A new state audit faults the Washington state Employment Security Department (ESD) for computer vulnerabilities that contributed to the theft of $600 million in this spring's massive unemployment fraud.
The report released Friday by the Office of Washington State Auditor Pat McCarthy also finds ESD inaccurately reported the amount of money lost and recovered.
In addition, the audit report calls out the state's fiscal overseer, the Office of Financial Management, for misstating the fraud's potential impact on the state budget.
The report is the first of five ongoing audits into the unemployment fraud fiasco. Others are expected to be released in the coming months.
Some of Friday's findings, which are included in an annual financial review of state government called the Comprehensive Annual Financial Report (CAFR), had been expected.
Others spotlight lingering questions about both the causes of the largest fraud in state history and the state's handling of the investigation.
Last month, the auditor's office took the extraordinary step of rebuking ESD Commissioner Suzi LeVine for delays in supplying the auditor's office with information about the fraud.
Friday's report comes just two days after ESD publicly updated its estimates of the number of unemployment claims the agency suspected were fraudulent.
In a statement, McCarthy called the fraud "a major concern" and said the funds stolen "were given to the state to use for the benefit of Washingtonians."
She added: "The financial statements should be transparent about what happened."
This is a breaking news story that will be updated.