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An employee stole more than $100,000 from a Salt Lake County liquor store over a 31⁄2-year period, according to a report from the state auditor that the Utah liquor commission’s chair described as “scathing.” The annual audit, which the Office of the Utah State Auditor started in February, was released during the liquor commission’s monthly meeting Thursday. The audit’s findings included the revelation that a liquor store employee stole $112,809 from an unidentified liquor store in Salt Lake County between January 2021 and June 2024.
The state auditor’s office analyzed all “change orders” from the store in question and found the discrepancy. “Change orders” happen when liquor stores request small bills and change from a bank to replace large bills in their registers, a transaction called a “shipment,” the audit report said. According to DABS policy, stores are required to return the same amount in large bills back to the bank within a certain time period, a transaction referred to as a “deposit,” the report said.
At this particular store, the report said, the amount returned to the bank in deposits during change orders was $112,809 less than the amount provided to the store by the bank in shipments. The amount shorted from each deposit started out relatively small, ranging from $200 to $600, the report said. But over time, that amount rose to a range of $1,000 to $2,000, the report continued.
DABS spokesperson Michelle Schmitt said one employee was responsible for the discrepancies, and that the Utah attorney general’s office is investigating. In its response in the report, the DABS said that it took “swift action” after it learned of the issue, and that the employee doesn’t work for the department anymore. DABS executive director Tiffany Clason said in a statement that “the audit findings regarding theft are a direct result of the DABS’ request.
Upon discovering the theft, we immediately reported it to the state auditor and requested their review.” “Additionally, the department quickly adjusted internal controls and processes that will prevent and swiftly detect theft attempts throughout the entire agency,” Clason continued. Auditors also identified six short transactions totaling $8,671, indicating that cash submitted to the bank as store sales revenue deposits was less than the amounts on the deposit slips, the report said.
Out of the transactions, which also took place between January 2021 and June 2024, two of them totaling $5,500 happened at the same store where the $112,809 was stolen, and the rest happened at other liquor stores, the report said. Schmitt identified the $8,671 as “missing,” not necessarily stolen. “There are many possible explanations for why this may occur, such as counting errors by the clerks responsible for writing the amount on the deposit slip,” she said via email.
“Although small percentage of cash variances are common in retail, it is something the DABS is taking every effort to mitigate to ensure absolute accuracy in reporting.” What else did the audit say? Auditors also found that the DABS had been improperly recording sales revenue and expenses for type 5 package agencies, which are “contractually authorized to sell their own manufactured liquor directly to the public for off-premise consumption,” the report said. Such package agencies are within distilleries, wineries and breweries, which sell their own product on the premises.
Because they’re not buying it from the DABS for resale, the DABS shouldn’t be recording any revenue or expenses for those sales, the report said. However, as discovered during the fiscal year 2024 financial audit cycle, the DABS had improperly recorded $3,362,514 in expenses and $3,846,619 in sales revenue for fiscal year 2025, the report said. When the DABS was alerted to the issue last September, the department discontinued the practice, the report said.
The auditors recommended that the agency reverse those accounting entries made for type 5 package agencies before the DABS’ fiscal year close-out in July and August. In its response in the report, the DABS said that the period from July 2024 through August 2024 is all that’s left to be adjusted. In another finding, auditors said the DABS improperly accounted for statutory earmarks, which include portions of type 5 package agencies’ sales that go into the Uniform School Fund, the Public Safety Fund and Underage Drinking Prevention.
The report’s final finding cited DABS’ unresolved accounting problems with Cost of Goods Sold Expense (COGS), which resulted in several adjustments to the state’s Annual Comprehensive Financial Report (ACFR). The ACFR “facilitates transparency and oversight of the State’s use of public funds and is used for bond reporting requirements,” the report said. “If COGS is misreported, it will impact the amount of money transferred to the General Fund that is available for other public expenses and public works,” the report continued.
In its response to the finding in the report, the DABS said that it is “dedicated” to solving the problem with the COGS. It added that it has completed a full inventory count and has hired an account firm to help with an analysis of the COGS..
