audit_findings: 14

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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
14 wa-sao 1020366 2016-001   WA City of Chehalis City/Town 0487 5311475 no_match Washington State Auditor's Office Financial and Federal audit — City of Chehalis Financial and Federal 2016 2016-01-01 2016-12-31 2019-03-28 federal_award_compliance material_weakness     The City’s accounting and financial statement preparation controls were not adequate to accurately report the Schedule of Expenditures of Federal Awards Background City management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting . The City also must prepare a Schedule of Expenditures of Federal Awards (SEFA) as part of the annual financial report. Title 2 Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires a grantee to identify, in its accounts, all federal program awards received and expended. The City must report all federal awards expended on the SEFA each fiscal year. Our audit identified internal control deficiencies that adversely affected the City’s ability to produce reliable financial statements. Description of Condition The former Finance Manager was unaware of the types of grants received by the City, which contributed to the City’s lack of controls over the proper reporting of both state and federal grants on the SEFA. Additionally, t he City did not have an effective review process to ensure the accuracy of the SEFA. We consider this to be a significant deficiency in internal controls. Cause of Con dition The former Finance Manager lacked adequate training and resources to accurately report federal expenditures on the schedule. Further, the City lacked a formalized review process over the final financial statement s. Washington State Auditor’s Office Page 7 Effect of Condition Our audit identified the following errors on the SEFA provided for audit:  Airport Improvement Grant program (CFDA 20.106) grant expenditures were understated by $576,693.  A State Transportation Grant was recorded in error , which resulted in the program being overstated by $396,180. These changes to the SEFA resulted in a change of audit scope that required the City to obtain an audit of an additional federal grant program for fiscal year 2016. The city corrected these errors. Recommendation s We recommend the City:  Ensure employees responsible for financial statement preparation have adequate training and resources to ensure financial schedules are presented accurately  Implement an effective review process over the final financial statements City ’s Response The City of Chehalis would like to thank the Washington State Auditor’s Office and the Olympia Team for its hard work on the City of Chehalis audits and its recommendations to improve our process. The City would like to note that 1) the condition addressed by this audit finding does not impact any of the financial statement in the City’s annual report except for the 2016 Schedule of Expenditures of Federal Awards (SEFA); 2) 2016 SEFA reporting discrepancy was identified by the City during 2017 SEFA preparation, subsequent to the completion of the 2016 audit, and reported to the Auditor’s Office. The former Finance Manager retired in September 2017. A new Finance Director was hired in December 2017 who is working to improve staff training and implement financial repo rting and review procedures over the SEFA to ensure proper reporting of SEFA. Auditor’s Remarks We appreciate the City’s commitment to resolve this finding. We will review the corrective action taken during our next regular audit. We th ank the City for it s cooperation and assistance during the audit. Washington State Auditor’s Office Page 8 Applicable Laws and Regulations Government Auditing Standards, December 2011 Revision, paragraph 4.23 establishes reporting requirements related to significant deficiencies or material weaknesses in internal control, instances of fraud or abuse, and noncompliance with provisions of law, regulations, contracts, or grant agreements. The American Institute of Certified Public A ccountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards , s ection 265, Com municating Internal Controls R elated Matter Identified in an Audit, paragraph 7. RCW 43.09.200 Local government accounting – Uniform system of accounting, requires the state auditor to prescribe the system of accounting and reporting for all local governments. The Budgeting, Accounting, and R eporting System (BARS) Manual, 3.1.3, Internal Control, r equires each loc al government to establish and maintain an effective system of internal controls that provides reasonable assurance that the government will achieve its objectives. Title 2 U.S. Code of Federal Regulations (CFR) Part 200.502 Determining Federal awards expended, provides the basis for determining when federal awards expended. Washington State Auditor’s Office Page 9 https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020366&isFinding=false&sp=false 2026-07-30 13:24:54