State Auditor briefs Tacoma on 2023 accountability audit; payroll timekeeping issues flagged and 2024 single‑audit programs announced
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Summary
Wendy Choi of the Washington State Auditor’s Office and audit leads Judy Lee and Jason Starr told Tacoma’s Government Performance Finance Committee on July 15 that the 2023 accountability audit found compliance in the areas tested but identified payroll timekeeping weaknesses in a management letter after three reported suspected losses.
Wendy Choi, assistant director of local audit for the Washington State Auditor’s Office (SAO), and audit leads Judy Lee and Jason Starr briefed the Government Performance Finance Committee and Audit Advisory Board on July 15 about the city’s fiscal‑year 2023 accountability audit exit conference and opened the 2024 federal single‑audit entrance conference.
Audit results for 2023 SAO auditors said they selected audit areas based on risk and concluded that, for the areas examined, the city “complied in all material respects” and maintained controls to safeguard public funds. The accountability audit covered a range of departments and processes, including payroll and timekeeping for Tacoma Public Utilities and Public Works, the municipal court’s enterprise justice conversion, procurement and cash‑receiving for Tacoma Rail, environmental services operations (wastewater, solid waste, surface water), public works contracts and deposits, IT controls, planning and development permit deposits, police seized‑funds tracking, and neighborhood and community‑services tax compliance.
Payroll timekeeping and reported losses Jason Starr and Judy Lee told the committee that three suspected or known losses were reported to the SAO during the audit period; SAO’s procedures found a common trend of inadequate supervisor monitoring that created the potential for employees to be paid for hours not worked. Two of the reported instances in the audited period were determined to involve employees paid for hours not worked; a separate previously reported 2022 instance had been addressed by the department, SAO said.
SAO’s management‑letter recommendations and next steps The SAO said it communicated recommendations to management in a non‑published management letter addressing payroll timekeeping: provide supervisor training, update payroll policies, and ensure supervisors have appropriate resources to monitor and approve time. The SAO emphasized that management letters are public records referenced in the published report but are not printed in full in the published audit report.
Federal single‑audit entrance and major programs selected Choi and Starr described the single‑audit process (federal fiscal year 2024) required when a government expends more than $750,000 in federal funds. The SAO said it will test compliance with federal requirements and internal controls for selected federal awards and report results to federal authorities.
Programs selected for the 2024 single audit (illustrative list presented by auditors): community development block grants (including COVID‑era CDBG allocations), the Edward Byrne Memorial Justice Assistance Grant, and Coronavirus State and Local Fiscal Recovery Funds. Auditors said those programs account for about 58% of the city’s federal expenditures in the covered year and that program selection follows federal planning procedures and risk assessments.
Audit logistics and publication SAO staff told the committee the 2023 accountability audit engagement cost remained within the estimate, in part due to timely city responses. SAO said the city’s 2023 report would be published on the SAO website in the next one to two weeks and reminded city staff of the requirement to immediately report any suspected loss of public funds to the SAO’s office under Washington state law.
Questions from board members and staff Board and council members asked how audits treat internal policies versus legal compliance; SAO staff said auditors review government policies and then test whether controls work as designed, and the office will flag issues that appear to be outside legal authority for city legal counsel. Members also asked whether enterprise systems such as SAP will standardize timekeeping across varied departmental work patterns; SAO and city staff replied that one‑size solutions do not always fit field work patterns and that different divisions may legitimately use different timekeeping approaches, but adequate supervisory review and segregation of duties remain required.
Timing and follow up SAO staff said the financial statement audit for calendar year 2024 was complete and that the federal single audit will proceed with a target federal deadline in the fall; auditors expected to return to present single‑audit exit results later in the year.
The committee did not take formal action on the audit presentations; SAO staff thanked city liaisons Susan and Polly for timeliness and cooperation during the engagement.
