A report from the Washington State Auditor revealed in a 2021 audit of South King Fire that about $232,178.25 was either lost or not requested due to lack of proper oversight of finances in 2019, among other findings.
On Aug. 19, the office released a report that examined the areas within South King Fire with the highest risk of fraud, loss, abuse or non-compliance.
These losses were attributed to former fire chief Allen Church not following policy along with other oversight inadequacies when it came to things such as:
• Church signing his own leave slips.
• Incorrect unused overtime cashouts for Church.
• Incorrect procedure when Church was issued a district phone, but still received a cash allowance.
• Filling up company vehicles outside of district pumps.
• Not returning a laptop when retiring.
• Church having a familial conflict of interest with a contracted company that resulted in over $150,000 of unclaimed money.
“The District lacked oversight of its financial activities to ensure the safeguarding of public resources and compliance with state law,” the report said. South King Fire serves the cities of Federal Way, Des Moines and parts of unincorporated King County.
District’s response
In the report, the district said it had found vulnerabilities in early 2020 after an internal audit by district employees. The district said that district processes, otherwise ordinary and routine in nature for all other employees, were insufficient or nonexistent for the fire chief position. The district reported that a self-approval practice with no established methods to provide transparency to the board of commissioners created vulnerabilities.
Due to the COVID-19 pandemic response and subsequent delays with annual audits, the district stated that this information was not submitted to the State Auditor’s Office until the 2021 audit period. The report said that on March 9, 2022, district management reported concerns related to the activity of former Fire Chief Church.
“During the audit, it was determined that employees had identified non-compliance with district policies, but did not feel comfortable reporting them due to the authority of the Fire Chief position and fear of retaliation,” the report stated. “District employees felt compelled to comply, which resulted in exceptions made to practice and policy.”
The report said that despite the uncomfortable scenarios of identifying district policy non-compliance, when a change in leadership occurred, employees felt comfortable coming forward with their concerns and shared them with the State Auditor’s Office to demonstrate accountability within the organization and to seek recommendations from the auditors on how to move forward.
The report states that the areas where issues were found were payroll, accounts payable disbursements, vehicle and fuel usage, small attractive assets, and conflict of interest.
Payroll
The report states that Church approved his own leave slips without a secondary review, and the district did not maintain a time tracker for flexible leave. As a result, the auditors could not verify the accuracy of Church’s leave balances and whether the district properly recorded the flexible time he took.
Additionally, the district did not adequately review a sick leave cashout that was paid to Church when he retired in Dec. 2019, resulting in an overpayment of $58,566.25. According to the report, district policy states that it pays cashouts at 25% of the employee’s rate of pay for each hour of unused sick leave. The report states that they found the district paid unused sick leave out at Church’s full pay rate.
Accounts payable disbursements
The report states that staff did not retain adequate documentation to demonstrate that disbursements were valid, approved and for an allowable purpose under state law and district policy.
The report states that, specifically, the district did not comply with its policy when issuing a cellphone to Church. The report stated that the district’s policy offers three options for employees required to carry a mobile phone: a district-provided cellphone, a district-provided cellphone with employee contributions, or a $300 allowance every two calendar years for the purchase of a cellphone for official business use.
The report states that in 2019, the district provided Church with a cellphone and $300.
Another issue they found was that when the district sponsored a table at the Advancing Leadership 20th anniversary dinner and auction, the district did not ensure meals the event provided were only for district staff, volunteers or elected officials when they were the only ones who were supposed to have their meals paid for. The report states that the district paid for Church’s spouse and other local government officials to attend this event.
Vehicle and fuel usage
The report stated that the district did not adequately monitor Church’s vehicle and fuel card activities to ensure they were reasonable and only for the district’s business.
Specifically, they found multiple instances in which Church’s district vehicle and fuel usage appeared to be for personal use, but they could not confirm this due to inadequate monitoring control.
They also found that Church had field transactions totaling $65.72 that he paid with his district-issued credit card at other fuel stations when employees were required to fill up vehicles using district-owned fuel stations.
Small and attractive assets
The report states that the district staff did not ensure Church returned a district laptop valued at $300 upon his retirement and that the district disposed of the laptop in accordance with its policy.
Conflict of interest
According to the report, state law prohibits municipal officers from having a financial interest in a contract made under their supervision or accepting compensation from any other person beneficially interested in the contract. The report added that the district has a conflict-of-interest policy that prohibits members of the fire department from using their influence to benefit family members.
Despite that policy, the report states that the district contracted with an emergency medical services company from 2011 to 2020, where a family member of Church worked.
The report states that the contract with the company contained liquidated damages clauses for not providing timely responses to emergency calls, and a consumer price index inflator clause, in which the district could annually adjust the monthly payments it received from the company.
The report stated that Church was involved in these decisions due to a lack of oversight when he should have recused himself. The report said that the district did not collect liquidated damages totaling $127,450 from the company for not providing timely responses to emergency calls, and it also did not use the CPI inflator option, and if it had, it could have collected an additional $46,162. This resulted in unclaimed money totaling $173,612.
