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Anti-Fraud Workshops: “Auditor Yost needs to make this training mandatory”
Brendan Inscho, director of Public Integrity for the Auditor of State’s office, leads a Fraud Prevention and Detection training in Piqua on April 20, 2016. The workshop was the sixth of seven anti-fraud trainings hosted by the Auditor's office during April.
Columbus – The impact of fraud on our public institutions is devastating:
- $3 million from a county
- $1.2 million at a community school
- $1.1 million at 19 schools in one district
Since Dave Yost became Auditor in 2011, state investigators and auditors have identified more than $8.35 million that were illegally expended or misappropriated. Some 110 people have been convicted for crimes uncovered by audit investigators during that time.
“Beyond the financial costs, each incidence of theft erodes the public’s precious trust in its institutions,” Auditor Yost said.
Too often, the auditing staff uncovers evidence of theft and misspending while reviewing the financial documents of local governments and school districts. Frustrated that the signs of theft are sometimes overlooked, Auditor Yost created a statewide training program designed to help school board members, county commissioners and other public officials with oversight authority to recognize some of the tell-tale signs of fraud.
“The response to this training has exceeded our expectations,” Yost said. “We had capacity crowds at several of the locations, and the feedback has been terrific.” Including those registered for the final session, being held tomorrow (April 27th) in Powell, about 650 people will have attended one of the seven free training seminars held in all regions of the state.
“We decided to provide this training so that those running our townships, villages and schools know the warning signs of fraud,” Yost said. “We know statistically the longer the fraud continues unabated, the more damage is done. We need to educate our local officials to help them be on the lookout to protect our citizens and their money.”
Becky Larrabee, fiscal officer for the Village of Lakeview, was so impressed by the training she received at the Piqua event that she recommended it be required of every public official.
“Auditor Yost needs to make this training mandatory for village administrators, council members and mayors,” Larrabee said.
Brendan Inscho, director of the auditor’s Public Integrity Assurance Team which created the training program, said he intends to approach the state associations for school boards as well as other governments and offer to make similar presentations to their members.
Judy Blankenship, a City Council member from Huber Heights, said the training reminded her that officials cannot let their guard down.
“I trust the people who work for us and we have good checks and balances, but I guess you can never be careful enough,” Blankenship said.
Inscho said Blankenship has the right mindset: Trust, but verify, and always be vigilant.
The audit staff said theft is possible when institutions do not have sufficient internal controls and multiple checks on receipts and expenditures. They said signs of fraud include undocumented or unsupported transactions, photocopied or missing records, unexpected overdrafts or significant drops in account balances. Audit investigators explained that typically fraud occurs through the interception of checks intended for the institution and then being converted into cash, the misuse of credit cards or the outright theft of petty cash.
Inscho said local officials told him they were most appreciative of being encouraged to ask questions and demand documentation – even if that means a short delay in getting something approved. “We told them, ‘It’s all right to be inquisitive, to ask questions.’ We need to all ask intelligent questions because at the end of the day the public will be thankful you were good stewards of their money.”
Statistically, the sooner the fraud is detected, the less money is at risk: Statistics show that if the theft is discovered within six months after first being initiated, the damage amounts to a median loss of $45,000. At 24 months, the damage is typically $150,000. If the theft continues for 60 months, the median loss is $738,000.
Jeremie Hittle, treasurer and chief financial officer for Piqua City Schools, said his district experienced theft from vending machines last year, so the topic of fraud struck a nerve.
“People need to understand that (fraud) happens,” Hittle said. “You can think you’re immune to it, but you’re not.”
Yost applauds the attitude.
“While our responsibility is to find fraud and theft after it happens, our goal is to prevent it from happening in the first place. That way, no tax dollars are stolen and no lives are destroyed when the thieves are caught – and they always get caught,” Yost said.
The Auditor of State’s office, one of five independently elected statewide offices in Ohio, is responsible for auditing more than 5,800 state and local government agencies. Under the direction of Auditor Dave Yost, the office also provides financial services to local governments, investigates and prevents fraud in public agencies and promotes transparency in government.
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