Preparing your annual report? Here’s what’s new in SAO’s updated Cash-basis Checklist

A new year has begun, which means it's time for cash-basis governments to close out last year and begin preparing annual financial reports. Annual reports for local governments with fiscal year ending 12/31 are due to the Office of the Washington State Auditor by May 30, 2026. To help you submit a complete and accurate report on time, we’ve updated our Checklist for Preparing and Reviewing Cash-Basis Financial Statements.

The Checklist is designed to help you identify steps you may have missed before submission and reduce the risk of reporting errors. Below are reminders and focus areas to keep in mind as you prepare your report.

What's new this year

We’ve added three new checklist questions for 2025 reporting, covering the following topics:

• Proper reporting of landfill liabilities - We have noticed some governments that have a landfill are not reporting this liability. For this reason, we clarified reporting requirements and added a new checklist question.
• Disclosure of short-term debt – We’ve added a new checklist question to help remind you of a new disclosure requirement. You must disclose all short-term debt activities that occurred throughout the year, even if you have none at year-end.
• Schedule of Expenditures of Federal Awards (SEFA) reporting – A handful of federal programs have specific SEFA reporting guidance. We compile this information in one document, and provide a link within the Budgeting, Reporting and Accounting System (BARS) Manual. We noticed some governments overlook the link, so we included a reminder in our Checklist.

Ongoing focus areas in the Checklist

In addition to any current updates, the Checklist continues to emphasize several key areas that commonly require careful review.

Complete a global bank reconciliation

Review checklist question number 3 and make sure you complete a global reconciliation of cash and investments. This helps you detect and correct errors, before an audit. You should reconcile revenues and expenditures, as well as the ending cash and investment balance to all banking and investment information.

Carefully prepare and review your SEFA

We devote an entire section within our checklist to SEFA reporting (see checklist questions 51-64). Our questions will prompt you to consider many trouble spots, which often lead to errors or omissions. This schedule determines whether you need a federal single audit, so it is important to get it right. If you require a federal single audit, we will audit this schedule and provide an opinion on it.

Areas that continue to cause audit issues

Review your ending cash and investment classifications

Review your classifications carefully, as prompted by checklist questions 20-21. Remember, these classifications convey important information to financial statement readers about how much of your resources are reserved for a specific purpose and how much is freely available for spending. We often report errors made within the various classifications during our audits.

Double-check your Schedule of Liabilities

During each cash-basis audit, we perform testing on the Schedule of Liabilities and provide an opinion on it. We continue to note misreported or unreported liabilities. These issues often require correction and delay report completion. We devote an entire checklist section to this schedule; refer to questions 32-40. Please take the time to consider the checklist questions and review this schedule.  

Need assistance?

Remember, the Office of the Washington State Auditor is here to help. For technical accounting questions, submit a request through the Help Desk in the client portal. To access your client portal, sign in first. Then, select “other action” among the menu options. 

For guidance on best practices, resources or internal controls, contact the Center for Government Innovation, as service of the Office of the Washington State Auditor by emailing Center@sao.wa.gov.