May 3—A fraud investigation by the Washington state Auditor's Office revealed $22,783 in misappropriated funds and $33,730 in questionable expenditures by a former utility clerk for the City of Tenino, according to an investigative report published April 13.
The case will be referred to the Thurston's County Prosecutor's Office, according to the auditor's office.
According to a news release from the city, the employee, who was not identified in the report, was placed on administrative leave when financial activity was discovered by a resident who volunteers for the city in 2019. A police report was filed with the Tenino Police Department, according to the city.
The Chronicle has identified the former city employee as Denise Nelson through a public records request.
When asked about the transactions on Dec. 27, 2019, Nelson acknowledged they were inappropriate, according to the report. Her employment was terminated Jan. 15, 2020.
The fraudulent and questionable activity occurred between January 2016 and December 2019, according to the auditor's office.
The auditor's office found that Nelson misappropriated the funds using several methods, including processing negative cash payment transactions, utility escrow payments, processing accounting system adjustments, applying business and occupation (B&O) tax payments to customer utility accounts and transferring and writing off customer utility accounts.
"On February 2, 2023, we interviewed the former utility clerk," auditors wrote in their final report. "She said she knew processing some of the customer adjustments was wrong. However, when we asked her to explain the reasoning behind specific examples that involved customer adjustments and missing cash receipts, she did not provide any information. Instead, she asserted that our office could not pursue her to recoup the missing funds because 'it was past the statute of limitations.' Four days after our interview, the former utility clerk sent a text message to the mayor asking for a meeting to discuss repaying the city."
The auditor's office cited control weaknesses including inadequate segregation of duties for cash receipt and bank deposit preparation, a lack of oversight or monitoring of the utility clerk and a failure to monitor B&O and utility close-out payments.
"We recommend the city strengthen its internal controls over cash receipting to ensure adequate oversight and monitoring to safeguard public resources," the auditor's office wrote. "The city should segregate duties between those responsible for cash receipting and those responsible for preparing bank deposits, or implement increased monitoring to ensure transactions are supported and accurate. In addition, we recommend the city implement processes or procedures to ensure adjustments, transfers or other non-cash transactions are adequately supported and independently reviewed."