Categorized in: Announcements Fraud

Tags:

Published: January 13, 2022

The City of Tenino lost $280,309 in public funds after an employee sent the money out of state using a common electronic payment method, according to a fraud report released today by the Office of the Washington State Auditor (SAO).

The City’s then-Clerk-Treasurer, who had received specialized training in cybercrimes during his military service, said he had been scammed into sending the payments by a phishing email. He resigned a few months later. The Washington State Patrol investigated but could not determine whether he personally benefited from the scheme, and turned its files over to the FBI for further investigation.

SAO’s investigation revealed that the City’s then-Clerk-Treasurer had full access to the City’s bank accounts and could complete electronic transfers with no oversight.

“The City of Tenino’s loss should serve as a lesson for every government in Washington: No matter how small your operations are, strong internal controls can reduce the risk of losing public funds,” said State Auditor Pat McCarthy. “Electronic payment methods are less expensive to taxpayers and allow for faster vendor payments and payroll processing. But those benefits can be wiped away if governments don’t have checks and balances.”

SAO offered recommendations to help the City improve. Those can be found in the full report.

Tenino’s loss happened over approximately six weeks in 2020, when the then-Clerk-Treasurer sent 20 different electronic payments to various recipients using the Automated Clearing House (ACH) network. Thousands of business and governments use ACH to send and receive money more quickly and efficiently than using paper checks.

SAO has noted an uptick in ACH frauds affecting local governments, and has put together resources to help governments prevent them:

Additionally, SAO created a step-by-step guide to help governments of any size set up internal controls to protect against error and fraud.

As governments increase their digital footprint, SAO’s #BeCyberSmart initiative offers curated information for a variety of roles within local government, since cybersecurity is everybody’s job. SAO also offers cybersecurity audits to state agencies and local governments. Soon SAO will release a special report on its distinctive role in Washington’s cybersecurity landscape. As of December 2021, 60 state agencies and local governments have reaped the benefits of SAO’s customized audit program. Interested in the report? Sign up for “This Week’s Best at SAO.”

Media inquiries: Kathleen Cooper, Director of Communications – Kathleen.Cooper@sao.wa.gov | 360-890-0751

Share this on social!
Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
« back to Audit Connection Home

Categorized in: Announcements Fraud

Tags: