I have totaled all Payroll Transactions from the City of Beaumont General Ledger for the months of May through October, 2012. I have compared these totals with the Bank Statements and Council Check Warrants and found the general ledger has $1,301,068.96 more expenses attached to employee payroll than the automatic deposits documented on the Bank Statement.
The City Council Check Warrants have no correlation to either the Bank Statements or General Ledger. The Dates listed on the Check Warrant are not the correct Payroll Dates. The only time the Check Warrant dates and General Ledger dates corresponded was 10/25/12 when the City was shifting so much money it entered the payroll transaction #222921 with the date of 10/25/12 instead of the correct payroll date of 10/18/12.
The Check Warrants do verify that 'Guardian Insurance' check dates & amounts correlate with the Bank Statement, but the actual amounts recorded on the General Ledger average $2,000 more than the actual amounts paid.
I have seen the practice of listing alternate dates on the check warrants in other California cities. I have no idea how this 'procedure' originated, but each time the Finance Director lists the incorrect dates or amounts they are committing State and Federal felonies.
I audited a total of thirteen (13) pay periods from 05/01/12 – 10/25/12. I also included the General Leger payroll for 11/01/12 on the spreadsheet for reference because 10/25/12 was not actually a pay period.
Total Payroll Per the Bank Statement from May – October was $ 5,750,85.97.
Total Payroll Per General Ledger from May – October was $ 7,051.923.93.
This leaves a Material Misstatement of $1,301.068.96.
There is a difference of $473,080.04 between what the City states on the general ledger and the Bank Statement Payroll Deductions. Every pay date is overstated by at least $10,000.00. Deductions for vision, dental, disability, and life insurance are separate transactions and the check is issued to Guardian to pay for these costs. But the City also takes these deductions from the Payroll Transactions.
For example: 7000 - Transit Department shows the standard monthly Dental deduction of 32.61 was paid on 05/01/12, but the City of Beaumont attached another $150.00 dental deduction to the 05/05/12 payroll.
The largest discrepancy was on 07/27/12 when the bank statement shows payroll was $468,612.36, but the general ledger shows a total of $711,731.73 in payroll expenses. The City padded the employees' payroll by $1/4 Million on that one pay date alone.
The Month of October was a 'lost weekend' for the Accounting Department. Payroll issued on 10/05/12 was 'normal'; Bank Statement reported $421,431.06 in payroll, City general ledger recordings totaled $437,932.54. This leaves a $ 16,501.48 discrepancy, but for the City of Beaumont, that's normal.
The Bank shows payroll was issued 10/18/12 for $453,411.42 and shows no other payroll transaction between 10/05/12 and the end of the month.
The General Ledger lists their payroll on 10/25/12 with transaction # 222921 for $459,647.00.
The Beaumont General Ledger does have payroll transactions dated 10/12/12, but these are additional checks issued:
10/12/12 - #219889 - $105,323.91
10/12/12 - # 219909 - $29,702.97
Apparently the City 'got confused' when they issued additional checks for $135,026.88.
There are a total of seventeen (17) additional transactions totaling $827,998.92. The checks range in amounts, but every month there is a transaction over $100,000:
# 210440 – 06/08/12 - $107,838.85
#212635 – 06/30/12 - $106,940.65
#215697 – 08/17/12 - $107,434.68
#218901 – 09/28/12 - $103,123.34
#219889 – 10/12/12 - $105,323.91
The above transactions are coded 3020- Medical Insurance with the memo 'Cigna Health Care'. But there are no Cigna transactions listed on the Check Warrants. The City carries Kaiser and the Guardian Insurance to cover dental, disability, vision, & life.
The City also shows a massive transfers of money listed on the Council Check Warrants as 'Mutual of Omaha', but the City of Beaumont doesn't carry Mutual of Omaha Insurance. On the Bank Statements the automatic debit transactions are listed as 'MG Trust'.
There was a total of $78,864.54 in payroll charged to a department coded 7100. This department is not listed on the budget.
On 05/17/12 the City posted transaction #209836 giving a FICA credit of $439.14 to department 2000 – Quality of Life. This department does not have any FICA deductions taken from their employee's paychecks. Any overpayment from FICA should be credited back to the individual department.
The department of the City Manager is the only department to have 'STD Insurance'. The level of nasty the City Manager must exhibit to require STD Insurance has yet to be determined.
If I can find $1.3 Million addition employee expenses added to payroll in five months, the City of Beaumont is most likely padding their Employee Payroll Account by $3 Million/year.