State auditor warns Klein Irrigation District; county staff monitor possible 'unauditable' finding

Clallam County staff told the finance committee they received a courtesy notice from the Washington State Auditor’s Office that Klein Irrigation District has not cooperated with its 2022–2023 audit and could soon receive an unauditable opinion. The county was informed the State Auditormay escalate enforcement to the state attorney general, which could direct the state treasurer to withhold monies and forbid the county from processing warrants for the district.

Why it matters: a finding of unauditable for a junior taxing district can trigger steps that block the district from receiving state-distributed revenues and can prevent the county from issuing payments or payroll on the district’s behalf. County staff emphasized they have no current instruction to stop routine processing; instead, they were notified as part of the auditorofficecourtesy and asked to be ready should the attorney general issue formal instructions.

Details from the committee briefing: the State Auditorreported repeated failure by the district to respond to requests and that the auditorhas spoken individually with the districtcommissioners and secretary. In prior similar cases county staff said these final letters have sometimes prompted the district to respond, but if not, the auditoroffice can proceed to issue an unauditable report; once that report is issued, the attorney general could instruct agencies (including the county) to stop releasing funds and processing warrants.

County response and next steps: staff offered to send a county communication reminding Klein Irrigation District of the auditorofficedeadline and the potential consequences; the State Auditorsaid the county’s outreach would be appreciated but is not mandatory. County staff also discussed that, if the district were dissolved or placed in default, there could be follow-up work to determine disposition of remaining district funds and whether an adjoining district could assume administration for economies of scale.

Timing: the State Auditorwill send a final letter giving the district 15 days to respond; staff said the time between an unauditable opinion and any attorney-general-led enforcement can vary and the county will await formal instruction before changing processing procedures.

Ending: staff will draft a courtesy email to the district contact and will update the committee if the State Auditoror attorney general issues formal instructions that would change the countyprocessing or distribution of district funds.