MOSES LAKE — The City of Moses Lake’s internal controls over accounting and financial statement preparation were inadequate to ensure accurate and complete financial reporting in 2017, the State Auditor’s Office stated in a finding issued Thursday.
The SAO listed a number of deficiencies in the City’s management of its financial reporting. Among other things, City management did not have a formal process to evaluate the accuracy and consistency of the City’s financial statements and the City did not reconcile bank statements during 2017, the SAO wrote.
These deficiencies, the SAO continued, caused the City to understate accounts receivable in its governmental funds by a little over $1.3 million, classified $310,000 in transfers to the Equipment and Rental Revolving Fund as charges for service revenue, and overstated cash and investments by just under $110,000. Furthermore, the City allocated $770,390 in administrative expenses.
The SAO also found that the City allocated administrative costs in proportion to its expenses without demonstrating that this was an effective method of approximating the actual cost of services. Because of this, the SAO said, the City’s allocation of $770,390 in administrative expenses could not be determined to be “fair and equitable.”
Both the SAO and City officials agreed that the reporting problems were created by a combination of turnover in accounting staff and frequently changing reporting requirements. The SAO did not take any disciplinary action against the City.
“We appreciate the City’s commitment to resolving the conditions noted, and we will evaluate the City’s corrective actions during our next audit,” the SAO wrote in its letter of findings.
“The City takes very seriously its responsibility to produce accurate, meaningful financial statements,” City officials wrote to the SAO in response.
The findings relate to Moses Lake’s Comprehensive Annual Financial Report from 2017, the last year for which an audit has been completed.
Emry Dinman can be reached via email at firstname.lastname@example.org.