{"database": "mytown-research", "table": "audit_findings", "rows": [[31, "wa-sao", "1021289", "fraud-investigation", 4349, "WA", "Franklin County", "County", "0115", "53021", "geoid_county", "Washington State Auditor's Office", "Fraud investigation \u2014 Franklin County", "Fraud", 2016, "2016-01-01", "2016-12-31", "2018-04-30", "misappropriation", "fraud_investigation", 11062.0, "misappropriat ed $11,062", "Investigation Summary On October 25, 2017, the County Clerk notified our Office, as r equired by state law, regarding a potential loss of public funds in the Superior Court Clerk\u2019s Office. The Franklin County Sheriff\u2019s Office investigated. We reviewed the Sheriff\u2019s Office investigation, performed an", "Investigation Summary \nOn October 25, 2017, the County Clerk notified our Office, as r equired by state law, regarding a \npotential loss of public funds in the Superior Court Clerk\u2019s Office. \nThe Franklin County Sheriff\u2019s Office investigated. We reviewed the Sheriff\u2019s Office investigation, \nperformed an expanded review and determined a cash receipting m isappropriation totaling \n$11,062 occurred at the Superior Court Clerk\u2019s Office between J anuary 2017 and July 2017. Our \ninvestigation also revealed control weaknesses in the County Treasurer\u2019s Office. \nWe will refer this report to the Franklin County Prosecuting Attorney\u2019s Office. \nBackground and Inv estigation Results \nFranklin County operates on an average annual budget of about $ 40 million, including about \n$900,000 in revenues from the Superior Court Clerk\u2019s Office. The Clerk\u2019s Office has 14 full-time \npositions and one part-time position. \nThe loss was detected on Octobe r 13, 2017, while the Legal Fina ncial Officer was checking \ncustomer voicemails on the Financial Manager\u2019s office phone because she was out on unexpected \nleave. A customer left a message, questioning why the County had not yet cashed a check mailed \nin July 2017. While researching for an explanation, the Legal Financial Officer identified an entire \nday\u2019s deposit from July 18, 2017 \u2013 $6,614 in cash and $2,246 in checks \u2013 never made it to the \nbank. \nWe reviewed the investigation performed by the Franklin County Sheriff\u2019s Office. Deputies \ncompared daily cash receipting hard copy files to bank statemen ts from January 2016 through \nDecember 2017. Deputies also reviewed the County Treasurer\u2019s Office deposit logs to identify the \nperson who took the deposit to the Treasurer\u2019s Office. The Sheriff\u2019s Office confirmed the July 18, \n2017 deposit was missing and identified an additional deposit missing dated January 18, 2017. The \nJanuary deposit consisted of $1,387 in cash and $815 in checks. \nOur investigation focused on cash receipting procedures includi ng electronic accounting system \nadjustments and reconciliations. We also: \n\uf0b7 Compared all system cash receipts to the bank statement deposit s for January 2016 to \nDecember 2017. We did not identify any additional missing deposits. We found that funds \nwere typically deposited within one to three business days after receipt. However, we found \nthat in July 2017, not including the missing deposit, funds rec eipted on the 19 th and 20 th \nwere delayed in deposit by seven days and funds receipted on th e 21st were delayed five \ndays. Some depositing delays up to six days continued in Septem ber through \nDecember 2017. \n \n\u00a0\nWashington State Auditor\u2019s Office Page 4 \n\uf0b7 Learned the Financial Manager and Legal Financial Officer at the end of the day typically \nhandled together the reconciliation of all cash and checks receipted for that day. There was \nno backup if one of the two were absent. Once funds were reconc iled from the system to \nthe tills, the bank deposit slip was prepared and the funds wer e placed into a sealed bank \nbag and placed in the vault overnight. The following morning, t ypically, the Financial \nManager and on occasion the Legal Financial Officer would take the bank bag to the \nCounty Treasurer\u2019s Office for deposit. This responsibility was not assigned to one person. \n\uf0b7 Observed by reviewing the receipting system that the July 18, 2 017, missing deposit was \nstill pending to be posted in the system as reconciled to the b ank. It was the Financial \nManager\u2019s responsibility to identify and reconcile pending deposits in the system. \n\uf0b7 Discovered that the Clerk\u2019s Office recieved a safe from the Tre asurer\u2019s Office sometime \nin 2015 and did not change the combination once installed. In a ddition, the Financial \nManager told us in an interview that in April 2017 she had given the safe\u2019s combination to \none of the Clerk\u2019s Office cashiers. \nThe Clerk\u2019s Office changed accounting and case management syste ms in late 2015; therefore we \nalso performed limited testing in the old receipting system to determine if misappropriation risks \nexisted in the old system or were limited to the new system. We did not identify any issues in the \nold system. Further, to determine if any additional misappropri ation occurred, we also examined \nsystem adjustments and forfeite d-property disbursements, and pe rformed a limited review of \ndisbursements. We did not find additional misappropriation; however, we did identify additional \nweaknesses. Specifically, the cu rrent accounting system cannot produce reports that are detailed \nenough to allow adequate monitoring. \nIn February 2018, we interviewed the Financial Manager, Legal F inancial Officer and County \nClerk. Based on our interviews, we noted the following: \n\uf0b7 The County Clerk explained that the Finance Manager would provi de him with a system \nscreen shot of the monthly bank reconciliation. He did not reta in the documentation but \nwould review it to ensure it appeared to balance. \n\uf0b7 The Financial Manager explained that she was behind on reconcil ing the system to the \nbank. With the assistance of the Legal Finance Officer, she was reconciling the system in \nsix-month blocks. Due to the rec onciliation process being time consuming, they would at \ntimes refer to their internal daily deposit forms in addition t o or instead of the bank \nstatements. She explained that if the deposit bag was not in th e safe in the morning she \nwould likely have assumed it was b ecause the Legal Finance Officer had already taken it \ndown to the Treasurer\u2019s Office. There was no formal process or method of accountability \nfor taking the deposit to the Treasurer\u2019s Office. \n \n\u00a0\nWashington State Auditor\u2019s Office Page 5 \n\uf0b7 The Financial Manager also said the Clerk\u2019s Office experienced significant staff turnover \nfrom January 2016 through December 2017. During this time, 20 e mployees were hired \nand 16 separated from the office. \n\uf0b7 The Legal Finance Officer explained that she only read off the bank statement to the \nFinance Manager who then cleared bank deposit amounts. She woul d not know if there \nwere any deposits in the system that were unreconciled to research the reason for them not \nbeing deposited. The Legal Fin ance Office was not aware of any review or monitoring \nbeing performed on the reconciliations or various types of adjustments. \nControl Weaknesses \nInternal controls at the County were not adequate to safeguard public resources or detect \nmisappropriation in a timely manner. We found the following wea knesses allowed the \nmisappropriation to occur: \n\uf0b7 The Clerk\u2019s Office lacked segregation of duties over cash handl ing procedures. The two \nprimary people responsible for reconciling the cash receipts to the deposits also prepared \nthe deposit and transmitted funds to the Treasurer\u2019s Office. In addition, there was not \nadequate oversight from someone independent of cash handling, r econciling and \ndepositing. \n\uf0b7 The bank reconciliation to the system receipting records was not completed in a reasonable \namount of time nor was there monitoring of the bank reconciliat ions to ensure they were \naccurate or performed timely. \n\uf0b7 An unknown number of people had access to the vault, where cash and checks receipted \nfor the day were placed in a sealed bank bag overnight. In addi tion, multiple people \ntransferred the bank bag to the Treasurer\u2019s Office the following day for deposit. \nRecommendations \nWe recommend the County Clerk\u2019s office strengthen internal cont rols over cash receipting \nprocedures. For example, someone independent of the receipting and depositing process should \nreconcile the system receipts to the bank statement to ensure a dequate oversight and monitoring \nto safeguard public resources a nd compliance with County polici es. Further, this should include \nreviewing the receipting system for any unreconciled deposits or pending system adjustments. \nWe also recommend the County seek recovery of the misappropriat ed $11,062 and related \ninvestigation costs of $12,650 from its insurance bonding company, as appropriate. Any \ncompromise or settlement of this claim by the County must be approved in writing by the Attorney \nGeneral and State Auditor as directed by state law (RCW 43.09.260). Assistant Attorney General \nMatt Kernutt is the contact person for the Attorney General\u2019s O ffice and can be reached at (360) \n586-0740 or mattk1@atg.wa.gov. The contact for the State Auditor\u2019s Office is Sadie Armijo, \n \n\u00a0\nWashington State Auditor\u2019s Office Page 6 \nAssistant Director of Local Audit, who can be reached at (360) 902-0362 or \nSadie.Armijo@sao.wa.gov. \nCounty Clerk\u2019s Response \nFranklin County would like to thank the State Aud itor\u2019s Office for the opportunity to respond to \nthe Investigation Report regarding the alleged misappropriation of funds. \nWhen the Superior Court Clerk\u2019s office discover ed a potential loss of public funds, the County \nRisk Manager, State Auditor\u2019s office, and law en forcement were properly notified. In addition, \nthe employee was placed on administrative leave while the matter was investigated. \nAs a result of the investigation, the County strengthened internal controls to prevent the violation \nof long standing policies and procedures in the following areas: \n\uf0b7 Cash receipting duties are delegated exclusively to cashiers. \n\uf0b7 The preparation of the deposit is the duel responsibility of the Financial Manager and the \nLegal Financial Officer. In the event of ei ther of their absence, the Chief Deputy, the \nClerk and/or an authorized LFO Deputy Clerk w ill backup. All deposits are clearly \ndocumented and verified delivered to the Count y Treasurer\u2019s vault the same working day \non the Treasurer\u2019s Office Garda Log, together with the date, time and signature of \ndeliverer on Clerk\u2019s Office Daily Reconciliation Report. \n\uf0b7 Increased controls to ensure accurate and timely reconciliation, including a monthly \nreview of any unreconciled deposits or pending system adjustments. \n\uf0b7 Legal Financial Office\u2019s safe combina tion is changed every 90 days and when an \nauthorized employee entrusted with the combi nation leaves the County\u2019s employment. \nUnder no circumstances is the safe combination to be shared without the express consent \nof the Clerk. \nThe County concurs with the State Auditor\u2019s recommendations and will actively seek recovery of \nthe misappropriated funds and investigation costs from its insurance bonding company. \nFranklin County appreciates the thorough investigation completed by the State Auditor\u2019s Office. \nState Auditor\u2019s Office Remarks \nWe thank County officials and personnel for their assistance an d cooperation during the \ninvestigation. We will review the corrective action taken during our next regular audit. \n \n\u00a0\nWashington State Auditor\u2019s Office Page 7", "https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021289&isFinding=false&sp=false", "2026-07-30 13:24:54"]], "columns": ["rowid", "source", "report_number", "finding_number", "muni_id", "state", "entity_name", "entity_type", "entity_ext_id", "place_geoid", "match_method", "auditor", "report_title", "audit_type", "fiscal_year", "period_start", "period_end", "published_date", "finding_category", "severity", "questioned_cost", "cost_basis", "finding_title", "finding_text", "report_url", "fetched_at"], "primary_keys": ["rowid"], "primary_key_values": ["31"], "units": {}, "query_ms": 35.53563798777759, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}