HomeMy WebLinkAboutWA State 2019 Audit
Financial Statements and Federal Single Audit
Report
City of Pasco
For the period January 1, 2019 through December 31, 2019
Published December 24, 2020
Report No. 1027509
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (564) 999-0950 Pat.McCarthy@sao.wa.gov
Office of the Washington State Auditor
Pat McCarthy
December 24, 2020
Mayor and City Council
City of Pasco
Pasco, Washington
Report on Financial Statements and Federal Single Audit
Please find attached our report on the City of Pasco’s financial statements and compliance with
federal laws and regulations.
We are issuing this report in order to provide information on the City’s financial condition.
Sincerely,
Pat McCarthy
State Auditor
Olympia, WA
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Office of the Washington State Auditor
TABLE OF CONTENTS
Schedule of Findings and Questioned Costs ................................................................................... 4
Schedule of Audit Findings and Responses .................................................................................... 6
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards..................................................................................................... 9
Independent Auditor's Report on Compliance for Each Major Federal Program and Report on
Internal Control Over Compliance in Accordance With the Uniform Guidance ......................... 12
Independent Auditor's Report on Financial Statements ................................................................ 15
Financial Section ........................................................................................................................... 19
Corrective Action Plan for Findings Reported Under Uniform Guidance ..................................109
About the State Auditor's Office ..................................................................................................110
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Office of the Washington State Auditor
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
City of Pasco
January 1, 2019 through December 31, 2019
SECTION I – SUMMARY OF AUDITOR’S RESULTS
The results of our audit of the City of Pasco are summarized below in accordance with Title 2 U.S.
Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Financial Statements
We issued an unmodified opinion on the fair presentation of the financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component units and remaining fund information in accordance with accounting
principles generally accepted in the United States of America (GAAP).
Internal Control over Financial Reporting:
Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over financial reporting that we consider to be significant deficiencies.
Material Weaknesses: We identified deficiencies that we consider to be material
weaknesses.
We noted no instances of noncompliance that were material to the financial statements of the City.
Federal Awards
Internal Control over Major Programs:
Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over major federal programs that we consider to be significant deficiencies.
Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
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Office of the Washington State Auditor
We issued an unmodified opinion on the City’s compliance with requirements applicable to each
of its major federal programs.
We reported no findings that are required to be disclosed in accordance with 2 CFR 200.516(a).
Identification of Major Federal Programs
The following programs were selected as major programs in our audit of compliance in accordance
with the Uniform Guidance.
CFDA No. Program or Cluster Title
14.218 CDBG – Entitlement Grants Cluster – Community Development Block
Grants/Entitlement Grants
20.205 Highway Planning and Construction Cluster – Highway Planning and
Construction
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
the Uniform Guidance, was $750,000.
The City did not qualify as a low-risk auditee under the Uniform Guidance.
SECTION II – FINANCIAL STATEMENT FINDINGS
See Finding 2019-001.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED
COSTS
None reported.
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Office of the Washington State Auditor
SCHEDULE OF AUDIT FINDINGS AND RESPONSES
City of Pasco
January 1, 2019 through December 31, 2019
2019-001 The City’s internal controls over financial reporting were
inadequate to ensure accurate reporting.
Background
The City’s elected officials, state, and federal agencies, and the public rely on the
information included in the financial statements and reports to make decisions. City
management is responsible for designing, implementing and maintaining internal
controls that provide reasonable assurance regarding the reliability of financial
reporting.
Government Auditing Standards, prescribed by the Comptroller General of the
United States, requires the auditor to communicate material weaknesses, defined
below in the Applicable Laws and Regulations section, as a finding.
Description of Condition
Our audit identified the following deficiencies in internal controls over financial
reporting that, when taken together, represent a material weakness:
Governmental Accounting Standards Board Statement No. 34 (GASB 34)
outlines the criteria for reporting a major fund on the financial statements.
Governmental and proprietary fund financial statements focus on major
funds. The financial statements should present major funds individually and
non-major funds in aggregate. Accounting standards provide quantitative
thresholds for identifying which funds must be reported as major. The City
prepared a calculation to determine its major funds. However, the City
missed two major funds because it did not incorporate current guidance in
the tool it used to determine the criteria for reporting a major fund.
The City did not have an effective process in place to review the financial
statements to ensure they were accurate and complete.
Cause of Condition
The City uses a spreadsheet to help with the calculation and determination of major
funds. The City did not update the spreadsheet to align with current guidance and
ensure the calculation of major funds included all applicable criteria. In addition,
the City did not dedicate adequate resources to perform a detailed review of the
financial statements.
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Office of the Washington State Auditor
Effect of Condition
The material weakness in internal controls caused the following material errors
found in the financial statements submitted for audit:
The City did not report the Ambulance Fund or the Local Improvement
District Loan Fund as major funds, as required by GASB 34.
Our audit identified several other, less significant errors in the statements,
notes, and schedules.
Recommendation
We recommend the City dedicate sufficient resources to preparing accurate
financial statements under generally accepted accounting practices (GAAP),
including ensuring that tools used to prepare the financial statements reflect current
guidance. In addition, the City should establish a robust process to review the final
financial statements to ensure they are accurate and complete.
City’s Response
The City is appreciative of the work of the State Auditor’s Office, and agrees with
their finding. The City recognizes the importance of accurate reporting and strives
to continuously improve reporting. Upon notification of the error, the spreadsheet
calculation was corrected and the 2019 report recreated to provide correct
presentation. Since the finding notification, the City has implemented a software
solution that integrates with our accounting program. This program will support
the production of future annual statements. Use of the program, will standardize
incorporation of all financial information for report preparation. Additionally, the
software is updated annually to reflect new accounting pronouncements.
Auditor’s Remarks
We appreciate the City’s commitment to resolve this finding and thank the City for
its cooperation and assistance during the audit. We will review the corrective action
taken during our next regular audit.
Applicable Laws and Regulations
Government Auditing Standards, December 2011 Revision, paragraph 4.23
establishes reporting requirements related to significant deficiencies or material
weaknesses in internal control, instances of fraud or abuse, and noncompliance with
provisions of law, regulations, contracts, or grant agreements.
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Office of the Washington State Auditor
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 265, Communicating Internal Control Related Matters Identified
in an Audit, paragraph 7.
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Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
City of Pasco
January 1, 2019 through December 31, 2019
Mayor and City Council
City of Pasco
Pasco, Washington
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component units and remaining fund information of the City of Pasco, as of and for the
year ended December 31, 2019, and the related notes to the financial statements, which collectively
comprise the City’s basic financial statements, and have issued our report thereon dated
December 16, 2020.
As discussed in Note 16 to the 2019 financial statements, in February 2020, a state of emergency
was declared that could have a negative financial effect on the City. Management’s plans in
response to this matter are also described in Note 16.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal
control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies and therefore, material weaknesses or significant
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Office of the Washington State Auditor
deficiencies may exist that were not identified. However, as described in the accompanying
Schedule of Audit Findings and Responses, we identified certain deficiencies in internal control
that we consider to be material weaknesses.
A deficiency in internal control 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 basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the City’s financial statements will not be prevented, or detected and
corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance. We consider the deficiencies described in the
accompanying Schedule of Audit Findings and Responses as Finding 2019-001 to be material
weaknesses.
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free
from material misstatement, we performed tests of the City’s compliance with certain provisions
of laws, regulations, contracts and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However, providing
an opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required
to be reported under Government Auditing Standards.
CITY’S RESPONSE TO FINDINGS
The City’s response to the findings identified in our audit is described in the accompanying
Schedule of Audit Findings and Responses. The City’s response was not subjected to the auditing
procedures applied in the audit of the financial statements and, accordingly, we express no opinion
on the response.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City’s internal control or on compliance. This report is an integral part of an audit performed in
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Office of the Washington State Auditor
accordance with Government Auditing Standards in considering the City’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose. However, this
report is a matter of public record and its distribution is not limited. It also serves to disseminate
information to the public as a reporting tool to help citizens assess government operations.
Pat McCarthy
State Auditor
Olympia, WA
December 16, 2020
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Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR
EACH MAJOR FEDERAL PROGRAM AND REPORT ON
INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE
WITH THE UNIFORM GUIDANCE
City of Pasco
January 1, 2019 through December 31, 2019
Mayor and City Council
City of Pasco
Pasco, Washington
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM
We have audited the compliance of the City of Pasco, with the types of compliance requirements
described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could
have a direct and material effect on each of the City’s major federal programs for the year ended
December 31, 2019. The City’s major federal programs are identified in the accompanying
Schedule of Findings and Questioned Costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and
conditions of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and the audit
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Those standards and the Uniform Guidance require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
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Office of the Washington State Auditor
referred to above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about the City’s compliance with those
requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. Our audit does not provide a legal determination on the City’s compliance.
Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2019.
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
Management of the City is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the City’s internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program in order to determine the auditing procedures that are appropriate in the circumstances
for the purpose of expressing an opinion on compliance for each major federal program and to test
and report on internal control over compliance in accordance with the Uniform Guidance, but not
for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over
compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
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Office of the Washington State Auditor
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control
that might be material weaknesses or significant deficiencies. We did not identify any deficiencies
in internal control over compliance that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
Purpose of this Report
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other
purpose. However, this report is a matter of public record and its distribution is not limited. It also
serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.
Pat McCarthy
State Auditor
Olympia, WA
December 16, 2020
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Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON
FINANCIAL STATEMENTS
City of Pasco
January 1, 2019 through December 31, 2019
Mayor and City Council
City of Pasco
Pasco, Washington
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund and the discretely presented component units and
remaining fund information of the City of Pasco, as of and for the year ended December 31, 2019,
and the related notes to the financial statements, which collectively comprise the City’s basic
financial statements as listed on page 19.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
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Office of the Washington State Auditor
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the City’s preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each
major fund and the aggregate discretely presented component units and remaining fund
information of the City of Pasco, as of December 31, 2019, and the respective changes in financial
position and, where applicable, cash flows thereof, and the budgetary comparison for the General
and Ambulance funds, for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Matters of Emphasis
As discussed in Note 16 to the 2019 financial statements, in February 2020, a state of emergency
was declared that could have a negative financial effect on the City. Management’s plans in
response to this matter are also described in Note 16. Our opinion is not modified with respect to
this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis and required supplementary information listed on page 19
be presented to supplement the basic financial statements. Such information, although not a part
of the basic financial statements, is required by the Governmental Accounting Standards Board
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Office of the Washington State Auditor
who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements as a whole. The accompanying
Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as
required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
This schedule is not a required part of the basic financial statements. Such information is the
responsibility of management and was derived from and relates directly to the underlying
accounting and other records used to prepare the basic financial statements. The information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and
certain additional procedures, including comparing and reconciling such information directly to
the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the
information is fairly stated, in all material respects, in relation to the basic financial statements
taken as a whole.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
December 16, 2020 on our consideration of the City’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on internal control over financial reporting or on compliance. That report is an
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Office of the Washington State Auditor
integral part of an audit performed in accordance with Government Auditing Standards in
considering the City’s internal control over financial reporting and compliance.
Pat McCarthy
State Auditor
Olympia, WA
December 16, 2020
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Office of the Washington State Auditor
FINANCIAL SECTION
City of Pasco
January 1, 2019 through December 31, 2019
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis – 2019
BASIC FINANCIAL STATEMENTS
Statement of Net Position – 2019
Statement of Activities – 2019
Balance Sheet – Governmental Funds – 2019
Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental
Funds – 2019
Reconciliation of Governmental Funds Statement of Revenues, Expenditures and
Changes in Fund Balance to the Statement of Activities – 2019
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual
– General Fund – 2019
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual
– Ambulance Fund – 2019
Statement of Net Position – Proprietary Funds – 2019
Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds
– 2019
Statement of Cash Flows – Proprietary Funds – 2019
Statement of Net Position – Fiduciary Funds – 2019
Statement of Changes in Fiduciary Net Position – 2019
Notes to Financial Statements – 2019
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the Net OPEB Liability and Related Ratios – Old Fire OPEB –
2019
Schedule of Investment Returns – Old Fire OPEB – 2019
Schedule of City Contributions – LEOFF 1 OPEB – 2019
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Office of the Washington State Auditor
Schedule of Changes in the Total OPEB Liability and Related Ratios – LEOFF 1 OPEB –
2019
Schedule of Changes in the City’s Net Pension Liability and Related Ratios – Old Fire
Pension Fund – 2019
Schedule of Contributions – Fire Pension Fund – 2019
Schedule of Investment Returns – Fire Pension Plan – 2019
Schedule of Proportionate Share of the Net Pension Liability (Asset) – PERS 1, PERS
2/3, LEOFF 1, LEOFF 2
Schedule of Employer Contributions – PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 – 2019
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards – 2019
Notes to the Schedule of Expenditures of Federal Awards – 2019
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Office of the Washington State Auditor
CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER
UNIFORM GUIDANCE
City of Pasco
January 1, 2019 through December 31, 2019
This schedule presents the corrective action planned by the City for findings reported in this report
in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance).
Finding ref number:
2019-001
Finding caption:
The City’s internal controls over financial reporting were
inadequate to ensure accurate reporting.
Name, address, and telephone of City contact person:
Richa Sigdel, Finance Director;
525 N 3rd, Pasco, WA 99301;
(509) 545-3488
Corrective action the auditee plans to take in response to the finding:
The City has updated its major fund calculation spreadsheet as well as implemented a software
system which will complete a separate major fund calculation to ensure accuracy. Further,
independent review of the major fund calculations is an itemized step in the City’s CAFR
Checklist.
Anticipated date to complete the corrective action: Completed
Finance Department (509) 545-3420 Fax (509) 544-3082
P.O. Box 293 525 N. Third Ave. Pasco, WA 99301
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Office of the Washington State Auditor
ABOUT THE STATE AUDITOR’S OFFICE
The State Auditor’s Office is established in the state’s Constitution and is part of the executive
branch of state government. The State Auditor is elected by the citizens of Washington and serves
four-year terms.
We work with our audit clients and citizens to achieve our vision of government that works for
citizens, by helping governments work better, cost less, deliver higher value, and earn greater
public trust.
In fulfilling our mission to hold state and local governments accountable for the use of public
resources, we also hold ourselves accountable by continually improving our audit quality and
operational efficiency and developing highly engaged and committed employees.
As an elected agency, the State Auditor’s Office has the independence necessary to objectively
perform audits and investigations. Our audits are designed to comply with professional standards
as well as to satisfy the requirements of federal, state, and local laws.
Our audits look at financial information and compliance with state, federal and local laws on the
part of all local governments, including schools, and all state agencies, including institutions of
higher education. In addition, we conduct performance audits of state agencies and local
governments as well as fraud, state whistleblower and citizen hotline investigations.
The results of our work are widely distributed through a variety of reports, which are available on
our website and through our free, electronic subscription service.
We take our role as partners in accountability seriously, and provide training and technical
assistance to governments, and have an extensive quality assurance program.
Contact information for the State Auditor’s Office
Public Records requests PublicRecords@sao.wa.gov
Main telephone (564) 999-0950
Toll-free Citizen Hotline (866) 902-3900
Website www.sao.wa.gov
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Accountability Audit Report
City of Pasco
For the period January 1, 2017 through December 31, 2018
Published August 5, 2019
Report No. 1023178
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 Pat.McCarthy@sao.wa.gov
Office of the Washington State Auditor
Pat McCarthy
August 5, 2019
Mayor and City Council
City of Pasco
Pasco, Washington
Report on Accountability
Thank you for the opportunity to work with you to promote accountability, integrity and openness
in government. The State Auditor’s Office takes seriously our role of providing state and local
governments with assurance and accountability as the independent auditor of public accounts. In
this way, we strive to help government work better, cost less, deliver higher value and earn greater
public trust.
Independent audits provide essential accountability and transparency for City operations. This
information is valuable to management, the governing body and public stakeholders when
assessing the government’s stewardship of public resources.
The attached comprises our independent audit report on the City’s compliance with applicable
requirements and safeguarding of public resources for the areas we examined. We appreciate the
opportunity to work with your staff and we value your cooperation during the audit.
Sincerely,
Pat McCarthy
State Auditor
Olympia, WA
Washington State Auditor’s Office Page 3
TABLE OF CONTENTS
Audit Results ................................................................................................................................... 4
Related Reports ............................................................................................................................... 6
Information about the City .............................................................................................................. 7
About the State Auditor's Office ..................................................................................................... 8
Washington State Auditor’s Office Page 4
AUDIT RESULTS
This report describes the overall results and conclusions for the areas we examined. In most of the
areas we examined, City operations complied with applicable state laws, regulations, and its own
policies, and provided adequate controls over safeguarding of public resources.
As referenced above, we noted certain matters that we communicated to City management and
Mayor and City Council in a letter dated July 30, 2019, related to cash receipting at the golf course.
We appreciate the City’s commitment to resolving those matters.
About the audit
This report contains the results of our independent accountability audit of the City of Pasco from
January 1, 2017 through December 31, 2018.
Management is responsible for ensuring compliance and adequate safeguarding of public resources
from fraud, loss or abuse. This includes the design, implementation and maintenance of internal
controls relevant to these objectives.
This audit was conducted under the authority of RCW 43.09.260, which requires the Office of the
State Auditor to examine the financial affairs of all local governments. Our audit involved
performing procedures to obtain evidence about the City’s uses of public resources, compliance
with state laws and regulations and its own policies and procedures, and internal controls over such
matters.
In keeping with general auditing practices, we do not examine every transaction, activity or area.
Instead, based on our risk assessment for the year ended December 31, 2018, the areas examined
were those representing the highest risk of fraud, loss, abuse, or noncompliance. The following
areas were examined during this audit period:
Self-insurance – unemployment, health and welfare
Cost allocation plan – equitable distribution of indirect costs
Police Department – citations
Procurement – professional services and public works
Cash-receipting – Parks and Recreation Department and the golf course
Contracts – golf course and animal control services
Accounts payable – general disbursements and electronic fund transfers
Sale of land
Washington State Auditor’s Office Page 5
Payroll – gross wages, holiday, and premium police training officer pay and employee
allocation
IT security policies, procedures, practices and controls protecting financial systems
Accounts receivable – collection of bad debt
Washington State Auditor’s Office Page 6
RELATED REPORTS
Financial
Our opinion on the City’s financial statements and compliance with federal grant program
requirements for 2017 and 2018 is provided in a separate report, which includes the City’s financial
statements. That report is available on our website, http://portal.sao.wa.gov/ReportSearch.
That report includes a finding in 2017 for a material weakness in internal controls over financial
reporting regarding post-employment benefits other than pensions.
Federal grant programs
We evaluated internal controls and tested compliance with the federal program requirements, as
applicable, for the City’s major federal program, which is listed in the Schedule of Findings and
Questioned Costs section of the separate financial statement and single audit report. That report
is available on our website, http://portal.sao.wa.gov/ReportSearch.
Washington State Auditor’s Office Page 7
INFORMATION ABOUT THE CITY
The City of Pasco, incorporated in 1891, currently serves approximately 73,000 Franklin County
citizens. The City provides services including police, fire, Municipal Court, emergency response,
parks and recreation, a senior center, a golf course, public works, and planning and economic
development. The City also operates a cemetery, a water system, sewer system and an irrigation
system.
An elected, seven-member Council governs the City. The Council selects one of its members to
serve as Mayor. The Council also appoints management to oversee the City’s daily operations as
well as its approximate 370 employees. The City had about $99 million and $100 million in
expenditures for 2017 and 2018, respectively.
Contact information related to this report
Address: City of Pasco
525 N. 3rd
P.O. Box 293
Pasco, WA 99301
Contact: Richa Sigdel, Finance Director
Telephone: (509) 545-3488
Website: www.pasco-wa.gov
Information current as of report publish date.
Audit history
You can find current and past audit reports for the City of Pasco at
http://portal.sao.wa.gov/ReportSearch.
Washington State Auditor’s Office Page 8
ABOUT THE STATE AUDITOR’S OFFICE
The State Auditor's Office is established in the state's Constitution and is part of the executive
branch of state government. The State Auditor is elected by the citizens of Washington and serves
four-year terms.
We work with our audit clients and citizens to achieve our vision of government that works for
citizens, by helping governments work better, cost less, deliver higher value, and earn greater
public trust.
In fulfilling our mission to hold state and local governments accountable for the use of public
resources, we also hold ourselves accountable by continually improving our audit quality and
operational efficiency and developing highly engaged and committed employees.
As an elected agency, the State Auditor's Office has the independence necessary to objectively
perform audits and investigations. Our audits are designed to comply with professional standards
as well as to satisfy the requirements of federal, state, and local laws.
Our audits look at financial information and compliance with state, federal and local laws on the
part of all local governments, including schools, and all state agencies, including institutions of
higher education. In addition, we conduct performance audits of state agencies and local
governments as well as fraud, state whistleblower and citizen hotline investigations.
The results of our work are widely distributed through a variety of reports, which are available on
our website and through our free, electronic subscription service.
We take our role as partners in accountability seriously, and provide training and technical
assistance to governments, and have an extensive quality assurance program.
Contact information for the State Auditor’s Office
Public Records requests PublicRecords@sao.wa.gov
Main telephone (360) 902-0370
Toll-free Citizen Hotline (866) 902-3900
Website www.sao.wa.gov