State Auditors Office Update Presented to the Puget Sound Finance Officers Association December 14,...
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State Auditor’s Office Update Presented to the Puget Sound Finance Officers Association December 14, 2012 1 Chuck Pfeil, CPA Director of State and Local Audit
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Transcript of State Auditors Office Update Presented to the Puget Sound Finance Officers Association December 14,...
State Auditor’s Office UpdatePresented to the Puget Sound Finance
Officers Association
December 14, 2012
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Chuck Pfeil, CPADirector of State and Local Audit
Topics
1. Transitioning to a new State Auditor
2. Audit frequency
3. Local government financial condition
4. Public Development Authorities (PDAs) and Public Facilities Districts (PFDs)
5. On call contracting
6. Receiving payments through a vendor
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Topics
7. Electronic BARS
8. Online filing requirement
9. Single Audit reform
10.SEC
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Transitioning to a new State Auditor
Troy Kelley, State Auditor-elect
Doug Cochran, chief of staff
Ruta Fanning, transition team leader
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Audit Frequency Budgets and cycles regularly reviewed at team
level
State Auditor’s Office reassessing Accountability Audits in schools, cities and counties.
Current school cycles: 85 annual 120 two year 41 three year 49 limited-scope accountability audits (audit
assessments)
110 offered less frequent audits; 61 accepted
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Audit Frequency
Current city & town cycles: 110 annual 117 two year 40 three year 40 limited-scope accountability audits (audit
assessments)
123 being offered less frequent audits
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Audit Frequency
Current county cycles: 30 annual 9 two year
4 being offered less frequent audits Budget reductions from $3,300 to $33,000
being made
Plan on annual statewide review
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State Auditor’s Office
Audit Summary on Local Government Financial Condition
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Local Government Financial Condition
Our audits evaluate financial condition at least once every three years.
Small but growing trend of distressed governments: 88 governments reported on since 2006
28 cities, two counties, 16 schools and 42 special purpose districts
Reported 22 governments in 2008 and 37 in 2010
Growing state and national interest.
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Local Government Financial Condition Government types most affected
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Local Government Financial Condition
Government types most affected
In 2006 we found most financial condition issues in hospitals and school districts.
School districts showing signs of distress have declined.
We continue to see distress in hospitals and a growing frequency in entities like cities, counties, risk pools, public development authorities and public facilities districts.
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Local Government Financial Condition The state has limited authority to step in
The Superintendent of Public Instruction can intervene when school districts are faced with distressed financial condition or the prospect of insolvency.
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Local Government Financial Condition
Where are these governments?
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Local Government Financial Condition
Resources
State Auditor’s Office Client Support Portal/Local Government Performance Center
State Treasurer’s 2010 report on financial health of cities and counties
Association of Washington Cities “Red Flag Checklist”
Government Finance Officers Association “Fiscal First Aid Resource”
Future Tool: Enhancements to the State Auditor’s Local Government Financial Reporting System
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State Auditor’s Office
Audit Summary on Public Development Authorities (PDAs) and Public Facility Districts (PFDs)
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PDAs & PFDs
We audit PDAs and PFDs at least every three years.
Many do an effective job.
We have found recurring audit issues with some.
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PDAs & PFDs
What are they? Public corporations formed by cities, towns or counties.
Established to carry out a specific function.
PDA purposes vary widely: Convention center Sports facility Museum Housing Economic development Tall ships Public market
PFDs are formed to acquire, create or operate certain public facilities: Convention center Museum Sports, recreation and entertainment facilities17
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PDAs & PFDs
What have we found?
Common audit issues fall into four areas:
1. Inadequate monitoring by the creating entities.
2. Inadequate governance by the appointed boards.
3. Declining or distressed financial condition.
4. Non-compliance with laws and regulations.
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PDAs & PFDsRecommendations to creating entities Ensure appointed officials receive training and
guidance on applicable laws and regulations.
Ensure appointed board members take an active role in monitoring operations.
Attend audit entrances and exits.
Monitor their financial health.
Inform the State Auditor when new PDAs and PFDs are created.
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PDAs & PFDsRecommendations to the Legislature
Change state law to require creating entities to:
Monitor the PFDs they create. (This requirement is already in PDA law.)
Receive annual reports from the PDAs and PFDs summarizing operations.
Notify the State Auditor of new PDAs and PFDs.
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On Call Contracting
Some government use what they refer to as on call contracting
Bid for a type of service for a period of time. Vaguely specified.
Not specifically authorized in state law
But we are not saying they aren’t legal
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On Call Contracting
Concerns center around public works. Early warning based on interactions with L&I and MRSC.
Make sure you are in compliance with applicable laws (bidding, contracting, prevailing wage,…)
Questions? Cindy Evans, Manager, Legal Services
Scott Bills, Asst Audit Manager [email protected]
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Receiving payments through a vendor
Growing number of entities accepting payments through a vendor
Often appears to citizen that payment is being made to the government
Legal concern Funds not transferred to government timely
Funds sitting in vendors bank; not a qualified public depository
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Electronic BARS
Have published 15 BARs manuals/reporting packages in .pdf and paper
Consolidated those into 10 manuals
2012 is last year for paper BARS
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Electronic BARS
Creating manual that combines web-based and .pdf….indexing our .pdf
Will be released in January
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Online Filing Requirement
Online filing done by most governments 1,000 of 1,700 filers in 2012
Will be working to encourage greater use in 2013
Incentive will be f/s creation for cash basis filers
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Proposed Federal Audit Changes
OMB considering Federal Audit changes:
Higher audit threshold Fewer compliance requirements Focus on improper payments,
fraud, errors and waste Higher questioned cost threshold
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Securities & Exchange Commission Report on Municipal Securities Market
July 31 report issuedhttp://www.sec.gov/news/studies/2012/munireport073112.pdf Seeking expanded authority including:
Setting issuer disclosure requirements(timeframe, frequency, content)
Establishing the form and content of financial statements
Questionnaire in Fall 2012
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Auditor’s Office Contacts
Brian Sonntag, CGFMState Auditor(360) [email protected]
Chuck Pfeil, CPADirectorof State and Local Audit(360) [email protected]
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