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Bell seeks help from state to find an auditing firm

The city says it asked at least 30 firms for proposals for a new auditing contract five months ago, but they either didn't respond or declined.

May 29, 2011|By Ruben Vives, Los Angeles Times
  • Bell interim Chief Administrative Officer Pedro Carrillo in February
Bell interim Chief Administrative Officer Pedro Carrillo in February (Bob Chamberlin, Los Angeles…)

After receiving no response from dozens of accountancy firms, the city of Bell plans to turn to the state controller's office for help finding someone to perform a thorough audit of its books.

The city asked at least 30 firms for proposals for a new auditing contract five months ago, but they either didn't respond or declined, said Pedro Carrillo, Bell's interim chief administrative officer.

"The resistance and hesitation we've gotten is that nobody wants to touch Bell," Carrillo said, adding that most auditing firms do not want the scrutiny.

As a result, the town has been unable to draft a budget for the next fiscal year. For now, the newly elected City Council has put specific budget discussions on hold until it has a better understanding of the city's fiscal standing — and until it holds a town hall meeting Friday.

The small town southeast of downtown Los Angeles, where prosecutors allege that former top officials misappropriated at least $5.5 million in public funds, is facing a potential deficit of $4.9 million. The city's reserves are expected to plummet to $100,000 by the end of June, Carrillo said.

He said he has already asked state Assemblyman Ricardo Lara (D-Bell Gardens) for help in getting the city back on track.

Lara said he placed a call to the controller's office to help Bell find an independent auditor.

"I'm concerned in finding somebody for [Bell] so they can continue getting work done," Lara said.

A spokeswoman for state Controller John Chiang said his office became aware of Bell's dilemma in hiring a firm after the city missed at least two state deadlines to file audited financial records.

Spokeswoman Hallye Jordan said state officials will meet with Bell officials Thursday to discuss the problems — and whether the state can help.

Chiang's office has already performed several limited audits of Bell and found that the city illegally collected taxes and levied fees, then used those funds to pay for higher salaries.

His reports sharply criticized city leaders for creating an environment with an "extremely high" potential for waste, fraud, abuse and misappropriation of funds.

Chiang also investigated the quality and accuracy of Bell's audits after the auditing firm Mayer Hoffman McCann gave the city's financial records a clean bill of health. State auditors found that Mayer Hoffman McCann failed to comply with fieldwork auditing standards and that its audit of Bell amounted to a "rubber stamp."

The firm should have uncovered Bell's problems, Chiang said. The California Board of Accountancy, which regulates the profession in the state, said it is investigating the firm's work in Bell.

Mayer Hoffman McCann, which audits the books of dozens of government agencies in California and has 30 offices nationwide, disputed the controller's audit and said Bell officials had deceived the firm's auditors through a massive scheme of collusion.

After Chiang's report was released, several cities began to review their decision to employ the firm. Some submitted proposals for a new auditing contract.

Lara has proposed legislation that would increase accountability and transparency of cities and counties throughout the state by allowing the state controller's office to develop and issue new guidelines for independent auditors. Assembly Bill 229 would require that local governments rotate auditing firms every six years.

ruben.vives@latimes.com

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