HomeMy WebLinkAbout2020 sao audit response
2020 Audit Environment
Covid-19 Pandemic
Austere Staffing
High staff turnover - recruiting difficulties
Software Implementations - Sympro and Munis
Exceedingly Complex Rules
Ever shifting guidance: "hiding the ball" or "moving the goalposts"
$144,330,833 Variance in Annual Report - overstatementReconciled Total Deposits and Investments over 100+ funds Total Cash and Investments 2020 Audited Annual Report 0.55%, $803,066
99.45%,
The new (2018) definition in the Auditing Standards Board's Statement on Auditing
Standards of materiality is:
Misstatements, including omissions, are considered to be material if there is a
substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the financial statements.
.55% is not considered material.
Reconciled Total Deposits and Investments over 100+ funds
$ 144,330,833
Variance in Annual Report - overstatement$ 803,066
Total Deposits and Investments Reported 145,133,899
0.55%
Classic case of "hiding the ball" or "moving the goalposts."
$113.4 million in ending cash and Investment balances were misclassified:
Should have been classified as Investment Trust Accounts, not custodial.
We said they were blue when they actually purple - very little practical effect.
These accounts were listed as custodial in our 2019 financial statements based on guidance from the received from the SAO in April 2020.
The SAO had no problem with these accounts being listed as custodial in our 2019 financial statements published in December 2020.
In May 2021 we reported these accounts as custodial again in our 2020 financial statements.
On December 9, 2021 we were informed that these accounts were misclassified.
December 15, 2021 SAO guidance - Section 3.2.9 in the BARS Cash Manual was changed to reflect the new classification guidance.
Custodial fund beginning cash and investments were overstated by $353,395 were overstated
because the County did not report prior year adjustments it later identified as necessary.
Prior SAO guidance was to correct these misstatements in the year they were found - not as prior year adjustments.
PEER Performance
14 0f 39 Washington Counties had 16 findings between them in 2021. Jefferson County had no findings.
13 0f 39 Washington Counties had 19 findings between them in 2022. King County had 4 findings.
King and Pierce counties have substantially larger Auditor and Treasurer staffs doing the same work we do here.
Below is an example finding from Pierce County.
Pierce County 2020 SAO Audit 2 Findings
Effect of Condition The County’s financial information contained an error that management did not detect. During our audit, we found the County did not correctly implement GASB Statement
No. 84 for fiduciary funds.
As a result, the County overstated its Fiduciary Fund liability balance by $1.173 billion, which caused the prior period adjustment to be understated by $1.298 billion.
The effect of these errors and other miscellaneous errors caused the County to understate its net position by $1.146 billion. The County corrected these errors in the final financial
statements.