audit_findings: 12

This data as json

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
12	wa-sao	1020019	2016-006	4	WA	City of Seattle	City/Town	0433	5363000	geoid_place	Washington State Auditor's Office	Financial and Federal audit — City of Seattle	Financial and Federal	2016	2016-01-01	2016-12-31	2019-08-19	federal_award_compliance	material_weakness			The City did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards	Background City management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting. These controls should ensure financial events are identified properly and presented completely. Controls should also ensure the criteria and accounting methodology applied to financial events are correct. Local governments in Washington that spend federal funds must prepare a Schedule of Expenditures of Federal Awards (SEFA) as part of the annual financial report. Federal regulations require grantees to identify, in their accounts, all federal money spent on the SEFA each fiscal year. Our audit identified a deficiency in internal controls that adversely affected the City’s ability to produce a relia ble SEFA. Because of its effect on the City’s financial reporting, we consider this a significant deficiency. Description of Condition When preparing the SEFA, the Citywide Accounting department relied on other City departments’ supporting documentation a nd information to ensure accurate presentation. During the 2017 audit, Citywide Accounting brought to our attention that a department did not report its 2016 grant expenditures for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds , which were funded by the U.S. Environmental Protection Agency (EPA). Cause of Condition The City did not clearly understand the SEFA reporting requirements for the grant under the Budgeting, Accounting and Reporting System (BARS) Manual and Uniform Guidance. The Department treated this grant as a federal loan and reported the 2016 expenditures upon its first drawdown in 2017. Washington State Auditor's Office Effect of Condition Inaccurate financial reports limit access to financial information used by City officials, the public, state and federal agencies and other interested parties. In addition, these conditions delay the audit process and increase audit costs. The City understated its 2016 SEFA by $17,760,345 because it did not include expenditures for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds. The correct amount makes this a major program required to be audited for fiscal year 2016. The City subsequently corrected the misstatement. Our Office completed the review of this grant, and updated and reissued our financial audit report and federal single audit report in 2019. Recommendations We recommend the City dedicate sufficient time and resources to strengthen internal controls over SEFA preparation to ensure the information received from the departments is accurate and based on federal expenditures. We further recommend the City to tra in departmental staff responsible for SEFA preparation to review the BARS Manual and Uniform Guidance to ensure expenditures are reported in the correct year. City’s Response The City acknowledges the Auditor’s concerns regarding inadequate internal controls over financial reporting on the SEFA. As relates to the specific deficiency, the Department of Ecology Loan for the Henderson North Combined Sewer Overflow Reductions project, the auditor asserts that the loan drawdowns covering 2015 and 2016 were not recorded in those years. The City disputes the finding for 2015. Because the loan in question was not awarded to the City until 2016, expenditures of federal funds were not known when the SEFA was prepared for 2015. Further, the City received guidance from the EPA indicating that the triggering action for audit purposes is when an SRF borrower submits an invoice/disbursement/payment request to the state. The City did not submit a disbursement until 7/31/2016. Regarding 2016, the City acknowledges that the drawdown request submitted in 2016 but received in 2017 was not included in the 2016 SEFA. As federal (EPA) and State (Department of Ecology) agencies have provided conflicting guidelines, the City will work to clarify rules and procedures for reporting retroactive awards on the SEFA. The City appreciate SAO’s guidance on this issue. Washington State Auditor's Office Auditor’s Remarks Per OMB Circular A-133 Compliance Supplement 2015 Part 4 for the CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds (CWSRF), Environmental Protection Agency (EPA) requires the grantees to include project expenditures during the audit period when they were incurred, regardless of when the grantee received reimbu rsement. EPA further clarifies that if a subrecipient incurs expenditures under an approved CWSRF loan in one audit period for which it is not reimbursed by the State until a subsequent audit period, those expenditures should be reported on the subrecipie nt’s SEFA in the year in which the outlay was made, regardless of when the subrecipient received reimbursement. We thank the City for its commitment to fiscal accountability and accurate financial reporting. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 510 – Financial Statements, establishes criteria and requirements related to the preparation of the schedule of expenditures of Federal awards. The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, paragraph 11. Budget, Accounting and Reporting Standards (BARS) manu al 4.8.5 establishes reporting requirements related to the schedule of expenditures of Federal awards. Title 2 CFR Part 200, Uniform Guidance, section 302 – Financial Management, requires grantees to identify, in their accounts, all Federal awards re ceived and expended and the Federal programs under which the awards were received. Title 2 CFR Part 200, Uniform Guidance, section 514 – Scope of Audit, requires the audit be conducted in accordance with Generally Accepted Government Audit ing Standards (GAGAS) and encompass the financial statements and s chedule of expenditure of Federal awards (SEFA). OMB Circular A-133 Compliance Supplement 2016 Part 4 Environmental Protection Agency (EPA) CFDA 66.458 Capitalization Grants for Clean Water State Revolving Funds IV. Other Information requires the grantees to include project expenditures during the audit period when they were incurred, regardless of when the grantee received reimbursement. Washington State Auditor's Office	https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false	2026-07-30 13:24:54