audit_findings: 8

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
8	wa-sao	1020019	2016-002	4	WA	City of Seattle	City/Town	0433	5363000	geoid_place	Washington State Auditor's Office	Financial and Federal audit — City of Seattle	Financial and Federal	2016	2016-01-01	2016-12-31	2019-08-19	internal_controls	material_weakness			The Seattle City Employees’ Retirement System d id not have adequate internal controls in its accounting, which caused delays in its annual financial statement preparation	Background Management is responsible for designing, implementing and maintaining internal controls to fairly present financial statements and provide reasonable assurance regarding reliability of financial reporting. The City prepares its financial statements in accordance with generally accepted accounting principles (GAAP) as prescribed by the Budgeting, Accounting and Reporting System (BARS) Manual. A certified public accountant firm audited the fund financial statements of the Seattle City Employees’ Retirement System [SCERS] and provided its report to our Office. In accordance with auditing standards, we are responsible for reporting internal control deficiencies that affect the City’s financial reporting. Descrip tion of Condit ion The certified public accountant firm’s audit identified the following significant deficiency in internal controls over financial reporting: “Account Reconciliations and Reporting During the year, the investment and securities lending general ledger accounts were not analyzed and reconciled with subsidiary information on a periodic basis. These periodic reconciliations, together with the posting of correcting journal entries, help ensure timely and accurate interim financial information that can be used to monitor and control operations. In addition, timely reconciliation of accounts is most cost efficient, since reconciliation at a later date is often more difficult and time consuming. A key accounting system goal should be to provide tim ely, accurate financial information for management.” Cause of Condition The City did not prioritize timely account reconciliations of the Seattle City Employees’ Retirement System. Washington State Auditor's Office Effec t of Conditi on Timely reconciliations of general ledger accounts were not performed throughout the year. Further, untim ely reconciliations caused a delay in pr eparing the fin ancial statements. Rec omm endations The certified public accountant firm recommended: “SCERS adopt procedures to ensure that the monthly analysis of general ledger accounts becomes a routine procedure. It was additionally identified the financial statements reflect the reclassification between investment income and securities lending income not reflected in the trial balance. While the proper amounts were reflected in the financial statements, we recommend timely, accurate journal entries in order to prevent errors.” City’s Respo nse In 2015, SCERS began monthly reconciliations with the monthly investment summaries received from its custodial bank, Bank of New York (BNY). To date, SCERS has only been able to receive detailed securities lending information on an annual basis from BNY. SCERS is continuing to work with BNY to ensure that monthly investment summaries are complete and accurate and that detailed s ecurities l ending information are provided monthly. Audit or’s Rem arks We appreciate the City’s commitment to resolve the identified condition and thank City personnel for their cooperation and assistance during the audit. Appli cable Laws and Regulat ions Government Auditing Standards, December 2011 Revision, paragraph 4.23 states: 4.23 When performing GAGAS financial audits, auditors should communicate in the report on in ternal control over financial reporting and compliance, based upon the work performed, (1) significant deficiencies and mat erial w eaknesses in in ternal control; (2) instances of fraud and noncompliance with provisions of laws or regulations that have a material effect on the audit and any other instances that warrant the attention of those charged with governance; (3) no ncompliance with provisions of contracts or grant agreements that has a material effect on the audit; and (4) abuse that has a material effect on the audit. Washington State Auditor's Office The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards , section 265, as follows: Deficiency in internal control. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely b asis. A deficiency in design exists when (a) a control necessary to meet the control objective is missing, or (b) an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met. A deficiency in operation exists when a properly d esigned control does not operate as designed or when the person performing the control does not possess the necessary authority or competence to perform the control effectively. Material weakness. A deficiency, or a combination of deficiencies, in internal control over fin ancial reporting, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be pr evented, or d etected and corrected, on a timely basis. A reasonably possibility exists when the likelihood of an event occurring is either reasonably possible or probably as defined as follows: Reasonably possible. The chance of the future event or events occurring is more than remote but less than likely. Probable. The future event or events a re likely to occur. Significant deficiency. A deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those charged with governance. A11 Indicators of material weaknesses in internal control include:  identification of fraud, whether or not material, on the part of senior management. For the purpose of this indicator, the term “senior management” includ es the principal executive and fin ancial officers as well as any other members of senior man agement who play a significant role in the entity's financial reporting process; Washington State Auditor's Office  restatement of previously issued financial statements to reflect the correction of a material misstatement due to fraud or error;  identification by the auditor of a material misstatement of the financial statements under audit in circumstances that indicate that the m isstatement would not have been detected and corrected by the entity's internal control; and  ineffective oversight of the entity's financial reporting and internal control by those charged with governance. RCW 43.09.200 Local government accounting – Uniform system of accounting, states in part: The state auditor shall formulate, prescribe, and install a system of accounting and reporting for all local governments, which shall be uniform for every public institution, and every public office, and every public account of the same class. Budgeting, Accounting, and R eporting S ystem (BARS) Manual - Accounting, Accounting Principles and Internal Control, Internal Control states in part: 3.1.3.20 Internal control is a process – affected by those charged with governance, management and other p ersonnel designed to provide reasonable assurance regarding the achievement of objectives in the following categories:  Effectiveness and efficiency of operations  Compliance with applicable laws and regulations  Reliability of financial reporting 3.1.3.30 Management and the governing body are responsible for the government’s performance, compliance and financial reporting. Therefore, the adequacy of internal control to provide reasonable assurance of achieving these objectives is also the responsibility of management and the governing body. The governing body has ultimate responsibility for ensuring adequate controls to achieve objectives, even though primary responsibility has been delegated to management. Since management and the governing body are assumed to work in harmony, both parties are collectively referred to as “management” throughout the rest of this section. 3.1.3.140 This objective refers to fair p resentation of financial statements and r equired schedules in all material r espects in accordance with the stated basis of accounting. Washington State Auditor's Office 3.1.3.150 In meeting this objective, the government should have controls that accomplish the following key functions:  Identification of financial events – Controls should ensure fin ancial events and transactions are properly identified and recorded.  Properly applying accounting standards – Controls should ensure correct criteria and methodology is applied when accounting for financial events. When the correct method of accounting for or reporting a transaction is unclear, the government should seek clarification by performing r esearch, contracting for accounting assistance, or communicating with the State Auditor’s Office or standard setting bodies.  Correctly accounting for all financial events – Controls should ensure that:  Only valid transactions are recorded and reported.  All transactions occurred during the period are recorded and reported.  Transactions are recorded and reported at properly valued and calculated amounts.  Recorded and reported tr ansactions accurately reflect legal rights and obligations.  Transactions are recorded and reported in the account and fund to which they apply.  Preparation of the annual report – Controls should ensure that fin ancial stat ements and r equired s chedules are properly compiled and p repared from sou rce accounting records. Controls should also ensure correct presentation of statements and schedules. Washington State Auditor's Office	https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020019&isFinding=false&sp=false	2026-07-30 13:24:54