{"database": "mytown-research", "table": "audit_findings", "is_view": false, "human_description_en": "", "rows": [[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 \u2014 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 \nThe objective of the Community Development Block Grant program is to develop \nviable urban communities by providing decent housing, a suitable living \nenvironment, and expanding economic opportunities, principally for persons of low \nand moderate income. The City of Seattle spent $11.6 million in grant funds from \nthe U. S. Department of Housing and Urban Development. The City\u2019s Human \nService Department passed on $3.8 million to five subrecipients during 2015 to \nprovide homeless assistance to City\u2019s residents. \nFederal regulations require the City to perform risk evaluations to evaluate \nsubrecipients\u2019 risk of noncompliance to determine the appropriate level of \nmonitoring. It also requires the City to monitor the subrecipients\u2019 activities to \nensure that the subawards are used for authorized purposes which can be \naccomplished by either requiring subrecipient invoices to contain supporting \ndocumentation or reviewing supporting documentation during on -site visits. That \nmonitoring, particularly the on -site visit s, is important to ensure that the \nsubrecipients\u2019 administration of programs are appropriate and in compliance with \napplicable requirements, including those related to allowable and supported costs. \n \nWashington State Auditor\u2019s Office Page 10 \nThe City requires the subrecipients to submit detailed general ledger reports as part \nof the request for payment and has a policy for semi-annual on-site visits to review \ndocumentation included in the report to ensure the costs are allowable and \nsupported. \nThe City\u2019s process for subrecipient monitoring is not working as intended. During \nour audit, we found: \n\uf0b7 The Human Service Department did not perform risk assessments for the \nthree subrecipients we selected for review. \n\uf0b7 For two of the three subrecipients reviewed, the Human Service Department \ndid not obtain supporting documentation with the requests for payment, nor \ndid they perform on-site visits, where a review of documentation to support \nthe costs reimbursed would have been done. \nWe consider these deficiencies in internal controls to be significant deficiencies. \nCause of Condition \nThe Departments were not aware that risk evaluations are required for all \nsubrecipients receiving money from federal awards. \nThe Grants and Contracts Specialists who are responsible for approving \nsubrecipient payments and performi ng on -site visits did not have the necessary \ntraining and resources to perform adequate reviews. \nEffect of Condition and Questioned Costs \nWithout adequate internal controls in place, the Department cannot ensure that the \nsubrecipients used the program fu nds in accordance with the grant agreement and \nfederal requirements. \nThe Human Service Department paid $928,647 to two subrecipients without \nperforming on-site visits or requiring adequate supporting documentation for costs \nincurred. As a result, we are questioning the total amount paid to these \nsubrecipients. \nRecommendation \nWe recommend that the Departments establish internal controls to ensure \ncompliance with the subrecipient monitoring requirements including: \n\uf0b7 Conduct a risk assessment to evaluate each subrecipient's risk of \nnoncompliance for purposes of determining the appropriate monitoring \nactivities. \n \nWashington State Auditor\u2019s Office Page 11 \n\uf0b7 Provide training to program specialists to ensure they have an adequate \nunderstanding of federal subrecipient monitoring requirements and \nDepartment policies. \n\uf0b7 Require subrecipients to provide adequate documentation to support the \ncosts incurred or perform on -site visits that includes a review of source \ndocumentation. \nCity\u2019s Response \nThe City understands the Auditor\u2019s concerns regarding inadequate internal \ncontrols in place and is taking immediate and long -term corrective actions to \nensure compliance with federal subrecipient monitoring requirements going \nforward. \nAuditor\u2019s Remarks \nWe thank the City for its assistance during the audit and will follow up on corrective \nactions taken during the next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, as follows: \n.11 For purposes of adapting GAAS to a compliance audit, the \nfollowing terms have the meanings attributed as follows: . . . \nDeficiency in internal control over compliance. A \ndeficiency in internal control over compliance exists w hen \nthe design or operation of a control over compliance does \nnot allow management or employees, in the normal course \nof performing their assigned functions, to prevent, or detect \nand correct, noncompliance on a timely basis. A deficiency \nin design exists when (a) a control necessary to meet the \ncontrol objective is missing, or (b) an existing control is not \nproperly designed so that, even if the control operates as \ndesigned, the control objective would not be met. A \ndeficiency in operation exists when a pr operly designed \ncontrol does not operate as designed or the person \nperforming the control does not possess the necessary \nauthority or competence to perform the control effectively. . \n. \n \nWashington State Auditor\u2019s Office Page 12 \nMaterial weakness in internal control over compliance. \nA deficiency, or combination of deficiencies, in internal \ncontrol over compliance, such that there is a reasonable \npossibility that material noncompliance with a compliance \nrequirement will not be prevented, or detected and corrected, \non a timely basis. In this section, a reasonable possibility \nexists when the likelihood of the event is either reasonably \npossible or probable as defined as follows: \nReasonably possible. The chance of the future event or \nevents occurring is more than remote but less than likely. \nRemote. The c hance of the future event or events \noccurring is slight. \nProbable. The future event or events are likely to occur. \nSignificant deficiency in internal control over \ncompliance. A deficiency, or a combination of deficiencies, \nin internal control over compliance that is less severe than a \nmaterial weakness in internal control over compliance, yet \nimportant enough to merit attention by those charged with \ngovernance. \nTitle 2 Code of Federal Regulations Section 200.303 Internal controls. \nThe non-Federal entity must: \n(a) Establish and maintain effective internal control over the \nFederal award that provides reasonable assurance that the \nnon-Federal entity is managing the Federal award in \ncompliance with Federal statutes, regulations, and the terms \nand conditions of the Federal award. These internal controls \nshould be in compliance with guidance in \u201cStandards for \nInternal Control in the Federal Government\u201d issued by the \nComptroller General of the United States or the \u201cInternal \nControl Integrated Framework\u201d, issued by the Committee of \nSponsoring Organizations of the Treadway Commission \n(COSO). \n(b) Comply with Federal statutes, regulations, and the terms \nand conditions of the Federal awards. \n \nWashington State Auditor\u2019s Office Page 13 \nTitle 2 Code of Federal Regulations Subpart D Post Federal Award Requirements \nSection 200.331 Requirements for pass-through entities states in part: \nAll pass-through entities must: \n(b) Evaluate each subrecipient's risk of noncompliance with \nFederal statutes, regulations, and the terms and conditions of \nthe subaward for purposes of determining the appropriate \nsubrecipient monitoring described in paragraphs (d) and (e) \nof this section, which may include consideration of such \nfactors as: \n(1) The subrecipient's prior experience with the same or \nsimilar subawards; \n(2) The results of previous audits including whether or \nnot the subrecipient receives a Single Audit in \naccordance with Subpart F\u2014Audit Requirements of this \npart, and the extent to which the same or similar \nsubaward has been audited as a major program; \n(3) Whether the subrecipient has new personnel or new \nor substantially changed systems; and \n(4) The extent and results of Federal awarding agency \nmonitoring (e.g., if the subrecipient also receives Federal \nawards directly from a Federal awarding agency). \n(d) Monitor the activities of the subrecipient as necessary to \nensure that the subaward is used for authorized purposes, in \ncompliance with Federal statutes, regulations, and the terms \nand conditions of the subaward; and that subaward \nperformance goals are a chieved. Pass -through entity \nmonitoring of the subrecipient must include: \n(1) Reviewing financial and performance reports \nrequired by the pass-through entity. \n(2) Following-up and ensuring that the subrecipient takes \ntimely and appropriate action on all de ficiencies \npertaining to the Federal award provided to the \nsubrecipient from the pass -through entity detected \nthrough audits, on-site reviews, and other means. \n \nWashington State Auditor\u2019s Office Page 14 \n(3) Issuing a management decision for audit findings \npertaining to the Federal award provided to the \nsubrecipient from the pass-through entity as required by \n\u00a7200.521 Management decision. \n(e) Depending upon the pass -through entity's assessment of \nrisk posed by the subrecipient (as described in paragraph (b) \nof this section), the following monitoring tools may be useful \nfor the pass -through entity to ensure proper accountability \nand compliance with program requirements and \nachievement of performance goals: \n(1) Providing subrecipients with training and technical \nassistance on program-related matters; and \n(2) Performing on -site reviews of the subrecipient's \nprogram operations; \n(3) Arranging for agreed-upon-procedures engagements \nas described in \u00a7200.425 Audit services. \n(f) Verify that every subrecipient is audited as required by \nSubpart F \u2014Audit Requirements of this part when it is \nexpected that the subrecipient's Federal awards expended \nduring the respective fiscal year equaled or exceeded the \nthreshold set forth in \u00a7200.501 Audit requirements. \n(g) Consider whether the results of the subrecipient's audits, \non-site reviews, or other monitoring indicate conditions that \nnecessitate adjustments to the pass -through entity's own \nrecords. \n(h) Consider taking enforcement action against \nnoncompliant subrecipients as described in \u00a7200.338 \nRemedies for noncompliance of this part and in program \nregulations. \n \nWashington State Auditor\u2019s Office Page 15 \nTitle 2 Code of Federal Regulations Subpart E Cost Principles Sections 200.400 \nthrough 200.403 General Provisions and Basic Considerations states in part: \n\u00a7200.400 Policy guide. \nThe application of these cost principles is based on the \nfundamental premises that: \n(a) The non-Federal entity is responsible for the efficient and \neffective administration of the Federal award through the \napplication of sound management practices. \n(b) The non -Federal entity assumes responsibility for \nadministering Federal funds in a manner consistent with \nunderlying agreements, program objectives, and the terms \nand conditions of the Federal award. \n(c) The non-Federal entity, in recognition of its own unique \ncombination of staff, facilities, and experience, has the \nprimary responsibility for employing whatever form of \nsound organization and management techniques may be \nnecessary in order to assure proper and efficient \nadministration of the Federal award. \n(d) The application of these cost principles should require no \nsignificant changes in the internal accounting policies and \npractices of the non-Federal entity. However, the accounting \npractices of the non -Federal entity must be consistent with \nthese cost principles and support the accumulation of costs \nas required by the principles, and must provide for adequate \ndocumentation to support costs charged to the Federal \naward. \n \u00a7200.402 Composition of costs. \nTotal cost. The total cost of a Federal award is the sum of the \nallowable direct and allocable indirect costs less any applicable \ncredits. \n \n \nWashington State Auditor\u2019s Office Page 16 \n\u00a7200.403 Factors affecting allowability of costs. \nExcept where otherwise authorized by statute, costs must meet \nthe following general criteria in order to be allowable under \nFederal awards: \n(a) Be necessary and reasonable for the performance of the \nFederal award and be allocable thereto under these \nprinciples. \n(b) Conform to any limitations or exclusions set forth i n \nthese principles or in the Federal award as to types or amount \nof cost items. \n(c) Be consistent with policies and procedures that apply \nuniformly to both federally -financed and other activities of \nthe non-Federal entity. \n(d) Be accorded consistent treatm ent. A cost may not be \nassigned to a Federal award as a direct cost if any other cost \nincurred for the same purpose in like circumstances has been \nallocated to the Federal award as an indirect cost. \n(e) Be determined in accordance with generally accepted \naccounting principles (GAAP), except, for state and local \ngovernments and Indian tribes only, as otherwise provided \nfor in this part. \n (g) Be adequately documented. See also \u00a7\u00a7200.300 \nStatutory and national policy requirements through 200.309 \nPeriod of performance of this part. \n \n \nWashington State Auditor\u2019s 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 \u2014 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 \nThe City of Seattle\u2019s Human Service Department administers the Continuum of \nCare Program. This program is designed to promote communitywide commitment \nto the goal of ending homelessness by providing housing and supportive services \nto homeless individuals a nd families. The Department spent $11.4 million in \nContinuum of Care funds, of which $10.6 million was passed on to subrecipients \nwho perform the primary activities of this program. \nDescription of Condition \nFederal regulations require the City to monitor subrecipients\u2019 activities to ensure \nthat subwards are used for authorized purposes which can be accomplished by \nsubrecipients submitting invoices containing supporting source documentation or \nreviewing supporting source documentation during on-site visits. That monitoring, \nparticularly the on -site visits, is important to ensure that subrecipients\u2019 \nadministration of programs are appropriate and in compliance with federal \nrequirements, including those related to allowable costs and activities. \nDuring the current audit, we found: \n\uf0b7 The Department utilized a monitoring log to track on -site visits for \nsubrecipients by project. However, the log excluded 36 of the 82 projects \n \nWashington State Auditor\u2019s Office Page 18 \nduring 2015. Without a complete and current log, the Department cannot \nensure site visits are performed and tracked for all subrecipients\u2019 projects. \n\uf0b7 The Department\u2019s policy is to perform semi -annual site visits; however, it \ndid not perform on -site visits that included a fiscal review of invoices or \nother documentation required to support the costs incurred for eight of the \n16 projects reviewed. For the fiscal reviews that were conducted, \ndocumentation was not always sufficiently complete to establish that site \nvisits were adequately performed. \nWe consider these control deficiencies to be material weaknesses. \nCause of Condition \nThe Grants and Contracts Specialists who perform on -site visits did not have the \nnecessary training and resources to perform adequate financial review. \nEffect of Condition and Questioned Costs \nBy reimbursing subrecipie nts for costs claimed without receiving adequate \ndocumentation or otherwise monitoring the subreceipients\u2019 use of funding, the City \nis unable to ensure costs charge to the grant are allowable. As a result, we are \nquestioning $1,566,880 of costs paid to eight subrecipient projects. \nRecommendation \nWe recommend the Department establish internal controls to ensure compliance \nwith the subreceipient monitoring requirements including: \n\uf0b7 Providing training to program specialists to ensure they have an adequate \nunderstanding of federal subrecipient monitoring requirements and \nDepartment policies. \n\uf0b7 Requiring subrecipients to provide adequate documentation to support the \ncosts incurred or perform on -site visits that includes a review of source \ndocumentation. \n\uf0b7 Retaining sufficient documentation to demonstrate compliance with federal \nsubreceipient monitoring requirements. \nCity\u2019s Response \nThe City understands the Auditor\u2019s concerns regarding inadequate internal \ncontrols in place and is taking immediate and long -term corrective actions to \nensure compliance with federal subrecipient monitoring requirements going \nforward. \n \nWashington State Auditor\u2019s Office Page 19 \nAuditor\u2019s Remarks \nWe thank the City for its assistance during the audit and will follow up on corrective \nactions taken during the next audit. \nApplicabl e Laws and Regulations \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance) establishes reporting requirements for audit findings. \n 2 CFR 200.516 Audit Reporting, states in part: \n(a) Audit findings reported. The auditor must report the \nfollowing 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 \u2014 City of Seattle", "Financial and Federal", 2015, "2015-01-01", "2015-12-31", "2019-08-19", "federal_award_compliance", "material_weakness", null, null, "The City did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards", "Background \nCity management is responsible for designing and following internal controls that \nprovide reasonable assurance regarding the reliability of financial reporting. These \ncontrols should ensure financial events are identified properly and presented \ncompletely. Controls should also ensure the criteria and accounting methodology \napplied to financial events are correct. \nLocal governments in Washington that spend federal funds must prepare a Schedule \nof Expenditures of Federal Awards (SEFA) as part of the annual f inancial report. \nFederal regulations require grantees to identify, in their accounts, all federal money \nspent on the SEFA each fiscal year. \nOur audit identified a deficiency in internal controls that adversely affected the \nCity\u2019s ability to produce a relia ble SEFA. Because of its effect on the City\u2019s \nfinancial reporting, we consider this a significant deficiency. \nDescription of Condition \nWhen preparing the SEFA, the Citywide Accounting department relied on other \nCity departments\u2019 supporting documentation a nd information to ensure accurate \npresentation. During the 2017 audit, Citywide Accounting brought to our attention \nthat a department did not report its 2015 grant expenditures for the CFDA 66.458 \nCapitalization Grants for Clean Water State Revolving Funds , which were funded \nby the U.S. Environmental Protection Agency (EPA) \nCause of Condition \nThe City did not clearly understand the SEFA reporting requirements for the grant \nunder the Budgeting, Accounting and Reporting System (BARS) Manual and \nUniform Guidance. The Department treated this grant as a federal loan and \nreported the 2015 expenditures upon its first drawdown in 2017. \n \n \nWashington State Auditor\u2019s Office Page 7 \nEffect of Condition \nInaccurate financial reports limit access to financial information used by Ci ty \nofficials, the public, state and federal agencies and other interested parties. In \naddition, these conditions delay the audit process and increase audit costs. \nThe City understated its 2015 SEFA by $15,612,937 because it did not include \nexpenditures for the CFDA 66.458 Capitalization Grants for Clean Water State \nRevolving Funds. The correct amount makes this a major program required to be \naudited for fiscal year 2015. \nThe City subsequently corrected the misstatement. Our Office completed the \nreview of this grant, and updated and reissued our financial audit report and \nfederal single audit report in 201 9 \nRecommendation s \nWe recommend the City dedicate sufficient time and resources to strengthen \ninternal controls over SEFA preparation to ensure the informa tion received from \nthe departments is accurate and based on federal expenditures. \nWe further recommend the City to train departmental staff responsible for SEFA \npreparation to review the BARS Manual and Uniform Guidance to ensure \nexpenditures are reported in the correct year. \nCity \u2019s Response \nThe City acknowledges the Auditor\u2019s concerns regarding inadequate internal \ncontrols over financial reporting on the SEFA. As relates to the specific deficiency, \nthe Department of Ecology Loan for the Henderson North Combined Sewer \nOverflow Reductions project, the auditor asserts that the loan drawdowns covering \n2015 and 2016 were not recorded in those years. The City disputes the finding for \n2015. Because the loan in question was not awarded to the City until 2016, \nexpenditures of federal funds were not known when the SEFA was prepared for \n2015. Further, t he City received guidance from the EPA indicating that the \ntriggering action for audit purposes is when an SRF borrower submits an \ninvoice/disbursement/payment request to the state. The City did not submit a \ndisbursement until 7/31/2016. \nRegarding 2016, the City acknowledges that the drawdown request submitted in \n2016 but received in 2017 was not included in the 2016 SEFA. As federal (EPA) \nand State (Department of Ecology) agencies have provided conflicting guidelines, \nthe City will work to clarify rules and procedures for reporting retroactive awards \non the SEFA. The City appreciate SAO\u2019s guidance on this issue. \n \nWashington State Auditor\u2019s Office Page 8 \nAuditor\u2019s Remarks \nPer OMB Circular A -133 Compliance Supplement 2015 Part 4 for the CFDA \n66.458 Capitalization Grants for Clean Water State Revolving Funds (CWSRF), \nEnvironmental Protection Agency (EPA) requires the grantees to include project \nexpenditures during the audit period wh en they were incurred, regardless of when \nthe grantee received reimbursement. EPA further clarifies that if a subrecipient \nincurs expenditures under an approved CWSRF loan in one audit period for which \nit is not reimbursed by the State until a subsequent audit period, those expenditures \nshould be reported on the subrecipient\u2019s SEFA in the year in which the outlay was \nmade, regardless of when the subrecipient received reimbursement. \nWe thank the City for its commitment to fiscal accountability and accurate financial \nreporting. \nApplicable Laws and Regulations \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 510 \u2013 Financial Statements, establishes criteria and \nrequirements related to the preparation of the s chedule of expenditures of Federal \nawards. \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nBudget, Accounting and Reporting Standards (BARS) manu al 4.8.5 establishes \nreporting requirements related to the schedule of expenditures of Federal awards. \nTitle 2 CFR Part 200, Uniform Guidance, section 302 \u2013 Financial Management, \nrequires grantees to identify, in their accounts, all Federal awards re ceived and \nexpended and the Federal programs under which the awards were received. \nTitle 2 CFR Part 200, Uniform Guidance, section 514 \u2013 Scope of Audit, requires \nthe audit be conducted in accordance with Generally Accepted Government \nAuditing Standards (GAGAS) and encompass the financial statements and \nschedule of expenditure of Federal awards (SEFA). \nOMB Circular A -133 Compliance Supplement 2015 Part 4 Environmental \nProtection Agency (EPA) CFDA 66.458 Capitalization Grants for Clean Water \nState Revolving Funds IV. Other Information requires the grantees to include \nproject expenditures during the audit period when they were incurred, regardless of \nwhen the grantee received reimbursement. \n \n \nWashington State Auditor\u2019s 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", null, "WA", "Town of Coupeville", "City/Town", "0357", "5315185", "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 Town of Coupeville", "Financial and Federal", 2015, "2014-01-01", "2015-12-31", "2018-09-20", "federal_award_compliance", "material_weakness", null, null, "The Town did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards", "Background \nTown management is responsible for designing and following internal controls that \nprovide reasonable assurance regarding the reliability of financial reporting. These \ncontrols should ensure financial events are identified properly and presented \ncompletely. Controls should also ensur e the criteria and accounting methodology \napplied to financial events is correct. Our audit identified a deficiency in internal \ncontrols that adversely affected the Town\u2019s ability to produce reliable schedules. \nBecause of its effect on the Town\u2019s financial reporting, we consider this a \nsignificant deficiency. \nLocal governments in Washington that spend federal funds must prepare a Schedule \nof Expenditures of Federal Awards (SEFA) as part of the annual financial report. \nFederal regulations require grantees to identify, in their accounts, all federal money \nspent on the SEFA each fiscal year. \nIf the government spends $750,000 or more in federal grant awards in a year, it \nmust arrange for an audit of its federal grants, in accordance with federal \nregulations. Further, the government must submit the single audit reporting package \nto the federal government within 30 calendar days after we issue our audit report or \nwithin nine months after the end of the audit period, whichever is earlier. \nDescription of Condition \nThe Town\u2019s internal controls over financial reporting of the SEFA were not \nsufficient to ensure accurate presentation . Although required for governments \nreporting on a cash basis, t he Town did not report expenditures paid related to a \nfederal loan on the SEFA. \nCause of Condition \nThe Town did not have a clear understanding of the SEFA reporting requirements \nfor its federal grants and loans and did not follow guidance provided in the \nBudgeting, Accounting and Reporting System (BARS) Manual or Uniform \nGuidance. \n \n \nWashington State Auditor\u2019s Office Page 7 \nAlthough the Town had procedures in place to review the required schedules, the \nreview was not adequate to detect and correct errors related to the SEFA before the \naudit. \nEffect of Condition \nThe Town misstated its SEFA because it did not include expenditures of the federal \nloan awarded under CFDA 10.760 Water and Waste Disposal Systems for Rural \nCommunities. \nThe Town identified the misstatement and corrected the SEFA. However, the \nadditional expenditures caused the Town\u2019s annual federal expenditures to exceed \nthe $750,000 threshold, requiring a federal single audit, after the Town\u2019s federal \ndeadline for completing the audit and submitting its reporting package had expired. \nAfter the federal deadline, our Office completed a federal single audit, updated and \nreissued our financial audit report and issued the Town\u2019s federal single audit report. \nRecommendation s \nWe recommend the Town: \n\uf0b7 Prepare the SEFA in accordance with requirements outlined in the \nBudgeting, Accounting and Reporting System (BARS) Manual and Uniform \nGuidance \n\uf0b7 Strengthen internal controls over SEFA preparation to ensure all federal \nawards spent are included on the schedule \nTown \u2019s Response \nIn 2015 the Town received a Water and Waste Disposal Systems for Rural \nCommunities loan from the USDA. Town staff sought guidance from their USDA \nrepresentative on reporting requirements and was told the loan did not qualify for \nreporting on the Schedule o f Expenditures of Federal Awards (SEFA) because it \nwas a loan and not a grant. Based on this inaccurate guidance, the loan \nexpenditures were not reported on the 2015 SEFA. Unfortunately, the 2014 -2015 \nannual audit performed by the State did not find the error in the 2015 SEFA report \neither. In late 2017 the Town applied for a FEMA grant, which if awarded in 2018 \nwould require specific financial management. In preparation of possibly receiving \nthis grant award the Town sent staff to a Washington State Audito r's training on \nmanaging Federal Awards, to ensure records and reporting would be handled \nappropriately. It was at this training that staff learned that the federal loan \nawarded under CFDA 10.760 should have been included in the 2015 SEFA report. \n \n \nWashington State Auditor\u2019s Office Page 8 \nThe Town immediately contacted the State Auditor's Office to self -report and then \nfiled a corrected SEFA and scheduled a federal single audit. \nAuditor\u2019s Remarks \nWe appreciate the Town\u2019s commitment to resolve this finding and thank the Town \nfor its cooperation and assistance during the audit. We will review the corrective \naction taken during the next regular audit. \nApplicable Laws and Regulations \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 510 \u2013 Financial Statements, establishes criteria and \nrequirements related to the preparation of the schedule of expenditures of Federal \nawards. \nThe American Institute of Certified Public Accountan ts defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nBudget, Accounting and Reporting Standards (BARS) manual 4.8.5 establishes \nreporting requirements related to the schedule of expenditures of Federal awards. \nTitle 2 CFR Part 200, Uniform Guidance, section 302 \u2013 Financial Management, \nrequires grantees to identify, in their accounts, all Federal awards received and \nexpended and the Federal programs under which the awards were received. \nTitle 2 CFR Part 200, Uniform Guidance, section 501 - Audit Requirements, \nrequires non -Federal entities that expend Federal awards of $750,000 or more \nduring its fiscal year to have conducted a single audit. \nTitle 2 CFR Part 200, Unifor m Guidance, section 514 \u2013 Scope of Audit, requires \nthe audit be conducted in accordance with Generally Accepted Government \nAuditing Standards (GAGAS) and encompass the financial statements and \nschedule of expenditure of Federal awards (SEFA). \nTitle 2 CFR Part 200, Uniform Guidance, section 512 \u2013 Report submission, requires \nthe audit be completed, the data collection form and reporting package submitted \nwithin the earlier of 30 calendar days after the auditor\u2019s report, or nine months after \nthe end of the audit period. \n \n \nWashington State Auditor\u2019s 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", null, "WA", "Ferry County", "County", "0113", "53019", "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 Ferry County", "Financial and Federal", 2016, "2016-01-01", "2016-12-31", "2019-02-19", "federal_award_compliance", "material_weakness", null, null, "The County\u2019s internal controls over financial statement preparation were inadequate to ensure accurate reporting of federal expenditures", "Background \nCounty management is responsible for designing and follo wing internal controls \nthat provide reasonable assurance regarding the reliability of financial reporting. \nOur audit identified deficiencies in internal controls that hindered the County\u2019s \nability to produce reliable financial statements. \nAll local gover nments in Washington that spend federal funds must prepare a \nSchedule of Expenditure of Federal Awards (SEFA) as part of the annual financial \nreport. Title 2 Part 200 Uniform Administrative Requirements, Cost Principles and \nAudit Requirements for Federal A wards (Uniform Guidance) requires grantees to \nidentify, in their accounts, all federal program awards received and spent and to \nreport all federal awards spent on the SEFA each fiscal year. \nDescription of Condition \nOur audit identified a deficiency in internal controls over financial reporting that \nrepresents a significant deficiency. The County\u2019s Accounting Department primarily \nrelied on individual departments to submit complete and accurate federal grant \nexpenditure information to the Accounting Depar tment for reporting. The \nDepartment did not have an adequate secondary review process of this information \nto verify whether grant expenditures were included in the proper period. \nCause of Condition \nThe Accounting Department compares federal grant revenue received in the year \nto federal expenditures reported by its departments to confirm that those \nexpenditures are reasonable. However, the Accounting Department did not also \nconsider reimbursements that County departments receive subsequent to year-end. \nIn addition, prior Public Works staff did not have sufficient knowledge of federal \nrequirements to report federal grant expenditures accurately. The Public Works \nDepartment inaccurately provided information for federal grant reimbursements, \nrather than expenditures. \n \nWashington State Auditor\u2019s Office Page 7 \nEffect of Condition \nInaccurate financial reports limit access to financial information used by County \nofficials, the public, state and federal agencies and other interested parties. \nInaccurate financial statements also can delay or hinder the audit process and \nincrease audit costs. \nThe County did not include $512,879 from a Highway Planning and Construction \ngrant on its SEFA. The omitted expenditures were significant to the County\u2019s major \nfederal program and required further audit examination for compliance with federal \nrequirements. \nInaccurate reporting of federal expenditures can also affect the amount of audit \ncoverage required and delay an audit beyond the required nine -month reporting \ndeadline. Should County staff not identify errors or omit ted financial information \nin a timely manner, the County might not meet its federal reporting deadline and \ncould jeopardize future federal funding. \nRecommendation s \nWe recommend that the County: \n\uf0b7 Improve controls over the accuracy and completeness of SEFA preparation \n\uf0b7 Provide training to all County staff responsible for federal grant reporting \nCounty\u2019s Response \nIn 2016 there was a misunderstanding regarding whether the expenditures or the \nrevenue should be reported. The confusion was due to the difference in reporting \nof FEMA revenues on the Schedule 16 where as other federal projects report \nexpenditures. \nAuditor\u2019s Remarks \nWe appreciate the County\u2019s commitment to resolving the issues noted. \nApplicable Laws and Regulations \nRCW 43.09.200 Local government account ing \u2013 Uniform system of accounting, \nrequires the State Auditor to prescribe the system of accounting and reporting for \nall local governments. \nGovernment Auditing Standards, December 2011 Revision, paragraph 4.23 \nestablishes reporting requirements related t o significant deficiencies or material \n \nWashington State Auditor\u2019s Office Page 8 \nweakness in internal control, instances of fraud or abuse, and noncompliance with \nprovisions of law, regulations, contracts, or grant agreements. \nThe American Institute of Certified Public Accountants defines signific ant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 265, Communicating Internal Control Related Matters Identified \nin an Audit, paragraph 7. \nThe Budgeting, Accounting, and Reporting System (BARS) manual, 3.1.3, Internal \nControl, requires each local government to establish and maintain an effective \nsystem of internal controls that provides reasonable assurance that the government \nwill achieve its objectives. \n \n \nWashington State Auditor\u2019s Office Page 9 \nSCHEDULE OF FEDERAL AWARD FINDI NGS AND \nQUESTIONED COSTS \nFerry County \nJanuary 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", null, "WA", "Ferry County", "County", "0113", "53019", "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe County spent $1,970,353 federal Highway Planning and Construction funds in \n2016. $1,372,075 was spent on the Boulder Creek project for construction of about \nthree miles of roadway. The County spent $529,662 on the Curlew Storm project \nfor construction of a thin lift overlay. \nThe Davis -Bacon Act (Act) requires all laborers and mechanics employed by \ncontractors or subcontractors for work on construction projects financed with more \nthan $2,000 of federal funds to be paid wages no less than those established for the \nlocality of the project (prevailing wage rates) by the Department of Labor. The Act \nincludes a requirement for the contractor and subcontractor to submit to the County \nweekly, for each week in which any contract work was performed, a copy of its \npayroll and a signed \u201cStatement of Compliance\u201d (weekly certified payroll reports). \nThe prime contractor may collect the weekly certified payroll reports for the County \nduring the project, but the County remains responsible for compliance and \nmaintaining the documents according to records retention requirements. \n \nWashington State Auditor\u2019s Office Page 10 \n \nDescription of Condition \nThe County did not have adequate controls in place to ensure it collects all weekly \ncertified payroll reports from its prime contractor and subcontractors performing \nwork on its federally funded projects. \nWe consider this deficiency to be a material weakness. This issue was not reported \nas a finding in the prior audit. \nCause of Condition \nThe County documented subcontractors that worked on the projects and used that \ninformation to request weekly certified payroll reports for those periods from the \nprime contractor. However, the prime contractor did not collect all weekly certified \npayrolls from subcontractors, and the County did not have a process to follow up \nwhen its prime contractor did not respond to the initial request, or separately collect \nthem. \nEffect of Condition and Questioned Costs \nThe County did not collect 11 of the 89 required weekly certified payroll reports \nfor work performed on the Boulder Creek West and Curlew Storm projects. Also, \nthe County did not ensure that 16 weekly certified pay roll reports were received \nwithin seven days for the Boulder Creek West project. \nWithout adequate internal controls, the County cannot demonstrate workers were \npaid prevailing wages as the Act requires. The County could be liable for paying \nadditional wages if prevailing wages were not paid. \nRecommendation \nWe recommend the County strengthen internal controls over compliance with the \nAct\u2019s requirements, including implementing effective controls to ensure it collects \nall weekly certified payroll reports when due. \nCounty\u2019s Response \nThe prime contractor on the Boulder Cr project was a subcontractor on the Curlew \nStorm/Overlay project. This contractor has a history of not complying when it \ncomes time to hand in required paperwork. The County has a documented history \nof attempting to collect missing or late paperwork from this contractor. \nThe County did not know at that time that it could seek required paperwork directly \nfrom subcontractors as leverage for such required documents. In light of this new \n \nWashington State Auditor\u2019s Office Page 11 \nunderstanding of what the County ca n do to collect missing paperwork they have \ndeveloped a Corrective Action Plan that will help in resolving this issue. \nThe County will use a checklist to ensure the timely receipt of all required \ndocuments and will withhold payment when necessary to enforce this compliance. \nThe County will notify the prime contractor that compliance of handing in required \npaperwork will be a part of the contractors performance review and that the County \nwill seek further actions if issues persist; including the request of n ot allowing the \nprime contractor awards of future projects. \nAuditor\u2019s Remarks \nWe appreciate the County\u2019s commitment to resolving the issues noted. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 303 Internal controls, establishes internal control \nrequirements for management of Federal awards to non-Federal entities. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 516 Audit findings, establishes reporting \nrequirements for audit findings. \nTitle 29, U.S. Code of Federal Regulations (CFR), Section 3.3 \u2013 Weekly statement \nwith res pect to payment of wages, and Section 3.4 \u2013 Submission of weekly \nstatements and the preservation an inspection of weekly payroll records, establishes \nrequirements for submission of weekly certified payroll reports. \n \n \n \n \nWashington State Auditor\u2019s 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 \u2014 City of Seattle", "Financial and Federal", 2016, "2016-01-01", "2016-12-31", "2019-08-19", "internal_controls", null, null, null, "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 \nCity management is responsible for designing and following internal controls \nthat provide reasonable assurance regarding the reliability of financial reporting. \nA certified public accounting firm audited the fund financial statements of the \nCity of Seattle City Light Department and provided its report to our Office. \nIn accordance with auditing standards, we are responsible for reporting internal \ncontrol deficiencies that affect the City\u2019s financial reporting. \nDescrip tion of Condit ion \nThe certified public accountant firm\u2019s report identified the following significant \ndeficiency in internal controls over financial reporting: \n\u201cThe financial internal control documentation associated with the CCB \n[Customer Care and Billings] implementation was incomplete as of the financial \nstatement d ate. In addition, the D epartment\u2019s internal audit personnel was \ninvolved in the design and rollout of the IT [Information Technology] security \ncontrols in the system. It was also noted that reliable billing system reports were \nnot available in the new system and the processes and controls surrounding the \nbilling/revenue adjustments was not consistently maintained during 2016.\u201d \nCause of Condition \n\u201cThe Department did not update previously provided internal control \ndocumentation during the pre- and post-implementation phases of the CCB \nimplementation within the finance division.\u201d \nEffec t of Conditi on \n\u201cInternal audit personnel was also involved in several IT implementation roles \nof the system which decreases the reliance that can be placed on future work of \nthe in ternal audit department related to security ov er the CCB system. In \n \n \nWashington State Auditor's Office \naddition, r eliable reporting tools were created with limited verification of \naccuracy during the implementation and billing system adjustments were not \nreviewed during the year.\u201d \nRec omm endations \nThe certified public accountant firm recommended the following: \n\uf0b7 Document financial, physical and IT processes and controls associated with \nCCB. \n\uf0b7 Assign a new Security Administrator for CCB outside of the internal audit \ndepartment. \n\uf0b7 Limit reliance on future internal audit work related to security over the CCB \nsystem. \n\uf0b7 Identify key roles and functions of IT personnel associated with the CCB \nsystem. \n\uf0b7 Create and verify accurate billing system reports surrounding revenues, \naccounts receivable, billing consumption and billing adjustments. \n\uf0b7 Implement and monitor a process for the review and approval of customer \nbilling and accounts receivable adjustments. \nCity\u2019s Respo nse \nWe appreciate the CPA firm\u2019s observations and recommendations in regards to \nthe recently implemented CCB billing system and agree that improvements can \nbe made to enhance the areas noted above. Overall, we believe the \nimplementation of the CCB billing system was successful and Department staff \nare determined to improve daily operations during 2017. Following is some of \nthe work in progress: \n1. Document financial, physical and IT processes and controls associated \nwith CCB. Response: Work on internal controls documentation is in \nprogress and th e goal is to complete by the end of 2 nd quarter 2017. The \nDepartment\u2019s Business Technology Solutions team is the lead. \n2. Assign a new Security Administrator for CCB outside the internal audit \ndepartment. Response: Effective in late April 2017, the Department\u2019s \nBusiness Technology Solutions has been assigned this responsibility. \n3. Limit reliance on internal audit work surrounding the CCB system. \nResponse: The Department\u2019s Business Technology Solutions team has been \nassigned responsibility for these areas.\nWashington State Auditor's Office \n4. Identify key roles and functions of IT personnel associated with the \nCCB system. Response: The Department\u2019s Business Technology \nSolutions team has been assigned the lead to administer CCB billing \nsystem related items including identification of key roles and IT \nfunctions. \n5. Create and verify accurate billing system reports surrounding \nrevenues, accounts receivable, billing consumption and billing \nadjustments. Response: Work has been in progress since the start of \n2017 to improve reporting from the CCB billing system and including \nfor specific items identified. Work is being led by the Department\u2019s \nBusiness Technology Solutions team and included end -users from the \nDepartment and Seattle Public Utilities. \n6. Implement and monitor a process for the review and approval of \ncustomer billing and accounts receivable adjustments. Response: The \nCustomer Care Division is in the process of re -evaluating review and \napproval of customer billing and accounts receivable adjustments . \nRevised procedures, related documentation, and implementation of \nthese procedures is expected to be completed by June 2017. \nAudit or\u2019s Rem arks \nWe appreciate the City\u2019s commitment to resolve the identified condition and \nthank City personnel for their cooperation and assistance during the audit. \nAppli cable Laws and Regulat ions \nGovernment Auditing Standards, December 2011 Revision, paragraph 4.23 \nstates: \n4.23 When performing GAGAS financial audits, \nauditors 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 \u2014 City of Seattle", "Financial and Federal", 2016, "2016-01-01", "2016-12-31", "2019-08-19", "internal_controls", "material_weakness", null, null, "The Seattle City Employees\u2019 Retirement System d id not have adequate internal controls in its accounting, which caused delays in its annual financial statement preparation", "Background \nManagement is responsible for designing, implementing and maintaining internal \ncontrols to fairly present financial statements and provide reasonable assurance \nregarding reliability of financial reporting. The City prepares its financial \nstatements in accordance with generally accepted accounting principles (GAAP) as \nprescribed by the Budgeting, Accounting and Reporting System (BARS) Manual. \nA certified public accountant firm audited the fund financial statements of the \nSeattle City Employees\u2019 Retirement System [SCERS] and provided its report to \nour Office. In accordance with auditing standards, we are responsible for reporting \ninternal control deficiencies that affect the City\u2019s financial reporting. \nDescrip tion of Condit ion \nThe certified public accountant firm\u2019s audit identified the following significant \ndeficiency in internal controls over financial reporting: \n\u201cAccount Reconciliations and Reporting \nDuring the year, the investment and securities lending general ledger accounts were \nnot analyzed and reconciled with subsidiary information on a periodic basis. These \nperiodic reconciliations, together with the posting of correcting journal entries, \nhelp ensure timely and accurate interim financial information that can be used to \nmonitor and control operations. In addition, timely reconciliation of accounts \nis most cost efficient, since reconciliation at a later date is often more difficult and \ntime consuming. A key accounting system goal should be to provide tim ely, \naccurate financial information for management.\u201d \nCause of Condition \nThe City did not prioritize timely account reconciliations of the Seattle City \nEmployees\u2019 Retirement System.\nWashington State Auditor's Office \nEffec t of Conditi on \nTimely reconciliations of general ledger accounts were not performed throughout the \nyear. Further, untim ely reconciliations caused a delay in pr eparing the fin ancial \nstatements. \nRec omm endations \nThe certified public accountant firm recommended: \n\u201cSCERS adopt procedures to ensure that the monthly analysis of general ledger \naccounts becomes a routine procedure. \nIt was additionally identified the financial statements reflect the reclassification between \ninvestment income and securities lending income not reflected in the trial balance. While \nthe proper amounts were reflected in the financial statements, we recommend timely, \naccurate journal entries in order to prevent errors.\u201d \nCity\u2019s Respo nse \nIn 2015, SCERS began monthly reconciliations with the monthly investment summaries \nreceived from its custodial bank, Bank of New York (BNY). To date, SCERS has only \nbeen able to receive detailed securities lending information on an annual basis from BNY. \nSCERS is continuing to work with BNY to ensure that monthly investment summaries are \ncomplete and accurate and that detailed s ecurities l ending information are provided \nmonthly. \nAudit or\u2019s Rem arks \nWe appreciate the City\u2019s commitment to resolve the identified condition and thank City \npersonnel for their cooperation and assistance during the audit. \nAppli cable Laws and Regulat ions \nGovernment Auditing Standards, December 2011 Revision, paragraph 4.23 states: \n4.23 When performing GAGAS financial audits, auditors should \ncommunicate in the report on in ternal control over financial \nreporting and compliance, based upon the work performed, (1) \nsignificant deficiencies and mat erial w eaknesses in in ternal \ncontrol; (2) instances of fraud and noncompliance with provisions \nof laws or regulations that have a material effect on the audit and \nany other instances that warrant the attention of those charged with \ngovernance; (3) no ncompliance with provisions of contracts or \ngrant agreements that has a material effect on the audit; and (4) \nabuse that has a material effect on the audit. \nWashington State Auditor's Office \nThe American Institute of Certified Public Accountants defines significant deficiencies \nand material weaknesses in its Codification of Statements on Auditing Standards , \nsection 265, as follows: \nDeficiency in internal control. A deficiency in internal control \nover financial reporting exists when the design or operation of a \ncontrol does not allow management or employees, in the normal \ncourse of performing their assigned functions, to prevent, or detect \nand correct, misstatements on a timely b asis. A deficiency in \ndesign exists when (a) a control necessary to meet the control \nobjective is missing, or (b) an existing control is not properly \ndesigned so that, even if the control operates as designed, the \ncontrol objective would not be met. A deficiency in operation \nexists when a properly d esigned control does not operate as \ndesigned or when the person performing the control does not \npossess the necessary authority or competence to perform the \ncontrol effectively. \nMaterial weakness. A deficiency, or a combination of deficiencies, \nin internal control over fin ancial reporting, such that there is a \nreasonable possibility that a material misstatement of the entity's \nfinancial statements will not be pr evented, or d etected and \ncorrected, on a timely basis. A reasonably possibility exists when \nthe likelihood of an event occurring is either reasonably possible \nor probably as defined as follows: \nReasonably possible. The chance of the future event or events \noccurring is more than remote but less than likely. \nProbable. The future event or events a re likely to occur. \nSignificant deficiency. \nA deficiency, or a combination of deficiencies, in internal \ncontrol over financial reporting that is less severe than a \nmaterial weakness yet important enough to merit attention by \nthose charged with governance. \nA11 Indicators of material weaknesses in internal control include: \n\uf0b7 identification of fraud, whether or not material, on the part \nof senior management. For the purpose of this indicator, \nthe term \u201csenior management\u201d includ es the principal \nexecutive and fin ancial officers as well as any other \nmembers of senior man agement who play a significant \nrole in the entity's financial reporting process; \nWashington State Auditor's Office \n\uf0b7 restatement of previously issued financial statements to\nreflect the correction of a material misstatement due to\nfraud or error;\n\uf0b7 identification by the auditor of a material misstatement of\nthe financial statements under audit in circumstances that\nindicate that the m isstatement would not have been\ndetected and corrected by the entity's internal control; and\n\uf0b7 ineffective oversight of the entity's financial reporting\nand internal control by those charged with governance.\nRCW 43.09.200 Local government accounting \u2013 Uniform system of accounting, states \nin part: \nThe state auditor shall formulate, prescribe, and install a system of \naccounting and reporting for all local governments, which shall be \nuniform for every public institution, and every public office, and \nevery public account of the same class. \nBudgeting, Accounting, and R eporting S ystem (BARS) Manual - Accounting, \nAccounting Principles and Internal Control, Internal Control states in part: \n3.1.3.20 Internal control is a process \u2013 affected by those charged \nwith governance, management and other p ersonnel designed to \nprovide reasonable assurance regarding the achievement of \nobjectives in the following categories: \n\uf0b7 Effectiveness and efficiency of operations\n\uf0b7 Compliance with applicable laws and regulations\n\uf0b7 Reliability of financial reporting\n3.1.3.30 Management and the governing body are responsible for \nthe government\u2019s performance, compliance and financial \nreporting. Therefore, the adequacy of internal control to provide \nreasonable assurance of achieving these objectives is also the \nresponsibility of management and the governing body. The \ngoverning body has ultimate responsibility for ensuring adequate \ncontrols to achieve objectives, even though primary responsibility \nhas been delegated to management. Since management and the \ngoverning body are assumed to work in harmony, both parties are \ncollectively referred to as \u201cmanagement\u201d throughout the rest of \nthis section. \n3.1.3.140 This objective refers to fair p resentation of financial \nstatements and r equired schedules in all material r espects in \naccordance with the stated basis of accounting. \nWashington State Auditor's Office \n3.1.3.150 In meeting this objective, the government should have \ncontrols that accomplish the following key functions: \n\uf0b7 Identification of financial events \u2013 Controls should\nensure fin ancial events and transactions are properly\nidentified and recorded.\n\uf0b7 Properly applying accounting standards \u2013 Controls\nshould ensure correct criteria and methodology is applied\nwhen accounting for financial events. When the correct\nmethod of accounting for or reporting a transaction is\nunclear, the government should seek clarification by\nperforming r esearch, contracting for accounting\nassistance, or communicating with the State Auditor\u2019s\nOffice or standard setting bodies.\n\uf0b7 Correctly accounting for all financial events \u2013 Controls\nshould ensure that:\n\uf0b7 Only valid transactions are recorded and reported.\n\uf0b7 All transactions occurred during the period are\nrecorded and reported.\n\uf0b7 Transactions are recorded and reported at properly\nvalued and calculated amounts.\n\uf0b7 Recorded and reported tr ansactions accurately\nreflect legal rights and obligations.\n\uf0b7 Transactions are recorded and reported in the\naccount and fund to which they apply.\n\uf0b7 Preparation of the annual report \u2013 Controls should ensure\nthat fin ancial stat ements and r equired s chedules are\nproperly compiled and p repared from sou rce accounting\nrecords. Controls should also ensure correct presentation of\nstatements and schedules.\nWashington 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 \u2014 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 \ncompliance with federal requirements over allowable costs and \nsubrecipient monitoring. \nCFDA Number and Title: 14.218 Community Development \nBlock Grants/Entitlement Grants \nFederal Grantor Name: U. S. Department of Housing and \nUrban Development \nFederal Award/Contract Number: B16MC530005, B14MC530005, \nB15MC530005, B13MC530005, \nB10MC530005 \nPass-through Entity Name: NA \nPass-through Award/Contract NA \nNumber: \nQuestioned Cost Amount: $3,291,160 \nDes cripti on o f Con dit ion \nThe objective of the Community Development Block Grant program is to develop \nviable urban communities by providi ng d ecent housing and a suitable living \nenvironment, and expanding economic opportunities, principally for persons of low and \nmoderate income. During 2016, the City of Seattle spent $10,930,929 in federal grant \nfunds under this program, of which $6,124,407 was passed to 17 subrecipients for 30 \nprojects. \nThe City must monitor subrecipients\u2019 activities to ensure subawards are used for \nauthorized purposes. This monitoring can be accomplished through collecting \nsupporting documentation from subrecipients with requests for payment or reviewing \nsupporting documentation during onsite monitoring vis its. The mon itoring, \nparticularly the onsite visits, is important to ensure that a subrecipient\u2019s administration \nof the program is appropriate and complies with federal requirements, including those \nrelating to allowable costs and activities and rehabilitation requirements. For those \nWashington State Auditor's Office \nsubawards funded under the Uniform Guidance, the City also must perform risk \nassessments to evaluate subrecipients\u2019 risk of noncompliance and d etermine the \nappropriate level of monitoring. \nThe City requires its subrecipients to submit detailed general ledger reports as part of \nthe request for payment and has a policy that requires semiannual onsite visits to review \nsupporting documentation to ensure costs charged to the program are allowable and \nsupported. \nThe City\u2019s process for subrecipient monitoring and determining if costs are allowable \nand supported was not working as intended for projects funded under the Unif orm \nGuidance. During our audit, we reviewed 12 of 27 projects funded under the Uniform \nGuidance and found the Human Service Department did not: \n\uf0b7 Perform risk assessments for six subrecipients\n\uf0b7 Obtain ad equate supporting documentation wi th the requests for p ayment or\nperform an onsite fiscal v isit for four subrecipients, at whi ch a review of\ndocumentation to support the costs reimbursed would have been done\n\uf0b7 Perform an onsite assessment for one subrecipient to ensure compliance with\nrehabilitation requirements\nWe consider these deficiencies in int ernal controls to be a material weakness. This \nissue was reported in the prior audit as finding 2015-001. \nCau se o f Con diti on \nThe grants and contracts specialists responsible for approving subrecipient requests for \npayments and performing onsite visits did not have the necessary tr aining and \nresources to perform adequate reviews. \nThe Department was not aware that risk evaluations are required for all subrecipients \nreceiving money from federal awards. During our 2016 audit, the Department was \nmade aware of this requirement and developed and implemented a new subrecipient \nmonitoring policy manual and trained grant and contract specialists in 2017. \nEff ect of Con diti on a n d Qu e stion e d Costs \nWithout adequate internal controls in place, the Department cannot ensure that the \nsubrecipients used the program funds in accordance with the grant agreement and \nfederal requirements. \nThe Department paid $3,291,160 to four subrecipients without performing onsite visits \nor requiring adequate supporting do cumentation for incurred costs. Because of \ninsufficient review of subrecipient expenditures, the City us ed federal funds to \nWashington State Auditor's Office \nreimburse its subrecipients for costs that were not supported as required. As a result,we \nare q uestioning the total amount paid to these subrecipients. In addition, the \nDepartment cannot ensure compliance with rehabilitation requirements for one \nsubrecipient. \nRecom m en dation s \nWe recommend the Department establish internal controls to ensure compliance with \nthe subrecipient monitoring requirements. Specifically, the Department should: \n\uf0b7 Provide training and resources to grants and contracts specialists to ensure they\nhave an adequate understanding of federal allowable costs and subr ecipient\nmonitoring requirements\n\uf0b7 Evaluate each subrecipient\u2019s risk of noncompliance to determine the\nappropriate level of monitoring activities\n\uf0b7 Perform adequate financial review required by City policies through:\n\uf0b7 Requiring subrecipients to provide adequate documentation to\nsupport the incurred costs incurred; and/or\n\uf0b7 Performing onsite visits that include a review of source\ndocumentation.\nCit y\u2019s Res pon s e \nThe City agrees with the Auditor\u2019s finding and had taken corrective actions to ensure \ncompliance with federal requirements over allowable costs and subrecipient \nmonitoring going forward. \nAu ditor\u2019s Rem ark s \nWe appreciate the City\u2019s commitment to resolve this finding and thank the City for its \ncooperation and assistance during the audit. We will review the corrective action taken \nduring our next regular audit. \nApplica ble Laws an d Regu lation s \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform \nGuidance), Section 303, Internal controls, establishes requirements for in ternal \ncontrols for non-federal entities.\nWashington State Auditor's Office \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform \nGuidance), Section 331, Requirements for p ass-through entities, establishes \nsubrecipient monitoring and management requirements for pass- through entities. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform \nGuidance), Section 516, Audit findings, establishes reporting requirements for audit \nfindings. \nWashington 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 \u2014 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 \nThe grants and contracts specialists responsible for approving subrecipient requests for \npayments and performing onsite visits did not have the necessary tr aining and \nresources to perform adequate reviews. \nThe Department was not aware that risk evaluations are required for all subrecipients \nreceiving money from federal awards. During our 2016 audit, the Department was \nmade aware of this requirement and developed and implemented a new subrecipient \nmonitoring policy manual and trained grants and contracts specialists in 2017. \nEffec t of Conditi on and Questio ned Cost s \nWithout adequate internal controls in place, the Department cannot ensure the \nsubrecipients used the program funds in accordance with t he grant agreement and \nfederal requirements. \nThe Department paid $101,972 to one subrecipient without performing an onsite fiscal \nvisit or requiring adequate supporting documentation for incurred costs. Because of \ninsufficient review of subrecipient expenditures, the City used federal funds to \nreimburse its subrecipient for costs that were not supported as required. As a result, \nwe are questioning the total amount paid to this subrecipient. \nWashington State Auditor's Office \nRec omm endations \nWe recommend the Department establish internal controls to ensure compliance with \nthe subrecipient monitoring requirements. Specifically, the Department should: \n\uf0b7 Provide training and resources to grants and contracts specialists to \nensure they have an adequate understanding of federal requirements over \nallowable costs and subrecipient monitoring \n\uf0b7 Evaluate each subrecipient\u2019s risk of noncompliance to determine the \nappropriate level of monitoring activities \n\uf0b7 Perform adequate financial review required by City policies through: \n\uf0b7 Requiring subrecipients to provide adequate documentation to support \nthe incurred costs; and/or \n\uf0b7 Performing onsite visits that include a review of source \ndocumentation. \nCity\u2019s Respo nse \nThe City agrees with the Auditor\u2019s finding and had taken corrective actions to ensure \ncompliance with federal requirements over allowable costs and subrecipient \nmonitoring going forward. \nAudit or\u2019s Rem arks \nWe appreciate the City\u2019s commitment to resolve this finding and thank the City for its \ncooperation and assistance during the audit. We will review the corrective action taken \nduring our next regular audit. \nAppli cable Laws and Regulat ions \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform \nGuidance), Section 303, Internal controls, establishes requirements for in ternal \ncontrols for non-federal entities. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform \nGuidance), Section 331, Requirements for pass-through entities, establishes \nsubrecipient monitoring and management requirements for pass- through entities. \n \nWashington State Auditor's Office \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform \nGuidance), Section 516, Audit findings, establishes reporting requirements for audit \nfindings. \n \n \n \n \n \n \nWashington 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 \u2014 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 \nThe grants and contracts specialists responsible for approving subrecipient requests for \npayments and performing onsite visits did not have the necessary tr aining and \nresources to perform adequate reviews. \nThe Department was not aware that risk evaluations are required for all subrecipients \nreceiving money from federal awards. During our 2016 audit, the Department was \nmade aware of this requirement and developed and implemented a new subrecipient \nmonitoring policy manual and trained grants and contracts specialists in 2017.\nWashington State Auditor's Office \nEffec t of Conditi on and Questio ned Cost s \nWithout adequate internal controls in place, the Department cannot ensure that the \nsubrecipients used the program funds in accordance with the grant agreement and \nfederal requirements. Our audit found fis cal or pr ogram monitoring was not \nperformed during 2016 for 10 of 16 projects tested. \nThe Department performed onsite visits for three projects in early 2017 and \nreviewed supporting documentation to verify the costs and activities were allowable. \nAs a result, we are not questioning the costs related to these projects. \nThe Department paid $1,180,042 for seven projects without performing onsite visits \nor requiring adequate supporting do cumentation for incurred costs. Because of \ninsufficient review of subrecipient expenditures, the City us ed federal funds to \nreimburse six subrecipients for costs that were not supported as required. As a result, \nwe are questioning the total amount paid to these subrecipients. We projected the \nidentified error from our non-statistical sample of 16 projects to all 74 projects funded \nby the program, which resulted in an estimated $5,457,692 in likely questioned \ncosts. The known questioned costs of $1,180,042 are includ ed in the to tal likely \nquestioned costs of $5,457,692. \nRec omm endations \nWe recommend the Human Service Department establish internal controls to ensure \ncompliance with the subrecipient monitoring requirements. Specifically, the \nDepartment should: \n\uf0b7 Provide training and resources to grants and contracts specialists to \nensure they have an adequate understanding of federal allowable costs \nand subrecipient monitoring requirements \n\uf0b7 Evaluate each subrecipient\u2019s risk of noncompliance to determine the \nappropriate level of monitoring activities \n\uf0b7 Perform adequate financial review required by City policies through: \n\uf0b7 Requiring subrecipients to provide adequate documentation to \nsupport the incurred costs; and/or \n\uf0b7 Performing onsite visits that include a review of source documentation.\nWashington State Auditor's Office \nCity\u2019s Respo nse \nThe City agrees with the Auditor\u2019s finding and had taken corrective actions to ensure \ncompliance with federal requirements over allowable costs and subrecipient \nmonitoring going forward. \nAudit or\u2019s Rem arks \nWe appreciate the City\u2019s commitment to resolve this finding and thank the City for \nits cooperation and assistance during the audit. We will review the corrective action \ntaken during our next regular audit. \nAppli cable Laws and Regulat ions \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), Section 303, Internal controls, establishes requirements for \ninternal controls for non-federal entities. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), Section 331, Requirements for p ass-through entities, \nestablishes subrecipient monitoring and management requirements for pass- through \nentities. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), Section 516, Audit findings, establishes reporting requirements \nfor audit findings. \nU.S. Office of M anagement and Budget (OMB) Circular A-133, Audits of States, \nLocal Governments, and Non-Profit Organizations, Subpart D \u2013 Federal Agencies \nand Pass-Through Entities, section .400(d) Pass-through entity responsibilities, \nestablishes subrecipient monitoring and management requirements for pass- through \nentities. \n \n \n \n \n \nWashington 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 \u2014 City of Seattle", "Financial and Federal", 2016, "2016-01-01", "2016-12-31", "2019-08-19", "federal_award_compliance", "material_weakness", null, null, "The City did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards", "Background \nCity management is responsible for designing and following internal controls that \nprovide reasonable assurance regarding the reliability of financial reporting. These \ncontrols should ensure financial events are identified properly and presented \ncompletely. Controls should also ensure the criteria and accounting methodology \napplied to financial events are correct. \nLocal governments in Washington that spend federal funds must prepare a Schedule of \nExpenditures of Federal Awards (SEFA) as part of the annual financial report. Federal \nregulations require grantees to identify, in their accounts, all federal money spent on \nthe SEFA each fiscal year. \nOur audit identified a deficiency in internal controls that adversely affected the City\u2019s \nability to produce a relia ble SEFA. Because of its effect on the City\u2019s financial \nreporting, we consider this a significant deficiency. \nDescription of Condition \nWhen preparing the SEFA, the Citywide Accounting department relied on other City \ndepartments\u2019 supporting documentation a nd information to ensure accurate \npresentation. During the 2017 audit, Citywide Accounting brought to our attention that \na department did not report its 2016 grant expenditures for the CFDA 66.458 \nCapitalization Grants for Clean Water State Revolving Funds , which were funded by \nthe U.S. Environmental Protection Agency (EPA). \nCause of Condition \nThe City did not clearly understand the SEFA reporting requirements for the grant \nunder the Budgeting, Accounting and Reporting System (BARS) Manual and Uniform \nGuidance. The Department treated this grant as a federal loan and reported the 2016 \nexpenditures upon its first drawdown in 2017. \nWashington State Auditor's Office \nEffect of Condition \nInaccurate financial reports limit access to financial information used by City officials, \nthe public, state and federal agencies and other interested parties. In addition, these \nconditions delay the audit process and increase audit costs. \nThe City understated its 2016 SEFA by $17,760,345 because it did not include \nexpenditures for the CFDA 66.458 Capitalization Grants for Clean Water State \nRevolving Funds. The correct amount makes this a major program required to be \naudited for fiscal year 2016. \nThe City subsequently corrected the misstatement. Our Office completed the review \nof this grant, and updated and reissued our financial audit report and federal single \naudit report in 2019. \nRecommendations \nWe recommend the City dedicate sufficient time and resources to strengthen internal \ncontrols over SEFA preparation to ensure the information received from the \ndepartments is accurate and based on federal expenditures. \nWe further recommend the City to tra in departmental staff responsible for SEFA \npreparation to review the BARS Manual and Uniform Guidance to ensure \nexpenditures are reported in the correct year. \nCity\u2019s Response \nThe City acknowledges the Auditor\u2019s concerns regarding inadequate internal controls \nover financial reporting on the SEFA. As relates to the specific deficiency, the \nDepartment of Ecology Loan for the Henderson North Combined Sewer Overflow \nReductions project, the auditor asserts that the loan drawdowns covering 2015 and \n2016 were not recorded in those years. The City disputes the finding for 2015. Because \nthe loan in question was not awarded to the City until 2016, expenditures of federal \nfunds were not known when the SEFA was prepared for 2015. Further, the City \nreceived guidance from the EPA indicating that the triggering action for audit purposes \nis when an SRF borrower submits an invoice/disbursement/payment request to the \nstate. The City did not submit a disbursement until 7/31/2016. \nRegarding 2016, the City acknowledges that the drawdown request submitted in 2016 \nbut received in 2017 was not included in the 2016 SEFA. As federal (EPA) and State \n(Department of Ecology) agencies have provided conflicting guidelines, the City will \nwork to clarify rules and procedures for reporting retroactive awards on the SEFA. \nThe City appreciate SAO\u2019s guidance on this issue. \nWashington State Auditor's Office \nAuditor\u2019s Remarks \nPer OMB Circular A-133 Compliance Supplement 2015 Part 4 for the CFDA 66.458 \nCapitalization Grants for Clean Water State Revolving Funds (CWSRF), \nEnvironmental Protection Agency (EPA) requires the grantees to include project \nexpenditures during the audit period when they were incurred, regardless of when the \ngrantee received reimbu rsement. EPA further clarifies that if a subrecipient incurs \nexpenditures under an approved CWSRF loan in one audit period for which it is not \nreimbursed by the State until a subsequent audit period, those expenditures should be \nreported on the subrecipie nt\u2019s SEFA in the year in which the outlay was made, \nregardless of when the subrecipient received reimbursement. \nWe thank the City for its commitment to fiscal accountability and accurate financial \nreporting. \nApplicable Laws and Regulations \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform \nGuidance), section 510 \u2013 Financial Statements, establishes criteria and requirements \nrelated to the preparation of the schedule of expenditures of Federal awards. \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nBudget, Accounting and Reporting Standards (BARS) manu al 4.8.5 establishes \nreporting requirements related to the schedule of expenditures of Federal awards. \nTitle 2 CFR Part 200, Uniform Guidance, section 302 \u2013 Financial Management, \nrequires grantees to identify, in their accounts, all Federal awards re ceived and \nexpended and the Federal programs under which the awards were received. \nTitle 2 CFR Part 200, Uniform Guidance, section 514 \u2013 Scope of Audit, requires the \naudit be conducted in accordance with Generally Accepted Government Audit ing \nStandards (GAGAS) and encompass the financial statements and s chedule of \nexpenditure of Federal awards (SEFA). \nOMB Circular A-133 Compliance Supplement 2016 Part 4 Environmental Protection \nAgency (EPA) CFDA 66.458 Capitalization Grants for Clean Water State Revolving \nFunds IV. Other Information requires the grantees to include project expenditures \nduring the audit period when they were incurred, regardless of when the grantee \nreceived reimbursement. \nWashington 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", null, "WA", "Shoreline Fire Department", "Fire Protection District", "1126", null, "not_municipal", "Washington State Auditor's Office", "Accountability audit \u2014 Shoreline Fire Department", "Accountability", 2016, "2016-01-01", "2016-12-31", "2018-08-27", "procurement", null, null, null, "The District did not verify purchases made through its purchasing cooperative complied with the state laws and regulations", "Background \nFire districts are required to competitively bid all purchases over $50,000 \n(RCW 52.14.110). Specifications for the purchases must be available to all \ninterested parties and must be approved by the governing body. The submitted \nbids must be opened and read publicly at a fixed time and place. \nState law allows fire districts to fulfill bidding requirements through a process \nreferred to as piggybacking. \u201cPiggybacking\u201d refers to one local government \nmaking purchases from contracts awarded by another government or group of \ngovernments via an interlocal agreement or contract. To ensure compliance when \nprocuring through piggybacking, the local government must ensure its own \nbidding requirements are met before expending public funds. \nDescription of Condition \nIn 2016, Shoreline Fire District entered into a purchasing cooperative to purchase \na ladder truck totaling $1,187,500. The District observed other public agencies \nuse the same purchasing group and verified state law authorized the use of \npurchasing cooperatives. \nHowever, the District did not ensure the procurement process used by the \npurchasing cooperative complied with Washington bid requirements. The \npurchasing cooperative selected a vendor using a request for proposal process, \nrather than a formal competitive bidding process. \nCause of Condition \nThe purchasing cooperative\u2019s procurement method complied with the out -of-state \nlead agency\u2019s bid requirements; however, it did not satisfy the procurement \nregulations in Washington. The District believed all Washington procurement \nregulations were met by entering into the cooperative contract. However, the \nDistrict did not know they were required to verify and maintain evidence that \nWashington\u2019s bid laws were satisfied. \n \n \nWashington State Auditor\u2019s Office Page 6 \nEffect of Condition \nThe District cannot demonstra te it adequately safeguarded public resources by \nensuring that the purchase complied with the District\u2019s applicable laws and \nregulations. \nRecommendation \nWe recommend the District ensure that purchases made through purchasing \ncooperatives or other governmen t municipalities comply with the District\u2019s \napplicable laws and regulations. In addition, the District should retain \ndocumentation of its efforts to verify the purchase complied with Washington \nprocurement regulations before making the purchase. \nDistrict\u2019s Response \nThe Shoreline Fire Department is committed to cooperating with the State \nAuditor to ensure that our Department is managed and operated in full \ncompliance with the law. The Department is also committed to complying with all \npublic bidding laws to ensure that public funds are spent in the most responsible \nand efficient manner possible. \nUnfortunately, when purchasing the ladder truck, our Department did not ensure \nthe procurement process used by the purchasing cooperative complied with \nWashington St ate bid requirements. This was an unintentional oversight of our \npolicy language; however, the purpose of engaging with this purchasing \ncooperative was solely in the interest of saving the taxpayers money. In the end, \nwe believe that this purchase resulted in savings to the citizens as we were \nprovided with multiple discounts. \nAlthough we had this misstep, the Department felt due diligence was applied by \nresearching the purchasing cooperative contract with Pierce, other public \nagencies that had made the pu rchases under the same contract, reading of the \nWashington State Interlocal Cooperative Act, and solicitation of a legal opinion \nfrom counsel. The language of the Interlocal Cooperative Act authorized the use \nof the purchasing cooperative contract. While we disagree with the decision to \nissue the Department a finding, we understand that it was our responsibility to \ncollect and maintain evidence that Washington\u2019s bid laws were satisfied. \nWe are planning to implement additional internal controls to ensure that the State \nbid requirements are met going forward by requiring that employees responsible \nfor purchasing on behalf of the Department to present verification to the \nCommissioners that all statutory requirements have been met before a request for \napproval is presented to the Board. \n \n \nWashington State Auditor\u2019s Office Page 7 \nIn conclusion, our Department performed due diligence in evaluating and \ninitiating the purchase, but erred in piggybacki ng onto a contract that was \nnon-compliant with State law. This error likely did not cost our taxpayers \nadditional funds, but we recognize the importance of being compliant with bid \nlaws. The Department views these annual audits as a part of our continuing \nquality improvement process meant t o improve our methods for safeguarding the \ncitizen's dollars. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolve the finding and thank the \nDistrict for its cooperation and assistance during the audit. We will review the \ncorrective action take during our next regular audit. \nApplicable Laws and Regulations \nRCW 52.14.110, Purchases and public works \u2013 Competitive bids required \u2013 \nExceptions, establishes the procurement thresholds for fire protection district. \nRCW 39.34.030 (5)(b), Joint powers\u2014Agreements for joint or cooperative action, \nrequisites, effect on responsibilities of component agencies \u2014Joint utilization of \narchitectural or engineering services \u2014Financing of joint projects, states that \nentering into a cooperative agreement does not reli eve any public agency of its \nresponsibility imposed upon by law. \n \n \n \nWashington State Auditor\u2019s Office Page 8 \nRELATED REPORTS \nFinancial \nOur opinion on the District\u2019s financial statements is provided in a separate report, which includes \nthe District\u2019s financial statements. That report is available on our website , \nhttp://portal.sao.wa.gov/ReportSearch . \n \n \n \n \n \nWashington State Auditor\u2019s Office Page 9 \nINFORMATION ABOUT TH E DISTRICT \nKing County Fire Protection District No. 4 was formed in 1939 and now operates as Shoreline \nFire Department. The District serves a population of approximately 55,000 citizens within the \nCity of Shoreline, approximately 14 square-miles. In addition, the ALS program serves the cities \nof Bothell, Kenmore, Lake Forest Park and a portion of Woodinville resulting in an additional \npopulation of 75,000 in an area of approximately 22 square-miles. The District provides 24 -hour \ncoverage for fire suppression, technical rescue, emergency medical and advanced life support, \nfire prevention and education, fire investigations, inspections and code co mpliance to its service \narea. \nAn elected, five -member Board of Commissioners governs the District. The Board appoints a \nFire Chief to oversee the District \u2019s daily operations as well as its 120 employees. In fiscal year \n2016, the District operated on an annual budget of about $24.6 million. \nContact information related to this report \nAddress: Shoreline Fire Department \n17525 Aurora Avenue N. \nShoreline, WA 98133 \nContact: Joyce Brown, Administrative Director \nTelephone: (206) 533-6570 \nWebsite: www.shorelinefire.com \nInformation current as of report publish date. \n \nAudit history \nYou can find cur rent and past audit reports for Shoreline Fire Department at \nhttp://portal.sao.wa.gov/ReportSearch . \n \n \n \nWashington State Auditor\u2019s Office Page 10 \nABOUT THE STATE A UDITOR\u2019S OFFICE \nThe State Auditor's Office is established in the state's Constitution and is part of the executive \nbranch of state government. The State Auditor is elected by the citizens of Washington and \nserves four-year terms. \nWe work with our audit clients and citizens to achieve our vision of government that works for \ncitizens, by helping governments work better, cost less, deliver higher value, and earn greater \npublic trust. \nIn fulfilling our mission to hold state and local governments accountable for the use of public \nresources, we also hold ourselves accountable by conti nually improving our audit quality and \noperational efficiency and developing highly engaged and committed employees. \nAs an elected agency, the State Auditor's Office has the independence necessary to objectively \nperform audits and investigations. Our audits are designed to comply with professional standards \nas well as to satisfy the requirements of federal, state, and local laws. \nOur audits look at financial information and compliance with state, federal and local laws on the \npart of all local governments, including schools, and all state agencies, including institutions of \nhigher education. In addition, we conduct performance audi ts of state agencies and local \ngovernments as well as fraud, state whistleblower and citizen hotline investigations. \nThe results of our work are widely distributed through a variety of reports, which are available \non our website and through our free, electronic subscription service. \nWe take our role as partners in accountability seriously, and provide training and technical \nassistance to governments, and have an extensive quality assurance program. \nContact information for the State Auditor\u2019s Office \nPublic Records requests PublicRecords@sao.wa.gov \nMain telephone (360) 902-0370 \nToll-free Citizen Hotline (866) 902-3900 \nWebsite 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", null, "WA", "City of Chehalis", "City/Town", "0487", "5311475", "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 City of Chehalis", "Financial and Federal", 2016, "2016-01-01", "2016-12-31", "2019-03-28", "federal_award_compliance", "material_weakness", null, null, "The City\u2019s accounting and financial statement preparation controls were not adequate to accurately report the Schedule of Expenditures of Federal Awards", "Background \nCity management is responsible for designing and following internal controls that \nprovide reasonable assurance regarding the reliability of financial reporting . \nThe City also must prepare a Schedule of Expenditures of Federal Awards \n(SEFA) as part of the annual financial report. Title 2 Part 200 - Uniform \nAdministrative Requirements, Cost Principles, and Audit Requirements for \nFederal Awards requires a grantee to identify, in its accounts, all federal program \nawards received and expended. The City must report all federal awards expended \non the SEFA each fiscal year. \nOur audit identified internal control deficiencies that adversely affected the City\u2019s \nability to produce reliable financial statements. \nDescription of Condition \nThe former Finance Manager was unaware of the types of grants received by the \nCity, which contributed to the City\u2019s lack of controls over the proper reporting of \nboth state and federal grants on the SEFA. Additionally, t he City did not have an \neffective review process to ensure the accuracy of the SEFA. \nWe consider this to be a significant deficiency in internal controls. \nCause of Con dition \nThe former Finance Manager lacked adequate training and resources to accurately \nreport federal expenditures on the schedule. Further, the City lacked a formalized \nreview process over the final financial statement s. \n \n \n \nWashington State Auditor\u2019s Office Page 7 \nEffect of Condition \nOur audit identified the following errors on the SEFA provided for audit: \n\uf0b7 Airport Improvement Grant program (CFDA 20.106) grant expenditures \nwere understated by $576,693. \n\uf0b7 A State Transportation Grant was recorded in error , which resulted in the \nprogram being overstated by $396,180. \nThese changes to the SEFA resulted in a change of audit scope that required the \nCity to obtain an audit of an additional federal grant program for fiscal year 2016. \nThe city corrected these errors. \nRecommendation s \nWe recommend the City: \n\uf0b7 Ensure employees responsible for financial statement preparation have \nadequate training and resources to ensure financial schedules are presented \naccurately \n\uf0b7 Implement an effective review process over the final financial statements \nCity \u2019s Response \nThe City of Chehalis would like to thank the Washington State Auditor\u2019s Office and \nthe Olympia Team for its hard work on the City of Chehalis audits and its \nrecommendations to improve our process. \nThe City would like to note that 1) the condition addressed by this audit finding \ndoes not impact any of the financial statement in the City\u2019s annual report except \nfor the 2016 Schedule of Expenditures of Federal Awards (SEFA); 2) 2016 SEFA \nreporting discrepancy was identified by the City during 2017 SEFA preparation, \nsubsequent to the completion of the 2016 audit, and reported to the Auditor\u2019s \nOffice. \nThe former Finance Manager retired in September 2017. A new Finance Director \nwas hired in December 2017 who is working to improve staff training and \nimplement financial repo rting and review procedures over the SEFA to ensure \nproper reporting of SEFA. \nAuditor\u2019s Remarks \nWe appreciate the City\u2019s commitment to resolve this finding. We will review the \ncorrective action taken during our next regular audit. We th ank the City for it s \ncooperation and assistance during the audit. \n \n \nWashington State Auditor\u2019s Office Page 8 \nApplicable Laws and Regulations \nGovernment Auditing Standards, December 2011 Revision, paragraph 4.23 \nestablishes reporting requirements related to significant deficiencies or material \nweaknesses in internal control, instances of fraud or abuse, and noncompliance \nwith provisions of law, regulations, contracts, or grant agreements. \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on \nAuditing Standards , s ection 265, Com municating Internal Controls R elated \nMatter Identified in an Audit, paragraph 7. \nRCW 43.09.200 Local government accounting \u2013 Uniform system of accounting, \nrequires the state auditor to prescribe the system of accounting and reporting \nfor all local governments. \nThe Budgeting, Accounting, and R eporting System (BARS) Manual, 3.1.3, \nInternal Control, r equires each loc al government to establish and maintain an \neffective system of internal controls that provides reasonable assurance that the \ngovernment will achieve its objectives. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200.502 Determining \nFederal awards expended, provides the basis for determining when federal \nawards expended. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nWashington State Auditor\u2019s 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", null, "WA", "City of Chehalis", "City/Town", "0487", "5311475", "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nDuring fiscal year 2016, the City of Chehalis spent $692,210 through the Airport \nImprovement Grant. \nThe Davis-Bacon Act (Act) requires that all laborers and mechanics employed by \ncontractors or subcontractors to work on construction contracts of more than \n$2,000 financed with federal funds must be p aid wages not less than those \nestablished for the locality of the project (prevailing wage rates) by the \nDepartment of Labor. The A ct includes a requirement for the contractor or \nsubcontractor to submit to the City weekly, for each week in which any \ncontract work is performed, a copy of its payroll and a statement of compliance \n(weekly certified payroll). \nDescription of Condition \nThe City did not have an adequate process in place to ensure contractors and \nsubcontractors working on federal grant -funded projects filed week ly certified \npayrolls. \n \n \nWashington State Auditor\u2019s Office Page 10 \nWe consider this internal control deficiency to be a material weakness, which led \nto material noncompliance. This issue was not reported as a finding in the prior \naudit. \nCause of Condition \nThe City did not dedicate the necessary resources to develop an adequate system of \nmonitoring and review to ensure weekly certified payrolls were submitted by all \ncontractors and subcontractors. The City did not know it could assess sanctions for \ncontractor noncompliance with this requirement. \nEffect of Condition and Questioned Costs \nThe City did not obtain all weekly certified payrolls for the Chehalis -Centralia \nAirport Apron Rehabilitation project. \nOur audit found that 28 of the 104 required weekly certified payroll reports were \nnot obtained d uring 2016. The missing weekly certified payroll reports were all \nfrom subcontractors. \nWithout adequate internal controls, the City cannot demonstrate workers were paid \nprevailing wages as required by the Act. The City could be liable for paying \nadditional wages if prevailing wages were not paid. \nRecommendation \nWe recommend the City implement internal controls to ensure compliance with the \nAct\u2019s requirements, including implementing an effective process to ensure all \nweekly certified payrolls are collected. This could include actions such as assessing \nsanctions on noncompliant contractors in accordance with Standard Specifications \nuntil certified payroll reports are received for all hours worked during each pay \nperiod. \nCity \u2019s Response \nThe City would like to thank the State Auditor\u2019s Office for their recommendations \nand assistance throughout the audit. \nThe City hired an engineering firm to oversee the program, including obtaining \nweekly certified payrolls from the contractors and subcontractors. It was verifi ed, \nafter the initial auditor\u2019s requests for records, that the required weekly certified \npayrolls from the contractors and subcontractors had been obtained by the \nengineering firm with some exceptions and were available at the engineering firm. \nHowever, the City staff was unaware of the federal requirements during the audit, \n \n \nWashington State Auditor\u2019s Office Page 11 \nand the City did not have controls in place to ensure and monitor that the \nengineering firm was complying with the grant requirements. \nThe City had staff turnover at the Airport during the grant period. The City\u2019s former \nAirport Director resigned in August 2017. The City\u2019s new Airport Operations \nCoordinator has taken over the grant project but was unaware of the federal grant \nrequirements of Davis-Bacon Act. \nFor future Airport grants, t he City will create a checklist and monitor the \nengineering firm to ensure all grant requirements are met. In addition, the Airport \nstaff will attend a federal grant training to gain knowledge of federal grant \nrequirements. \nAuditor\u2019s Remarks \nWe appreciate the City\u2019s commitment to resolve this finding. We will review the \ncorrective action taken during our next regular audit. We th ank the City for its \ncooperation and assistance during the audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 200.303 Internal controls, establishes internal \ncontrol requirements for management of Federal awards to non-Federal entities. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 200.516 Audit findings, establishes reporting \nrequirements for audit findings. \nTitle 29, U.S. Code of Federal Regulations (CFR), Section 5.5 \u2013 Contract \nprovisions and related matters, establishes required contract provisions with \nregard to prevailing wages. \nTitle 29, U.S. Code of Federal Regulations (CFR), Section 3.3 \u2013 Weekly statement \nwith respect to payment of wages establishes weekly certified payroll \nrequirements. \n \n \n \nWashington State Auditor\u2019s 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", null, "WA", "Northwest Educational Service District No 189", "Educational Service District", "2649", null, "not_municipal", "Washington State Auditor's Office", "Financial and Federal audit \u2014 Northwest Educational Service District No 189", "Financial and Federal", 2017, "2016-09-01", "2017-08-31", "2018-05-31", "internal_controls", "significant_deficiency", null, null, "The District did not report the liabilities related to its other postemployment benefits in accordance with governmental accounting standards", "Background \nDistrict board members, state and federal agencies, and the public rely on the \ninformation included in the financial statements and report to make decisions. \nDistrict management is responsible for designing and following in ternal controls \nthat provide reasonable assurance regarding the reliability of financial reporting. \nOur audit identified a significant deficiency in internal controls over financial \nreporting that hindered the District\u2019s ability to produce reliable finan cial \nstatements. \nDescription of Condition \nThe District did not report the liabilities related to other postemployment benefits \nin accordance with Governmental Accounting Standards Board (GASB) Statement \nNo. 45 \u2013 Accounting and Financial Reporting by Employ ers for Postemployment \nBenefits Other Than Pensions. \nCause of Condition \nWhen GASB Statement No. 45 became effective for governments, the District \nreported under a different basis of accounting. Subsequently, the District switched \nto reporting in accordance with generally accepted accounting principles (GAAP); \nand asserts that staff evaluated the GASB during conversion and determined it was \nnot applicable. \nThe District chose not to restate the financial statements to include other post -\nemployment benefits for fiscal year 2017. \nEffect of Condition \nDistrict did not obtain an actuarial study to determine the amount of liabilities \nrelated to other post-employment benefits. Consequently, the District did not report \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nthis liability or present the note disclosures and other information required by \ngenerally accepted accounting principles. \nRecommendation s \nWe recommend the District: \n\uf0b7 Perform necessary research and obtain needed actuarial studies to correctly \nreport other post-employment benefit liabilities on its financial statements. \n\uf0b7 Establish a more formalize process for technical review of the financial \nstatements to ensure accurate preparation and reporting of the District \nfinancial statements in accordance with generally accepted accounting \nprinciples and reporting requirements. \nDistrict \u2019s Response \nThe District appreciates the opportunity to respond to the finding of the State \nAuditor\u2019s office; however we respectfully disagree with the State Auditor\u2019s Office \n(SAO) position related to the application of Government Accounting Standards \nBoard Statement No. 45 (GASB 45) \u2013 Accounting and Financial Reporting by \nEmployers for Postemployment Benefits other than Pensions, to the Northwest \nEducational Service District No. 189 financial statements. As indicated in the State \nAuditor\u2019s Office finding, it is accurate that the District did not obtain an actuarial \nstudy to determine postemployment benefit (OPEB) liabilities, as the District \nbelieves it has properly accounted for OPEB liab ilities in accordance with \nGASB 45. \nThe District\u2019s review and analysis of the underlying accounting pronouncements \nresulted in recording activity for post -retirement benefits for employees offered \nthrough the Health Care Authority (HCA) as a cost -sharing plan under an \narrangement equivalent to a trust. The District\u2019s current relationship with the HCA \nconsists of monthly payments for health benefit premiums for eligible active \nemployees. The District does not make any direct payments to HCA for retiree \nhealthcare, and was unaware that funds paid for health benefit premiums could be \nused for such a purpose. \nAll nine Educational Service District\u2019s in the state of Washington changed from \nmodified accrual financial reporting to full accrual financial reporting in \naccordance with generally acce pted accountin g principles (GAAP) in the \n2011-2012 school year. During the year of implementation, the ESD accounting \nmanual went through a significant revision with consultation from OSPI and the \nState Auditor\u2019s Office, including a thorough technical review of all GAAP and \nGASB technical guidance. GA SB 45 was in effect at the time the revised manual \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nwas adopted. The State Auditor\u2019s Office conducts an audit of the District on an \nannual basis. The implementation of GASB 45 has never been brought up as an \nissue during these annual audits, and the District has received a clean audit opinion \nwith no findings every year since the initial year of financial reporting in \naccordance with GAAP. \nSeveral months after the conclusion of the District\u2019s 2016 -17 annual audit, \nincluding the exit conference attended by th e District Board representatives, at \nwhich no findings, management letter, or exit items were identified, the State \nAuditor\u2019s Office communicated to the District that they would receive a finding for \nnot reporting a GASB 45 liability. The State Auditor\u2019s O ffice did not accept the \ncollaborative research and position of the nine ESD\u2019s in the application of GASB \n45. Further communication indicated that even if the District procured services for \nan actuarial study for GASB 45 liabilities that the District would still receive a \nfinding, but would receive a clean audit opinion. Government Accounting \nStandards Board Statement No. 75 (GASB 75) \u2013 Accounting and Financial \nReporting for Postemployment Benefits other than Pensions replaces GASB 45 \nbeginning with the 201 7-2018 reporting year. The District is aware of this new \nGASB statement and has been actively researching and analyzing the applicability \nof GASB 75 since the beginning of this year. \nThe District evaluated the options and decided the fiscally responsible solution was \nto avoid spending in excess of $13,000 for an actuarial study, plus additional costs \nrelated to time for the State Auditor\u2019s Office to audit the study, in order to make \nadjustments to our 2016 -17 financial statements for an expiring GASB statem ent. \nThe District\u2019s position is to focus time and resources on the implementation of \nGASB statements that are applicable effective with the 2017 -18 year. \nManagement\u2019s belief is that the 2016 -17 financial statements, as reported, fairly \nreflect the financia l position of the District, and accurately provides information \nneeded to make financial decisions, consistent with the last six years. \nUnfortunately, this decision resulted in this audit finding as well as a qualified \nopinion on the financial statements. \nIn response to the State Auditor\u2019s Office recommendations, the District will \ncontinue the research of OPEB liabilities in accordance with GASB 75 and make \nnecessary changes to the financial statements and financial disclosures, as \nappropriate. In addition , the District will implement a more formalized technical \nreview of the financial statements in accordance with generally accepted \naccounting principles and reporting requirements, and document the review for the \nState Auditor\u2019s Office. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nThe District apprec iates the opportunity to respond to the State Auditor\u2019s Office \nfinding. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s communication throughout the audit process. We \nreassert that District management is responsible for designing and following \ninternal cont rols that provide reasonable assurance regarding the reliability of \nfinancial reporting, including compliance with Generally Accepted Accounting \nPrinciples (GAAP). \nWe look forward to working with the District again and reviewing the \nimplementation of GASB 75 Accounting and Financial Reporting by Employers \nfor Postemployment Benefits other than Pensions during the next audit. \nApplicable Laws and Regulations \nGovernment Accounting Standards Board Statement No. 45 \nGovernment Auditing Standards, December 2011 Revision, paragraph 4.23 \nThe American Institute of Certified Public Accountants Codification of Statements \non Auditing Standards, section 265 \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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 \u2014 City of Seattle", "Fraud", 2015, "2009-01-01", "2015-11-30", "2018-05-31", "misappropriation", "fraud_investigation", null, null, "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 \nOn April 24, 2017, the Director of Citywide Accounting and Payroll notified our Office \nregarding a potential loss of public funds as state law requires. \nThe City contracted with an investigative firm and provided the City a summary report of its \ninvestigation. We reviewed the investigative firm\u2019s investigation report and agree with its \nconclusions. The investigation determined that funds collected by the City between January 2009 \nand November 2015 for the employee giving and volunteer program were not deposited or \nturned over to the charities, resulting in questionable activity totaling $20,978. \nBackground and Investigation Results \nThe City, located in King County, operates on an annual budget of about $5.1 billion including \n$1.1 billion for the general fund. The City has implemented an employee giving and volunteer \nprogram, Seattle Shares, that facilitates employee philanthropy by offering ways for employees \nto give to charities. The most common method that employees use to contribute is through \npayroll deductions; employees also may give one-time gifts of cash or checks during department \nfundraising events. \nThe Seattle Shares Program Coordinator started with the City in March 2008. Her job duties \nincluded entering donor information into the Human Resources Information System\u2019s payroll \ndatabase (EV5), answering customer questions and presenting funds for deposit to the Treasury \nDepartment. Employees also had the option to submit their charitable donations directly t o the \nTreasury Department. A separate employee handled any donations made through a payroll \ndeduction. \nOn November 9, 2016, while the Program Coordinator was on extended paid leave, two city \nemployees discovered boxes at the Program Coordinator \u2019s workspace that contained over \n$15,000 in cash and checks along with donation forms indicating the funds were charitable \ncontributions. The boxes contained checks dating from 2009 to 2014. The Seattle Department of \nHuman Resources then initiated a personnel investigation with the help of an investigative firm. \nThe investigative firm\u2019s investigation included: \n\u2022 A review of the funds and documentation discovered in the workspace of the Program \nCoordinator \n\u2022 A review of the charity database and deposit history \n\u2022 A determinat ion of whether the loss was due to the Program Coordinator\u2019s failure to \nperform her job duties or whether the loss was due to inadequate policies and procedures. \n \n \nWashington State Auditor\u2019s Office Page 4 \nAdditionally, the investigation included interview s with several City employees, including the \nProgram Coordinator. During the investigative firm\u2019s interview with the Program Coordinator on \nDecember 6, 2016, she delivered an additional $4,500 of undeposited funds from her residence. \nOf the $4,500, all but $55 was in cash. According to the Program Coordinator, part of the reason \nfor not depositing the funds was the enormity of her workload in the 2015 fall Seattle Shares \nevent. \nThe results of the investigat ion concluded the total known employee donations that the Program \nCoordinator failed to deposit or turn over to the intended charities was $20,476. Of that amount, \n$15,976 in cash , coins, and checks were discovered in a cabinet at the Program Coordinator \nworkspace and $4,500 was produced during her interview. The investigative firm was able to \nidentify the intended charities for all but $1,321 of the $20,476. The investigative firm further \nidentified events for which donations were reportedly raised but not deposited, in th e amount of \n$502. \nControl Weaknesses \nInternal controls at the City were not adequate to safeguard funds held in trust by the City. We \nfound the following weaknesses allowed the misappropriation to occur: \n\u2022 Duties were not segregated: The Program Coordinator handled all aspects of the cash \nreceipting process. \n\u2022 The City did not perform an independent reconciliation of donations to the payroll \ndatabase or bank statements to ensure all money received was recorded and deposited. \nRecommendation s \nWe recommend the City strengthen internal controls over cash receipts to ensure adequate \noversight and monitoring to safeguard funds held in trust by the City and compliance with City \npolicies. \nWe also recommend the City seek recovery of the undeposited $502 and related investigation \ncosts of $1,735 from the former Seattle Shares Program Coordinator and/or the City\u2019s insurance \nbonding company, as appropriate. Any compromise or settlement of this claim by the City must \nbe approved in writing by the Attorney General and State Audito r as directed by state law \n(RCW 43.09.260). Assistant Attorney General Matthew Kernutt is the contact person for the \nAttorney General\u2019s Office and can be reached at (360) 586- 0740 or MattK1@atg.wa.gov. The \ncontact for the State Auditor\u2019s Office is Sadie Armijo , Assistant Director of Local Audit , who \ncan be reached at (360) 902-0362 or Sadie.Armijo@sao.wa.gov. \n \n \n \n \nWashington State Auditor\u2019s Office Page 5 \nCity\u2019s Response \nThe City of Seattle appreciates the State Auditor\u2019s Office recommendation on this matter. The \nCity understands that inadequate controls exist that allowed this type of misappropriation. The \nCity has taken steps to correct their procedures. This is awaiting a review by the Citywide \nAccounting Division\u2019s Compliance Manager. \n \nState Auditor\u2019s Office Remarks \nWe thank City officials and personnel for their assistance and cooperation during the \ninvestigation. \n \n \n \nWashington State Auditor\u2019s Office Page 6 \nABOUT THE STATE A UDITOR\u2019S OFFICE \nThe State Auditor's Office is established in the state's Constitution and is part of the executive \nbranch of state government. The State Auditor is elected by the citizens of Washington and \nserves four-year terms. \nWe work with our audit clients and citizens to achieve our vision of government that works for \ncitizens, by helping governments work better, cost less, deliver higher value, and earn greater \npublic trust. \nIn fulfilling our mission to hold state and local governments accountable for the use of publ ic \nresources, we also hold ourselves accountable by continually improving our audit quality and \noperational efficiency and developing highly engaged and committed employees. \nAs an elected agency, the State Auditor's Office has the independence necessary to objectively \nperform audits and investigations. Our audits are designed to comply with professional standards \nas well as to satisfy the requirements of federal, state, and local laws. \nOur audits look at financial information and compliance with state, fede ral and local laws on the \npart of all local governments, including schools, and all state agencies, including institutions of \nhigher education. In addition, we conduct performance audits of state agencies and local \ngovernments as well as fraud, state whistleblower and citizen hotline\n investigations. \nThe results of our work are widely distributed through a variety of reports, which are available \non our website and through our free, electronic subscription service. \nWe take our role as partners in accountability seriously, and provide training and technical \nassistance to governments, and have an extensive quality assurance program. \nContact information for the State Auditor\u2019s Office \nPublic Records requests PublicRecords@sao.wa.gov \nMain telephone (360) 902-0370 \nToll-free Citizen Hotline (866) 902-3900 \nWebsite 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", null, "WA", "City of Soap Lake", "City/Town", "0325", "5365345", "no_match", "Washington State Auditor's Office", "Accountability audit \u2014 City of Soap Lake", "Accountability", 2016, "2015-01-01", "2016-12-31", "2018-05-17", "internal_controls", null, null, null, "The City lacked adequate internal controls to bill utility accounts in accordance with City Code", "Background \nThe City operates water and sewer utilities, and collected $889,115 and $894,316 \nin water and sewer revenues in 2015 and 2016 , respectively. The utilities serve \nabout 1,350 customers, using rates established by Municipal City Code, \nChapter 13. The City periodically amends City Code through ordinances, which \nupdate annual rates in the Code\u2019s appendix. Ninety customers are classified as \neither commercial or commercial residen tial, and most have multiple units \nassociated with their accounts. \nDescription of Condition \nThe City\u2019s internal controls did not ensure customers were billed in accordance \nwith City Code. Further, City management did not adequately monitor utility \nbillings to determine City Code was followed. Specifically, the City charged \ncommercial and commercial-residential customers for one unit per sewer services \naccount. However, City Code stipulates that each additional unit under an account \nshould be charged the established base rate. \nIn addition, the City Code section pertaining to water rates and overage charges \ndoes not specify whether commercial customers should receive additional base \nwater consumption before incurring overage charges for multi-unit accounts. \nCause of Condition \nCity staff incorrectly classified commercial and commercial -residential sewer \nutility accounts as \u201csingle unit\u201d in the billing system and lacked understanding of \nthe City\u2019s rate setting code over the water utility. \nEffect of Condition \nBetween 2015 and 2016, the City under -billed about $200,000 for sewer utilities \nacross 15 accounts, which is a loss of revenue to the City. The majority of under-\nbilling is because of not charging for additional units by account. \nBecause City Code lacks clarity for multi-unit water utility rates, we are unable to \ndetermine the exact amount of over - or under-billing. However, we estimate the \nCity potentially under-billing about $30,000 for the same 15 accounts. \n \n \n \nWashington State Auditor\u2019s Office Page 7 \nRecommendation s \nWe recommend the City: \n\uf0b7 Train utility billing staff to properly classify commercial and commercial -\nresidential sewer utility accounts in the billing system \n\uf0b7 Clarify the City Municipal Code section for commercial customer water \nrates and overage charges for multi-unit accounts. \n\uf0b7 Develop and follow monitoring controls that ensure utility customers are \nbilled according to rates approved in City Code. \nCity \u2019s Response \nThe City concurs with what the audit discovered as we have also made that same \ndiscovery. The City is working to ensure compliance with the city ordinances and \nwill be reviewing them before the next approved budget. The City has also \ncontacted the city attorney for assistance to ensure the ordinances are consistently \nworded and that the council\u2019s wishes are properly applied. \nAuditor\u2019s Remarks \nWe appreciate the steps the City is taking to resolve this issue. We will review the \ncondition during our next audit. \nApplicable Laws and Regulations \nRCW 43.09.200 Local government accounting \u2013 Uniform system of accounting, \nrequires the State Auditor to prescribe the system of accounting and reporting for \nall local governments. \nThe Budgeting, Accounting and Reporting System (BARS) Manual, 3.1.3, Internal \nControl, requires each local government to establish and maintain an effective \nsystem of internal controls that provides reasonable assurance that the government \nwill achieve its objectives. \nORDINANCE NO. 2015 \u2013 1210; Amendment to Chapter 13.14 of the Soap Lake \nMunicipal Code titled \u201cSewer Service System\u201d states, in part: \nB.5. \u201cWater service unit\u201d shall mean the greater of the \nfollowing: each structure, or structures, residence, or residences, \nlot, or portion or separate unit of a condomin ium used as a \ndwelling unit by a family, as herein defined, shall be deemed one \nwater service unit. By way of example, a triplex shall be three \n \n \nWashington State Auditor\u2019s Office Page 8 \nwater service units; a condominium with 20 separate dwelling \nunits shall be 20 water service units. \nChapter 13.14.290 Sewer rates, states, in part: \nA. The Soap Lake City council shall, annually or more often if \nnecessary, by resolution, establish a schedule \u201cAppendix S\u201d of \ncharges and rates for sewer hookup and connection charges, \nsewer rates, allotments and ove rage charges. The Resolution \nshall also list all other sewer service fees and charges \nCHAPTER 13.14 APPENDIX \"S\"SEWER RATES\u201d, states in part: \nC. Monthly Service Fee: \nEach calendar month during which a sewer service \nconnection is active at any time shall result in the following \ncharges: \n1. Each residential sewer connection serving a single \nresidential dwelling unit: $52.14 per month. \nEach additional residential dwelling unit using the same \nsewer service: $52.14 per month. \n2. Each commercial sewer connection serving one \ncommercial service: $40.84 per month. \nEach additional commercial unit using the same sewer \nservice: $40.84 per month. \n3. Each commercial residential connection serving at \nleast one commercial residential dwelling unit shall be \ndeemed to be one residential commercial unit: $40.84 \nper month. \n4. Usage Charge for Each Commercial Sewer Service \nUnit and for Each \nCommercial Residential Dwelling Sewer Service \nUnit: \nIn addition to the monthly base rate charge for \neach commercial sewer service unit and for each \ncommercial dwelling unit, there shall be charged \n \n \nWashington State Auditor\u2019s Office Page 9 \nfor sewer usa ge the sum of $1.58 for each 1 00 \ncubic feet of water or portion thereof supplied to \nthe commercial water service unit account and to \na comm ercial dwelling water service unit \naccount commencing with the first 100 cubic feet \nof water. \n5. Minimum monthly base rate charge for each customer \nshall be determined by multiplying the monthly base rate \ncharge times the number of sewer service units and then \nadding the usage charge of $1.58 per 100 cubic feet of \nwater or portion thereof supplied to the commercial \nresidential or commercial water service account to the \nbase unit charges, commencing with the first 1 00 cubic \nfeet of water. \nCHAPTER 13.18 APPENDIX \"W\" WATER RATES states, in part: \nCommercial \n1. Basic Water Rate: $26.60 per month \n2. Overage Charge for water usage over 500 cubic feet: \n$1.54 per each additional 100 cubic feet or portion thereof. \nCommercial Residential \n1. Basic Water Rate: $26.60 per month for each commercial \nresidential connection serving a commercial residential \ndwelling unit; provided, however, that for each residential \ndwelling unit in excess of one served by a single meter the \nmonthly water charge shall be $19.32, to include the use of \n500 cubic feet of water per month per each unit. \n2. Overage Charge for water usage over 500 cubic feet: \n$1.54 per each additional 100 cubic feet or portion thereof. \n \n \n \n \nWashington State Auditor\u2019s 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", null, "WA", "City of Soap Lake", "City/Town", "0325", "5365345", "no_match", "Washington State Auditor's Office", "Accountability audit \u2014 City of Soap Lake", "Accountability", 2016, "2015-01-01", "2016-12-31", "2018-05-17", "misappropriation", null, null, null, "The City lacks proper oversight for the acquisition, sale and tracking of assets in the Police Department", "Background \nThe City of Soap Lake serves a population of about 1,550 Grant County citizens. \nThe City Police Department has four full -time employees, including one Police \nChief and two officers. \nIn June 2016, our audit r eported the Police Department did not use assets in an \nauthorized and approved manner and recommended the City strengthen controls \nover acquisition, tracking and sale of assets. However, our current audit identified \ncontinued concerns. \nDescription of Cond ition \nThe Police Department is responsible for most functions surrounding the \u201ccash \nonly\u201d sales of Police Department assets, as well as asset acquisition and tracking, \nwhich creates an increased risk for potential misuse and misappropriation. These \ncontrol weaknesses allowed the following to occur: \n1. City records indicate that in March 2015, a Reserve Officer paid $700 to the \nCity for a 1999 Chevrolet Blazer police vehicle. One day later, Department \nof Licensing (DOL) records show he signed a \u201cvehicle release of interest\u201d \nform transferring ownership to a close relative of the Police Chief at that \ntime. The Reserve Officer said the former Police Chief asked him to act as \nthe original buyer to avoid the appearance of a conflict of interest. \n2. In May 2015, the City acquired a cargo trailer valued at $8,000 through the \nLESO 1033 military surplus program, which allows law enforcement \nagencies to acquire military assets for current law enforcement purposes at \nno cost, except the travel and/or shipping expenses associated with \nacquisition. Less than a year later, the City traded the trailer to a City Police \nOfficer in exchange for two radar units with a total value of $4,000 \naccording to the sales record. However, the City was unable to demonstrate \nthat the City received the units as part of this particular trad e deal, or that \nthe trade was equitable. Additionally, the buyer listed in the City\u2019s records \ndid not agree to the buyer listed in the DOL sales record. City records \nshowed the buyer as a third party, while DOL records show the buyer was \nthe Police Officer. \n3. On October 5, 2016, the City Council approved the Police Department\u2019s \nrequest to surplus 125 items, most of which were firearms, based on a \n \n \nWashington State Auditor\u2019s Office Page 11 \nprovided list. One vendor bid on the purchase of the entire lot. A review of \nthis sale revealed the following: \n\uf0b7 The City could not demonstrate it advertised the sale as required by \nState law (RCW 63.32.020). \n\uf0b7 The list of firearms the City Council approved for surplus was not the \nsame as the list of firearms the vendor received for bid. Three firearms \nnot approved by the City Council were included on the list given to the \nvendor, and two firearms on the surplus list were not on the list given to \nthe vendor. \n\uf0b7 Police Department employees then personally purchased seven firearms \nfrom the vendor. A City police officer purchased three firearms the same \nday the vendor received them. The current Police Chief purchased four \nfirearms the following day. According to the vendor, it sold these \nfirearms at the same price it paid the City for them. \n4. In May 2014, the City established an asset inventory policy requiring staff \nto track all assets valued over $500 and assign a City asset number. While \nthe City was documenting Police Department asset tracking to meet City \npolicy requirements, the Police Department\u2019s asset tracking had the \nfollowing weaknesses: \n\uf0b7 Department staff did not consistently add assets to the City\u2019s tracking \nspreadsheet. We identified 13 assets purchased or acquired through \ntrade, totaling $7,595, directly from Police Department employees, \nbetween February 2016 and December 2016 that were not listed on the \nCity\u2019s asset tracking spreadsheet as of April 2017. Assets included \nfirearms and radar units. \n\uf0b7 The City did not independently verify the City\u2019s receipt of these 13 \nassets. We attempted to physically confirm that these assets were within \nthe City\u2019s possession. However, due to City sales records not including \nuniquely identifiable information at the t ime of acquisition, we were \nunable to confirm if these assets were within their possession. We found \nthe Department did have similar assets in their possession, but only \nbased on the item\u2019s general type. \nCause of Condition \nDespite past audit recommendat ions, the City Council and Mayor have not taken \naction to implement proper oversight or independent monitoring of the acquisition, \nsale and tracking of Police Department assets. \n \n \nWashington State Auditor\u2019s Office Page 12 \nEffect of Condition \nWithout adequate tracking and monitoring procedures, asset s are vulnerable to \nmisappropriation, misuse or loss, which City staff might not be detect promptly, if \nat all. In addition, lack of adequate documentation over Police Department asset \nsales and surplused items made it very difficult to determine whether the City: \n\uf0b7 Safeguarded assets properly. \n\uf0b7 Received the best price for City assets purchased from or sold to Police \nDepartment personnel, which is a possi ble violation of State law \n(RCW 42.23.070). \n\uf0b7 Suffered a loss. \nRecommendations \nWe strongly recommend the Ci ty Council and Mayor take actions to adequately \nsafeguard its Police Department assets by strengthening controls over asset \ntracking. This should include, but not be limited to: \n\uf0b7 Increasing segregation of duties and monitoring over transactions \ninvolving City employees \n\uf0b7 Completing independent, periodic inventories \n\uf0b7 Maintaining up-to-date asset listings \n\uf0b7 Documenting adequate tracking information for identification \nWe also recommend the Police Department present complete and accurate \ninformation to the City Council for surplus, including identifiable tracking \ninformation especially when the disposition of firearms are involved, to comply \nwith State law (RCW 9.41.09 and 63.32.010). \nWe further recommend the City review all purchase and trade sales documentation \nrelated to items involving Police Department employees so the City receives the \nbest price benefit and that a potential loss does not occur. \nCity\u2019s Response \nThank you for the invitation to provide a written response to the preliminary draft \naudit report of the City of Soap Lake for the audit period 2015 through 2016. \nYour preliminary draft includes an audit finding which describes the City's alleged \nlack of pro per oversight for the acquisition, sale, and tracking of assets in the \nPolice Department. The draft audit report concludes that without \"adequate \ntracking and monitoring procedures\", City assets may be vulnerable to loss, \n \n \nWashington State Auditor\u2019s Office Page 13 \nmisuse, or misappropriation. After identifying two 2015 sales of surplus property \nand a 2016 City Council approval to surplus 125 items, the audit acknowledged the \nCity's 2014 adopted asset inventory and tracking policy while identifying two \nweaknesses in the police department's internal asset tracking procedures related to \nnot consistently adding assets to the City's tracking spreadsheet, and not \nindependently verifying receipt of newly acquired assets. \nA new Police Chief was hired in January, 2017. The new administration promptly \nimplemented many reforms to create a more efficient and accountable police \ndepartment, and the new Chief continues to review and make improvements to the \ndepartment's internal administration, including asset tracking and inventory. All of \nthe recommendations cont ained in the draft audit report have been addressed by \nthe Mayor and/or the Chief and are substantially completed. A complete asset \ninventory with description, serial or VIN number, and asset tag number, was \nprovided to the City Council at its February 21, 2018 meeting. \nThe City appreciates the diligence of the Auditor's Office in providing monitoring \nand oversight to local government operations and welcomes its input and \nrecommendations on how to improve the City's overall performance objectives. \nAuditor\u2019s Remarks \nWe appreciate the City\u2019s commitment to resolve the issue noted and we will follow-\nup during the next scheduled audit. \nApplicable Laws and Regulations \nThe City\u2019s asset inventory policy requires all assets over $500 to be tracked, \nassigned as property of City of Soap Lake, and assigned an asset number. \nRCW 42.23.070 (1) prohibits municipal officers from using their position to secure \nspecial privileges or exemptions. \nRCW 43.09.200 Local government accounting \u2013 Uniform system of accounting, \nrequires the State Auditor to prescribe the system of accounting and reporting for \nall local governments, and requires the system to exhibit true accounts shoing the \nreceipt, use and disposition of all public property. \nChapter 3.3.5.10 of the Budgeting, Accounting, and Reporting System (BARS) \nmanual requires a physical inventory of capital assets. \n \n \n \n \n \nWashington State Auditor\u2019s 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", null, "WA", "Kitsap County Consolidated Housing Authority", "Housing Authority", "0346", null, "not_municipal", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 Rural Housing Service Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-th", "Description of Condition \nThe Housing Authority spent $1,204,013 in Rural Self -Help Technical Assistance \nfunds in fiscal year 2017. The objective of this program is to help low- and very-low-\nincome individuals and their families to build homes in rural areas by the self -help \nmethod. \nThe Housing Authority\u2019s program expenditures consist of both direct and indirect \ncosts. The program was reimbursed $514,282 (43 percent of program expenses) for \nindirect costs. Indirect costs charged are based on an indirect cost allocation plan, \nincluding several different allocations of administrative payroll, building, vehicle, \nequipment and training costs. \nThe Housing Authority did not have adequate internal controls to ensure indirect cost \nallocations met federal grant requirements for allowable costs. \nWe consider this deficiency in internal controls to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nWashington State Auditor's Office\nCause of Condition \nAlthough current staff were not involved with the creation of the Authority\u2019s indirect \ncost allocation plan, staff did not update the plan in accordance with Uniform \nGuidance. Additionally, Authority management did not adequately monitor and \nreview the plan to ensure it still fit the Housing Authority\u2019s changing circumstances. \nEffect of Condition and Questioned Costs \nThe Housing Authority\u2019s lack of internal controls resulted in noncompliance with \nfederal allowable cost requirements for indirect costs. We noted the following: \n\uf0b7 The Housing Authority\u2019s Agency -Wide Indirect Overhead cost pool, the \nlargest of the Authority\u2019s indirect cost allocation pools, did not allocate \nindirect costs equitably to all programs. We identified seven programs that did \nnot have indirect costs from this pool allocated to them. However, indirect \ncosts related to these programs were not removed from the pool, they were \nsimply allocated to other programs. \n\uf0b7 Executive Director salary and benefits were included in the amount allocated, \nwhich is unallowable. This resulted in known questioned costs of $34,714. \n\uf0b7 Indirect costs allocated from the Agency -Wide Indirect Overhead cost pool \nover allocated actual costs. \n\uf0b7 Employee leave was charged directly to the grant rather than equitably \nallocated to all areas worked. \n\uf0b7 An allocation was made that was not included in the indirect cost allocation \nplan which is therefore unallowable. This resulted in estimated questioned \ncosts of $33,497. \nBased on the above control deficiencies and noncomplianc e, we identified total \nknown questioned costs of $34,714 and total estimated questioned costs of $33,497. \nHowever, because of the complexity of the indirect cost allocation plan and the other \ndeficiencies noted above, additional questioned costs likely exi st that have not been \nidentified. \nRecommendation \nWe recommend the Housing Authority strengthen internal controls to ensure costs \ncharged to its federal program meet allowable cost requirements. Specifically, the \nHousing Authority should: \n\uf0b7 Provide training a nd other resources to its staff members to ensure they \nunderstand federal regulations \nWashington State Auditor's Office\n\uf0b7 Modify how employee payroll and benefits are charged to federal programs \nto meet federal requirements \n\uf0b7 Improve documentation, methodology and support for allocation of ind irect \ncosts and re-evaluate these allocations annually \nAdditionally, the Housing Authority should contact the United States Department of \nAgriculture Rural Development to determine a reasonable basis for allocating indirect \ncosts and identify and resolve any additional questioned costs. \nHousing Authority\u2019s Response \nHousing Kitsap recognizes the importance of correctly accounting for and \ndistributing indirect overhead cost pool allocations and appreciates the hard work \nperformed by the State Auditor\u2019s Office. Prior to the audit, our office had identified \nthe indirect overhead cost pool and allocation process as problematic. Corrective \naction was taken which includes the following: \n\uf0b7 Worked with Rural Community Assistance Corporation (RCAC) as directed \nby the United State Department of Agriculture \u2013 Rural Development (RD), to \nidentify and analyze solutions that meet USDA and 523 Technical Assistance \n(TA) grant requirements. \n\uf0b7 Determined that the agency meets the conditions of 200.414 (f) for a 10% De \nMinimis indirect cost rate by: \n\uf0b7 Never having received a negotiated indirect cost rate; \n\uf0b7 State or local governmental department agency that receives less than \n$35 million in direct federal funding; \n\uf0b7 A Cost Allocation Plan is not required by the Department of Housing \nand Urban Development (HUD); \n\uf0b7 Documented the process and elected to use the 10% De Minimis indirect cost \nrate as allowed by 200.415 (f) to pay for overhead costs that are not directly \ncharged to federal awards. Per 2 CFR Section 200.403 costs will be \nconsistently charged as either direct or indirect costs. \n\uf0b7 Eliminated the indirect overhead cost pool and cost allocation process. \nWe do not concur that the Executive Director\u2019s salary and benefits are unallowable. \nPer RCAC, the RD\u2019s designated technical and compliance advisor, the salary and \nbenefits of an Executive Directors are allowable and are used by most, if not all other \n523 TA grant recipients, referencing Uniform Guidance of Parts 400, 415, 416, 418 \nand 422 to Title 2 of the CFR. \nWashington State Auditor's Office\nAuditor\u2019s Remarks \nWe thank the Authority for its cooperation and assistance throughout the a udit, and \nthe steps it is taking to address these issues. Federal law states that salaries and \nexpenses of the chief executive of a local government are not allowed to be charged \nto the grant. The Executive Director is the chief executive of the Housing Authority. \nTherefore, under Uniform Guidance, his salary must not be charged. We confirmed \nthis with the awarding agency, USDA. \nThe Housing Authority cited parts 400, 415, 416, 418 and 422 of Title 2 in their \nresponse. While these CFR parts may be applica ble to Housing Kitsap\u2019s Rural Self -\nHelp Technical Assistance Grant, they do not apply to our audit work and resulting \nfinding, which is grounded in Title 2 part 200 section 444 . We reaffirm our audit \nfinding and will review the status of the Authority\u2019s corrective action during our next \naudit. \nApplicable Laws and Regulations \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 303, Internal Controls, establishes internal control \nrequirements for management of Federal awards to non-Federal entities. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Princi ples, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 516, Audit findings, establishes reporting requirements \nfor audit findings. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Princ iples, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 444, General Costs of Government, establishes \nunallowable general costs of a government. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 408, Limitation on Allowance of Costs , establishes \nguidance on conforming to any limitations or exclusions set forth in the terms and \nconditions of the Federal award, or other governing regulations as to types or amounts \nof cost items. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 40 5, Allowable Costs, establishes guidance for which \ncosts are allocable. \nWashington State Auditor's Office\nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 404 , Reasonable Costs , establishes guidance on \nreasonableness of costs. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 403, Factors Affecting Allowability of Costs , \nestablishes guidance on cost principles that affect the allowability of costs. \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of St atements on Auditing \nStandards, section 935, paragraph 11. \nRural Development Part 1944 - Housing, Subpart I \u2013 Self-Help Technical Assistance \nGrants, Section 1944.406 Prohibited Use of Grant Funds , provides guidance on \nprohibited uses of grant funds. \nRural Development Part 1944 \u2013Housing, Subpart I \u2013 Self Help Technical Assistance \nGrants, Section 1944.405 Authorized Use of Grant Funds , provides guidance on \nauthorized use of grant funds. \nRural Development Part 194 \u2013 Housing, Subpart I \u2013 Self-Help Technical Assistance \nGrants, Section 1944-410, Processing pre-applications, applications, and competing \ngrant dockets, provides guidance on information required for grant pre -application, \napplication and grant docket including an indirect or direct cost policy and proposed \nindirect cost rate developed in accordance with 7 CFR Part 3015 and Part 3016. \n \n \nWashington 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", null, "WA", "Omak School District No 19", "School District", "1976", null, "no_match", "Washington State Auditor's Office", "Accountability audit \u2014 Omak School District No 19", "Accountability", 2017, "2015-09-01", "2017-08-31", "2018-04-30", "internal_controls", null, null, null, "The District lacked sufficient internal controls over Associated Study Body activities to safeguard against potential loss and noncompliance with laws and regulations", "Background \nDistricts may use Associated Study Body (ASB) funds for optional and \nnoncurricular student activities that are cultural, athletic, recreational or social in \nnature, or in support of ASB activities and programs. \nOmak School District\u2019s ASB program collected revenue of $188,000 and $205,000 \nin fiscal years 2016 and 2017, respective ly, and spent $165,000 and $191,000 \nduring those same years. \nDescription of Condition \nOur examination identified the following conditions: \nFundraisers \nWe tested six ASB fundraisers with $18,390 in receipts and found the ASB lacked \nadequate documentation. The District did not: \n\u2022 Reconcile beginning or ending inventory for sales, or ending receipts to \nsource documents (tickets, merchandise, manual receipts , etc.) to detect or \nprevent loss of inventory or receipts \n\u2022 Use pre-numbered tickets for a dance event or issue manual receipts when \nselling merchandise or accepting donations, or for events \n\u2022 Obtain a fundraiser reconciliation and profit analysis in four fundraisers, \nreducing the District\u2019s ability to detect potential loss \n\u2022 Include projection of revenue, expenditures and profit on the Fundraiser \nIntent Form \n\u2022 Deposit receipted funds within 24 hours of three events, which does not \ncomply with state law (RCW 43.09.240) or School District Accounting \nManual rules for timely deposits \n\u2022 Obtain Superintendent\u2019s approval for fundraisers exceeding $5,000 as \nrequired by District policy. \n \n \nWashington State Auditor\u2019s Office Page 7 \nCash Receipting \nThe District lacked adequate independent monitoring of ASB receipts and \nindependent review of the ASB imprest/depository account to prevent or detect \nmisappropriation or loss. \nDisbursements \nThe ASB Council did not routinely approve payments as required by state \nregulations (WAC 392-138-125). The Council formally approved only $575 of the \n$356,000 spent during the audit period. \nMeeting Minutes \nThe District could not provide minutes for 20 meetings of the ASB Council during \nthe audit period. Due to the lack of minutes, the District could not provide evidence \nof Council approval for 46 of the 109 fundraisers conducted during the audit period. \n Negative Club Balances \nOf the 84 active ASB clubs, seven clubs in 2017 and two clubs in 2016 ended the \nyear with negative balances at the club level, which violates state regulations \n(WAC 392-138-125). \nCause of Condition \nDistrict management has not routinely monitored ASB activity or provided the \nnecessary support and policies for staff and ASB Council to enforce club \ncompletion or retention of the required documentation for fundraisers. In addition, \nstaff lacked technical knowledge of ASB requirements to approve all fundraisers, \napprove all payments during ASB meetings, retain those meeting minutes and \nrefrain from allowing clubs to spend more than their fund balance. \nEffect of Condition \nInadequate internal controls over ASB fundraising and disbursements, including \ninsufficient approval and monitoring by the ASB Student Council or management, \nincrease the risk that a loss or misappropriation of public funds might occur and not \nbe detected quickly, if at all. \n \n \n \n \nWashington State Auditor\u2019s Office Page 8 \nRecommen dations \nWe recommend the District improve internal controls over ASB activities to \ncomply with state laws, regulations and District policy to safeguard public \nresources. Specifically, the District should: \n\u2022 Reconcile fundraiser receipts to expected revenue d erived from inventory \nsold, tickets or other methods of estimating expected revenue \n\u2022 Perform independent monitoring and review of cash receipts and imprest \naccount reconciliations. \n\u2022 Prepare, retain and monitor all necessary records for ASB activities \n\u2022 Clearly document formal approval of activities and payments in \nASB Student Council minutes retained to follow archival requirements \n\u2022 Improve policies and procedures to provide guidance about required \ndocumentation and overall fundraiser expectations \n\u2022 Establish monitoring procedures for club fund balances so budgets can be \nset to maintain a positive fund balance \nDistrict\u2019s Response \nThe Omak School District concurs with the finding of deficiencies in ASB by the \nState Auditor\u2019s Office. Our student council, advisors and coaches will attend an \nASB training provided by the State Auditor\u2019s Office in the fall. We will strengthen \ninternal controls and implement better fundraising and reconciliation procedures. \nAuditor\u2019s Remarks \nWe appreciate the steps the District is taki ng to resolve this issue. We will review \nthe condition during our next audit. \nApplicable Laws and Regulations \n \nWAC 392-123-010. The Accounting Manual, sets forth the requirements for the \nuse of the accounting manual by the District. \nWAC 392-138-014 Accounting procedures and records, sets forth requirements for \naccounting methods and procedures to follow regulations and guidelines \nestablished in the Accounting Manual for Public Schools in the State of \nWashington. \n \nWashington State Auditor\u2019s Office Page 9 \nAccounting Manual f or Public School Districts in the State of Washington, \nChapter 3, Accounting Guidelines, Internal Control Structure, sets forth \nrequirements for establishing and maintaining an effective system of internal \ncontrols. \nRCW 43.09.240 Local government accounti ng - Public officers and employees - \nDuty to account and report - Removal from office - Deposit of collections, sets forth \nthe requirement for public official to deposit public funds within 24 hours of \nreceipt. \nAccounting Manual for Public School Districts in the State of Washington, \nChapter 9, Information Unique to Each Fund, Associated Student Bodies \nAssociation, sets forth guidelines for accounting of ASB funds. \nWAC 392-138-125 Associated study body public moneys \u2013 Disbursement approval \n\u2013 Total disbursements, sets forth requirements for ASB budgets and disbursement \napprovals. \nRCW 28A.325.030 Associated student body program fund \u2013 Fund-raising activities \n\u2013 Non associated student body program fund moneys, sets forth requirements for \nconducting ASB fund-raising activities. \nRCW 28A.400.030 Superintendent\u2019s duties, sets forth requirements for the school \ndistrict superintendent to keep accurate records and detailed accounts for receipts \nand expenditures of school money. \nDAN GS50-05A-13 Rev. 2 establishes the retention requirements for governing \nand executive board meeting minutes. \nOmak School District Policy 3530P requires S uperintendent approval for \nfund-raising activities in excess of $5,000. \n \n \nWashington State Auditor\u2019s Office Page 10 \nRELATED REPORTS \nFinancial \nOur opinion on the District\u2019s financial statements and compliance with federal grant program \nrequirements is provided in a separate report, which includes the District\u2019s financial statements. \nThat report is available on our website, http://portal.sao.wa.gov/ReportSearch. \n \nFederal grant programs \nWe evaluated internal controls and tested compliance with the federal program requirements, as \napplicable, for the District\u2019s 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", null, "WA", "City of Orting", "City/Town", "0594", "5352005", "no_match", "Washington State Auditor's Office", "Accountability audit \u2014 City of Orting", "Accountability", 2016, "2014-01-01", "2016-12-31", "2018-05-07", "procurement", "material_weakness", null, null, "The City\u2019s internal controls over procurement were inadequate to ensure compliance with bid law", "Background \nState law requires the City to use formal competitive bidding procedures for \npurchases of $15,000 or more. This includes advertising the purchases\u2019 \nspecifications in a general circulation periodical, opening the bids at a public forum \nwith a fixed time and place, and awarding the contract to the lowest responsible \nbidder. In addition, the governing body must approve the winning bid. \nDescription of Condition \nIn 2016, the City purchased three trucks, one backhoe and a trailer totaling \n$269,637. In 2017, the City purchased a generator and a backhoe totaling $183,398. \nEach of these purchases exceeded $15,000. Our audit identified the following \nconcerns: \n\u2022 For most of the purchases, the City used a vendor roster to identify potential \nvendors and then completed an online search to identify the lowest price. \nThe City should have advertised to solicit sealed bids to be opened at a \npublic forum. \n\u2022 A backhoe was purchased through a procurement services vendor that did \nnot advertise to solicit bids, thereby not allowing the opportunity for all \npotential vendors to submit bids as state law requires. \nCause of Condition \nCity management were not aware of the competitive bid requirements for purchases \nof $15,000 or more. \nEffect of Condition \nThe City cannot demonstrate it received the lowest price for these purchases or that \nall vendors were given equal opportunity to bid. \n \nWashington State Auditor\u2019s Office Page 6 \nRecommendation \nWe recommend the City implement adequate internal controls over procurement to \nensure compliance with state laws and ensure an open, competitive environment \nfor all purchases. \nCity \u2019s Response \nThe City erred in its procurement process as outlined by the Auditor in the \nAccountability Audit. The city staff have since received training on State \nprocurement requirements, passed a Purchasing Policy in January 2018, and put \nin place a more controlled procurement process that is in conformance with State \nLaw.\n \nAuditor\u2019s Remarks \nWe appreciate the timely actions taken by City staff during the audit to get \nunderstanding of procurement requirements. \nCity staff were very helpful during the audit process. We will review these changes \nduring our next audit. \nApplicable Laws and Regulatio ns \nRCW 35.23.352 \nPublic works \u2013 Contracts \u2013 Bids \u2013 Small works roster \u2013 Purchasing \nrequirements, recycled or reused materials or products.\n \nWashington State Auditor\u2019s Office Page 7 \nRELATED REPORTS \nFinancial \nOur opinion on the City\u2019s financial statements is provided in a separate report, which includes the \nCity\u2019s financial statements. That report is available on our website, \nhttp://portal.sao.wa.gov/ReportSearch. \nThat report includes a finding for a material weakness in internal controls over financial reporting. \n \n \nWashington State Auditor\u2019s Office Page 8 \nINFORMATION ABOUT THE CITY \nThe City of Orting serves 7,600 citizens in Pierce County. It is administered by a mayor -council \nform of government. The City has seven elected Council Members and an independently elected \nMayor. The City Council appoints an Administrator to oversee the City\u2019s daily operations as well \nas its 33 employees. \nThe City provides services including water, sewer, stormwater, police protection, Municipal Court, \nparks and recreation, building permitting and land use, planning and economic development. For \nfiscal years 2014, 2015, and 2016, the City expended approximately $21.7 million, $10.9 million, \nand $10.1 million, respectively. \nContact information related to this report \nAddress: City of Orting \n110 E. Train \nP.O. Box 489 \nOrting, WA 98360 \nContact: Scott Larson, Treasurer \nTelephone: (360) 893-2219, ext. 111 \nWebsite: www.cityoforting.org \nInformation current as of report publish date. \n \nAudit history \nYou can find current and past audit reports for the City of Orting at \nhttp://portal.sao.wa.gov/ReportSearch. \n \n \n \nWashington State Auditor\u2019s Office Page 9 \nABOUT THE STATE A UDITOR\u2019S OFFICE \nThe State Auditor's Office is established in the state's Constitution and is part of the executive \nbranch of state government. The State Auditor is elected by the citizens of Washington and serves \nfour-year terms. \nWe work with our audit clients and citizens to achieve our vision of government that works for \ncitizens, by helping governments work better, cost less, deliver higher value, and earn greater \npublic trust. \nIn fulfilling our mission to hold state and local governments accountable for the use of public \nresources, we also hold ourselves accountable by conti nually improving our audit quality and \noperational efficiency and developing highly engaged and committed employees. \nAs an elected agency, the State Auditor's Office has the independence necessary to objectively \nperform audits and investigations. Our audits are designed to comply with professional standards \nas well as to satisfy the requirements of federal, state, and local laws. \nOur audits look at financial information and compliance with state, federal and local laws on the \npart of all local governments, including schools, and all state agencies, including institutions of \nhigher education. In addition, we conduct performance audits of state agencies and local \ngovernments as well as fraud, state whistleblower and citizen hotline\n investigations. \nThe results of our work are widely distributed through a variety of reports, which are available on \nour website and through our free, electronic subscription service. \nWe take our role as partners in accountability seriously, and provide training and technical \nassistance to governments, and have an extensive quality assurance program. \nContact information for the State Auditor\u2019s Office \nPublic Records requests PublicRecords@sao.wa.gov \nMain telephone (360) 902-0370 \nToll-free Citizen Hotline (866) 902-3900 \nWebsite 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", null, "WA", "Kettle Falls School District No 212", "School District", "2064", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 School Breakfast Program 10.555 \u2013 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 \nThe District participates in the School Breakfast and National School Lunch \nprograms, and received $262,967 from them during fiscal year 2017. Th ese \nprograms provide funding for free and reduced -price meals for low -income \nstudents. Families must meet income requirements to be eligible for these \nprograms. \nEach year, districts must select a sample of applications and verify that family \nincome information reported to the districts is correct. The Office of Superintendent \nof Public Instruction (OSPI) instruct s school districts on how to verify program \neligibility. Districts must review selected applicants\u2019 income documentation to \nconfirm students are receiving correct benefits of free or reduced-price meals. If the \nfamily\u2019s income does not meet requirements, the student is not eligible and must \npay full price for meals. OSPI instructions include guidance to districts for \ndetermining the number of applications th at must be verified based on their non-\n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nresponse rate from previous years \u2019 verifications. The verification process must be \ncompleted by November 15 each year. \nThe District was required to use a 3 percent focused sampling method, because the \nDistrict\u2019s nonresponse rate exceeded 20 percent during the 2015-2016 school year\u2019s \nverification process. This sampling method require d the District to select three \n\u201cerror prone\u201d applications for verification. Error-prone applications are defined as \nany application where the reported household income falls within $100 a month of \nthe upper income limit for free or reduced-priced meal eligibility. \nDescription of Condition \nWhile the District did have a process in place to perform the verification process, \ninternal controls were not effective to ensure the District performed the verification \nsteps accurately. \nOur audit found that although the District selected the appropriate number of \napplications to test, one of the three applications the District selected for \nverification wa s not error-prone. As such, it should not have been selected for \nverification. \nWe consider this control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District did not review the ap plications it selected to ensure each one met the \ncriteria for classification as error-prone. \nEffect of Condition and Questioned Costs \nA lack of proper internal controls over the verification process increases the risk \nthat error -prone applications are not properly selected for verification. It also \nincreases the risk that free or reduced -price meals could be provided to children \nwho are not eligible to receive them. The District could receive funding for \nhouseholds that do not qualify for free and reduced-price meals. \nRecommendation \nWe recommend that the District improve its internal controls to ensure it performs \nits application selection process correctly. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDistrict \u2019s Response \nThe Kettle Falls School District Nutrition Services Manager will continue to \nsample applications and verify that family income information reported to the \ndistrict is correct. The Administrative Secretary for the Kettle Falls School district \nwill continue to receive copies of the verific ations. These are reviewed to make \nsure the process was completed and completed prior to November 15 th deadline. \nControls will be updated in the following manner: \nThe Administrative Secretary will be involved in the process prior to the deadline \nof November 15th to get all back up documentation to prove that the applications \nchosen for verification are \u201cerror prone\u201d applications. She will work with the \nNutrition Services Manager to assure that we have back up documents on the \nnumber of applications to be chosen, that \u201cerror prone\u201d applications are chosen, \nand that all verifications are completed before the November 15th deadline. \nAll documentation will also be reviewed by the Business Manager. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to r esolving the issues noted and will \nfollow up during the next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 516, Audit findings, establishes re porting \nrequirements for audit findings. \nTitle 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes \nthe requirements for auditees to maintain internal controls over federal programs \nand comply with federal program requirements. \nTitle 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals \nand Free Milk in Schools , Section 6a, Verification requirements, establishes \nrequirements for verifying eligibility of children for free and reduced price meal \nbenefits. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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 \u2014 Whitman County", "Accountability", 2016, "2016-01-01", "2016-12-31", "2018-05-17", "internal_controls", null, null, null, "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 \nWhitman County is responsible for the disbursement of over $3.5 mi llion of \nexpenditure activity for 32 special purpose taxing districts including fire, cemetery, \nparks and recreation, water/sewer, hospital and library districts . Twenty-five of \nthese districts pay their own expenditures from a revolving fund bank account and \nseek replenishment for the account from the County Auditor\u2019s Office. \nDescription of Condition \nAs part of the 2012, 2014 and 2015 audits, we communicated conce rns that the \nCounty\u2019s current practices did not adequately safeguard public funds because it did \nnot ensure there was adequate support for reimbursement of special purpose taxing \ndistrict expenditures and that warrants paid for districts had been approved by each \ndistrict\u2019s governing body. During the current audit, we identified no improvement \nin the County\u2019s monitoring of special purpose taxing district expenditures. The \nfollowing internal control weaknesses still exist: \n\uf0b7 The County did not have interlocal agreements established with districts as \nrequired by state law (RCW 39.34 ) defining responsibilities and \nexpectations for district s that use the revolving fund process. These \nagreements should communicate the minimum requirements for \nestablishing and operating a revolving fund as prescribed by the Budgeting, \nAccounting and Reporting System (BARS) Manual (3.8.8.20). \n\uf0b7 The County did not require evidence that the district\u2019s governing body has \nproperly approved a revolving fund, including the maximum authoriz ed \nbalance. Without this documentation, the County cannot ensure that \nrequests for revolving fund replenishment are within the amount authorized \nby the district\u2019s governing body. \n\uf0b7 The County did not require supporting documentation , such as a listing of \napproved vouchers paid , for the replenishment of the revolving fund . \nSupporting documentation is necessary to determine requested \nreplenishments are based on actual claims paid by the district, as prescribed \nby the BARS Manual (3.8.5.80). \n \n \nWashington State Auditor\u2019s Office Page 7 \n\uf0b7 The County did not properly monitor district revolving fund \nreimbursements to ensure they were timely (replenished at least monthly), \nsupported and processed in accordance with BARS Manual guidance. \nCause of Condition \nThe County did not dedicate sufficient resources to address the prior audit concerns \nand did not implement procedures to ensure interlocal agreements were established \nand that reimbursements to special purpose taxing districts were supported and \napproved. \nEffect of Condition \nDuring the current audit, we tested 22 transactions totaling $606,150 for fire, \ncemetery, hospital, parks and recreation and library districts. We found the County \ndid not: \n\uf0b7 Require or maintain supporting documentation for the reimburse ments to \ndistricts for all transactions tested \n\uf0b7 Obtain or maintain evidence that the district\u2019s governing body properly \napproved disbursements for five transactions totaling $249,291 \nBecause the County did not have interlocal agreements established or contr ols in \nplace to properly monitor the revolving fund reimbursement process, it could not \nensure public funds were adequately safeguarded. \nRecommendation s \nWe recommend the County: \n\uf0b7 Establish interlocal agreements with the special purpose taxing districts \nusing the revolving fund process that define the responsibilities and \nexpectations for the County and districts \n\uf0b7 Develop the necessary procedures to ensure public funds are adequately \nsafeguarded and to determine warrants paid for special purpose taxing \ndistricts have been approved by each district\u2019s governing body \n\uf0b7 Monitor district revolving fund reimbursements to ensure they are \nreplenished at least monthly. \n\uf0b7 Establish policies and procedures to obtain s upporting documentation to \nensure requested replenishments are based on actual claims paid by the \ndistrict. \n \n \n \nWashington State Auditor\u2019s Office Page 8 \nCounty\u2019s Response \nWe agree with all of the points made in this finding and will work with the Special \nPurpose Taxing Districts to come into compliance. \nAuditor\u2019s Remarks \nWe thank the County for its cooperation and assistance during the audit and \nacknowledge its commitment to improving the condition described. We will review \nthe status of this issue during our next audit. \nApplicable Laws and Regulations \nChapter 36.22 RCW, County Auditor. \nRCW 36.22.090. Warrants of political subdivisions. \nChapter 39.34 RCW, Interlocal Cooperation Act. \nThe Budgeting, Accounting and Reporting System (BARS) Manual, 3.8.8, Imprest, \nPetty Cash and Other Revolving Funds. \nThe Budgeting, Accounting and Reporting System (BARS) Manual, 3.8.5, Voucher \nCertification and Approval. \n \n \n \nWashington State Auditor\u2019s Office Page 9 \n \n \nWHITMAN COUNTY WASHINGTON \n OFFICE OF THE AUDITOR \n 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", null, "WA", "Elma School District No 68", "School District", "1887", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe federal Title I program\u2019s objective is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with high concentrations of children from low-income families. During fiscal \nyear 2017, the District spent $359,739 in Title I program funds. \nFederal regulations require recipients of federal money to establish and follow \ninternal controls to ensure compliance with program requirements. These controls \ninclude knowledge of grant requirements and monitoring of program controls. \nTo meet the requirements for highly qualified status, all paraprofessionals charged \nto Title I must have a high school diploma or its recognized equivalent. \nThe District is responsible for ensuring all Title I paraprofessionals meet this \nrequirement. The District did not verify and maintain documentation demonstrating \na high school diploma or its recognized equivalent was received. The District relied \non the attestation of the applicant s without physically verifying appropriate \ndocumentation. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nWe consider this deficiency in internal controls to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District was not aware of the requirement to obtain evidence of a high school \ndiploma or its equivalent to support the federal requirement. \nEffect of Condition and Questioned Costs \nWithout adequate controls in place, the District cannot ensure costs charged to the \ngrant are allowable. \nUpon request, the District was able to provide documentation as evidence of a high \nschool diploma for the paraprofessionals selected. Therefore, we are not \nquestioning the paraprofessionals\u2019 salaries charged to the grant. \nRecommendation \nWe recommend the District establish and follow internal controls to ensure every \nparaprofessional provides evidence they received a high school diploma or its \nequivalent. We also recommend the District keep a copy of this evidence in the \nemployee\u2019s file. \nDistrict \u2019s Respons e \nThe District concurs with the finding and will add a step in the hiring process to \ninclude all needed documents for compliance with Title I requirements. \nAuditor\u2019s Remarks \nWe thank the District for its cooperation and assistance dur ing the audit and look \nforward to reviewing the District\u2019s corrective action during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 303 \u2013 Internal controls, describes the requirements \nfor auditees to maintain internal controls over federal programs and comply with \nfederal program requirements. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nTitle 2 CFR Part 200, Uniform Guidance, section 516 \u2013 Audit findings, establishes \nreporting requirements for audit findings. \nTitle 34CFR Part 200, Title I \u2013 Improving the Academic Achievement of the \nDisadvantaged, Subpart A \u2013 Improving Basic Programs Operated by Local \nEducation Agencies, section 58 \u2013 Qualifications of paraprofessionals, requires all \nLocal Education Agencies (LEA) to ensure that each paraprofessional hired by the \nLEA who works in a program supported by the funds of the grant must have earned \na secondary school diploma or its recognized equivalent. \n \n \n \n \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Evergreen School District No 114", "School District", "1841", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nDuring fiscal year 2017, the District spent $5,401,583 in Title I grant funds. This \nprogram\u2019s objective is to improve the teaching and learning of children who are at \nrisk of not meeting challenging academic standards and who reside in areas with \nhigh concentrations of children from low-income families. The District used these \nfunds to improve teaching and learning at 14 elementary schools. \nFederal requirements prohibit grant recipients from contracti ng with or making \nsubawards to parties who have been suspended or debarred from doing business \nwith the federal government. The District must verify that all vendors receiving \n$25,000 or more in federal awards have not been suspended or debarred. To do this, \nthe District could obtain a written certification from the vendor or insert a clause \ninto the contract where the vendor states it is not suspended or debarred. \nAlternatively, the District may review the federal Excluded Parties List (EPLS) \nissued by the U.S. General Services Administration. The District must meet one of \nthese requirements before entering into a contract with the vendor. \nThe District did not have procedures in place when it purchased from three vendors \nmore than $25,000 each for educati onal materials. The District did not obtain a \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nwritten certification or review EPLS to verify the vendors were not suspended or \ndebarred before awarding the contracts. \nWe consider this internal control deficiency to be a material weakness. This issue \nwas not reported as a finding in the prior audit. \nCause of Condition \nThe District was aware of suspension and debarment requirements but was not \naware they applied to the purchase of goods and materials. \nEffect of Condition and Questioned Costs \nThe District paid three vendors a total of $439,499 in fiscal year 2017 and did not \nverify that the vendors were not suspended or debarred. Payments on contracts to \nsuspended or debarred vendors would be unallowable and subject to recovery by \nthe grantor. We were able to verify the vendors had not been suspended or debarred; \ntherefore, we are not questioning costs for these payments. \nRecommendation \nWe recommend the District follow established internal controls to ensure vendors \nare not suspended or debarred from participating in federal programs before making \nany payments. \nDistrict \u2019s Response \nThe District agrees with the State Auditor\u2019s audit finding, as explained in the report \nsections on Description and Cause of Condition, and Effect of Conditions and \nQuestioned Costs. The District verified the three vendors that the District \npurchased educational materials were not Suspended or Debarred, after the State \nAuditors notified the District that education materials are within the Suspended \nand Debarment federal regulations. \nThe District agrees with the State Auditor\u2019s recommendations, and will make the \nnecessary changes to strengthen controls, so that audit conditions of this nature \nwill not happen again. We thank the State Auditors for making it clear that the \nDistrict was aware of Suspension and Debarment federal regulations, except for \nthe purchase of goods and materials. \nThe District has very effective procedures for compliance with Suspension and \nDebarment federal regulations for processing contracts for professional s ervices \nand public works projects. The District has made initial changes to its procedures \nfor purchasing goods and materials using federal funds. The District will complete \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nits procedures after confirmation of the regulations is received from the State \nAuditor\u2019s office. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolve this finding and thank the \nDistrict for its cooperation and assistance during the audit. \nAppli cable Laws and Regulat ions \nTitle 2, Code of Federal Regulations \u2013 Grants and Agreements, Section \u00a7 200.303 \nInternal controls states in part: \nThe non-Federal entity must: \n(a) Establish and maintain effective internal control over the \nFederal award that provides reasonable assurance that the \nnon-Federal entity is managing the Federal award in \ncompliance with Federal statutes, regulations, and the terms \nand conditions of the Federal award. These internal \ncontrols should be in compliance with guidance in \n\u2018\u2018Standards for Internal Control in the Federal \nGovernment\u2019\u2019 issued by the Comptroller General of the \nUnited States or the \u2018\u2018Internal Control Integra ted \nFramework\u2019\u2019, issued by the Committee of Sponsoring \nOrganizations of the Treadway Commission (COSO). \n(b) Comply with Federal statutes, regulations, and the terms \nand conditions of the Federal awards. \nTitle 2, Code of Federal Regulations \u2013 Grants and Agreements, Section \u00a7 200.516 \nAudit findings, states in part: \n(a) Audit findings reported . The auditor must report the \nfollowing 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", null, "WA", "Clover Park School District No 400", "School District", "2002", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nThe federal Title I program\u2019s objective is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with high concentrations of children from low -income families. During \nfiscal year 2017, the District spent $5,284,367 in Title I program funds. \nFederal regulations require recipients of federal money to establish and follow \ninternal controls to ensure compliance with program requirements. These controls \ninclude knowledge of grant requirements and monitoring of program controls. \nTo meet the requirements for highly qualified status, all paraprofessionals charged \nto Title I must have a high school diploma or its recognized equivalent. The District \nis responsible for ensuring all paraprofessionals it charges to the program meet this \nrequirement. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDescription of Condition \nThe District did not verify and maintain document ation demonstrating that \nparaprofessionals it charged to the program had received a high school diploma or \nits recognized equivalent. \nWe consider this deficiency in internal controls to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District relied on employees certifying they acquired the high school diploma \nor equivalent on their employment application to determine whether the federal \nrequirement was met. \nEffect of Condition and Questioned Costs \nWithout adequate controls in place, the District cannot ensure costs charged to the \ngrant are allowable. \nThe District charged salary and benefit costs of 70 paraprofessionals to the program \nin 2017. Our audit found t he District was unable to initially demonstrate that four \nof the 14 paraprofessionals we tested had received either a high school diploma or \nits equivalent. \nWe are not questioning costs. The District subsequently verified that each \nparaprofessional met the requirement, showing that two had evidence of a \nhigh school diploma and two attended a college requiring a high school diploma or \nits equivalent as a condition of enrollment. \nRecommendation \nWe recommend the District establish and follow internal controls to ensure it has \ndocumentation demonstrating it verified every paraprofessional it hires has a \nhigh school diploma or its equivalent. \nDistrict \u2019s Response \nRequest for reconsideration of finding: \nOn February 8, 2018, Clover Park School District\u2019s assigned auditor provided \nHuman Resources a list of seventeen (17) employees for the purpose of auditing \nhighly qualified paraprofessional document requirements. Of the seventeen (17) \npersonnel files audited, fifteen (15) employees met the highly qualified \nparaprofessional document requirement s. Of those fifteen (15) personnel files, \nthirteen (13) employees had documented diploma/high school transcripts and two \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \n(2) employees had met the document requirements through their BA transcripts. \nThe two (2) remaining employee personnel files were from employees that had \nresigned June 14, 2017 to move out -of-state. One (1) of those paraprofessionals \nearned her AA degree from the University of Phoenix, which required a high school \ndiploma or GED equivalent in order to enter their program (see attached \nadmissions requirements). The other paraprofessional attended Chattahoochee \nValley Community College which required a high school diploma or GED \nequivalent in order to enter their program (see attached admissions requirements). \nWe accepted these transcript s as verification of high school diploma/GED \nequivalent. It was our understanding these transcripts would be an allowable form \nof verification of high school diploma/GED equivalent. The auditor suggested that \nwe pursue obtaining a copy of the high school diploma/GED equivalent via form \nnumber SPI 1581 HEA Veri (3/04). These forms were mailed to the respective \ncollege and university; however, they were returned to us by the college and \nuniversity requiring an original signature from the former employee(s) . We made \nseveral attempts to contact the two (2) former employees via telephone and to date \nhave not received a return call from either of the former employees. We request \nyour reconsideration of the finding by accepting the transcripts along with the \nadmissions requirements we have on file for the two (2) paraprofessionals in \nquestion. \nAs an outcome of this audit, we have added some other measures to include: \nadditional communication regarding requirements for employment, and \nverification of requirements through the existing internal audit process. \nSpecifically, in addition to the highly qualified requirements listed on our job \nannouncements, we have posted the requirements on the employment web page and \nhave added a communication about these specific requirements prior to new \nemployee orientation. Also, in addition to our existing hiring checklist, we are \ncurrently re -auditing all district paraprofessional employment files to ensure \ncompliance with highly qualified requirements. \nOn April 19, 2018 the auditor notified us that three (3) employee files were removed \nfrom the audit due to being partially funded by Title. The action reduced the audit \nlist from seventeen (17) to fourteen (14). \nAuditor\u2019s Remarks \nWe thank the District for its cooperati on and assistance during the audit and the \nsteps it is taking to address this issue. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nWe reiterate that we are not questioning costs. However, auditing standards require \nus to issue a finding regarding lack of internal controls, regardless of whether any \ncosts are questioned. \nWe have verified with the pass through agency, OSPI, certification from the \nemployee of a high school diploma is not sufficient evidence to meet the highly \nqualified paraprofessional requirement. It is the District\u2019s responsibil ity to ensure \nit is hiring only qualified paraprofessionals. When the district is unable to obtain a \ncopy of the diploma, OSPI will evaluate on a case -by-case basis and may grant a \nwaiver. The District did not obtain a waiver for the employees in question. \nWe reaffirm our audit finding and will review the status of the District\u2019s corrective \naction during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guida nce), section 516 \u2013 Audit findings, establishes r eporting \nrequirements for audit findings. \nTitle 2 CFR Part 200, Uniform Guidance, section 303 \u2013 Internal controls, describes \nthe requirements for auditees to maintain internal controls o ver federal programs \nand comply with federal program requirements. \nTitle 34, CFR Part 200, Title I \u2013 Improving the Academic Achievement of the \nDisadvantaged, Subpart A \u2013 Improving Basic Programs Operated by Local \nEducation Agencies, section 58 \u2013 Qualifications of paraprofessionals, requires all \nLocal Education Agencies (LEA) to ensure that each paraprofessional hired by the \nLEA who works in a program supported by the funds of the grant must have earned \na secondary school diploma or its recognized equivalent. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Eastmont School District No 206", "School District", "1857", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nDuring fiscal year 2017, the District spent $1,270,741 in Title I grant funds. This \nprogram\u2019s objective is to improve the teaching and learning of children who are at \nrisk of not meeting challenging academic standards and who reside in areas with \nhigh concentrations of children from low-income families. The District used these \nfunds to improve teaching and learning at seven school buildings. \nFederal requirements prohibi t grant recipients from contracting with or making \nsubawards to parties who have been suspended or debarred from doing business \nwith the federal government. To comply with this requirement, the District must \nverify that vendors receiving $25,000 or more in federal awards have not been \nsuspended or debarred. This verification may be accomplished by obtaining a \nwritten certification from the vendor or inserting a clause in the contract in which \nthe vendor states it is not suspended or debarred. Alternatively, the District may \nreview the federal Excluded Parties List (EPLS) issued by the U.S. General \nServices Administration. The District must meet one of these requirements before \nentering into a contract with the vendor. \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\nDescription of Condition \nThe District has a process in place, but it was not effective to ensure compliance. \nThe District did not obtain a written certification or review EPLS to verify two \nvendors it paid $61,849 were not suspended or debarred before awarding the \ncontracts. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District does not typically use Title I funds to pay vendors for goods or services \nover $25,000. Therefore, the District\u2019s standard process was not followed. \nEffect of Condition and Questioned Costs \nAny payments of program funds to a vendor that has been suspended or debarred \nwould be unallowable and subject to recovery by the grantor. \nWe were able to v erify neither of the vendors had been suspended or debarred. \nTherefore, we are not questioning the related costs. \nRecommendation \nWe recommend the District follow established internal controls to ensure vendors \nare not suspended or debarred from participati ng in federal programs before \nentering into contracts. \nDistrict\u2019s Response \nThe District concurs with the auditor\u2019s finding. The District is aware of the \nrequirement that certification be obtained from vendors in order to ensure that the \nvendor is not suspended or debarred from doing business with the Federal \ngovernment. In the instances noted by the auditor, staff were not aw are that the \nrequirement related to cumulative totals. \nThe District has implemented changes to procedures that require review of the \nFederal Excluded Parties List (EPLS) for any purchase that is using state or federal \nsupplemental program dollars. The documentation of this review will be attached \nto the internal document used to request spending of these program dollars. We \nare confident that with this improvement in our process that the required \ndocumentation will be obtained prior to a payment of any amount being issued to \na vendor. \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolve this finding and thank the \nDistrict for its cooperation and assistance during the audit. We will review the \ncorrective action taken during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 200.303 Internal controls, establishes internal control \nrequirements for management of Federal awards to non-Federal entities. \nTitle 2 CFR Part 200, Uniform Guidance, section 200.516 Audit findings, \nestablishes reporting requirements for audit findings, and requirements for \nmanagement of Federal awards to non-Federal entities. \nTitle 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide \nDebarment and Suspension (Nonprocurement) establishes non -procurement \ndebarment and suspension regulations implementing Executive Orders 12549 and \n12689. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nSCHEDULE OF FEDERAL AWARD FINDINGS AND \nQUESTIONED CO STS \nEastmont School District No. 206 \nDouglas County \nSeptember 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", null, "WA", "Eastmont School District No 206", "School District", "1857", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nDuring fiscal year 2017, the District spent $1,270,741 in Title I grant funds. This \nprogram\u2019s objective is to improve the teaching and learning of children who are at \nrisk of not meeting challenging academic standards and who reside in areas with \nhigh concentrations of children from low-income families. The District used these \nfunds to improve teaching and learning at seven school buildings. \nFederal regulations require recipients of federal funds to establish and follow \ninternal controls to comply with program requirements. These controls include \nknowledge of grant requirements and monitoring of program controls. \nDistricts must report graduation rate data for all public high schools to the Offic e \nof Superintendent of Public Instruction (OSPI) annually. This is done by submitting \na Graduation Rate Report that indicates the student\u2019s enrollment status as \ngraduated, transferred out, dropped out, migrated to another country or deceased. \nThe District must retain adequate support for how it classifies a student\u2019s \nenrollment status. To confirm a student transferred out, the District must have \nofficial written documentation that the student enrolled in another school or in an \neducational program that culminates in the award of a regular high school diploma. \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDescription of Condition \nOur audit examined the District\u2019s documentation for students it classified as \n\u201ctransferred out.\u201d \nThe District\u2019s controls were not adequate to ensure it gathered the required \ndocuments to support its classification of students that left the District to be \nhomeschooled. Specifically, the District did not obtain annual I ntent to Provide \nHome-Based Education forms (homeschool forms) for each of these students. \nWithout these forms, the District cannot report the students as a confirmed transfer. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District was aware that homeschool forms were required yearly, but it did not \nhave procedures in place and did not monitor to ensure staff gathered and retained \nforms to support reporting those students as confirmed transfers. \nEffect of Condition and Questioned Costs \nThe District did not o btain official written documentation to support the transfer \nstatus for five of the 16 students tested. It incorrectly reported these students as \ntransferred out when it reported graduation rate data to OSPI. \nAlthough we are not questioning any costs, the District is at risk of misrepresenting \nthe graduation rates. \nRecommendation \nWe recommend the District establish controls to obtain and keep current \nhomeschool forms for all students reported as transfers out. \nDistrict\u2019s Response \nThe District concurs that the \u201cIntent to Provide Home -Based Education\u201d forms \n(homeschool) forms were not obtained or retained as required. The Eastmont High \nSchool counseling office have revised their procedures to include a requirement to \ndouble check that this form exists in the student\u2019s file when a student transfers or \nwithdraws for this purpose. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolve this finding and thank the \nDistrict for its cooperation and assistance during the audit . We will review the \ncorrective action taken during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Costs Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), Section 303 Internal controls, establishes internal control \nrequirements for management of Federal awards to non -Federal entities. \nTitle 2 CFRPart 200, (Uniform Guidance, Section 516 \u2013 Audit findings, establishes \nreporting requirements for audit findings. \nPart 200, Subpart A \u2013 Improving Basic Programs Operated by Local Educational \nAgencies, Section 200. 19 \u2013 Other academic indicators \u2013 establishes the \nrequirement for Districts to have official written documentation to confirm a \nstudent transferred out. \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Bridgeport School District No 75", "School District", "1855", null, "no_match", "Washington State Auditor's Office", "Accountability audit \u2014 Bridgeport School District No 75", "Accountability", 2017, "2015-09-01", "2017-08-31", "2018-05-24", "internal_controls", null, null, null, "The District\u2019s internal controls over Associated Study Body activities were insufficient to safeguard against potential loss and noncompliance with laws and regulations", "Background \nDistricts may use Associated Student Body (ASB) funds for optional and \nnoncurricular student activities that are cultural, athletic, recreational or social in \nnature, or that otherwise support ASB activities and programs. \nBridgeport School District\u2019s (District) ASB program collected revenue of $153,930 \nand $140,638 during fiscal years 2016 and 2017, respectively. \nDescription of Condition \nOur examination identified the following conditions: \nFundraisers and events: \nFor each event or fundraiser, the ASB should retain source documentation of \nactivity such as tickets sold, change in inventory, or manual receipts issued to \nreconcile against actual monies collected. Without this reconciliation, the ASB \nmight not be able to detect potential losses of inventory of funds in a timely manner. \nWe tested 16 ASB fundraisers and nine gated events, and found the District lacked \nadequate independent monitoring of ASB receipts. Further, documentation was \neither inadequate or missing. Specifically, the ASB did not: \n\uf0b7 Complete the final reconciliations of cas h receipts to activity, such as \nreceipts, tickets sold, or change in inventory, on a timely basis for six \nfundraisers. Concession fundraiser activities occurring in September and \nOctober were not reconciled until June. \n\uf0b7 Print sales reports from the point-of-sales system after each of the nine gated \nevents tested. As a result, activity from multiple events or for the entire \nmonth was included on the same report, limiting the District\u2019s ability to \nreconcile actual funds deposited to expected revenues. \n\uf0b7 Retain documentation of p rom tickets sold before the event to either the \nDistrict\u2019s own students or other participating districts. As such, the ASB \ncould not compare actual funds deposited to expected revenues. \n\uf0b7 Approve five fundraisers before the event began. Additionally, ASB \nCouncil minutes did not reflect approval for four events. \n \n \n \nWashington State Auditor\u2019s Office Page 7 \n\uf0b7 Perform a final profit analysis for five fundraisers. The ASB reconciled the \nprom event based on budgeted expenses rather than actual, resulting in an \nunexplained variance of $1,353. \nMinutes \nASB meeting minutes did not clearly define ASB activity for approval, and did not \nconsistently identify sufficient details and amounts for expenditures and \nfundraisers. Additionally, five of 30 documented meeting minutes did not specify \nwhether a quorum was present. \nSimilar deficiencies were communicated to the District in a finding in our prior \naudit. \nCause of Condition \nThe District has not allocated the necessary resources and oversight to establish \nadequate internal controls over ASB activities or to ensure ASB activities are \nhandled in accordance with state laws and regulations, and are adequately \nsupported and monitored. \nEffect of Condition \nInadequate internal controls over ASB fundraising and disbursements, including \ninsufficient approval and monitoring by the ASB Student Council, increase the risk \nthat a loss or misappropriation of public funds might occur and not b e detected \nquickly, if at all. \nRecommendation \nWe recommend the District improve internal controls over ASB activities to \ncomply with state laws and regulation and provide adequate safeguarding of public \nresources. Specifically, we recommend the District: \n\uf0b7 Provide adequate training to staff and students involved in ASB fundraisers \n\uf0b7 Reconcile fundraiser receipts to expected revenues as derived from \ninventory sold, tickets or another method of estimating expected revenue \n\uf0b7 Prepare, retain and monitor all necessary records for ASB activities \n\uf0b7 Retain all ASB Student Council Minutes and clearly document formal \napproval of activities, purchases, and prior minutes \n \n \n \n \nWashington State Auditor\u2019s Office Page 8 \nDistrict\u2019s Response \nBridgeport School District concurs with the cause and effect of the ASB program \ncondition. Key district employees will attend ASB training to ensure all staff are \nknowledgeable of the necessary internal control s. The District will provide \nin-service to all middle and high school staff on ASB requirements and procedures. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolve the issues noted and we will \nfollow-up during the next scheduled audit. \nApplicable Laws and Regulations \nWAC 392-123-010. The Accounting Manual, sets forth the requirements for the \nuse of the accounting manual by the District. \nWAC 392-138-014 Accounting procedures and records, sets forth requirements for \naccounting methods and procedures to follow regulations and guidelines \nestablished in the Accounting Manual for Public Schools in the State of \nWashington. \nAccounting Manual for Public School Districts in the State of Washington, \nChapter 3, Accounting Guidelines, Internal Control Structure, sets forth \nrequirements for establishing and maintaining an effective system of internal \ncontrols. \nAccounting Manual for Public School Districts in the State of Washington, \nChapter 9, Information Unique to Each Fund, Associated Student Bodies \nAssociation, sets forth guidelines for accounting of ASB funds. \nWAC 392 -138-125. Associated study body public moneys \u2013 Disbursement \napproval \u2013 Total disbursements, sets forth requirements for ASB budgets and \ndisbursement approvals. \nRCW 28A.325.030 Associated student body program fund \u2013 Fund-raising activities \n\u2013 Non associated student body program fund moneys, sets forth requirements for \nconducting ASB fund-raising activities. \nRCW 28A.400.030 Superintendent\u2019s duties, sets forth requirements for the school \ndistrict superintendent to keep accurate records and detailed accounts for receipts \nand expenditures of school money. \n \n \n \nWashington State Auditor\u2019s 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 \u2014 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\u2019s Office. The Franklin County Sheriff\u2019s Office investigated. We reviewed the Sheriff\u2019s Office investigation, performed an", "Investigation Summary \nOn October 25, 2017, the County Clerk notified our Office, as r equired by state law, regarding a \npotential loss of public funds in the Superior Court Clerk\u2019s Office. \nThe Franklin County Sheriff\u2019s Office investigated. We reviewed the Sheriff\u2019s Office investigation, \nperformed an expanded review and determined a cash receipting m isappropriation totaling \n$11,062 occurred at the Superior Court Clerk\u2019s Office between J anuary 2017 and July 2017. Our \ninvestigation also revealed control weaknesses in the County Treasurer\u2019s Office. \nWe will refer this report to the Franklin County Prosecuting Attorney\u2019s Office. \nBackground and Inv estigation Results \nFranklin County operates on an average annual budget of about $ 40 million, including about \n$900,000 in revenues from the Superior Court Clerk\u2019s Office. The Clerk\u2019s Office has 14 full-time \npositions and one part-time position. \nThe loss was detected on Octobe r 13, 2017, while the Legal Fina ncial Officer was checking \ncustomer voicemails on the Financial Manager\u2019s office phone because she was out on unexpected \nleave. A customer left a message, questioning why the County had not yet cashed a check mailed \nin July 2017. While researching for an explanation, the Legal Financial Officer identified an entire \nday\u2019s deposit from July 18, 2017 \u2013 $6,614 in cash and $2,246 in checks \u2013 never made it to the \nbank. \nWe reviewed the investigation performed by the Franklin County Sheriff\u2019s Office. Deputies \ncompared daily cash receipting hard copy files to bank statemen ts from January 2016 through \nDecember 2017. Deputies also reviewed the County Treasurer\u2019s Office deposit logs to identify the \nperson who took the deposit to the Treasurer\u2019s Office. The Sheriff\u2019s Office confirmed the July 18, \n2017 deposit was missing and identified an additional deposit missing dated January 18, 2017. The \nJanuary deposit consisted of $1,387 in cash and $815 in checks. \nOur investigation focused on cash receipting procedures includi ng electronic accounting system \nadjustments and reconciliations. We also: \n\uf0b7 Compared all system cash receipts to the bank statement deposit s for January 2016 to \nDecember 2017. We did not identify any additional missing deposits. We found that funds \nwere typically deposited within one to three business days after receipt. However, we found \nthat in July 2017, not including the missing deposit, funds rec eipted on the 19 th and 20 th \nwere delayed in deposit by seven days and funds receipted on th e 21st were delayed five \ndays. Some depositing delays up to six days continued in Septem ber through \nDecember 2017. \n \n\u00a0\nWashington State Auditor\u2019s Office Page 4 \n\uf0b7 Learned the Financial Manager and Legal Financial Officer at the end of the day typically \nhandled together the reconciliation of all cash and checks receipted for that day. There was \nno backup if one of the two were absent. Once funds were reconc iled from the system to \nthe tills, the bank deposit slip was prepared and the funds wer e placed into a sealed bank \nbag and placed in the vault overnight. The following morning, t ypically, the Financial \nManager and on occasion the Legal Financial Officer would take the bank bag to the \nCounty Treasurer\u2019s Office for deposit. This responsibility was not assigned to one person. \n\uf0b7 Observed by reviewing the receipting system that the July 18, 2 017, missing deposit was \nstill pending to be posted in the system as reconciled to the b ank. It was the Financial \nManager\u2019s responsibility to identify and reconcile pending deposits in the system. \n\uf0b7 Discovered that the Clerk\u2019s Office recieved a safe from the Tre asurer\u2019s Office sometime \nin 2015 and did not change the combination once installed. In a ddition, the Financial \nManager told us in an interview that in April 2017 she had given the safe\u2019s combination to \none of the Clerk\u2019s Office cashiers. \nThe Clerk\u2019s Office changed accounting and case management syste ms in late 2015; therefore we \nalso performed limited testing in the old receipting system to determine if misappropriation risks \nexisted in the old system or were limited to the new system. We did not identify any issues in the \nold system. Further, to determine if any additional misappropri ation occurred, we also examined \nsystem adjustments and forfeite d-property disbursements, and pe rformed a limited review of \ndisbursements. We did not find additional misappropriation; however, we did identify additional \nweaknesses. Specifically, the cu rrent accounting system cannot produce reports that are detailed \nenough to allow adequate monitoring. \nIn February 2018, we interviewed the Financial Manager, Legal F inancial Officer and County \nClerk. Based on our interviews, we noted the following: \n\uf0b7 The County Clerk explained that the Finance Manager would provi de him with a system \nscreen shot of the monthly bank reconciliation. He did not reta in the documentation but \nwould review it to ensure it appeared to balance. \n\uf0b7 The Financial Manager explained that she was behind on reconcil ing the system to the \nbank. With the assistance of the Legal Finance Officer, she was reconciling the system in \nsix-month blocks. Due to the rec onciliation process being time consuming, they would at \ntimes refer to their internal daily deposit forms in addition t o or instead of the bank \nstatements. She explained that if the deposit bag was not in th e safe in the morning she \nwould likely have assumed it was b ecause the Legal Finance Officer had already taken it \ndown to the Treasurer\u2019s Office. There was no formal process or method of accountability \nfor taking the deposit to the Treasurer\u2019s Office. \n \n\u00a0\nWashington State Auditor\u2019s Office Page 5 \n\uf0b7 The Financial Manager also said the Clerk\u2019s Office experienced significant staff turnover \nfrom January 2016 through December 2017. During this time, 20 e mployees were hired \nand 16 separated from the office. \n\uf0b7 The Legal Finance Officer explained that she only read off the bank statement to the \nFinance Manager who then cleared bank deposit amounts. She woul d not know if there \nwere any deposits in the system that were unreconciled to research the reason for them not \nbeing deposited. The Legal Fin ance Office was not aware of any review or monitoring \nbeing performed on the reconciliations or various types of adjustments. \nControl Weaknesses \nInternal controls at the County were not adequate to safeguard public resources or detect \nmisappropriation in a timely manner. We found the following wea knesses allowed the \nmisappropriation to occur: \n\uf0b7 The Clerk\u2019s Office lacked segregation of duties over cash handl ing procedures. The two \nprimary people responsible for reconciling the cash receipts to the deposits also prepared \nthe deposit and transmitted funds to the Treasurer\u2019s Office. In addition, there was not \nadequate oversight from someone independent of cash handling, r econciling and \ndepositing. \n\uf0b7 The bank reconciliation to the system receipting records was not completed in a reasonable \namount of time nor was there monitoring of the bank reconciliat ions to ensure they were \naccurate or performed timely. \n\uf0b7 An unknown number of people had access to the vault, where cash and checks receipted \nfor the day were placed in a sealed bank bag overnight. In addi tion, multiple people \ntransferred the bank bag to the Treasurer\u2019s Office the following day for deposit. \nRecommendations \nWe recommend the County Clerk\u2019s office strengthen internal cont rols over cash receipting \nprocedures. For example, someone independent of the receipting and depositing process should \nreconcile the system receipts to the bank statement to ensure a dequate oversight and monitoring \nto safeguard public resources a nd compliance with County polici es. Further, this should include \nreviewing the receipting system for any unreconciled deposits or pending system adjustments. \nWe also recommend the County seek recovery of the misappropriat ed $11,062 and related \ninvestigation costs of $12,650 from its insurance bonding company, as appropriate. Any \ncompromise or settlement of this claim by the County must be approved in writing by the Attorney \nGeneral and State Auditor as directed by state law (RCW 43.09.260). Assistant Attorney General \nMatt Kernutt is the contact person for the Attorney General\u2019s O ffice and can be reached at (360) \n586-0740 or mattk1@atg.wa.gov. The contact for the State Auditor\u2019s Office is Sadie Armijo, \n \n\u00a0\nWashington State Auditor\u2019s Office Page 6 \nAssistant Director of Local Audit, who can be reached at (360) 902-0362 or \nSadie.Armijo@sao.wa.gov. \nCounty Clerk\u2019s Response \nFranklin County would like to thank the State Aud itor\u2019s Office for the opportunity to respond to \nthe Investigation Report regarding the alleged misappropriation of funds. \nWhen the Superior Court Clerk\u2019s office discover ed a potential loss of public funds, the County \nRisk Manager, State Auditor\u2019s office, and law en forcement were properly notified. In addition, \nthe employee was placed on administrative leave while the matter was investigated. \nAs a result of the investigation, the County strengthened internal controls to prevent the violation \nof long standing policies and procedures in the following areas: \n\uf0b7 Cash receipting duties are delegated exclusively to cashiers. \n\uf0b7 The preparation of the deposit is the duel responsibility of the Financial Manager and the \nLegal Financial Officer. In the event of ei ther of their absence, the Chief Deputy, the \nClerk and/or an authorized LFO Deputy Clerk w ill backup. All deposits are clearly \ndocumented and verified delivered to the Count y Treasurer\u2019s vault the same working day \non the Treasurer\u2019s Office Garda Log, together with the date, time and signature of \ndeliverer on Clerk\u2019s Office Daily Reconciliation Report. \n\uf0b7 Increased controls to ensure accurate and timely reconciliation, including a monthly \nreview of any unreconciled deposits or pending system adjustments. \n\uf0b7 Legal Financial Office\u2019s safe combina tion is changed every 90 days and when an \nauthorized employee entrusted with the combi nation leaves the County\u2019s employment. \nUnder no circumstances is the safe combination to be shared without the express consent \nof the Clerk. \nThe County concurs with the State Auditor\u2019s recommendations and will actively seek recovery of \nthe misappropriated funds and investigation costs from its insurance bonding company. \nFranklin County appreciates the thorough investigation completed by the State Auditor\u2019s Office. \nState Auditor\u2019s Office Remarks \nWe thank County officials and personnel for their assistance an d cooperation during the \ninvestigation. We will review the corrective action taken during our next regular audit. \n \n\u00a0\nWashington State Auditor\u2019s 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", null, "WA", "Selah School District No 119", "School District", "2109", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe objective of the Title I program is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with high concentrations of low-income families. During fiscal year 2017, the \nDistrict spent $876,847 in Title I program funds. \nFederal regulations require recipients of federal money to establish and follow \ninternal controls to ensure compliance with program requirements. These controls \ninclude knowledge of grant requirements and monitoring of program controls. \nDistricts must report graduation rate data for all of their public high schools to the \nOffice of Superintendent of Public Instruction (OSPI) annually. This is done by \nsubmitting a Graduation Rate Report that indicates the student\u2019s enrollment status: \ngraduated, transferred out, dropped out, migrated to another country or deceased. \nThe Distri ct must retain adequate support for changes to a student\u2019s status. To \nconfirm a student transferred out, the District must have official written \ndocumentation that the student enrolled in another s chool or in an educational \nprogram that culminates in the award of a regular high school diploma. \n \n \nWashington State Auditor's Office\n \n \nDescription of Condition \nWe found the District did not adequately design or follow controls to ensure \ncompliance with the Title I graduation reporting requirements. Specifically, the \nDistrict did not h ave official w ritten documentation to support the students it \nreported as having transferred out of its high school and its alternative school. \nWe consider this control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nHigh school staff did not follow District protocol to ensure documentation was \nacquired for students transferrin g out of the District. Also, staff members at the \nalternative school were not aware of the requirement to obtain and retain \ndocumentation for students transferring from a treatment facility to another district. \nEffect of Condition and Questioned Costs \nThe District could not demonstrate it accurately classified the status of 16 out of 20 \nstudents it reported as confirmed transfers. Two of these students were reported as \ntransferred from the high school, and 14 were reported as transferred from the \nalternative school through a treatment facility. \nAlthough there are no questioned costs, the District cannot ensure it reported \naccurate graduation rates to OSPI in compliance with the program requirements. \nRecommendation s \nWe recommend the District provide training and guidance to staff members and \nverify they are obtaining and retaining written verification that students transferring \nout of the District enrolled in another s chool or in an educational prog ram that \nculminates in the award of a regular high school diploma. \nDistrict \u2019s Response \nThe District agrees that established protocols to obtain and retain adequate \nsupport for changes to a student's status to confirm a student transferred out were \nnot followed by appropriate personnel at the high school level. The District is in \nagreement that it must have a copy of a records request or confirmation from the \nstudent reporting system on file to support a student transferring and enrolling in \nanother school district or in an educational program that culminates in the award \nof a regular high school diploma. Further, the District agrees that it did not have \nsufficient internal controls in place to provide follow up to ensure such \n \n \nWashington State Auditor's Office\n \n \ndocumentation was on hand for students transferri ng to other districts. The \nDistrict also acknowledges that protocols had not been established for obtaining \ndocumentation to prove re -enrollment to the applicable originating district (or \ntransfer to another district) for students leaving Sundown M Ranch, a treatment \nfacility who is affiliated with the school district. The assumption has always been \nthey were returning to their home district, but it was not confirmed and documented \nfor these students. \nThe District has since met with the appropriate personnel at the high school and \nalternative school to review existing protocols for documentation of students \ntransferring to other districts (i.e. records request from the new district or \ndocumentation from the system confirming the enrollment with anoth er district), \nthe process for follow up, as well as the newly developed process at the alternative \nschool so that the District can ensure compliance with graduation data reporting \nrequirements. A plan to meet with other appropriate personnel at other buil dings \nabout established protocols will be accomplished prior to the last day of school. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolve this finding and thank the \nDistrict for its cooperation and assistance during the audit. We will re view the \ncorrective action taken during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations, (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 303 \u2013 Internal controls, describes the requirements for \nauditees to maintain internal controls over federal programs and comply with \nfederal program requirements. \nTitle 2 CFR Part 200, Uniform Guidance, section 516 \u2013 Audit findings, establishes \nreporting requirements for audit findings. \nTitle 34 CFR Part 200, Subpart A \u2013 Improving Basic Programs Operated by Local \nEducational Agencies, section 200.19 \u2013 Other academic indicators \u2013 establishes the \nrequirement for Districts to have official written documentation to confirm a \nstudent transferred out. \n \n \nWashington 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", null, "WA", "City of Rock Island", "City/Town", "0280", "5359180", "no_match", "Washington State Auditor's Office", "Fraud investigation \u2014 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 \nOn November 28, 2016, the Mayor of the City of Rock Island notified our Office regarding a \npotential loss of public funds as state law requires. \nWe investigated and determined a cash receipting misappropriation totaling $37,056 occurred at \nthe City between November 2015 and October 2016. The misappropriated funds were all cash \npayments that were receipted, but not deposited. \nIn addition to the cash receipting misappropriation, we also identified questionabl e transactions \ntotaling $1,071 and a $225 deleted receipt that was unsupported. \nThe City did not file a report wi th the Douglas County Sheriff\u2019s Office . Our Office notified the \nDouglas County Sheriff\u2019s Office, and we will send this report to the Douglas County Prosecuting \nAttorney\u2019s Office. \nBackground and Investigation Results \nThe City, located in Douglas County, receives annual revenues of about $1 million. The City\u2019s \nrevenue comes from multiple sources but primarily utility sales. Other sources of revenue \ninclude lease payments, fees from building permits and licenses. The City has three full -time and \ntwo part-time employees. The Clerk/Treasurer is responsib le for overseeing the daily financial \noperations of the City with the support of a Deputy Clerk. The Clerk/Treasurer reconciles the \nelectronic accounting system to the bank records, while the Deputy Clerk handles most of the \ncash receipting duties and recording those payments in the accounting system. \nOur investigation focused on cash receipting. City staff issue receipts for payments made at City \nHall. Staff members then record and reconcile receipts in the City\u2019s accounting system. Our \ninvestigation focused on the following activities: \nCash receipts from January 2015 to November 2016 \nWe compared receipts recorded in the electronic accounting system to amounts deposited at the \nbank and identified a total of $37,056 in cash transactions that were entered i nto the accounting \nsystem but not deposited into the bank account. The investigation revealed the following: \n\uf0b7 State law requires governments to deposit funds into a bank within 24 hours of receiving \nthem unless the City formalizes a policy or resolution wai ving the 24-hour requirement, \nand allowing deposits no less than weekly. Rock Island had no such waiver. During the \nperiod we investigated, the number of days between receipt date and deposit date ranged \nfrom one to 119 days, with an average of 34 days. \n \n \nWashington State Auditor's Office\n \n \n\uf0b7 In October 2015, the City changed its deposit process, requiring checks and cash to be \ndeposited separately. The reason for this change, according to the former \nClerk/Treasurer, was a mutual decision between the Clerk/Treasurer and Deputy Clerk \nbased on in formation received at their accounting software vendor\u2019s conference in the \nfall of 201 5. The Deputy Clerk said she was directed by the former Clerk/Treasurer to \nchange the process. \n\uf0b7 After the deposit process changed, 25 cash deposits noted in the accounting software \nsystem were not actually deposited into the bank. The system allows users to select what \nreceipt batches were included in deposits made to the bank. The remaining receipt \nbatches remain in the system as \u201cunattached .\u201d The reconciliation reports sent to the \nMayor to review and approve did not include the 25 \u201cunattached\u201d cash deposits . \nHowever, these \u201cunattached\u201d deposits appeared on a screen for the Clerk/Treasurer to \nsee before printing the report. \n\uf0b7 The Clerk/Treasurer said that when she prepared the reconciliation reports, she was only \nchecking that deposited amounts on the bank statement were listed in the accounting \nsystem. However, using that approach and not including any unattached receipt batches \ndefeats the purpose of the Mayor\u2019s review of the reconciliation report. \n\uf0b7 On March 8, 2016, 10 deposits totaling about $8,350 in cash were deposited at the bank, \nwhich included cash receipts from November 2015, December 2015, January 2016 and \nFebruary 2016. This oc curred just prior to t he Mayor t aking over the duty of making \ndeposits in mid to late March 2016. \n\uf0b7 After the Mayor took over depositing duties , we did not identify any missing deposits in \nthe period from April 2016 to September 2016. Further, the number of days between \nreceipt date and deposit date averaged 14 days. \n\uf0b7 Before March 2016, it is unclear whose responsibility it was to take deposits to the bank. \nThe former Clerk/Treasurer said multiple City employees made deposits. The Deputy \nClerk said typically the Clerk/Treasurer made deposits. \n\uf0b7 Further, our investigation revealed the City\u2019s safe was not secured during business \nhours, allowing anyone within the building to access its contents. In addition, it was not \nclear who knew the safe combination and who ha d physical access to City Hall because \nthe City\u2019s inventory of keys might not have been accurate. \nManual Receipts from January 2015 to November 2016 \nAlthough the City regularly uses its electronic accounting system to record receipts, it also \noccasionally uses a manual receipt book. City staff later enter manual receipts into the system. \nWe attempted to compare manual receipts to transactions recorded in the system and subsequent \ndeposits. We were unable to trace $1,071 in receipts because the City did not consistently record \n \n \nWashington State Auditor's Office\n \n \nnon-sufficient-funds fees in the accounting system and did not deposit within a reasonable \namount of time. In addition, 10 receipts were missing from the receipt book , so we were unable \nto test those receipts. \nDeleted receipt transactions from January 2015 to November 2016 \nThe electronic accounting system allows transactions to be deleted to allow for human error and \nother reasonable circumstances. However, governments should document the reason behind \ndeletions to demonstrate that these inherently risky transactions are valid and appropriate. We \ncompared cash receipts to the deleted trans actions report and tested eight transactions for \nappropriateness. The City could not demonstrate the reason for one deleted $225 transaction. \nTo determine if any additional misappropriations occurred, we also examined other significant \nsystems at the Cit y, including payroll and general disbursements. We did not identify any \nadditional misappropriation. We also reviewed additional areas of cash receipting and did not \nfind additional misappropriation; however, we did identify additional internal control \nweaknesses related to physical access to City Hall and the safe combination. \nWe determined the City could not assign responsibility for the misappropriation due to control \nweaknesses over cash receipting procedures and safeguarding of public resources. \nContro l Weaknesses \nInternal controls at the City were not adequate to safeguard public resources. We found the \nfollowing weaknesses allowed the misappropriation to occur: \n\uf0b7 The Clerk/Treasurer and Deputy Clerk, who are responsible for cash receipting, data \nentry, bank depositing, and reconciliations, have the ability to make adjustments in the \naccounting system. Further, those adjustments were not reviewed by someone \nindependent of the process. \n\uf0b7 An accounting system weakness allows users to apply payments to custome r accounts, \nwhile the payment remains \u201cunattached\u201d within the system. As a result, the payments do \nnot appear on the monthly reconciliation activity report that lists all funds receipted for \nthe period, and which the City relies on to reconcile with the bank statement. \n\uf0b7 No one independent of the reconciliation process compared these \u201cunattached receipts\u201d in \nthe system to the Clerk/Treasurer\u2019s monthly bank reconciliation to determine if \nunattached items were reasonable and appropriate. \n\uf0b7 The Clerk/Treasurer was responsible for bank reconciliations and also delivered receipted \nfunds to the bank for deposit. \n\uf0b7 City staff inconsistently used manual receipts, and the City lacked oversight or \nreconciliation processes over those manual receipts. \n \n \nWashington State Auditor's Office\n \n \n\uf0b7 Access to City Hall\u2019s safe was not limited based on need. Rather, all City staff had access \nto the safe during the day. In addition, the City did not know who had a key to City Hall \nor the combination to the safe. \nRecommendations \nWe recommend the City stre ngthen internal controls over cash receipting , including adequate \noversight and monitoring to safeguard public resources and comply with City policies. At a \nminimum, improvements should include: \n\uf0b7 Appropriate segregation of duties and monitoring over cash receipting, bank deposit \npreparation and bank reconciliations \n\uf0b7 Adequate documentation of bank reconciliations to verify all amounts receipted are \ndeposited \n\uf0b7 Independent review of cash receipt adjustments in the system and verification that \nadjustments are reasonable and adequately supported \n\uf0b7 Consistent accounting treatment of bank and non-sufficient-funds fees. If manual receipts \nare used, someone independent of the receipting process should review these and verify \nthey were entered into the system and deposited. \n\uf0b7 Limited access to City Hall and the safe to essential personnel only \nWe also recommend the City seek recovery of the misappropriated $ 37,056 and related \ninvestigation costs of $11,165 from its insurance bonding company. Any compromise or \nsettlement of this claim by the City must be approved in writing by the Attorney General and \nState Auditor as directed by state law (RCW 43.09.260). Assistant Attorney General Matt \nKernutt is the contact person for the Attorney General\u2019s Office and can be reached at \n(360) 586-0740 or mattkl@atg.wa.gov. The contact for the State Auditor\u2019s Office is Sadie \nArmijo, Assistant Director of Local Audit, who can be reached at (360) 902 -0362 or \nSadie.Armijo@sao.wa.gov. \nCity\u2019s Response \nSubsequent to the departure of a former City Clerk/Treasurer, the then City Clerk/Treasurer and \ncurrent Mayor discovered that multiple batched cash receipts had been credited as received by \nthe City and correctl y applied to City customer utility accounts, but were never deposited in the \nCity bank account. The current Mayor and the Clerk/Treasurer were unable to account for these \nmissing funds and therefore contacted the State Auditor\u2019s office and requested an inv estigation \nbe conducted. This investigation was followed up by an investigation by the Douglas County \nSheriff\u2019s office to determine whether criminal charges should be brought against one or more \nindividuals. We understand from your report and from the Doug las County Sheriff\u2019s office that \n \n \nWashington State Auditor's Office\n \n \nyou were able to confirm that the cash was taken and remains missing, but neither your office \nnor the Sheriff\u2019s office were able to identify the person or persons who stole the cash. \nYou have identified several recommendat ions most of which we have already implemented and \nothers the City will be implementing soon. One of the challenges for the City is having a limited \nnumber of employees which is not ideal when handling the significant amount of cash we \nreceive. We have cha nged the locks on City Hall and the combination to the City safe and have \nrestricted access to keys to City Hall and have limited knowledge of the safe combination to only \ntwo City employees. We appreciate your efforts to identify the thief or thieves and are confident \nour new team at City Hall will do everything within our power and authority to prevent any such \noccurrence from happening again. \nState Auditor\u2019s Office Remarks \nWe thank City officials and personnel for their assistance and cooperation during the \ninvestigation. \n \n \n \nWashington State Auditor's Office\n \n \nABOUT THE STATE A UDITOR\u2019S OFFICE \nThe State Auditor's Office is established in the state's Constitution and is part of the executive \nbranch of state government. The State Auditor is elected by the citizens of Washington and \nserves four-year terms. \nWe work with our audit clients and citizens to achieve our vision of government that works for \ncitizens, by helping governments work better, cost less, deliver higher value, and earn greater \npublic trust. \nIn fulfilling our mission to hold state and local governments accountable for the use of public \nresources, we also hold ourselves accountable by continually improving our audit quality and \noperational efficiency and developing highly engaged and committed employees. \nAs an elected agency, the State Auditor's Office has the independence necessary to objectively \nperform audits and investigations. Our audits are designed to comply with professional standards \nas well as to satisfy the requirements of federal, state, and local laws. \nOur audits look at financial information and compliance with state, federal and local laws on the \npart of all local governments, including schools, and all state agencies, including institutions of \nhigher education. In addition , we conduct performance audits of state agencies and local \ngovernments as well as fraud, state whistleblower and citizen hotline investigations. \nThe results of our work are widely distributed through a variety of reports, which are available \non our website and through our free, electronic subscription service. \nWe take our role as partners in accountability seriously, and provide training and technical \nassistance to governments, and have an extensive quality assurance program. \nContact information for the State Auditor\u2019s Office \nPublic Records requests PublicRecords@sao.wa.gov \nMain telephone (360) 902-0370 \nToll-free Citizen Hotline (866) 902-3900 \nWebsite www.sao.wa.gov \n \n \n \nWashington State Auditor's Office\n \n \nPage 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", null, "WA", "Cheney School District No 360", "School District", "2048", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nThe objective of the Title I program is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with high concentrations of children from low -income families. During \nfiscal year 2017, the District spent $1,033,467 in Title I program funds. \nFederal regulations require federal money recipients to establish and follow internal \ncontrols to ensure compliance with program requirements. These controls include \nknowledge of grant requirements and monitoring of program controls. \nTo meet requirements for \u201chighly qualified\u201d classification, a paraprofessional must \nhave a high school diploma or its recognized equivalent and have met one of the \nfollowing requirements: \n\uf0b7 Completed at least two years of study at an institution of higher education \n\uf0b7 Obtained an associate\u2019s or higher college degree \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \n\uf0b7 Met a rigorous standard of quality and can demonstrate, through a formal \nstate or local academic assessment, knowledge of and the ability to assist in \ninstructing, reading, writing and mathematics, or reading readiness, writing \nreadiness and mathematics readiness \nDescription of Condition \nWe reviewed the District\u2019s internal controls over highly qualified status \nrequirements to determine whether paraprofessionals charged to the Title I grant \nmet the requirements for that status. Our audit found that the District did not obtain \nand maintain documentation demonstrating evidence that all paraprofessionals \ncharged to the Title I program met the requirements for highly qualified status. \nWe consider this deficiency in internal controls to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District did not have a process in place to obtain a high school diploma or \nequivalent from its paraprofessionals when they were hired. Instead, the District \nrelied on its understanding that most colleges require a high school diploma for a \nstudent to be accepted for enrollment. However, some out -of-state colleges do not \nrequire this before enrollment. In addition, because of an oversight, the District did \nnot follow its established process to obtain a copy of the college transcript for two \nparaprofessionals to ensure they met one of the three additional requirements for \nhighly qualified status. \nEffect of Condition and Questioned Costs \nWithout adequate controls in place, the District cannot demonstrate that costs \ncharged to the grant were allowable. Also, without documentation supporting a \nhigh school diploma or its equivalent and that parapr ofessionals met one of the \nthree other requirements, the District cannot demonstrate Title I students were \ninstructed by a highly qualified paraprofessional. \nOur audit found: \n\uf0b7 None of the 13 paraprofessionals charged to the District\u2019s Title I program \nhad a high school diploma or equivalent on file at the District. \n\uf0b7 Two of the 13 paraprofessionals did not have documentation to demonstrate \nthey met one of the three additional requirements for highly qualified status. \nHowever, during the audit, the District was able to obtain evidence of a high school \ndiploma or its equivalent and additional documentation to demonstrate high ly \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nqualified status for ten of the 13 paraprofessionals test ed. The District charged \n$66,511 in salaries and benefits to its Title I program for the remaining three \nparaprofessionals and could not demonstrate the paraprofessionals met the \nrequirements for highly qualified status. \nRecommendation s \nWe recommend the District establish and follow internal controls and maintain \nsupporting documentati on to demonstrate all paraprofessionals meet the federal \nrequirements for highly qualified status. \nDistrict \u2019s Response \nThe District has developed adequate controls to ensure all required supporting \ndocumentation is collected and maintained, including high school diplomas, to \nmeet the federal requirements when placing paraprofessionals in highly qualified \npositions. \nAuditor\u2019s Remarks \nWe appreciate the steps the District is taking to resolve this issue. We will review \nthe condition during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 516 Audit findings, establishes reporting \nrequirements for audit findings. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 303 Internal controls, establishes requirements for \nmanagement of Federal awards to non-Federal entities. \nTitle 34, U.S. Code of Federal Regulations (CFR) Part 200, Title I \u2013 Improving \nthe Academic Achievement of the Disadvantaged, section 58 \u2013 Qualifications of \nparaprofessionals, establishes requirements to ensure paraprofessionals working in \nTitle I programs are highly qualified. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Mason County Fire Protection District No 18", "Fire Protection District", "0300", null, "not_municipal", "Washington State Auditor's Office", "Accountability audit \u2014 Mason County Fire Protection District No 18", "Accountability", 2017, "2016-01-01", "2017-12-31", "2018-05-21", "misappropriation", null, null, null, "The District did not have adequate internal controls over cash receipting and petty cash to ensure adequate safeguarding of public resources", "Background \nMason County Fire Protection District No. 18 is located in Mason County and \nserves the Lake Cushman area. The District\u2019s total revenue was about $362,000 \nand $211,000 in 2016 and 2017, respectively. \nDistrict management is responsible for establishing effective internal controls to \nensure compliance with state law and adequate safeguarding of public funds. \nDescription of Condition \nThe District\u2019s internal control systems were inadequate to ensure compliance with \nstate laws and safeguarding of public resources. Our current audi t identified the \nfollowing control deficiencies: \nCash receipting \nThe District receives an average of $14,000 a year in revenue other than taxes. The \nDistrict did not record or have records of funds receipted, and did not have a \nreconciliation function to ensure receipted funds were adequately safeguarded from \nloss or misappropriation. \nIn addition, the District lacked adequate controls to ensure funds were deposited \npromptly in accordance with state law (RCW 43.09.240). Because there were not \nadequate controls or any records of cash receipted, we were not able to test cash \nreceipting. There is a continued risk of loss or misappropriation for cash receipting. \nPetty cash \nThe District had a petty cash fund of $1,000 and total replenishments to the fund of \nabout $3,000 in 2016 and 2017. \nThe District identified a loss of $666 in petty cash funds. We tested 42 petty cash \nexpenditures and six monthly reimbursements for those expenses from 2016 and \n2017. We noted the following: \n \nWashington State Auditor\u2019s Office Page 7 \n\u2022 Three of the six monthly reimbursement amounts did not tie to supporting \nreceipts. We identified a total of $1,127 in petty cash expenditures that were \nunsupported or questionable. \n\u2022 17 petty cash expenses, totaling $346, were used by or reimbursed to the \npetty cash custodian without a secondary review or approval. \n\u2022 14 petty cash expenses, totaling $424, were not allowable because the \nDistrict had not determined in its policy that they were a valid use of funds. \nCause of Condition \nThe District staff responsible for cash receipting and petty cash lacked adequate \ntraining and resources to establish adequate internal controls. In addition, District \nmanagement did not dedicate sufficient resources or monitoring to ensure effective \ninternal controls were established and consistently applied. \nEffect of Condition \nWithout adequate internal controls in place to ensure compliance with state law and \nsafeguarding of public resources, the District is at increased risk of noncompliance, \nfraud and abuse. \nNoncompliance, fraud and abuse can result in loss of public trust, fewer resources \navailable to perform services and inability to maintain the public assets entrusted \nto the District by its taxpayers. \nRecommendation \nWe recommend the District establish a process to proactively identify, assess and \nrespond to risks. \nWe further recommend the District establish and follow internal controls to ensure: \n\u2022 Receipted funds are recorded, promptly deposited, intact and reconciled by \nsomeone not involved in the receipting process \n\u2022 Petty cash reimbursements are supported by adequate documentation and \nhave a secondary review to ensure all expenses are for District purposes and \nallowable under District policy \nFinally, we recommend the District ensure employees responsible for key internal \ncontrols receive adequate training to effectively perform their duties. \n \n \nWashington State Auditor\u2019s Office Page 8 \nDistrict\u2019s Response \nOn December 31 st, 2016 we had a change of district secretary and then the \ntermination of our Fire Chief on January 13 th, 2017. This all prompted \nconsiderable examination of our policies and procedures that were in place. \nMason County Fire District 18 adopted many new policies on March 31 st, 2017. \nThe petty cash policy was included in this grouping. The Cash receipting policy has \nbeen instituted in accordance with RCW 43.09.240 \nWe now have a detailed review and audit of all payments made to our volunteers \nand procedures set in place to monitor warrants and credit card transactions. \nPrior to our onsite audit, most of the issues noted had been addressed. The \nrecommendations from the State Auditor\u2019s office regarding findings noted will be \nimplemented where appropriate. \nAuditor\u2019s Remarks \nWe want to thank the District for its assistance throughout the audit and the steps it \nis taking to address the issues. The District\u2019s status of corrective actions will be \nreviewed during our next audit. \nApplicable Laws and Regulations \nRCW 43.09.200 \u2013 Local government accounting \u2013 Uniform system of accounting, \ngives the state auditor the authority to formulate, prescribe and install a uniform \nsystem of accounting and reporting for all local governments. \nBudgeting Accounting and Reporting System (BARS) Manual \u2013 Accounting, \nAccounting Principles and General Procedures, Internal Control defines internal \ncontrol, describes it purpose, and specifies each entity is responsible for \nestablishing and maintaining an effective system of internal control throughout \ntheir government. \nRCW 43.09.240 \u2013 Local government accounting \u2013 Public officers and employees \n\u2013 Duty to account and report \u2013 Removal from office \u2013 Deposit of collections, \ndescribes the timely depositing requirements for local governments. \n \n \n \nWashington State Auditor\u2019s 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", null, "WA", "Mason County Fire Protection District No 18", "Fire Protection District", "0300", null, "not_municipal", "Washington State Auditor's Office", "Accountability audit \u2014 Mason County Fire Protection District No 18", "Accountability", 2017, "2016-01-01", "2017-12-31", "2018-05-21", "internal_controls", null, null, null, "The District did not have adequate controls over payroll and disbursements to ensure expenditures were adequately supported and for District business", "Background \nMason County Fire Protection District No. 18 is located in Mason County and \nserves the Lake Cushman area. The District\u2019s operating expenditures totaled about \n$225,000 and $250,000 in 2016 and 2017, respectively. \nDistrict management is responsible for establishing effective internal controls to \nensure public funds are adequately safeguarded. \nDescription of Condition \nWe identified the following deficiencies in internal controls: \nPayroll \n\u2022 There was not a detailed review of payments to volunteers and \ncommissioners by someone independent of the payroll process to ensure \npayments were correctly calculated and adequately supported. \nDisbursements and credit cards \n\u2022 There was not a detailed review of warrants or credit card transactions by \nsomeone independent of t he disbursement process to ensure accuracy and \ncompliance with District policy. \n\u2022 The District did not have a process in place to ensure adequate support was \nretained for all purchases and warrants paid. \nCause of Condition \nThe District staff responsible for payroll and disbursements lacked adequate \ntraining and resources to establish adequate internal controls. In addition, District \nmanagement did not dedicate sufficient resources or monitoring to ensure effective \ninternal controls were established and consistently applied. \n \n \n \nWashington State Auditor\u2019s Office Page 10 \nEffect of Condition \nPayroll \nThe District primarily consists of volunteer firefighters who are paid, based on \npoints earned, on a quarterly basis. In addition, Commissioners are compensated \n$114 for each meeting, once a month. \nWe tested payments to volunteers and noted the District did not have records to \nsupport the four quarterly volunteer payments in 2016. \nWe also tested eight months, or 57 meetings, for Commissioners and noted the \nDistrict: \n\u2022 Did not have meeting activity logs for four months \n\u2022 Did not have adequate support for six of the meetings to verify they were \nfor legitimate District business \nWe also noted that Commissioners who also serve as volunteers receive \ncompensation for responding to calls and attending drills in addition to their \nCommissioner compensation. The District was not able to demonstrate payments \nto volunteers were made with the intent to reimburse expenses; therefore, \ncompensation to Commissioners for volunteer services might be unallowable \n(RCW 52.14.010). \nDisbursements and credit cards \nWe reviewed 68 disbursement transactions and 29 credit card transactions and \nidentified the following: \n\u2022 Four disbursement transactions, totaling $2,741, did not have adequate \nsupporting documentation. \n\u2022 Eight credit card transactions , totaling $374, did not have adequate \nsupporting documentation to ensure each purchase was allowable under \nstate law and district policy, and that each transaction was for District use. \n\u2022 The District was not able to provide the 2016 December-January credit card \nstatement. \n \n \n \n \nWashington State Auditor\u2019s Office Page 11 \nRecommendation \nWe recommend the District: \n\u2022 Establish written policies and procedures for disbursements and payroll and \nensure monitoring is adequate to prevent misappropriation \n\u2022 Ensure adequate segregation of duties and monitoring over the general and \npayroll disbursement processes \nFinally, we recommend the District ensure employees responsible for key internal \ncontrols receive adequate training to effectively perform their duties. \nDistrict\u2019s Response \nOn December 31 st, 2016 we had a change of district secretary and then the \ntermination of our Fire Chief on January 13 th, 2017. This all prompted \nconsiderable examination of our policies and procedures that were in place. \nMason County Fire District 18 adopted many new polic ies on March 31 st, 2017. \nThe petty cash policy was included in this grouping. The Cash receipting policy has \nbeen instituted in accordance with RCW 43.09.240 \nWe now have a detailed review and audit of all payments made to our volunteers \nand procedures set in place to monitor warrants and credit card transactions. \nPrior to our onsite audit, most of the issues noted had been addressed. The \nrecommendations from the State Auditor\u2019s office regarding findings noted will be \nimplemented where appropriate. \nAuditor\u2019s Remarks \nWe want to thank the District for its assistance throughout the audit and the steps it \nis taking to address the issues. The District\u2019s status of corrective actions will be \nreviewed during our next audit. \nApplicable Laws and Regulations \nRCW 43.09.200 \u2013 Local government accounting; Uniform system of accounting, \nrequires the State Auditor to prescribe the system of accounting and reporting for \nall local governments. \nThe Budgeting, Accounting and Reporting System (BARS) Manual, 3.1.3, Internal \nControl, requires each local government to establish and maintain an effective \nsystem of internal controls that provides reasonable assurance that the government \nwill achieve its objectives. \n \nWashington State Auditor\u2019s Office Page 12 \nThe Budgeting, Accounting, and Reporting System Manual (BARS), 3.14, \nAccounting Principles and Internal Control outlines the local government\u2019s \nresponsibility for obtaining and retention of original vouchers, receipts and other \ndocuments. \nRCW 43.09.2855 \u2013 Local governments; Use of credit cards requires local \ngovernments to adopt a system for the distribution of the credit cards, the \nauthorization and control of the use of credit cards, the credit limits available on \nthe credit cards, payment of the bills, and any other rule necessary to implement or \nadminister the system outlined in the RCW.\n \n \n \n \nWashington State Auditor\u2019s Office Page 13 \nINFORMATION ABOUT THE DISTRICT \nMason County Fire Protection District No. 18 has served the Lake Cushman area of Mason County \nsince 1977. The District primarily consists of volunteer firefighters but does have a paid fire chief \nand secretary. \nAn elected, three-member Board of Commissioners governs the District. During fiscal years 2016 \nand 2017, the District received approximately $350,000 in revenues , primarily from property \ntaxes. \nContact information related to this report \nAddress: Mason County Fire Protection District No. 18 \n240 N. Standstill Drive S. \nHoodsport, WA 98548 \nContact: Mike Sexton, Fire Chief \nTelephone: (360) 877-9882 \nInformation current as of report publish date. \n \nAudit history \nYou can find current and past audit reports for Mason County Fire Protection District No. 18 at \nhttp://portal.sao.wa.gov/ReportSearch. \n \n \n \nWashington State Auditor\u2019s Office Page 14 \nABOUT THE STATE A UDITOR\u2019S OFFICE \nThe State Auditor's Office is established in the state's Constitution and is part of the executive \nbranch of state government. The State Auditor is elected by the citizens of Washington and serves \nfour-year terms. \nWe work with our audit clients and citizens to achieve our vision of government that works for \ncitizens, by helping governments work better, cost less, deliver higher value, and earn greater \npublic trust. \nIn fulfilling our mission to hold state and local governments accounta ble for the use of public \nresources, we also hold ourselves accountable by continually improving our audit quality and \noperational efficiency and developing highly engaged and committed employees. \nAs an elected agency, the State Auditor's Office has the in dependence necessary to objectively \nperform audits and investigations. Our audits are designed to comply with professional standards \nas well as to satisfy the requirements of federal, state, and local laws. \nOur audits look at financial information and comp liance with state, federal and local laws on the \npart of all local governments, including schools, and all state agencies, including institutions of \nhigher education. In addition, we conduct performance audits of state agencies and local \ngovernments as well as fraud, state whistleblower and citizen hotline\n investigations. \nThe results of our work are widely distributed through a variety of reports, which are available on \nour website and through our free, electronic subscription service. \nWe take our role as partners in accountability seriously, and provide training and technical \nassistance to governments, and have an extensive quality assurance program. \nContact information for the State Auditor\u2019s Office \nPublic Records requests PublicRecords@sao.wa.gov \nMain telephone (360) 902-0370 \nToll-free Citizen Hotline (866) 902-3900 \nWebsite 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", null, "WA", "Aberdeen School District No 5", "School District", "1882", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 Special Education\u2013Grants to States (IDEA, Part B) 84.173 \u2013 Special Education\u2013 Preschool Grants (IDEA Preschool) Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: NA Pass-through Entit", "Background \nThe District participates in the Individuals with Disabilities Education Act\u2019s \nSpecial Education program. The District received $826,202 from the program \nduring fiscal year 2017. \nFederal regulations require recipients of federal money to establish and follow \ninternal controls to ensure compliance with program requirements. These controls \ninclude knowledge of grant requirements and monitoring of program controls. \nThe District must ensure it follows the most restrictive procurement requirements \nwhen procuring goods and s ervices. The District procured professional special \neducation services from two contractors at costs of $276,264 and $216,458, \nrespectively. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDescription of Condition \nThe District did not maintain support to show it followed the most restrictive \nprocurement requirements in awarding either of the two contracts for professional \nspecial education services. \nWe consider this deficiency in internal controls to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Conditio n \nThe District experienced employee turnover at the procurement position and was \nunable to find the documentation to show it followed the appropriate procurement \nmethod. \nEffect of Condition and Questioned Costs \nThe District was unable to show it complied w ith federal procurement \nrequirements. The District cannot demonstrate it received the best price for the \ngoods it purchased if supporting documentation is not maintained. \nWe did not question costs because the funds were used for an allowable purpose. \nReco mmendation s \nWe recommend the District ensures it follows its policies in applying the most \nrestrictive procurement method when procuring goods and services with federal \ngrant funds. We further recommend it improve internal controls to ensure it \nmaintains documentation supporting its compliance. \nDistrict\u2019s Response \nThe Aberdeen School District is re-evaluating the process used for purchasing. We \nare hiring one person specifically to procure bids, services and supplies. One of \ntheir primary responsibilities will be to post, track and respond to RFP/RFQ\u2019s. For \nthe 2018-19 school year, an RFP for services used to support Special Education \nwas posted and advertised. The bid sheet will be consulted for hiring additional \nproviders, as needed. The district has also been able to hire several people, as \nemployees of the district, to provide these services starting in the 2018 -19 school \nyear. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nAuditor\u2019s Remarks \nWe thank the District for its c ooperation throughout the audit and the steps it is \ntaking to address these concerns. We will review the status of the District\u2019s \ncorrective action during our next audit \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guida nce), section 516 Audit findings, establishes r eporting \nrequirements for audit findings. \nTitle 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, establishes \ninternal control requirements for management of Federal awards to non -Federal \nentities. \nTitle 2 CFR Part 200, Uniform Guidance, section 318 General procurement \nstandards, establishes procurement requirements. \nTitle 2 CFR Part 200, Uniform Guidance, section 320 Methods of procurement to \nbe followed, describes the procurement methods to be followed. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Aberdeen School District No 5", "School District", "1882", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nThe objective of the Title I program is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with high concentrations of children from low-income families. During fiscal \nyear 2017, the District spent $1,246,878 in Title I program funds. \nDistricts must report graduation rate data for all public high schools to the Office \nof Superintendent of Public Instruction (OSPI) annually. This is done by submitting \na Graduation Rate Report that indicates the student\u2019s enrollment status as \ngraduated, transferred out, dropped out, migrated to another country or deceased. \nThe district must retain adequate support for how it classifies a student\u2019s enrollment \nstatus. To confirm a student transferred out, the district must have official written \ndocumentation that the student enrolled in another school or in an educational \nprogram that culminates in the award of a regular high school diploma. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDescription of Condition \nOur audit examined the District\u2019s documentation for students it classified as \n\u201ctransferred out.\u201d \nThe District\u2019s controls were not adequate to ensure it gathered the required \ndocuments to support its classification of students that left the District. Specifically, \nthe District did not obtain annual I ntent to Provide Home-Based Education forms \n(homeschool forms) for each student who left the District to be homeschooled. It \nalso did not obtain written documentation confirming students who transferred to \nanother district actually enrolled in the new district. Without these documents, the \nDistrict cannot report the students as a confirmed transfer. \nWe consider these control deficiencies to be material weaknesses. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nDistrict staff were not aware of the documentation necessary to demonstrate \nstudents as confirmed transfers. \nEffect of Condition and Questioned Costs \nOut of nine transfers reviewed, four did not have proper documentation maintained. \nBy not maintaining proper documentation, the District cannot ensure it has \nprovided accurate reports to OSPI. Further, the District is at risk of incorrectly \ncalculating graduation rates. \nThere are no questioned costs associated with this compliance requirement. \nRecommendation s \nWe recommend the District establish controls to obtain and k eep documentation \nconfirming students that transfer out of the District are properly classified, \nincluding current homeschool forms and written notification confirming the student \nenrolled at the new District. \nDistrict\u2019s Response \nThe Aberdeen School District enrolls home schooled students who wish to register \nto take Running Start classes. In the past an Intent to Home School form was not \nrequired at the time of registration. The Aberdeen School District is changing that \nprocess and will now require any student who presents as a home school student to \ncomplete an Intent to Home School form with the enrollment packet. To ensure \ncontinuous enrollment and academic progress in a course of study. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nAuditor\u2019s Remarks \nWe thank the District for its c ooperation throughout the audit and the steps it is \ntaking to address these concerns. We will review the status of the District\u2019s \ncorrective action during our next audit \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance, section 303 \u2013 Internal controls, describes the requirements for \nauditees to maintain internal controls over federal programs and comply with \nfederal program requirements. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guida nce), section 516 Audit findings, establishes r eporting \nrequirements for audit findings. \nTitle 2 CFR Part 200, Uniform Guidance, Section 34 \u2013 High School Graduation \nRates, discusses requirements for reporting cohort graduation rates and changes in \nhow changes in student status are classified. \nTitle 34 CFR Part 200, Subpart A \u2013 Improving Basic Programs Operated by Local \nEducational Agencies, Section 200.19 \u2013 Other academic indicators \u2013 establishes \nthe requirement for Districts to have official written documentation to confirm a \nstudent transferred out. \n \n \n \n \n \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nIND EPENDENT AUDITOR\u2019S R EPORT ON INTERNAL CO NTROL \nOVER FINANCIAL REPOR TING AND ON COMPLIAN CE AND \nOTHER MATTERS BASED ON AN AUDIT OF FINAN CIAL \nSTATEMENTS PERFORMED IN ACCORDANCE WITH \nGOVERNMENT AUDITING STANDARDS \n \nAberdeen School District No. 5 \nGrays Harbor County \nSeptember 1, 2016 through August 31, 2017 \n \nBoard of Directors \nAberdeen School District No. 5 \nAberdeen, Washington \nWe have audited, in accordance with auditing standards generally accepted in the United States of \nAmerica and the standards applicable to financial audits contained in Government Auditing \nStandards, issued by the Comptroller General of the United States, t he financial statements of \nAberdeen School District No. 5, Grays Harbor County, Washington, as of and for the year ended \nAugust 31, 2017, and the related notes to the financial statements, which collectively comprise the \nDistrict\u2019s financial statements, and have issued our report thereon dated May 16, 2018. \nWe issued an unmodified opinion on the fair presentation of the District\u2019s financial statements in \naccordance with its regulatory basis of accounting. We issued an adverse opinion on the fair \npresentation with regard to accounting principles generally accepted in the United States of \nAmerica (GAAP) because , as described in Note 1, the Accounting Manual for Public School \nDistricts in the State of Washington does not require the District to prepare the government-wide \nstatements presenting the financial position and changes in financial position of its governmental \nactivities as required by GAAP. The effects on the financial statements of the variances between \nthe basis of accounting described in Note 1 and accounting principles generally accepted in the \nUnited States of America, although not reasonably determinable, are presumed to be material. \n \nINTERNAL CONTROL OVER FINANCIAL REPORTING \nIn planning and performing our audit of the financial statements, we considered the District\u2019s \ninternal control over financial reporting (internal control) to determine the audit procedures that \nare appropriate in the circumstances for the purpose of expressing our opinion on the financial \nstatements, but not for the purpose of expressing an opinion on the effectiveness of the District\u2019s \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \ninternal control. Accordingly, we do not express an opinion on the effectiveness of the District\u2019s \ninternal control. \nA deficiency in internal control exists when the design or operation of a control does not allow \nmanagement or employees, in the normal course of performing their assigned functions, to prevent, \nor detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a \ncombination of deficiencies, in i nternal control such that there is a reasonable possibility that a \nmaterial misstatement of the District's financial statements will not be prevented, or detected and \ncorrected on a timely basis. A significant deficiency is a deficiency, or a combination of \ndeficiencies, in internal control that is less severe than a material weakness, yet important enough \nto merit attention by those charged with governance. \nOur consideration of internal control was for the limited purpos e described in the first paragraph \nof this section and was not designed to identify all deficiencies in internal control that might be \nmaterial weaknesses or significant deficiencies. Given these limitations, during our audit we did \nnot identify any defic iencies in internal control that we consider to be material weaknesses. \nHowever, material weaknesses may exist that have not been identified. \n \nCOMPLIANCE AND OTHER MATTERS \nAs part of obtaining reasonable assurance about whether the District\u2019s financial statements are free \nfrom material misstatement, we performed tests of the District\u2019s compliance with certain \nprovisions of laws, regulations, contracts and grant agreements, noncompliance with which could \nhave a direct and material effect on the determinatio n of financial statement amounts. However, \nproviding an opinion on compliance with those provisions was not an objective of our audit, and \naccordingly, we do not express such an opinion. \nThe results of our tests disclosed no instances of noncompliance or other matters that are required \nto be reported under Government Auditing Standards. \n \nPURPOSE OF THIS REPORT \nThe purpose of this report is solely to describe the scope of our testing of internal control and \ncompliance and the results of that testing, and not to provide an opinion on the effectiveness of the \nDistrict\u2019s internal control or on compliance. This report is an integral part of an audit performed \nin accordance with Government Auditing Standards in considering the District\u2019s internal control \nand compliance. Accordingly, this communication is not suitable for any other purpose. However, \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nthis report is a matter of public record and its distribution is not limited. It also serves to \ndisseminate information to the public as a reporting tool to h elp citizens assess government \noperations. \n \nPat McCarthy \nState Auditor \nOlympia, WA \n \nMay 16, 2018 \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Puyallup School District No 3", "School District", "1994", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nThe federal Title I program\u2019s objective is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with a high concentration of low-income families. During fiscal year 2017, \nthe District spent $2,538,387 in Title I program funds. \nFederal regulations require federal money recipients to establish and follow internal \ncontrols to ensure compliance with program requirements. These controls include \nknowledge of grant requirements and monitoring of program controls. \nEach paraprofessional the District charges to the Title I program must have \nobtained either a high school diploma or its recognized equivalent . The District \nmust verify that all paraprofessionals it charges to the program have met this \nrequirement. \nDescription of Condition \nThe District \u2019s procedures for verifying paraprofessionals it hired met the \nqualification requirements during the period of the audit were not effective in \nensuring compliance. The District relied on each applicant\u2019s certification that he \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nor she obtained a high school diploma or its equivalent, without always physically \nverifying and documenting that they did. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District relied on paraprofessionals\u2019 certification that they acquired a high \nschool diploma or equivalent on their employment application to demonstrate the \nfederal requirement was met, without always performing further verification and \ndocumenting it. \nEffect of Condition and Questioned Costs \nWithout adequate internal controls in place , such as (maintaining evidence the \nDistrict verified the paraprofessional had obtained a high school diploma or \nequivalent, the District cannot demonstrate paraprofessionals met the requirement \nand, therefore, that costs charged to the grant were allowable. \nOur audit found the District did not have evidence of a high school diploma on file \nfor four of the 25 paraprofessionals it charged to the program. \nSubsequently, the District obtained copies of transcripts and high school diplomas \nfor the four paraprofessionals to show each met the requirement. Therefore, we are \nnot questioning costs the District charged to the grant. \nRec ommendation s \nWe recommend the District establish and follow internal controls to ensure every \nparaprofessional provides evidence of a high school diploma or its equivalent and \nto keep a copy of this evidence in the employee file. \nDistrict\u2019s Response \nThe Puyallup School District does not concur with the finding of a material \nweakness in internal controls with regard to the highly -qualified status of Title I \nparaprofessionals. The District was aware of the requirement that Title I \nparaprofessionals mus t have a high school diploma or GED and performed \nverification of this by either reviewing an employee\u2019s actual diploma/transcript; or \nthrough an employee\u2019s certification on their application form. We have found no \nwritten documentation requiring the Dist rict to maintain a file copy of a \nparaprofessional\u2019s high school diploma/GED or transcripts. Written guidance \nprovided by OSPI (Title I, Part A Guide to Paraeducator Requirements issued \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nAugust 2017), explicitly states that districts must maintain a file c opy of official \ntranscripts as verification of college credentials (for which the District was 100% \ncompliant on this greater indicator of qualifications) but is silent on any such \nrequirement for verification of a paraeducator\u2019s high school diploma/GED or \ntranscripts. The District\u2019s reliance on the employee\u2019s certification of high school \ndiploma/GED or transcripts was not an internal control weakness, rather a \nreasonable assumption based on the insignificance of a high school diploma in \nrelation to the co llege/ETS test requirements and lack of written documentation \nrequiring a file copy be maintained. \nBased on the new ESSA legislation, the District anticipated that a copy of the high \nschool diploma/GED or transcripts would be required to be maintained starting in \nSeptember 2018 and had been proactively contacting Title I paraprofessional staff \nwho had not already provided us with a copy. Also at this time we began requiring \nthis documentation for new hires as well. Prior to the end of the audit all high \nschool diplomas or transcripts for Title I paraprofessionals had been obtained. \nThe District is confident that our students were well served by the quality \nparaprofessionals that were employed in the Title I program. We will continue our \ncurrent practice of ensuring that a copy of an employee\u2019s high school diploma/GED \nor transcript will be maintained on file for all Title I paraprofessionals. \nAuditor\u2019s Remarks \nWe thank the District for its cooperation and assistance during the audit and the \nsteps it is taking to address this issue. \n In the OSPI website and the OSPI Title I, Part A, Guide to Paraeducator \nRequirements: \nParaeducator Qualifications \nA. All paraeducators must have the first, essential credential \u2014 a high school \ndiploma or GED (General Educational Development). Paraeducators can provide a \ncopy of their high school diploma \u2014 transcripts are not necessary. \nB. With this credential in place, there are three educational pathways and one \nevaluation option a potential paraeducator can take to meet federal requirements. \n1. Two years of study at an institution of higher education. The institution you \nchoose must meet five criteria of the Higher Education Act, Section 101(a). All \nclasses must be at level 100 or higher. See Appendix A for a list of public and \nprivate institutions OSPI determined meet the five criteria. \n2. Associate degree or higher. All associate degrees are acceptable. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \n3. Pass the ETS ParaPro Assessment. The assessment measures skills, and content \nknowledge related to reading, writing and math. Contact ETS 800-772-9476 or visit \nETS ParaPro Assessment. \n4. Washington paraeducator portfolio or apprenticeship program \u2014 completed \npreviously. Those meeting the apprenticeship requirements must present a \njourneycard or certificate. The portfolio and apprenticeships are no longer offered \nfor enrollment, however OSPI will continue to honor this pathway.\u2026 \nExceptions to a High School Diploma \n(1) In some states, students can enter community college without a high school \ndiploma or its equivalent. Districts are allowed to accept these colleges, if the first \ncriterion is absent. OSPI will waive the high school diploma requirement if the \nparaeducator has official college transcripts documenting at least two years of study \nat an instit ution of higher education. The institution you choose must meet five \ncriteria of the Higher Education Act, Section 101(a). All classes must be at level \n100 or higher. See Appendix A for a list of Washington public and private \ninstitutions OSPI determined meet the five criteria. \n(2) There may be extenuating circumstances when a paraeducator is cannot access \nan official copy of the high school diploma or transcripts. OSPI may grant a waiver \non a case-by-case basis. Contact the Title II, A office. \nWe have ve rified with the pass through agency, OSPI, certification from the \nemployee of a high school diploma is not sufficient evidence. It is the District\u2019s \nresponsibility to ensure it is hiring only qualified paraprofessionals. When the \ndistrict is unable to obtain a copy of the diploma, OSPI will evaluate on a case-by-\ncase basis and may grant a waiver. \nWe reaffirm our audit finding and will review the status of the District\u2019s corrective \naction during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guida nce), section 516 Audit findings, establishes r eporting \nrequirements for audit findings. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nTitle 2 CFR Part 200Uniform Guidance, section 303 Internal controls, describes \nthe requirements for auditees to maintain internal controls over federal programs \nand comply with federal program requirements. \nTitle 34CFR Part 200, Title I \u2013 Improving the Academic Achievement of the \nDisadvantaged, section 58 \u2013 Qualifications of paraprofessionals, requires all Local \nEducation Agencies (LEA) to ensure that each paraprofessional hired by the LEA \nwho works in a program supported by the funds of the grant must h ave earned a \nsecondary school diploma or its recognized equivalent. \nOffice of Superintendent of Public Instruction (OSPI) Title I, Part A, Guide to \nParaeducator Requirements, establishes the high school diploma or its equivalent \nas the \u201cessential requirement\u201d and considers a copy of the paraeducator\u2019s high \nschool diploma in lieu of a transcript as adequate in demonstrating the credential \nis in place. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Shelton School District No 309", "School District", "1970", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe objective of the Title I program is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with high concentrations of low-income families. During fiscal year 2017, the \nDistrict spent $1,178,952 in Title I program funds. \nFederal regulations require federal -money recipients to establish and follow \ninternal controls to ensure compliance with program requirements. These controls \ninclude knowledge of grant requirements and monitoring of program controls. \nSuspension and debarment \nFederal requirements prohibit grant recipients from contracting with or making \nsub-awards to parties suspended or debarred from doing business with the federal \ngovernment. The District must verify that all contractors receiving $25,000 or more \nand all sub-awards have not been suspended or debarred. This verification may be \naccomplished by collecting a written certification from the party, or adding a clause \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nor condition into the contract. Alternatively, the District may review the federal \nExcluded Parties List issued by the U.S. General Service Administration. The \nDistrict must meet one of these requirements before entering into contracts with \ncontractors or sub-recipients. \nGraduation rate reporting \nDistricts must report graduation -rate data for all public high schools to OSPI \nannually. Among other purposes, this information is u sed to determine if the \nDistrict has met adequate yearly progress requirements for Title I funding. The \nDistrict reports this information in a Graduation Rate Report that indicates the \nstudent\u2019s enrollment status: graduated, transferred out, dropped out, m igrated to \nanother country or deceased. The District must retain adequate support for each \nstudent\u2019s reported status and for changes to a student\u2019s status. Students identified \non the report as transferred are excluded from that District\u2019s graduation rate. To \nconfirm that a student transferred out, the District must have official written \ndocumentation that the student enrolled in another school or in an educational \nprogram that culminates in the award of a regular high school diploma. \nDescription of Condition \nSuspension and debarment \nThe District did not have internal controls in place to ensure contractors were not \nsuspended or debarred from participating in federal programs before entering into \ncontract. \nThis issue was not reported as a finding in the prior audit. \nWe consider this control deficiency to be a significant deficiency. \nGraduation rate reporting \nWe found the District did not adequately design or follow controls to ensure \ncompliance with the Title I graduation reporting requirements. Specifically, the \nDistrict did not have official written documentation to support all reports of \nstudents transferred out of the District. \nThis issue was reported as a finding in the prior audit as finding 2016-002. \nWe consider this control deficiency to be a material weakness. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nCause of Condition \nSuspension and debarment \nEmployees responsible for ensuring compliance with requirements regarding \nsuspension and debarment for the Title I grant program were not aware of the \nrequirements. \nGraduation rate reporting \nDistrict staff were not aware of the requirement to obtain and r etain written \ndocumentation for students transferring to another district. \nEffect of Condition and Questioned Costs \nSuspension and debarment \nThe District did not ensure two contractors were not suspended or debarred before \nentering into contract. Without proper controls, the District increases the risk of \nawarding grant funds to contractors and sub -recipients that are excluded from \nparticipating in federal programs. Any payments made to an ineligible party are \nunallowable and would be subject to recovery by the funding agency. \nWe confirmed the contractors were not suspended or debarred; therefore, we are \nnot questioning costs. \nGraduation rate reporting \nThe District did not retain appropriate, official written documentation to support \nthe transfer status for eight of 18 students tested. As a result, t he District is at risk \nof incorrectly calculating graduation rates. \nRecommendations \nWe recommend the District improve internal controls to ensure: \n\uf0b7 Staff responsible for ensuring compliance with federal requirements receive \nappropriate training \n\uf0b7 Verification that all contractors receiving $25,000 or more and all \nsub-awardees are not excluded from doing business with the federal \ngovernment \n\uf0b7 Accurate reporting of graduation rate data to OSPI and retention of records \nto support the data reported \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDistrict\u2019s Response \nSuspension and Debarment \nThe Executive Director of Finance has contacted all staff in the district that \nreceives Federal Funds to remind them of the Suspension and Debarment rules. \nThe rules are listed in the district\u2019s board policy no. 6220 procedures. This board \npolicy will also be updated this year in the district\u2019s board policy review. \nAn e-mail was sent to all district staff involved in f ederal funds on April 12, 2018 \ndirecting them to District Board Policy no. 6220 for purchasing with federal funds. \nGraduation Rate Reporting \nThe CHOICE High School principal has instructed the school registrar on proper \nprocedures as far as only indicating that a student transferred if we received written \nconfirmation from the sending school, or could verify in CEDARS (and then printed \nthe verification for the file). In addition, the CHOICE registrar printed all students \nwith a withdraw code for the 2017 -2018 school year to review all transfers and \nmake sure we have the necessary written documentation. \nThe Executive Director of Finance also sent guidance to all district registrars \noutlining appropriate written confirmation that a student is enrolled at anoth er \ndistrict, instructing them to ensure this documentation is in place before removing \nthem from the cohort as a transfer out. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s response and recognize that the District is committed \nto ongoing quality improvement and working to improve its internal controls and \nensure compliance. \nWe also wish to thank District management and staff for their cooperation and \nassistance throughout the audit. We look forward to working with the District on \nthis issue and will review the District\u2019s corrective action during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \n(Uniform Guidance), section 303, Internal controls, establishes internal control \nrequirements for management of Federal awards to non-Federal entities. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 516, Audit findings, establishes reporting \nrequirements for audit findings. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 180, OMB Guidelines to \nAgencies on Governmentwide Debarment and Suspension , section 220, Are any \nprocurement contracts included as covered transactions?, defines covered \ntransactions. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 180, OMB Guidelines to \nAgencies on Governmentwide Debarment and Suspension, section 300, What must \nI do before I enter into a covered transactions with another person at the next lower \ntier?, outlines suspensio n and debarment requirements and methods of ensuring \ncompliance. \nTitle 34, U.S. Code of Federal Regulations (CFR) Part 200, Title I \u2013 Improving the \nAcademic Achievement of the Disadvantaged, section 19, Other academic \nindicators, establishes requirements for calculating and reporting graduation rates \nto the State levels. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Deer Park School District No 414", "School District", "2052", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe District participates in the Title I program, which provides financial assistance \nto schools to improve the teaching and learning of children who are at risk of not \nmeeting challenging academic standards and who reside in areas with high \nconcentrations of children from low -income families. During school year \n2016-2017, the District spent $701,988 in Title I funds for this program. \nFederal regulations require federal money recipients to establish and follow internal \ncontrols to ensure compliance with program requirements. These controls include \nknowledge of grant requirements and monitoring of program controls. \nTime and effort \nWe audited the District\u2019s internal controls over payroll to determine whether \nsalaries and benefits charged to the grant were a dequately supported by \ntime-and-effort documentation as required by federal regulations. Depending on \nthe number and types of activities program employees worked, time -and-effort \ndocumentation can be a semi -annual certification or monthly personal activity \nreports, such as a timesheet. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nProcurement \nGrantees must use a competitive process to procure goods and services to ensure \nthey received the best price from the lowest responsible bidder. Grantees must \napply the more restrictive of federal requirements or State law by obtaining quotes \nor following a competitive bidding process, depending on the purchase amount. \n\uf0b7 State law is more restrictive than the federal requirements for purchases \nexceeding $75,000, requiring the District to obtain formal bids. \n\uf0b7 Federal requirements are more restrictive than state law for purchases less \nthan $75,000. The District must obtain at least three quote s for purchases \ngreater than $3,500 but less than $75,000, but need not apply a competitive \nprocess for \u201cmicro\u201d purchases of $3,500 or less. \nDescription of Condition \nTime and effort \nOur audit found the District did not obtain a semi -annual certification f or one \nemployee who worked half-time in the program for a significant portion of the year. \nThe District\u2019s controls for verifying time-and-effort documentation did not include \na process to check for employees charged to the program who started after the \nbeginning of the year. \nWe consider this internal control deficiency to be a significant deficiency. \nThis issue was not reported as a finding in the prior audit. \nProcurement \nThe District purchased curriculum and services totaling $47,487 from five vendors. \nWe found that the District did not retain sufficient documentation to demonstrate it \napplied the required competitive method to award each vendor the contract for these \npurchases. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nCause of Condition \nTime and effort \nThe District had a process in place to obtain the required time -and-effort \ndocumentation for each employee it would charge to program at the start of each \nschool year. The District did not have a control to verify employees who started in \nthe program after the beginning of the year had appropriate time -and-effort \ndocumentation. Because of the timing of its process, the District did not identify an \nemployee who was hired after the start of the school year for inclusion on the semi-\nannual certifications list. \nProcurement \nThe District staff member responsible for procurement procedures was not aware \nthat the federal requirements were more restrictive than State law for purchases of \nsupplies and materials less than $75,000. \nEffect of Condition and Questioned Costs \nTime and effort \nWithout proper time -and-effort records, the District did not comply with the \nrequirement and federal grantors cannot be assured the $11,379 of payroll costs \ncharged to the program for one employee was accurate or valid. However, the \nDistrict was able to provide alternative documentation that adequately showed the \ncosts it charged the program were allowable. As a result, we are not questioning \nthese costs. \nProcurement \nThe District purchased $47,487 from five vendors without obtaining price \nquotations ranging in purchase amounts from $6,292 to $14,594. Without adequate \ndocumentation of the process it used to select the five vendors it charged to the \nprogram, the District cannot show it followed a competitive process in compliance \nwith federal regulations. Further, the District cannot ensure it received the best \npossible price for equipment, supplies and services purchased under the program. \nBecause the products and services purchased are allowable under the federal \nprogram, we are not questioning costs. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nRecommendation s \nTime and effort \nWe recommend the District follow its own established internal control procedures \nto ensure it meets federal requirements for time -and-effort documentation of all \nemployee payroll costs charged to grants. \nProcurement \nWe recommend that the District establish adequate internal controls to ensure i t \nretains sufficient documentation to demonstrate it met federal procurement \nrequirements for purchases of equipment, supplies and services. \nDistrict \u2019s Response \nThe district hired a partial FTE teacher mid -year to work second semester in the \nTitle I program. The hiring was properly documented, but the employee name was \ninadvertently left off the semi-annual certification for second semester. The district \nhas instituted a process to check against HR recor ds prior to completing the \nsemi-annual certification. \nThe Title I director has been made aware of federal micro -purchase requirements \nand has been provided a full schedule of purchasing thresholds and the associated \nrequirements. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolving the issues noted and will \nfollow up during the next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements f or Federal Awards \n(Uniform Guidance), Section 516, Audit findings, establishes reporting \nrequirements for audit findings. \nTitle 2 CFR Part 200, Section 303 \u2013 Internal controls, describes the requirements \nfor auditees to maintain internal controls over fede ral programs and comply with \nfederal program requirements. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nTitle 2 CFR Part 200, Section 318 - General procurement standards, describes the \nrequirements for auditees to use its own procurement procedures, which reflect \napplicable Federal State, and local laws and maintain records sufficient to detail the \nhistory of procurement.. \nTitle 2 CFR Part 200 , Section 319 \u2013 Competition, establishes all procurement \ntransactions are to be conducted in a manner providing full and open competition, \nand requires non-federal entities to have written procedures for procurement \ntransactions. \nTitle 2 CFR Part 200 , Section 320 - Methods of procurement to be followed , \ndescribes each allowable procurement method. \nOffice of Superintendent of Public Instruction (OSPI) Bulletin 051-11 Attachment \nA \u2013 Standards for Charging Employee Compensation to Federal Grants establishes \nrequirements for documenting time and effort. \n \n \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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 \u2014 City of Sunnyside", "Accountability", 2016, "2016-01-01", "2016-12-31", "2018-05-21", "internal_controls", null, null, null, "The City did not have adequate oversight of payroll operations to safeguard public resources", "Background \nThe City paid about $10.7 million in payroll during 2016. During three prior audits \ndating back to 2011, we have recommended the City Council and management \nstrengthen internal controls over payroll. The current audit identified continuing \ncontrol weaknesses in this area. \nDescription of Condition \nThe City uses a system to run payroll and issue payroll checks that is separate from \nits general ledger and financial reporting system. The payroll system data is \nuploaded to its general ledger after payroll checks are processed. However, after \nthe payroll is upload ed, subsequent payments to vendors for employee benefits \u2013 \nsuch as retirement, unemployment and deferred compensation \u2013 are made through \nan online system. \nWe noted the following payroll related control deficiencies that continue to hinder \nthe City\u2019s ability to properly report payroll expenditures in the general ledger: \n\uf0b7 In 2015, o ne City employee was responsible for human resources and \npayroll functions without oversight or monitoring. In 2016, the City hired a \nseparate employee to process employee payro ll, independent from human \nresources functions. However, human resources was still responsible for \nprocessing employee benefit payments, which included calculating, \nreporting and remitting these payments. No one reviewed this information \nto ensure it was submitted or recorded correctly. \n\uf0b7 An independent review of payments to benefit vendors was not performed \nbefore the payments were issued to ensure the transactions were valid, \nsupported and properly recorded in the general ledger. \n\uf0b7 Although the City performed a reconciliation between the bank statement \nactivity and the general ledger, differences identified during the \nreconciliation were not adequately followed up on. Differences related to \npayroll transactions were recorded in a temporary clearing account and sent \nto the Human Resources Assistant for follow-up; however, the City did not \nalways identify the reason for the differences to accurately record the \ntransactions to the proper account. \n \n \n \nWashington State Auditor\u2019s Office Page 7 \nCause of Condition \nThe City Council and the City Manager have not made it a priority to address prior \naudit recommendations or to segregate the payroll and human resources functions \nin a manner that provides adequate oversight, monitoring and accountability. \nAlthough these positions were separated during the audit period, Human Resources \nstill processes benefit payments without adequate oversight. Further, management \nhas not held staff accountable for following up on differences that are identified \nbetween the bank reconciliation and the ge neral ledger to ensure all payroll \ntransactions are recorded accurately in the general ledger system. \nEffect of Condition \nWithout adequate oversight and monitoring of payroll payments and the \nreconciliation to the general ledger, the City cannot ensure all payments are valid. \nAlso, the City cannot ensure that the general ledger reports accurate payroll \nexpenditures. \nFrom our review of bank reconciliations for 2016, the City identified the following \npayments processed through the bank that were not included in the general ledger: \n\uf0b7 One retirement payment of $11,619 from February 2016. \n\uf0b7 Three payments for unemployment compensa tion totaling $13,095 from \nMarch, May and November 2016. \nIn addition, there were multiple instances in 2016 when the deferred compensation \npayments in the general ledger did not agree to the amount paid, for minor amounts. \nOnce these differences were identified, the City recorded these transactions in the \nclearing fund and flagged them for further follow-up. However, at the time of our \naudit, the City had followed up on only one out of the four transactions several \nmonths after the transaction occurred. Further, the City did not take adequate steps \nto research why the differences occurred and establish appropriate procedures to \navoid future differences. \nThe City was forced to do a prior period adjustment, totaling $192,988, at the \nbeginning of 2016 to clear unresolved payroll differences that had accumulated \nsince 2012. Unresolved differences of about $10,000 still remain in the clearing \naccount as of the date of our audit. \n \n \n \nWashington State Auditor\u2019s Office Page 8 \nRecommendation s \nWe recommend the City develop payroll policies and internal control processes to \nensure: \n\uf0b7 Adequate monitoring, review and approval of all payroll benefit payments \n\uf0b7 All payroll-related payments are accurately and promptly reconciled to the \ngeneral ledger to ensure accurate reporting \n\uf0b7 Any unresolved differences continue to be researched and resolved to \nensure all public funds are accounted for and properly recorded \nCity \u2019s Response \nThe City of Sunnyside acknowledges this finding in part, however disputes the \nassertion that the City Council and City Manager do not make this a priority. The \ncity has been working to rectify these conditions. The City did in fact hire a payroll \nclerk to segregate HR and payroll functions. The city has been working on \ntransitioning to a single financial software system for several years. Dur ing the \naudit period the City was using one (BIAS) financial software for most financial \ntransactions, and another (Eden) because it was not able to use Bias for HR and \npayroll. The city has now completed the transition and has eliminated the dual \nsystem problem. Management recently reorganized staff and has placed HR under \nthe direct supervision of the Finance and Administrative Services Director. All \npayroll benefit payments are now run through Accounts payable and have a two \ntear approval process. The pa yroll related payments are now reconciled to the \nGeneral Ledger in a timely manner. Management is currently working on resolving \nall outstanding HR and payroll related discrepancies. \nAuditor\u2019s Remarks \nWe appreciate the City\u2019s commitment to resolve this finding and thank the City for \nits cooperation and assistance during the audit. We will review the corrective action \ntaken during our next audit. \nApplicable Laws and Regulations \nRCW 43.09.200 \u2013 Local government accounting \u2013 Uniform system of accounting. \nBudgeting Accounting and Reporting System (BARS) Manual \u2013 Accounting \nPrinciples and Controls, Internal Control, Constrols over Financial Reporting \nBARS Manual 3.1 \u2013 Accounting Principles and Internal Controls \nBARS Manual 3.8.11 \u2013 Electronic Funds Transfer \u2013 Disbursements \n \n \n \nWashington State Auditor\u2019s Office Page 9 \nFinance & Administrative Services Director \n818 East Edison Avenue \nSunnyside, Washington 98944 \n(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", null, "WA", "Mead School District No 354", "School District", "2045", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nThe Title I program\u2019s objective is to improve the teaching and learning of children \nwho are at risk of not meeting state academic standards and who reside in areas \nwith high concentrations of children from low -income families. During \nfiscal year 2017, the District spent $953,732 in Title I program funds. \nFederal regulations require federal money recipients to establish and follow internal \ncontrols to ensure compliance with program requirements. These controls include \nknowledge of grant requirements and monitoring of program controls. \nAll paraprofessionals funded by Title I must have a high school diploma or its \nrecognized equivalent and meet one of the following requirements: \n\uf0b7 Have completed at least two years of study at an institution of higher \neducation \n\uf0b7 Have obtained an associate\u2019s or higher college degree \n\uf0b7 Have met a rigorous standard of quality and can demonstrate, through a \nformal state or local academic assessment, knowledge of and the ability to \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nassist in instructing, reading, writing and mathematics, or reading readiness, \nwriting readiness and mathematics readiness. \nThe District is responsible for ensuring all paraprofessionals it charges to the \nTitle I program have met the qualification requirements. The District must maintain \ndocumentation to support the paraprofess ionals\u2019 qualifications at the \nschool-building or District level. \nDescription of Condition \nWe reviewed the District\u2019s internal controls over the qualifications of \nparaprofessionals requirement to determine whether paraprofessionals charged to \nthe Title I grant were qualified. Our audit found that the District \u2019s procedures did \nnot include verifying and maintaining documentation demonstrating the \nparaprofessionals met all the requirements. \nWe consider this deficiency in internal controls to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District did not have a process in place to obtain evidence of a high school \ndiploma or its equivalent from its paraprofessionals when hired. Instead, the District \nrelied on its understanding that most colleges require a high school diploma for a \nstudent to be accepted for enrollment, for those paraprofessionals who did not take \nthe assessments required for qualification. \nEffect of Condition and Questioned Costs \nWithout adequate controls in place, the District cannot demonstrate that costs \ncharged to the grant were allowable. Further, without documentation showing that \na paraprofessional had a high school diploma or its equivalent, the District cannot \ndemonstrate Title I students were instructed by a qualified paraprofessional. \nOur audit found the District did not have evidence of a high school diploma or its \nequivalent on file for 10 of 14 paraprofessionals it charged to the Title I program. \nDuring the audit, the District was able to obtain high school diplomas or equivalent \nfor only six of the 10 paraprofessionals we tested. We are questioning the $57,382 \nin salaries and benefits the District charged to its Title I program for the remaining \nfour paraprofessionals the District could not demonstrate were qualified. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nRecommendation s \nWe recommend the District strengthen its internal controls by verifying and \nmaintaining supporting documentation to demonstrate all paraprofessionals meet \nthe qualification requirements. \nDistrict \u2019s Response \nThe District did not have a sufficient process in place to obtain physical proof of a \nhigh school diploma upon hire. Instead, the District relied on its understanding \nthat most colleges require a high school diploma for a student to be accepted for \nenrollment as well as the listing of the high school completion on the employment \napplication which is certified as true and factual by the employee\u2019s signature on \nthat application. \nIn order to resolve this issue, there has been an audit comp leted of all para \neducator employment files to identify individuals whose file does not contain \nsupporting documentation to sufficiently prove the requirements have been met by \nthe employee. These employees with deficiencies noted in their file are now be ing \ngiven the opportunity to provide a copy of their high school diploma, or a copy of \nhigh school transcript showing graduation date, or a copy of their GED or \na college transcript listing the high school or GED with date completed/issued. \nIn addition, h iring processes have been updated to require this documentation in \norder for an applicant's file to be considered complete and passed on for further \nconsideration of employment with the district. \nAuditor\u2019s Remarks \nWe thank District management and staff for their assistance during the audit. We \nwill follow up on the status of the issue during our next scheduled audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guida nce), section 516 Audit findings, establishes r eporting \nrequirements for audit findings. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nTitle 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, describes \nthe requirements for auditees to maintain internal controls over federal programs \nand comply with federal program requirements. \nTitle 34 CFR Part 200, Title I \u2013 Improving the Academic Achievement of the \nDisadvantaged, section 58 \u2013 Qualifications of paraprofessionals, establishes \nrequirements of paraprofessionals to work in Title I programs. \n \n \n \n \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Nine Mile Falls School District No 325/179", "School District", "2043", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe District participates in the School Breakfast and National School Lunch \nprograms, and received $228,873 for them during fiscal year 2017. These programs \nprovide funding for free and reduced-price meals for low-income students. Families \nmust meet income guidelines to be eligible for these programs. \nEach year, districts must select a sample of applications and verify that family \nincome information reported to the District is correct. The Office of Superintendent \nof Public Instruction (OSPI) instructs school districts on how to verify program \neligibility, including the number of applications that must be verified based on their \nnonresponse rates from the previous school year\u2019s verifications. The verification \nprocess must be completed by November 15 of each year. \nThe District was required to use a 3 percent focused sampling method, because the \nDistrict\u2019s nonresponse rate exceeded 20 percent during the 2015-2016 school year\u2019s \nverification process. This sampling method require d the District to select three \n\u201cerror prone\u201d applications for verification. An error-prone application is defined as \none where the reported monthly household income falls within $100 of the upper \nincome limit for free or reduced-priced meal eligibility. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDistricts must verify income support for the time period from the month before it \nreceived the application through the month it verifies the income reported on the \napplication. \nIf the verification process results in a reduction or termination of meal benefits, the \nDistrict must send a letter of adverse a ction to notify the family at least 10 days \nbefore the change takes effect. Also, the District must change the benefit status \nimmediately after this 10-day advance notice period. \nDescription of Condition \nAlthough the District did have a process in place t o perform the verification \nprocess, internal controls were not effective to ensure the District performed the \nverification steps accurately and in compliance with federal requirements. \nWe consider this control deficiency to be a material weaknesses. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District had a basic understanding of the verification process but was not aware \nit needed to use a different sampling method due to the change in the non-response \nrate it experi enced in the prior year. The District also was not aware of OSPI\u2019s \nguidelines for the support it needed to obtain to verify the reported household \nincomes. Because the District thought the household was eligible, it did not send \nthe letter of adverse actio n informing the household that benefits were being \nterminated. \nEffect of Condition and Questioned Costs \nA lack of proper internal controls over the verification process increases the risk \nthat free or reduced-price meals could be provided to children who were not eligible \nto receive them. \nOur audit found the District: \n\uf0b7 Used the wrong sampling method and selected an insufficient number of \napplications to verify \n\uf0b7 Did not obtain proper income verification documentation for one student \nand overclaimed meals by $242 \n\uf0b7 Did not inform a household it was no longer eligible to participate in the \nprogram within the 10-day period required by the program. This caused the \nDistrict to report incorrect response rate information to OSPI, which could \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \naffect the number of applications the District will need to verify during the \nnext fiscal year. \nRecommendation s \nWe recommend that the District: \n\uf0b7 Train employees responsible for the verification requirements to ensure \ncompliance with OSPI and U.S. Department of Agriculture regulations and \nguidance \n\uf0b7 Review its verification process to ensure its verifications follow OSPI \nguidelines \nDistrict \u2019s Response \nTo ensure that this doesn\u2019t occur in the future, the Director of Business will \nannually audit the accuracy of the program eligibility review by analyzing the \nfollowing: \n\uf0b7 The Sampling Method \u2013 The sampling method will be reviewed ensuring \nthat the correct method was selected based on federal guidelines. \n\uf0b7 The Review Process \u2013 the analysis of the error prone applications will be \nthoroughly audited looking for timely household income support, for wage \nverification that is clearly identifiable, and proper handling of benefit status \nchange when applicable. \nIn addition, the Director of Business will ensure that the Food Service Director has \nthe adequate training needed to properly adhere to USDA and/or OSPI regulations \nin regards to verification requirements. \nAuditor\u2019s Remarks \nWe thank District management and staff for their assistance during the audit. We \nwill follow up on the status of the issue during our next scheduled audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Acco untants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Princip les, and Audit Requirements for Federal Awards \n(Uniform Guidance) section 516 \u2013 Audit Findings, establishes reporting \nrequirements for audit findings. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nTitle 2 CFR Part 200, Uniform Guidance, section 303 \u2013 Internal controls, describes \nthe requirements for auditees to maintain internal controls over federal programs \nand comply with federal program requirements. \nTitle 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals \nand Free Milk in Schools , Section 6a \u2013 Verification requirements, esta blishes \nrequirements for verifying eligibility of children for free and reduced price meal \nbenefits. \n \n \n \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Nine Mile Falls School District No 325/179", "School District", "2043", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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\u2019s internal controls were not adequate to ensure compliance with Title I grant requirements for graduation rate reporting. CFDA Number and Title: 84.010 \u2013 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 \nDuring fiscal year 2017, the District spent $308,385 in Title I grant funds. The \nTitle I program\u2019s objective is to improve the teaching and learning of children who \nare at risk of not meeting challenging academic standards and who reside in areas \nwith high concentrations of children from low-income families. \nFederal regulations require federal-money recipients to establish and follow \ninternal controls to comply with program requirements. These controls include \nknowledge of grant requirements and monitoring of program controls. \nDistricts must report graduation rate data for all public high schools to the Office \nof Superintendent of Public Instruction (OSPI) annually. This is done by submitting \na Graduation Rate Report that indicates the student\u2019s enrollment status: graduated, \ntransferred out, dropped out, migrated to another country or deceased. The District \nmust retain adequate support for changes to a student\u2019s status. To confirm a student \nhas transferred out, the District must have official written docum entation that the \nstudent enrolled in another school or in an educational program that culminates in \nthe award of a regular high school diploma. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDescription of Condition \nOur audit examined the District\u2019s documentation for students it classified as \n\u201ctransferred out.\u201d \nThe District\u2019s controls were not adequate to ensure it gathered the required \ndocuments to support its classification of a student who left the District to be \nhomeschooled and several foreign exchange students who left the District to return \nto their home country. Specifically, the District did not obtain annual I ntent to \nProvide Home-Based Education forms (homeschool forms) for the homeschooled \nstudent, and did not retain the exchange -student applications for its exchange \nstudents. Without these forms, the District cannot report the students as confirmed \ntransfers. \nWe consider this control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nDistrict staff were not aware of the requirement to obtain and retain documentation \nto evidence transfers of foreign exchange students and students transferring to \nhome-schooled programs. The District thought it could discard the support for these \nstudents once they had left the District. \nEffect of Condition and Questioned Costs \nThe District did not obtain official written documentation to support the transfer \nstatus for seven of the 15 students tested. It i ncorrectly reported these students as \ntransferred out when it reported graduation rate data to OSPI. \nAlthough there are no questioned costs, the District is at risk of misrepresenting the \ngraduation rates. \nRecommendation s \nWe recommend the District: \n\uf0b7 Train and guide staff to ensure appropriate personnel understand the grant \nrequirements and the Secretary of State\u2019s records retention policy \nrequirements \n\uf0b7 Establish controls to obtain and keep current homeschool forms and foreign \nexchange applications for all students reported as transferred out \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDistrict \u2019s Response \nTo ensure that this weakness ceases, the Director of Business will ensure the \nfollowing: \n\uf0b7 That training is offered to appropriate personnel to ensure that they \nunderstand the grant requirements and th e Secretary of State\u2019s records \nretention requirements. \n\uf0b7 That controls are established that results with the District keeping current \nhomeschool forms and foreign exchange applications for all students \nreported as transferred out. \nAuditor\u2019s Remarks \nWe thank District management and staff for their assistance during the audit. We \nwill follow up on the status of the issue during our next scheduled audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Costs Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), Section 303 \u2013 Internal controls, describes the requirements \nfor auditees to maintain internal controls over federal programs and comply with \nfederal program requirements. \nTitle 2 CFR Part 200, Uniform Guidance, Section 516 \u2013 Audit findings, establishes \nreporting requirements for audit findings. \nTitle 34 CFR Part 200, Subpart A \u2013 Improving Basic Programs Operated by Local \nEducational Agencies, Section 200.19 \u2013 Other academic indicators, establishes the \nrequirement for Districts to have official written documentation to confirm a \nstudent transferred out. \n \n \n \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Mary Walker School District No 207", "School District", "2063", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe District participates in the School Breakfast, National School Lunch, and \nSummer Food Service programs, and received $248,011 from the programs in \nfiscal year 2017. These programs help fund free and reduced -price meals for \nlow-income students. Families must meet income requirements to be eligible for \nthese programs. \nProcurement \nFederal grant recipients must follow the more restrictive of federal, state or local \nprocurement requirements when purchasing food, equipment, supplies and \nservices with federal funds. The District\u2019s policy requires quotes from three or \nmore qualified sources for purchases be tween $3,500 and $75,000, which is \ncompliant with state law and federal regulations. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nSuspension and debarment \nFederal requirements prohibit grant recipients from contracting with or making \nsubawards to parties who have been suspended or debarred from doing business \nwith the federal government. The District must verify that all vendors receiving \n$25,000 or more have not been suspended or debarred. This verification may be \naccomplished by obtaining a written certification from the vendor, or inserting a \nclause in the contract in which the vendor states it is not suspended or debarred. \nAlternatively, the District may review the federal Excluded Parties List (EPLS) \nissued by the U.S. General Services Administration. The District must meet one \nof these requirements before entering into a contract with the vendor. \nDescription of Condition \nProcurement \nAlthough t he Distri ct has policies and procedures in place over procurement, \nthese were not effective in ensuring the District complied with applicable \nprocurement requirements. The District did not ensure it received quotes for all \npurchases between $3,500 and $75,000. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nSuspension and debarment \nThe Distri ct\u2019s internal controls were not effective to ensure it complied with \napplicable suspension and debarment requirements . The District did not verify \nvendors were not suspended or debarred for purchases exceeding $25,000. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nProcurement \nDistrict personnel were aware of the procurement requirements and District policy, \nbut the policy was not followed. The District asserts this was because of turnover \nin its food services department. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nSuspension and debarment \nAlthough the District was aware of the requirement, it did not ensure established \ncontrols were followed before making the award, due to a clerical oversight. \nEffect of Condition and Questioned Costs \nProcurement \nThe District paid two vendors $31,817 and $5,216, respectively but did not obtain \nquotes. \nBy not obtaining competing quotes, the District cannot be sure it received the best \npossible price for the purchases funded by the nutrition programs. \nSuspension and debarment \nThe District paid two vendors over $25,000. It did not verify that one of these \ntwo vendors, which it paid $31,817, had not been suspended or debarred. \nPayments on contracts to suspended or debarred vendors are unallowable and \nmight result in the District having to repay program funding to the grantor. \nBecause we were able to verify the vendor had not been suspended or debarred, \nwe are not questioning costs. \nRecommendation s \nProcurement \nWe recommend the District follow its established policy to ensure it meets federal \nrequirements for procuring purchases, and retain documentation to demonstrate \ncompliance. \nSuspension and debarment \nWe recommend the District follow established internal controls to ensure it can \ndemonstrate it verified its vendors are not suspended or debarred from \nparticipating in federal programs before entering into contracts. \nDistrict \u2019s Response \nThe District did not have adequate internal controls to ensure compliance with \nprocurement, and suspension and debarment requirements. \nThe Mary Walker School District has implemented the following procedures \nregarding suspension and debarment and procurement. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \n\uf0b7 The District will check and retain support of suspension and debarment \nprior to expending $25,000 or more with vendors when using federal funds. \n\uf0b7 The District will obtain quotes and retain support when making small \npurchases with federal funds less than $75,000. \nAuditor\u2019s Remarks \nWe thank the District for its cooperation during the audit and look forward to \nreviewing the District\u2019s corrective action during our next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 303 \u2013 Internal controls, describes the requirements \nfor auditees to maintain internal controls over federal programs and comply with \nfederal program requirements. \nTitle 2 CFR Part 200, Uniform Guidance, section 516 Audit findings, establishes \nreporting requirements for audit findings, and requirements for management of \nFederal awards to non-Federal entities. \nTitle 2 CFR Part 200 , Section 319 \u2013 Competition, establishes all procurement \ntransactions are to be conducted in a manner providing full and open competition, \nand requires non -federal entities to have written procedures for procurement \ntransactions. \nTitle 2 CFR Part 200, Section 320 \u2013 Methods of procurement to be followed , \ndescribes each allowable procurement method. \nTitle 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide \nDebarment and Susp ension (Nonprocurement) establishes no n-procurement \ndebarment and suspension regulations, implementing Executive Orders 12549 and \n12689. \n \n \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nMARY WALKER SCHOOL DISTRICT NO. 207 \nP.O. Box 159 ~ 500 N. 4th Street \nSpringdale, WA 99173-0159 \nPhone: (509) 258-4534 ~ Fax: (509) 258-4707 \n \nSUPERINTENDENT BOARD OF DIRECTORS PRINCIPAL (6-12) \nRick L. Winters District 1 ~ Jeffrey Canfield ~ Chairperson Matthew L. Cobb \n District 2 ~ James Scott \n District 3 ~ Amy Roy PRINCIPAL (PK-5) \nDIRECTOR OF BUSINESS SERVICES District 4 ~ Justyn Turner & SPECIAL SERVICES DIRECTOR \nSue 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", null, "WA", "Newport Consolidated Joint School District No 56-415", "School District", "1990", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe District participa tes in the School Breakfast, National School Lunch and \nSummer Food Service programs, and received $455,699 from them during the \n2016-17 school year. These programs provide funding for free and reduced -price \nmeals for low-income students. Families must meet income guidelines to be eligible \nfor these programs. \nEach year, districts must select a sample of program applications and verify that \nfamily income information re ported is correct. The Office of Superintendent of \nPublic Instruction (OSPI) instructs school districts on ho w to verify program \neligibility. Districts must review selected applicants\u2019 income documentation to \nconfirm students are receiving correct benefits of free or reduced-price meals. If the \nfamily\u2019s income does not meet requirements, the student is not eligible and must \npay full price for meals. OSPI instructions to districts include guidance for \ndetermining the number of applications that must be verif ied based on their \nnon-response rate from previous years\u2019 verifications. The verification process must \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nbe completed by November 15 each year. In addition, the verification summary \nreport is to be submitted to OSPI by February 1. \n The District needed to use a 3 percent focused sampling method, because the \nDistrict\u2019s nonresponse rate exceeded 20 percent during the 2015-2016 school year\u2019s \nverification process. This sampling method require d the District to select three \n\u201cerror prone\u201d applications for verification. An error-prone application is defined as \none in which the reported monthly household income falls within $100 of the upper \nincome limit for free or reduced-priced meal eligibility. \nDescription of Condition \nAlthough the District had a process in place to perform the verification process, \ninternal controls were not effective to ensure the District performed the verification \nsteps accurately and in compliance with federal requirements. \nWe consider this control deficiency to be a material weaknesses. \nThis issue was not reported as a finding in the prior audit. \nCause of Condition \nThe District had a basic understanding of the verification process but was not aware \nthat to select the correct number of applications it had to follow U.S. Depar tment \nof Agriculture (USDA) requirements to round up all fractions and decimals to the \nnearest whole number. The District did not review the applications it selected to \nensure each one met the criteria for classification as error-prone. \nEffect of Condit ion and Questioned Costs \nA lack of effective internal controls over the verification process increases the risk \nthat error -prone applications are not properly selected for verification. It also \nincreases the risk that free or reduced -price meals could be p rovided to children \nwho are not eligible to receive them. Further, the District could receive funding for \nhouseholds that do not qualify for free and reduced-price meals. \nOur audit found that the District did not select the appropriate number of \napplications to test. In addition, one of the applications the District selected for \nverification was not error-prone. As such, it should not have been selected for \nverification. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nRecommendation s \nWe recommend that the District: \n\uf0b7 Provide sufficient training to emplo yees responsible for the nutrition \nprogram to ensure compliance with the verification requirements in \naccordance with OSPI and USDA guidance \n\uf0b7 Review the verification process before the deadlines to ensure it is \nperformed in accordance with OSPI guidelines \nDistrict \u2019s Response \nThe District will provide sufficient training to employees responsible for the \nnutrition program to ensure compliance with the verification requirements in \naccordance with OSPI and USDA guidance. \nThe District will also review the verifi cation process prior to the deadlines to \nensure it is performed in accordance with OSPI guidelines. \nAuditor\u2019s Remarks \nWe thank District management and staff for their assistance during the audit. We \nwill follow up on the status of the issue during our next scheduled audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines sign ificant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 516 \u2013 Audit findings, establishes reporting \nrequirements for audit findings. \nTitle 2 CFR Part 200, Uniform Guidance, section 303 \u2013 Internal controls, describes \nthe requirements for auditees to maintain internal controls over federal programs \nand comply with federal program requirements. \nTitle 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals \nand Free Milk in Scho ols, Section 6a \u2013 Verification requirements, establishes \nrequirements for verifying eligibility of children for free and reduced price meal \nbenefits. \n \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nNewport School District #56-415 \n \n \nP.O. Box 70 Phone: (509) 447-3167 \n1380 W. 5th Street Fax: (509) 447-2553 \nNewport, 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", null, "WA", "Manson School District No 19", "School District", "1822", null, "no_match", "Washington State Auditor's Office", "Accountability audit \u2014 Manson School District No 19", "Accountability", 2017, "2014-09-01", "2017-08-31", "2018-05-24", "misappropriation", null, null, null, "The District\u2019s internal controls over Associated Student Body activities were insufficient to safeguard against potential loss and noncompliance with laws and regulations", "Background \nDistricts may use Associated Student Body (ASB) funds for optional and \nnoncurricular student activities that are cultural, athletic, recreational or social in \nnature, or that otherwise support ASB activities and programs. \nManson School District\u2019s ASB program collected revenue of about $68,000, \n$79,000 and $104,000 during fiscal years 2015, 2016 and 2017, respectively. \nDescription of Condition \nOur examination identified the following conditions: \nFundraisers and events \nFor each event or fundraiser, the ASB should retain source documentation of \nactivity such as beginning and ending number of tickets sold, inventory change, or \nmanual receipts issued to reconcile against actual funds collected. Without this \nreconciliation, the ASB might not be able to detect potential losses of inventory or \nfunds promptly. \nOur examination found the District did not document ASB Fundraiser Activity for \nall three fiscal years under audit. Therefore, the District cannot determine whether \nit received all money owed to it, and ultimately whether a loss or misappropriation \noccurred. \nIn addition, the ASB Council meeting minutes contained insufficient detail and did \nnot clearly state approvals of activities and events. \n Student Store \nThe District could not demonstrate whether it reconciled inventory counts to sales \nfor any of the four days we tested at the store. \nASB Council meeting minutes \nFor the three years under audit, the high school ASB Council met on a weekly basis \nand the middle school Council met on a bi-weekly basis. However, the District was \nable to provide documented minutes for only 15 meetings. In addition, the minutes \n \nWashington State Auditor\u2019s Office Page 7 \non file were not complete, lacking approval and support for purchases and \nfundraisers. \nNegative club balances \nFourteen of 72 clubs in fiscal year 2015, five of 73 clubs in fiscal year 2016, and \n13 of 67 clubs in fiscal year 2017 ended the year with negative balances at the club \nlevel, which does not comply with state regulations (WAC 392.138.125). \nCause of Conditi on \nThe District did not provide sufficient oversight to ensure established policies and \nprocedures were followed by the ASB, and specifically that necessary records such \nas Council minutes and fundraiser worksheets were completed properly and \nretained. \nEffect of Condition \nInadequate internal controls over ASB fundraising and disbursements, including \ninsufficient approval and monitoring by the ASB Student Council, increase the risk \nthat a loss or misappropriation of public funds might occur and not be detec ted \nquickly, if at all. \nRecommendation s \nWe recommend the District improve internal controls over ASB activities to \ncomply with state laws and regulation and adequately safeguard public resources. \nSpecifically, we recommend the District: \n\u2022 Provide adequate training to staff and students involved in ASB fundraisers \n\u2022 Reconcile fundraiser receipts to expected revenues as derived from \ninventory sold, tickets or another method of estimating expected revenue \n\u2022 Prepare, retain and monitor all necessary records for ASB activities \n\u2022 Retain all ASB Student Council Minutes and clearly document formal \napproval of activities, purchases and prior minutes \nDistrict \u2019s Response \nWe would like to thank the State Auditor\u2019s Office for pointing some issues with our \nASB. \nThe District plans to implement internal controls sufficient to ensure ASB records \nare kept as required. The District has already implemented the use of its point of \n \nWashington State Auditor\u2019s Office Page 8 \nsale system in the Student Store and ASB Concessions. As part of this system, \ninventories are maintained and reconciled to sales. \nAuditor\u2019s Remarks \nWe appreciate the steps the District is taking to resolve these issues. We will \nfollow-up on the condition of these matters in the next audit. \nApplicable Laws and Regulations \nAccounting Manual for Public Sc hool Districts in the State of Washington, \nChapter 3, Accounting Guidelines, Internal Control Structure, sets forth \nrequirements for establishing and maintaining an effective system of internal \ncontrols. \nAccounting Manual for Public School Districts in the State of Washington, \nChapter 9, Information Unique to Each Fund, Associated Student Bodies \nAssociation, sets forth guidelines for accounting of ASB funds. \nWAC 392-138-014 Accounting procedures and records, sets forth requirements for \naccounting methods and procedures to follow regulations and guidelines \nestablished in the Accounting Manual for Public Schools in the State of \nWashington. \nWAC 392- 138-125. As sociated student body public moneys \u2013 Disbursement \napproval \u2013 Total disbursements, sets forth requirements for ASB budgets and \ndisbursement approvals. \nWAC 392-123-010. The Accounting Manual, sets forth the requirements for the \nuse of the accounting manual by the District. \nRCW 28A.325.030 Associated student body program fund \u2013 Fund-raising activities \n\u2013 Non associated student body program fund moneys, sets forth requirements for \nconducting ASB fund-raising activities. \nDAN Gs50-05A-13 Rev. 2 establishes the retention requirements for governing and \nexecutive board meeting minutes. RCW 28A.400.030 Superintendent\u2019s duties, sets \nforth requirements for the school district superintendent to keep accurate records \nand detailed accounts for receipts and expenditures of school money.\n \nWashington State Auditor\u2019s Office Page 9 \nRELATED REPORTS \nFinancial \nOur opinion on the District\u2019s financial statements and compliance with federal grant program \nrequirements is provided in a separate report, which includes the District\u2019s financial statements. \nThat report is available on our website, http://portal.sao.wa.gov/ReportSearch. \n \nFederal grant programs \nWe evaluated internal controls and tested compliance with the federal program requirements, as \napplicable, for the District\u2019s 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", null, "WA", "Quincy School District No 144", "School District", "1873", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \nThe District participates in the School Breakfast, National School Lunch and \nSummer Food Service programs , which provide free and reduced -price meals for \nstudents from low -income families. It received $1,423,221 from these programs \nduring the 2016 -2017 school year. Families must meet income guidelines to be \neligible for these programs. \nEach year, districts must select a sample of applicants and verify that the family \nincome information reported to the district is correct. The Office of Superintendent \nof Public Instruction (OSPI) ins tructs school districts on how to verify program \neligibility. Districts must review selected applicants\u2019 income documentation and \nconfirm students are receiving correct benefits of free or reduced -price meals. \nOtherwise, the student is not eligible and must pay for meals at full price. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDescription of Condition \nThe District did not retain supporting documentation to demonstrate it performed \nthe required verification process. Therefore, we were not able to determine if the \nDistrict complied with this requirement. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was reported as a finding in the prior audit as finding 2016-001. \nCause of Condition \nOur prior audit reported non-compliance with verification requirements; however, \nthe audit occurred after the verification deadline for the 2016-17 school year. As a \nresult, the District was unable to implement audit recommendations before it \ncompleted the 2016 -2017 verification process. The cause of the prior audit issue \nwas that the District assigned inexperienced staff to the program and did not provide \nadequate oversight. \nEffect of Condition and Questioned Costs \nA lack of proper internal controls over the verification process increases the risk \nthat free or reduced-price meals could be provided to children who are not eligible \nto receive them. The District could receive funding for households that do not \nqualify for free and reduced -price meals. Because the District did not retain \ndocumentation to support its verification process, it cannot demonstrate it verified \nthat family income information was accurately reported for the number of \napplications required by the programs. \nRecommendation s \nWe continue to recommend the District: \n\uf0b7 Train staff regarding federal child nutrition program verification \nrequirements \n\uf0b7 Establish internal controls and adequate oversight to confirm that the \nannual verification process is completed properly and quickly \n\uf0b7 Retain adequate documentation to demonstrate compliance with \nverification requirements \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________\n \n \nDistrict \u2019s Response \nThe District has hired a Food Service Clerk position with a portion of the position \nbeing dedicated to fulfilling the Verification Process. This position will have \ncontinued training by OPSI, other districts and internal staff. Distric t office staff \nwill oversee that eligibility and verification processes to ensure that they are being \ncompleted timely and accurately. \nAuditor\u2019s Remarks \nWe appreciate the District\u2019s commitment to resolving the issues noted and will \nfollow up during the next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guida nce), section 516 Audit findings, establishes r eporting \nrequirements for audit findings. \nTitle 2 CFR Part 200, Uniform Guidance, section 303 describes the requirements \nfor auditees to maintain internal controls over federal programs and comply with \nfederal program requirements. \nTitle 7 CFR Part 245, Determining Eligibility for Free and Reduced Price Meals \nand Free Milk in Schools , Section 6a, Verification requirements, establishes \nrequirements for verifying eligibility of children for free and reduced price meal \nbenefits. \n \n \nWashington State Auditor's Office\n___________________________________________________________________________________________________________________", "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", null, "WA", "Kiona-Benton City School District No 52", "School District", "1818", null, "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 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 \u2013 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 \nThe federal Title I program\u2019s objective is to improve the teaching and learning of \nchildren who are at risk of not meeting state academic standards and who reside in \nareas with high concentrations of children from low-income families. During fiscal \nyear 2017, the District spent $537,021 in Title I program funds. \nFederal regulations require recipients of federal money to establish and follow \ninternal controls to ensure compliance with program requirements. These controls \ninclude knowledge of grant requirements and monitoring of program controls. \nState tests are based on the K-12 learning standards. Students are tested in English \nlanguage arts, math and science. Assessments measure students\u2019 learning, including \nthe critical -thinking and problem -solving aspect s of the new standards. Results \nfrom these tests not only will allow accountability for schools and districts, but also \nwill allow states to be compared to each other in a fair system. OSPI updates \nassurance forms and training logs yearly to ensure school districts are following the \nprescribed requirements and have an understanding of any new requirements that \nshould be followed when giving assessments to students. \n \n \nWashington State Auditor's Office\n \n \nDistricts must establish and maintain an assessment system that is valid, reliable \nand consistent with relevant professional and technical standards. Within their \nassessment system s, states must have policies and procedures to maintain test \nsecurity and ensure that districts implement those policies and procedures. \nDescription of Condition \nThe District could not show it obtained the most recent version of OSPI\u2019s Security \nTest Assurance forms. In addition, the District did not retain records of teacher \nattendance at required trainings or that it followed required security procedures \nbefore, during and following assessment testing of students for any of the District\u2019s \nschools. \nWe consider this internal control deficiency to be a material weakness. \nThis issue was not reported as a finding in the prior audit \nCause of Condition \nThe District\u2019s appointed Assessment Coordinator was not aware OSPI had released \nan updated version of its assessment security form. Also, t he District\u2019s \nIntermediate Counselor was responsible for maintaining assessment testing \ndocuments, including teacher training logs, and prior test assurance and post -test \nassurance forms. Because of an unexpected vacancy of the position, the District \nstated it placed all of the Counselor\u2019s files in storage, but could not locate them. \nEffect of Condition \nThe District was unable to demonstrate it complied with its District Security Plan \nfor ensuring security requirements over Assessment Tests were followed in \ncompliance with OSPI policies and procedures . The District also was unable to \nprovide completed test assurance forms from each school in the District and did not \nobtain the most recent version of OSPI\u2019s assessment security forms for distribution \nto each school. The District schools include: \n\u2022 K-2: Primary \n\u2022 3-5: Intermediate \n\u2022 6-8: Middle \n\u2022 9-12: High \nThe Dis trict also did not comply with the requirements for retaining adequate \nsupport (test assurance forms and teacher training logs) as required. \n \n \nWashington State Auditor's Office\n \n \nRecommendation \nWe recom mend the District develop controls to ensure it uses the most recent \nversion of OSPI \u2019s Assessment Test System forms and develop policies and \nprocedures to store and safeguard the forms completed for each school. \nDistrict\u2019s Response \nWe concur with the State Auditor\u2019s federal audit from the period September 1. 2016 \nthrough August 31, 2017. \nThe records retention issue found by the auditor was a mere error by our \nassessment coordinator and lack of oversite by our federal grants director. We \nhave made some changes to our processes to ensure that in the future proper \ndocument retention requirements are followed the District will: 1) go over all \nprocedures with the Assessment Coordinator each year 2) have the Assessment \nCoordinator maintain a copy of the testing security documents at the conclusion of \neach state testing session and all originals documentation will be sent to the \nFederal Program Director to ensure records are maintained and available for \naudit or inspection. These changes should help minimize this concern in the future. \nAuditor\u2019s Remarks \nWe thank the District for its cooperation throughout the audit and the s teps it is \ntaking to address these concerns. We will review the status of the District\u2019s \ncorrective action during our next audit \nApplicable Laws and Regulations \nThe American Insti tute of Ce rtified Publi c A ccountants de fines sig nificant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, Compliance Audits, paragraph 11. \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 303 Internal controls, describes the requirements for \nauditees to maintain internal controls over federal programs and comply with \nfederal program requirements. \nTitle 20 U.S. Code section 6311(b)(3)(C)(iii) requires state and local education \nagencies to establish and maintain a valid, reliable assessment systems, consistent \nwith relevant professional and technical standards.\n \n \n \n \nWashington State Auditor's Office", "https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021391&isFinding=false&sp=false", "2026-07-30 13:24:54"]], "truncated": false, "filtered_table_rows_count": 2588, "expanded_columns": [], "expandable_columns": [], "columns": ["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"], "primary_keys": [], "units": {}, "query": {"sql": "select 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 from audit_findings order by rowid limit 51", "params": {}}, "facet_results": {}, "suggested_facets": [{"name": "match_method", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet=match_method"}, {"name": "audit_type", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet=audit_type"}, {"name": "fiscal_year", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet=fiscal_year"}, {"name": "finding_category", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet=finding_category"}, {"name": "severity", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet=severity"}, {"name": "period_start", "type": "date", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet_date=period_start"}, {"name": "period_end", "type": "date", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet_date=period_end"}, {"name": "published_date", "type": "date", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet_date=published_date"}, {"name": "fetched_at", "type": "date", "toggle_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_facet_date=fetched_at"}], "next": "50", "next_url": "https://research.theboringparts.com/mytown-research/audit_findings.json?_next=50", "private": false, "allow_execute_sql": true, "query_ms": 1475.558350008214, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}