Citing finance director turnover, state audit calls out city for missing 2015 filing deadline


The Washington State Auditors Office has released the findings of its most recent audit of City of Mountlake Terrace finances, and found a material weakness in the city’s internal controls that caused it to miss the deadline for filing its fiscal year 2015 financial statements.

Washington law requires the State Auditor to audit all levels of local government on a regular basis. The Mountlake Terrace audit covered the time period from Jan. 1, 2014-Dec. 31, 2015.

State law requires the city to submit its annual report to auditor’s office within 150 days of fiscal year’s end. The annual report includes financial statements, supporting schedules and notes to the financial statements.

According to the auditor’s report, the City of Mountlake Terrace missed the deadline and did not provide a complete set of fiscal year 2015 financial statements until December 2016, the auditor’s office said.

City Manager Scott Hugill told the Mountlake Terrace City Council during its June 19 business meeting that the deadline was missed due to the transition of city finance directors in 2015. Former Finance Director Sonja Springer left Mountlake Terrace to work for the City of Lynnwood in mid-2015, and she was followed by finance director Nanette Spear, who left after about six months on the job. When the city’s current finance director, Crystil Wooldridge, was hired in March 2016, she had about two months to file 2015 financial statements, Hugill said. “Because of the gap we had in finance directors, we just weren’t able to meet that timeline,” he said.

The audit report also cited a variety of errors in the financial statements, which Hugill attributed to the type of financial reporting that was used to file the report. Mountlake Terrace uses a modified accrual basis of reporting, he said in a clarifying email Tuesday, which is different from the reports Wooldridge has experience filing from her previous positions at different cities.

“All the issues have been corrected,” Hugill told the council, noting that files have been submitted and that 2016 financial statement were submitted to the state auditor at the end of May.

The audit also noted that during the time that Mountlake Terrace was experiencing turnover in finance directors, the city contracted with a consultant to prepare its financial
statements. “However, the consultant failed to meet the prescribed deadlines,
resulting in the city having to prepare the financial statements,” the audit report said.
In his email Tuesday, Hugill said that the consultant in question was Paul Glick, a trainer on public sector accounting with years of experience. “The issue was that over time, so many public agencies sought his services that he had less and less time to devote to preparing Mountlake Terrace’s financial statements,” Hugill said.
Because the city did not complete its fiscal year 2015 financial statements in a timely manner, the audit report said, “it missed its requirement to receive a federal audit within nine months after year-end. By not completing federally mandated audits by the required deadline, the city may be at risk of losing future federal funding or having to repay funds already received,” the auditor’s office said.

Hugill responded that Mountlake Terrace “fortunately has a long history of properly tracking and accounting for federally-funded projects, and as such I do not believe this single audit will lead to a change in how the city’s grants are reviewed and approved,” he said.

The report said that in 2015, the City spent $25 million on its primary government activities, which include general city administration, police, animal control, building inspection, planning and zoning, public works, parks and recreation, water, sewer and surface water services.
— By Teresa Wippel




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