Fraud

As technology evolves, so does fraud… right? The last five years have revealed new schemes and new ways to make those schemes a bit easier with the widespread use of artificial intelligence (AI), deepfake technology and even generative AI sites with chatbots ready to help would-be fraudsters with their schemes.  

With all this technology at hand, anti-fraud professionals have been surprised at the dramatic rise in a less-sophisticated scheme: external check fraud.

Every year, the Special Investigations Team at the Office of the Washington State Auditor investigates misappropriation in all types of governments, from large state agencies to small towns and special purpose districts. So far in 2024, our Office has issued 17 fraud investigation reports representing more than $2.2 million in misappropriated or questionable uses of public resources. 

No matter the type or size of your government, fraud could happen to you and, if left undetected, it could have significant financial implications. 

Since 2019, the Office of the Washington State Auditor has reported more than $2 million in public funds that were misappropriated through purchase card schemes. Purchase cards are convenient for local governments because they can significantly reduce the volume of purchase orders, invoices, petty-cash transactions and checks that governments need to process. But they also carry a high risk of fraud, waste and abuse. 

The clerk-treasurer of a small city in the Cascades misappropriated more than $900,000 in public funds over nearly a decade, despite warning signs that improper activity was occurring, the Office of the Washington State Auditor found in a fraud report issued today.

A Washington state employee misappropriated nearly $900,000 through fraudulent credit card purchases, the Office of the Washington State Auditor found in a fraud report released today. It is the largest internal misappropriation in a state agency in at least the last 15 years.

The report identifies $878,115 in misappropriations between 2019 and 2023 at the Office of Administrative Hearings (OAH).

Misappropriation of public funds and fraud cases have surged in just the past year due to remote work, artificial intelligence and other factors.

Five years ago, the Office of the Washington State Auditor advised the town of Cusick that it had inadequate controls over its payroll and credit cards. Had the small government followed its audit recommendations then, it likely could have avoided more recent, and much larger, losses.  

Several irrigation and drainage districts near Yakima hired the same bookkeeper who misappropriated public funds through a variety of schemes, according to a report published today by the Office of the Washington State Auditor.

The Pierce County Housing Authority needs to prioritize better financial controls to reduce the risk of another loss of public funds, the Office of the Washington State Auditor concluded in a report published Thursday.

“It’s time to make strong financial controls the Pierce County Housing Authority’s highest priority. Without them, the risk of a loss of public funds is too high,” said State Auditor Pat McCarthy.

Employees are on the road again, traveling to various in-person trainings and conferences. Given this, one cannot help but wonder about the internal control systems for processing employee reimbursements and travel claims. Are they ready to handle this activity and prevent waste, loss or abuse?