City makes changes in wake of fraud scheme, but still on the hook for some legal fees
Saskatoon's City Hall is pictured on March 22, 2017. (Jim Barnsley/CTV Saskatoon)
SASKATOON -- The City of Saskatoon has made several changes to how electronic funds transfer (EFT) payments are made following a $1.04-million fraud scheme earlier this year, according to a city report.
However, it also says the city will be on the hook for an estimated $75,000 in legal fees associated with recovering the stolen funds.
The report to the Governance and Priorities Committee says once the fraud was discovered, the city notified its internal auditor, banking institution and the Saskatoon Police Service.
A finance team was then tasked with implementing best practice controls while a recovery and investigation team, composed of senior civic leaders not involved with Finance functions, focused on getting the money back and the internal investigation.
All requests for changes to banking information since the start of 2019 were reviewed, and each vendor and individual within those companies was contacted to verify their request. No other fraudulent changes were discovered.
People from the Accounts Payable division, where the fraud had occurred, were interviewed to find out what controls were in place at the time, available documentation and what actions led to the fraud.
“The investigation determined that there was no malicious intent by any civic employee. However, the team did determine that the fraud was due to systemic failure primarily related to a lack of appropriate procedures or guidelines for employees in this area of the Administration to follow,” the report reads.
The City’s internal auditor, Price waterhouse Coopers (PwC), reviewed the internal controls the city implemented following the fraud.
“PwC presented its findings to the Recovery/Investigation team and although they acknowledged many appropriate controls had been put in place, PwC recommended additional changes. The City took further action and has fully implemented these recommendations,” the report reads.
A court order has allowed the city to recover the stolen funds, and it was awarded $25,000 to partially cover legal costs. However, the report says the city’s legal fees are estimated to be $100,000.
That number could rise if the court decision is appealed. The report says no appeal has yet been filed.
Administration estimates there will be a $75,000 net cost to the city for legal fees associated to recovered the funds