Tuesday, January 5, 2010

State Report: $100 Million Wasted By Seattle Port Will Not Be Recovered

A new report from the Washington State Auditor's office has found that performance audits conducted of state agencies and local governments have saved taxpayers $3.6 billion since voters approved the audits in 2005.

However, the report also confirmed that some of the waste found in the audits, such as nearly $100 million lost by the Port of Seattle between 2004 and 2007, would never be recovered.

The state auditor's office released the 350-page audit of the port in December 2007, finding nearly 50 indications of financial and contracting irregularities or fraud at the port. While the state audit did not detail any cases of suspected fraud in 2007, the state found that the port had “no controls in place to prevent a variety of fraud schemes.”

In addition, the state auditors found that the port wasted nearly $100 million in taxpayer money through improper construction contracting.

The audit led to a United States Department of Justice investigation into the accusation of fraud at the port. However, the state auditor’s office was unable to prove fraud due to state regulations putting the collection of substantiating evidence outside the legal mandate of the office.

A port-generated internal review completed in June 2008 gave the port’s financial accounting since the period covered by the state audit a “clean, unqualified” bill of health. In the commissioned report, port-hired accountants “noted no significant deficiencies nor material weaknesses” in the port's internal controls in the period following that analyzed by the state audit.

In passing the new slate of procedures, the port commissioners acknowledged the connection to the state and internal audit.

The state auditor's latest report also confirmed that since December 2007, the port has put into place policies and regulations that should prevent problems such as those uncovered by the original audit.