State Controller: City of Beaumont has Failed to File Financial Transactions Report Due in October 2011

The City of Beaumont has failed to file a financial transactions report that was due in October 2011, a filing that is required under state law, California Controller John Chiang's staff said Wednesday, one day after the city council voted 5-0 to accept the city's most recent audit.

A letter to the City of Beaumont dated Oct. 16, 2013, states in part:

City Fiscal Officer
City of Beaumont 
550 East 6th Street Beaumont, CA 92223

Re: Delinquent Report(s) of Financial Transactions

Dear City Fiscal Officer:

A review of our records indicate we have not received your report(s) of financial transactions listed below:

Year                              Report Not Received 
2010-11                       Cities Financial Transactions Report

Asked for clarity, controller's spokesman Jacob Roper said the text of the letter refers to the Fiscal Year 2010-2011 "city's financial transactions report." FY 2010-2011 ended June 30, 2011.

The City of Beaumont's 2010-2011 financial transactions report was due Oct. 18, 2011, Roper said Wednesday afternoon.

Given opportunity to provide response for the City of Beaumont, a spokeswoman said Wednesday afternoon she was working on it.

Chiang sent letters Oct. 16 to 126 local governments statewide that failed to file reports, according to a controller's statement distributed Wednesday morning. The City of Beaumont and the other delinquent governments were given a deadline of Dec. 31, 2013, to file the documents.

"Transparency in financial reporting - including public salaries - is necessary to protect communities against the misuse of taxpayer dollars and other abuses of public trust," Chiang said in the Oct. 16 news release.

Here's more from Chiang's release:

Under Government Code 53891, local governments are required to file a report of financial transactions with the State Controller's Office, which include figures on revenues, expenditures, and long-term debt, within 90-110 days of the end of the fiscal year. Each report noted in the Controller’s letter is more than a year overdue, during which time the agencies ignored a penalty-free grace period, as well as written notification – delivered via certified mail – warning that assessment of monetary penalties is forthcoming.

The Controller publishes financial reporting instructions on his website annually. Following the 2010 scandal in the City of Bell, he amended the filing instructions to include detailed reports of employee wages and benefit costs. That data is now used to support the Controller's website dedicated to employee compensation – publicpay.ca.gov.

Repeated failures to file may indicate serious internal control problems at the local level, according to Chiang.

"In many of the Controller's recent audits, internal control deficiencies either caused or were symptoms of serious fiscal distress for local governments," Chiang's staff said. "Internal controls include separation of powers between budgeting and check-writing, avoiding potential conflicts of interest in hiring or contracting, and other measures designed to protect the integrity of a local government's finances."

Letters to the City of Beaumont and other governments urge non-compliant cities and special districts to file delinquent reports by December 31, 2013, or be subject to an audit to obtain the missing data, according to Chiang's staff.

Public agencies which have demonstrated a chronic inability to file their financial reports may be subject to an additional audit of their internal controls and other fiscal management practices, Chiang's staff said.

"My office's audits of Bell, Stockton and other fiscally-distressed public agencies have highlighted how weak accounting and reporting practices deny local leaders the opportunity to fix problems before they deteriorate into crisis and scandal," Chiang said. "The lack of transparency provides a breeding ground for unchecked spending, corruption, and fiscal mismanagement."

Last month, Governor Jerry Brown signed AB 1248, a bill sponsored by Controller Chiang and authored by Assemblyman Ken Cooley (D-Rancho Cordova), which calls for the Controller's Office to work with local governments to develop statewide internal control guidelines.

All 58 California counties are current on their reporting requirements, according to Chiang's staff. No county governments were included in Wednesday's mailing.

For more about the Oct. 15 Beaumont council meeting see:

Beaumont Council Votes 5-0 to Accept June 2012 Audit

VIDEO: Beaumont Council Member Visits Speakers' Podium

VIDEO: Blogger Requests Internal Control Audit at Beaumont Council Meeting