updated 11/12/2010 8:48:58 AM ET 2010-11-12T13:48:58

A report says audits of a scandal-plagued Los Angeles suburb repeatedly failed to flag cases of fraud and mismanagement, giving the city a clean bill of health.

The Los Angeles Times reported Thursday that while Bell's city leaders raised salaries, levied illegal taxes and wrongly loaned public money, the finances were given a clean bill of health by the city's outside auditors, Mayer Hoffman McCann.

The city even won numerous awards for the financial reports the auditor signed off on. Those audits are now under investigation by State Controller John Chiang's office.

Chiang spokeswoman Hallye Jordan told the Times that the state is baffled by how an accounting firm could have missed the abuses, which were quickly found by the controller's office.

A message left with Mayer Hoffman after business hours wasn't immediately returned.

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Information from: Los Angeles Times.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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