{"database": "mytown-research", "table": "audit_findings", "rows": [[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"]], "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": ["rowid"], "primary_key_values": ["14"], "units": {}, "query_ms": 6.2344880134332925, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}