(The Center Square) — The Calcasieu Parish School Board lost more than $1.6 million in a phishing scam last school year, with nearly half unrecovered more than a year later, according to a recent audit.
A contracted audit recently published by the Louisiana Legislative Auditor found the Calcasieu Parish School District made numerous payments totaling $1,607,620 to scammers who sent “seemingly valid emails” to change vendor bank account information.
“School Board personnel made the changes to the vendor records based on the email request and fraudulent form submissions with no further verification being completed,” auditors wrote. “Seven … payments were made to the scammers totaling $1,607,620 between the two vendors from July 2021 and January 2022.”
School officials realized the mistake in December 2021, when they implemented policy requiring a follow-up phone call to the vendor contact number on file to confirm change requests are valid.
“The school board notified the Sherriff, the District Attorney, and the Louisiana Legislative Auditor of the fraud occurrence as required by Louisiana Statute … and notified its cyber insurance carrier,” the report read.
The board managed to recover $837,771 through payment reversal at the bank, but $789,849 remains unrecovered.
“We recommend the School Board to continue their policy to verify authenticity of request received via email to change profile and banking information,” auditors wrote. “We further recommend the School Board to risk assess any other potential vulnerabilities that could occur with online and electronic communications.”
Other findings from the audit show the school board did not accurately identify all program expenditures for federal disaster and COVID funding. Auditors blamed the issue on a lack of proper controls.
“The grant awards or agreements were not properly interpreted or reviewed to identify or determine the proper amount to be reported as expenditures or (Schedule of Expenditures of Federal Awards),” the report read. “The SEFA provided to us for audit did not contain all the federal programs or the correct amounts of federal expenditures based on the terms of the grant awards and requirements to reporting on some of the federal programs reported.”
The issue with not correctly recording expenditures for the federal programs contributed to the district missing a deadline to submit a required audit to the Federal Audit Clearing House Internet Data Entry System, as well.
The Calcasieu Parish School Board responded to the findings in a letter on June 30 that agreed with the findings and explained corrective action plans for each. Those plans include adjustments for billing, new procedures for verifying vendor account changes, and better notification and documentation of grant expenditures.
