audit_findings: 18
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| 18 | wa-sao | 1020959 | 2016-001 | WA | City of Soap Lake | City/Town | 0325 | 5365345 | no_match | Washington State Auditor's Office | Accountability audit — City of Soap Lake | Accountability | 2016 | 2015-01-01 | 2016-12-31 | 2018-05-17 | internal_controls | The City lacked adequate internal controls to bill utility accounts in accordance with City Code | Background The City operates water and sewer utilities, and collected $889,115 and $894,316 in water and sewer revenues in 2015 and 2016 , respectively. The utilities serve about 1,350 customers, using rates established by Municipal City Code, Chapter 13. The City periodically amends City Code through ordinances, which update annual rates in the Code’s appendix. Ninety customers are classified as either commercial or commercial residen tial, and most have multiple units associated with their accounts. Description of Condition The City’s internal controls did not ensure customers were billed in accordance with City Code. Further, City management did not adequately monitor utility billings to determine City Code was followed. Specifically, the City charged commercial and commercial-residential customers for one unit per sewer services account. However, City Code stipulates that each additional unit under an account should be charged the established base rate. In addition, the City Code section pertaining to water rates and overage charges does not specify whether commercial customers should receive additional base water consumption before incurring overage charges for multi-unit accounts. Cause of Condition City staff incorrectly classified commercial and commercial -residential sewer utility accounts as “single unit” in the billing system and lacked understanding of the City’s rate setting code over the water utility. Effect of Condition Between 2015 and 2016, the City under -billed about $200,000 for sewer utilities across 15 accounts, which is a loss of revenue to the City. The majority of under- billing is because of not charging for additional units by account. Because City Code lacks clarity for multi-unit water utility rates, we are unable to determine the exact amount of over - or under-billing. However, we estimate the City potentially under-billing about $30,000 for the same 15 accounts. Washington State Auditor’s Office Page 7 Recommendation s We recommend the City: Train utility billing staff to properly classify commercial and commercial - residential sewer utility accounts in the billing system Clarify the City Municipal Code section for commercial customer water rates and overage charges for multi-unit accounts. Develop and follow monitoring controls that ensure utility customers are billed according to rates approved in City Code. City ’s Response The City concurs with what the audit discovered as we have also made that same discovery. The City is working to ensure compliance with the city ordinances and will be reviewing them before the next approved budget. The City has also contacted the city attorney for assistance to ensure the ordinances are consistently worded and that the council’s wishes are properly applied. Auditor’s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations 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 Reporting System (BARS) Manual, 3.1.3, Internal Control, requires each local government to establish and maintain an effective system of internal controls that provides reasonable assurance that the government will achieve its objectives. ORDINANCE NO. 2015 – 1210; Amendment to Chapter 13.14 of the Soap Lake Municipal Code titled “Sewer Service System” states, in part: B.5. “Water service unit” shall mean the greater of the following: each structure, or structures, residence, or residences, lot, or portion or separate unit of a condomin ium used as a dwelling unit by a family, as herein defined, shall be deemed one water service unit. By way of example, a triplex shall be three Washington State Auditor’s Office Page 8 water service units; a condominium with 20 separate dwelling units shall be 20 water service units. Chapter 13.14.290 Sewer rates, states, in part: A. The Soap Lake City council shall, annually or more often if necessary, by resolution, establish a schedule “Appendix S” of charges and rates for sewer hookup and connection charges, sewer rates, allotments and ove rage charges. The Resolution shall also list all other sewer service fees and charges CHAPTER 13.14 APPENDIX "S"SEWER RATES”, states in part: C. Monthly Service Fee: Each calendar month during which a sewer service connection is active at any time shall result in the following charges: 1. Each residential sewer connection serving a single residential dwelling unit: $52.14 per month. Each additional residential dwelling unit using the same sewer service: $52.14 per month. 2. Each commercial sewer connection serving one commercial service: $40.84 per month. Each additional commercial unit using the same sewer service: $40.84 per month. 3. Each commercial residential connection serving at least one commercial residential dwelling unit shall be deemed to be one residential commercial unit: $40.84 per month. 4. Usage Charge for Each Commercial Sewer Service Unit and for Each Commercial Residential Dwelling Sewer Service Unit: In addition to the monthly base rate charge for each commercial sewer service unit and for each commercial dwelling unit, there shall be charged Washington State Auditor’s Office Page 9 for sewer usa ge the sum of $1.58 for each 1 00 cubic feet of water or portion thereof supplied to the commercial water service unit account and to a comm ercial dwelling water service unit account commencing with the first 100 cubic feet of water. 5. Minimum monthly base rate charge for each customer shall be determined by multiplying the monthly base rate charge times the number of sewer service units and then adding the usage charge of $1.58 per 100 cubic feet of water or portion thereof supplied to the commercial residential or commercial water service account to the base unit charges, commencing with the first 1 00 cubic feet of water. CHAPTER 13.18 APPENDIX "W" WATER RATES states, in part: Commercial 1. Basic Water Rate: $26.60 per month 2. Overage Charge for water usage over 500 cubic feet: $1.54 per each additional 100 cubic feet or portion thereof. Commercial Residential 1. Basic Water Rate: $26.60 per month for each commercial residential connection serving a commercial residential dwelling unit; provided, however, that for each residential dwelling unit in excess of one served by a single meter the monthly water charge shall be $19.32, to include the use of 500 cubic feet of water per month per each unit. 2. Overage Charge for water usage over 500 cubic feet: $1.54 per each additional 100 cubic feet or portion thereof. Washington State Auditor’s Office Page 10 | https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020959&isFinding=false&sp=false | 2026-07-30 13:24:54 |