rowid,source,report_number,finding_number,muni_id,state,entity_name,entity_type,entity_ext_id,place_geoid,match_method,auditor,report_title,audit_type,fiscal_year,period_start,period_end,published_date,finding_category,severity,questioned_cost,cost_basis,finding_title,finding_text,report_url,fetched_at 1,wa-sao,1017656,2015-001,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2015,2015-01-01,2015-12-31,2019-08-19,federal_award_compliance,material_weakness,928647.0,"Questioned Cost Amount: $928,647","The City did not have adequate internal controls in place to ensure compliance with federal subrecipient monitoring requirements. CFDA Number and Title: 14.218 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U. S. Department of Housing and Urban Development Federal Award/Contract Number: B10MC530005, B11MC530005, B12MC530005, B13MC530005, B14MC530005, B15MC530005 Pass-t","Description of Condition The objective of the Community Development Block Grant program is to develop viable urban communities by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for persons of low and moderate income. The City of Seattle spent $11.6 million in grant funds from the U. S. Department of Housing and Urban Development. The City’s Human Service Department passed on $3.8 million to five subrecipients during 2015 to provide homeless assistance to City’s residents. Federal regulations require the City to perform risk evaluations to evaluate subrecipients’ risk of noncompliance to determine the appropriate level of monitoring. It also requires the City to monitor the subrecipients’ activities to ensure that the subawards are used for authorized purposes which can be accomplished by either requiring subrecipient invoices to contain supporting documentation or reviewing supporting documentation during on -site visits. That monitoring, particularly the on -site visit s, is important to ensure that the subrecipients’ administration of programs are appropriate and in compliance with applicable requirements, including those related to allowable and supported costs. Washington State Auditor’s Office Page 10 The City requires the subrecipients to submit detailed general ledger reports as part of the request for payment and has a policy for semi-annual on-site visits to review documentation included in the report to ensure the costs are allowable and supported. The City’s process for subrecipient monitoring is not working as intended. During our audit, we found:  The Human Service Department did not perform risk assessments for the three subrecipients we selected for review.  For two of the three subrecipients reviewed, the Human Service Department did not obtain supporting documentation with the requests for payment, nor did they perform on-site visits, where a review of documentation to support the costs reimbursed would have been done. We consider these deficiencies in internal controls to be significant deficiencies. Cause of Condition The Departments were not aware that risk evaluations are required for all subrecipients receiving money from federal awards. The Grants and Contracts Specialists who are responsible for approving subrecipient payments and performi ng on -site visits did not have the necessary training and resources to perform adequate reviews. Effect of Condition and Questioned Costs Without adequate internal controls in place, the Department cannot ensure that the subrecipients used the program fu nds in accordance with the grant agreement and federal requirements. The Human Service Department paid $928,647 to two subrecipients without performing on-site visits or requiring adequate supporting documentation for costs incurred. As a result, we are questioning the total amount paid to these subrecipients. Recommendation We recommend that the Departments establish internal controls to ensure compliance with the subrecipient monitoring requirements including:  Conduct a risk assessment to evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate monitoring activities. Washington State Auditor’s Office Page 11  Provide training to program specialists to ensure they have an adequate understanding of federal subrecipient monitoring requirements and Department policies.  Require subrecipients to provide adequate documentation to support the costs incurred or perform on -site visits that includes a review of source documentation. City’s Response The City understands the Auditor’s concerns regarding inadequate internal controls in place and is taking immediate and long -term corrective actions to ensure compliance with federal subrecipient monitoring requirements going forward. Auditor’s Remarks We thank the City for its assistance during the audit and will follow up on corrective actions taken during the next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, as follows: .11 For purposes of adapting GAAS to a compliance audit, the following terms have the meanings attributed as follows: . . . Deficiency in internal control over compliance. A deficiency in internal control over compliance exists w hen the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance on a timely basis. A deficiency in design exists when (a) a control necessary to meet the control objective is missing, or (b) an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met. A deficiency in operation exists when a pr operly designed control does not operate as designed or the person performing the control does not possess the necessary authority or competence to perform the control effectively. . . Washington State Auditor’s Office Page 12 Material weakness in internal control over compliance. A deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. In this section, a reasonable possibility exists when the likelihood of the event is either reasonably possible or probable as defined as follows: Reasonably possible. The chance of the future event or events occurring is more than remote but less than likely. Remote. The c hance of the future event or events occurring is slight. Probable. The future event or events are likely to occur. Significant deficiency in internal control over compliance. A deficiency, or a combination of deficiencies, in internal control over compliance that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Title 2 Code of Federal Regulations Section 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. Washington State Auditor’s Office Page 13 Title 2 Code of Federal Regulations Subpart D Post Federal Award Requirements Section 200.331 Requirements for pass-through entities states in part: All pass-through entities must: (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F—Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are a chieved. Pass -through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all de ficiencies pertaining to the Federal award provided to the subrecipient from the pass -through entity detected through audits, on-site reviews, and other means. Washington State Auditor’s Office Page 14 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 Management decision. (e) Depending upon the pass -through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass -through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on -site reviews of the subrecipient's program operations; (3) Arranging for agreed-upon-procedures engagements as described in §200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F —Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 Audit requirements. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass -through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.338 Remedies for noncompliance of this part and in program regulations. Washington State Auditor’s Office Page 15 Title 2 Code of Federal Regulations Subpart E Cost Principles Sections 200.400 through 200.403 General Provisions and Basic Considerations states in part: §200.400 Policy guide. The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non -Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non -Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles, and must provide for adequate documentation to support costs charged to the Federal award. §200.402 Composition of costs. Total cost. The total cost of a Federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits. Washington State Auditor’s Office Page 16 §200.403 Factors affecting allowability of costs. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth i n these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally -financed and other activities of the non-Federal entity. (d) Be accorded consistent treatm ent. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (g) Be adequately documented. See also §§200.300 Statutory and national policy requirements through 200.309 Period of performance of this part. Washington State Auditor’s Office Page 17",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1017656&isFinding=false&sp=false,2026-07-30 13:24:54 2,wa-sao,1017656,2015-002,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2015,2015-01-01,2015-12-31,2019-08-19,federal_award_compliance,material_weakness,1566880.0,"Questioned Cost Amount: $1,566,880",The City did not have adequate internal controls in place to ensure compliance with federal subre cipient monitoring requirements. CFDA Number and Title: 14.267 Continuum of Care Program Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: Multiple awards Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amo,"Background The City of Seattle’s Human Service Department administers the Continuum of Care Program. This program is designed to promote communitywide commitment to the goal of ending homelessness by providing housing and supportive services to homeless individuals a nd families. The Department spent $11.4 million in Continuum of Care funds, of which $10.6 million was passed on to subrecipients who perform the primary activities of this program. Description of Condition Federal regulations require the City to monitor subrecipients’ activities to ensure that subwards are used for authorized purposes which can be accomplished by subrecipients submitting invoices containing supporting source documentation or reviewing supporting source documentation during on-site visits. That monitoring, particularly the on -site visits, is important to ensure that subrecipients’ administration of programs are appropriate and in compliance with federal requirements, including those related to allowable costs and activities. During the current audit, we found:  The Department utilized a monitoring log to track on -site visits for subrecipients by project. However, the log excluded 36 of the 82 projects Washington State Auditor’s Office Page 18 during 2015. Without a complete and current log, the Department cannot ensure site visits are performed and tracked for all subrecipients’ projects.  The Department’s policy is to perform semi -annual site visits; however, it did not perform on -site visits that included a fiscal review of invoices or other documentation required to support the costs incurred for eight of the 16 projects reviewed. For the fiscal reviews that were conducted, documentation was not always sufficiently complete to establish that site visits were adequately performed. We consider these control deficiencies to be material weaknesses. Cause of Condition The Grants and Contracts Specialists who perform on -site visits did not have the necessary training and resources to perform adequate financial review. Effect of Condition and Questioned Costs By reimbursing subrecipie nts for costs claimed without receiving adequate documentation or otherwise monitoring the subreceipients’ use of funding, the City is unable to ensure costs charge to the grant are allowable. As a result, we are questioning $1,566,880 of costs paid to eight subrecipient projects. Recommendation We recommend the Department establish internal controls to ensure compliance with the subreceipient monitoring requirements including:  Providing training to program specialists to ensure they have an adequate understanding of federal subrecipient monitoring requirements and Department policies.  Requiring subrecipients to provide adequate documentation to support the costs incurred or perform on -site visits that includes a review of source documentation.  Retaining sufficient documentation to demonstrate compliance with federal subreceipient monitoring requirements. City’s Response The City understands the Auditor’s concerns regarding inadequate internal controls in place and is taking immediate and long -term corrective actions to ensure compliance with federal subrecipient monitoring requirements going forward. Washington State Auditor’s Office Page 19 Auditor’s Remarks We thank the City for its assistance during the audit and will follow up on corrective actions taken during the next audit. Applicabl e Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) establishes reporting requirements for audit findings. 2 CFR 200.516 Audit Reporting, states in part: (a) Audit findings reported. The auditor must report the following as audit findings in a",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1017656&isFinding=false&sp=false,2026-07-30 13:24:54 3,wa-sao,1017656,2015-003,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2015,2015-01-01,2015-12-31,2019-08-19,federal_award_compliance,material_weakness,,,The City did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards,"Background City management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting. These controls should ensure financial events are identified properly and presented completely. Controls should also ensure the criteria and accounting methodology applied to financial events are correct. Local governments in Washington that spend federal funds must prepare a Schedule of Expenditures of Federal Awards (SEFA) as part of the annual f inancial report. Federal regulations require grantees to identify, in their accounts, all federal money spent on the SEFA each fiscal year. Our audit identified a deficiency in internal controls that adversely affected the City’s ability to produce a relia ble SEFA. Because of its effect on the City’s financial reporting, we consider this a significant deficiency. Description of Condition When preparing the SEFA, the Citywide Accounting department relied on other City departments’ supporting documentation a nd information to ensure accurate presentation. During the 2017 audit, Citywide Accounting brought to our attention that a department did not report its 2015 grant expenditures for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds , which were funded by the U.S. Environmental Protection Agency (EPA) Cause of Condition The City did not clearly understand the SEFA reporting requirements for the grant under the Budgeting, Accounting and Reporting System (BARS) Manual and Uniform Guidance. The Department treated this grant as a federal loan and reported the 2015 expenditures upon its first drawdown in 2017. Washington State Auditor’s Office Page 7 Effect of Condition Inaccurate financial reports limit access to financial information used by Ci ty officials, the public, state and federal agencies and other interested parties. In addition, these conditions delay the audit process and increase audit costs. The City understated its 2015 SEFA by $15,612,937 because it did not include expenditures for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds. The correct amount makes this a major program required to be audited for fiscal year 2015. The City subsequently corrected the misstatement. Our Office completed the review of this grant, and updated and reissued our financial audit report and federal single audit report in 201 9 Recommendation s We recommend the City dedicate sufficient time and resources to strengthen internal controls over SEFA preparation to ensure the informa tion received from the departments is accurate and based on federal expenditures. We further recommend the City to train departmental staff responsible for SEFA preparation to review the BARS Manual and Uniform Guidance to ensure expenditures are reported in the correct year. City ’s Response The City acknowledges the Auditor’s concerns regarding inadequate internal controls over financial reporting on the SEFA. As relates to the specific deficiency, the Department of Ecology Loan for the Henderson North Combined Sewer Overflow Reductions project, the auditor asserts that the loan drawdowns covering 2015 and 2016 were not recorded in those years. The City disputes the finding for 2015. Because the loan in question was not awarded to the City until 2016, expenditures of federal funds were not known when the SEFA was prepared for 2015. Further, t he City received guidance from the EPA indicating that the triggering action for audit purposes is when an SRF borrower submits an invoice/disbursement/payment request to the state. The City did not submit a disbursement until 7/31/2016. Regarding 2016, the City acknowledges that the drawdown request submitted in 2016 but received in 2017 was not included in the 2016 SEFA. As federal (EPA) and State (Department of Ecology) agencies have provided conflicting guidelines, the City will work to clarify rules and procedures for reporting retroactive awards on the SEFA. The City appreciate SAO’s guidance on this issue. Washington State Auditor’s Office Page 8 Auditor’s Remarks Per OMB Circular A -133 Compliance Supplement 2015 Part 4 for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds (CWSRF), Environmental Protection Agency (EPA) requires the grantees to include project expenditures during the audit period wh en they were incurred, regardless of when the grantee received reimbursement. EPA further clarifies that if a subrecipient incurs expenditures under an approved CWSRF loan in one audit period for which it is not reimbursed by the State until a subsequent audit period, those expenditures should be reported on the subrecipient’s SEFA in the year in which the outlay was made, regardless of when the subrecipient received reimbursement. We thank the City for its commitment to fiscal accountability and accurate financial reporting. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 510 – Financial Statements, establishes criteria and requirements related to the preparation of the s chedule of expenditures of Federal awards. The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Budget, Accounting and Reporting Standards (BARS) manu al 4.8.5 establishes reporting requirements related to the schedule of expenditures of Federal awards. Title 2 CFR Part 200, Uniform Guidance, section 302 – Financial Management, requires grantees to identify, in their accounts, all Federal awards re ceived and expended and the Federal programs under which the awards were received. Title 2 CFR Part 200, Uniform Guidance, section 514 – Scope of Audit, requires the audit be conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS) and encompass the financial statements and schedule of expenditure of Federal awards (SEFA). OMB Circular A -133 Compliance Supplement 2015 Part 4 Environmental Protection Agency (EPA) CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds IV. Other Information requires the grantees to include project expenditures during the audit period when they were incurred, regardless of when the grantee received reimbursement. Washington State Auditor’s Office Page 9",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1017656&isFinding=false&sp=false,2026-07-30 13:24:54 4,wa-sao,1018576,2015-001,,WA,Town of Coupeville,City/Town,0357,5315185,no_match,Washington State Auditor's Office,Financial and Federal audit — Town of Coupeville,Financial and Federal,2015,2014-01-01,2015-12-31,2018-09-20,federal_award_compliance,material_weakness,,,The Town did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards,"Background Town management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting. These controls should ensure financial events are identified properly and presented completely. Controls should also ensur e the criteria and accounting methodology applied to financial events is correct. Our audit identified a deficiency in internal controls that adversely affected the Town’s ability to produce reliable schedules. Because of its effect on the Town’s financial reporting, we consider this a significant deficiency. Local governments in Washington that spend federal funds must prepare a Schedule of Expenditures of Federal Awards (SEFA) as part of the annual financial report. Federal regulations require grantees to identify, in their accounts, all federal money spent on the SEFA each fiscal year. If the government spends $750,000 or more in federal grant awards in a year, it must arrange for an audit of its federal grants, in accordance with federal regulations. Further, the government must submit the single audit reporting package to the federal government within 30 calendar days after we issue our audit report or within nine months after the end of the audit period, whichever is earlier. Description of Condition The Town’s internal controls over financial reporting of the SEFA were not sufficient to ensure accurate presentation . Although required for governments reporting on a cash basis, t he Town did not report expenditures paid related to a federal loan on the SEFA. Cause of Condition The Town did not have a clear understanding of the SEFA reporting requirements for its federal grants and loans and did not follow guidance provided in the Budgeting, Accounting and Reporting System (BARS) Manual or Uniform Guidance. Washington State Auditor’s Office Page 7 Although the Town had procedures in place to review the required schedules, the review was not adequate to detect and correct errors related to the SEFA before the audit. Effect of Condition The Town misstated its SEFA because it did not include expenditures of the federal loan awarded under CFDA 10.760 Water and Waste Disposal Systems for Rural Communities. The Town identified the misstatement and corrected the SEFA. However, the additional expenditures caused the Town’s annual federal expenditures to exceed the $750,000 threshold, requiring a federal single audit, after the Town’s federal deadline for completing the audit and submitting its reporting package had expired. After the federal deadline, our Office completed a federal single audit, updated and reissued our financial audit report and issued the Town’s federal single audit report. Recommendation s We recommend the Town:  Prepare the SEFA in accordance with requirements outlined in the Budgeting, Accounting and Reporting System (BARS) Manual and Uniform Guidance  Strengthen internal controls over SEFA preparation to ensure all federal awards spent are included on the schedule Town ’s Response In 2015 the Town received a Water and Waste Disposal Systems for Rural Communities loan from the USDA. Town staff sought guidance from their USDA representative on reporting requirements and was told the loan did not qualify for reporting on the Schedule o f Expenditures of Federal Awards (SEFA) because it was a loan and not a grant. Based on this inaccurate guidance, the loan expenditures were not reported on the 2015 SEFA. Unfortunately, the 2014 -2015 annual audit performed by the State did not find the error in the 2015 SEFA report either. In late 2017 the Town applied for a FEMA grant, which if awarded in 2018 would require specific financial management. In preparation of possibly receiving this grant award the Town sent staff to a Washington State Audito r's training on managing Federal Awards, to ensure records and reporting would be handled appropriately. It was at this training that staff learned that the federal loan awarded under CFDA 10.760 should have been included in the 2015 SEFA report. Washington State Auditor’s Office Page 8 The Town immediately contacted the State Auditor's Office to self -report and then filed a corrected SEFA and scheduled a federal single audit. Auditor’s Remarks We appreciate the Town’s commitment to resolve this finding and thank the Town for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 510 – Financial Statements, establishes criteria and requirements related to the preparation of the schedule of expenditures of Federal awards. The American Institute of Certified Public Accountan ts defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Budget, Accounting and Reporting Standards (BARS) manual 4.8.5 establishes reporting requirements related to the schedule of expenditures of Federal awards. Title 2 CFR Part 200, Uniform Guidance, section 302 – Financial Management, requires grantees to identify, in their accounts, all Federal awards received and expended and the Federal programs under which the awards were received. Title 2 CFR Part 200, Uniform Guidance, section 501 - Audit Requirements, requires non -Federal entities that expend Federal awards of $750,000 or more during its fiscal year to have conducted a single audit. Title 2 CFR Part 200, Unifor m Guidance, section 514 – Scope of Audit, requires the audit be conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS) and encompass the financial statements and schedule of expenditure of Federal awards (SEFA). Title 2 CFR Part 200, Uniform Guidance, section 512 – Report submission, requires the audit be completed, the data collection form and reporting package submitted within the earlier of 30 calendar days after the auditor’s report, or nine months after the end of the audit period. Washington State Auditor’s Office Page 9",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1018576&isFinding=false&sp=false,2026-07-30 13:24:54 5,wa-sao,1019842,2016-001,,WA,Ferry County,County,0113,53019,no_match,Washington State Auditor's Office,Financial and Federal audit — Ferry County,Financial and Federal,2016,2016-01-01,2016-12-31,2019-02-19,federal_award_compliance,material_weakness,,,The County’s internal controls over financial statement preparation were inadequate to ensure accurate reporting of federal expenditures,"Background County management is responsible for designing and follo wing internal controls that provide reasonable assurance regarding the reliability of financial reporting. Our audit identified deficiencies in internal controls that hindered the County’s ability to produce reliable financial statements. All local gover nments in Washington that spend federal funds must prepare a Schedule of Expenditure of Federal Awards (SEFA) as part of the annual financial report. Title 2 Part 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal A wards (Uniform Guidance) requires grantees to identify, in their accounts, all federal program awards received and spent and to report all federal awards spent on the SEFA each fiscal year. Description of Condition Our audit identified a deficiency in internal controls over financial reporting that represents a significant deficiency. The County’s Accounting Department primarily relied on individual departments to submit complete and accurate federal grant expenditure information to the Accounting Depar tment for reporting. The Department did not have an adequate secondary review process of this information to verify whether grant expenditures were included in the proper period. Cause of Condition The Accounting Department compares federal grant revenue received in the year to federal expenditures reported by its departments to confirm that those expenditures are reasonable. However, the Accounting Department did not also consider reimbursements that County departments receive subsequent to year-end. In addition, prior Public Works staff did not have sufficient knowledge of federal requirements to report federal grant expenditures accurately. The Public Works Department inaccurately provided information for federal grant reimbursements, rather than expenditures. Washington State Auditor’s Office Page 7 Effect of Condition Inaccurate financial reports limit access to financial information used by County officials, the public, state and federal agencies and other interested parties. Inaccurate financial statements also can delay or hinder the audit process and increase audit costs. The County did not include $512,879 from a Highway Planning and Construction grant on its SEFA. The omitted expenditures were significant to the County’s major federal program and required further audit examination for compliance with federal requirements. Inaccurate reporting of federal expenditures can also affect the amount of audit coverage required and delay an audit beyond the required nine -month reporting deadline. Should County staff not identify errors or omit ted financial information in a timely manner, the County might not meet its federal reporting deadline and could jeopardize future federal funding. Recommendation s We recommend that the County:  Improve controls over the accuracy and completeness of SEFA preparation  Provide training to all County staff responsible for federal grant reporting County’s Response In 2016 there was a misunderstanding regarding whether the expenditures or the revenue should be reported. The confusion was due to the difference in reporting of FEMA revenues on the Schedule 16 where as other federal projects report expenditures. Auditor’s Remarks We appreciate the County’s commitment to resolving the issues noted. Applicable Laws and Regulations RCW 43.09.200 Local government account ing – Uniform system of accounting, requires the State Auditor to prescribe the system of accounting and reporting for all local governments. Government Auditing Standards, December 2011 Revision, paragraph 4.23 establishes reporting requirements related t o significant deficiencies or material Washington State Auditor’s Office Page 8 weakness in internal control, instances of fraud or abuse, and noncompliance with provisions of law, regulations, contracts, or grant agreements. The American Institute of Certified Public Accountants defines signific ant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 265, Communicating Internal Control Related Matters Identified in an Audit, paragraph 7. The Budgeting, Accounting, and Reporting System (BARS) manual, 3.1.3, Internal Control, requires each local government to establish and maintain an effective system of internal controls that provides reasonable assurance that the government will achieve its objectives. Washington State Auditor’s Office Page 9 SCHEDULE OF FEDERAL AWARD FINDI NGS AND QUESTIONED COSTS Ferry County January 1, 2016 through December 31, 2016",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1019842&isFinding=false&sp=false,2026-07-30 13:24:54 6,wa-sao,1019842,2016-002,,WA,Ferry County,County,0113,53019,no_match,Washington State Auditor's Office,Financial and Federal audit — Ferry County,Financial and Federal,2016,2016-01-01,2016-12-31,2019-02-19,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,"The County did not have adequate internal controls to comply with Davis-Bacon Act (wage rate) requirements. CFDA Number and Title: 20.205, Highway Planning and Construction Federal Grantor Name: Federal Highway Administration, Department of Transportation Federal Award/Contract Number: NA Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA","Background The County spent $1,970,353 federal Highway Planning and Construction funds in 2016. $1,372,075 was spent on the Boulder Creek project for construction of about three miles of roadway. The County spent $529,662 on the Curlew Storm project for construction of a thin lift overlay. The Davis -Bacon Act (Act) requires all laborers and mechanics employed by contractors or subcontractors for work on construction projects financed with more than $2,000 of federal funds to be paid wages no less than those established for the locality of the project (prevailing wage rates) by the Department of Labor. The Act includes a requirement for the contractor and subcontractor to submit to the County weekly, for each week in which any contract work was performed, a copy of its payroll and a signed “Statement of Compliance” (weekly certified payroll reports). The prime contractor may collect the weekly certified payroll reports for the County during the project, but the County remains responsible for compliance and maintaining the documents according to records retention requirements. Washington State Auditor’s Office Page 10 Description of Condition The County did not have adequate controls in place to ensure it collects all weekly certified payroll reports from its prime contractor and subcontractors performing work on its federally funded projects. We consider this deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The County documented subcontractors that worked on the projects and used that information to request weekly certified payroll reports for those periods from the prime contractor. However, the prime contractor did not collect all weekly certified payrolls from subcontractors, and the County did not have a process to follow up when its prime contractor did not respond to the initial request, or separately collect them. Effect of Condition and Questioned Costs The County did not collect 11 of the 89 required weekly certified payroll reports for work performed on the Boulder Creek West and Curlew Storm projects. Also, the County did not ensure that 16 weekly certified pay roll reports were received within seven days for the Boulder Creek West project. Without adequate internal controls, the County cannot demonstrate workers were paid prevailing wages as the Act requires. The County could be liable for paying additional wages if prevailing wages were not paid. Recommendation We recommend the County strengthen internal controls over compliance with the Act’s requirements, including implementing effective controls to ensure it collects all weekly certified payroll reports when due. County’s Response The prime contractor on the Boulder Cr project was a subcontractor on the Curlew Storm/Overlay project. This contractor has a history of not complying when it comes time to hand in required paperwork. The County has a documented history of attempting to collect missing or late paperwork from this contractor. The County did not know at that time that it could seek required paperwork directly from subcontractors as leverage for such required documents. In light of this new Washington State Auditor’s Office Page 11 understanding of what the County ca n do to collect missing paperwork they have developed a Corrective Action Plan that will help in resolving this issue. The County will use a checklist to ensure the timely receipt of all required documents and will withhold payment when necessary to enforce this compliance. The County will notify the prime contractor that compliance of handing in required paperwork will be a part of the contractors performance review and that the County will seek further actions if issues persist; including the request of n ot allowing the prime contractor awards of future projects. Auditor’s Remarks We appreciate the County’s commitment to resolving the issues noted. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303 Internal controls, establishes internal control requirements for management of Federal awards to non-Federal entities. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516 Audit findings, establishes reporting requirements for audit findings. Title 29, U.S. Code of Federal Regulations (CFR), Section 3.3 – Weekly statement with res pect to payment of wages, and Section 3.4 – Submission of weekly statements and the preservation an inspection of weekly payroll records, establishes requirements for submission of weekly certified payroll reports. Washington State Auditor’s Office Page 12",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1019842&isFinding=false&sp=false,2026-07-30 13:24:54 7,wa-sao,1020019,2016-001,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2016,2016-01-01,2016-12-31,2019-08-19,internal_controls,,,,The City did not maintain adequate processes and controls within the Customer Care and Billings system to ensure proper security roles were maintained and provide reliable reporting,"Background City management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting. A certified public accounting firm audited the fund financial statements of the City of Seattle City Light Department and provided its report to our Office. In accordance with auditing standards, we are responsible for reporting internal control deficiencies that affect the City’s financial reporting. Descrip tion of Condit ion The certified public accountant firm’s report identified the following significant deficiency in internal controls over financial reporting: “The financial internal control documentation associated with the CCB [Customer Care and Billings] implementation was incomplete as of the financial statement d ate. In addition, the D epartment’s internal audit personnel was involved in the design and rollout of the IT [Information Technology] security controls in the system. It was also noted that reliable billing system reports were not available in the new system and the processes and controls surrounding the billing/revenue adjustments was not consistently maintained during 2016.” Cause of Condition “The Department did not update previously provided internal control documentation during the pre- and post-implementation phases of the CCB implementation within the finance division.” Effec t of Conditi on “Internal audit personnel was also involved in several IT implementation roles of the system which decreases the reliance that can be placed on future work of the in ternal audit department related to security ov er the CCB system. In Washington State Auditor's Office addition, r eliable reporting tools were created with limited verification of accuracy during the implementation and billing system adjustments were not reviewed during the year.” Rec omm endations The certified public accountant firm recommended the following:  Document financial, physical and IT processes and controls associated with CCB.  Assign a new Security Administrator for CCB outside of the internal audit department.  Limit reliance on future internal audit work related to security over the CCB system.  Identify key roles and functions of IT personnel associated with the CCB system.  Create and verify accurate billing system reports surrounding revenues, accounts receivable, billing consumption and billing adjustments.  Implement and monitor a process for the review and approval of customer billing and accounts receivable adjustments. City’s Respo nse We appreciate the CPA firm’s observations and recommendations in regards to the recently implemented CCB billing system and agree that improvements can be made to enhance the areas noted above. Overall, we believe the implementation of the CCB billing system was successful and Department staff are determined to improve daily operations during 2017. Following is some of the work in progress: 1. Document financial, physical and IT processes and controls associated with CCB. Response: Work on internal controls documentation is in progress and th e goal is to complete by the end of 2 nd quarter 2017. The Department’s Business Technology Solutions team is the lead. 2. Assign a new Security Administrator for CCB outside the internal audit department. Response: Effective in late April 2017, the Department’s Business Technology Solutions has been assigned this responsibility. 3. Limit reliance on internal audit work surrounding the CCB system. Response: The Department’s Business Technology Solutions team has been assigned responsibility for these areas. Washington State Auditor's Office 4. Identify key roles and functions of IT personnel associated with the CCB system. Response: The Department’s Business Technology Solutions team has been assigned the lead to administer CCB billing system related items including identification of key roles and IT functions. 5. Create and verify accurate billing system reports surrounding revenues, accounts receivable, billing consumption and billing adjustments. Response: Work has been in progress since the start of 2017 to improve reporting from the CCB billing system and including for specific items identified. Work is being led by the Department’s Business Technology Solutions team and included end -users from the Department and Seattle Public Utilities. 6. Implement and monitor a process for the review and approval of customer billing and accounts receivable adjustments. Response: The Customer Care Division is in the process of re -evaluating review and approval of customer billing and accounts receivable adjustments . Revised procedures, related documentation, and implementation of these procedures is expected to be completed by June 2017. Audit or’s Rem arks We appreciate the City’s commitment to resolve the identified condition and thank City personnel for their cooperation and assistance during the audit. Appli cable Laws and Regulat ions Government Auditing Standards, December 2011 Revision, paragraph 4.23 states: 4.23 When performing GAGAS financial audits, auditors should communicate in the",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false,2026-07-30 13:24:54 8,wa-sao,1020019,2016-002,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2016,2016-01-01,2016-12-31,2019-08-19,internal_controls,material_weakness,,,"The Seattle City Employees’ Retirement System d id not have adequate internal controls in its accounting, which caused delays in its annual financial statement preparation","Background Management is responsible for designing, implementing and maintaining internal controls to fairly present financial statements and provide reasonable assurance regarding reliability of financial reporting. The City prepares its financial statements in accordance with generally accepted accounting principles (GAAP) as prescribed by the Budgeting, Accounting and Reporting System (BARS) Manual. A certified public accountant firm audited the fund financial statements of the Seattle City Employees’ Retirement System [SCERS] and provided its report to our Office. In accordance with auditing standards, we are responsible for reporting internal control deficiencies that affect the City’s financial reporting. Descrip tion of Condit ion The certified public accountant firm’s audit identified the following significant deficiency in internal controls over financial reporting: “Account Reconciliations and Reporting During the year, the investment and securities lending general ledger accounts were not analyzed and reconciled with subsidiary information on a periodic basis. These periodic reconciliations, together with the posting of correcting journal entries, help ensure timely and accurate interim financial information that can be used to monitor and control operations. In addition, timely reconciliation of accounts is most cost efficient, since reconciliation at a later date is often more difficult and time consuming. A key accounting system goal should be to provide tim ely, accurate financial information for management.” Cause of Condition The City did not prioritize timely account reconciliations of the Seattle City Employees’ Retirement System. Washington State Auditor's Office Effec t of Conditi on Timely reconciliations of general ledger accounts were not performed throughout the year. Further, untim ely reconciliations caused a delay in pr eparing the fin ancial statements. Rec omm endations The certified public accountant firm recommended: “SCERS adopt procedures to ensure that the monthly analysis of general ledger accounts becomes a routine procedure. It was additionally identified the financial statements reflect the reclassification between investment income and securities lending income not reflected in the trial balance. While the proper amounts were reflected in the financial statements, we recommend timely, accurate journal entries in order to prevent errors.” City’s Respo nse In 2015, SCERS began monthly reconciliations with the monthly investment summaries received from its custodial bank, Bank of New York (BNY). To date, SCERS has only been able to receive detailed securities lending information on an annual basis from BNY. SCERS is continuing to work with BNY to ensure that monthly investment summaries are complete and accurate and that detailed s ecurities l ending information are provided monthly. Audit or’s Rem arks We appreciate the City’s commitment to resolve the identified condition and thank City personnel for their cooperation and assistance during the audit. Appli cable Laws and Regulat ions Government Auditing Standards, December 2011 Revision, paragraph 4.23 states: 4.23 When performing GAGAS financial audits, auditors should communicate in the report on in ternal control over financial reporting and compliance, based upon the work performed, (1) significant deficiencies and mat erial w eaknesses in in ternal control; (2) instances of fraud and noncompliance with provisions of laws or regulations that have a material effect on the audit and any other instances that warrant the attention of those charged with governance; (3) no ncompliance with provisions of contracts or grant agreements that has a material effect on the audit; and (4) abuse that has a material effect on the audit. Washington State Auditor's Office The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards , section 265, as follows: Deficiency in internal control. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely b asis. A deficiency in design exists when (a) a control necessary to meet the control objective is missing, or (b) an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met. A deficiency in operation exists when a properly d esigned control does not operate as designed or when the person performing the control does not possess the necessary authority or competence to perform the control effectively. Material weakness. A deficiency, or a combination of deficiencies, in internal control over fin ancial reporting, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be pr evented, or d etected and corrected, on a timely basis. A reasonably possibility exists when the likelihood of an event occurring is either reasonably possible or probably as defined as follows: Reasonably possible. The chance of the future event or events occurring is more than remote but less than likely. Probable. The future event or events a re likely to occur. Significant deficiency. A deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those charged with governance. A11 Indicators of material weaknesses in internal control include:  identification of fraud, whether or not material, on the part of senior management. For the purpose of this indicator, the term “senior management” includ es the principal executive and fin ancial officers as well as any other members of senior man agement who play a significant role in the entity's financial reporting process; Washington State Auditor's Office  restatement of previously issued financial statements to reflect the correction of a material misstatement due to fraud or error;  identification by the auditor of a material misstatement of the financial statements under audit in circumstances that indicate that the m isstatement would not have been detected and corrected by the entity's internal control; and  ineffective oversight of the entity's financial reporting and internal control by those charged with governance. RCW 43.09.200 Local government accounting – Uniform system of accounting, states in part: The state auditor shall formulate, prescribe, and install a system of accounting and reporting for all local governments, which shall be uniform for every public institution, and every public office, and every public account of the same class. Budgeting, Accounting, and R eporting S ystem (BARS) Manual - Accounting, Accounting Principles and Internal Control, Internal Control states in part: 3.1.3.20 Internal control is a process – affected by those charged with governance, management and other p ersonnel designed to provide reasonable assurance regarding the achievement of objectives in the following categories:  Effectiveness and efficiency of operations  Compliance with applicable laws and regulations  Reliability of financial reporting 3.1.3.30 Management and the governing body are responsible for the government’s performance, compliance and financial reporting. Therefore, the adequacy of internal control to provide reasonable assurance of achieving these objectives is also the responsibility of management and the governing body. The governing body has ultimate responsibility for ensuring adequate controls to achieve objectives, even though primary responsibility has been delegated to management. Since management and the governing body are assumed to work in harmony, both parties are collectively referred to as “management” throughout the rest of this section. 3.1.3.140 This objective refers to fair p resentation of financial statements and r equired schedules in all material r espects in accordance with the stated basis of accounting. Washington State Auditor's Office 3.1.3.150 In meeting this objective, the government should have controls that accomplish the following key functions:  Identification of financial events – Controls should ensure fin ancial events and transactions are properly identified and recorded.  Properly applying accounting standards – Controls should ensure correct criteria and methodology is applied when accounting for financial events. When the correct method of accounting for or reporting a transaction is unclear, the government should seek clarification by performing r esearch, contracting for accounting assistance, or communicating with the State Auditor’s Office or standard setting bodies.  Correctly accounting for all financial events – Controls should ensure that:  Only valid transactions are recorded and reported.  All transactions occurred during the period are recorded and reported.  Transactions are recorded and reported at properly valued and calculated amounts.  Recorded and reported tr ansactions accurately reflect legal rights and obligations.  Transactions are recorded and reported in the account and fund to which they apply.  Preparation of the annual report – Controls should ensure that fin ancial stat ements and r equired s chedules are properly compiled and p repared from sou rce accounting records. Controls should also ensure correct presentation of statements and schedules. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false,2026-07-30 13:24:54 9,wa-sao,1020019,2016-003,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2016,2016-01-01,2016-12-31,2019-08-19,federal_award_compliance,material_weakness,3291160.0,"Questioned Cost Amount: $3,291,160","The City did not have adequate internal controls in place to ensure compliance with federal requirements over allowable costs and subrecipient monitoring. CFDA Number and Title: 14.218 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U. S. Department of Housing and Urban Development Federal Award/Contract Number: B16MC530005, B14MC530005, B15MC530005,","The City did not have adequate internal controls in place to ensure compliance with federal requirements over allowable costs and subrecipient monitoring. CFDA Number and Title: 14.218 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U. S. Department of Housing and Urban Development Federal Award/Contract Number: B16MC530005, B14MC530005, B15MC530005, B13MC530005, B10MC530005 Pass-through Entity Name: NA Pass-through Award/Contract NA Number: Questioned Cost Amount: $3,291,160 Des cripti on o f Con dit ion The objective of the Community Development Block Grant program is to develop viable urban communities by providi ng d ecent housing and a suitable living environment, and expanding economic opportunities, principally for persons of low and moderate income. During 2016, the City of Seattle spent $10,930,929 in federal grant funds under this program, of which $6,124,407 was passed to 17 subrecipients for 30 projects. The City must monitor subrecipients’ activities to ensure subawards are used for authorized purposes. This monitoring can be accomplished through collecting supporting documentation from subrecipients with requests for payment or reviewing supporting documentation during onsite monitoring vis its. The mon itoring, particularly the onsite visits, is important to ensure that a subrecipient’s administration of the program is appropriate and complies with federal requirements, including those relating to allowable costs and activities and rehabilitation requirements. For those Washington State Auditor's Office subawards funded under the Uniform Guidance, the City also must perform risk assessments to evaluate subrecipients’ risk of noncompliance and d etermine the appropriate level of monitoring. The City requires its subrecipients to submit detailed general ledger reports as part of the request for payment and has a policy that requires semiannual onsite visits to review supporting documentation to ensure costs charged to the program are allowable and supported. The City’s process for subrecipient monitoring and determining if costs are allowable and supported was not working as intended for projects funded under the Unif orm Guidance. During our audit, we reviewed 12 of 27 projects funded under the Uniform Guidance and found the Human Service Department did not:  Perform risk assessments for six subrecipients  Obtain ad equate supporting documentation wi th the requests for p ayment or perform an onsite fiscal v isit for four subrecipients, at whi ch a review of documentation to support the costs reimbursed would have been done  Perform an onsite assessment for one subrecipient to ensure compliance with rehabilitation requirements We consider these deficiencies in int ernal controls to be a material weakness. This issue was reported in the prior audit as finding 2015-001. Cau se o f Con diti on The grants and contracts specialists responsible for approving subrecipient requests for payments and performing onsite visits did not have the necessary tr aining and resources to perform adequate reviews. The Department was not aware that risk evaluations are required for all subrecipients receiving money from federal awards. During our 2016 audit, the Department was made aware of this requirement and developed and implemented a new subrecipient monitoring policy manual and trained grant and contract specialists in 2017. Eff ect of Con diti on a n d Qu e stion e d Costs Without adequate internal controls in place, the Department cannot ensure that the subrecipients used the program funds in accordance with the grant agreement and federal requirements. The Department paid $3,291,160 to four subrecipients without performing onsite visits or requiring adequate supporting do cumentation for incurred costs. Because of insufficient review of subrecipient expenditures, the City us ed federal funds to Washington State Auditor's Office reimburse its subrecipients for costs that were not supported as required. As a result,we are q uestioning the total amount paid to these subrecipients. In addition, the Department cannot ensure compliance with rehabilitation requirements for one subrecipient. Recom m en dation s We recommend the Department establish internal controls to ensure compliance with the subrecipient monitoring requirements. Specifically, the Department should:  Provide training and resources to grants and contracts specialists to ensure they have an adequate understanding of federal allowable costs and subr ecipient monitoring requirements  Evaluate each subrecipient’s risk of noncompliance to determine the appropriate level of monitoring activities  Perform adequate financial review required by City policies through:  Requiring subrecipients to provide adequate documentation to support the incurred costs incurred; and/or  Performing onsite visits that include a review of source documentation. Cit y’s Res pon s e The City agrees with the Auditor’s finding and had taken corrective actions to ensure compliance with federal requirements over allowable costs and subrecipient monitoring going forward. Au ditor’s Rem ark s We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applica ble Laws an d Regu lation s The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 303, Internal controls, establishes requirements for in ternal controls for non-federal entities. Washington State Auditor's Office Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 331, Requirements for p ass-through entities, establishes subrecipient monitoring and management requirements for pass- through entities. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 516, Audit findings, establishes reporting requirements for audit findings. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false,2026-07-30 13:24:54 10,wa-sao,1020019,2016-004,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2016,2016-01-01,2016-12-31,2019-08-19,federal_award_compliance,material_weakness,101972.0,"Questioned Cost Amount: $101,972","The City did not have adequate internal controls in place to ensure compliance with federal requirements over allowable costs and subrecipient monitoring. CFDA Number and Title: 14.241 Housing Opportunities for Persons with AIDS Federal Grantor Name: Department of Housing and Urban Development, Office of Community Planning and Development Federal Award/Contract Number: WAH13-F001,WAH14-F001, WAH15","Cause of Condition The grants and contracts specialists responsible for approving subrecipient requests for payments and performing onsite visits did not have the necessary tr aining and resources to perform adequate reviews. The Department was not aware that risk evaluations are required for all subrecipients receiving money from federal awards. During our 2016 audit, the Department was made aware of this requirement and developed and implemented a new subrecipient monitoring policy manual and trained grants and contracts specialists in 2017. Effec t of Conditi on and Questio ned Cost s Without adequate internal controls in place, the Department cannot ensure the subrecipients used the program funds in accordance with t he grant agreement and federal requirements. The Department paid $101,972 to one subrecipient without performing an onsite fiscal visit or requiring adequate supporting documentation for incurred costs. Because of insufficient review of subrecipient expenditures, the City used federal funds to reimburse its subrecipient for costs that were not supported as required. As a result, we are questioning the total amount paid to this subrecipient. Washington State Auditor's Office Rec omm endations We recommend the Department establish internal controls to ensure compliance with the subrecipient monitoring requirements. Specifically, the Department should:  Provide training and resources to grants and contracts specialists to ensure they have an adequate understanding of federal requirements over allowable costs and subrecipient monitoring  Evaluate each subrecipient’s risk of noncompliance to determine the appropriate level of monitoring activities  Perform adequate financial review required by City policies through:  Requiring subrecipients to provide adequate documentation to support the incurred costs; and/or  Performing onsite visits that include a review of source documentation. City’s Respo nse The City agrees with the Auditor’s finding and had taken corrective actions to ensure compliance with federal requirements over allowable costs and subrecipient monitoring going forward. Audit or’s Rem arks We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Appli cable Laws and Regulat ions The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 303, Internal controls, establishes requirements for in ternal controls for non-federal entities. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 331, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass- through entities. Washington State Auditor's Office Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 516, Audit findings, establishes reporting requirements for audit findings. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false,2026-07-30 13:24:54 11,wa-sao,1020019,2016-005,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2016,2016-01-01,2016-12-31,2019-08-19,federal_award_compliance,material_weakness,1180042.0,"Questioned Cost Amount: $1,180,042",The City did not have adequate internal controls in place to ensure compliance with federal requirements over allowable cost and subrecipient monitoring. CFDA Number and Title: 14.267 Continuum of Care Program Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: Multiple awards Pass-through Entity Name: NA Pass-through Award/Contract NA Number,"Cause of Condition The grants and contracts specialists responsible for approving subrecipient requests for payments and performing onsite visits did not have the necessary tr aining and resources to perform adequate reviews. The Department was not aware that risk evaluations are required for all subrecipients receiving money from federal awards. During our 2016 audit, the Department was made aware of this requirement and developed and implemented a new subrecipient monitoring policy manual and trained grants and contracts specialists in 2017. Washington State Auditor's Office Effec t of Conditi on and Questio ned Cost s Without adequate internal controls in place, the Department cannot ensure that the subrecipients used the program funds in accordance with the grant agreement and federal requirements. Our audit found fis cal or pr ogram monitoring was not performed during 2016 for 10 of 16 projects tested. The Department performed onsite visits for three projects in early 2017 and reviewed supporting documentation to verify the costs and activities were allowable. As a result, we are not questioning the costs related to these projects. The Department paid $1,180,042 for seven projects without performing onsite visits or requiring adequate supporting do cumentation for incurred costs. Because of insufficient review of subrecipient expenditures, the City us ed federal funds to reimburse six subrecipients for costs that were not supported as required. As a result, we are questioning the total amount paid to these subrecipients. We projected the identified error from our non-statistical sample of 16 projects to all 74 projects funded by the program, which resulted in an estimated $5,457,692 in likely questioned costs. The known questioned costs of $1,180,042 are includ ed in the to tal likely questioned costs of $5,457,692. Rec omm endations We recommend the Human Service Department establish internal controls to ensure compliance with the subrecipient monitoring requirements. Specifically, the Department should:  Provide training and resources to grants and contracts specialists to ensure they have an adequate understanding of federal allowable costs and subrecipient monitoring requirements  Evaluate each subrecipient’s risk of noncompliance to determine the appropriate level of monitoring activities  Perform adequate financial review required by City policies through:  Requiring subrecipients to provide adequate documentation to support the incurred costs; and/or  Performing onsite visits that include a review of source documentation. Washington State Auditor's Office City’s Respo nse The City agrees with the Auditor’s finding and had taken corrective actions to ensure compliance with federal requirements over allowable costs and subrecipient monitoring going forward. Audit or’s Rem arks We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Appli cable Laws and Regulat ions The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 303, Internal controls, establishes requirements for internal controls for non-federal entities. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 331, Requirements for p ass-through entities, establishes subrecipient monitoring and management requirements for pass- through entities. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 516, Audit findings, establishes reporting requirements for audit findings. U.S. Office of M anagement and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, Subpart D – Federal Agencies and Pass-Through Entities, section .400(d) Pass-through entity responsibilities, establishes subrecipient monitoring and management requirements for pass- through entities. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false,2026-07-30 13:24:54 12,wa-sao,1020019,2016-006,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Financial and Federal audit — City of Seattle,Financial and Federal,2016,2016-01-01,2016-12-31,2019-08-19,federal_award_compliance,material_weakness,,,The City did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards,"Background City management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting. These controls should ensure financial events are identified properly and presented completely. Controls should also ensure the criteria and accounting methodology applied to financial events are correct. Local governments in Washington that spend federal funds must prepare a Schedule of Expenditures of Federal Awards (SEFA) as part of the annual financial report. Federal regulations require grantees to identify, in their accounts, all federal money spent on the SEFA each fiscal year. Our audit identified a deficiency in internal controls that adversely affected the City’s ability to produce a relia ble SEFA. Because of its effect on the City’s financial reporting, we consider this a significant deficiency. Description of Condition When preparing the SEFA, the Citywide Accounting department relied on other City departments’ supporting documentation a nd information to ensure accurate presentation. During the 2017 audit, Citywide Accounting brought to our attention that a department did not report its 2016 grant expenditures for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds , which were funded by the U.S. Environmental Protection Agency (EPA). Cause of Condition The City did not clearly understand the SEFA reporting requirements for the grant under the Budgeting, Accounting and Reporting System (BARS) Manual and Uniform Guidance. The Department treated this grant as a federal loan and reported the 2016 expenditures upon its first drawdown in 2017. Washington State Auditor's Office Effect of Condition Inaccurate financial reports limit access to financial information used by City officials, the public, state and federal agencies and other interested parties. In addition, these conditions delay the audit process and increase audit costs. The City understated its 2016 SEFA by $17,760,345 because it did not include expenditures for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds. The correct amount makes this a major program required to be audited for fiscal year 2016. The City subsequently corrected the misstatement. Our Office completed the review of this grant, and updated and reissued our financial audit report and federal single audit report in 2019. Recommendations We recommend the City dedicate sufficient time and resources to strengthen internal controls over SEFA preparation to ensure the information received from the departments is accurate and based on federal expenditures. We further recommend the City to tra in departmental staff responsible for SEFA preparation to review the BARS Manual and Uniform Guidance to ensure expenditures are reported in the correct year. City’s Response The City acknowledges the Auditor’s concerns regarding inadequate internal controls over financial reporting on the SEFA. As relates to the specific deficiency, the Department of Ecology Loan for the Henderson North Combined Sewer Overflow Reductions project, the auditor asserts that the loan drawdowns covering 2015 and 2016 were not recorded in those years. The City disputes the finding for 2015. Because the loan in question was not awarded to the City until 2016, expenditures of federal funds were not known when the SEFA was prepared for 2015. Further, the City received guidance from the EPA indicating that the triggering action for audit purposes is when an SRF borrower submits an invoice/disbursement/payment request to the state. The City did not submit a disbursement until 7/31/2016. Regarding 2016, the City acknowledges that the drawdown request submitted in 2016 but received in 2017 was not included in the 2016 SEFA. As federal (EPA) and State (Department of Ecology) agencies have provided conflicting guidelines, the City will work to clarify rules and procedures for reporting retroactive awards on the SEFA. The City appreciate SAO’s guidance on this issue. Washington State Auditor's Office Auditor’s Remarks Per OMB Circular A-133 Compliance Supplement 2015 Part 4 for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds (CWSRF), Environmental Protection Agency (EPA) requires the grantees to include project expenditures during the audit period when they were incurred, regardless of when the grantee received reimbu rsement. EPA further clarifies that if a subrecipient incurs expenditures under an approved CWSRF loan in one audit period for which it is not reimbursed by the State until a subsequent audit period, those expenditures should be reported on the subrecipie nt’s SEFA in the year in which the outlay was made, regardless of when the subrecipient received reimbursement. We thank the City for its commitment to fiscal accountability and accurate financial reporting. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 510 – Financial Statements, establishes criteria and requirements related to the preparation of the schedule of expenditures of Federal awards. The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Budget, Accounting and Reporting Standards (BARS) manu al 4.8.5 establishes reporting requirements related to the schedule of expenditures of Federal awards. Title 2 CFR Part 200, Uniform Guidance, section 302 – Financial Management, requires grantees to identify, in their accounts, all Federal awards re ceived and expended and the Federal programs under which the awards were received. Title 2 CFR Part 200, Uniform Guidance, section 514 – Scope of Audit, requires the audit be conducted in accordance with Generally Accepted Government Audit ing Standards (GAGAS) and encompass the financial statements and s chedule of expenditure of Federal awards (SEFA). OMB Circular A-133 Compliance Supplement 2016 Part 4 Environmental Protection Agency (EPA) CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds IV. Other Information requires the grantees to include project expenditures during the audit period when they were incurred, regardless of when the grantee received reimbursement. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false,2026-07-30 13:24:54 13,wa-sao,1020241,2016-001,,WA,Shoreline Fire Department,Fire Protection District,1126,,not_municipal,Washington State Auditor's Office,Accountability audit — Shoreline Fire Department,Accountability,2016,2016-01-01,2016-12-31,2018-08-27,procurement,,,,The District did not verify purchases made through its purchasing cooperative complied with the state laws and regulations,"Background Fire districts are required to competitively bid all purchases over $50,000 (RCW 52.14.110). Specifications for the purchases must be available to all interested parties and must be approved by the governing body. The submitted bids must be opened and read publicly at a fixed time and place. State law allows fire districts to fulfill bidding requirements through a process referred to as piggybacking. “Piggybacking” refers to one local government making purchases from contracts awarded by another government or group of governments via an interlocal agreement or contract. To ensure compliance when procuring through piggybacking, the local government must ensure its own bidding requirements are met before expending public funds. Description of Condition In 2016, Shoreline Fire District entered into a purchasing cooperative to purchase a ladder truck totaling $1,187,500. The District observed other public agencies use the same purchasing group and verified state law authorized the use of purchasing cooperatives. However, the District did not ensure the procurement process used by the purchasing cooperative complied with Washington bid requirements. The purchasing cooperative selected a vendor using a request for proposal process, rather than a formal competitive bidding process. Cause of Condition The purchasing cooperative’s procurement method complied with the out -of-state lead agency’s bid requirements; however, it did not satisfy the procurement regulations in Washington. The District believed all Washington procurement regulations were met by entering into the cooperative contract. However, the District did not know they were required to verify and maintain evidence that Washington’s bid laws were satisfied. Washington State Auditor’s Office Page 6 Effect of Condition The District cannot demonstra te it adequately safeguarded public resources by ensuring that the purchase complied with the District’s applicable laws and regulations. Recommendation We recommend the District ensure that purchases made through purchasing cooperatives or other governmen t municipalities comply with the District’s applicable laws and regulations. In addition, the District should retain documentation of its efforts to verify the purchase complied with Washington procurement regulations before making the purchase. District’s Response The Shoreline Fire Department is committed to cooperating with the State Auditor to ensure that our Department is managed and operated in full compliance with the law. The Department is also committed to complying with all public bidding laws to ensure that public funds are spent in the most responsible and efficient manner possible. Unfortunately, when purchasing the ladder truck, our Department did not ensure the procurement process used by the purchasing cooperative complied with Washington St ate bid requirements. This was an unintentional oversight of our policy language; however, the purpose of engaging with this purchasing cooperative was solely in the interest of saving the taxpayers money. In the end, we believe that this purchase resulted in savings to the citizens as we were provided with multiple discounts. Although we had this misstep, the Department felt due diligence was applied by researching the purchasing cooperative contract with Pierce, other public agencies that had made the pu rchases under the same contract, reading of the Washington State Interlocal Cooperative Act, and solicitation of a legal opinion from counsel. The language of the Interlocal Cooperative Act authorized the use of the purchasing cooperative contract. While we disagree with the decision to issue the Department a finding, we understand that it was our responsibility to collect and maintain evidence that Washington’s bid laws were satisfied. We are planning to implement additional internal controls to ensure that the State bid requirements are met going forward by requiring that employees responsible for purchasing on behalf of the Department to present verification to the Commissioners that all statutory requirements have been met before a request for approval is presented to the Board. Washington State Auditor’s Office Page 7 In conclusion, our Department performed due diligence in evaluating and initiating the purchase, but erred in piggybacki ng onto a contract that was non-compliant with State law. This error likely did not cost our taxpayers additional funds, but we recognize the importance of being compliant with bid laws. The Department views these annual audits as a part of our continuing quality improvement process meant t o improve our methods for safeguarding the citizen's dollars. Auditor’s Remarks We appreciate the District’s commitment to resolve the finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action take during our next regular audit. Applicable Laws and Regulations RCW 52.14.110, Purchases and public works – Competitive bids required – Exceptions, establishes the procurement thresholds for fire protection district. RCW 39.34.030 (5)(b), Joint powers—Agreements for joint or cooperative action, requisites, effect on responsibilities of component agencies —Joint utilization of architectural or engineering services —Financing of joint projects, states that entering into a cooperative agreement does not reli eve any public agency of its responsibility imposed upon by law. Washington State Auditor’s Office Page 8 RELATED REPORTS Financial Our opinion on the District’s financial statements is provided in a separate report, which includes the District’s financial statements. That report is available on our website , http://portal.sao.wa.gov/ReportSearch . Washington State Auditor’s Office Page 9 INFORMATION ABOUT TH E DISTRICT King County Fire Protection District No. 4 was formed in 1939 and now operates as Shoreline Fire Department. The District serves a population of approximately 55,000 citizens within the City of Shoreline, approximately 14 square-miles. In addition, the ALS program serves the cities of Bothell, Kenmore, Lake Forest Park and a portion of Woodinville resulting in an additional population of 75,000 in an area of approximately 22 square-miles. The District provides 24 -hour coverage for fire suppression, technical rescue, emergency medical and advanced life support, fire prevention and education, fire investigations, inspections and code co mpliance to its service area. An elected, five -member Board of Commissioners governs the District. The Board appoints a Fire Chief to oversee the District ’s daily operations as well as its 120 employees. In fiscal year 2016, the District operated on an annual budget of about $24.6 million. Contact information related to this report Address: Shoreline Fire Department 17525 Aurora Avenue N. Shoreline, WA 98133 Contact: Joyce Brown, Administrative Director Telephone: (206) 533-6570 Website: www.shorelinefire.com Information current as of report publish date. Audit history You can find cur rent and past audit reports for Shoreline Fire Department at http://portal.sao.wa.gov/ReportSearch . Washington State Auditor’s Office Page 10 ABOUT THE STATE A UDITOR’S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. We work with our audit clients and citizens to achieve our vision of government that works for citizens, by helping governments work better, cost less, deliver higher value, and earn greater public trust. In fulfilling our mission to hold state and local governments accountable for the use of public resources, we also hold ourselves accountable by conti nually improving our audit quality and operational efficiency and developing highly engaged and committed employees. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audi ts of state agencies and local governments as well as fraud, state whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously, and provide training and technical assistance to governments, and have an extensive quality assurance program. Contact information for the State Auditor’s Office Public Records requests PublicRecords@sao.wa.gov Main telephone (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Website www.sao.wa.gov",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020241&isFinding=false&sp=false,2026-07-30 13:24:54 14,wa-sao,1020366,2016-001,,WA,City of Chehalis,City/Town,0487,5311475,no_match,Washington State Auditor's Office,Financial and Federal audit — City of Chehalis,Financial and Federal,2016,2016-01-01,2016-12-31,2019-03-28,federal_award_compliance,material_weakness,,,The City’s accounting and financial statement preparation controls were not adequate to accurately report the Schedule of Expenditures of Federal Awards,"Background City management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting . The City also must prepare a Schedule of Expenditures of Federal Awards (SEFA) as part of the annual financial report. Title 2 Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires a grantee to identify, in its accounts, all federal program awards received and expended. The City must report all federal awards expended on the SEFA each fiscal year. Our audit identified internal control deficiencies that adversely affected the City’s ability to produce reliable financial statements. Description of Condition The former Finance Manager was unaware of the types of grants received by the City, which contributed to the City’s lack of controls over the proper reporting of both state and federal grants on the SEFA. Additionally, t he City did not have an effective review process to ensure the accuracy of the SEFA. We consider this to be a significant deficiency in internal controls. Cause of Con dition The former Finance Manager lacked adequate training and resources to accurately report federal expenditures on the schedule. Further, the City lacked a formalized review process over the final financial statement s. Washington State Auditor’s Office Page 7 Effect of Condition Our audit identified the following errors on the SEFA provided for audit:  Airport Improvement Grant program (CFDA 20.106) grant expenditures were understated by $576,693.  A State Transportation Grant was recorded in error , which resulted in the program being overstated by $396,180. These changes to the SEFA resulted in a change of audit scope that required the City to obtain an audit of an additional federal grant program for fiscal year 2016. The city corrected these errors. Recommendation s We recommend the City:  Ensure employees responsible for financial statement preparation have adequate training and resources to ensure financial schedules are presented accurately  Implement an effective review process over the final financial statements City ’s Response The City of Chehalis would like to thank the Washington State Auditor’s Office and the Olympia Team for its hard work on the City of Chehalis audits and its recommendations to improve our process. The City would like to note that 1) the condition addressed by this audit finding does not impact any of the financial statement in the City’s annual report except for the 2016 Schedule of Expenditures of Federal Awards (SEFA); 2) 2016 SEFA reporting discrepancy was identified by the City during 2017 SEFA preparation, subsequent to the completion of the 2016 audit, and reported to the Auditor’s Office. The former Finance Manager retired in September 2017. A new Finance Director was hired in December 2017 who is working to improve staff training and implement financial repo rting and review procedures over the SEFA to ensure proper reporting of SEFA. Auditor’s Remarks We appreciate the City’s commitment to resolve this finding. We will review the corrective action taken during our next regular audit. We th ank the City for it s cooperation and assistance during the audit. Washington State Auditor’s Office Page 8 Applicable Laws and Regulations Government Auditing Standards, December 2011 Revision, paragraph 4.23 establishes reporting requirements related to significant deficiencies or material weaknesses in internal control, instances of fraud or abuse, and noncompliance with provisions of law, regulations, contracts, or grant agreements. The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards , s ection 265, Com municating Internal Controls R elated Matter Identified in an Audit, paragraph 7. RCW 43.09.200 Local government accounting – Uniform system of accounting, requires the state auditor to prescribe the system of accounting and reporting for all local governments. The Budgeting, Accounting, and R eporting System (BARS) Manual, 3.1.3, Internal Control, r equires each loc al government to establish and maintain an effective system of internal controls that provides reasonable assurance that the government will achieve its objectives. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.502 Determining Federal awards expended, provides the basis for determining when federal awards expended. Washington State Auditor’s Office Page 9",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020366&isFinding=false&sp=false,2026-07-30 13:24:54 15,wa-sao,1020366,2016-002,,WA,City of Chehalis,City/Town,0487,5311475,no_match,Washington State Auditor's Office,Financial and Federal audit — City of Chehalis,Financial and Federal,2016,2016-01-01,2016-12-31,2019-03-28,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,"The City did not have adequate internal controls to ensure compliance with federal Davis -Bacon Act (prevailing wage) requirements. CFDA Number and Title: 20.106 Airport Improvement Grant Federal Grantor Name: Federal Aviation Administration, U.S. Department of Transportation Federal Award/Contract Number: 3-53-0012-017-2016 Pass-through Entity Name: NA Pass-through Award/Contract Number: NA Quest","Background During fiscal year 2016, the City of Chehalis spent $692,210 through the Airport Improvement Grant. The Davis-Bacon Act (Act) requires that all laborers and mechanics employed by contractors or subcontractors to work on construction contracts of more than $2,000 financed with federal funds must be p aid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor. The A ct includes a requirement for the contractor or subcontractor to submit to the City weekly, for each week in which any contract work is performed, a copy of its payroll and a statement of compliance (weekly certified payroll). Description of Condition The City did not have an adequate process in place to ensure contractors and subcontractors working on federal grant -funded projects filed week ly certified payrolls. Washington State Auditor’s Office Page 10 We consider this internal control deficiency to be a material weakness, which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The City did not dedicate the necessary resources to develop an adequate system of monitoring and review to ensure weekly certified payrolls were submitted by all contractors and subcontractors. The City did not know it could assess sanctions for contractor noncompliance with this requirement. Effect of Condition and Questioned Costs The City did not obtain all weekly certified payrolls for the Chehalis -Centralia Airport Apron Rehabilitation project. Our audit found that 28 of the 104 required weekly certified payroll reports were not obtained d uring 2016. The missing weekly certified payroll reports were all from subcontractors. Without adequate internal controls, the City cannot demonstrate workers were paid prevailing wages as required by the Act. The City could be liable for paying additional wages if prevailing wages were not paid. Recommendation We recommend the City implement internal controls to ensure compliance with the Act’s requirements, including implementing an effective process to ensure all weekly certified payrolls are collected. This could include actions such as assessing sanctions on noncompliant contractors in accordance with Standard Specifications until certified payroll reports are received for all hours worked during each pay period. City ’s Response The City would like to thank the State Auditor’s Office for their recommendations and assistance throughout the audit. The City hired an engineering firm to oversee the program, including obtaining weekly certified payrolls from the contractors and subcontractors. It was verifi ed, after the initial auditor’s requests for records, that the required weekly certified payrolls from the contractors and subcontractors had been obtained by the engineering firm with some exceptions and were available at the engineering firm. However, the City staff was unaware of the federal requirements during the audit, Washington State Auditor’s Office Page 11 and the City did not have controls in place to ensure and monitor that the engineering firm was complying with the grant requirements. The City had staff turnover at the Airport during the grant period. The City’s former Airport Director resigned in August 2017. The City’s new Airport Operations Coordinator has taken over the grant project but was unaware of the federal grant requirements of Davis-Bacon Act. For future Airport grants, t he City will create a checklist and monitor the engineering firm to ensure all grant requirements are met. In addition, the Airport staff will attend a federal grant training to gain knowledge of federal grant requirements. Auditor’s Remarks We appreciate the City’s commitment to resolve this finding. We will review the corrective action taken during our next regular audit. We th ank the City for its cooperation and assistance during the audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 200.303 Internal controls, establishes internal control requirements for management of Federal awards to non-Federal entities. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 200.516 Audit findings, establishes reporting requirements for audit findings. Title 29, U.S. Code of Federal Regulations (CFR), Section 5.5 – Contract provisions and related matters, establishes required contract provisions with regard to prevailing wages. Title 29, U.S. Code of Federal Regulations (CFR), Section 3.3 – Weekly statement with respect to payment of wages establishes weekly certified payroll requirements. Washington State Auditor’s Office Page 12",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020366&isFinding=false&sp=false,2026-07-30 13:24:54 16,wa-sao,1020705,2017-001,,WA,Northwest Educational Service District No 189,Educational Service District,2649,,not_municipal,Washington State Auditor's Office,Financial and Federal audit — Northwest Educational Service District No 189,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-31,internal_controls,significant_deficiency,,,The District did not report the liabilities related to its other postemployment benefits in accordance with governmental accounting standards,"Background District board members, state and federal agencies, and the public rely on the information included in the financial statements and report to make decisions. District management is responsible for designing and following in ternal controls that provide reasonable assurance regarding the reliability of financial reporting. Our audit identified a significant deficiency in internal controls over financial reporting that hindered the District’s ability to produce reliable finan cial statements. Description of Condition The District did not report the liabilities related to other postemployment benefits in accordance with Governmental Accounting Standards Board (GASB) Statement No. 45 – Accounting and Financial Reporting by Employ ers for Postemployment Benefits Other Than Pensions. Cause of Condition When GASB Statement No. 45 became effective for governments, the District reported under a different basis of accounting. Subsequently, the District switched to reporting in accordance with generally accepted accounting principles (GAAP); and asserts that staff evaluated the GASB during conversion and determined it was not applicable. The District chose not to restate the financial statements to include other post - employment benefits for fiscal year 2017. Effect of Condition District did not obtain an actuarial study to determine the amount of liabilities related to other post-employment benefits. Consequently, the District did not report Washington State Auditor's Office ___________________________________________________________________________________________________________________ this liability or present the note disclosures and other information required by generally accepted accounting principles. Recommendation s We recommend the District:  Perform necessary research and obtain needed actuarial studies to correctly report other post-employment benefit liabilities on its financial statements.  Establish a more formalize process for technical review of the financial statements to ensure accurate preparation and reporting of the District financial statements in accordance with generally accepted accounting principles and reporting requirements. District ’s Response The District appreciates the opportunity to respond to the finding of the State Auditor’s office; however we respectfully disagree with the State Auditor’s Office (SAO) position related to the application of Government Accounting Standards Board Statement No. 45 (GASB 45) – Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions, to the Northwest Educational Service District No. 189 financial statements. As indicated in the State Auditor’s Office finding, it is accurate that the District did not obtain an actuarial study to determine postemployment benefit (OPEB) liabilities, as the District believes it has properly accounted for OPEB liab ilities in accordance with GASB 45. The District’s review and analysis of the underlying accounting pronouncements resulted in recording activity for post -retirement benefits for employees offered through the Health Care Authority (HCA) as a cost -sharing plan under an arrangement equivalent to a trust. The District’s current relationship with the HCA consists of monthly payments for health benefit premiums for eligible active employees. The District does not make any direct payments to HCA for retiree healthcare, and was unaware that funds paid for health benefit premiums could be used for such a purpose. All nine Educational Service District’s in the state of Washington changed from modified accrual financial reporting to full accrual financial reporting in accordance with generally acce pted accountin g principles (GAAP) in the 2011-2012 school year. During the year of implementation, the ESD accounting manual went through a significant revision with consultation from OSPI and the State Auditor’s Office, including a thorough technical review of all GAAP and GASB technical guidance. GA SB 45 was in effect at the time the revised manual Washington State Auditor's Office ___________________________________________________________________________________________________________________ was adopted. The State Auditor’s Office conducts an audit of the District on an annual basis. The implementation of GASB 45 has never been brought up as an issue during these annual audits, and the District has received a clean audit opinion with no findings every year since the initial year of financial reporting in accordance with GAAP. Several months after the conclusion of the District’s 2016 -17 annual audit, including the exit conference attended by th e District Board representatives, at which no findings, management letter, or exit items were identified, the State Auditor’s Office communicated to the District that they would receive a finding for not reporting a GASB 45 liability. The State Auditor’s O ffice did not accept the collaborative research and position of the nine ESD’s in the application of GASB 45. Further communication indicated that even if the District procured services for an actuarial study for GASB 45 liabilities that the District would still receive a finding, but would receive a clean audit opinion. Government Accounting Standards Board Statement No. 75 (GASB 75) – Accounting and Financial Reporting for Postemployment Benefits other than Pensions replaces GASB 45 beginning with the 201 7-2018 reporting year. The District is aware of this new GASB statement and has been actively researching and analyzing the applicability of GASB 75 since the beginning of this year. The District evaluated the options and decided the fiscally responsible solution was to avoid spending in excess of $13,000 for an actuarial study, plus additional costs related to time for the State Auditor’s Office to audit the study, in order to make adjustments to our 2016 -17 financial statements for an expiring GASB statem ent. The District’s position is to focus time and resources on the implementation of GASB statements that are applicable effective with the 2017 -18 year. Management’s belief is that the 2016 -17 financial statements, as reported, fairly reflect the financia l position of the District, and accurately provides information needed to make financial decisions, consistent with the last six years. Unfortunately, this decision resulted in this audit finding as well as a qualified opinion on the financial statements. In response to the State Auditor’s Office recommendations, the District will continue the research of OPEB liabilities in accordance with GASB 75 and make necessary changes to the financial statements and financial disclosures, as appropriate. In addition , the District will implement a more formalized technical review of the financial statements in accordance with generally accepted accounting principles and reporting requirements, and document the review for the State Auditor’s Office. Washington State Auditor's Office ___________________________________________________________________________________________________________________ The District apprec iates the opportunity to respond to the State Auditor’s Office finding. Auditor’s Remarks We appreciate the District’s communication throughout the audit process. We reassert that District management is responsible for designing and following internal cont rols that provide reasonable assurance regarding the reliability of financial reporting, including compliance with Generally Accepted Accounting Principles (GAAP). We look forward to working with the District again and reviewing the implementation of GASB 75 Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions during the next audit. Applicable Laws and Regulations Government Accounting Standards Board Statement No. 45 Government Auditing Standards, December 2011 Revision, paragraph 4.23 The American Institute of Certified Public Accountants Codification of Statements on Auditing Standards, section 265 Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020705&isFinding=false&sp=false,2026-07-30 13:24:54 17,wa-sao,1020910,fraud-investigation,4,WA,City of Seattle,City/Town,0433,5363000,geoid_place,Washington State Auditor's Office,Fraud investigation — City of Seattle,Fraud,2015,2009-01-01,2015-11-30,2018-05-31,misappropriation,fraud_investigation,,,"Investigation Summary On April 24, 2017, the Director of Citywide Accounting and Payroll notified our Office regarding a potential loss of public funds as state law requires. The City contracted with an investigative firm and provided the City a summary report of its investigation. We reviewed the i","Investigation Summary On April 24, 2017, the Director of Citywide Accounting and Payroll notified our Office regarding a potential loss of public funds as state law requires. The City contracted with an investigative firm and provided the City a summary report of its investigation. We reviewed the investigative firm’s investigation report and agree with its conclusions. The investigation determined that funds collected by the City between January 2009 and November 2015 for the employee giving and volunteer program were not deposited or turned over to the charities, resulting in questionable activity totaling $20,978. Background and Investigation Results The City, located in King County, operates on an annual budget of about $5.1 billion including $1.1 billion for the general fund. The City has implemented an employee giving and volunteer program, Seattle Shares, that facilitates employee philanthropy by offering ways for employees to give to charities. The most common method that employees use to contribute is through payroll deductions; employees also may give one-time gifts of cash or checks during department fundraising events. The Seattle Shares Program Coordinator started with the City in March 2008. Her job duties included entering donor information into the Human Resources Information System’s payroll database (EV5), answering customer questions and presenting funds for deposit to the Treasury Department. Employees also had the option to submit their charitable donations directly t o the Treasury Department. A separate employee handled any donations made through a payroll deduction. On November 9, 2016, while the Program Coordinator was on extended paid leave, two city employees discovered boxes at the Program Coordinator ’s workspace that contained over $15,000 in cash and checks along with donation forms indicating the funds were charitable contributions. The boxes contained checks dating from 2009 to 2014. The Seattle Department of Human Resources then initiated a personnel investigation with the help of an investigative firm. The investigative firm’s investigation included: • A review of the funds and documentation discovered in the workspace of the Program Coordinator • A review of the charity database and deposit history • A determinat ion of whether the loss was due to the Program Coordinator’s failure to perform her job duties or whether the loss was due to inadequate policies and procedures. Washington State Auditor’s Office Page 4 Additionally, the investigation included interview s with several City employees, including the Program Coordinator. During the investigative firm’s interview with the Program Coordinator on December 6, 2016, she delivered an additional $4,500 of undeposited funds from her residence. Of the $4,500, all but $55 was in cash. According to the Program Coordinator, part of the reason for not depositing the funds was the enormity of her workload in the 2015 fall Seattle Shares event. The results of the investigat ion concluded the total known employee donations that the Program Coordinator failed to deposit or turn over to the intended charities was $20,476. Of that amount, $15,976 in cash , coins, and checks were discovered in a cabinet at the Program Coordinator workspace and $4,500 was produced during her interview. The investigative firm was able to identify the intended charities for all but $1,321 of the $20,476. The investigative firm further identified events for which donations were reportedly raised but not deposited, in th e amount of $502. Control Weaknesses Internal controls at the City were not adequate to safeguard funds held in trust by the City. We found the following weaknesses allowed the misappropriation to occur: • Duties were not segregated: The Program Coordinator handled all aspects of the cash receipting process. • The City did not perform an independent reconciliation of donations to the payroll database or bank statements to ensure all money received was recorded and deposited. Recommendation s We recommend the City strengthen internal controls over cash receipts to ensure adequate oversight and monitoring to safeguard funds held in trust by the City and compliance with City policies. We also recommend the City seek recovery of the undeposited $502 and related investigation costs of $1,735 from the former Seattle Shares Program Coordinator and/or the City’s insurance bonding company, as appropriate. Any compromise or settlement of this claim by the City must be approved in writing by the Attorney General and State Audito r as directed by state law (RCW 43.09.260). Assistant Attorney General Matthew Kernutt is the contact person for the Attorney General’s Office and can be reached at (360) 586- 0740 or MattK1@atg.wa.gov. The contact for the State Auditor’s Office is Sadie Armijo , Assistant Director of Local Audit , who can be reached at (360) 902-0362 or Sadie.Armijo@sao.wa.gov. Washington State Auditor’s Office Page 5 City’s Response The City of Seattle appreciates the State Auditor’s Office recommendation on this matter. The City understands that inadequate controls exist that allowed this type of misappropriation. The City has taken steps to correct their procedures. This is awaiting a review by the Citywide Accounting Division’s Compliance Manager. State Auditor’s Office Remarks We thank City officials and personnel for their assistance and cooperation during the investigation. Washington State Auditor’s Office Page 6 ABOUT THE STATE A UDITOR’S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. We work with our audit clients and citizens to achieve our vision of government that works for citizens, by helping governments work better, cost less, deliver higher value, and earn greater public trust. In fulfilling our mission to hold state and local governments accountable for the use of publ ic resources, we also hold ourselves accountable by continually improving our audit quality and operational efficiency and developing highly engaged and committed employees. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. Our audits look at financial information and compliance with state, fede ral and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments as well as fraud, state whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously, and provide training and technical assistance to governments, and have an extensive quality assurance program. Contact information for the State Auditor’s Office Public Records requests PublicRecords@sao.wa.gov Main telephone (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Website www.sao.wa.gov",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020910&isFinding=false&sp=false,2026-07-30 13:24:54 18,wa-sao,1020959,2016-001,,WA,City of Soap Lake,City/Town,0325,5365345,no_match,Washington State Auditor's Office,Accountability audit — City of Soap Lake,Accountability,2016,2015-01-01,2016-12-31,2018-05-17,internal_controls,,,,The City lacked adequate internal controls to bill utility accounts in accordance with City Code,"Background The City operates water and sewer utilities, and collected $889,115 and $894,316 in water and sewer revenues in 2015 and 2016 , respectively. The utilities serve about 1,350 customers, using rates established by Municipal City Code, Chapter 13. The City periodically amends City Code through ordinances, which update annual rates in the Code’s appendix. Ninety customers are classified as either commercial or commercial residen tial, and most have multiple units associated with their accounts. Description of Condition The City’s internal controls did not ensure customers were billed in accordance with City Code. Further, City management did not adequately monitor utility billings to determine City Code was followed. Specifically, the City charged commercial and commercial-residential customers for one unit per sewer services account. However, City Code stipulates that each additional unit under an account should be charged the established base rate. In addition, the City Code section pertaining to water rates and overage charges does not specify whether commercial customers should receive additional base water consumption before incurring overage charges for multi-unit accounts. Cause of Condition City staff incorrectly classified commercial and commercial -residential sewer utility accounts as “single unit” in the billing system and lacked understanding of the City’s rate setting code over the water utility. Effect of Condition Between 2015 and 2016, the City under -billed about $200,000 for sewer utilities across 15 accounts, which is a loss of revenue to the City. The majority of under- billing is because of not charging for additional units by account. Because City Code lacks clarity for multi-unit water utility rates, we are unable to determine the exact amount of over - or under-billing. However, we estimate the City potentially under-billing about $30,000 for the same 15 accounts. Washington State Auditor’s Office Page 7 Recommendation s We recommend the City:  Train utility billing staff to properly classify commercial and commercial - residential sewer utility accounts in the billing system  Clarify the City Municipal Code section for commercial customer water rates and overage charges for multi-unit accounts.  Develop and follow monitoring controls that ensure utility customers are billed according to rates approved in City Code. City ’s Response The City concurs with what the audit discovered as we have also made that same discovery. The City is working to ensure compliance with the city ordinances and will be reviewing them before the next approved budget. The City has also contacted the city attorney for assistance to ensure the ordinances are consistently worded and that the council’s wishes are properly applied. Auditor’s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations RCW 43.09.200 Local government accounting – Uniform system of accounting, requires the State Auditor to prescribe the system of accounting and reporting for all local governments. The Budgeting, Accounting and Reporting System (BARS) Manual, 3.1.3, Internal Control, requires each local government to establish and maintain an effective system of internal controls that provides reasonable assurance that the government will achieve its objectives. ORDINANCE NO. 2015 – 1210; Amendment to Chapter 13.14 of the Soap Lake Municipal Code titled “Sewer Service System” states, in part: B.5. “Water service unit” shall mean the greater of the following: each structure, or structures, residence, or residences, lot, or portion or separate unit of a condomin ium used as a dwelling unit by a family, as herein defined, shall be deemed one water service unit. By way of example, a triplex shall be three Washington State Auditor’s Office Page 8 water service units; a condominium with 20 separate dwelling units shall be 20 water service units. Chapter 13.14.290 Sewer rates, states, in part: A. The Soap Lake City council shall, annually or more often if necessary, by resolution, establish a schedule “Appendix S” of charges and rates for sewer hookup and connection charges, sewer rates, allotments and ove rage charges. The Resolution shall also list all other sewer service fees and charges CHAPTER 13.14 APPENDIX ""S""SEWER RATES”, states in part: C. Monthly Service Fee: Each calendar month during which a sewer service connection is active at any time shall result in the following charges: 1. Each residential sewer connection serving a single residential dwelling unit: $52.14 per month. Each additional residential dwelling unit using the same sewer service: $52.14 per month. 2. Each commercial sewer connection serving one commercial service: $40.84 per month. Each additional commercial unit using the same sewer service: $40.84 per month. 3. Each commercial residential connection serving at least one commercial residential dwelling unit shall be deemed to be one residential commercial unit: $40.84 per month. 4. Usage Charge for Each Commercial Sewer Service Unit and for Each Commercial Residential Dwelling Sewer Service Unit: In addition to the monthly base rate charge for each commercial sewer service unit and for each commercial dwelling unit, there shall be charged Washington State Auditor’s Office Page 9 for sewer usa ge the sum of $1.58 for each 1 00 cubic feet of water or portion thereof supplied to the commercial water service unit account and to a comm ercial dwelling water service unit account commencing with the first 100 cubic feet of water. 5. Minimum monthly base rate charge for each customer shall be determined by multiplying the monthly base rate charge times the number of sewer service units and then adding the usage charge of $1.58 per 100 cubic feet of water or portion thereof supplied to the commercial residential or commercial water service account to the base unit charges, commencing with the first 1 00 cubic feet of water. CHAPTER 13.18 APPENDIX ""W"" WATER RATES states, in part: Commercial 1. Basic Water Rate: $26.60 per month 2. Overage Charge for water usage over 500 cubic feet: $1.54 per each additional 100 cubic feet or portion thereof. Commercial Residential 1. Basic Water Rate: $26.60 per month for each commercial residential connection serving a commercial residential dwelling unit; provided, however, that for each residential dwelling unit in excess of one served by a single meter the monthly water charge shall be $19.32, to include the use of 500 cubic feet of water per month per each unit. 2. Overage Charge for water usage over 500 cubic feet: $1.54 per each additional 100 cubic feet or portion thereof. Washington State Auditor’s Office Page 10",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020959&isFinding=false&sp=false,2026-07-30 13:24:54 19,wa-sao,1020959,2016-002,,WA,City of Soap Lake,City/Town,0325,5365345,no_match,Washington State Auditor's Office,Accountability audit — City of Soap Lake,Accountability,2016,2015-01-01,2016-12-31,2018-05-17,misappropriation,,,,"The City lacks proper oversight for the acquisition, sale and tracking of assets in the Police Department","Background The City of Soap Lake serves a population of about 1,550 Grant County citizens. The City Police Department has four full -time employees, including one Police Chief and two officers. In June 2016, our audit r eported the Police Department did not use assets in an authorized and approved manner and recommended the City strengthen controls over acquisition, tracking and sale of assets. However, our current audit identified continued concerns. Description of Cond ition The Police Department is responsible for most functions surrounding the “cash only” sales of Police Department assets, as well as asset acquisition and tracking, which creates an increased risk for potential misuse and misappropriation. These control weaknesses allowed the following to occur: 1. City records indicate that in March 2015, a Reserve Officer paid $700 to the City for a 1999 Chevrolet Blazer police vehicle. One day later, Department of Licensing (DOL) records show he signed a “vehicle release of interest” form transferring ownership to a close relative of the Police Chief at that time. The Reserve Officer said the former Police Chief asked him to act as the original buyer to avoid the appearance of a conflict of interest. 2. In May 2015, the City acquired a cargo trailer valued at $8,000 through the LESO 1033 military surplus program, which allows law enforcement agencies to acquire military assets for current law enforcement purposes at no cost, except the travel and/or shipping expenses associated with acquisition. Less than a year later, the City traded the trailer to a City Police Officer in exchange for two radar units with a total value of $4,000 according to the sales record. However, the City was unable to demonstrate that the City received the units as part of this particular trad e deal, or that the trade was equitable. Additionally, the buyer listed in the City’s records did not agree to the buyer listed in the DOL sales record. City records showed the buyer as a third party, while DOL records show the buyer was the Police Officer. 3. On October 5, 2016, the City Council approved the Police Department’s request to surplus 125 items, most of which were firearms, based on a Washington State Auditor’s Office Page 11 provided list. One vendor bid on the purchase of the entire lot. A review of this sale revealed the following:  The City could not demonstrate it advertised the sale as required by State law (RCW 63.32.020).  The list of firearms the City Council approved for surplus was not the same as the list of firearms the vendor received for bid. Three firearms not approved by the City Council were included on the list given to the vendor, and two firearms on the surplus list were not on the list given to the vendor.  Police Department employees then personally purchased seven firearms from the vendor. A City police officer purchased three firearms the same day the vendor received them. The current Police Chief purchased four firearms the following day. According to the vendor, it sold these firearms at the same price it paid the City for them. 4. In May 2014, the City established an asset inventory policy requiring staff to track all assets valued over $500 and assign a City asset number. While the City was documenting Police Department asset tracking to meet City policy requirements, the Police Department’s asset tracking had the following weaknesses:  Department staff did not consistently add assets to the City’s tracking spreadsheet. We identified 13 assets purchased or acquired through trade, totaling $7,595, directly from Police Department employees, between February 2016 and December 2016 that were not listed on the City’s asset tracking spreadsheet as of April 2017. Assets included firearms and radar units.  The City did not independently verify the City’s receipt of these 13 assets. We attempted to physically confirm that these assets were within the City’s possession. However, due to City sales records not including uniquely identifiable information at the t ime of acquisition, we were unable to confirm if these assets were within their possession. We found the Department did have similar assets in their possession, but only based on the item’s general type. Cause of Condition Despite past audit recommendat ions, the City Council and Mayor have not taken action to implement proper oversight or independent monitoring of the acquisition, sale and tracking of Police Department assets. Washington State Auditor’s Office Page 12 Effect of Condition Without adequate tracking and monitoring procedures, asset s are vulnerable to misappropriation, misuse or loss, which City staff might not be detect promptly, if at all. In addition, lack of adequate documentation over Police Department asset sales and surplused items made it very difficult to determine whether the City:  Safeguarded assets properly.  Received the best price for City assets purchased from or sold to Police Department personnel, which is a possi ble violation of State law (RCW 42.23.070).  Suffered a loss. Recommendations We strongly recommend the Ci ty Council and Mayor take actions to adequately safeguard its Police Department assets by strengthening controls over asset tracking. This should include, but not be limited to:  Increasing segregation of duties and monitoring over transactions involving City employees  Completing independent, periodic inventories  Maintaining up-to-date asset listings  Documenting adequate tracking information for identification We also recommend the Police Department present complete and accurate information to the City Council for surplus, including identifiable tracking information especially when the disposition of firearms are involved, to comply with State law (RCW 9.41.09 and 63.32.010). We further recommend the City review all purchase and trade sales documentation related to items involving Police Department employees so the City receives the best price benefit and that a potential loss does not occur. City’s Response Thank you for the invitation to provide a written response to the preliminary draft audit report of the City of Soap Lake for the audit period 2015 through 2016. Your preliminary draft includes an audit finding which describes the City's alleged lack of pro per oversight for the acquisition, sale, and tracking of assets in the Police Department. The draft audit report concludes that without ""adequate tracking and monitoring procedures"", City assets may be vulnerable to loss, Washington State Auditor’s Office Page 13 misuse, or misappropriation. After identifying two 2015 sales of surplus property and a 2016 City Council approval to surplus 125 items, the audit acknowledged the City's 2014 adopted asset inventory and tracking policy while identifying two weaknesses in the police department's internal asset tracking procedures related to not consistently adding assets to the City's tracking spreadsheet, and not independently verifying receipt of newly acquired assets. A new Police Chief was hired in January, 2017. The new administration promptly implemented many reforms to create a more efficient and accountable police department, and the new Chief continues to review and make improvements to the department's internal administration, including asset tracking and inventory. All of the recommendations cont ained in the draft audit report have been addressed by the Mayor and/or the Chief and are substantially completed. A complete asset inventory with description, serial or VIN number, and asset tag number, was provided to the City Council at its February 21, 2018 meeting. The City appreciates the diligence of the Auditor's Office in providing monitoring and oversight to local government operations and welcomes its input and recommendations on how to improve the City's overall performance objectives. Auditor’s Remarks We appreciate the City’s commitment to resolve the issue noted and we will follow- up during the next scheduled audit. Applicable Laws and Regulations The City’s asset inventory policy requires all assets over $500 to be tracked, assigned as property of City of Soap Lake, and assigned an asset number. RCW 42.23.070 (1) prohibits municipal officers from using their position to secure special privileges or exemptions. RCW 43.09.200 Local government accounting – Uniform system of accounting, requires the State Auditor to prescribe the system of accounting and reporting for all local governments, and requires the system to exhibit true accounts shoing the receipt, use and disposition of all public property. Chapter 3.3.5.10 of the Budgeting, Accounting, and Reporting System (BARS) manual requires a physical inventory of capital assets. Washington State Auditor’s Office Page 14",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020959&isFinding=false&sp=false,2026-07-30 13:24:54 20,wa-sao,1021046,2017-001,,WA,Kitsap County Consolidated Housing Authority,Housing Authority,0346,,not_municipal,Washington State Auditor's Office,Financial and Federal audit — Kitsap County Consolidated Housing Authority,Financial and Federal,2017,2016-07-01,2017-06-30,2018-12-24,federal_award_compliance,material_weakness,34714.0,"Questioned Cost Amount: $34,714",The Housing Authority did not have adequate internal controls to ensure it met allowable costs/cost principles requirements for its Rural Self-Help Technical Assistance Program. CFDA Number and Title: 10.420 Rural Self-Help Housing Technical Assistance Federal Grantor Name: US Department of Agriculture – Rural Housing Service Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-th,"Description of Condition The Housing Authority spent $1,204,013 in Rural Self -Help Technical Assistance funds in fiscal year 2017. The objective of this program is to help low- and very-low- income individuals and their families to build homes in rural areas by the self -help method. The Housing Authority’s program expenditures consist of both direct and indirect costs. The program was reimbursed $514,282 (43 percent of program expenses) for indirect costs. Indirect costs charged are based on an indirect cost allocation plan, including several different allocations of administrative payroll, building, vehicle, equipment and training costs. The Housing Authority did not have adequate internal controls to ensure indirect cost allocations met federal grant requirements for allowable costs. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Washington State Auditor's Office Cause of Condition Although current staff were not involved with the creation of the Authority’s indirect cost allocation plan, staff did not update the plan in accordance with Uniform Guidance. Additionally, Authority management did not adequately monitor and review the plan to ensure it still fit the Housing Authority’s changing circumstances. Effect of Condition and Questioned Costs The Housing Authority’s lack of internal controls resulted in noncompliance with federal allowable cost requirements for indirect costs. We noted the following:  The Housing Authority’s Agency -Wide Indirect Overhead cost pool, the largest of the Authority’s indirect cost allocation pools, did not allocate indirect costs equitably to all programs. We identified seven programs that did not have indirect costs from this pool allocated to them. However, indirect costs related to these programs were not removed from the pool, they were simply allocated to other programs.  Executive Director salary and benefits were included in the amount allocated, which is unallowable. This resulted in known questioned costs of $34,714.  Indirect costs allocated from the Agency -Wide Indirect Overhead cost pool over allocated actual costs.  Employee leave was charged directly to the grant rather than equitably allocated to all areas worked.  An allocation was made that was not included in the indirect cost allocation plan which is therefore unallowable. This resulted in estimated questioned costs of $33,497. Based on the above control deficiencies and noncomplianc e, we identified total known questioned costs of $34,714 and total estimated questioned costs of $33,497. However, because of the complexity of the indirect cost allocation plan and the other deficiencies noted above, additional questioned costs likely exi st that have not been identified. Recommendation We recommend the Housing Authority strengthen internal controls to ensure costs charged to its federal program meet allowable cost requirements. Specifically, the Housing Authority should:  Provide training a nd other resources to its staff members to ensure they understand federal regulations Washington State Auditor's Office  Modify how employee payroll and benefits are charged to federal programs to meet federal requirements  Improve documentation, methodology and support for allocation of ind irect costs and re-evaluate these allocations annually Additionally, the Housing Authority should contact the United States Department of Agriculture Rural Development to determine a reasonable basis for allocating indirect costs and identify and resolve any additional questioned costs. Housing Authority’s Response Housing Kitsap recognizes the importance of correctly accounting for and distributing indirect overhead cost pool allocations and appreciates the hard work performed by the State Auditor’s Office. Prior to the audit, our office had identified the indirect overhead cost pool and allocation process as problematic. Corrective action was taken which includes the following:  Worked with Rural Community Assistance Corporation (RCAC) as directed by the United State Department of Agriculture – Rural Development (RD), to identify and analyze solutions that meet USDA and 523 Technical Assistance (TA) grant requirements.  Determined that the agency meets the conditions of 200.414 (f) for a 10% De Minimis indirect cost rate by:  Never having received a negotiated indirect cost rate;  State or local governmental department agency that receives less than $35 million in direct federal funding;  A Cost Allocation Plan is not required by the Department of Housing and Urban Development (HUD);  Documented the process and elected to use the 10% De Minimis indirect cost rate as allowed by 200.415 (f) to pay for overhead costs that are not directly charged to federal awards. Per 2 CFR Section 200.403 costs will be consistently charged as either direct or indirect costs.  Eliminated the indirect overhead cost pool and cost allocation process. We do not concur that the Executive Director’s salary and benefits are unallowable. Per RCAC, the RD’s designated technical and compliance advisor, the salary and benefits of an Executive Directors are allowable and are used by most, if not all other 523 TA grant recipients, referencing Uniform Guidance of Parts 400, 415, 416, 418 and 422 to Title 2 of the CFR. Washington State Auditor's Office Auditor’s Remarks We thank the Authority for its cooperation and assistance throughout the a udit, and the steps it is taking to address these issues. Federal law states that salaries and expenses of the chief executive of a local government are not allowed to be charged to the grant. The Executive Director is the chief executive of the Housing Authority. Therefore, under Uniform Guidance, his salary must not be charged. We confirmed this with the awarding agency, USDA. The Housing Authority cited parts 400, 415, 416, 418 and 422 of Title 2 in their response. While these CFR parts may be applica ble to Housing Kitsap’s Rural Self - Help Technical Assistance Grant, they do not apply to our audit work and resulting finding, which is grounded in Title 2 part 200 section 444 . We reaffirm our audit finding and will review the status of the Authority’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Findings (Uniform Guidance), Section 303, Internal Controls, establishes internal control requirements for management of Federal awards to non-Federal entities. Title 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Princi ples, and Audit Requirements for Federal Findings (Uniform Guidance), Section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Princ iples, and Audit Requirements for Federal Findings (Uniform Guidance), Section 444, General Costs of Government, establishes unallowable general costs of a government. Title 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Findings (Uniform Guidance), Section 408, Limitation on Allowance of Costs , establishes guidance on conforming to any limitations or exclusions set forth in the terms and conditions of the Federal award, or other governing regulations as to types or amounts of cost items. Title 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Findings (Uniform Guidance), Section 40 5, Allowable Costs, establishes guidance for which costs are allocable. Washington State Auditor's Office Title 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Findings (Uniform Guidance), Section 404 , Reasonable Costs , establishes guidance on reasonableness of costs. Title 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Findings (Uniform Guidance), Section 403, Factors Affecting Allowability of Costs , establishes guidance on cost principles that affect the allowability of costs. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of St atements on Auditing Standards, section 935, paragraph 11. Rural Development Part 1944 - Housing, Subpart I – Self-Help Technical Assistance Grants, Section 1944.406 Prohibited Use of Grant Funds , provides guidance on prohibited uses of grant funds. Rural Development Part 1944 –Housing, Subpart I – Self Help Technical Assistance Grants, Section 1944.405 Authorized Use of Grant Funds , provides guidance on authorized use of grant funds. Rural Development Part 194 – Housing, Subpart I – Self-Help Technical Assistance Grants, Section 1944-410, Processing pre-applications, applications, and competing grant dockets, provides guidance on information required for grant pre -application, application and grant docket including an indirect or direct cost policy and proposed indirect cost rate developed in accordance with 7 CFR Part 3015 and Part 3016. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021046&isFinding=false&sp=false,2026-07-30 13:24:54 21,wa-sao,1021049,2017-001,,WA,Omak School District No 19,School District,1976,,no_match,Washington State Auditor's Office,Accountability audit — Omak School District No 19,Accountability,2017,2015-09-01,2017-08-31,2018-04-30,internal_controls,,,,The District lacked sufficient internal controls over Associated Study Body activities to safeguard against potential loss and noncompliance with laws and regulations,"Background Districts may use Associated Study Body (ASB) funds for optional and noncurricular student activities that are cultural, athletic, recreational or social in nature, or in support of ASB activities and programs. Omak School District’s ASB program collected revenue of $188,000 and $205,000 in fiscal years 2016 and 2017, respective ly, and spent $165,000 and $191,000 during those same years. Description of Condition Our examination identified the following conditions: Fundraisers We tested six ASB fundraisers with $18,390 in receipts and found the ASB lacked adequate documentation. The District did not: • Reconcile beginning or ending inventory for sales, or ending receipts to source documents (tickets, merchandise, manual receipts , etc.) to detect or prevent loss of inventory or receipts • Use pre-numbered tickets for a dance event or issue manual receipts when selling merchandise or accepting donations, or for events • Obtain a fundraiser reconciliation and profit analysis in four fundraisers, reducing the District’s ability to detect potential loss • Include projection of revenue, expenditures and profit on the Fundraiser Intent Form • Deposit receipted funds within 24 hours of three events, which does not comply with state law (RCW 43.09.240) or School District Accounting Manual rules for timely deposits • Obtain Superintendent’s approval for fundraisers exceeding $5,000 as required by District policy. Washington State Auditor’s Office Page 7 Cash Receipting The District lacked adequate independent monitoring of ASB receipts and independent review of the ASB imprest/depository account to prevent or detect misappropriation or loss. Disbursements The ASB Council did not routinely approve payments as required by state regulations (WAC 392-138-125). The Council formally approved only $575 of the $356,000 spent during the audit period. Meeting Minutes The District could not provide minutes for 20 meetings of the ASB Council during the audit period. Due to the lack of minutes, the District could not provide evidence of Council approval for 46 of the 109 fundraisers conducted during the audit period. Negative Club Balances Of the 84 active ASB clubs, seven clubs in 2017 and two clubs in 2016 ended the year with negative balances at the club level, which violates state regulations (WAC 392-138-125). Cause of Condition District management has not routinely monitored ASB activity or provided the necessary support and policies for staff and ASB Council to enforce club completion or retention of the required documentation for fundraisers. In addition, staff lacked technical knowledge of ASB requirements to approve all fundraisers, approve all payments during ASB meetings, retain those meeting minutes and refrain from allowing clubs to spend more than their fund balance. Effect of Condition Inadequate internal controls over ASB fundraising and disbursements, including insufficient approval and monitoring by the ASB Student Council or management, increase the risk that a loss or misappropriation of public funds might occur and not be detected quickly, if at all. Washington State Auditor’s Office Page 8 Recommen dations We recommend the District improve internal controls over ASB activities to comply with state laws, regulations and District policy to safeguard public resources. Specifically, the District should: • Reconcile fundraiser receipts to expected revenue d erived from inventory sold, tickets or other methods of estimating expected revenue • Perform independent monitoring and review of cash receipts and imprest account reconciliations. • Prepare, retain and monitor all necessary records for ASB activities • Clearly document formal approval of activities and payments in ASB Student Council minutes retained to follow archival requirements • Improve policies and procedures to provide guidance about required documentation and overall fundraiser expectations • Establish monitoring procedures for club fund balances so budgets can be set to maintain a positive fund balance District’s Response The Omak School District concurs with the finding of deficiencies in ASB by the State Auditor’s Office. Our student council, advisors and coaches will attend an ASB training provided by the State Auditor’s Office in the fall. We will strengthen internal controls and implement better fundraising and reconciliation procedures. Auditor’s Remarks We appreciate the steps the District is taki ng to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations WAC 392-123-010. The Accounting Manual, sets forth the requirements for the use of the accounting manual by the District. WAC 392-138-014 Accounting procedures and records, sets forth requirements for accounting methods and procedures to follow regulations and guidelines established in the Accounting Manual for Public Schools in the State of Washington. Washington State Auditor’s Office Page 9 Accounting Manual f or Public School Districts in the State of Washington, Chapter 3, Accounting Guidelines, Internal Control Structure, sets forth requirements for establishing and maintaining an effective system of internal controls. RCW 43.09.240 Local government accounti ng - Public officers and employees - Duty to account and report - Removal from office - Deposit of collections, sets forth the requirement for public official to deposit public funds within 24 hours of receipt. Accounting Manual for Public School Districts in the State of Washington, Chapter 9, Information Unique to Each Fund, Associated Student Bodies Association, sets forth guidelines for accounting of ASB funds. WAC 392-138-125 Associated study body public moneys – Disbursement approval – Total disbursements, sets forth requirements for ASB budgets and disbursement approvals. RCW 28A.325.030 Associated student body program fund – Fund-raising activities – Non associated student body program fund moneys, sets forth requirements for conducting ASB fund-raising activities. RCW 28A.400.030 Superintendent’s duties, sets forth requirements for the school district superintendent to keep accurate records and detailed accounts for receipts and expenditures of school money. DAN GS50-05A-13 Rev. 2 establishes the retention requirements for governing and executive board meeting minutes. Omak School District Policy 3530P requires S uperintendent approval for fund-raising activities in excess of $5,000. Washington State Auditor’s Office Page 10 RELATED REPORTS Financial Our opinion on the District’s financial statements and compliance with federal grant program requirements is provided in a separate report, which includes the District’s financial statements. That report is available on our website, http://portal.sao.wa.gov/ReportSearch. Federal grant programs We evaluated internal controls and tested compliance with the federal program requirements, as applicable, for the District’s major federal program, which is listed in the",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021049&isFinding=false&sp=false,2026-07-30 13:24:54 22,wa-sao,1021104,2016-001,,WA,City of Orting,City/Town,0594,5352005,no_match,Washington State Auditor's Office,Accountability audit — City of Orting,Accountability,2016,2014-01-01,2016-12-31,2018-05-07,procurement,material_weakness,,,The City’s internal controls over procurement were inadequate to ensure compliance with bid law,"Background State law requires the City to use formal competitive bidding procedures for purchases of $15,000 or more. This includes advertising the purchases’ specifications in a general circulation periodical, opening the bids at a public forum with a fixed time and place, and awarding the contract to the lowest responsible bidder. In addition, the governing body must approve the winning bid. Description of Condition In 2016, the City purchased three trucks, one backhoe and a trailer totaling $269,637. In 2017, the City purchased a generator and a backhoe totaling $183,398. Each of these purchases exceeded $15,000. Our audit identified the following concerns: • For most of the purchases, the City used a vendor roster to identify potential vendors and then completed an online search to identify the lowest price. The City should have advertised to solicit sealed bids to be opened at a public forum. • A backhoe was purchased through a procurement services vendor that did not advertise to solicit bids, thereby not allowing the opportunity for all potential vendors to submit bids as state law requires. Cause of Condition City management were not aware of the competitive bid requirements for purchases of $15,000 or more. Effect of Condition The City cannot demonstrate it received the lowest price for these purchases or that all vendors were given equal opportunity to bid. Washington State Auditor’s Office Page 6 Recommendation We recommend the City implement adequate internal controls over procurement to ensure compliance with state laws and ensure an open, competitive environment for all purchases. City ’s Response The City erred in its procurement process as outlined by the Auditor in the Accountability Audit. The city staff have since received training on State procurement requirements, passed a Purchasing Policy in January 2018, and put in place a more controlled procurement process that is in conformance with State Law. Auditor’s Remarks We appreciate the timely actions taken by City staff during the audit to get understanding of procurement requirements. City staff were very helpful during the audit process. We will review these changes during our next audit. Applicable Laws and Regulatio ns RCW 35.23.352 Public works – Contracts – Bids – Small works roster – Purchasing requirements, recycled or reused materials or products. Washington State Auditor’s Office Page 7 RELATED REPORTS Financial Our opinion on the City’s financial statements is provided in a separate report, which includes the City’s financial statements. That report is available on our website, http://portal.sao.wa.gov/ReportSearch. That report includes a finding for a material weakness in internal controls over financial reporting. Washington State Auditor’s Office Page 8 INFORMATION ABOUT THE CITY The City of Orting serves 7,600 citizens in Pierce County. It is administered by a mayor -council form of government. The City has seven elected Council Members and an independently elected Mayor. The City Council appoints an Administrator to oversee the City’s daily operations as well as its 33 employees. The City provides services including water, sewer, stormwater, police protection, Municipal Court, parks and recreation, building permitting and land use, planning and economic development. For fiscal years 2014, 2015, and 2016, the City expended approximately $21.7 million, $10.9 million, and $10.1 million, respectively. Contact information related to this report Address: City of Orting 110 E. Train P.O. Box 489 Orting, WA 98360 Contact: Scott Larson, Treasurer Telephone: (360) 893-2219, ext. 111 Website: www.cityoforting.org Information current as of report publish date. Audit history You can find current and past audit reports for the City of Orting at http://portal.sao.wa.gov/ReportSearch. Washington State Auditor’s Office Page 9 ABOUT THE STATE A UDITOR’S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. We work with our audit clients and citizens to achieve our vision of government that works for citizens, by helping governments work better, cost less, deliver higher value, and earn greater public trust. In fulfilling our mission to hold state and local governments accountable for the use of public resources, we also hold ourselves accountable by conti nually improving our audit quality and operational efficiency and developing highly engaged and committed employees. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments as well as fraud, state whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously, and provide training and technical assistance to governments, and have an extensive quality assurance program. Contact information for the State Auditor’s Office Public Records requests PublicRecords@sao.wa.gov Main telephone (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Website www.sao.wa.gov",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021104&isFinding=false&sp=false,2026-07-30 13:24:54 23,wa-sao,1021221,2017-001,,WA,Kettle Falls School District No 212,School District,2064,,no_match,Washington State Auditor's Office,Financial and Federal audit — Kettle Falls School District No 212,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-14,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,Kettle Falls School District did not have adequate internal controls over its federal child nutrition program verification requirements . CFDA Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Grantor Name: United States Department of Agriculture Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instructi,"Background The District participates in the School Breakfast and National School Lunch programs, and received $262,967 from them during fiscal year 2017. Th ese programs provide funding for free and reduced -price meals for low -income students. Families must meet income requirements to be eligible for these programs. Each year, districts must select a sample of applications and verify that family income information reported to the districts is correct. The Office of Superintendent of Public Instruction (OSPI) instruct s school districts on how to verify program eligibility. Districts must review selected applicants’ income documentation to confirm students are receiving correct benefits of free or reduced-price meals. If the family’s income does not meet requirements, the student is not eligible and must pay full price for meals. OSPI instructions include guidance to districts for determining the number of applications th at must be verified based on their non- Washington State Auditor's Office ___________________________________________________________________________________________________________________ response rate from previous years ’ verifications. The verification process must be completed by November 15 each year. The District was required to use a 3 percent focused sampling method, because the District’s nonresponse rate exceeded 20 percent during the 2015-2016 school year’s verification process. This sampling method require d the District to select three “error prone” applications for verification. Error-prone applications are defined as any application where the reported household income falls within $100 a month of the upper income limit for free or reduced-priced meal eligibility. Description of Condition While the District did have a process in place to perform the verification process, internal controls were not effective to ensure the District performed the verification steps accurately. Our audit found that although the District selected the appropriate number of applications to test, one of the three applications the District selected for verification wa s not error-prone. As such, it should not have been selected for verification. We consider this control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District did not review the ap plications it selected to ensure each one met the criteria for classification as error-prone. Effect of Condition and Questioned Costs A lack of proper internal controls over the verification process increases the risk that error -prone applications are not properly selected for verification. It also increases the risk that free or reduced -price meals could be provided to children who are not eligible to receive them. The District could receive funding for households that do not qualify for free and reduced-price meals. Recommendation We recommend that the District improve its internal controls to ensure it performs its application selection process correctly. Washington State Auditor's Office ___________________________________________________________________________________________________________________ District ’s Response The Kettle Falls School District Nutrition Services Manager will continue to sample applications and verify that family income information reported to the district is correct. The Administrative Secretary for the Kettle Falls School district will continue to receive copies of the verific ations. These are reviewed to make sure the process was completed and completed prior to November 15 th deadline. Controls will be updated in the following manner: The Administrative Secretary will be involved in the process prior to the deadline of November 15th to get all back up documentation to prove that the applications chosen for verification are “error prone” applications. She will work with the Nutrition Services Manager to assure that we have back up documents on the number of applications to be chosen, that “error prone” applications are chosen, and that all verifications are completed before the November 15th deadline. All documentation will also be reviewed by the Business Manager. Auditor’s Remarks We appreciate the District’s commitment to r esolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes re porting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools , Section 6a, Verification requirements, establishes requirements for verifying eligibility of children for free and reduced price meal benefits. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021221&isFinding=false&sp=false,2026-07-30 13:24:54 24,wa-sao,1021228,2016-001,4362,WA,Whitman County,County,0179,53075,geoid_county,Washington State Auditor's Office,Accountability audit — Whitman County,Accountability,2016,2016-01-01,2016-12-31,2018-05-17,internal_controls,,,,The County did not have controls in place to ensure reimbursements to special purpose taxing districts for revolving fund expenditures were approved and supported,"Background Whitman County is responsible for the disbursement of over $3.5 mi llion of expenditure activity for 32 special purpose taxing districts including fire, cemetery, parks and recreation, water/sewer, hospital and library districts . Twenty-five of these districts pay their own expenditures from a revolving fund bank account and seek replenishment for the account from the County Auditor’s Office. Description of Condition As part of the 2012, 2014 and 2015 audits, we communicated conce rns that the County’s current practices did not adequately safeguard public funds because it did not ensure there was adequate support for reimbursement of special purpose taxing district expenditures and that warrants paid for districts had been approved by each district’s governing body. During the current audit, we identified no improvement in the County’s monitoring of special purpose taxing district expenditures. The following internal control weaknesses still exist:  The County did not have interlocal agreements established with districts as required by state law (RCW 39.34 ) defining responsibilities and expectations for district s that use the revolving fund process. These agreements should communicate the minimum requirements for establishing and operating a revolving fund as prescribed by the Budgeting, Accounting and Reporting System (BARS) Manual (3.8.8.20).  The County did not require evidence that the district’s governing body has properly approved a revolving fund, including the maximum authoriz ed balance. Without this documentation, the County cannot ensure that requests for revolving fund replenishment are within the amount authorized by the district’s governing body.  The County did not require supporting documentation , such as a listing of approved vouchers paid , for the replenishment of the revolving fund . Supporting documentation is necessary to determine requested replenishments are based on actual claims paid by the district, as prescribed by the BARS Manual (3.8.5.80). Washington State Auditor’s Office Page 7  The County did not properly monitor district revolving fund reimbursements to ensure they were timely (replenished at least monthly), supported and processed in accordance with BARS Manual guidance. Cause of Condition The County did not dedicate sufficient resources to address the prior audit concerns and did not implement procedures to ensure interlocal agreements were established and that reimbursements to special purpose taxing districts were supported and approved. Effect of Condition During the current audit, we tested 22 transactions totaling $606,150 for fire, cemetery, hospital, parks and recreation and library districts. We found the County did not:  Require or maintain supporting documentation for the reimburse ments to districts for all transactions tested  Obtain or maintain evidence that the district’s governing body properly approved disbursements for five transactions totaling $249,291 Because the County did not have interlocal agreements established or contr ols in place to properly monitor the revolving fund reimbursement process, it could not ensure public funds were adequately safeguarded. Recommendation s We recommend the County:  Establish interlocal agreements with the special purpose taxing districts using the revolving fund process that define the responsibilities and expectations for the County and districts  Develop the necessary procedures to ensure public funds are adequately safeguarded and to determine warrants paid for special purpose taxing districts have been approved by each district’s governing body  Monitor district revolving fund reimbursements to ensure they are replenished at least monthly.  Establish policies and procedures to obtain s upporting documentation to ensure requested replenishments are based on actual claims paid by the district. Washington State Auditor’s Office Page 8 County’s Response We agree with all of the points made in this finding and will work with the Special Purpose Taxing Districts to come into compliance. Auditor’s Remarks We thank the County for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Chapter 36.22 RCW, County Auditor. RCW 36.22.090. Warrants of political subdivisions. Chapter 39.34 RCW, Interlocal Cooperation Act. The Budgeting, Accounting and Reporting System (BARS) Manual, 3.8.8, Imprest, Petty Cash and Other Revolving Funds. The Budgeting, Accounting and Reporting System (BARS) Manual, 3.8.5, Voucher Certification and Approval. Washington State Auditor’s Office Page 9 WHITMAN COUNTY WASHINGTON OFFICE OF THE AUDITOR Eunice L. Coker, Auditor",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021228&isFinding=false&sp=false,2026-07-30 13:24:54 25,wa-sao,1021235,2017-001,,WA,Elma School District No 68,School District,1887,,no_match,Washington State Auditor's Office,Financial and Federal audit — Elma School District No 68,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-07,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls in place to ensure compliance with the federal Title I grant requirements for highly qualified paraprofessionals. CFDA Number and Title: 84.010 - Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instructio,"Description of Condition The federal Title I program’s objective is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During fiscal year 2017, the District spent $359,739 in Title I program funds. Federal regulations require recipients of federal money to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. To meet the requirements for highly qualified status, all paraprofessionals charged to Title I must have a high school diploma or its recognized equivalent. The District is responsible for ensuring all Title I paraprofessionals meet this requirement. The District did not verify and maintain documentation demonstrating a high school diploma or its recognized equivalent was received. The District relied on the attestation of the applicant s without physically verifying appropriate documentation. Washington State Auditor's Office ___________________________________________________________________________________________________________________ We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District was not aware of the requirement to obtain evidence of a high school diploma or its equivalent to support the federal requirement. Effect of Condition and Questioned Costs Without adequate controls in place, the District cannot ensure costs charged to the grant are allowable. Upon request, the District was able to provide documentation as evidence of a high school diploma for the paraprofessionals selected. Therefore, we are not questioning the paraprofessionals’ salaries charged to the grant. Recommendation We recommend the District establish and follow internal controls to ensure every paraprofessional provides evidence they received a high school diploma or its equivalent. We also recommend the District keep a copy of this evidence in the employee’s file. District ’s Respons e The District concurs with the finding and will add a step in the hiring process to include all needed documents for compliance with Title I requirements. Auditor’s Remarks We thank the District for its cooperation and assistance dur ing the audit and look forward to reviewing the District’s corrective action during our next audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Title 2 CFR Part 200, Uniform Guidance, section 516 – Audit findings, establishes reporting requirements for audit findings. Title 34CFR Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, Subpart A – Improving Basic Programs Operated by Local Education Agencies, section 58 – Qualifications of paraprofessionals, requires all Local Education Agencies (LEA) to ensure that each paraprofessional hired by the LEA who works in a program supported by the funds of the grant must have earned a secondary school diploma or its recognized equivalent. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021235&isFinding=false&sp=false,2026-07-30 13:24:54 26,wa-sao,1021258,2017-001,,WA,Evergreen School District No 114,School District,1841,,no_match,Washington State Auditor's Office,Financial and Federal audit — Evergreen School District No 114,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-14,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure compliance with suspension and debarment requirements for purchases of goods and materials. CFDA Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-throu,"Description of Condition During fiscal year 2017, the District spent $5,401,583 in Title I grant funds. This program’s objective is to improve the teaching and learning of children who are at risk of not meeting challenging academic standards and who reside in areas with high concentrations of children from low-income families. The District used these funds to improve teaching and learning at 14 elementary schools. Federal requirements prohibit grant recipients from contracti ng with or making subawards to parties who have been suspended or debarred from doing business with the federal government. The District must verify that all vendors receiving $25,000 or more in federal awards have not been suspended or debarred. To do this, the District could obtain a written certification from the vendor or insert a clause into the contract where the vendor states it is not suspended or debarred. Alternatively, the District may review the federal Excluded Parties List (EPLS) issued by the U.S. General Services Administration. The District must meet one of these requirements before entering into a contract with the vendor. The District did not have procedures in place when it purchased from three vendors more than $25,000 each for educati onal materials. The District did not obtain a Washington State Auditor's Office ___________________________________________________________________________________________________________________ written certification or review EPLS to verify the vendors were not suspended or debarred before awarding the contracts. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District was aware of suspension and debarment requirements but was not aware they applied to the purchase of goods and materials. Effect of Condition and Questioned Costs The District paid three vendors a total of $439,499 in fiscal year 2017 and did not verify that the vendors were not suspended or debarred. Payments on contracts to suspended or debarred vendors would be unallowable and subject to recovery by the grantor. We were able to verify the vendors had not been suspended or debarred; therefore, we are not questioning costs for these payments. Recommendation We recommend the District follow established internal controls to ensure vendors are not suspended or debarred from participating in federal programs before making any payments. District ’s Response The District agrees with the State Auditor’s audit finding, as explained in the report sections on Description and Cause of Condition, and Effect of Conditions and Questioned Costs. The District verified the three vendors that the District purchased educational materials were not Suspended or Debarred, after the State Auditors notified the District that education materials are within the Suspended and Debarment federal regulations. The District agrees with the State Auditor’s recommendations, and will make the necessary changes to strengthen controls, so that audit conditions of this nature will not happen again. We thank the State Auditors for making it clear that the District was aware of Suspension and Debarment federal regulations, except for the purchase of goods and materials. The District has very effective procedures for compliance with Suspension and Debarment federal regulations for processing contracts for professional s ervices and public works projects. The District has made initial changes to its procedures for purchasing goods and materials using federal funds. The District will complete Washington State Auditor's Office ___________________________________________________________________________________________________________________ its procedures after confirmation of the regulations is received from the State Auditor’s office. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. Appli cable Laws and Regulat ions Title 2, Code of Federal Regulations – Grants and Agreements, Section § 200.303 Internal controls states in part: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ‘‘Standards for Internal Control in the Federal Government’’ issued by the Comptroller General of the United States or the ‘‘Internal Control Integra ted Framework’’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. Title 2, Code of Federal Regulations – Grants and Agreements, Section § 200.516 Audit findings, states in part: (a) Audit findings reported . The auditor must report the following as audit findings in a",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021258&isFinding=false&sp=false,2026-07-30 13:24:54 27,wa-sao,1021263,2017-001,,WA,Clover Park School District No 400,School District,2002,,no_match,Washington State Auditor's Office,Financial and Federal audit — Clover Park School District No 400,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-10,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls in place to ensure compliance with the federal Title I grant requirements for highly qualified paraprofessionals. CFDA Number and Title 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction ,"Background The federal Title I program’s objective is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low -income families. During fiscal year 2017, the District spent $5,284,367 in Title I program funds. Federal regulations require recipients of federal money to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. To meet the requirements for highly qualified status, all paraprofessionals charged to Title I must have a high school diploma or its recognized equivalent. The District is responsible for ensuring all paraprofessionals it charges to the program meet this requirement. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Description of Condition The District did not verify and maintain document ation demonstrating that paraprofessionals it charged to the program had received a high school diploma or its recognized equivalent. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District relied on employees certifying they acquired the high school diploma or equivalent on their employment application to determine whether the federal requirement was met. Effect of Condition and Questioned Costs Without adequate controls in place, the District cannot ensure costs charged to the grant are allowable. The District charged salary and benefit costs of 70 paraprofessionals to the program in 2017. Our audit found t he District was unable to initially demonstrate that four of the 14 paraprofessionals we tested had received either a high school diploma or its equivalent. We are not questioning costs. The District subsequently verified that each paraprofessional met the requirement, showing that two had evidence of a high school diploma and two attended a college requiring a high school diploma or its equivalent as a condition of enrollment. Recommendation We recommend the District establish and follow internal controls to ensure it has documentation demonstrating it verified every paraprofessional it hires has a high school diploma or its equivalent. District ’s Response Request for reconsideration of finding: On February 8, 2018, Clover Park School District’s assigned auditor provided Human Resources a list of seventeen (17) employees for the purpose of auditing highly qualified paraprofessional document requirements. Of the seventeen (17) personnel files audited, fifteen (15) employees met the highly qualified paraprofessional document requirement s. Of those fifteen (15) personnel files, thirteen (13) employees had documented diploma/high school transcripts and two Washington State Auditor's Office ___________________________________________________________________________________________________________________ (2) employees had met the document requirements through their BA transcripts. The two (2) remaining employee personnel files were from employees that had resigned June 14, 2017 to move out -of-state. One (1) of those paraprofessionals earned her AA degree from the University of Phoenix, which required a high school diploma or GED equivalent in order to enter their program (see attached admissions requirements). The other paraprofessional attended Chattahoochee Valley Community College which required a high school diploma or GED equivalent in order to enter their program (see attached admissions requirements). We accepted these transcript s as verification of high school diploma/GED equivalent. It was our understanding these transcripts would be an allowable form of verification of high school diploma/GED equivalent. The auditor suggested that we pursue obtaining a copy of the high school diploma/GED equivalent via form number SPI 1581 HEA Veri (3/04). These forms were mailed to the respective college and university; however, they were returned to us by the college and university requiring an original signature from the former employee(s) . We made several attempts to contact the two (2) former employees via telephone and to date have not received a return call from either of the former employees. We request your reconsideration of the finding by accepting the transcripts along with the admissions requirements we have on file for the two (2) paraprofessionals in question. As an outcome of this audit, we have added some other measures to include: additional communication regarding requirements for employment, and verification of requirements through the existing internal audit process. Specifically, in addition to the highly qualified requirements listed on our job announcements, we have posted the requirements on the employment web page and have added a communication about these specific requirements prior to new employee orientation. Also, in addition to our existing hiring checklist, we are currently re -auditing all district paraprofessional employment files to ensure compliance with highly qualified requirements. On April 19, 2018 the auditor notified us that three (3) employee files were removed from the audit due to being partially funded by Title. The action reduced the audit list from seventeen (17) to fourteen (14). Auditor’s Remarks We thank the District for its cooperati on and assistance during the audit and the steps it is taking to address this issue. Washington State Auditor's Office ___________________________________________________________________________________________________________________ We reiterate that we are not questioning costs. However, auditing standards require us to issue a finding regarding lack of internal controls, regardless of whether any costs are questioned. We have verified with the pass through agency, OSPI, certification from the employee of a high school diploma is not sufficient evidence to meet the highly qualified paraprofessional requirement. It is the District’s responsibil ity to ensure it is hiring only qualified paraprofessionals. When the district is unable to obtain a copy of the diploma, OSPI will evaluate on a case -by-case basis and may grant a waiver. The District did not obtain a waiver for the employees in question. We reaffirm our audit finding and will review the status of the District’s corrective action during our next audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guida nce), section 516 – Audit findings, establishes r eporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 – Internal controls, describes the requirements for auditees to maintain internal controls o ver federal programs and comply with federal program requirements. Title 34, CFR Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, Subpart A – Improving Basic Programs Operated by Local Education Agencies, section 58 – Qualifications of paraprofessionals, requires all Local Education Agencies (LEA) to ensure that each paraprofessional hired by the LEA who works in a program supported by the funds of the grant must have earned a secondary school diploma or its recognized equivalent. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021263&isFinding=false&sp=false,2026-07-30 13:24:54 28,wa-sao,1021280,2017-001,,WA,Eastmont School District No 206,School District,1857,,no_match,Washington State Auditor's Office,Financial and Federal audit — Eastmont School District No 206,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-07,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to comply with federal suspension and debarment requirements. CFDA Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 09-206 Questio,"Background During fiscal year 2017, the District spent $1,270,741 in Title I grant funds. This program’s objective is to improve the teaching and learning of children who are at risk of not meeting challenging academic standards and who reside in areas with high concentrations of children from low-income families. The District used these funds to improve teaching and learning at seven school buildings. Federal requirements prohibi t grant recipients from contracting with or making subawards to parties who have been suspended or debarred from doing business with the federal government. To comply with this requirement, the District must verify that vendors receiving $25,000 or more in federal awards have not been suspended or debarred. This verification may be accomplished by obtaining a written certification from the vendor or inserting a clause in the contract in which the vendor states it is not suspended or debarred. Alternatively, the District may review the federal Excluded Parties List (EPLS) issued by the U.S. General Services Administration. The District must meet one of these requirements before entering into a contract with the vendor. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Description of Condition The District has a process in place, but it was not effective to ensure compliance. The District did not obtain a written certification or review EPLS to verify two vendors it paid $61,849 were not suspended or debarred before awarding the contracts. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District does not typically use Title I funds to pay vendors for goods or services over $25,000. Therefore, the District’s standard process was not followed. Effect of Condition and Questioned Costs Any payments of program funds to a vendor that has been suspended or debarred would be unallowable and subject to recovery by the grantor. We were able to v erify neither of the vendors had been suspended or debarred. Therefore, we are not questioning the related costs. Recommendation We recommend the District follow established internal controls to ensure vendors are not suspended or debarred from participati ng in federal programs before entering into contracts. District’s Response The District concurs with the auditor’s finding. The District is aware of the requirement that certification be obtained from vendors in order to ensure that the vendor is not suspended or debarred from doing business with the Federal government. In the instances noted by the auditor, staff were not aw are that the requirement related to cumulative totals. The District has implemented changes to procedures that require review of the Federal Excluded Parties List (EPLS) for any purchase that is using state or federal supplemental program dollars. The documentation of this review will be attached to the internal document used to request spending of these program dollars. We are confident that with this improvement in our process that the required documentation will be obtained prior to a payment of any amount being issued to a vendor. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 200.303 Internal controls, establishes internal control requirements for management of Federal awards to non-Federal entities. Title 2 CFR Part 200, Uniform Guidance, section 200.516 Audit findings, establishes reporting requirements for audit findings, and requirements for management of Federal awards to non-Federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement) establishes non -procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Washington State Auditor's Office ___________________________________________________________________________________________________________________ SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED CO STS Eastmont School District No. 206 Douglas County September 1, 2016 through August 31, 2017",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021280&isFinding=false&sp=false,2026-07-30 13:24:54 29,wa-sao,1021280,2017-002,,WA,Eastmont School District No 206,School District,1857,,no_match,Washington State Auditor's Office,Financial and Federal audit — Eastmont School District No 206,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-07,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to comply with graduation rate reporting requirements. CFDA Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 09-206 Questioned Cos,"Background During fiscal year 2017, the District spent $1,270,741 in Title I grant funds. This program’s objective is to improve the teaching and learning of children who are at risk of not meeting challenging academic standards and who reside in areas with high concentrations of children from low-income families. The District used these funds to improve teaching and learning at seven school buildings. Federal regulations require recipients of federal funds to establish and follow internal controls to comply with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. Districts must report graduation rate data for all public high schools to the Offic e of Superintendent of Public Instruction (OSPI) annually. This is done by submitting a Graduation Rate Report that indicates the student’s enrollment status as graduated, transferred out, dropped out, migrated to another country or deceased. The District must retain adequate support for how it classifies a student’s enrollment status. To confirm a student transferred out, the District must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Description of Condition Our audit examined the District’s documentation for students it classified as “transferred out.” The District’s controls were not adequate to ensure it gathered the required documents to support its classification of students that left the District to be homeschooled. Specifically, the District did not obtain annual I ntent to Provide Home-Based Education forms (homeschool forms) for each of these students. Without these forms, the District cannot report the students as a confirmed transfer. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District was aware that homeschool forms were required yearly, but it did not have procedures in place and did not monitor to ensure staff gathered and retained forms to support reporting those students as confirmed transfers. Effect of Condition and Questioned Costs The District did not o btain official written documentation to support the transfer status for five of the 16 students tested. It incorrectly reported these students as transferred out when it reported graduation rate data to OSPI. Although we are not questioning any costs, the District is at risk of misrepresenting the graduation rates. Recommendation We recommend the District establish controls to obtain and keep current homeschool forms for all students reported as transfers out. District’s Response The District concurs that the “Intent to Provide Home -Based Education” forms (homeschool) forms were not obtained or retained as required. The Eastmont High School counseling office have revised their procedures to include a requirement to double check that this form exists in the student’s file when a student transfers or withdraws for this purpose. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit . We will review the corrective action taken during our next audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 303 Internal controls, establishes internal control requirements for management of Federal awards to non -Federal entities. Title 2 CFRPart 200, (Uniform Guidance, Section 516 – Audit findings, establishes reporting requirements for audit findings. Part 200, Subpart A – Improving Basic Programs Operated by Local Educational Agencies, Section 200. 19 – Other academic indicators – establishes the requirement for Districts to have official written documentation to confirm a student transferred out. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021280&isFinding=false&sp=false,2026-07-30 13:24:54 30,wa-sao,1021283,2017-001,,WA,Bridgeport School District No 75,School District,1855,,no_match,Washington State Auditor's Office,Accountability audit — Bridgeport School District No 75,Accountability,2017,2015-09-01,2017-08-31,2018-05-24,internal_controls,,,,The District’s internal controls over Associated Study Body activities were insufficient to safeguard against potential loss and noncompliance with laws and regulations,"Background Districts may use Associated Student Body (ASB) funds for optional and noncurricular student activities that are cultural, athletic, recreational or social in nature, or that otherwise support ASB activities and programs. Bridgeport School District’s (District) ASB program collected revenue of $153,930 and $140,638 during fiscal years 2016 and 2017, respectively. Description of Condition Our examination identified the following conditions: Fundraisers and events: For each event or fundraiser, the ASB should retain source documentation of activity such as tickets sold, change in inventory, or manual receipts issued to reconcile against actual monies collected. Without this reconciliation, the ASB might not be able to detect potential losses of inventory of funds in a timely manner. We tested 16 ASB fundraisers and nine gated events, and found the District lacked adequate independent monitoring of ASB receipts. Further, documentation was either inadequate or missing. Specifically, the ASB did not:  Complete the final reconciliations of cas h receipts to activity, such as receipts, tickets sold, or change in inventory, on a timely basis for six fundraisers. Concession fundraiser activities occurring in September and October were not reconciled until June.  Print sales reports from the point-of-sales system after each of the nine gated events tested. As a result, activity from multiple events or for the entire month was included on the same report, limiting the District’s ability to reconcile actual funds deposited to expected revenues.  Retain documentation of p rom tickets sold before the event to either the District’s own students or other participating districts. As such, the ASB could not compare actual funds deposited to expected revenues.  Approve five fundraisers before the event began. Additionally, ASB Council minutes did not reflect approval for four events. Washington State Auditor’s Office Page 7  Perform a final profit analysis for five fundraisers. The ASB reconciled the prom event based on budgeted expenses rather than actual, resulting in an unexplained variance of $1,353. Minutes ASB meeting minutes did not clearly define ASB activity for approval, and did not consistently identify sufficient details and amounts for expenditures and fundraisers. Additionally, five of 30 documented meeting minutes did not specify whether a quorum was present. Similar deficiencies were communicated to the District in a finding in our prior audit. Cause of Condition The District has not allocated the necessary resources and oversight to establish adequate internal controls over ASB activities or to ensure ASB activities are handled in accordance with state laws and regulations, and are adequately supported and monitored. Effect of Condition Inadequate internal controls over ASB fundraising and disbursements, including insufficient approval and monitoring by the ASB Student Council, increase the risk that a loss or misappropriation of public funds might occur and not b e detected quickly, if at all. Recommendation We recommend the District improve internal controls over ASB activities to comply with state laws and regulation and provide adequate safeguarding of public resources. Specifically, we recommend the District:  Provide adequate training to staff and students involved in ASB fundraisers  Reconcile fundraiser receipts to expected revenues as derived from inventory sold, tickets or another method of estimating expected revenue  Prepare, retain and monitor all necessary records for ASB activities  Retain all ASB Student Council Minutes and clearly document formal approval of activities, purchases, and prior minutes Washington State Auditor’s Office Page 8 District’s Response Bridgeport School District concurs with the cause and effect of the ASB program condition. Key district employees will attend ASB training to ensure all staff are knowledgeable of the necessary internal control s. The District will provide in-service to all middle and high school staff on ASB requirements and procedures. Auditor’s Remarks We appreciate the District’s commitment to resolve the issues noted and we will follow-up during the next scheduled audit. Applicable Laws and Regulations WAC 392-123-010. The Accounting Manual, sets forth the requirements for the use of the accounting manual by the District. WAC 392-138-014 Accounting procedures and records, sets forth requirements for accounting methods and procedures to follow regulations and guidelines established in the Accounting Manual for Public Schools in the State of Washington. Accounting Manual for Public School Districts in the State of Washington, Chapter 3, Accounting Guidelines, Internal Control Structure, sets forth requirements for establishing and maintaining an effective system of internal controls. Accounting Manual for Public School Districts in the State of Washington, Chapter 9, Information Unique to Each Fund, Associated Student Bodies Association, sets forth guidelines for accounting of ASB funds. WAC 392 -138-125. Associated study body public moneys – Disbursement approval – Total disbursements, sets forth requirements for ASB budgets and disbursement approvals. RCW 28A.325.030 Associated student body program fund – Fund-raising activities – Non associated student body program fund moneys, sets forth requirements for conducting ASB fund-raising activities. RCW 28A.400.030 Superintendent’s duties, sets forth requirements for the school district superintendent to keep accurate records and detailed accounts for receipts and expenditures of school money. Washington State Auditor’s Office Page 9",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021283&isFinding=false&sp=false,2026-07-30 13:24:54 31,wa-sao,1021289,fraud-investigation,4349,WA,Franklin County,County,0115,53021,geoid_county,Washington State Auditor's Office,Fraud investigation — Franklin County,Fraud,2016,2016-01-01,2016-12-31,2018-04-30,misappropriation,fraud_investigation,11062.0,"misappropriat ed $11,062","Investigation Summary On October 25, 2017, the County Clerk notified our Office, as r equired by state law, regarding a potential loss of public funds in the Superior Court Clerk’s Office. The Franklin County Sheriff’s Office investigated. We reviewed the Sheriff’s Office investigation, performed an","Investigation Summary On October 25, 2017, the County Clerk notified our Office, as r equired by state law, regarding a potential loss of public funds in the Superior Court Clerk’s Office. The Franklin County Sheriff’s Office investigated. We reviewed the Sheriff’s Office investigation, performed an expanded review and determined a cash receipting m isappropriation totaling $11,062 occurred at the Superior Court Clerk’s Office between J anuary 2017 and July 2017. Our investigation also revealed control weaknesses in the County Treasurer’s Office. We will refer this report to the Franklin County Prosecuting Attorney’s Office. Background and Inv estigation Results Franklin County operates on an average annual budget of about $ 40 million, including about $900,000 in revenues from the Superior Court Clerk’s Office. The Clerk’s Office has 14 full-time positions and one part-time position. The loss was detected on Octobe r 13, 2017, while the Legal Fina ncial Officer was checking customer voicemails on the Financial Manager’s office phone because she was out on unexpected leave. A customer left a message, questioning why the County had not yet cashed a check mailed in July 2017. While researching for an explanation, the Legal Financial Officer identified an entire day’s deposit from July 18, 2017 – $6,614 in cash and $2,246 in checks – never made it to the bank. We reviewed the investigation performed by the Franklin County Sheriff’s Office. Deputies compared daily cash receipting hard copy files to bank statemen ts from January 2016 through December 2017. Deputies also reviewed the County Treasurer’s Office deposit logs to identify the person who took the deposit to the Treasurer’s Office. The Sheriff’s Office confirmed the July 18, 2017 deposit was missing and identified an additional deposit missing dated January 18, 2017. The January deposit consisted of $1,387 in cash and $815 in checks. Our investigation focused on cash receipting procedures includi ng electronic accounting system adjustments and reconciliations. We also:  Compared all system cash receipts to the bank statement deposit s for January 2016 to December 2017. We did not identify any additional missing deposits. We found that funds were typically deposited within one to three business days after receipt. However, we found that in July 2017, not including the missing deposit, funds rec eipted on the 19 th and 20 th were delayed in deposit by seven days and funds receipted on th e 21st were delayed five days. Some depositing delays up to six days continued in Septem ber through December 2017.   Washington State Auditor’s Office Page 4  Learned the Financial Manager and Legal Financial Officer at the end of the day typically handled together the reconciliation of all cash and checks receipted for that day. There was no backup if one of the two were absent. Once funds were reconc iled from the system to the tills, the bank deposit slip was prepared and the funds wer e placed into a sealed bank bag and placed in the vault overnight. The following morning, t ypically, the Financial Manager and on occasion the Legal Financial Officer would take the bank bag to the County Treasurer’s Office for deposit. This responsibility was not assigned to one person.  Observed by reviewing the receipting system that the July 18, 2 017, missing deposit was still pending to be posted in the system as reconciled to the b ank. It was the Financial Manager’s responsibility to identify and reconcile pending deposits in the system.  Discovered that the Clerk’s Office recieved a safe from the Tre asurer’s Office sometime in 2015 and did not change the combination once installed. In a ddition, the Financial Manager told us in an interview that in April 2017 she had given the safe’s combination to one of the Clerk’s Office cashiers. The Clerk’s Office changed accounting and case management syste ms in late 2015; therefore we also performed limited testing in the old receipting system to determine if misappropriation risks existed in the old system or were limited to the new system. We did not identify any issues in the old system. Further, to determine if any additional misappropri ation occurred, we also examined system adjustments and forfeite d-property disbursements, and pe rformed a limited review of disbursements. We did not find additional misappropriation; however, we did identify additional weaknesses. Specifically, the cu rrent accounting system cannot produce reports that are detailed enough to allow adequate monitoring. In February 2018, we interviewed the Financial Manager, Legal F inancial Officer and County Clerk. Based on our interviews, we noted the following:  The County Clerk explained that the Finance Manager would provi de him with a system screen shot of the monthly bank reconciliation. He did not reta in the documentation but would review it to ensure it appeared to balance.  The Financial Manager explained that she was behind on reconcil ing the system to the bank. With the assistance of the Legal Finance Officer, she was reconciling the system in six-month blocks. Due to the rec onciliation process being time consuming, they would at times refer to their internal daily deposit forms in addition t o or instead of the bank statements. She explained that if the deposit bag was not in th e safe in the morning she would likely have assumed it was b ecause the Legal Finance Officer had already taken it down to the Treasurer’s Office. There was no formal process or method of accountability for taking the deposit to the Treasurer’s Office.   Washington State Auditor’s Office Page 5  The Financial Manager also said the Clerk’s Office experienced significant staff turnover from January 2016 through December 2017. During this time, 20 e mployees were hired and 16 separated from the office.  The Legal Finance Officer explained that she only read off the bank statement to the Finance Manager who then cleared bank deposit amounts. She woul d not know if there were any deposits in the system that were unreconciled to research the reason for them not being deposited. The Legal Fin ance Office was not aware of any review or monitoring being performed on the reconciliations or various types of adjustments. Control Weaknesses Internal controls at the County were not adequate to safeguard public resources or detect misappropriation in a timely manner. We found the following wea knesses allowed the misappropriation to occur:  The Clerk’s Office lacked segregation of duties over cash handl ing procedures. The two primary people responsible for reconciling the cash receipts to the deposits also prepared the deposit and transmitted funds to the Treasurer’s Office. In addition, there was not adequate oversight from someone independent of cash handling, r econciling and depositing.  The bank reconciliation to the system receipting records was not completed in a reasonable amount of time nor was there monitoring of the bank reconciliat ions to ensure they were accurate or performed timely.  An unknown number of people had access to the vault, where cash and checks receipted for the day were placed in a sealed bank bag overnight. In addi tion, multiple people transferred the bank bag to the Treasurer’s Office the following day for deposit. Recommendations We recommend the County Clerk’s office strengthen internal cont rols over cash receipting procedures. For example, someone independent of the receipting and depositing process should reconcile the system receipts to the bank statement to ensure a dequate oversight and monitoring to safeguard public resources a nd compliance with County polici es. Further, this should include reviewing the receipting system for any unreconciled deposits or pending system adjustments. We also recommend the County seek recovery of the misappropriat ed $11,062 and related investigation costs of $12,650 from its insurance bonding company, as appropriate. Any compromise or settlement of this claim by the County must be approved in writing by the Attorney General and State Auditor as directed by state law (RCW 43.09.260). Assistant Attorney General Matt Kernutt is the contact person for the Attorney General’s O ffice and can be reached at (360) 586-0740 or mattk1@atg.wa.gov. The contact for the State Auditor’s Office is Sadie Armijo,   Washington State Auditor’s Office Page 6 Assistant Director of Local Audit, who can be reached at (360) 902-0362 or Sadie.Armijo@sao.wa.gov. County Clerk’s Response Franklin County would like to thank the State Aud itor’s Office for the opportunity to respond to the Investigation Report regarding the alleged misappropriation of funds. When the Superior Court Clerk’s office discover ed a potential loss of public funds, the County Risk Manager, State Auditor’s office, and law en forcement were properly notified. In addition, the employee was placed on administrative leave while the matter was investigated. As a result of the investigation, the County strengthened internal controls to prevent the violation of long standing policies and procedures in the following areas:  Cash receipting duties are delegated exclusively to cashiers.  The preparation of the deposit is the duel responsibility of the Financial Manager and the Legal Financial Officer. In the event of ei ther of their absence, the Chief Deputy, the Clerk and/or an authorized LFO Deputy Clerk w ill backup. All deposits are clearly documented and verified delivered to the Count y Treasurer’s vault the same working day on the Treasurer’s Office Garda Log, together with the date, time and signature of deliverer on Clerk’s Office Daily Reconciliation Report.  Increased controls to ensure accurate and timely reconciliation, including a monthly review of any unreconciled deposits or pending system adjustments.  Legal Financial Office’s safe combina tion is changed every 90 days and when an authorized employee entrusted with the combi nation leaves the County’s employment. Under no circumstances is the safe combination to be shared without the express consent of the Clerk. The County concurs with the State Auditor’s recommendations and will actively seek recovery of the misappropriated funds and investigation costs from its insurance bonding company. Franklin County appreciates the thorough investigation completed by the State Auditor’s Office. State Auditor’s Office Remarks We thank County officials and personnel for their assistance an d cooperation during the investigation. We will review the corrective action taken during our next regular audit.   Washington State Auditor’s Office Page 7",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021289&isFinding=false&sp=false,2026-07-30 13:24:54 32,wa-sao,1021290,2017-001,,WA,Selah School District No 119,School District,2109,,no_match,Washington State Auditor's Office,Financial and Federal audit — Selah School District No 119,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-07,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure compliance with federal Title I graduation rate reporting requirements. CFDA Number and Title: 84.010 Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number:,"Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of low-income families. During fiscal year 2017, the District spent $876,847 in Title I program funds. Federal regulations require recipients of federal money to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. Districts must report graduation rate data for all of their public high schools to the Office of Superintendent of Public Instruction (OSPI) annually. This is done by submitting a Graduation Rate Report that indicates the student’s enrollment status: graduated, transferred out, dropped out, migrated to another country or deceased. The Distri ct must retain adequate support for changes to a student’s status. To confirm a student transferred out, the District must have official written documentation that the student enrolled in another s chool or in an educational program that culminates in the award of a regular high school diploma. Washington State Auditor's Office Description of Condition We found the District did not adequately design or follow controls to ensure compliance with the Title I graduation reporting requirements. Specifically, the District did not h ave official w ritten documentation to support the students it reported as having transferred out of its high school and its alternative school. We consider this control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition High school staff did not follow District protocol to ensure documentation was acquired for students transferrin g out of the District. Also, staff members at the alternative school were not aware of the requirement to obtain and retain documentation for students transferring from a treatment facility to another district. Effect of Condition and Questioned Costs The District could not demonstrate it accurately classified the status of 16 out of 20 students it reported as confirmed transfers. Two of these students were reported as transferred from the high school, and 14 were reported as transferred from the alternative school through a treatment facility. Although there are no questioned costs, the District cannot ensure it reported accurate graduation rates to OSPI in compliance with the program requirements. Recommendation s We recommend the District provide training and guidance to staff members and verify they are obtaining and retaining written verification that students transferring out of the District enrolled in another s chool or in an educational prog ram that culminates in the award of a regular high school diploma. District ’s Response The District agrees that established protocols to obtain and retain adequate support for changes to a student's status to confirm a student transferred out were not followed by appropriate personnel at the high school level. The District is in agreement that it must have a copy of a records request or confirmation from the student reporting system on file to support a student transferring and enrolling in another school district or in an educational program that culminates in the award of a regular high school diploma. Further, the District agrees that it did not have sufficient internal controls in place to provide follow up to ensure such Washington State Auditor's Office documentation was on hand for students transferri ng to other districts. The District also acknowledges that protocols had not been established for obtaining documentation to prove re -enrollment to the applicable originating district (or transfer to another district) for students leaving Sundown M Ranch, a treatment facility who is affiliated with the school district. The assumption has always been they were returning to their home district, but it was not confirmed and documented for these students. The District has since met with the appropriate personnel at the high school and alternative school to review existing protocols for documentation of students transferring to other districts (i.e. records request from the new district or documentation from the system confirming the enrollment with anoth er district), the process for follow up, as well as the newly developed process at the alternative school so that the District can ensure compliance with graduation data reporting requirements. A plan to meet with other appropriate personnel at other buil dings about established protocols will be accomplished prior to the last day of school. Auditor’s Remarks We appreciate the District’s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will re view the corrective action taken during our next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations, (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516 – Audit findings, establishes reporting requirements for audit findings. Title 34 CFR Part 200, Subpart A – Improving Basic Programs Operated by Local Educational Agencies, section 200.19 – Other academic indicators – establishes the requirement for Districts to have official written documentation to confirm a student transferred out. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021290&isFinding=false&sp=false,2026-07-30 13:24:54 33,wa-sao,1021296,fraud-investigation,,WA,City of Rock Island,City/Town,0280,5359180,no_match,Washington State Auditor's Office,Fraud investigation — City of Rock Island,Fraud,2016,2015-01-01,2016-12-31,2018-05-08,misappropriation,fraud_investigation,37056.0,"misappropriation totaling $37,056","Investigation Summary On November 28, 2016, the Mayor of the City of Rock Island notified our Office regarding a potential loss of public funds as state law requires. We investigated and determined a cash receipting misappropriation totaling $37,056 occurred at the City between November 2015 and Oct","Investigation Summary On November 28, 2016, the Mayor of the City of Rock Island notified our Office regarding a potential loss of public funds as state law requires. We investigated and determined a cash receipting misappropriation totaling $37,056 occurred at the City between November 2015 and October 2016. The misappropriated funds were all cash payments that were receipted, but not deposited. In addition to the cash receipting misappropriation, we also identified questionabl e transactions totaling $1,071 and a $225 deleted receipt that was unsupported. The City did not file a report wi th the Douglas County Sheriff’s Office . Our Office notified the Douglas County Sheriff’s Office, and we will send this report to the Douglas County Prosecuting Attorney’s Office. Background and Investigation Results The City, located in Douglas County, receives annual revenues of about $1 million. The City’s revenue comes from multiple sources but primarily utility sales. Other sources of revenue include lease payments, fees from building permits and licenses. The City has three full -time and two part-time employees. The Clerk/Treasurer is responsib le for overseeing the daily financial operations of the City with the support of a Deputy Clerk. The Clerk/Treasurer reconciles the electronic accounting system to the bank records, while the Deputy Clerk handles most of the cash receipting duties and recording those payments in the accounting system. Our investigation focused on cash receipting. City staff issue receipts for payments made at City Hall. Staff members then record and reconcile receipts in the City’s accounting system. Our investigation focused on the following activities: Cash receipts from January 2015 to November 2016 We compared receipts recorded in the electronic accounting system to amounts deposited at the bank and identified a total of $37,056 in cash transactions that were entered i nto the accounting system but not deposited into the bank account. The investigation revealed the following:  State law requires governments to deposit funds into a bank within 24 hours of receiving them unless the City formalizes a policy or resolution wai ving the 24-hour requirement, and allowing deposits no less than weekly. Rock Island had no such waiver. During the period we investigated, the number of days between receipt date and deposit date ranged from one to 119 days, with an average of 34 days. Washington State Auditor's Office  In October 2015, the City changed its deposit process, requiring checks and cash to be deposited separately. The reason for this change, according to the former Clerk/Treasurer, was a mutual decision between the Clerk/Treasurer and Deputy Clerk based on in formation received at their accounting software vendor’s conference in the fall of 201 5. The Deputy Clerk said she was directed by the former Clerk/Treasurer to change the process.  After the deposit process changed, 25 cash deposits noted in the accounting software system were not actually deposited into the bank. The system allows users to select what receipt batches were included in deposits made to the bank. The remaining receipt batches remain in the system as “unattached .” The reconciliation reports sent to the Mayor to review and approve did not include the 25 “unattached” cash deposits . However, these “unattached” deposits appeared on a screen for the Clerk/Treasurer to see before printing the report.  The Clerk/Treasurer said that when she prepared the reconciliation reports, she was only checking that deposited amounts on the bank statement were listed in the accounting system. However, using that approach and not including any unattached receipt batches defeats the purpose of the Mayor’s review of the reconciliation report.  On March 8, 2016, 10 deposits totaling about $8,350 in cash were deposited at the bank, which included cash receipts from November 2015, December 2015, January 2016 and February 2016. This oc curred just prior to t he Mayor t aking over the duty of making deposits in mid to late March 2016.  After the Mayor took over depositing duties , we did not identify any missing deposits in the period from April 2016 to September 2016. Further, the number of days between receipt date and deposit date averaged 14 days.  Before March 2016, it is unclear whose responsibility it was to take deposits to the bank. The former Clerk/Treasurer said multiple City employees made deposits. The Deputy Clerk said typically the Clerk/Treasurer made deposits.  Further, our investigation revealed the City’s safe was not secured during business hours, allowing anyone within the building to access its contents. In addition, it was not clear who knew the safe combination and who ha d physical access to City Hall because the City’s inventory of keys might not have been accurate. Manual Receipts from January 2015 to November 2016 Although the City regularly uses its electronic accounting system to record receipts, it also occasionally uses a manual receipt book. City staff later enter manual receipts into the system. We attempted to compare manual receipts to transactions recorded in the system and subsequent deposits. We were unable to trace $1,071 in receipts because the City did not consistently record Washington State Auditor's Office non-sufficient-funds fees in the accounting system and did not deposit within a reasonable amount of time. In addition, 10 receipts were missing from the receipt book , so we were unable to test those receipts. Deleted receipt transactions from January 2015 to November 2016 The electronic accounting system allows transactions to be deleted to allow for human error and other reasonable circumstances. However, governments should document the reason behind deletions to demonstrate that these inherently risky transactions are valid and appropriate. We compared cash receipts to the deleted trans actions report and tested eight transactions for appropriateness. The City could not demonstrate the reason for one deleted $225 transaction. To determine if any additional misappropriations occurred, we also examined other significant systems at the Cit y, including payroll and general disbursements. We did not identify any additional misappropriation. We also reviewed additional areas of cash receipting and did not find additional misappropriation; however, we did identify additional internal control weaknesses related to physical access to City Hall and the safe combination. We determined the City could not assign responsibility for the misappropriation due to control weaknesses over cash receipting procedures and safeguarding of public resources. Contro l Weaknesses Internal controls at the City were not adequate to safeguard public resources. We found the following weaknesses allowed the misappropriation to occur:  The Clerk/Treasurer and Deputy Clerk, who are responsible for cash receipting, data entry, bank depositing, and reconciliations, have the ability to make adjustments in the accounting system. Further, those adjustments were not reviewed by someone independent of the process.  An accounting system weakness allows users to apply payments to custome r accounts, while the payment remains “unattached” within the system. As a result, the payments do not appear on the monthly reconciliation activity report that lists all funds receipted for the period, and which the City relies on to reconcile with the bank statement.  No one independent of the reconciliation process compared these “unattached receipts” in the system to the Clerk/Treasurer’s monthly bank reconciliation to determine if unattached items were reasonable and appropriate.  The Clerk/Treasurer was responsible for bank reconciliations and also delivered receipted funds to the bank for deposit.  City staff inconsistently used manual receipts, and the City lacked oversight or reconciliation processes over those manual receipts. Washington State Auditor's Office  Access to City Hall’s safe was not limited based on need. Rather, all City staff had access to the safe during the day. In addition, the City did not know who had a key to City Hall or the combination to the safe. Recommendations We recommend the City stre ngthen internal controls over cash receipting , including adequate oversight and monitoring to safeguard public resources and comply with City policies. At a minimum, improvements should include:  Appropriate segregation of duties and monitoring over cash receipting, bank deposit preparation and bank reconciliations  Adequate documentation of bank reconciliations to verify all amounts receipted are deposited  Independent review of cash receipt adjustments in the system and verification that adjustments are reasonable and adequately supported  Consistent accounting treatment of bank and non-sufficient-funds fees. If manual receipts are used, someone independent of the receipting process should review these and verify they were entered into the system and deposited.  Limited access to City Hall and the safe to essential personnel only We also recommend the City seek recovery of the misappropriated $ 37,056 and related investigation costs of $11,165 from its insurance bonding company. Any compromise or settlement of this claim by the City must be approved in writing by the Attorney General and State Auditor as directed by state law (RCW 43.09.260). Assistant Attorney General Matt Kernutt is the contact person for the Attorney General’s Office and can be reached at (360) 586-0740 or mattkl@atg.wa.gov. The contact for the State Auditor’s Office is Sadie Armijo, Assistant Director of Local Audit, who can be reached at (360) 902 -0362 or Sadie.Armijo@sao.wa.gov. City’s Response Subsequent to the departure of a former City Clerk/Treasurer, the then City Clerk/Treasurer and current Mayor discovered that multiple batched cash receipts had been credited as received by the City and correctl y applied to City customer utility accounts, but were never deposited in the City bank account. The current Mayor and the Clerk/Treasurer were unable to account for these missing funds and therefore contacted the State Auditor’s office and requested an inv estigation be conducted. This investigation was followed up by an investigation by the Douglas County Sheriff’s office to determine whether criminal charges should be brought against one or more individuals. We understand from your report and from the Doug las County Sheriff’s office that Washington State Auditor's Office you were able to confirm that the cash was taken and remains missing, but neither your office nor the Sheriff’s office were able to identify the person or persons who stole the cash. You have identified several recommendat ions most of which we have already implemented and others the City will be implementing soon. One of the challenges for the City is having a limited number of employees which is not ideal when handling the significant amount of cash we receive. We have cha nged the locks on City Hall and the combination to the City safe and have restricted access to keys to City Hall and have limited knowledge of the safe combination to only two City employees. We appreciate your efforts to identify the thief or thieves and are confident our new team at City Hall will do everything within our power and authority to prevent any such occurrence from happening again. State Auditor’s Office Remarks We thank City officials and personnel for their assistance and cooperation during the investigation. Washington State Auditor's Office ABOUT THE STATE A UDITOR’S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. We work with our audit clients and citizens to achieve our vision of government that works for citizens, by helping governments work better, cost less, deliver higher value, and earn greater public trust. In fulfilling our mission to hold state and local governments accountable for the use of public resources, we also hold ourselves accountable by continually improving our audit quality and operational efficiency and developing highly engaged and committed employees. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition , we conduct performance audits of state agencies and local governments as well as fraud, state whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously, and provide training and technical assistance to governments, and have an extensive quality assurance program. Contact information for the State Auditor’s Office Public Records requests PublicRecords@sao.wa.gov Main telephone (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Website www.sao.wa.gov Washington State Auditor's Office Page 8",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021296&isFinding=false&sp=false,2026-07-30 13:24:54 34,wa-sao,1021301,2017-001,,WA,Cheney School District No 360,School District,2048,,no_match,Washington State Auditor's Office,Financial and Federal audit — Cheney School District No 360,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-21,federal_award_compliance,material_weakness,66511.0,"Questioned Cost Amount: $66,511",The District did not have adequate internal controls to ensure compliance with the federal Title I grant requirements for highly qualified paraprofessionals. CFDA Number and Title: 84.010 – Title I Grants to Local Education Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pa,"Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low -income families. During fiscal year 2017, the District spent $1,033,467 in Title I program funds. Federal regulations require federal money recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. To meet requirements for “highly qualified” classification, a paraprofessional must have a high school diploma or its recognized equivalent and have met one of the following requirements:  Completed at least two years of study at an institution of higher education  Obtained an associate’s or higher college degree Washington State Auditor's Office ___________________________________________________________________________________________________________________  Met a rigorous standard of quality and can demonstrate, through a formal state or local academic assessment, knowledge of and the ability to assist in instructing, reading, writing and mathematics, or reading readiness, writing readiness and mathematics readiness Description of Condition We reviewed the District’s internal controls over highly qualified status requirements to determine whether paraprofessionals charged to the Title I grant met the requirements for that status. Our audit found that the District did not obtain and maintain documentation demonstrating evidence that all paraprofessionals charged to the Title I program met the requirements for highly qualified status. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District did not have a process in place to obtain a high school diploma or equivalent from its paraprofessionals when they were hired. Instead, the District relied on its understanding that most colleges require a high school diploma for a student to be accepted for enrollment. However, some out -of-state colleges do not require this before enrollment. In addition, because of an oversight, the District did not follow its established process to obtain a copy of the college transcript for two paraprofessionals to ensure they met one of the three additional requirements for highly qualified status. Effect of Condition and Questioned Costs Without adequate controls in place, the District cannot demonstrate that costs charged to the grant were allowable. Also, without documentation supporting a high school diploma or its equivalent and that parapr ofessionals met one of the three other requirements, the District cannot demonstrate Title I students were instructed by a highly qualified paraprofessional. Our audit found:  None of the 13 paraprofessionals charged to the District’s Title I program had a high school diploma or equivalent on file at the District.  Two of the 13 paraprofessionals did not have documentation to demonstrate they met one of the three additional requirements for highly qualified status. However, during the audit, the District was able to obtain evidence of a high school diploma or its equivalent and additional documentation to demonstrate high ly Washington State Auditor's Office ___________________________________________________________________________________________________________________ qualified status for ten of the 13 paraprofessionals test ed. The District charged $66,511 in salaries and benefits to its Title I program for the remaining three paraprofessionals and could not demonstrate the paraprofessionals met the requirements for highly qualified status. Recommendation s We recommend the District establish and follow internal controls and maintain supporting documentati on to demonstrate all paraprofessionals meet the federal requirements for highly qualified status. District ’s Response The District has developed adequate controls to ensure all required supporting documentation is collected and maintained, including high school diplomas, to meet the federal requirements when placing paraprofessionals in highly qualified positions. Auditor’s Remarks We appreciate the steps the District is taking to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516 Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303 Internal controls, establishes requirements for management of Federal awards to non-Federal entities. Title 34, U.S. Code of Federal Regulations (CFR) Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, section 58 – Qualifications of paraprofessionals, establishes requirements to ensure paraprofessionals working in Title I programs are highly qualified. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021301&isFinding=false&sp=false,2026-07-30 13:24:54 35,wa-sao,1021303,2017-001,,WA,Mason County Fire Protection District No 18,Fire Protection District,0300,,not_municipal,Washington State Auditor's Office,Accountability audit — Mason County Fire Protection District No 18,Accountability,2017,2016-01-01,2017-12-31,2018-05-21,misappropriation,,,,The District did not have adequate internal controls over cash receipting and petty cash to ensure adequate safeguarding of public resources,"Background Mason County Fire Protection District No. 18 is located in Mason County and serves the Lake Cushman area. The District’s total revenue was about $362,000 and $211,000 in 2016 and 2017, respectively. District management is responsible for establishing effective internal controls to ensure compliance with state law and adequate safeguarding of public funds. Description of Condition The District’s internal control systems were inadequate to ensure compliance with state laws and safeguarding of public resources. Our current audi t identified the following control deficiencies: Cash receipting The District receives an average of $14,000 a year in revenue other than taxes. The District did not record or have records of funds receipted, and did not have a reconciliation function to ensure receipted funds were adequately safeguarded from loss or misappropriation. In addition, the District lacked adequate controls to ensure funds were deposited promptly in accordance with state law (RCW 43.09.240). Because there were not adequate controls or any records of cash receipted, we were not able to test cash receipting. There is a continued risk of loss or misappropriation for cash receipting. Petty cash The District had a petty cash fund of $1,000 and total replenishments to the fund of about $3,000 in 2016 and 2017. The District identified a loss of $666 in petty cash funds. We tested 42 petty cash expenditures and six monthly reimbursements for those expenses from 2016 and 2017. We noted the following: Washington State Auditor’s Office Page 7 • Three of the six monthly reimbursement amounts did not tie to supporting receipts. We identified a total of $1,127 in petty cash expenditures that were unsupported or questionable. • 17 petty cash expenses, totaling $346, were used by or reimbursed to the petty cash custodian without a secondary review or approval. • 14 petty cash expenses, totaling $424, were not allowable because the District had not determined in its policy that they were a valid use of funds. Cause of Condition The District staff responsible for cash receipting and petty cash lacked adequate training and resources to establish adequate internal controls. In addition, District management did not dedicate sufficient resources or monitoring to ensure effective internal controls were established and consistently applied. Effect of Condition Without adequate internal controls in place to ensure compliance with state law and safeguarding of public resources, the District is at increased risk of noncompliance, fraud and abuse. Noncompliance, fraud and abuse can result in loss of public trust, fewer resources available to perform services and inability to maintain the public assets entrusted to the District by its taxpayers. Recommendation We recommend the District establish a process to proactively identify, assess and respond to risks. We further recommend the District establish and follow internal controls to ensure: • Receipted funds are recorded, promptly deposited, intact and reconciled by someone not involved in the receipting process • Petty cash reimbursements are supported by adequate documentation and have a secondary review to ensure all expenses are for District purposes and allowable under District policy Finally, we recommend the District ensure employees responsible for key internal controls receive adequate training to effectively perform their duties. Washington State Auditor’s Office Page 8 District’s Response On December 31 st, 2016 we had a change of district secretary and then the termination of our Fire Chief on January 13 th, 2017. This all prompted considerable examination of our policies and procedures that were in place. Mason County Fire District 18 adopted many new policies on March 31 st, 2017. The petty cash policy was included in this grouping. The Cash receipting policy has been instituted in accordance with RCW 43.09.240 We now have a detailed review and audit of all payments made to our volunteers and procedures set in place to monitor warrants and credit card transactions. Prior to our onsite audit, most of the issues noted had been addressed. The recommendations from the State Auditor’s office regarding findings noted will be implemented where appropriate. Auditor’s Remarks We want to thank the District for its assistance throughout the audit and the steps it is taking to address the issues. The District’s status of corrective actions will be reviewed during our next audit. Applicable Laws and Regulations RCW 43.09.200 – Local government accounting – Uniform system of accounting, gives the state auditor the authority to formulate, prescribe and install a uniform system of accounting and reporting for all local governments. Budgeting Accounting and Reporting System (BARS) Manual – Accounting, Accounting Principles and General Procedures, Internal Control defines internal control, describes it purpose, and specifies each entity is responsible for establishing and maintaining an effective system of internal control throughout their government. RCW 43.09.240 – Local government accounting – Public officers and employees – Duty to account and report – Removal from office – Deposit of collections, describes the timely depositing requirements for local governments. Washington State Auditor’s Office Page 9",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021303&isFinding=false&sp=false,2026-07-30 13:24:54 36,wa-sao,1021303,2017-002,,WA,Mason County Fire Protection District No 18,Fire Protection District,0300,,not_municipal,Washington State Auditor's Office,Accountability audit — Mason County Fire Protection District No 18,Accountability,2017,2016-01-01,2017-12-31,2018-05-21,internal_controls,,,,The District did not have adequate controls over payroll and disbursements to ensure expenditures were adequately supported and for District business,"Background Mason County Fire Protection District No. 18 is located in Mason County and serves the Lake Cushman area. The District’s operating expenditures totaled about $225,000 and $250,000 in 2016 and 2017, respectively. District management is responsible for establishing effective internal controls to ensure public funds are adequately safeguarded. Description of Condition We identified the following deficiencies in internal controls: Payroll • There was not a detailed review of payments to volunteers and commissioners by someone independent of the payroll process to ensure payments were correctly calculated and adequately supported. Disbursements and credit cards • There was not a detailed review of warrants or credit card transactions by someone independent of t he disbursement process to ensure accuracy and compliance with District policy. • The District did not have a process in place to ensure adequate support was retained for all purchases and warrants paid. Cause of Condition The District staff responsible for payroll and disbursements lacked adequate training and resources to establish adequate internal controls. In addition, District management did not dedicate sufficient resources or monitoring to ensure effective internal controls were established and consistently applied. Washington State Auditor’s Office Page 10 Effect of Condition Payroll The District primarily consists of volunteer firefighters who are paid, based on points earned, on a quarterly basis. In addition, Commissioners are compensated $114 for each meeting, once a month. We tested payments to volunteers and noted the District did not have records to support the four quarterly volunteer payments in 2016. We also tested eight months, or 57 meetings, for Commissioners and noted the District: • Did not have meeting activity logs for four months • Did not have adequate support for six of the meetings to verify they were for legitimate District business We also noted that Commissioners who also serve as volunteers receive compensation for responding to calls and attending drills in addition to their Commissioner compensation. The District was not able to demonstrate payments to volunteers were made with the intent to reimburse expenses; therefore, compensation to Commissioners for volunteer services might be unallowable (RCW 52.14.010). Disbursements and credit cards We reviewed 68 disbursement transactions and 29 credit card transactions and identified the following: • Four disbursement transactions, totaling $2,741, did not have adequate supporting documentation. • Eight credit card transactions , totaling $374, did not have adequate supporting documentation to ensure each purchase was allowable under state law and district policy, and that each transaction was for District use. • The District was not able to provide the 2016 December-January credit card statement. Washington State Auditor’s Office Page 11 Recommendation We recommend the District: • Establish written policies and procedures for disbursements and payroll and ensure monitoring is adequate to prevent misappropriation • Ensure adequate segregation of duties and monitoring over the general and payroll disbursement processes Finally, we recommend the District ensure employees responsible for key internal controls receive adequate training to effectively perform their duties. District’s Response On December 31 st, 2016 we had a change of district secretary and then the termination of our Fire Chief on January 13 th, 2017. This all prompted considerable examination of our policies and procedures that were in place. Mason County Fire District 18 adopted many new polic ies on March 31 st, 2017. The petty cash policy was included in this grouping. The Cash receipting policy has been instituted in accordance with RCW 43.09.240 We now have a detailed review and audit of all payments made to our volunteers and procedures set in place to monitor warrants and credit card transactions. Prior to our onsite audit, most of the issues noted had been addressed. The recommendations from the State Auditor’s office regarding findings noted will be implemented where appropriate. Auditor’s Remarks We want to thank the District for its assistance throughout the audit and the steps it is taking to address the issues. The District’s status of corrective actions will be reviewed during our next audit. Applicable Laws and Regulations RCW 43.09.200 – Local government accounting; Uniform system of accounting, requires the State Auditor to prescribe the system of accounting and reporting for all local governments. The Budgeting, Accounting and Reporting System (BARS) Manual, 3.1.3, Internal Control, requires each local government to establish and maintain an effective system of internal controls that provides reasonable assurance that the government will achieve its objectives. Washington State Auditor’s Office Page 12 The Budgeting, Accounting, and Reporting System Manual (BARS), 3.14, Accounting Principles and Internal Control outlines the local government’s responsibility for obtaining and retention of original vouchers, receipts and other documents. RCW 43.09.2855 – Local governments; Use of credit cards requires local governments to adopt a system for the distribution of the credit cards, the authorization and control of the use of credit cards, the credit limits available on the credit cards, payment of the bills, and any other rule necessary to implement or administer the system outlined in the RCW. Washington State Auditor’s Office Page 13 INFORMATION ABOUT THE DISTRICT Mason County Fire Protection District No. 18 has served the Lake Cushman area of Mason County since 1977. The District primarily consists of volunteer firefighters but does have a paid fire chief and secretary. An elected, three-member Board of Commissioners governs the District. During fiscal years 2016 and 2017, the District received approximately $350,000 in revenues , primarily from property taxes. Contact information related to this report Address: Mason County Fire Protection District No. 18 240 N. Standstill Drive S. Hoodsport, WA 98548 Contact: Mike Sexton, Fire Chief Telephone: (360) 877-9882 Information current as of report publish date. Audit history You can find current and past audit reports for Mason County Fire Protection District No. 18 at http://portal.sao.wa.gov/ReportSearch. Washington State Auditor’s Office Page 14 ABOUT THE STATE A UDITOR’S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. We work with our audit clients and citizens to achieve our vision of government that works for citizens, by helping governments work better, cost less, deliver higher value, and earn greater public trust. In fulfilling our mission to hold state and local governments accounta ble for the use of public resources, we also hold ourselves accountable by continually improving our audit quality and operational efficiency and developing highly engaged and committed employees. As an elected agency, the State Auditor's Office has the in dependence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. Our audits look at financial information and comp liance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments as well as fraud, state whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously, and provide training and technical assistance to governments, and have an extensive quality assurance program. Contact information for the State Auditor’s Office Public Records requests PublicRecords@sao.wa.gov Main telephone (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Website www.sao.wa.gov",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021303&isFinding=false&sp=false,2026-07-30 13:24:54 37,wa-sao,1021321,2017-001,,WA,Aberdeen School District No 5,School District,1882,,no_match,Washington State Auditor's Office,Financial and Federal audit — Aberdeen School District No 5,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-17,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,"The District did not have adequate internal controls to ensure compliance with the federal Special Education Cluster grant requirements for procurement. CFDA Number and Title: 84.027 – Special Education–Grants to States (IDEA, Part B) 84.173 – Special Education– Preschool Grants (IDEA Preschool) Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entit","Background The District participates in the Individuals with Disabilities Education Act’s Special Education program. The District received $826,202 from the program during fiscal year 2017. Federal regulations require recipients of federal money to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. The District must ensure it follows the most restrictive procurement requirements when procuring goods and s ervices. The District procured professional special education services from two contractors at costs of $276,264 and $216,458, respectively. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Description of Condition The District did not maintain support to show it followed the most restrictive procurement requirements in awarding either of the two contracts for professional special education services. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Conditio n The District experienced employee turnover at the procurement position and was unable to find the documentation to show it followed the appropriate procurement method. Effect of Condition and Questioned Costs The District was unable to show it complied w ith federal procurement requirements. The District cannot demonstrate it received the best price for the goods it purchased if supporting documentation is not maintained. We did not question costs because the funds were used for an allowable purpose. Reco mmendation s We recommend the District ensures it follows its policies in applying the most restrictive procurement method when procuring goods and services with federal grant funds. We further recommend it improve internal controls to ensure it maintains documentation supporting its compliance. District’s Response The Aberdeen School District is re-evaluating the process used for purchasing. We are hiring one person specifically to procure bids, services and supplies. One of their primary responsibilities will be to post, track and respond to RFP/RFQ’s. For the 2018-19 school year, an RFP for services used to support Special Education was posted and advertised. The bid sheet will be consulted for hiring additional providers, as needed. The district has also been able to hire several people, as employees of the district, to provide these services starting in the 2018 -19 school year. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Auditor’s Remarks We thank the District for its c ooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guida nce), section 516 Audit findings, establishes r eporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, establishes internal control requirements for management of Federal awards to non -Federal entities. Title 2 CFR Part 200, Uniform Guidance, section 318 General procurement standards, establishes procurement requirements. Title 2 CFR Part 200, Uniform Guidance, section 320 Methods of procurement to be followed, describes the procurement methods to be followed. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021321&isFinding=false&sp=false,2026-07-30 13:24:54 38,wa-sao,1021321,2017-002,,WA,Aberdeen School District No 5,School District,1882,,no_match,Washington State Auditor's Office,Financial and Federal audit — Aberdeen School District No 5,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-17,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,"The District did not have adequate internal controls to ensure compliance with the federal Title I grant requirements for the annual report card, high school graduation rate. CFDA Number and Title: 84.010 – Title 1 Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Ed","Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During fiscal year 2017, the District spent $1,246,878 in Title I program funds. Districts must report graduation rate data for all public high schools to the Office of Superintendent of Public Instruction (OSPI) annually. This is done by submitting a Graduation Rate Report that indicates the student’s enrollment status as graduated, transferred out, dropped out, migrated to another country or deceased. The district must retain adequate support for how it classifies a student’s enrollment status. To confirm a student transferred out, the district must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Description of Condition Our audit examined the District’s documentation for students it classified as “transferred out.” The District’s controls were not adequate to ensure it gathered the required documents to support its classification of students that left the District. Specifically, the District did not obtain annual I ntent to Provide Home-Based Education forms (homeschool forms) for each student who left the District to be homeschooled. It also did not obtain written documentation confirming students who transferred to another district actually enrolled in the new district. Without these documents, the District cannot report the students as a confirmed transfer. We consider these control deficiencies to be material weaknesses. This issue was not reported as a finding in the prior audit. Cause of Condition District staff were not aware of the documentation necessary to demonstrate students as confirmed transfers. Effect of Condition and Questioned Costs Out of nine transfers reviewed, four did not have proper documentation maintained. By not maintaining proper documentation, the District cannot ensure it has provided accurate reports to OSPI. Further, the District is at risk of incorrectly calculating graduation rates. There are no questioned costs associated with this compliance requirement. Recommendation s We recommend the District establish controls to obtain and k eep documentation confirming students that transfer out of the District are properly classified, including current homeschool forms and written notification confirming the student enrolled at the new District. District’s Response The Aberdeen School District enrolls home schooled students who wish to register to take Running Start classes. In the past an Intent to Home School form was not required at the time of registration. The Aberdeen School District is changing that process and will now require any student who presents as a home school student to complete an Intent to Home School form with the enrollment packet. To ensure continuous enrollment and academic progress in a course of study. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Auditor’s Remarks We thank the District for its c ooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance, section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guida nce), section 516 Audit findings, establishes r eporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, Section 34 – High School Graduation Rates, discusses requirements for reporting cohort graduation rates and changes in how changes in student status are classified. Title 34 CFR Part 200, Subpart A – Improving Basic Programs Operated by Local Educational Agencies, Section 200.19 – Other academic indicators – establishes the requirement for Districts to have official written documentation to confirm a student transferred out. Washington State Auditor's Office ___________________________________________________________________________________________________________________ IND EPENDENT AUDITOR’S R EPORT ON INTERNAL CO NTROL OVER FINANCIAL REPOR TING AND ON COMPLIAN CE AND OTHER MATTERS BASED ON AN AUDIT OF FINAN CIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Aberdeen School District No. 5 Grays Harbor County September 1, 2016 through August 31, 2017 Board of Directors Aberdeen School District No. 5 Aberdeen, Washington We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, t he financial statements of Aberdeen School District No. 5, Grays Harbor County, Washington, as of and for the year ended August 31, 2017, and the related notes to the financial statements, which collectively comprise the District’s financial statements, and have issued our report thereon dated May 16, 2018. We issued an unmodified opinion on the fair presentation of the District’s financial statements in accordance with its regulatory basis of accounting. We issued an adverse opinion on the fair presentation with regard to accounting principles generally accepted in the United States of America (GAAP) because , as described in Note 1, the Accounting Manual for Public School Districts in the State of Washington does not require the District to prepare the government-wide statements presenting the financial position and changes in financial position of its governmental activities as required by GAAP. The effects on the financial statements of the variances between the basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s Washington State Auditor's Office ___________________________________________________________________________________________________________________ internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in i nternal control such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpos e described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any defic iencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of the District’s compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determinatio n of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. However, Washington State Auditor's Office ___________________________________________________________________________________________________________________ this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to h elp citizens assess government operations. Pat McCarthy State Auditor Olympia, WA May 16, 2018 Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021321&isFinding=false&sp=false,2026-07-30 13:24:54 39,wa-sao,1021323,2017-001,,WA,Puyallup School District No 3,School District,1994,,no_match,Washington State Auditor's Office,Financial and Federal audit — Puyallup School District No 3,Financial and Federal,2017,2015-09-01,2017-08-31,2018-05-31,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure it complied with Title I grant requirements for highly qualified paraprofessionals. CFDA Number and Title: 84.010 – Title I Grants to States Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-throu,"Background The federal Title I program’s objective is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with a high concentration of low-income families. During fiscal year 2017, the District spent $2,538,387 in Title I program funds. Federal regulations require federal money recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. Each paraprofessional the District charges to the Title I program must have obtained either a high school diploma or its recognized equivalent . The District must verify that all paraprofessionals it charges to the program have met this requirement. Description of Condition The District ’s procedures for verifying paraprofessionals it hired met the qualification requirements during the period of the audit were not effective in ensuring compliance. The District relied on each applicant’s certification that he Washington State Auditor's Office ___________________________________________________________________________________________________________________ or she obtained a high school diploma or its equivalent, without always physically verifying and documenting that they did. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District relied on paraprofessionals’ certification that they acquired a high school diploma or equivalent on their employment application to demonstrate the federal requirement was met, without always performing further verification and documenting it. Effect of Condition and Questioned Costs Without adequate internal controls in place , such as (maintaining evidence the District verified the paraprofessional had obtained a high school diploma or equivalent, the District cannot demonstrate paraprofessionals met the requirement and, therefore, that costs charged to the grant were allowable. Our audit found the District did not have evidence of a high school diploma on file for four of the 25 paraprofessionals it charged to the program. Subsequently, the District obtained copies of transcripts and high school diplomas for the four paraprofessionals to show each met the requirement. Therefore, we are not questioning costs the District charged to the grant. Rec ommendation s We recommend the District establish and follow internal controls to ensure every paraprofessional provides evidence of a high school diploma or its equivalent and to keep a copy of this evidence in the employee file. District’s Response The Puyallup School District does not concur with the finding of a material weakness in internal controls with regard to the highly -qualified status of Title I paraprofessionals. The District was aware of the requirement that Title I paraprofessionals mus t have a high school diploma or GED and performed verification of this by either reviewing an employee’s actual diploma/transcript; or through an employee’s certification on their application form. We have found no written documentation requiring the Dist rict to maintain a file copy of a paraprofessional’s high school diploma/GED or transcripts. Written guidance provided by OSPI (Title I, Part A Guide to Paraeducator Requirements issued Washington State Auditor's Office ___________________________________________________________________________________________________________________ August 2017), explicitly states that districts must maintain a file c opy of official transcripts as verification of college credentials (for which the District was 100% compliant on this greater indicator of qualifications) but is silent on any such requirement for verification of a paraeducator’s high school diploma/GED or transcripts. The District’s reliance on the employee’s certification of high school diploma/GED or transcripts was not an internal control weakness, rather a reasonable assumption based on the insignificance of a high school diploma in relation to the co llege/ETS test requirements and lack of written documentation requiring a file copy be maintained. Based on the new ESSA legislation, the District anticipated that a copy of the high school diploma/GED or transcripts would be required to be maintained starting in September 2018 and had been proactively contacting Title I paraprofessional staff who had not already provided us with a copy. Also at this time we began requiring this documentation for new hires as well. Prior to the end of the audit all high school diplomas or transcripts for Title I paraprofessionals had been obtained. The District is confident that our students were well served by the quality paraprofessionals that were employed in the Title I program. We will continue our current practice of ensuring that a copy of an employee’s high school diploma/GED or transcript will be maintained on file for all Title I paraprofessionals. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and the steps it is taking to address this issue. In the OSPI website and the OSPI Title I, Part A, Guide to Paraeducator Requirements: Paraeducator Qualifications A. All paraeducators must have the first, essential credential — a high school diploma or GED (General Educational Development). Paraeducators can provide a copy of their high school diploma — transcripts are not necessary. B. With this credential in place, there are three educational pathways and one evaluation option a potential paraeducator can take to meet federal requirements. 1. Two years of study at an institution of higher education. The institution you choose must meet five criteria of the Higher Education Act, Section 101(a). All classes must be at level 100 or higher. See Appendix A for a list of public and private institutions OSPI determined meet the five criteria. 2. Associate degree or higher. All associate degrees are acceptable. Washington State Auditor's Office ___________________________________________________________________________________________________________________ 3. Pass the ETS ParaPro Assessment. The assessment measures skills, and content knowledge related to reading, writing and math. Contact ETS 800-772-9476 or visit ETS ParaPro Assessment. 4. Washington paraeducator portfolio or apprenticeship program — completed previously. Those meeting the apprenticeship requirements must present a journeycard or certificate. The portfolio and apprenticeships are no longer offered for enrollment, however OSPI will continue to honor this pathway.… Exceptions to a High School Diploma (1) In some states, students can enter community college without a high school diploma or its equivalent. Districts are allowed to accept these colleges, if the first criterion is absent. OSPI will waive the high school diploma requirement if the paraeducator has official college transcripts documenting at least two years of study at an instit ution of higher education. The institution you choose must meet five criteria of the Higher Education Act, Section 101(a). All classes must be at level 100 or higher. See Appendix A for a list of Washington public and private institutions OSPI determined meet the five criteria. (2) There may be extenuating circumstances when a paraeducator is cannot access an official copy of the high school diploma or transcripts. OSPI may grant a waiver on a case-by-case basis. Contact the Title II, A office. We have ve rified with the pass through agency, OSPI, certification from the employee of a high school diploma is not sufficient evidence. It is the District’s responsibility to ensure it is hiring only qualified paraprofessionals. When the district is unable to obtain a copy of the diploma, OSPI will evaluate on a case-by- case basis and may grant a waiver. We reaffirm our audit finding and will review the status of the District’s corrective action during our next audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guida nce), section 516 Audit findings, establishes r eporting requirements for audit findings. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Title 2 CFR Part 200Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 34CFR Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, section 58 – Qualifications of paraprofessionals, requires all Local Education Agencies (LEA) to ensure that each paraprofessional hired by the LEA who works in a program supported by the funds of the grant must h ave earned a secondary school diploma or its recognized equivalent. Office of Superintendent of Public Instruction (OSPI) Title I, Part A, Guide to Paraeducator Requirements, establishes the high school diploma or its equivalent as the “essential requirement” and considers a copy of the paraeducator’s high school diploma in lieu of a transcript as adequate in demonstrating the credential is in place. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021323&isFinding=false&sp=false,2026-07-30 13:24:54 40,wa-sao,1021330,2017-001,,WA,Shelton School District No 309,School District,1970,,no_match,Washington State Auditor's Office,Financial and Federal audit — Shelton School District No 309,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-17,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,"The District lacked adequate internal controls to ensure compliance with requirements regarding suspension and debarment and graduation rate reporting for the Title I grant program. CFDA Number and Title: 84.010, Title I Grants to Local Agencies Federal Grantor Name: United States Department of Education Federal Award/Contract Number: Not applicable Pass-through Entity Name: Office of Superintende","Background The objective of the Title I program is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of low-income families. During fiscal year 2017, the District spent $1,178,952 in Title I program funds. Federal regulations require federal -money recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. Suspension and debarment Federal requirements prohibit grant recipients from contracting with or making sub-awards to parties suspended or debarred from doing business with the federal government. The District must verify that all contractors receiving $25,000 or more and all sub-awards have not been suspended or debarred. This verification may be accomplished by collecting a written certification from the party, or adding a clause Washington State Auditor's Office ___________________________________________________________________________________________________________________ or condition into the contract. Alternatively, the District may review the federal Excluded Parties List issued by the U.S. General Service Administration. The District must meet one of these requirements before entering into contracts with contractors or sub-recipients. Graduation rate reporting Districts must report graduation -rate data for all public high schools to OSPI annually. Among other purposes, this information is u sed to determine if the District has met adequate yearly progress requirements for Title I funding. The District reports this information in a Graduation Rate Report that indicates the student’s enrollment status: graduated, transferred out, dropped out, m igrated to another country or deceased. The District must retain adequate support for each student’s reported status and for changes to a student’s status. Students identified on the report as transferred are excluded from that District’s graduation rate. To confirm that a student transferred out, the District must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Description of Condition Suspension and debarment The District did not have internal controls in place to ensure contractors were not suspended or debarred from participating in federal programs before entering into contract. This issue was not reported as a finding in the prior audit. We consider this control deficiency to be a significant deficiency. Graduation rate reporting We found the District did not adequately design or follow controls to ensure compliance with the Title I graduation reporting requirements. Specifically, the District did not have official written documentation to support all reports of students transferred out of the District. This issue was reported as a finding in the prior audit as finding 2016-002. We consider this control deficiency to be a material weakness. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Cause of Condition Suspension and debarment Employees responsible for ensuring compliance with requirements regarding suspension and debarment for the Title I grant program were not aware of the requirements. Graduation rate reporting District staff were not aware of the requirement to obtain and r etain written documentation for students transferring to another district. Effect of Condition and Questioned Costs Suspension and debarment The District did not ensure two contractors were not suspended or debarred before entering into contract. Without proper controls, the District increases the risk of awarding grant funds to contractors and sub -recipients that are excluded from participating in federal programs. Any payments made to an ineligible party are unallowable and would be subject to recovery by the funding agency. We confirmed the contractors were not suspended or debarred; therefore, we are not questioning costs. Graduation rate reporting The District did not retain appropriate, official written documentation to support the transfer status for eight of 18 students tested. As a result, t he District is at risk of incorrectly calculating graduation rates. Recommendations We recommend the District improve internal controls to ensure:  Staff responsible for ensuring compliance with federal requirements receive appropriate training  Verification that all contractors receiving $25,000 or more and all sub-awardees are not excluded from doing business with the federal government  Accurate reporting of graduation rate data to OSPI and retention of records to support the data reported Washington State Auditor's Office ___________________________________________________________________________________________________________________ District’s Response Suspension and Debarment The Executive Director of Finance has contacted all staff in the district that receives Federal Funds to remind them of the Suspension and Debarment rules. The rules are listed in the district’s board policy no. 6220 procedures. This board policy will also be updated this year in the district’s board policy review. An e-mail was sent to all district staff involved in f ederal funds on April 12, 2018 directing them to District Board Policy no. 6220 for purchasing with federal funds. Graduation Rate Reporting The CHOICE High School principal has instructed the school registrar on proper procedures as far as only indicating that a student transferred if we received written confirmation from the sending school, or could verify in CEDARS (and then printed the verification for the file). In addition, the CHOICE registrar printed all students with a withdraw code for the 2017 -2018 school year to review all transfers and make sure we have the necessary written documentation. The Executive Director of Finance also sent guidance to all district registrars outlining appropriate written confirmation that a student is enrolled at anoth er district, instructing them to ensure this documentation is in place before removing them from the cohort as a transfer out. Auditor’s Remarks We appreciate the District’s response and recognize that the District is committed to ongoing quality improvement and working to improve its internal controls and ensure compliance. We also wish to thank District management and staff for their cooperation and assistance throughout the audit. We look forward to working with the District on this issue and will review the District’s corrective action during our next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Washington State Auditor's Office ___________________________________________________________________________________________________________________ (Uniform Guidance), section 303, Internal controls, establishes internal control requirements for management of Federal awards to non-Federal entities. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 U.S. Code of Federal Regulations (CFR) Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension , section 220, Are any procurement contracts included as covered transactions?, defines covered transactions. Title 2 U.S. Code of Federal Regulations (CFR) Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension, section 300, What must I do before I enter into a covered transactions with another person at the next lower tier?, outlines suspensio n and debarment requirements and methods of ensuring compliance. Title 34, U.S. Code of Federal Regulations (CFR) Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, section 19, Other academic indicators, establishes requirements for calculating and reporting graduation rates to the State levels. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021330&isFinding=false&sp=false,2026-07-30 13:24:54 41,wa-sao,1021339,2017-001,,WA,Deer Park School District No 414,School District,2052,,no_match,Washington State Auditor's Office,Financial and Federal audit — Deer Park School District No 414,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-17,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure compliance with federal time -and-effort and procurement requirements. CFDA Number and Title: 84.010 Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-through Award/Contrac,"Background The District participates in the Title I program, which provides financial assistance to schools to improve the teaching and learning of children who are at risk of not meeting challenging academic standards and who reside in areas with high concentrations of children from low -income families. During school year 2016-2017, the District spent $701,988 in Title I funds for this program. Federal regulations require federal money recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. Time and effort We audited the District’s internal controls over payroll to determine whether salaries and benefits charged to the grant were a dequately supported by time-and-effort documentation as required by federal regulations. Depending on the number and types of activities program employees worked, time -and-effort documentation can be a semi -annual certification or monthly personal activity reports, such as a timesheet. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Procurement Grantees must use a competitive process to procure goods and services to ensure they received the best price from the lowest responsible bidder. Grantees must apply the more restrictive of federal requirements or State law by obtaining quotes or following a competitive bidding process, depending on the purchase amount.  State law is more restrictive than the federal requirements for purchases exceeding $75,000, requiring the District to obtain formal bids.  Federal requirements are more restrictive than state law for purchases less than $75,000. The District must obtain at least three quote s for purchases greater than $3,500 but less than $75,000, but need not apply a competitive process for “micro” purchases of $3,500 or less. Description of Condition Time and effort Our audit found the District did not obtain a semi -annual certification f or one employee who worked half-time in the program for a significant portion of the year. The District’s controls for verifying time-and-effort documentation did not include a process to check for employees charged to the program who started after the beginning of the year. We consider this internal control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit. Procurement The District purchased curriculum and services totaling $47,487 from five vendors. We found that the District did not retain sufficient documentation to demonstrate it applied the required competitive method to award each vendor the contract for these purchases. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Cause of Condition Time and effort The District had a process in place to obtain the required time -and-effort documentation for each employee it would charge to program at the start of each school year. The District did not have a control to verify employees who started in the program after the beginning of the year had appropriate time -and-effort documentation. Because of the timing of its process, the District did not identify an employee who was hired after the start of the school year for inclusion on the semi- annual certifications list. Procurement The District staff member responsible for procurement procedures was not aware that the federal requirements were more restrictive than State law for purchases of supplies and materials less than $75,000. Effect of Condition and Questioned Costs Time and effort Without proper time -and-effort records, the District did not comply with the requirement and federal grantors cannot be assured the $11,379 of payroll costs charged to the program for one employee was accurate or valid. However, the District was able to provide alternative documentation that adequately showed the costs it charged the program were allowable. As a result, we are not questioning these costs. Procurement The District purchased $47,487 from five vendors without obtaining price quotations ranging in purchase amounts from $6,292 to $14,594. Without adequate documentation of the process it used to select the five vendors it charged to the program, the District cannot show it followed a competitive process in compliance with federal regulations. Further, the District cannot ensure it received the best possible price for equipment, supplies and services purchased under the program. Because the products and services purchased are allowable under the federal program, we are not questioning costs. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Recommendation s Time and effort We recommend the District follow its own established internal control procedures to ensure it meets federal requirements for time -and-effort documentation of all employee payroll costs charged to grants. Procurement We recommend that the District establish adequate internal controls to ensure i t retains sufficient documentation to demonstrate it met federal procurement requirements for purchases of equipment, supplies and services. District ’s Response The district hired a partial FTE teacher mid -year to work second semester in the Title I program. The hiring was properly documented, but the employee name was inadvertently left off the semi-annual certification for second semester. The district has instituted a process to check against HR recor ds prior to completing the semi-annual certification. The Title I director has been made aware of federal micro -purchase requirements and has been provided a full schedule of purchasing thresholds and the associated requirements. Auditor’s Remarks We appreciate the District’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements f or Federal Awards (Uniform Guidance), Section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over fede ral programs and comply with federal program requirements. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Title 2 CFR Part 200, Section 318 - General procurement standards, describes the requirements for auditees to use its own procurement procedures, which reflect applicable Federal State, and local laws and maintain records sufficient to detail the history of procurement.. Title 2 CFR Part 200 , Section 319 – Competition, establishes all procurement transactions are to be conducted in a manner providing full and open competition, and requires non-federal entities to have written procedures for procurement transactions. Title 2 CFR Part 200 , Section 320 - Methods of procurement to be followed , describes each allowable procurement method. Office of Superintendent of Public Instruction (OSPI) Bulletin 051-11 Attachment A – Standards for Charging Employee Compensation to Federal Grants establishes requirements for documenting time and effort. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021339&isFinding=false&sp=false,2026-07-30 13:24:54 42,wa-sao,1021358,2016-001,287,WA,City of Sunnyside,City/Town,0846,5368750,geoid_place,Washington State Auditor's Office,Accountability audit — City of Sunnyside,Accountability,2016,2016-01-01,2016-12-31,2018-05-21,internal_controls,,,,The City did not have adequate oversight of payroll operations to safeguard public resources,"Background The City paid about $10.7 million in payroll during 2016. During three prior audits dating back to 2011, we have recommended the City Council and management strengthen internal controls over payroll. The current audit identified continuing control weaknesses in this area. Description of Condition The City uses a system to run payroll and issue payroll checks that is separate from its general ledger and financial reporting system. The payroll system data is uploaded to its general ledger after payroll checks are processed. However, after the payroll is upload ed, subsequent payments to vendors for employee benefits – such as retirement, unemployment and deferred compensation – are made through an online system. We noted the following payroll related control deficiencies that continue to hinder the City’s ability to properly report payroll expenditures in the general ledger:  In 2015, o ne City employee was responsible for human resources and payroll functions without oversight or monitoring. In 2016, the City hired a separate employee to process employee payro ll, independent from human resources functions. However, human resources was still responsible for processing employee benefit payments, which included calculating, reporting and remitting these payments. No one reviewed this information to ensure it was submitted or recorded correctly.  An independent review of payments to benefit vendors was not performed before the payments were issued to ensure the transactions were valid, supported and properly recorded in the general ledger.  Although the City performed a reconciliation between the bank statement activity and the general ledger, differences identified during the reconciliation were not adequately followed up on. Differences related to payroll transactions were recorded in a temporary clearing account and sent to the Human Resources Assistant for follow-up; however, the City did not always identify the reason for the differences to accurately record the transactions to the proper account. Washington State Auditor’s Office Page 7 Cause of Condition The City Council and the City Manager have not made it a priority to address prior audit recommendations or to segregate the payroll and human resources functions in a manner that provides adequate oversight, monitoring and accountability. Although these positions were separated during the audit period, Human Resources still processes benefit payments without adequate oversight. Further, management has not held staff accountable for following up on differences that are identified between the bank reconciliation and the ge neral ledger to ensure all payroll transactions are recorded accurately in the general ledger system. Effect of Condition Without adequate oversight and monitoring of payroll payments and the reconciliation to the general ledger, the City cannot ensure all payments are valid. Also, the City cannot ensure that the general ledger reports accurate payroll expenditures. From our review of bank reconciliations for 2016, the City identified the following payments processed through the bank that were not included in the general ledger:  One retirement payment of $11,619 from February 2016.  Three payments for unemployment compensa tion totaling $13,095 from March, May and November 2016. In addition, there were multiple instances in 2016 when the deferred compensation payments in the general ledger did not agree to the amount paid, for minor amounts. Once these differences were identified, the City recorded these transactions in the clearing fund and flagged them for further follow-up. However, at the time of our audit, the City had followed up on only one out of the four transactions several months after the transaction occurred. Further, the City did not take adequate steps to research why the differences occurred and establish appropriate procedures to avoid future differences. The City was forced to do a prior period adjustment, totaling $192,988, at the beginning of 2016 to clear unresolved payroll differences that had accumulated since 2012. Unresolved differences of about $10,000 still remain in the clearing account as of the date of our audit. Washington State Auditor’s Office Page 8 Recommendation s We recommend the City develop payroll policies and internal control processes to ensure:  Adequate monitoring, review and approval of all payroll benefit payments  All payroll-related payments are accurately and promptly reconciled to the general ledger to ensure accurate reporting  Any unresolved differences continue to be researched and resolved to ensure all public funds are accounted for and properly recorded City ’s Response The City of Sunnyside acknowledges this finding in part, however disputes the assertion that the City Council and City Manager do not make this a priority. The city has been working to rectify these conditions. The City did in fact hire a payroll clerk to segregate HR and payroll functions. The city has been working on transitioning to a single financial software system for several years. Dur ing the audit period the City was using one (BIAS) financial software for most financial transactions, and another (Eden) because it was not able to use Bias for HR and payroll. The city has now completed the transition and has eliminated the dual system problem. Management recently reorganized staff and has placed HR under the direct supervision of the Finance and Administrative Services Director. All payroll benefit payments are now run through Accounts payable and have a two tear approval process. The pa yroll related payments are now reconciled to the General Ledger in a timely manner. Management is currently working on resolving all outstanding HR and payroll related discrepancies. Auditor’s Remarks We appreciate the City’s commitment to resolve this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our next audit. Applicable Laws and Regulations RCW 43.09.200 – Local government accounting – Uniform system of accounting. Budgeting Accounting and Reporting System (BARS) Manual – Accounting Principles and Controls, Internal Control, Constrols over Financial Reporting BARS Manual 3.1 – Accounting Principles and Internal Controls BARS Manual 3.8.11 – Electronic Funds Transfer – Disbursements Washington State Auditor’s Office Page 9 Finance & Administrative Services Director 818 East Edison Avenue Sunnyside, Washington 98944 (509) 837-3782 Office, (509) 837-3268 Fax",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021358&isFinding=false&sp=false,2026-07-30 13:24:54 43,wa-sao,1021376,2017-001,,WA,Mead School District No 354,School District,2045,,no_match,Washington State Auditor's Office,Financial and Federal audit — Mead School District No 354,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-21,federal_award_compliance,material_weakness,57382.0,"Questioned Cost Amount: $57,382",The District did not have adequate internal controls to ensure compliance with the federal Title I grant requirements for qualifications of paraprofessionals. CFDA Number and Title: 84.010 – Title I Grants to Local Education Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-thr,"Background The Title I program’s objective is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low -income families. During fiscal year 2017, the District spent $953,732 in Title I program funds. Federal regulations require federal money recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. All paraprofessionals funded by Title I must have a high school diploma or its recognized equivalent and meet one of the following requirements:  Have completed at least two years of study at an institution of higher education  Have obtained an associate’s or higher college degree  Have met a rigorous standard of quality and can demonstrate, through a formal state or local academic assessment, knowledge of and the ability to Washington State Auditor's Office ___________________________________________________________________________________________________________________ assist in instructing, reading, writing and mathematics, or reading readiness, writing readiness and mathematics readiness. The District is responsible for ensuring all paraprofessionals it charges to the Title I program have met the qualification requirements. The District must maintain documentation to support the paraprofess ionals’ qualifications at the school-building or District level. Description of Condition We reviewed the District’s internal controls over the qualifications of paraprofessionals requirement to determine whether paraprofessionals charged to the Title I grant were qualified. Our audit found that the District ’s procedures did not include verifying and maintaining documentation demonstrating the paraprofessionals met all the requirements. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The District did not have a process in place to obtain evidence of a high school diploma or its equivalent from its paraprofessionals when hired. Instead, the District relied on its understanding that most colleges require a high school diploma for a student to be accepted for enrollment, for those paraprofessionals who did not take the assessments required for qualification. Effect of Condition and Questioned Costs Without adequate controls in place, the District cannot demonstrate that costs charged to the grant were allowable. Further, without documentation showing that a paraprofessional had a high school diploma or its equivalent, the District cannot demonstrate Title I students were instructed by a qualified paraprofessional. Our audit found the District did not have evidence of a high school diploma or its equivalent on file for 10 of 14 paraprofessionals it charged to the Title I program. During the audit, the District was able to obtain high school diplomas or equivalent for only six of the 10 paraprofessionals we tested. We are questioning the $57,382 in salaries and benefits the District charged to its Title I program for the remaining four paraprofessionals the District could not demonstrate were qualified. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Recommendation s We recommend the District strengthen its internal controls by verifying and maintaining supporting documentation to demonstrate all paraprofessionals meet the qualification requirements. District ’s Response The District did not have a sufficient process in place to obtain physical proof of a high school diploma upon hire. Instead, the District relied on its understanding that most colleges require a high school diploma for a student to be accepted for enrollment as well as the listing of the high school completion on the employment application which is certified as true and factual by the employee’s signature on that application. In order to resolve this issue, there has been an audit comp leted of all para educator employment files to identify individuals whose file does not contain supporting documentation to sufficiently prove the requirements have been met by the employee. These employees with deficiencies noted in their file are now be ing given the opportunity to provide a copy of their high school diploma, or a copy of high school transcript showing graduation date, or a copy of their GED or a college transcript listing the high school or GED with date completed/issued. In addition, h iring processes have been updated to require this documentation in order for an applicant's file to be considered complete and passed on for further consideration of employment with the district. Auditor’s Remarks We thank District management and staff for their assistance during the audit. We will follow up on the status of the issue during our next scheduled audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guida nce), section 516 Audit findings, establishes r eporting requirements for audit findings. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 34 CFR Part 200, Title I – Improving the Academic Achievement of the Disadvantaged, section 58 – Qualifications of paraprofessionals, establishes requirements of paraprofessionals to work in Title I programs. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021376&isFinding=false&sp=false,2026-07-30 13:24:54 44,wa-sao,1021378,2017-001,,WA,Nine Mile Falls School District No 325/179,School District,2043,,no_match,Washington State Auditor's Office,Financial and Federal audit — Nine Mile Falls School District No 325/179,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-21,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure compliance with verification requirements. CFDA Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: NA Que,"Background The District participates in the School Breakfast and National School Lunch programs, and received $228,873 for them during fiscal year 2017. These programs provide funding for free and reduced-price meals for low-income students. Families must meet income guidelines to be eligible for these programs. Each year, districts must select a sample of applications and verify that family income information reported to the District is correct. The Office of Superintendent of Public Instruction (OSPI) instructs school districts on how to verify program eligibility, including the number of applications that must be verified based on their nonresponse rates from the previous school year’s verifications. The verification process must be completed by November 15 of each year. The District was required to use a 3 percent focused sampling method, because the District’s nonresponse rate exceeded 20 percent during the 2015-2016 school year’s verification process. This sampling method require d the District to select three “error prone” applications for verification. An error-prone application is defined as one where the reported monthly household income falls within $100 of the upper income limit for free or reduced-priced meal eligibility. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Districts must verify income support for the time period from the month before it received the application through the month it verifies the income reported on the application. If the verification process results in a reduction or termination of meal benefits, the District must send a letter of adverse a ction to notify the family at least 10 days before the change takes effect. Also, the District must change the benefit status immediately after this 10-day advance notice period. Description of Condition Although the District did have a process in place t o perform the verification process, internal controls were not effective to ensure the District performed the verification steps accurately and in compliance with federal requirements. We consider this control deficiency to be a material weaknesses. This issue was not reported as a finding in the prior audit. Cause of Condition The District had a basic understanding of the verification process but was not aware it needed to use a different sampling method due to the change in the non-response rate it experi enced in the prior year. The District also was not aware of OSPI’s guidelines for the support it needed to obtain to verify the reported household incomes. Because the District thought the household was eligible, it did not send the letter of adverse actio n informing the household that benefits were being terminated. Effect of Condition and Questioned Costs A lack of proper internal controls over the verification process increases the risk that free or reduced-price meals could be provided to children who were not eligible to receive them. Our audit found the District:  Used the wrong sampling method and selected an insufficient number of applications to verify  Did not obtain proper income verification documentation for one student and overclaimed meals by $242  Did not inform a household it was no longer eligible to participate in the program within the 10-day period required by the program. This caused the District to report incorrect response rate information to OSPI, which could Washington State Auditor's Office ___________________________________________________________________________________________________________________ affect the number of applications the District will need to verify during the next fiscal year. Recommendation s We recommend that the District:  Train employees responsible for the verification requirements to ensure compliance with OSPI and U.S. Department of Agriculture regulations and guidance  Review its verification process to ensure its verifications follow OSPI guidelines District ’s Response To ensure that this doesn’t occur in the future, the Director of Business will annually audit the accuracy of the program eligibility review by analyzing the following:  The Sampling Method – The sampling method will be reviewed ensuring that the correct method was selected based on federal guidelines.  The Review Process – the analysis of the error prone applications will be thoroughly audited looking for timely household income support, for wage verification that is clearly identifiable, and proper handling of benefit status change when applicable. In addition, the Director of Business will ensure that the Food Service Director has the adequate training needed to properly adhere to USDA and/or OSPI regulations in regards to verification requirements. Auditor’s Remarks We thank District management and staff for their assistance during the audit. We will follow up on the status of the issue during our next scheduled audit. Applicable Laws and Regulations The American Institute of Certified Public Acco untants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Princip les, and Audit Requirements for Federal Awards (Uniform Guidance) section 516 – Audit Findings, establishes reporting requirements for audit findings. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Title 2 CFR Part 200, Uniform Guidance, section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools , Section 6a – Verification requirements, esta blishes requirements for verifying eligibility of children for free and reduced price meal benefits. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021378&isFinding=false&sp=false,2026-07-30 13:24:54 45,wa-sao,1021378,2017-002,,WA,Nine Mile Falls School District No 325/179,School District,2043,,no_match,Washington State Auditor's Office,Financial and Federal audit — Nine Mile Falls School District No 325/179,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-21,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District’s internal controls were not adequate to ensure compliance with Title I grant requirements for graduation rate reporting. CFDA Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of the Superintendent of Public Instruction Pass-through Award/Contrac,"Background During fiscal year 2017, the District spent $308,385 in Title I grant funds. The Title I program’s objective is to improve the teaching and learning of children who are at risk of not meeting challenging academic standards and who reside in areas with high concentrations of children from low-income families. Federal regulations require federal-money recipients to establish and follow internal controls to comply with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. Districts must report graduation rate data for all public high schools to the Office of Superintendent of Public Instruction (OSPI) annually. This is done by submitting a Graduation Rate Report that indicates the student’s enrollment status: graduated, transferred out, dropped out, migrated to another country or deceased. The District must retain adequate support for changes to a student’s status. To confirm a student has transferred out, the District must have official written docum entation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Description of Condition Our audit examined the District’s documentation for students it classified as “transferred out.” The District’s controls were not adequate to ensure it gathered the required documents to support its classification of a student who left the District to be homeschooled and several foreign exchange students who left the District to return to their home country. Specifically, the District did not obtain annual I ntent to Provide Home-Based Education forms (homeschool forms) for the homeschooled student, and did not retain the exchange -student applications for its exchange students. Without these forms, the District cannot report the students as confirmed transfers. We consider this control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition District staff were not aware of the requirement to obtain and retain documentation to evidence transfers of foreign exchange students and students transferring to home-schooled programs. The District thought it could discard the support for these students once they had left the District. Effect of Condition and Questioned Costs The District did not obtain official written documentation to support the transfer status for seven of the 15 students tested. It i ncorrectly reported these students as transferred out when it reported graduation rate data to OSPI. Although there are no questioned costs, the District is at risk of misrepresenting the graduation rates. Recommendation s We recommend the District:  Train and guide staff to ensure appropriate personnel understand the grant requirements and the Secretary of State’s records retention policy requirements  Establish controls to obtain and keep current homeschool forms and foreign exchange applications for all students reported as transferred out Washington State Auditor's Office ___________________________________________________________________________________________________________________ District ’s Response To ensure that this weakness ceases, the Director of Business will ensure the following:  That training is offered to appropriate personnel to ensure that they understand the grant requirements and th e Secretary of State’s records retention requirements.  That controls are established that results with the District keeping current homeschool forms and foreign exchange applications for all students reported as transferred out. Auditor’s Remarks We thank District management and staff for their assistance during the audit. We will follow up on the status of the issue during our next scheduled audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, Section 516 – Audit findings, establishes reporting requirements for audit findings. Title 34 CFR Part 200, Subpart A – Improving Basic Programs Operated by Local Educational Agencies, Section 200.19 – Other academic indicators, establishes the requirement for Districts to have official written documentation to confirm a student transferred out. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021378&isFinding=false&sp=false,2026-07-30 13:24:54 46,wa-sao,1021379,2017-001,,WA,Mary Walker School District No 207,School District,2063,,no_match,Washington State Auditor's Office,Financial and Federal audit — Mary Walker School District No 207,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-21,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,"The District did not have adequate internal controls to ensure compliance with requirements regarding procurement, and suspension and debarment. CFDA Number and Title: 10.553 School Breakfast Program 10.555 National school Lunch Program 10.559 Summer Food Service Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: NA Pass-through Entity Name: Office of Super","Background The District participates in the School Breakfast, National School Lunch, and Summer Food Service programs, and received $248,011 from the programs in fiscal year 2017. These programs help fund free and reduced -price meals for low-income students. Families must meet income requirements to be eligible for these programs. Procurement Federal grant recipients must follow the more restrictive of federal, state or local procurement requirements when purchasing food, equipment, supplies and services with federal funds. The District’s policy requires quotes from three or more qualified sources for purchases be tween $3,500 and $75,000, which is compliant with state law and federal regulations. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Suspension and debarment Federal requirements prohibit grant recipients from contracting with or making subawards to parties who have been suspended or debarred from doing business with the federal government. The District must verify that all vendors receiving $25,000 or more have not been suspended or debarred. This verification may be accomplished by obtaining a written certification from the vendor, or inserting a clause in the contract in which the vendor states it is not suspended or debarred. Alternatively, the District may review the federal Excluded Parties List (EPLS) issued by the U.S. General Services Administration. The District must meet one of these requirements before entering into a contract with the vendor. Description of Condition Procurement Although t he Distri ct has policies and procedures in place over procurement, these were not effective in ensuring the District complied with applicable procurement requirements. The District did not ensure it received quotes for all purchases between $3,500 and $75,000. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Suspension and debarment The Distri ct’s internal controls were not effective to ensure it complied with applicable suspension and debarment requirements . The District did not verify vendors were not suspended or debarred for purchases exceeding $25,000. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition Procurement District personnel were aware of the procurement requirements and District policy, but the policy was not followed. The District asserts this was because of turnover in its food services department. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Suspension and debarment Although the District was aware of the requirement, it did not ensure established controls were followed before making the award, due to a clerical oversight. Effect of Condition and Questioned Costs Procurement The District paid two vendors $31,817 and $5,216, respectively but did not obtain quotes. By not obtaining competing quotes, the District cannot be sure it received the best possible price for the purchases funded by the nutrition programs. Suspension and debarment The District paid two vendors over $25,000. It did not verify that one of these two vendors, which it paid $31,817, had not been suspended or debarred. Payments on contracts to suspended or debarred vendors are unallowable and might result in the District having to repay program funding to the grantor. Because we were able to verify the vendor had not been suspended or debarred, we are not questioning costs. Recommendation s Procurement We recommend the District follow its established policy to ensure it meets federal requirements for procuring purchases, and retain documentation to demonstrate compliance. Suspension and debarment We recommend the District follow established internal controls to ensure it can demonstrate it verified its vendors are not suspended or debarred from participating in federal programs before entering into contracts. District ’s Response The District did not have adequate internal controls to ensure compliance with procurement, and suspension and debarment requirements. The Mary Walker School District has implemented the following procedures regarding suspension and debarment and procurement. Washington State Auditor's Office ___________________________________________________________________________________________________________________  The District will check and retain support of suspension and debarment prior to expending $25,000 or more with vendors when using federal funds.  The District will obtain quotes and retain support when making small purchases with federal funds less than $75,000. Auditor’s Remarks We thank the District for its cooperation during the audit and look forward to reviewing the District’s corrective action during our next audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516 Audit findings, establishes reporting requirements for audit findings, and requirements for management of Federal awards to non-Federal entities. Title 2 CFR Part 200 , Section 319 – Competition, establishes all procurement transactions are to be conducted in a manner providing full and open competition, and requires non -federal entities to have written procedures for procurement transactions. Title 2 CFR Part 200, Section 320 – Methods of procurement to be followed , describes each allowable procurement method. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Susp ension (Nonprocurement) establishes no n-procurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689. Washington State Auditor's Office ___________________________________________________________________________________________________________________ MARY WALKER SCHOOL DISTRICT NO. 207 P.O. Box 159 ~ 500 N. 4th Street Springdale, WA 99173-0159 Phone: (509) 258-4534 ~ Fax: (509) 258-4707 SUPERINTENDENT BOARD OF DIRECTORS PRINCIPAL (6-12) Rick L. Winters District 1 ~ Jeffrey Canfield ~ Chairperson Matthew L. Cobb District 2 ~ James Scott District 3 ~ Amy Roy PRINCIPAL (PK-5) DIRECTOR OF BUSINESS SERVICES District 4 ~ Justyn Turner & SPECIAL SERVICES DIRECTOR Sue McIsaac District 5 ~ Diana Beckman ~ Vice-Chairperson Edwina D. Hargrave",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021379&isFinding=false&sp=false,2026-07-30 13:24:54 47,wa-sao,1021380,2017-001,,WA,Newport Consolidated Joint School District No 56-415,School District,1990,,no_match,Washington State Auditor's Office,Financial and Federal audit — Newport Consolidated Joint School District No 56-415,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-21,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure it complied with verification requirements. CFDA Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.559 Summer Food Service Program Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-t,"Background The District participa tes in the School Breakfast, National School Lunch and Summer Food Service programs, and received $455,699 from them during the 2016-17 school year. These programs provide funding for free and reduced -price meals for low-income students. Families must meet income guidelines to be eligible for these programs. Each year, districts must select a sample of program applications and verify that family income information re ported is correct. The Office of Superintendent of Public Instruction (OSPI) instructs school districts on ho w to verify program eligibility. Districts must review selected applicants’ income documentation to confirm students are receiving correct benefits of free or reduced-price meals. If the family’s income does not meet requirements, the student is not eligible and must pay full price for meals. OSPI instructions to districts include guidance for determining the number of applications that must be verif ied based on their non-response rate from previous years’ verifications. The verification process must Washington State Auditor's Office ___________________________________________________________________________________________________________________ be completed by November 15 each year. In addition, the verification summary report is to be submitted to OSPI by February 1. The District needed to use a 3 percent focused sampling method, because the District’s nonresponse rate exceeded 20 percent during the 2015-2016 school year’s verification process. This sampling method require d the District to select three “error prone” applications for verification. An error-prone application is defined as one in which the reported monthly household income falls within $100 of the upper income limit for free or reduced-priced meal eligibility. Description of Condition Although the District had a process in place to perform the verification process, internal controls were not effective to ensure the District performed the verification steps accurately and in compliance with federal requirements. We consider this control deficiency to be a material weaknesses. This issue was not reported as a finding in the prior audit. Cause of Condition The District had a basic understanding of the verification process but was not aware that to select the correct number of applications it had to follow U.S. Depar tment of Agriculture (USDA) requirements to round up all fractions and decimals to the nearest whole number. The District did not review the applications it selected to ensure each one met the criteria for classification as error-prone. Effect of Condit ion and Questioned Costs A lack of effective internal controls over the verification process increases the risk that error -prone applications are not properly selected for verification. It also increases the risk that free or reduced -price meals could be p rovided to children who are not eligible to receive them. Further, the District could receive funding for households that do not qualify for free and reduced-price meals. Our audit found that the District did not select the appropriate number of applications to test. In addition, one of the applications the District selected for verification was not error-prone. As such, it should not have been selected for verification. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Recommendation s We recommend that the District:  Provide sufficient training to emplo yees responsible for the nutrition program to ensure compliance with the verification requirements in accordance with OSPI and USDA guidance  Review the verification process before the deadlines to ensure it is performed in accordance with OSPI guidelines District ’s Response The District will provide sufficient training to employees responsible for the nutrition program to ensure compliance with the verification requirements in accordance with OSPI and USDA guidance. The District will also review the verifi cation process prior to the deadlines to ensure it is performed in accordance with OSPI guidelines. Auditor’s Remarks We thank District management and staff for their assistance during the audit. We will follow up on the status of the issue during our next scheduled audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines sign ificant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516 – Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 – Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Scho ols, Section 6a – Verification requirements, establishes requirements for verifying eligibility of children for free and reduced price meal benefits. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Newport School District #56-415 P.O. Box 70 Phone: (509) 447-3167 1380 W. 5th Street Fax: (509) 447-2553 Newport, WA 99156 Web: www.newport.wednet.edu",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021380&isFinding=false&sp=false,2026-07-30 13:24:54 48,wa-sao,1021386,2017-001,,WA,Manson School District No 19,School District,1822,,no_match,Washington State Auditor's Office,Accountability audit — Manson School District No 19,Accountability,2017,2014-09-01,2017-08-31,2018-05-24,misappropriation,,,,The District’s internal controls over Associated Student Body activities were insufficient to safeguard against potential loss and noncompliance with laws and regulations,"Background Districts may use Associated Student Body (ASB) funds for optional and noncurricular student activities that are cultural, athletic, recreational or social in nature, or that otherwise support ASB activities and programs. Manson School District’s ASB program collected revenue of about $68,000, $79,000 and $104,000 during fiscal years 2015, 2016 and 2017, respectively. Description of Condition Our examination identified the following conditions: Fundraisers and events For each event or fundraiser, the ASB should retain source documentation of activity such as beginning and ending number of tickets sold, inventory change, or manual receipts issued to reconcile against actual funds collected. Without this reconciliation, the ASB might not be able to detect potential losses of inventory or funds promptly. Our examination found the District did not document ASB Fundraiser Activity for all three fiscal years under audit. Therefore, the District cannot determine whether it received all money owed to it, and ultimately whether a loss or misappropriation occurred. In addition, the ASB Council meeting minutes contained insufficient detail and did not clearly state approvals of activities and events. Student Store The District could not demonstrate whether it reconciled inventory counts to sales for any of the four days we tested at the store. ASB Council meeting minutes For the three years under audit, the high school ASB Council met on a weekly basis and the middle school Council met on a bi-weekly basis. However, the District was able to provide documented minutes for only 15 meetings. In addition, the minutes Washington State Auditor’s Office Page 7 on file were not complete, lacking approval and support for purchases and fundraisers. Negative club balances Fourteen of 72 clubs in fiscal year 2015, five of 73 clubs in fiscal year 2016, and 13 of 67 clubs in fiscal year 2017 ended the year with negative balances at the club level, which does not comply with state regulations (WAC 392.138.125). Cause of Conditi on The District did not provide sufficient oversight to ensure established policies and procedures were followed by the ASB, and specifically that necessary records such as Council minutes and fundraiser worksheets were completed properly and retained. Effect of Condition Inadequate internal controls over ASB fundraising and disbursements, including insufficient approval and monitoring by the ASB Student Council, increase the risk that a loss or misappropriation of public funds might occur and not be detec ted quickly, if at all. Recommendation s We recommend the District improve internal controls over ASB activities to comply with state laws and regulation and adequately safeguard public resources. Specifically, we recommend the District: • Provide adequate training to staff and students involved in ASB fundraisers • Reconcile fundraiser receipts to expected revenues as derived from inventory sold, tickets or another method of estimating expected revenue • Prepare, retain and monitor all necessary records for ASB activities • Retain all ASB Student Council Minutes and clearly document formal approval of activities, purchases and prior minutes District ’s Response We would like to thank the State Auditor’s Office for pointing some issues with our ASB. The District plans to implement internal controls sufficient to ensure ASB records are kept as required. The District has already implemented the use of its point of Washington State Auditor’s Office Page 8 sale system in the Student Store and ASB Concessions. As part of this system, inventories are maintained and reconciled to sales. Auditor’s Remarks We appreciate the steps the District is taking to resolve these issues. We will follow-up on the condition of these matters in the next audit. Applicable Laws and Regulations Accounting Manual for Public Sc hool Districts in the State of Washington, Chapter 3, Accounting Guidelines, Internal Control Structure, sets forth requirements for establishing and maintaining an effective system of internal controls. Accounting Manual for Public School Districts in the State of Washington, Chapter 9, Information Unique to Each Fund, Associated Student Bodies Association, sets forth guidelines for accounting of ASB funds. WAC 392-138-014 Accounting procedures and records, sets forth requirements for accounting methods and procedures to follow regulations and guidelines established in the Accounting Manual for Public Schools in the State of Washington. WAC 392- 138-125. As sociated student body public moneys – Disbursement approval – Total disbursements, sets forth requirements for ASB budgets and disbursement approvals. WAC 392-123-010. The Accounting Manual, sets forth the requirements for the use of the accounting manual by the District. RCW 28A.325.030 Associated student body program fund – Fund-raising activities – Non associated student body program fund moneys, sets forth requirements for conducting ASB fund-raising activities. DAN Gs50-05A-13 Rev. 2 establishes the retention requirements for governing and executive board meeting minutes. RCW 28A.400.030 Superintendent’s duties, sets forth requirements for the school district superintendent to keep accurate records and detailed accounts for receipts and expenditures of school money. Washington State Auditor’s Office Page 9 RELATED REPORTS Financial Our opinion on the District’s financial statements and compliance with federal grant program requirements is provided in a separate report, which includes the District’s financial statements. That report is available on our website, http://portal.sao.wa.gov/ReportSearch. Federal grant programs We evaluated internal controls and tested compliance with the federal program requirements, as applicable, for the District’s major federal programs, which are listed in the",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021386&isFinding=false&sp=false,2026-07-30 13:24:54 49,wa-sao,1021387,2017-001,,WA,Quincy School District No 144,School District,1873,,no_match,Washington State Auditor's Office,Financial and Federal audit — Quincy School District No 144,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-24,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure compliance with federal verification requirements. CFDA Number and Title: 10.553 School Breakfast Program 10.555 National School Lunch Program 10.559 Summer Food Service Program for Children Federal Grantor Name: U.S. Department of Agriculture (USDA) Federal Award/Contract Number: NA Pass-through Entity Name: Pass-through Award/Contrac,"Background The District participates in the School Breakfast, National School Lunch and Summer Food Service programs , which provide free and reduced -price meals for students from low -income families. It received $1,423,221 from these programs during the 2016 -2017 school year. Families must meet income guidelines to be eligible for these programs. Each year, districts must select a sample of applicants and verify that the family income information reported to the district is correct. The Office of Superintendent of Public Instruction (OSPI) ins tructs school districts on how to verify program eligibility. Districts must review selected applicants’ income documentation and confirm students are receiving correct benefits of free or reduced -price meals. Otherwise, the student is not eligible and must pay for meals at full price. Washington State Auditor's Office ___________________________________________________________________________________________________________________ Description of Condition The District did not retain supporting documentation to demonstrate it performed the required verification process. Therefore, we were not able to determine if the District complied with this requirement. We consider this internal control deficiency to be a material weakness. This issue was reported as a finding in the prior audit as finding 2016-001. Cause of Condition Our prior audit reported non-compliance with verification requirements; however, the audit occurred after the verification deadline for the 2016-17 school year. As a result, the District was unable to implement audit recommendations before it completed the 2016 -2017 verification process. The cause of the prior audit issue was that the District assigned inexperienced staff to the program and did not provide adequate oversight. Effect of Condition and Questioned Costs A lack of proper internal controls over the verification process increases the risk that free or reduced-price meals could be provided to children who are not eligible to receive them. The District could receive funding for households that do not qualify for free and reduced -price meals. Because the District did not retain documentation to support its verification process, it cannot demonstrate it verified that family income information was accurately reported for the number of applications required by the programs. Recommendation s We continue to recommend the District:  Train staff regarding federal child nutrition program verification requirements  Establish internal controls and adequate oversight to confirm that the annual verification process is completed properly and quickly  Retain adequate documentation to demonstrate compliance with verification requirements Washington State Auditor's Office ___________________________________________________________________________________________________________________ District ’s Response The District has hired a Food Service Clerk position with a portion of the position being dedicated to fulfilling the Verification Process. This position will have continued training by OPSI, other districts and internal staff. Distric t office staff will oversee that eligibility and verification processes to ensure that they are being completed timely and accurately. Auditor’s Remarks We appreciate the District’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guida nce), section 516 Audit findings, establishes r eporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals and Free Milk in Schools , Section 6a, Verification requirements, establishes requirements for verifying eligibility of children for free and reduced price meal benefits. Washington State Auditor's Office ___________________________________________________________________________________________________________________",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021387&isFinding=false&sp=false,2026-07-30 13:24:54 50,wa-sao,1021391,2017-001,,WA,Kiona-Benton City School District No 52,School District,1818,,no_match,Washington State Auditor's Office,Financial and Federal audit — Kiona-Benton City School District No 52,Financial and Federal,2017,2016-09-01,2017-08-31,2018-05-31,federal_award_compliance,material_weakness,0.0,Questioned Cost Amount: $0,The District did not have adequate internal controls to ensure compliance with the federal Title I grant requi rements for Assessment System Security. CFDA Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entity Name: Office of Superintendent of Public Instruction (OSPI) Pass-th,"Background The federal Title I program’s objective is to improve the teaching and learning of children who are at risk of not meeting state academic standards and who reside in areas with high concentrations of children from low-income families. During fiscal year 2017, the District spent $537,021 in Title I program funds. Federal regulations require recipients of federal money to establish and follow internal controls to ensure compliance with program requirements. These controls include knowledge of grant requirements and monitoring of program controls. State tests are based on the K-12 learning standards. Students are tested in English language arts, math and science. Assessments measure students’ learning, including the critical -thinking and problem -solving aspect s of the new standards. Results from these tests not only will allow accountability for schools and districts, but also will allow states to be compared to each other in a fair system. OSPI updates assurance forms and training logs yearly to ensure school districts are following the prescribed requirements and have an understanding of any new requirements that should be followed when giving assessments to students. Washington State Auditor's Office Districts must establish and maintain an assessment system that is valid, reliable and consistent with relevant professional and technical standards. Within their assessment system s, states must have policies and procedures to maintain test security and ensure that districts implement those policies and procedures. Description of Condition The District could not show it obtained the most recent version of OSPI’s Security Test Assurance forms. In addition, the District did not retain records of teacher attendance at required trainings or that it followed required security procedures before, during and following assessment testing of students for any of the District’s schools. We consider this internal control deficiency to be a material weakness. This issue was not reported as a finding in the prior audit Cause of Condition The District’s appointed Assessment Coordinator was not aware OSPI had released an updated version of its assessment security form. Also, t he District’s Intermediate Counselor was responsible for maintaining assessment testing documents, including teacher training logs, and prior test assurance and post -test assurance forms. Because of an unexpected vacancy of the position, the District stated it placed all of the Counselor’s files in storage, but could not locate them. Effect of Condition The District was unable to demonstrate it complied with its District Security Plan for ensuring security requirements over Assessment Tests were followed in compliance with OSPI policies and procedures . The District also was unable to provide completed test assurance forms from each school in the District and did not obtain the most recent version of OSPI’s assessment security forms for distribution to each school. The District schools include: • K-2: Primary • 3-5: Intermediate • 6-8: Middle • 9-12: High The Dis trict also did not comply with the requirements for retaining adequate support (test assurance forms and teacher training logs) as required. Washington State Auditor's Office Recommendation We recom mend the District develop controls to ensure it uses the most recent version of OSPI ’s Assessment Test System forms and develop policies and procedures to store and safeguard the forms completed for each school. District’s Response We concur with the State Auditor’s federal audit from the period September 1. 2016 through August 31, 2017. The records retention issue found by the auditor was a mere error by our assessment coordinator and lack of oversite by our federal grants director. We have made some changes to our processes to ensure that in the future proper document retention requirements are followed the District will: 1) go over all procedures with the Assessment Coordinator each year 2) have the Assessment Coordinator maintain a copy of the testing security documents at the conclusion of each state testing session and all originals documentation will be sent to the Federal Program Director to ensure records are maintained and available for audit or inspection. These changes should help minimize this concern in the future. Auditor’s Remarks We thank the District for its cooperation throughout the audit and the s teps it is taking to address these concerns. We will review the status of the District’s corrective action during our next audit Applicable Laws and Regulations The American Insti tute of Ce rtified Publi c A ccountants de fines sig nificant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303 Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 20 U.S. Code section 6311(b)(3)(C)(iii) requires state and local education agencies to establish and maintain a valid, reliable assessment systems, consistent with relevant professional and technical standards. Washington State Auditor's Office",https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021391&isFinding=false&sp=false,2026-07-30 13:24:54