As of Tuesday, September 30, 2014
GRANDVIEW – The Washington State Auditor’s Office found the city of Grandview did not properly report federal funds the municipality received for its wastewater treatment plant improvements.
The auditor’s office recently reviewed the city’s financial statements and federal fund reports for 2013, and issued its finding.
“We identified a significant deficiency in controls that adversely affects the city’s ability to produce a reliable schedule of expenditures of federal awards (SEFA), which is supplemental information required to be included in the city’s financial statements and is part of the audit report required by the federal government,” the auditor said.
The auditor noted that staff responsible for the preparation and review of the correct reporting requirements for expenditure of federal loans, which were not reported in the SEFA, were unaware of correct reporting requirements.
Grandview City Treasurer Matt Cordray last Tuesday admitted to the Grandview City Council that he did not think the funding for the wastewater improvement project needed to be reported.
“In 2013, the funds were from a US Bank loan,” he said.
Cordray explained to council that US Bank financed the $1.1 million loan in 2013. The loan was later converted to a loan from the USDA upon completion of the project, he said.
He said the city argued against the audit finding since the US Bank loan was not federal funding.
State officials ruled it is a federal loan because the funding ultimately came from the USDA, Cordray told the city council. He said the funds would have been included in the 2014 federal funds report.
The auditors said it should be reported in 2013 because the USDA committed to fund the project, he said.
In the audit report, state officials said, “Expenditures paid through interim financing are considered federal awards expended and required to be reported on the SEFA.”
Cordray said the city will undergo more in-depth audits in the future, as a result of the finding.
“Instead of auditing 25 percent, they will audit 50 percent of our federal reports,” he said.
The auditor’s office, in its report, recommended city staff review and understand reporting requirements as outlined in the Budgeting, Accounting and Reporting System manual. Also, another person who is knowledgeable with SEFA reports should review them in sufficient detail, suggested state auditors.