By Jim Steinberg, The Sun
and Joe Nelson, The Sun
Posted: 05/19/15, 2:17 PM PDT |

BEAUMONT >> State Controller Betty T. Yee on Tuesday announced her office was launching an investigation into the financial practices and reporting of this city of 42,000 to resolve “significant differences” between the city’s financial reporting and its audited statements.

“The substantial discrepancies call for a close analysis by our auditing team,” said Yee, the state’s top fiscal officer, in a statement Tuesday.

“Beaumont residents and businesses need to be assured that their tax dollars are being used properly.”

The city issued a statement saying it received Yee’s 3-page letter on Tuesday, and was “fully committed to cooperating with the State Controller’s investigation and looks forward to clarifying the areas of concern outlined in the notification letter.”

Yee’s announcement comes in the wake of an investigation by the FBI and Riverside County District Attorney’s Office into the city’s 22-year business relationship with the Beaumont-based civil engineering firm Urban Logic Consultants, Inc. In April, the FBI and district attorney investigators served search warrants at Beaumont City Hall, the home of City Manager Alan Kapanicas, and the offices of Urban Logic Consultants, which began contracting with the city in December 1993, when the company was still a general partnership, according to documents on file with the Secretary of State.

FBI spokeswoman Laura Eimiller said Tuesday that the criminal investigation is ongoing. She declined to comment on the state controller’s upcoming audit of the city.

Yee’s investigation is independent of and unrelated to the criminal federal investigation, said John Hill, a spokesman for the Controller’s Office.

An initial Controller’s Office review of Beaumont’s finances showed that in the 2012-2013 fiscal year, the city’s total expenditures as reported to the Controller’s Office were $50 million less than in audited financial statements.

Beaumont did not include capital assets within its government activities, and as a result, failed to record depreciation expenses, Yee said in her statement.

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