Washington state Auditor Brian Sonntag has issued a report citing significant deficiencies in the billing systems at Seattle City Light and Seattle Public Utilities (SPU). His report is based on annual audits by accounting firms.
At City Light, the auditor’s report says an overwhelming number of employees are able to adjust customer billing rates and use with little or no review. It says there’s an elevated risk of misappropriation of funds because so many people and departments handle the payments prior to deposit.
The audit also says employees should be required to disclose accounts in which they have an interest, such as those belonging to a family member. But Seattle City Light’s response says current union rules would prohibit such disclosure. City Light says it plans to implement a new billing system in 2014 that will resolve these issues.
The state audit finds similar issues at Seattle Public Utilities, saying the agency does not have formal policies and procedures for monitoring billing adjustments. But SPU officials say the report is outdated and that many of the concerns cited have already been corrected.
A previous audit found that SPU may have lost millions of dollars in city revenue because of unwarranted billing changes.
SPU’s Guillemette Regan said she was hired to correct these problems as director of risk and quality assurance in the wake of these audits. She says the utility’s procedures are much more rigorous now.
“It’s just in the last couple months we’ve finalized two more procedures that really strengthen how employees – their own personal utility accounts get addressed, and that that must be done by supervisors, and it cannot be done even by a fellow employee,” Regan said.
Regan said SPU is still wrapping up its own investigation which has resulted in five employees being fired for accessing their own accounts. SPU will present the full findings by the end of this year.
One of the fired employees is still awaiting trial. Chau Phan is accused of embezzling over $1 million while he worked for SPU. So far the city has recovered about $400,000 in assets.
Regan said they have been selling off Phan’s vehicles and property, but have no way to dispose of his Rolex watch. “We have recovered some property that we’re not in the business of selling that kind of property, so we will turn that over to the insurance company,” she said.
The King County prosecutor called Phan’s case the largest embezzlement of public funds in recent memory.