Timberland Regional Library leaders met with The Olympian on Friday to offer insight into the system's loss of $120,000 to a bogus account as well as other issues raised by the state Auditor's Office.
A recent audit examined the operations of the multi-county library district that serves Southwest Washington, from Jan. 1, 2019 to Dec. 31, 2021.
The audit ultimately resulted in a management letter that was sent to the board in February that outlined some concerns and listed recommendations to address them.
One of those items was addressed by the board this week, while the two more serious issues raised by the letter — public loss of funds and questions about the competitive bid and prevailing wage process — have already been dealt with, Executive Director Cheryl Heywood and Operations Director Brenda Lane said.
Between December 2020 and January 2021, the library district learned that around $120,000 had been electronically transferred to a bogus account to renew Timberland's annual insurance policy.
As soon as the district learned of the problem, the board, the Thurston County Treasurer's Office, the FBI, Tumwater police (TRL's headquarters is in Tumwater), the insurance company and the state Auditor's Office were alerted about the problem, Heywood said.
The library also launched an internal investigation and found that an employee had not followed the proper procedures, but also had fallen victim to a scam by someone pretending to be the executive director and operations director.
Lane remembered the day well, saying she and Heywood were in a long meeting when Lane said she started to receive messages from a staffer in finance who was getting ready to make the $120,000 payment.
What payment? Lane asked. The employee replied: The one you keep emailing me about. Unbeknownst to both of them, the scammers were sending those emails.
Despite the fraudulent payment, the FBI was able to recover about $65,000, while most of the remaining balance was covered by insurance. The library had to pay a $10,000 deductible, Heywood said.
Although the state Auditor's Office was alerted at the time about the incident, it was still part of the later audit. Lane's initial reaction to the management letter was, "This is not fair," but she came to terms with it.
"It happened," she said. "We can't hide from it."
Heywood said the library has since invested in more training for finance staff and now requires multi-factor authentication, which is similar to a multi-step verification process to identify a person online.
As to the status of the employee who made the error, Lane said she wouldn't comment on personnel matters.
Employee and library mistakes also were at the center of concerns surrounding the prevailing wage and competitive bid process.
An employee thought sending prevailing wage information to the state Department of Labor and Industries was the responsibility of the contractor, not the library, Lane said.
As for the competitive bid process, the library understands the process, Lane said. The challenge, however, is that their projects sometimes fail to attract the required number of bidders. Contractors aren't always interested in traveling to remote branches, such as Amanda Park in Grays Harbor County, Naselle in Pacific County or Salkum in Lewis County, Lane said.
That means the library has to call those contractors directly. That's OK, according to the state Auditor's Office, so long as they call at least three and document those efforts. Lane said the problem was there wasn't any documentation.
"We had the processes in place but they weren't as fine tuned," Heywood said, but she added that a state Auditor's Office management letter is nothing like a "finding," when auditors have significant concerns about a government's control over public resources or other issues.
The Board of Trustees is aware of the management letter and the recommendations, said Trustee and President-elect Mary Beth Harrington.
"They made sense, they were not shocking, they were not surprises, necessarily, and they were things that were easily resolved," she said.
