Auditor's Report: The first three paragraphs of the Auditor's Report are exactly the same as the 2011 Audit. The 2011 Audit does state that the City has not recorded Capital Assets and Depreciation, but what is contained in the 2012 Audit that was omitted in the 2011 Audit is the following paragraph:
“In our opinion, because of the effect of the matter discussed in the preceding paragraph, the financial statements of the government mental activities do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the governmental activities of the City of Beaumont as of June 30, 2012, and the respective changes in financial position for the fiscal year then ended.”
The City of Beaumont flunked the 2012 Audit and flunked the 2011 Audit for the same reason. The only question is: Will the auditing firm of Moss, Levy, & Hartzheim confirm that they omitted the 4th paragraph from the 2011 Auditor's Report, or does the Auditing Firm have a copy of the 2011 GAAP Audit Report that contains the 4th paragraph?
The 2011 and 2012 Auditors Report also state that the Auditors submitted an Internal Controls Audit as required, but these Audits have not been disclosed to the Public.
Both Audits also state that the City has omitted Management's Discussion and Analysis Report that is required by law.
The last sentence of the 2012 Auditors' Report states: “In our opinion, the information is fairly stated in all material respects in relations to the basic financial statements taken as a whole.”
In accounting terms; 'material' relates to the significance of transactions, balances, and errors contained in the financial statements. Materiality is relative to the size and particular circumstances of the entity.
The 'opinion' of the Auditing firm of Moss, Levy, Hartzheim is incorrect.
The State of California requires every City to submit a Financial Transactions Report within 120 days from the close of the fiscal year. The Financial Transactions Report lists all Revenue and Expenses. The GAAP Audit should reflect the same revenue and expenses as the State Financial Transactions Report, yet I have found the following discrepancies:
Sewer Fund – The Financial Transactions Reports states Sewer Fund Revenue at $4,584,907 and Expenses at $6,160,064 leaving a $1,545,957 Net Loss. The 2012 Audit lists Revenues at $ 4,297,011 and Expenses at $5,906,651. This leaves an unexplained $1/4 Million decrease in both revenues and expenses.
Transit Fund – The 2012 Audit states the Transit Fund had a net loss of $1,467,901, but the Transaction Report lists the loss at only $71,600 because the City included a ¼ cent sales tax raising revenue to $1,260,000. Why this sales tax revenue was omitted from the Audit in unknown.