State auditors announced a fraud finding involving Whitman County today after investigating the misappropriation of about $1,350 from Palouse Empire Fair scholarship funds in 2017.
Auditors determined at least $1,350 in checks intended to support fair royalty scholarships were cashed in May 2017, but not deposited into the county’s accounts. The auditor’s office issued a seven-page report on the investigation.
“During our review of the County’s investigation, we identified other operational areas with risks for additional losses,” the report states. “However, due to lack of adequate records and monitoring over Fair department operations, we could not determine if further misappropriation or questionable activity occurred.”
The report states the three fairground employees overseeing operations at the time left their positions later in 2017. County officials informed auditors of the potential fraud in August of 2018.
“Responsibility for misappropriated scholarship money could not be assigned,” auditors concluded in the report. “The vendors provided copies of the cancelled checks, which did not provide enough information to identify either the bank or bank account that ultimately received the funds.”
Auditors recommended the county strengthen financial controls over fair operations to improve oversight such as independent reviews of cash receipts, credit card purchases, payrolls, asset inventory and travel reimbursements.
County staff provided written responses to the findings and recommendations, noting new managers have imposed new training and other county departments now review financial transactions regularly. Read the full response in the audit report.
“New administrative staff was hired, and practices, policies, and procedures were addressed to correct internal control issues,” the response states.
A number of other policies have since been enacted to tighten controls on credit card purchases, payroll and reimbursements, the county reported.
“A minimum of two employees are necessary to fully process payroll, travel reimbursements, and credit card purchases,” the response states. “The Fair works closely with the Auditor Office to provide verification and appropriate documentation.”
Whitman County received a clean report in its most recent financial audit in September. You can read that 57-page report here as well as the management letter and exit conference materials here. The Lewiston Tribune reported on that audit report here.
Also today: State auditors published a clean audit of Whitman Hospital and Medical Center that was conducted by a third-party accounting firm. The report notes on page 31 that the coronavirus pandemic has had a significant impact on patient numbers.
“The COVID-19 pandemic has created economic uncertainties which may negatively impact the District’s financial position,” the audit states. “The District has seen significant declines in patient volumes starting in March when the State of Washington temporarily suspended elective procedures.”
Read the full 42-page report here.