Bank sweeps detect fraud

Bank sign above entranceA “bank sweep” is a process where you check with financial institutions to make sure no bank accounts exist for your organization that you aren’t aware of.

Work with your local bank and ask for a list of all accounts open under your organization’s name and/or  tax identification number. Also, consider contacting other financial institutions to determine if there are any unexpected accounts open.

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Lease accounting changes are coming soon

Close-up of a hand filling out lease agreement formIn June 2017, the Governmental Accounting Standards Board (GASB) issued Statement No. 87, a new accounting and reporting standard regarding leases. Under the prior approach, governments applied a somewhat subjective test to determine if a lease should be classified as “operating” or “capital.” Under the new approach, GASB assumes all leases (with a few stated exceptions) are just leases, eliminating “operating” leases. The primary goal of the new standard is to increase comparability across governments and provide financial statement users with better, more complete information by establishing a single model for lease accounting. The new standard will take effect for reporting periods beginning after December 15, 2019, and apply retroactively as if the standard was in place at the beginning of the implementation period. Early implementation is encouraged. To review the standard, see GASB Statement No. 87. Continue reading

Tax receivable: Are you reporting it correctly?

A pile of money and the word tax written on tiles.Are you reporting property, sales and other taxes in the correct period? Our Office recently found that some local governments were reporting these taxes when the cash was received, causing errors on the financial statements. Governmental Accounting Standards Board (GASB) Statement 33 – Accounting and Financial Reporting for Nonexchange Transactions provides guidance on reporting these revenue streams in the correct period.

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Keep an eye out for workshops to help meet annual report filing deadline

Man and woman working together at a computer.Spring will be here before you know it, and so will the annual report deadline for local governments whose fiscal year ends December 31, 2018. For those governments, annual reports are due May 30, 2019. State law does not provide for any exceptions, so we recommend starting the filing process early, and we are available to help.

Once again our Office will be conducting free filing workshops to help with the reporting process. Participants will be able to register for a one-hour time slot for individualized assistance. We will provide one-on-one assistance in person at several locations around the state or remotely through video call (Skype). We will provide computers for the in-person workshops, so if you bring the materials needed to file your report, you might be able to complete and file your report during the one-hour appointment.

Stay tuned for more details and registration!

Thinking of ‘piggybacking?’ First check out this new guide on the practice

Mother giving her daughter piggyback ride

If you are a local government in Washington state, you may be aware of RCW 39.34.030, which allows governments to use other agencies’ contracts to buy goods and services – also called “piggybacking.” But what you might not be aware of are the potential pitfalls of piggybacking, which can land you in some big trouble. The law, as written, isn’t a carte blanche license to just find any contract that is for something your government wants and buy it through that contract; it is more nuanced than that. Fortunately, the Municipal Research and Services Center (MRSC) has written an extensive guide to piggybacking that will help you reap the benefits of this law without stepping into dangerous territory.

Local governments in Washington know the importance of cybersecurity, but need tools to address concerns

The results from our recent cybersecurity survey are in, and they reveal governments of all sizes across Washington recognize the importance of cybersecurity. However, the majority of the governments we polled lack dedicated IT staff, let alone dedicated cybersecurity staff. To address this gap in expertise and resources, the Office of the Washington State Auditor has begun to develop resources, tools and training targeted at the specific cybersecurity issues of local governments. The first group of these resources will be available soon.

Washington local governments have all taken steps to address cybersecurity concerns themselves, according to the survey results, through dedicated policies, staff roles and responsibilities, security reviews and training programs. However, without dedicated staff for handling cybersecurity, governments struggle to keep up with the ever-changing landscape of cybersecurity issues.

In response to our survey, governments asked us for resources that could help them in their cybersecurity efforts. Specifically, governments requested sample policies, cybersecurity risk management plans, guidance on risk assessments and training for non-IT staff as well as leadership.

Our Office is working quickly to give governments the tools they need to stay on top of cybersecurity concerns, and will have even more tools available soon.

If your government has any questions or feedback about cybersecurity issues, contact the Performance Center at performance@sao.wa.gov or call 360-725-5621.

Cybersecurity frauds are targeting direct deposit payroll at local governments

A red fraud button on a computer keyboard.Local governments should ensure they protect against cybersecurity frauds in which an employee’s direct deposit payroll gets redirected to a fraudster’s bank account.

In this type of fraud, the fraudulent request to change the bank account uses the government’s change form that is emailed or mailed to payroll. In other cases, the fraudulent request is made in an email that looks like it is from the employee’s email account. The fraudulent bank accounts are frequently associated with out-of-state or internet banks.

We recommend that any request to change a direct deposit bank account include an in-person or verbal verification with the employee before the change is initiated.

We caution you to NOT use email to verify a change request; in some cases, the employee’s email account has been compromised and the fraudster intercepts and responds to the emailed verification.

If your government is a victim of this fraud, you are required to report it to the Office of the Washington State Auditor at portal.sao.wa.gov/saoportal/public.aspx/LossReport.

We also recommend reporting it to the FBI’s Internet Crime Complaint Center (IC3) at www.ic3.gov/complaint/default.aspx

A well-balanced, full-bodied Lean success in Washington wine country: process improvement success at Walla Walla Treasurer’s Office

Rows of Wine Grapes

Cab Franc Block 3, Rows of wine grapes at a vineyard in Walla Walla region of eastern Washington

Small governments, big focus

The Performance Center’s years of working with local governments all across Washington has given the Center an unprecedented understanding of the needs of local governments. Our targeted, customized approach to process improvement work not only helps local governments succeed in their chosen process, but gives them the depth of understanding they need to foster a Lean culture within. The work we did with the Walla Walla Treasurer’s Office outlines this kind of specialized assistance that makes the Center’s approach unique and effective.

The back story

County Treasurer Gordon Heimbigner was interested in making his office work more efficiently. Some of the processes they had, such as using manually created spreadsheets for journal entry and reporting, were time-intensive and cumbersome to the staff. Heimbigner (a former State Auditor’s Office employee) learned of the Lean services offered through the Performance Center through State Treasurer Duane Davidson, who encouraged him to contact the Performance Center to help facilitate the Lean process improvements and culture changes needed in Walla Walla.

The five-person team at the Walla Walla County Treasurer’s Office was open to change, and were already brainstorming creative ways to accommodate their increasing workload without extra help. They were excited at the prospect of getting expert help in making their workday run more smoothly and efficiently.

The work begins

Performance Center Lean Specialist Debra Hentz began her work with the County Treasurer by leading the group through a day of foundational Lean training, designed to give everyone a basic understanding and tools they would need to create success. From there, using the Performance Center’s model of customized process improvement services, Hentz determined the County Treasurer’s Office would most benefit from a three-day kaizen (or process improvement) event. Part of this customized approach and setting the foundation for success was to bring in other experts from the Performance Center, including a former auditor/financial management expert. This made sure the process improvements made would be in compliance with requirements as well as best practices in internal control principles.

The kaizen was aimed at mapping the County Treasurer’s Office cash receipting and journal entry processes to determine if they could be made more accurate or simple through the use of computer software rather than hand-created spreadsheets. Heimbigner hoped the kaizen would teach and empower his staff to use their new Lean skills in many different ways in their jobs.

Eye-opening revelations

The kaizen event revealed many areas that would improve efficiency. Staff realized they were collecting and recording more information than they needed. They also identified the opportunity to collaborate with and train other County departments on how to accurately enter information into the computer software system, which would free up Treasurer’s Office staff to better assist with more complex questions or issues.

Putting it all together

Mapping it out as a team gave the treasurer’s office some impressive results. What was once an 11-step process done by a single staff member was reduced to four steps. This freed up considerable time and helped ease the burden on the small staff. Through the collaboration and training with other County departments on recording their own data into the computer system, the kaizen was able to dramatically reduce the number of “human errors” which bogged down the process, resulting in employee-reported increased job satisfaction and positive working relationships for all involved. Office employees embraced a culture of process improvement, and now seek out opportunities to improve their everyday work environments.

Making a lasting change

Taking three days out of an already very busy workplace can seem scary; people ask “can we ’afford‘ to take this time?” But what people are really asking is:

  • Will there be meaningful change?
  • Will we waste our time just to have things go back to the old way, or maybe even a worse way?

The professionals at the Performance Center understand these concerns, and want to design a process improvement event around you and your unique needs. We are experts in helping local governments in Washington improve the way they work — from the operations they perform to the culture in the office environment. If you are interested in learning more about how the Performance Center can help you take the next step in creating a better government, email us at performance@sao.wa.gov or call us at 360-725-5621.

 

Have an employee incentive-pay program? Keep these things in mind

Governments in Washington must exercise care Businessman putting money in someone's hand.when creating and implementing programs to compensate employees beyond their base salary.

 

 

 

This article offers items to consider specific to performance-based incentive pay. The following is intended for informational purposes only – always consult your government’s attorney for specific legal advice on these matters. Continue reading

Don’t miss this upcoming free webinar “Cybersecurity Essentials for Local Government Leaders!”

computer_equipment-224824333Presented by the Municipal Research and Services Center (MRSC) and sponsored by the State Auditor’s Office Performance Center, this webinar is for elected officials, managers, information technology and other staff working to keep electronic systems safe from outside interference. Share this information with your co-workers and elected officials in order to get the most out of this opportunity!

This free webinar will help public sector leaders understand what their organization’s greatest vulnerabilities are and the most important investments necessary to reduce risk. You’ll hear from firsthand experience—in agencies both small and midsized—how opportunistic cybercriminals take advantage of system vulnerabilities. You’ll also learn about cybersecurity training that each person with your organization should have and how to get it.

Could a major cybersecurity incident happen to your agency? If it did, how costly could it be? You can’t afford to miss this presentation occurring October 18th at 11am – Register at: mrsc.org/getdoc/27fa135b-50ee-4ab2-ab1d-d9220f9324fe/Cybersecurity-Webinar-2018.aspx.