audit_findings: 16

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
16 wa-sao 1020705 2017-001   WA Northwest Educational Service District No 189 Educational Service District 2649   not_municipal Washington State Auditor's Office Financial and Federal audit — Northwest Educational Service District No 189 Financial and Federal 2017 2016-09-01 2017-08-31 2018-05-31 internal_controls significant_deficiency     The District did not report the liabilities related to its other postemployment benefits in accordance with governmental accounting standards Background District board members, state and federal agencies, and the public rely on the information included in the financial statements and report to make decisions. District management is responsible for designing and following in ternal controls that provide reasonable assurance regarding the reliability of financial reporting. Our audit identified a significant deficiency in internal controls over financial reporting that hindered the District’s ability to produce reliable finan cial statements. Description of Condition The District did not report the liabilities related to other postemployment benefits in accordance with Governmental Accounting Standards Board (GASB) Statement No. 45 – Accounting and Financial Reporting by Employ ers for Postemployment Benefits Other Than Pensions. Cause of Condition When GASB Statement No. 45 became effective for governments, the District reported under a different basis of accounting. Subsequently, the District switched to reporting in accordance with generally accepted accounting principles (GAAP); and asserts that staff evaluated the GASB during conversion and determined it was not applicable. The District chose not to restate the financial statements to include other post - employment benefits for fiscal year 2017. Effect of Condition District did not obtain an actuarial study to determine the amount of liabilities related to other post-employment benefits. Consequently, the District did not report Washington State Auditor's Office ___________________________________________________________________________________________________________________ this liability or present the note disclosures and other information required by generally accepted accounting principles. Recommendation s We recommend the District:  Perform necessary research and obtain needed actuarial studies to correctly report other post-employment benefit liabilities on its financial statements.  Establish a more formalize process for technical review of the financial statements to ensure accurate preparation and reporting of the District financial statements in accordance with generally accepted accounting principles and reporting requirements. District ’s Response The District appreciates the opportunity to respond to the finding of the State Auditor’s office; however we respectfully disagree with the State Auditor’s Office (SAO) position related to the application of Government Accounting Standards Board Statement No. 45 (GASB 45) – Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions, to the Northwest Educational Service District No. 189 financial statements. As indicated in the State Auditor’s Office finding, it is accurate that the District did not obtain an actuarial study to determine postemployment benefit (OPEB) liabilities, as the District believes it has properly accounted for OPEB liab ilities in accordance with GASB 45. The District’s review and analysis of the underlying accounting pronouncements resulted in recording activity for post -retirement benefits for employees offered through the Health Care Authority (HCA) as a cost -sharing plan under an arrangement equivalent to a trust. The District’s current relationship with the HCA consists of monthly payments for health benefit premiums for eligible active employees. The District does not make any direct payments to HCA for retiree healthcare, and was unaware that funds paid for health benefit premiums could be used for such a purpose. All nine Educational Service District’s in the state of Washington changed from modified accrual financial reporting to full accrual financial reporting in accordance with generally acce pted accountin g principles (GAAP) in the 2011-2012 school year. During the year of implementation, the ESD accounting manual went through a significant revision with consultation from OSPI and the State Auditor’s Office, including a thorough technical review of all GAAP and GASB technical guidance. GA SB 45 was in effect at the time the revised manual Washington State Auditor's Office ___________________________________________________________________________________________________________________ was adopted. The State Auditor’s Office conducts an audit of the District on an annual basis. The implementation of GASB 45 has never been brought up as an issue during these annual audits, and the District has received a clean audit opinion with no findings every year since the initial year of financial reporting in accordance with GAAP. Several months after the conclusion of the District’s 2016 -17 annual audit, including the exit conference attended by th e District Board representatives, at which no findings, management letter, or exit items were identified, the State Auditor’s Office communicated to the District that they would receive a finding for not reporting a GASB 45 liability. The State Auditor’s O ffice did not accept the collaborative research and position of the nine ESD’s in the application of GASB 45. Further communication indicated that even if the District procured services for an actuarial study for GASB 45 liabilities that the District would still receive a finding, but would receive a clean audit opinion. Government Accounting Standards Board Statement No. 75 (GASB 75) – Accounting and Financial Reporting for Postemployment Benefits other than Pensions replaces GASB 45 beginning with the 201 7-2018 reporting year. The District is aware of this new GASB statement and has been actively researching and analyzing the applicability of GASB 75 since the beginning of this year. The District evaluated the options and decided the fiscally responsible solution was to avoid spending in excess of $13,000 for an actuarial study, plus additional costs related to time for the State Auditor’s Office to audit the study, in order to make adjustments to our 2016 -17 financial statements for an expiring GASB statem ent. The District’s position is to focus time and resources on the implementation of GASB statements that are applicable effective with the 2017 -18 year. Management’s belief is that the 2016 -17 financial statements, as reported, fairly reflect the financia l position of the District, and accurately provides information needed to make financial decisions, consistent with the last six years. Unfortunately, this decision resulted in this audit finding as well as a qualified opinion on the financial statements. In response to the State Auditor’s Office recommendations, the District will continue the research of OPEB liabilities in accordance with GASB 75 and make necessary changes to the financial statements and financial disclosures, as appropriate. In addition , the District will implement a more formalized technical review of the financial statements in accordance with generally accepted accounting principles and reporting requirements, and document the review for the State Auditor’s Office. Washington State Auditor's Office ___________________________________________________________________________________________________________________ The District apprec iates the opportunity to respond to the State Auditor’s Office finding. Auditor’s Remarks We appreciate the District’s communication throughout the audit process. We reassert that District management is responsible for designing and following internal cont rols that provide reasonable assurance regarding the reliability of financial reporting, including compliance with Generally Accepted Accounting Principles (GAAP). We look forward to working with the District again and reviewing the implementation of GASB 75 Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions during the next audit. Applicable Laws and Regulations Government Accounting Standards Board Statement No. 45 Government Auditing Standards, December 2011 Revision, paragraph 4.23 The American Institute of Certified Public Accountants Codification of Statements on Auditing Standards, section 265 Washington State Auditor's Office ___________________________________________________________________________________________________________________ https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020705&isFinding=false&sp=false 2026-07-30 13:24:54