{"database": "mytown-research", "table": "audit_findings", "rows": [[3, "wa-sao", "1017656", "2015-003", 4, "WA", "City of Seattle", "City/Town", "0433", "5363000", "geoid_place", "Washington State Auditor's Office", "Financial and Federal audit \u2014 City of Seattle", "Financial and Federal", 2015, "2015-01-01", "2015-12-31", "2019-08-19", "federal_award_compliance", "material_weakness", null, null, "The City did not have adequate internal controls in place to ensure accurate financial reporting on 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. These \ncontrols should ensure financial events are identified properly and presented \ncompletely. Controls should also ensure the criteria and accounting methodology \napplied to financial events are correct. \nLocal governments in Washington that spend federal funds must prepare a Schedule \nof Expenditures of Federal Awards (SEFA) as part of the annual f inancial report. \nFederal regulations require grantees to identify, in their accounts, all federal money \nspent on the SEFA each fiscal year. \nOur audit identified a deficiency in internal controls that adversely affected the \nCity\u2019s ability to produce a relia ble SEFA. Because of its effect on the City\u2019s \nfinancial reporting, we consider this a significant deficiency. \nDescription of Condition \nWhen preparing the SEFA, the Citywide Accounting department relied on other \nCity departments\u2019 supporting documentation a nd information to ensure accurate \npresentation. During the 2017 audit, Citywide Accounting brought to our attention \nthat a department did not report its 2015 grant expenditures for the CFDA 66.458 \nCapitalization Grants for Clean Water State Revolving Funds , which were funded \nby the U.S. Environmental Protection Agency (EPA) \nCause of Condition \nThe City did not clearly understand the SEFA reporting requirements for the grant \nunder the Budgeting, Accounting and Reporting System (BARS) Manual and \nUniform Guidance. The Department treated this grant as a federal loan and \nreported the 2015 expenditures upon its first drawdown in 2017. \n \n \nWashington State Auditor\u2019s Office Page 7 \nEffect of Condition \nInaccurate financial reports limit access to financial information used by Ci ty \nofficials, the public, state and federal agencies and other interested parties. In \naddition, these conditions delay the audit process and increase audit costs. \nThe City understated its 2015 SEFA by $15,612,937 because it did not include \nexpenditures for the CFDA 66.458 Capitalization Grants for Clean Water State \nRevolving Funds. The correct amount makes this a major program required to be \naudited for fiscal year 2015. \nThe City subsequently corrected the misstatement. Our Office completed the \nreview of this grant, and updated and reissued our financial audit report and \nfederal single audit report in 201 9 \nRecommendation s \nWe recommend the City dedicate sufficient time and resources to strengthen \ninternal controls over SEFA preparation to ensure the informa tion received from \nthe departments is accurate and based on federal expenditures. \nWe further recommend the City to train departmental staff responsible for SEFA \npreparation to review the BARS Manual and Uniform Guidance to ensure \nexpenditures are reported in the correct year. \nCity \u2019s Response \nThe City acknowledges the Auditor\u2019s concerns regarding inadequate internal \ncontrols over financial reporting on the SEFA. As relates to the specific deficiency, \nthe Department of Ecology Loan for the Henderson North Combined Sewer \nOverflow Reductions project, the auditor asserts that the loan drawdowns covering \n2015 and 2016 were not recorded in those years. The City disputes the finding for \n2015. Because the loan in question was not awarded to the City until 2016, \nexpenditures of federal funds were not known when the SEFA was prepared for \n2015. Further, t he City received guidance from the EPA indicating that the \ntriggering action for audit purposes is when an SRF borrower submits an \ninvoice/disbursement/payment request to the state. The City did not submit a \ndisbursement until 7/31/2016. \nRegarding 2016, the City acknowledges that the drawdown request submitted in \n2016 but received in 2017 was not included in the 2016 SEFA. As federal (EPA) \nand State (Department of Ecology) agencies have provided conflicting guidelines, \nthe City will work to clarify rules and procedures for reporting retroactive awards \non the SEFA. The City appreciate SAO\u2019s guidance on this issue. \n \nWashington State Auditor\u2019s Office Page 8 \nAuditor\u2019s Remarks \nPer OMB Circular A -133 Compliance Supplement 2015 Part 4 for the CFDA \n66.458 Capitalization Grants for Clean Water State Revolving Funds (CWSRF), \nEnvironmental Protection Agency (EPA) requires the grantees to include project \nexpenditures during the audit period wh en they were incurred, regardless of when \nthe grantee received reimbursement. EPA further clarifies that if a subrecipient \nincurs expenditures under an approved CWSRF loan in one audit period for which \nit is not reimbursed by the State until a subsequent audit period, those expenditures \nshould be reported on the subrecipient\u2019s SEFA in the year in which the outlay was \nmade, regardless of when the subrecipient received reimbursement. \nWe thank the City for its commitment to fiscal accountability and accurate financial \nreporting. \nApplicable Laws and Regulations \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 510 \u2013 Financial Statements, establishes criteria and \nrequirements related to the preparation of the s chedule of expenditures of Federal \nawards. \nThe American Institute of Certified Public A ccountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nBudget, Accounting and Reporting Standards (BARS) manu al 4.8.5 establishes \nreporting requirements related to the schedule of expenditures of Federal awards. \nTitle 2 CFR Part 200, Uniform Guidance, section 302 \u2013 Financial Management, \nrequires grantees to identify, in their accounts, all Federal awards re ceived and \nexpended and the Federal programs under which the awards were received. \nTitle 2 CFR Part 200, Uniform Guidance, section 514 \u2013 Scope of Audit, requires \nthe audit be conducted in accordance with Generally Accepted Government \nAuditing Standards (GAGAS) and encompass the financial statements and \nschedule of expenditure of Federal awards (SEFA). \nOMB Circular A -133 Compliance Supplement 2015 Part 4 Environmental \nProtection Agency (EPA) CFDA 66.458 Capitalization Grants for Clean Water \nState Revolving Funds IV. Other Information requires the grantees to include \nproject expenditures during the audit period when they were incurred, regardless of \nwhen the grantee received reimbursement. \n \n \nWashington State Auditor\u2019s Office Page 9", "https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1017656&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": ["3"], "units": {}, "query_ms": 0.6795389926992357, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}