Housing authority still without adequate financial controls, audit finds

The Pierce County Housing Authority needs to prioritize better financial controls to reduce the risk of another loss of public funds, the Office of the Washington State Auditor concluded in a report published Thursday.

“It’s time to make strong financial controls the Pierce County Housing Authority’s highest priority. Without them, the risk of a loss of public funds is too high,” said State Auditor Pat McCarthy.

A 2019 fraud report identified a $7 million misappropriation at the housing authority, the largest misappropriation of its kind for a local government in Washington. A subsequent accountability audit in 2022 found the housing authority had improved some of its operations but had yet to implement full internal controls to ensure proper oversight of its financial activities.

Today’s report shows progress remains limited. The audit found the housing authority did not have adequate controls to ensure electronic funds transfers were valid and appropriate, and it had not fully reconciled all accounts from its old financial management system to its new system. In a formal response to the audit’s findings, the housing authority indicated it planned to implement specific reforms in March and April.

“Given the length of time since our fraud report, it is critically important the housing authority demonstrate its full commitment to accountability by addressing our findings and recommendations with urgency,” McCarthy said.

During a routine audit of the housing authority in 2019, auditors questioned wire transfers of large sums of money. The audit ultimately revealed the former finance director had used multiple schemes to misappropriate funds since 2016. In 2021, the former finance director was sentenced to more than four years in prison for the theft.

The new audit report, including responses from the housing authority, can be found here.

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 Media questions: Assistant Director of Communications Adam Wilson, Adam.Wilson@sao.wa.gov, 564-999-0799