The Port of Pasco is making sure all of the companies it pays with taxpayer money are real.
That effort was spurred by alleged embezzlement that Franklin County Auditor's Office staff found while verifying the county's vendors.
Like port officials, other local government officials say they are taking a close look to make sure they are doing all they can to prevent fraud in the wake of Franklin County's discovery.
Dennis M. Huston, a former Franklin County Public Works accounting and administration director, is suspected of embezzling more than $2.8 million from the county using the name of a Spokane company that closed in 2001. He has not been charged.
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"We are just trying to do our due diligence and make sure that the taxpayer's money is going to the correct place," said Linda O'Brien, the port's director of finance and administration.
O'Brien said she thinks state auditors this year will be looking at what vendor verification systems local governments have in place.
State auditors may do spot checks of vendor verification systems when auditing local governments that do a lot of work with vendors, said Mindy Chambers, spokeswoman for the state Auditor's Office.
O'Brien said the port already was checking companies when they became vendors, and she did spot checks on a random basis.
The Port of Pasco has sent out requests for modified W-9 forms to each of the 535 companies the port has done business with in the past five years, O'Brien said. It also narrowed the vendor list from 1,700 by taking off all companies the port hadn't done business with in more than five years.
As of Thursday, 320 vendors have responded.
On Monday, the port will send a letter to the companies that haven't responded yet, letting them know that if they do not send the requested information, they are in jeopardy of not being an approved vendor the port can do business with.
O'Brien said they also have beefed up their purchase order system. On each purchase order, employees have to check a box stating the vendor is on the port's authorized list. If not, a modified W-9 form has to be filed for the company to be set up as a vendor, she said.
Each month, the approved list of vendors will be sent to employees who sign and use purchase orders, O'Brien said.
Using a W-9 form probably is the best way to check if a vendor is valid, Chambers said, adding that local governments should routinely check vendors.
"You may not catch everybody, but making the effort to do that is just a good, solid business practice," Chambers said.
Like the Port of Pasco, local governments already required companies to submit W-9 forms in order to get approved to get on the agency's approved vendor list.
But Franklin County's experience brought up one of the possible cracks in the system that Pasco City Manager Gary Crutchfield said just hadn't been thought through. While it's difficult to get onto the city's vendor list, there's a potential problem when there aren't regular checks of vendors or a requirement for them to refile a W-9 form with the city, he said.
That's why Pasco is considering asking companies to send updated W-9 forms every two to three years, Crutchfield said. The city already required the form for companies to be eligible for payment, and changing an address required a new W-9 from a company.
Kennewick is doing a periodic spot check of vendors on the city's list, said John Noble, the purchasing manager for Kennewick and Richland. The most recent check was last week. Richland has not yet determined if it will do something similar.
Franklin PUD also started looking at its internal controls after the alleged embezzlement in Franklin County was reported last month.
Debbie Bone-Harris, Franklin PUD's spokeswoman, said the only changes they made were to designate only one employee to create new vendors and have the PUD's accounts payable accountant be in charge of vendor maintenance.
The PUD staff also is working on a report comparing the PUD's active vendors with the list of businesses registered with the state Department of Revenue, she said.
Benton County already asks vendors for an updated W-9 form each January and verifies the information using the Internal Revenue Service's database, said Brenda Chilton, the county's auditor.
The Port of Kennewick also already has internal monitoring to catch and prevent fraud.
About 95 percent of the checks the port issues are for businesses the port has a contract with, said Tammy Fine, the port's director of finance and auditor. And for the contract, the company is required to have insurance and valid business license with the secretary of state or the state Department of Licensing.
They verify companies on their small works roster every time they are awarded a contract, Fine said.
The Richland School District has a series of safeguards to make sure payments are appropriate and catch fraud, said Robyn Leseberg, supervisor of the district's accounts payable and purchasing department.
Leseberg reviews checks before they are sent out to ensure they are going to active vendors and for ordered services or supplies. The Richland School Board also reviews payment vouchers before they have final approval.
w Staff writers Loretto J. Hulse and Ty Beaver contributed to this report.