I beg of you to make sure your readers actually READ the Internal Control System audit released by State Controller Betty Yee’s office May 2020 which examined the city’s finances for the period of October 1, 2016 through September 30, 2018.
The city authorized writing off debt in the amount of $451, 966.16 for uncollected Transient Occupancy Tax (TOT) August 18 but it’s been sitting on the city’s books since 2010.
In a NORMAL accounting office, bad debt is written off the books when it is turned over to the debt collection agency. At the time the city did not have a contract with Marigold Financial who served as the city’s collection agency.
The state audit discovered that the city failed to monitor the aging report, which is a report showing the accounts moving from 30, 60, 90, 120+ days past due. Once they hit 120+ days those accounts should have been turned over to the collection agency and immediately taken off the city’s AR.
“Do all cities experience receivables that are due from either TOT taxes or sales taxes not remitted by businesses is something that is common,” asked Mayor Butts? “And do cities leave these items on the books for years with the intent to hopefully collect them?”
“They will keep them on the books as long as they do until they exhaust all attempts to collect them,” said Koike. “We send invoices to people we have on record and presented that data to collection agencies that could not collect due to either having incorrect data or being too old to collect on.
How does Sharon Koike LIE to the public that the debts couldn’t be collected due to lack of information? Did the motels in the city pick up and disappear overnight? Did the businesses/homeowners with false alarms move out the city? Are code enforcement officers issuing false violations intentionally?
The city’s municipal code allows for the city’s accounts receivable staff to physically go to businesses to perform audit functions.
By the city’s own admission, they created a collection policy on 9/12/2017, to address the proper monitoring and writing off of debt, but failed to do so until three years later? Does anyone know if the AR was leveraged for a bank loan?
When Wanda Brown speaks on the ineptness of the Finance Department, this is what she is speaking of. People being hired with zero accounting knowledge and promoting staff to finance supervisors who barely hold a high school diploma.
For Mayor Butts to say Ms. Brown doesn’t know accounting he made a fool of himself. Ms. Brown is reading directly from the state audit. Is he calling Betty Yee’s office incompetent too? Read for yourself.
By the way, where is our Chief Financial Officer David Esparza? Shouldn’t HE be providing updates regarding the city’s finances? There has to be a reason why we haven’t heard from him in MONTHS.