New audit reports find Mason County Fire District officials misappropriated public funds, did not comply with state laws

FOR IMMEDIATE RELEASE

Sept. 20, 2022

OLYMPIA – Today the Office of the Washington State Auditor released a fraud report and audit of Mason County Fire District No. 12, showing almost $70,000 in misappropriated public funds, as well as $95,000 in unsupported expenses.

Auditors also documented an overall disregard for state laws at the District in areas including ethics and conflicts of interest, open public meetings and financial transparency.

“High standards for public accountability are both challenging and necessary. Washington fire districts of all sizes meet them every day,” said State Auditor Pat McCarthy. “Our audits show financial and other safeguards are sorely needed in this fire district. The community and their elected commissioners should demand no less.”

McCarthy personally attended a meeting today, held via Zoom, to deliver the results of the audits to District leadership.

Among the top findings:

• Misappropriation and questionable spending occurred in payroll, credit cards and disbursements. The Fire Chief, the District Secretary and one of the commissioners benefited and were responsible in these areas.
• The District has not reported or remitted quarterly payroll tax payments to the federal Internal Revenue Service since December 2018.
• The District violated the state's Open Public Meetings Act by failing to provide adequate notice of meeting dates and times; failing to admit members of the public into virtual meetings on time, if at all; and failing to hold regular meetings as required by law.

Other results include finding the District:

• Did not have a policy or adequate controls to monitor the Fire Chief's use of a District vehicle to ensure she did not misuse it for personal use
• Failed to file annual financial reports with our Office in a timely manner as required by law

The District's noncompliance with state laws, overall lack of monitoring, and spending activity at the District was due, in part, to nepotism. One of the three elected commissioners is married to the District Secretary. The Fire Chief is their daughter. During the audit period, the Fire Chief and Secretary were the District's only employees. Notably, the District did not have a nepotism policy or set of controls to ensure family members could not appoint, supervise or discipline their relatives. As the reports detail, the commissioners trusted District employees implicitly, and neither questioned nor remedied the District's lack of policies, controls or procedures.

“Many local governments are small and serve close-knit communities, and there is nothing wrong with family members working together,” McCarthy said. “But when that happens, the public must be assured that policies and procedures exist to make sure people are held accountable no matter if they're related to a colleague or not.”

The audit and fraud investigation of the District published today include detailed recommendations to correct each finding. However, SAO does not have the authority to enforce corrections. In May, auditors recommended the District file a police report about the potential loss of public funds. However, as of Aug. 17, the District had not filed a police report.

Copies of today's completed audits will be delivered to the Mason County Prosecutor's Office for review. Copies of today's reports and previous audits of Mason County Fire District No. 12 can be found on the SAO website: www.sao.wa.gov. The special investigation report is here and the accountability audit report is here.

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