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2008, 03-03 Accountability Audit Report Feb 13, 2008 Washington State Auditor's Office Accountability Audit Report City of Spokane Valley Spokane County Report Date February 13, 2008 Report No. 74106 ".0"`), ;\ WASHINGTON Issue Datc1' : BR'AN SONNTAG ►s►►,tit; " STATE AUDITOR k.4. Washington State Auditor Brian Sonntag March 3, 2008 Council City of Spokane Valley Spokane Valley, Washington Report on Accountability Please find attached our report on the City of Spokane Valley's accountability and compliance with state laws and regulations and its own policies and procedures. In addition to this work, we also audit the City's financial statements and compliance with federal laws and regulations. The results of that audit will be included in a separately issued audit report. Sincerely, 4' (r20:71, — BRIAN SONNTAG, CGFM STATE AUDITOR Insurance Building,P.O.Box 40021 •Olympia,Washington 98504-0021•(360)902-0370•TDD Relay(800)833-6388 FAX(360)753-0646•http://www.sao.wa.gov Table of Contents City of Spokane Valley Spokane County February 13, 2008 Audit Summary 1 Description of the City 2 Audit Areas Examined 3 Audit Summary City of Spokane Valley Spokane County February 13, 2008 ABOUT THE AUDIT This report contains the results of our independent accountability audit of the City of Spokane Valley. We performed audit procedures to determine whether the City complied with state laws and regulations and its own policies and procedures. We also examined City management's accountability for public resources. Our work focused on specific areas that have potential for abuse and misuse of public resources. Areas examined during the audit were selected using financial transactions from January 1, 2006, through December 31, 2006. RESULTS The City complied with state laws and regulations and its own policies and procedures in the areas we examined. Internal controls were adequate to safeguard public assets. RELATED REPORTS Our opinion on the City's financial statements and compliance with federal program requirements is provided in a separate report, which includes the City's financial statements. That report includes a finding regarding weaknesses in internal controls over financial reporting. CLOSING REMARKS We thank City officials and personnel for their assistance and cooperation during the audit. Washington State Auditor's Office 1 Description of the City City of Spokane Valley Spokane County February 13, 2008 ABOUT THE CITY The City of Spokane Valley was incorporated on March 31, 2003, and has an estimated population of 85,000. The City operates under a council-manager form of government. Voters elect a seven-member City Council, which then appoints one member as Mayor and another member as Deputy Mayor. The economy in and around the City has traditionally relied on natural resources such as forest products, agriculture and mining. The area has experienced growth in technology firms, retail sales, manufacturing and service industries. Fairchild Air Force Base continues to contribute to the local economy. The City operates on an annual budget of approximately $68.8 million. Its 64 employees provide and administer services including police (through a contract with Spokane County), building inspection, street maintenance, parks and recreation, storm water management and general administration. AUDIT HISTORY We audit the City annually. This marks the fourth audit for the City. The past three audits have been free of findings. However, we are reporting one area of concern as a finding for the current audit. ELECTED OFFICIALS These officials served during the audit period: Mayor Diana Wilhite Deputy Mayor Steve Taylor Council: Michael DeVleming Dick Denenny Gary Schimmels Bill Gothmann Richard Munson APPOINTED OFFICIALS City Manager Dave Mercier Finance Director Kenneth Thompson ADDRESS City 11707 E. Sprague Ave., Suite 106 Spokane Valley, WA 99206 (509) 921-1000 Washington State Auditor's Office 2 Audit Areas Examined City of Spokane Valley Spokane County February 13, 2008 In keeping with general auditing practices, we do not examine every portion of the City of Spokane Valley's financial activities during each audit. The areas examined were those representing the highest risk of noncompliance, misappropriation or misuse. Other areas are audited on a rotating basis over the course of several years. The following areas of the City were examined during this audit period: ACCOUNTABILITY We evaluated the City's accountability and compliance with laws, regulations, contracts and grant agreements in the following areas: • Cash receipting • Conflict of interest/ethics laws • Disbursements/expenditures • Open public meetings/records laws • Payroll/personnel • Inter-fund transactions/balances • Building and planning —financial • Debt/covenants operations • Procurement (bidding/prevailing wage) • Parks and recreation —financial • Restricted funds operations • Accounting/financial reporting • Budget compliance • Insurance/risk management FEDERAL PROGRAMS We evaluated internal controls and tested compliance with federal program requirements, as applicable, for the City's major federal program, which is listed in the Federal Summary section the financial statement and single audit report. FINANCIAL AREAS Our opinion on the City's financial statements is provided in a separate report. That report includes the City's financial statements and other required financial information. We examined the financial activity and balances of the City including: • Cash and investments • Expenditures/expenses • Capital assets • Financial condition • Receivables • Financial statement preparation • Payables • Overall presentation of the financial • Long-term debt statements • Revenues Washington State Auditor's Office 3 o' ter. J r ABOUT THE STATE AUDITORS OFFICE ' r►rti6 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. Our mission is to work in cooperation with our audit clients and citizens as an advocate for government accountability. 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. The State Auditor's Office has 300 employees who are located around the state to deliver our services effectively and efficiently. Approximately 65 percent of our staff are certified public accountants or hold other certifications and advanced degrees. Our regular 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. We also perform fraud and whistleblower investigations. In addition,we have the authority to conduct performance audits of state agencies and local governments. The results of our audits are widely distributed through a variety of reports, which are available on our Web site. We continue to refine our reporting efforts to ensure the results of our audits are useful and understandable. We take our role as partners in accountability seriously. We provide training and technical assistance to governments and have an extensive program to coordinate audit efficiency and to ensure high-quality audits. State Auditor Brian Sonntag, CGFM Chief of Staff Ted Rutt Chief Policy Advisor Jerry Pugnetti Director of Administration Doug Cochran Director of Audit Chuck Pfeil, CPA Director of Performance Audit Linda Long, CPA, CGFM Director of Special Investigations Jim Brittain, CPA Director for Legal Affairs Jan Jutte Local Government Liaison Mike Murphy Communications Director Mindy Chambers Public Records Officer Mary Leider Main number (360) 902-0370 Toll-free hotline for government efficiency (866) 902-3900 Web Site www.sao.wa.gov (SAO FACTS.DOC-Rev.07/07)