I stumbled upon the nightmare of the 1920 account while tracking the Clean & Green Grant. The General Fund Check Register uses this code with three different fund accounts, but only one fund account appears on the budget. Below are the highlights of the audit. If anyone has any questions or would like to see the spreadsheets please email me at firstname.lastname@example.org.
The 1st set of numbers on an accounting code identifies the fund where the money comes from. The 2nd set of numbers describes the department. The definition of '1920' is: 'Miscellaneous, Non-Departmental'. This department was created to track the expenses & revenues of events that do not regularly occur in normal operations. This is where the Sandcastles money should go in and out so that we can clearly see the profit or loss to the City.
The City of Imperial Beach lists one 1920 account on the budget, but the City is coding checks under two other 1920 accounts that are not listed on the budget. Page 47 of the budget shows the department 101-1920. 101 is the code for General Fund money, but the City is issuing checks to two other hidden accounts: 248 and 408. The definition of both codes is: 'RDA 2003 TAB'. The City did not close down RDA, they only hid the accounts. Hiding accounts is a technique used in the private sector to launder & embezzle money. It 's illegal in the private sector and absolutely unacceptable in the public sector.
The 101-1920 department lists no employees, but the 2012-2013 budget has a NEGATIVE $74,000 coded to 'PERS-CITY PORTION'. To quote the RDA Auditor from the State Controller's Office: “How can that number be a negative?”
I don't know. It seems that the City is taking $74,000 from the City's contribution to the Employees' retirement and spending it in this account. Where is the Union Representative for our Line Workers?
At the bottom of the budget the account '90-01 TRANSFER OUT' lists $860,000. Transfer out what? This is a general fund account, there is no 'leftover' money to transfer out.
Page 13 of the 2011 Financial Statements show's the Original Budget at $312,015; the Final Budget at $1,293,467; and the Actual Amount at $3,402,103. The City not only 'missed it' by $3.1 million, but there was a $2,108,636 difference between where the City tried to close the books and the actual numbers. A $3 million error in a company this small is unacceptable, but a $3 million discrepancy in a department that should be empty is insanity.
101-1920 ACCOUNT: The budget states that this account is used for expenses such as telephone, copy & postage machines, but there is no reason to have 'communal' office supplies because every department has their own office supply budget. The postage meter bill was $10,328.38.
In the last fiscal year there was a total of $171,437.97 General Fund Checks coded to the 101-1920 Account. $64,597.70 were for 'Professional Services': $15,000 to J Simms/Che Agency and, most the rest to law firms such as Kane Ballmer or Opper Vargo. Most of the checks' memos state: 'Palm RDA'.
Even though this department has no employees $80/month is deducted for PERS 'professional services'. There are two '20-06' codes now listed on the Budget; one listed as 'Professional Services', and the other listed as 'S/S Reductions'.
This account also has tuition reimbursement expenses that should be coded to the Fire Dept., one person's vision insurance, and random tax assessments and fees.
248-1920 ACCOUNT: This is where the City hid the 'Clean & Green Grant' expenses. There was no additional funding for these expenses – all of the money came out of the general fund. This account lists $1,140,242.93 spent in 2011 and $636,907.72 in 2012 for a total of $1,777,150 out of the General Fund in the last two years. In the 400 checks issued; about 3/4s looks legitimate, but there are checks issued to fictitious addresses or housing that didn't fall into the guidelines.
408-248 ACCOUNT: A total of $891,540.26 has been coded to this account in the last two years. This account was used to hide legal fees, the 9th and Palm settlements, and to pay for signs and facades on private businesses. This account also pays regular landscaping and EDCO services – which makes no sense because all government buildings have their own departments & budgets. The 9th and palm settlements checks in this account are:
08/20/10 – ck # 71567 – Oscar Padron – $80,544.90
09/03/10 – ck # 71627 – Best $1 – 165,000
11/04/10 – ck # 72080 – Inner Vision – $100,000
02/01/12 – ck #79867 – Shawki Settlement - $149,843
These are two accounts that are hiding 9th and Palm expenses, but they are not the main accounts that are hiding the expenses.
The total for the three 1920 accounts FYE 2011 was $2,009,168.45; but the Auditors forced the City to close the 'Non-Department' Account at $3,402,103.00. Apparently the Auditors found another $1.3 million in expenses that were not accounted for.