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Home arrow Response #2 to Charges Against the City by Elizabeth Uremovic
Response #2 to Charges Against the City by Elizabeth Uremovic
Response #2 to Charges Against the City by Elizabeth Uremovic

May 9, 2013

To:  The Mayor and City Council

From:  Rochelle Clayton, Finance Manager

Elizabeth Uremovic has posted a second libelous and invalid “audit report” on her website:  www.libionline.net/city-of-la-habra-heights-audit. The latest posting is titled “Audit II – August 2011.” This letter is a response to her claims; I have detailed responses to her accusations against the City below and inserted documentation. The italicized portions are direct quotes from Ms. Uremovic’s website.

  1. Payroll: The City of La Habra Heights uses Paychex to process payroll. In the month of August the Check Warrant claimed a total of $71,571.00 in Payroll Disbursements. The Wells Fargo Bank Statements shows Paychex paid a total of $100,059.41 – $28,488.41 more than declared on the Check Warrant signed by the City Treasure and Ratified by Council.

    Paychex issues payroll to La Habra Heights in three different transaction types: Inc Payroll, Payroll, and Hours Payroll. Most of the payroll hidden from the public seems to come through 'Payroll'.

    The City of La Habra Heights pays bi-weekly. There were two (2) pay dates in the month of August, but Paychex issued five (5) invoices for services. I requested a list of City Employees, Job Titles, and Start Date, but the City claims to have no employee rooster and it will cost me $240.00 to create one.

Response:  There were 2 payrolls processed in August, however, there were voids and additional checks issued outside of the regular payroll processing in August 2011 so additional processing charges were incurred as well as a higher volume of Paychex deductions and credits posted to the bank statement. Below is the August 2011 Warrant Agenda Report, the Credits and Debits sections from the August 2011 bank statement, and a spreadsheet to calculate the total for Payroll Disbursements and Payroll Taxes as shown on the Warrant Agenda Report (totals are highlighted on the spreadsheet and note that contractor payments made through Paychex are listed on the Warrant Report listing but subtracted out of the Payroll Disbursements section of the Agenda Report).

As you can see above, the total debits and credits processed on the August 2011 bank statement equal the amount reported on the Warrant Agenda Report after subtracting out the contractor payments which are also listed on the warrant report at the top with EFT #175-182. Paying contractors through Paychex is no longer practiced; I discontinued this practice in July 2012.

  1. Checks Not Listed On Bank Statement: The City is using a second checking account that is posted on the Check Warrant and General Ledger with three-digit check numbers instead of the four and five-digit check numbers that are listed on the Wells Fargo Bank Statements:

    Ck 175 – 08/11/11 - $5,800.00 – A.Q. Engineering Consultants
    Ck 176 – 08/11/11 - $3,900.00 – KAL Planning Services
    Ck 177 – 08/11/11 - $4,500.00 – Medina, Maricela
    Ck 178 – 08/11/11 - $1,125.00 – Wingett, John
    Ck 179 – 08/25/11 - $4,700.00 – A.Q. Engineering
    Ck 180 – 08/25/11 – $3,900.00 – KAL Planning
    Ck 181 – 08/25/11 - $4,500.00 – Median, Marciela
    Ck 182 – 08/25/11 - $1,125.00 – Wingett, John

Response: There is no second checking account with 3-digit check numbers. The numbers are assigned EFT numbers to identify EFT payments processed through Paychex for contractors, which is no longer practiced and was discontinued in July 2012.

  1. Checks Reversed After Clearing Bank: In August, 2011 the City reversed the following nine checks after they had cleared Wells Fargo:

    Ck 2503 – 08/16/11 - $8,552.02 – Granicus, Inc
    Ck 2512 – 08/16/11 - $159.21 – Lighthouse Corp Office
    Ck 2519 – 08/17/11 - $11,349.85 – CNC Engineering
    Ck 2522 – 08/17/11 - $450.98 – Valley Power Systems
    Ck 2523 – 08/17/11 - $1,850.00 – All Care Industries
    Ck 2535 – 08/17/11 - $280.82 – United Site Services 08/04-09/11
    Ck 2536 – 08/17/11 - $1,229.77 – Xerox Corp
    Ck 2549 – 08/24/11 - $96.10 – Crest Lock & Key
    Ck 2559 – 08/24/11 - $700.00 – Barracuda Networks

     All nine checks cleared the Bank on 08/26/11 and reversed on 08/29/11. Checks 2536 and 2549 were issued only two (2) days previously. It is not possible for checks 2536 and 2549 to be processed through the U.S. Mail and clear the bank in two days. Someone from the City had to take them straight to the Bank and forge the endorsement of the checks in order for them to process so quickly

Response: Ck #2536 had an issue date of 9 days prior; Ck 2549 had an issued date of 2 days prior to 8/26/11. It is the practice of the City to print checks with a future issue date to allow for 1-2 days of review and approval/signature processing; if this process takes less time – we can mail checks 1 day prior to the printed issue date which means the checks can be mailed on 8/23/11 and received by vendor on the issue date of 8/24/11 which would account for the check clearing the bank 2 days after the issue date on the check.

  1. All nine checks were listed on the Warrant Report for August that was prepared after the 1st of September. The City was fully aware that the checks were reversed, but did not remove them from the Check Warrant. This left a Material Misstatement of $24,688.25.

Response: It was not the practice of the former Accounting Technician who prepared the Warrant Agenda Reports, to include any voided checks in the monthly Warrant Agenda Reports, which was an admitted inept practice and since I took over this process shortly after being hired, all checks (including voids) are included in the monthly Warrant Agenda Reports.

  1. One of the Checks – United Site Services – can be found on the July Warrant Report as it was paid on 07/21/11. Three of the Checks were reissued and listed again on the September, 2011 Check Register:

    Lighthouse Corp Office – 09/01/11 – Ck 2584 - $159.21
    CNC Engineering – 09/01/11 – Ck 2591 - $11,349.86

Crest Lock & Key – 09/01/11 – Ck 2572 - $96.10

Response: Check #2591 is to United Site Services for $280.82 for reissuance of 8/5–9/1/11 services, not to CNC Engineering (as listed above by Ms. Uremovic). There is no ck #2535  to United Site Services on the July 2011 Warrant Report – a ck #2405 for $280.82 was on that Warrant Report for the 7/8–8/4/11 period as the monthly amount remains constant until there is a rate or service change.

  1. The City Manager is the only person that would have the ability to manipulate the funds to this extent, but the City Treasure and Council are also criminally liable because they either conspired with the City Manager or neglected their duty of care.

Response: The City Manager has no access to manipulate funds; the comments mentioned by Ms. Uremovic are a result of some previous poor reporting practices, however our auditors, White Nelson Diehl Evans (WNDE), perform a full annual financial audit of the City which includes a review of the bank reconciliations, check issuances, check voids, payroll, and all other areas of Finance. After the conclusion of the annual audit, WNDE meet with the Audit Committee independent of any City staff.



Rochelle Clayton

Finance Manager

City of La Habra Heights