On 12-28-2020 audit findings of the City of Everett for the 2019 calendar year were released. There was one finding of material weakness in internal controls over financial reporting that resulted in errors. Click the logo above to see the full audit.
To see the full audit report for the year click here.
A letter from the Washington State Auditor’s Office regarding the city’s handling of the investigation into suspected fraud by an employee of the Everett Fire Marshal’s Office was sent to the city. Along with the letter was a report sent to the City outlining the State’s findings on the city’s investigation. We printed those findings below.
MyEverettNews.com has requested and is awaiting the City’s investigative reports and summaries and will pass those along once they are received as well as a list of questions and answers that the City is working on gathering.
Here is a link to the letter and report sent to the City of Everett by the State Auditor.
Background and Investigation Results
On September 17, 2019, the City notified our Office regarding a potential loss of public funds, as required by state law (RCW 43.09.185). The City’s Fire Marshal Office, a division of the City’s Fire Department, hired a new supervisor, who identified discrepancies in a Fire Inspector’s leave submittals that indicated the Fire Inspector was on vacation while indicating he was working regular hours.
The City hired a private consultant to review leave reporting, and determined the Fire Inspector did not properly submit 229 hours of leave for time, spent either on vacation or for days where there was no record of attendance. This resulted in misappropriation totaling $12,760 between January 2, 2019 and July 17, 2019.
We reviewed the consultant’s investigation and agree with the conclusions. The investigation found the Fire Inspector:
• Did not submit leave slips before or after leave he took between January 2, 2019 and
July 17, 2019
• Took 22 days of leave as recorded on the Department’s Outlook calendar, but that leave was not reported to the Administrative Assistant or recorded in the payroll system
• Did not work seven shifts he was assigned to and did not take leave for those absences
On October 16, 2019, the private consultant interviewed the Fire Inspector. A member of Union Counsel and the Union President were present. During the interview, the Fire Inspector denied falsifying his time cards and said he turned in his leave slips to his supervisor. He was placed on administrative leave on October 22, 2019. On January 21, 2020, the Fire Inspector resigned after agreeing to repay $12,760, the financial equivalent of 229 hours of work.
This restitution agreement was made before consulting and receiving approval from our Office and the Attorney General’s Office, as required under state law (RCW 43.09.260).
Control Weaknesses
Internal controls at the City were not adequate to safeguard public resources. The City’s investigation found the following weaknesses allowed the misappropriation to occur:
• The Fire Marshal Office controls were not adequate to confirm that employee leave slips were properly approved and turned in for processing by the Administrative Assistant, and to confirm leave usage was properly recorded in the payroll system.
Recommendations
We recommend the City and Fire Marshal Office ensure policies regarding requesting and submitting leave are properly communicated to all staff so consistent procedures are properly applied, and the City ensure employees comply with City policy over leave requests and submissions. Additionally, we recommend the City and Fire Marshal Office strengthen processes and controls to confirm leave slips are properly turned in and leave usage is properly reported to the Administrative Assistant and recorded in the payroll system.
We further recommend the City request approval from the Attorney General and State Auditor before seeking recovery for misappropriation to ensure compliance with state law (RCW 43.09.260).
We will refer this case to the County Prosecuting Attorney’s Office for any further action it determines is necessary.
We also recommend the City seek recovery of the related investigation costs of $5,625 from the former Fire Inspector and/or its insurance bonding company, as appropriate. Any compromise or settlement of this claim by the City must be approved in writing by the Attorney General and State Auditor as directed by state law (RCW 43.09.260). Assistant Attorney General Matt Kernutt is the contact person for the Attorney General’s Office and can be reached at (360) 586-0740 or matthew.kernutt@atg.wa.gov. The contact for the Office of the Washington State Auditor is Brandi Pritchard, Assistant Director of Local Audit and Special Investigations, who can be reached
at (360) 489-4591 or Brandi.Pritchard@sao.wa.gov.
City’s Response
The City of Everett concurs with the audit conclusions. The following corrective measures were implemented in 2019, at the time the issue was identified:
• All supervisors in the Fire Marshal’s office have received remedial training on the management of payroll exception slips, to include specific instruction that the supervisor is responsible for submittal of the form once it is in their possession. Policy for submittal of the form requires the supervisor to physically deliver the exception slip to the payroll clerk.
• A document lockbox has been installed outside the payroll clerk’s office to receive slips in the absence of the payroll clerk. The clerk and the Fire Chief have the only keys.
• All Fire Marshal’s staff are required to check in with their supervisor at the start and end of every work day.
• The Fire Marshal’s Office tracks attendance in a calendar system that runs parallel to, but separate from, the payroll system to provide a tool for comparison.
Auditor’s Remarks
We thank City officials and personnel for their assistance and cooperation during the investigation.
We will follow up on the City’s internal controls during our next regular audit.
January 20, 2021
Everett, Everett Fire