HUNTINGTON -- Authorities say governments and businesses need more than a typical audit to catch embezzlement.
The answers range from simple background checks and requiring employees to be bonded to more expensive forensic audits. Detectives typically use forensic audits in lengthy investigations about known cases, but some say the same practice should be used to catch embezzlement early on.
Officials said a typical audit checks to see everything balances. The forensic audit takes a deeper look at one's finances. It can be helpful at catching more elaborate schemes.
U.S. Attorney Charles T. Miller and others said it examines companies and individuals receiving funds. That is important when determining the legitimacy of the receiver. In some instances, the scheme artist will pass the money through a fictitious company that appears legitimate.
"It's not an uncommon scheme," said Miller, as he used an example of building a house. "If you saw a bunch of checks going out to Lowe's, Home Depot, John Smith plaster, you might not notice a check going out to Concrete Finishers, which may be a fictitious company."
The crime recently touched the Guyan Conservation District, Salt Rock Public Service District and Wayne County Schools.
Huntington Police Cpl. Phil Watkins said he does not believe embezzlement is prevalent in government, otherwise he believes more occurrences would be reported.
The most recent government case targeted the Guyan Conservation District. A federal indictment charges the former administrative officer, Marcia L. Masters, with taking about $704,600.
FBI Special Agent Joseph Ciccarelli is investigating Masters' case. He had no specific comments about that investigations, but he said governments need to do more to protect the public's money.
"What I have seen over time is that there is probably less scrutiny paid unfortunately, despite everybody's best efforts, to governmental entities and governmental funds," he said. "Those folks maybe have a greater responsibility because it's somebody else money."
The Conservation District is part of the state Conservation Agency. The agency's executive director, Truman Wolfe, declined comment when asked about safeguards the agency uses to control public funds.
State Auditor Glen Gainer's office examines budgets at the county and municipal levels. The state's Legislative Auditor's Office focuses on state agencies.
Gainer says his office does not have a forensic audit team. He estimates training a team could cost $30,000 to $40,000 per auditor.
The Auditor's Office compensates by searching for material non-compliance issues, such as a lack of internal controls. Gainer said his office cites those instances and forwards the information to local prosecutors. They decide whether to further investigate the issue.
"We do catch a lot, but are we catching it all? Probably not," he said. "We feel as long as there are strong internal controls in place, the likelihood of for that to occur is much less. I'm not saying it cannot happen, but the likelihood is less."
The Herald-Dispatch used the Freedom of Information Act to obtain budgetary information about the Conservation District, which covers six counties in southwestern West Virginia. The documents indicate the district's budget increased from $1.89 million to $7.9 million between July 2001 and June 2008. A majority of the increase has been allocated for floodwall projects in Milton and Logan, according to the budget and Chairman Boyd Meadows.
Ciccarelli said the expense of a forensic audit can render that solution impossible in many instances. However, he said business leaders and governments must analyze the cost-benefit.
"Somewhere there is a break-off point," he said. "We're going to scrutinize it this much more in order to avoid the kind of losses we might experience."
Forensic accounting is a special topics course at Marshall University. It's an annual graduate certificate program at West Virginia University, according to officials at both schools.
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