Financial Management

Are you reporting your activities in the correct fund type? Local governments should analyze the services they are providing and determine if the fund types used are appropriate.

An enterprise fund is a fund that may be used to report any activity for which a fee is charged to external users for goods or services. We have observed that local governments sometimes are not reporting enterprise activities in the correct fund type, and noted the following areas of concern:

Last fall, we posted an article strongly encouraging governments to start evaluating activities that might be classified as fiduciary activities under the Governmental Accounting Standards Board's (GASB) recently issued Statement No. 84.

Counties use property tax levies to collect funds for county roads. State law

Part of management's responsibility for financial reporting and safeguarding of public resources is to regularly evaluate its financial condition and develop plans to address any serious issues.

Many local governments use a third-party receipting vendor to provide electronic payment options to their constituents.

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.