The City of Saskatoon has been defrauded of more than $1 million of taxpayer money and officials say there's a chance it won't be returned.

The cash went missing after a fraudster, impersonating the CFO of a construction company, requested a change in banking information for the company. When the city went to make a payment to the construction company, it went to the fraudster's bank account instead.

Jeff Jorgenson, Saskatoon's City Manager, said the fraudster started their activity weeks ago. The city confirmed the money was gone Monday. Saskatoon police, the city's internal auditor and banking institutions are all involved in trying to get the money back.

"Through the last few days we've talked to a number of experts who we've engaged to help us with the fund recovery. Definitely it's a challenge," Jorgenson told reporters at city hall Thursday.

"There is no guarantee that any of the funds can be recovered, or if portions of the funds can be recovered."

Saskatoon's City Manager Jeff Jorgenson speaks with reporters at City Hall on Thursday, August 15, 2019. The City of Saskatoon has been defrauded roughly $1 million after it sent a payment to a fraudster who was impersonating a high-ranking employee at a construction company. (Albert Couillard/CBC)

Jorgenson said the city found that some institutions defrauded in the past were able to recover all of the funds while in other cases, recovering the funds has been virtually impossible.

"We're chasing down every lead," he said, adding that the city is "cautiously optimistic."

Saskatoon police confirmed they are investigating the fraud, but because the investigation is ongoing they said they were unable to say much more.

The City of Saskatoon did not name the construction company in question, but Jorgenson said the company is not at fault, noting the city will still have to honour its contract with the real company.

Saskatoon Mayor Charlie Clark said city staff are now going over Saskatoon's controls and checks to ensure the city is properly mitigating any potential risks.

Saskatoon Mayor Charlie Clark says staff are reviewing the city's checks and controls to ensure the city doesn't fall victim to future fraud. (Albert Couillard/CBC)

"It's been reassuring to understand and learn that this, I think, is very much an anomaly," Clark told reporters.

He said fast action by the city means there is a chance to "chase down that money" and called it a warning to everybody that "the world's changing quickly."

"It can affect anybody," said Clark. "We are going to make sure it doesn't happen again at the city, but we wanted to let everybody know and be as upfront as possible so that it can't happen to other people."

Jorgenson said it's too early to determine if there will be any repercussions for city employees, as the city is currently working to get a more fulsome picture of the incident.

"Right now, the focus and all of our energies are on recovering the funds, putting further controls in place and reviewing all the controls that are currently in place and fact finding," he said. "Once all of that work is complete then you follow the facts."