Seattle City Council
9/7/2012 12:20:00 PM
Monica Ghosh, Councilmember Godden's office: 206-684-8807;
Dana Robinson Slote (206) 615-0061
Councilmember Jean Godden
Council Committee receives report on March 2012 Seattle Public Utilities fraud
Report details steps taken to protect the City and ratepayers
Seattle – The Seattle City Council's Libraries, Utilities and Center (LUC) Committee this morning received a report from the City Auditor and Seattle Public Utilities (SPU) on the steps taken to protect the utility from fraud and theft.
"The findings identified by the Auditor and other assessment efforts taken by SPU will go a long way toward improving internal controls. I'm pleased with SPU's rapid response to the fraud and the steps they have taken to get their financial house in order. I will continue to monitor their progress and ensure that ratepayer dollars are secure," said Councilmember Jean Godden, LUC Committee Chair.
In March 2012, a former SPU employee was arrested for allegedly stealing over $1 million in customer payments related to water main extension projects. At that time, the LUC Committee requested that the City Auditor provide an independent review of internal process breakdowns that allowed the fraud to go undetected. The Committee also directed SPU to take immediate action to address lax procedures that were exploited.
Through the work of the City Attorney's office, the $1 million loss will likely be fully recovered.
In the audit report released today, the City Auditor identified three main areas of internal control weaknesses: lack of segregation of duties; lack of appropriate management oversight of financial transactions; and unauthorized system access.
SPU has already started to fix internal processes identified by the Auditor. The City Auditor will monitor SPU's progress on audit recommendations and has identified other areas of potential risk and recommendations.
The Council will continue to monitor SPU's activities, ensuring it is doing everything possible to protect ratepayer funds and operate a strong and transparent department.
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