont California