The Washington State Auditor’s Office reported nothing significantly adverse was found during their most recent annual audit of City of Ferndale internal controls and financial records for the period of January 1, 2018 through December 31, 2019.
According to the Washington State Auditor’s Office report, in the areas audited, the City’s “operations complied, in all material respects, with applicable state laws, regulations, and its own policies, and provided adequate controls over the safeguarding of public resources.”
As for financial reporting, the auditors reported “we did not identify any deficiencies in internal control that we consider to be material weaknesses.”
Financial records and internal control over financial reporting were audited. Specifically, the
following areas were reviewed during this audit period:
- Payroll – leave balances and accruals
- Accounts payable – electronic funds transfers
- Contract compliance – cash receipting and deposit timeliness
- Tracking and monitoring of theft sensitive assets, such as computers, tools, and
- Self-insurance for unemployment
- Cost allocation plan – equitable distribution of indirect costs
The audit report did include a notation about “certain matters related to cost allocations and theft-sensitive assets that we communicated to City management and Mayor and City Council in a letter dated November 6, 2020. We appreciate the City’s commitment to resolving those matters.”
In the November 6th letter, auditors voiced concern about how costs were being allocated between restricted funds designated for certain uses, such as utilities. Their concern centered on availability of documentation to support allocations of costs.
This concern was voiced after a previous audit in a letter to City staff recommending the City strengthen its internal controls, procedures, and documentation over cost allocations. According to the most recent letter, “Although the City took steps to follow a cost allocation plan, the cost allocation plan did not have enough detail to determine allocated costs were reasonable and benefited the funds being charged.”
In addition, the letter said the City needed to improve and better adhere to “policies and effective internal controls to safeguard assets purchased with public funds.”