INSIDE INGLEWOOD-The City of Inglewood released its FY 2011-12 Single Audit Report on August 27. The findings were extraordinary in the amount of errors that remain unresolved from the previous year’s audit.
But the most alarming fact may be that the former City of Bell firm, Mayer Hoffman McCann PC, was contracted to perform the audit.
In December 2010, CA State Controller John Chiang issued a scathing report on the firm’s audits for the City of Bell.
“MHM appears to have been a rubberstamp rather than a responsible auditor committed to providing the public with the transparency and accountability that could have prevented the mismanagement of the City’s finances by Bell officials,” said Chiang.
The result was a fine of $300,000 plus $50,000 for the investigation costs as well as two years probation for the firm.
The investigation was for “its audits of the California city of Bell, where a number of officials have been accused of fraud and public corruption,” according to a June 4, 2012 edition of Accounting Today magazine.
Shortly after the City of Bell scandal broke, the L.A. Times published a Nov. 11, 2010 story with the headline, “Bell’s auditors gave city clean bill of health despite record salaries, illegal taxes.”
The story was explicit in its details: “Year after year, while Bell’s city leaders raised salaries, levied illegal taxes, slapped arbitrary fees on businesses and loaned public money to insiders, the city’s outside auditors, Mayer Hoffman McCann, gave Bell’s financial record a clean bill of health.
“There has been a widespread failure by auditors to make sure that cities are properly spending hundreds of millions of dollars in redevelopment money. Each year, approximately 100 of the state’s 391 municipal redevelopment agencies fail to file annual reports as required by law.”
The internationally renowned financial news agency Bloomberg ran a story on Dec. 21, 2010 that reported on the “rubberstamping” work that Mayer Hoffman allowed which resulted in “eight current and former officials [being] arrested and charged with misappropriating public funds.”
The repercussions continued well into 2012 when the O.C. Register reported on June 21 that “[Costa Mesa] has terminated its contract with Mayer, Hoffman and McCann, the former auditors for the city of Bell.”
The City of Riverside also elected to not renew its contract with Mayer Hoffman.
“If you’re a small city in California, you probably won’t be looking to Mayer Hoffman McCann to do your audits. If you’re already with them, it’s time to go auditor shopping,” stated the insider accountancy Web site OngoingConcern.com in a December 28, 2010 story titled “The Bell Effect: City of Riverside Won’t Renew With Mayer Hoffman McCann.”
Much of the findings in Inglewood's latest audit have to do with redevelopment itemizations, water billings, unaccounted credit card billings and unknown employee pay-outs.
Randall Fleming is a veteran journalist and magazine publisher. He has worked at and for the New York Post, the Brooklyn Spectator and the Los Feliz Ledger. He is currently editor-in-chief at the Morningside Park Chronicle, a monthly newspaper based in Inglewood, CA and on-line at www.MorningsideParkChronicle.com. Views expressed and/or conclusions reached by Mr. Fleming are his and do not necessarily reflect those of CityWatch.)
-cw
CityWatch
Vol 11 Issue 76
Pub: Sept 20, 2013
