Loss of funds at economic development association underscores need for audits

The Camas-Washougal Economic Development Association resisted audits for years, lost public funds and lacked even basic financial documentation since its inception, the Office of the Washington State Auditor found in two reports issued today.

“Public funds need oversight and they need regular audits. Unfortunately, this is an example of the danger to tax dollars and public trust when accountability is shortchanged,” said State Auditor Pat McCarthy. “I hope it serves as a reminder of the importance of transparency and independent auditing, regardless of circumstance.”

Auditors found that the former executive director of the Association misappropriated $19,000 by using public funds for personal expenses, like a home climate control system. An additional $45,000 in costs were questioned, meaning the funds could have been spent on business items but were not adequately documented. The State Auditor's Office (SAO) also issued a report declaring the Association unauditable, because it failed to respond to numerous SAO requests to cooperate with an audit since it was formed.

The Association was created by the Port of Camas/Washougal and the cities of Camas and Washougal in 2011. Later, representatives of the cities' school districts and the Columbia River Economic Development Council joined its board of directors. The Association had no direct employees. Instead, the Port entered into a one-year contract with the sole-proprietor company of a local former mayor, who continued as an executive director without a contract, and who had sole control over the organization's bank accounts, until 2019.

The State Auditor's Office viewed the Association as a taxpayer-funded public entity and subject to audit. However, the former executive director did not respond to numerous inquiries and requests for financial records. In February 2019, SAO met with the Association board of directors, who then asked City of Washougal staff to review the Association's finances in preparation for an audit. That review revealed some of the misappropriations. The subsequent investigation by SAO found:

• $19,311 In misappropriated funds;
• $45,029 in questioned funds;
• More than $850,000 in checks written by the executive director to his company without review by the board;
• A lack of documentation, such as board approval of the $9,700 to $11,000 monthly compensation for the executive director, that forced investigators to rely on bank statements and interviews; and
• Because of the lack of documentation, the Association's expenditures of $1,260,583 over more than eight years could not be audited.

The former executive director resigned in May 2019. The Association's board plans to dissolve the association in June 2020.

The investigation report can be found on the SAO website here, and the report on unauditable government here. They have been forwarded to law enforcement for review.