We would like to share some of the details of this false billing scheme with you to help prevent other local governments from being victimized. The operators attach a copy of the company's clipped advertisement with the false bill. Believing that the invoice is related to the actual advertisement that ran in the local newspaper, some have paid the invoiced amount. We encourage you to be aware of this phony billing scheme and to share this information with those in your entity who process invoices or accounts payable to prevent future improper payments. You may also want to review your internal controls to determine whether your procedures would detect and prevent payments on misleading or fictitious billings such as these.
Many governmental units carry debt.
Debt can range from everyday accounts payable to bonds. In most cases, significant debt results from borrowing to construct buildings or purchase expensive equipment. It is never a good idea to use debt for normal operating expenditures. In recent years the types of financing vehicles available to local governments have become more numerous. Notes and accounts payable are usually short-term indebtedness and are part of the normal operations of an entity.