Managing the finances of public schools and municipalities is an enormous responsibility. Public officials entrusted with overseeing these entities must ensure the efficient use of taxpayer funds, maintain transparency, and safeguard against financial risks.
Non-Negotiable Responsibility
Protecting public funds from fraud, misuse, or misappropriation is a core duty for public officials. Treasury Management services play a pivotal role in establishing robust controls and procedures to prevent unauthorized transactions, detect irregularities, and maintain accurate financial records. By implementing these services, you can mitigate risks and maintain the trust and confidence of the community.
24-Hr Reporting Rule
Public officials are bound by strict reporting timelines when suspected fraudulent financial activities are identified. You must adhere to a narrow 24-hour window within which you must report such activities to your financial institution. This timeline is not merely a guideline—it is a legal requirement aimed at minimizing losses and preventing further harm to public funds.
Failing to report suspected fraudulent activities within the 24-hour window can have severe consequences. You may face legal liabilities, financial penalties, and reputational damage to the entity. Moreover, the delay in reporting could result in significant financial losses for the community, eroding public trust and confidence.
Case Study: Chetek’s $2.6M Wire Fraud Recovery
In November of 2023, the City of Chetek faced a devastating blow when it fell victim to a wire fraud scheme, resulting in a staggering loss of $2.6 million. The city believed the wire transfer was a legitimate payment towards the ongoing construction of the Chetek Wastewater Treatment Plant, a critical project that had begun in May of the same year.
Immediate Response
Upon discovery, city officials sprang into action. They alerted local and state law enforcement agencies, as well as the FBI, to investigate the fraudulent activity. Additionally, they notified every financial institution associated with the city’s accounts and the wastewater treatment plant project.
Through relentless efforts and close collaboration with their banking partners, Chetek achieved an unexpected victory. On March 1, 2024, the city announced the successful recovery of the entire $2.6 million. This remarkable turnaround brought immense relief to Chetek’s officials.
Enhancing Defenses
The city engaged third-party forensic analysts to conduct a comprehensive review of their email and user accounts. Fortunately, the analysis revealed that the scammers had not infiltrated any accounts or systems. Nevertheless, they implemented enhanced fraud detection capabilities and provided additional training to employees on identifying and reporting phishing emails.
Similar Attacks Across Wisconsin
Sadly, Chetek’s experience was not unique. Several other Wisconsin communities and organizations have fallen victim to similar fraudulent schemes in recent years. For instance:
- The Marshfield School District lost $660,000 in a sophisticated scam in 2019 but managed to recover a significant portion.
St. John XXII Catholic Parish in Port Washington and the West Allis-West Milwaukee School District also faced substantial losses due to fraudulent attacks.
Treasury Management Inventory
- Robust Internal Controls: Establish strong internal controls to prevent unauthorized access to financial systems and transactions.
- Regular Account Reconciliation: Conduct frequent reconciliation of accounts to detect discrepancies or irregularities.
- Employee Training: Provide comprehensive training on fraud awareness, reporting procedures, and the importance of safeguarding public funds.
- Real-Time Monitoring: Utilize banking tools, like Positive Pay, for real-time monitoring of accounts and transactions to detect anomalies.
- 24-Hour Reporting Protocol: Establish clear protocols for reporting suspected fraudulent activities to your financial institution within the required timeframe.
- Bank Collaboration: Foster a strong partnership with your bank to leverage their expertise in fraud detection and prevention.
- Continuous Improvement: Regularly review and update Treasury Management policies and procedures to adapt to evolving risks and regulations.
Take Action
Treasury Management serves as the backbone of financial stability and accountability for public schools and municipalities. It involves the strategic management of cash flow, investments, and compliance with regulations.
For public officials in these roles, the utilization of Treasury Management services is not just a best practice—it is a moral and legal obligation to protect the financial well-being of the community.
At CCFBank, we recognize the critical role that Treasury Management plays in the success of public entities. Our tailored solutions are designed to empower public officials with the tools you need to protect public funds and ensure compliance with reporting requirements. From secure online banking platforms to advanced fraud detection tools, we are committed to supporting the financial health and trust of our local communities.
Find your banker today to learn more about how CCFBank can partner with you to implement effective Treasury Management practices. Together, we can uphold fiscal integrity, safeguard public funds, and build a stronger community for all.
