State audit manager Haji Adams has reported that the city of Mercer Island received a pair of favorable accountability and financial audits for 2021.
Adams delivered the news during a robust exit conference report at Mercer Island City Council’s Sept. 5 special hybrid meeting while his colleague and assistant director of local audit Wendy Choy added some insight into the process and results.
Choy said her team is required to audit Mercer Island and other cities for each fiscal year. According to an exit conference document, the estimated cost of the audit rolls in at $77,400, plus travel costs.
“We hope that the relationship we have with the city provides that added level of assurance to the governing body and the community that the city is accountable for its public resources and that it has the appropriate policies and procedures in place to safeguard public resources,” she said, adding that the independent audits provide a transparent perspective and she hopes the recommendations will help improve the city’s government operations in the efficiency and effectiveness spheres.
In presenting the audit scope and results in the accountability realm, Adams said the city’s operations complied in all material respects with applicable state laws and in the areas that Choy touched upon.
While utilizing a risk-based audit approach, auditors thoroughly examined: accounts payable, public works procurement testing, payroll, open public meetings and financial condition.
On the financial statements side, the auditors delved into the city’s internal controls, issuing an unmodified clean-audit opinion and noting that the statements are fair and materially correct.
Although the auditors didn’t identify any material misstatements during the financial audit, they devised a list of uncorrected misstatements that don’t affect the team’s overall opinion.
“We’ve also shared those with management as well and we’re confident that that will be worked on and corrected for next audit period and future audits’ financial statements,” Adams said.
Noted within the 26-page exit conference document, a few of the 10 uncorrected misstatements are: Cash and investments is understated by $253,611, an amount which represents the city’s contribution to A Regional Coalition for Housing; and governmental activities payroll expenses are overstated by $402,773 and general fund payroll expenditures are overstated by $365,585, both due to the city not performing a year-end payroll accrual.
During its auditing process, the team evaluated required supplementary information, such as statements of net position and activities; the balance sheet for governmental funds; firefighters pension fund; schedule of revenues, expenditures and changes in fund balances (budget and actual — general fund) and more.
The city’s next audit began last month and will cover accountability for public resources, financial statement and federal programs.
“Independent audits provide essential accountability and transparency for city operations. This information is valuable to management, the governing body and public stakeholders when assessing the government’s stewardship of public resources,” said Pat McCarthy, state auditor, in the exit conference document.
