And while the odd term “under-deposits” has come into common usage – we’ve spoken to all kinds of money managers and business owners and can verify that it is a completely unheard of practice and is considered non-standard and highly irregular. In the July press conference when the under-depositing practice first came to light, Davis explained how under-depositing came into such harness in the council’s daily affairs.
[July 13th 2009]
Dwain Davis, Director of Finance – BCC
“The way the under-deposit works, for example the cashier every day takes in cash. If for some reason the council needs to pay out monies against which on that day we cannot write a check and we maybe take it from the cash at the cashier. So at the end of the day, the cashier will total the cash, she would have so much, but it is a sort of a automated system that is there so that system says you should have collected so much. So the difference then between what the actual cash and what the system says should be there should be for the amount of money taken out to buy or take care of whatever and that is what we term as under-deposit because we are saying for example we should deposit say $1,000 because that is what the system says but we are only depositing $900 because that is all the cash; we had taken out $100. So that $100 is termed as an under-deposit.”
Jules Vasquez,
Is that an accepted accounting terminology?
Dwain Davis,
“Whether it is accepted or not, I really don’t know but it is a term that I’ve seen used here from the time I cam here. A number of things were paid out with that. As I said before there are times the council finds itself in a position, we can’t write a check, because the bank account is to its hilt.”
Jules Vasquez,
Mr. Davis is there not a regulation that stipulates all payments from City Council over $50 have to be made by check, you are talking about cash.
Dwain Davis,
“Yes there is such a stipulation but as I said you, there are times, many times, we cannot write a check and then what do we have, people standing up out here quarrelling for their money because that is going to happen. So we try to pay them off.”
Jules Vasquez,
But sir that is not just a invention, that is the City Council Act that stipulates that payments over $50 must be by check. So at least you’re aware of that part of the law was being systematically ignored.
Dwain Davis,
“Yes I am aware.”
Jules Vasquez,
Would you say if we had $24,000 in that month; $24,000 x 12 is $288,000. Is that a fair annual projection, that it is something like that? And then second, was it in all cases cash transactions?
Dwain Davis,
“Well in all cases cash but saying that for the year is not necessarily true because it is not every month that that will happen.”
Jules Vasquez,
Speaking in specific terms then, was all those under-deposit transactions in cash?
Dwain Davis,
“In cash, that’s the purpose of it.”
The special audit found that the council’s Finance Department had systematically over-rode their internal control system and that such over-riding opens the door for illegality.
