{"database": "mytown-research", "table": "audit_findings", "rows": [[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"]], "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": ["16"], "units": {}, "query_ms": 12.44459001463838, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}