According to the September 2022 Financial Compliance audit, the Montana State Department of Agriculture lost $344,271 due to a phishing attack in October 2020.
The report states that the department disclosed two thefts of state resources during the audit. The thefts occurred due to an email phishing attack, during which a hacker impersonated a grant recipient. Out of the two payments sent out, the first was stopped, but the second went through.
According to the audit, this isn’t the first time the department was hit with email phishing attempts and fraud. In April 2020, an employee of the Department of Agriculture purchased $1,000 in gift cards — which were returned for full credit — in response to an email phishing attempt.
Although the department notified the chief attorney, the Montana Governor’s Office, the Department of Administration’s Risk Management and Tort Defense, and the State Financial Services Division, the audit states that the legislative auditor was not notified of the thefts.
The audit recommends that the Department of Agriculture comply with state laws regarding reporting any theft or attempt of theft stating, “State law requires the head of each agency to immediately notify both the attorney general and the legislative auditor, upon the discovery of any theft, actual or suspected, involving state money or property under that agency’s control or for which the agency is responsible.”
The department operates more than 30 programs, many funded through user fees. These programs include regulatory programs that protect producers, consumers, and the environment and develop and market programs to foster growth in Montana’s agriculture.
Additionally, the department oversees state and federal grants distributed to sub-recipients around the state of Montana. These grants are distributed under different programs to support various agriculture-based initiatives.
The Montana Legislative Audit Division completed the financial compliance report based on the prior two fiscal years. After identifying three issues with accounting and reporting practices, the division completed a recommendation to address the concerns.
According to the report, the audit also discovered that the department’s system, MT Plants — which provides licensing and registration services for pesticides, applicators, and dealers — has not consistently issued refunds for overpayments. As a result, customers have not been receiving notifications of credit balances — an issue that auditors recommend solving through improved internal controls and staff training.
“MT Plants is an older system with limited capabilities. It can track balances due to the department but cannot track balances due to the customer. Due to the system’s limitations, we do not know how many customer accounts have a credit balance and the total of those credit balances,” reads the report.
Christy Clark, director of the Department of Agriculture, concurred with the recommendations made by the office.
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