Financial Management

After observing that governments were reporting fiduciary activities inconsistently, in January 2017 the Governmental Accounting Standards Board (GASB) released Statement No. 84, Fiduciary Activities. The statement clarifies what constitutes fiduciary activity and how to report it. While the standard provides important guidance, the State Auditor's Office is concerned that lack of practical examples may lead government agencies to overlook or misunderstand the new requirements. For some governments, the audit implications of incorrect implementation may be significant.

Implementing effective internal financial policies can be challenging for local governments of any size, which is why the Performance Center teamed up with the Municipal Research and Services Center (MRSC) to simplify the process.

The processes for compiling and presenting financial and federal program reports contain many areas of risk, such as reorganization or personnel changes, and new or revised guidance and rules.

To help governments deal with the many possible challenges, our Office has issued two new risk assessment worksheets, one relating to financial reporting and the other to federal programs. Both are available in the Audit Resources section of our website: portal.sao.wa.gov/PerformanceCenter/

In May 2016, local governments reached out to the State Auditor's Office with concerns that mosquito control districts were not following state law regarding annual assessments for district operations.

“Piggybacking” refers to one local government making purchases from contracts awarded by another government or group of governments via an interlocal agreement or contract. Piggybacking is a convenient way to procure goods or services. However, our Office has seen an increasing number of local governments use this alternative method without completing the process properly. National purchasing cooperatives are becoming more widely used, and many of these are based in other states where the laws do not align with Washington law.

Accounting for capital assets is an area of difficulty for many governments. General purpose governments have been reporting infrastructure assets for more than a decade because of Governmental Accounting Standard's Board (GASB) Statement No. 34. This pronouncement required the reporting of many more assets than had been previously reported, including some with their own unique challenges such as roads.

(Repost from MRSC's blog. Original available here.)

By Toni Nelson, MRSC