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Home arrow Response #1 to Charges Against the City by Elizabeth Uremovic
Response #1 to Charges Against the City by Elizabeth Uremovic
Response #1 to Charges Against the City by Elizabeth Uremovic


May 9, 2013

To:  The Mayor and City Council

From:  Rochelle Clayton, Finance Manager


Elizabeth Uremovic requested public records related to finance and subsequently posted a libelous and invalid “audit report” on her website:  www.libionline.net/city-of-la-habra-heights-audit. This letter is a response to each of her claims; I have detailed responses to her allegations against the City below and attached documentation. The italicized portions are direct quotes from Ms. Uremovic’s website.

  1. The first internal audit of the City of La Habra Heights and have found numerous irregularities in their accounting practices. The data I have analyzed is from the General Ledger, Bank Statements, and Check Warrant Reports dated from July, 2010 thru June, 2011.

Response: Internal audits are performed internally by organization staff; this was an unofficial external review of certain records to draw conclusions without all of the information.

  1. Multiple Checkbooks – The City of La Habra Heights is using three (3) different checkbooks. There is a three-digit checkbook, a four-digit checkbook, and a five-digit check book. The Check Warrant lists checks issued from the three and four-digit checkbooks, but does not show the five digit checks issued.

    The four and five-digit checkbooks are listed on the Wells Fargo Bank Statements, but the three-digit checks do not clear this bank account. The three-digit checks are only and always issued to the four Payees: Maricela Medina, John Wingett, Margaret Crawford, & A.Q. Engineering Consultants. The three-digit checks total over $23,000.00 from November 2010 to June 2011. There must be another checking that is paying these checks.

Response:  No 3-digit checkbook exists – this is an assigned number to identify EFT transactions used for recording contracted vendors paid by direct debit of the City’s bank account by our payroll system, Paychex. The contracted vendors were debited by Paychex and processed with biweekly payroll, which is listed on page 1 of the Warrant Agenda Reports, and this is no longer practiced. In June 2010 we changed from Bank of America, a 5-digit check numbering system, to Wells Fargo with a 4-digit check numbering system. All 5 digit checks were issued before July 2010 from previous bank; refer to – EXHIBIT A-Check Summary Report for June-July 2010.

  1. Bank Of America Credit Card: The City is using a Bank of America credit card and forging the Check Warrants to hide the charges. Listed below are four incidence FYE 2011.

    11/03/10 – Transaction no. 27446 – Checks no. 1485 and 1486 were issued to Bank of America for $857.31 and 619.43, respectively. The checks are listed on the General Ledger and Well Fargo Bank Statement, but NOT listed on the Check Warrants.

12/29/10 – Transaction no. 27737 – Check no. 1623 is issued to Bank of America for $1,737.43. Transaction 27510 also listed Check no. 1623, but issued to Action Trophies for $109.25. This transaction is reversed in Transaction 27681. The Check Warrant lists Check no. 1623 issued to Action Trophies for $109.25. The Wells Fargo Bank Statement lists two (2) checks 1623 issued and cashed: one for $1,737.43 and another for $3,504.00. The January Check Warrant shows the $109.25 invoice for Action Trophies was paid on 01/20/11 with Check no. 1729.

The December Bank Statement shows that double check numbers were used twice that month – for check no. 1594 and check no. 1623. In both transactions the 'extra' check was for $3,504.00 and reversed by the bank. There is no paper trail for their of the $3,504.00 transactions on the General Ledger.

03/16/11 – Transaction no. 29425 – Check no. 1938 and 1939 issued to Bank of America for $1,203.22 and $379.48, respectively. These checks are listed on the General Ledger and Wells Fargo Bank Statement, but NOT listed on the Check Warrants.

01/12/11 – Transaction no. 38030 – The General Ledger shows $3,504.00 payment to Bank of America, but no check number is listed and this transaction does not show up on the Wells Fargo Bank Statement.

Response: Check #1623 was issued in the accounting system with wrong warrant # and voided in system after Warrant Agenda Report was completed – EXHIBIT B-Check Detail Report. The 2nd listing of check #1623 for $3,504 was an error in processing and corrected/reversed on same statement – EXHIBIT C-December 2010 Bank Statement. Additionally, on that same statement there were two debits for check #1594 and the duplicate was also for $3,504 which was also an error in processing and corrected/reversed on the same statement. These occurrences were errors in processing which were corrected on the same statement so there was no need for an accounting entry.

In Ms. Uremovic’s reference to “1/12/11 – Transaction no 38030” the transaction number is 28030 not 38030. This was a journal entry to record issuance of check #1697 – paid on 1/18/11, which is listed on EXHIBIT D-January 2011 Bank Statement but due to a processing error, it was not captured in the accounting system when the check was issued so it was entered via journal entry. Also see EXHIBIT E-Check Detail Report for check #1697 which shows that it was issued to another vendor and voided so no debit was processed and a journal entry had to be posted.

  1. $57,669.73: On 08/05/10 the City of La Habra Heights issued Check no. 1150 to Wells Fargo Equipment Finance. On the General Ledger this check is issued twice – in transaction no. 26286 and 26787. On 08/19/10 transaction 26382 is reversed and transaction no 26383 issues check no. 1204 for $57,669.73 to Wells Fargo Equipment Finance.

Response:  Check #1150 was issued on 8/5/10 and then voided in system and a stop-payment was placed on the check. It was cashed on 8/11/10 and then reversed on 8/12/10 due to stop-payment (not refunded). The payment was re-issued on 8/19/10 with check #1204 which was cashed on 8/25/10 – refer to EXHIBIT F-Check Detail Report & EXHIBIT G-August 2010 Bank Statement.

  1. Payroll – The City of La Habra Heights contracts with Paychex to process payroll. The Bank Statements, General Ledger, and Check Warrant should all have the same information but they tell three very different stories. City Employees are paid bi-weekly, but the Bank Statements show Payroll cut up to five (5) times in a month. The variation from the Check Warrants to the actual payouts varies from a few hundred to over $20,000 in a month.

    When I requested a copy of the Employee Rooster for the City of La Habra Heights I was told there was no listing for employees and it would cost $242 to produce a list of city employees for a town with the population of 5,300.

Response: Payroll is issued bi-weekly through Paychex payroll agency who directly debit our bank account for each payroll in 4 debits spanning over 2 days: 1-direct deposits, 2-paper check issuances, 3-payroll taxes, 4-Paychex charge for processing. Payroll issuances do not appear on the Warrant Agenda Report as checks issued because we do not issue checks; instead they do appear on the Warrant Agenda Report on page 1 under “Payroll Disbursements” and “Payroll Taxes.” However, the contractor payments issued through Paychex are listed on the Warrant Agenda Report with assigned EFT numbers. To demonstrate the amounts match – see EXHIBIT H-December 2010 Bank Statement, EXHIBIT I-Page 1 of the 12/2/2010 General Ledger Report, & EXHIBIT J-December 2010 Warrant Agenda Report)

In every public records request, Ms. Uremovic asked for “roosters”.  We can only assume she is asking for an employee roster which she has been informed is available on the website. She rejected that because she wants hiring dates and other detailed salary information about each employee to be assembled into chart. We are not required to assemble data. Moreover, information about hire dates and salary increases for each employee is maintained in the HR online system which only the Deputy City Clerk and Assistant City Manager have access to. There is a charge for accessing electronic records.

  1. Our government is a system of checks and balances. The basic procedure is for distributing local government funds is two signatures on every check - the City Manager and Finance Director. The City Clerk verifies the documentation. Shana Clark has declared herself City Manager, City Clerk, and Finance Director. Because Ms. Clark has no oversight she is able to withholding financial information from the public, embezzle funds, and forge the Check Warrants.

Response: Ms. Clark has no access to the blank checks. Ms. Clark has no access to the accounting system that writes the checks; that system is accessible only to the Accounting Technician and Finance Manager. Any check issued from that system is reviewed and counter-signed by the City Treasurer. The amount and purpose of each check is reported to the Council each month in the Warrant Report which is included in the agenda packet.

Ms. Clark cannot write a payroll check to herself or anyone else as she has no access to the Paychex system. Payments to her for wages and benefits are reviewed each year during the Independent Annual Audit which is performed by White Nelson Diehl Evans (WNDE). The WNDE auditor compares what was paid to Ms. Clark with what was authorized by the contract between the City Council and the City Manager.

Ms. Clark does not have a city credit card.

  1. The Check Warrants are prepared by an Accounting Technician and signed by City Treasure Arlene Mosley. There does not appear to be a Certified Public Accountant involved in the record keeping.

Response: All checks issued are reviewed prior to and after check printing by the Finance Manager, as is the monthly Warrant Agenda Report.

Please refer to Exhibits A through J as the supporting documentation to my responses to Ms. Uremovic’s allegations.

 

Sincerely,

 

Rochelle Clayton

Finance Manager

City of La Habra Heights