Auditor’s report provides guidance to deter theft
COLUMBUS — Theft by public employees at the local government level has resulted in millions of dollars unaccounted for across the state of Ohio in the past decade, according to a new report by State Auditor Dave Yost.
The report states that auditors have identified more than $3.4 million worth of incoming payments in the past 10 years that never made it into the government accounts. The missing money involved at least 77 local governments and school districts. Although not all of the cases were found to be definitively criminal, 53 employees at those local government entities were convicted of theft.
“Time and again rogue employees have successfully robbed governments because they were entrusted with total, unchecked control over fiscal operations,” Yost said. “It’s time for more administrators to take up shields and involve themselves in the defense of their financial resources.”
Yost’s report, “Pocketed Payments: Preventing the Theft of Incoming Funds,” was published as a guideline for local government leaders to use to help them be more involved in the process of handling incoming payments. The report states that many of the thefts cited in the report occurred at governments where a lone employee had control over the entire process with little to no oversight.
The report lists several specific cases of local government theft that occurred across Belmont, Jefferson and Harrison counties over the past decade that amounted to a total of $194,300 in stolen funds and resulted in several convictions.
“The nature of these jobs requires some employees to confront temptation on a daily basis,” Yost said. “Weak oversight can help turn temptation into intent, so the obvious solution is to nip this in the bud with solid internal controls. The majority of employees on the receiving side of the counter are good, honest people with no desire to cause harm. Unfortunately, there’s no test to tell the good from the bad. The next best option is to shut the window of opportunity on those who do wish to inflict damage by remaining vigilant and applying strong internal controls.”
The report notes that clerks, fiscal officers, secretaries and school employees are among those who have historically preyed on payments for utilities, taxes, court fees and student lunches to name a few, and also notes that thieves often are motivated by financial pressure to make ends meet, gambling or drug addiction, or a “desire to live beyond their means.”
According to the report, in some cases employees have manipulated customer billing account balances to conceal stolen cash, and some swapped secret checks for cash before making deposits.
Yost also said local governments have oversight challenges due to small budgets that can only afford to pay one or two employees. They account for 29 percent of the 77 governments with stolen or missing payments.
Payments collected but not deposited across the local area include:
∫ $32,000 was stolen in 2013 from the city of Martins Ferry by a former utility clerk
∫ $1,800 shortfall in the Bellaire Local School District cheerleading student activity fund in 2007
∫ $18,125 stolen from the village of Bellaire by a former utility clerk in 2012
∫ $37,161 was found to be “monies illegally expended” from the Belmont Park District by a former fiscal officer in 2015
∫ $16,156 was stolen by a former village of Barnesville fiscal officer in 2016
∫ $4,915 was found to be stolen from the Harrison County Juvenile Court by a former court clerk in 2011
∫ $3,538 in public money was not deposited into the city of Steubenville’s bank account in 2014
∫ $6,020 was found to be missing from the Wintersville magistrate court funds
∫ $19,910 was found to be stolen from the Belmont County Juvenile Court by a former grant administrator in 2009
∫ $58,294 was found to be missing from the village of Smithfield’s utility fund and mayor’s court collections
Bellaire Local School District Superintendent Darren Jenkins issued a statement addressing the $1,800 in funds that went missing from the district in 2007.
“Although it is embarrassing for our district to be listed in this report for not depositing the collected cheerleading camp fees from 2007, we are in a much different place in 2017,” Jenkins said. “This happened two superintendents ago and three treasurers ago. Additionally, there is an entirely new administrative team and Board of Education. We are in a new era.”
In the statement, Jenkins said that since the district was placed under fiscal emergency status by Yost’s office, internal controls, processes and procedures necessary for oversight of payment processing have been implemented.
“Not only were they corrected but they were tested and retested by the Auditor of State’s Office before they would release Bellaire from its fiscal emergency status. What most people do not realize is that the successful, continued testing of these internal fiscal control systems had has much to do with our release and our positive financial outlook as a district,” Jenkins noted. “Finally, the material weaknesses that were present in 2007 which allowed this embarrassing and regrettable episode to occur have been corrected.”