Auditor Edelen conducted the five -month-long investigation at the request of
"The report boils down to this: One individual had unfettered access to millions of taxpayer dollars without a single person looking over his shoulder for well over a decade," Auditor Edelen said. "That this could happen for that long in the 5th largest city in
Auditors reviewed more than 66,000 checks, unveiling a scheme that allowed the former finance director to write 68 checks to himself, his spouse, his aunt and a vendor under his control totaling
The former finance director created two fake vendor names in the city's finance software. To write a check, he would enter payment information using one of the two fictitious vendors or one of three legitimate city vendors and change the vendor name in the system to himself, his wife, his aunt or a vendor he controlled. He would then go into the office after hours, print the checks, delete the check history from the printer to avoid detection, change the name in the system back to the original vendor and deposit the checks into personal accounts he controlled.
"The scheme wasn't particularly elaborate," Auditor Edelen said. "But the city's failure to establish checks and balances and provide oversight granted him the opportunity."
The exam found that the former finance director had complete control over the city's financial activity without sufficient oversight or governance to prevent or detect fraud. One of the most significant issues identified is that he had complete access to all accounting system functions. He acted as the IT administrator, which allowed him to process payments using other employee accounts.
Internal controls that are intended to prevent and detect fraud were weak, easily manipulated and in some cases, nonexistent, auditors found. Auditors found that a 2012 reorganization of the fin ance department by the former finance director created the appearance that he had segregated duties. In reality, the staff wasn't provided training to familiarize them with the new job functions and they had insufficient knowledge of what constituted good internal controls and sufficiently segregated duties.
"He built a system of designed incompetence for his graft," Auditor Edelen said. Auditor Edelen praised
"History demonstrates that cities that have been victimized like this can not only recover muchof the stolen money but also move forward in a positive way," he said. The audit report can be found on the auditor's website.
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