Editorial: This is why local governments are audited

By The Herald Editorial Board

This is why there’s a state Auditor’s Office and why The Herald and other newspapers regularly run stories about seemingly picayune audits of local governments — from the county administration down to cemetery districts — that point out rules that weren’t followed and safeguards that weren’t in place, even when no money goes missing:

A fraud investigation by the state Auditor’s Office alleged this week that a former finance director for the Pierce County Housing Authority had misappropriated more than $6.9 million in public funds, the biggest such fraud case involving a local government in at least the last 25 years in the state. The housing authority has filed a report, that includes the auditor’s findings, with the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development.

During a routine audit of the government agency, the auditor’s staff detected funds had gone missing between March 2016 and July 2019. The investigation that followed found that the official, who was fired in August, allegedly had transferred funds to her own bank accounts by making the transactions look like payments to vendors.

State Auditor Pat McCarthy called the fraud “a shameful breach of public trust” that “was designed to mislead everyone at the Housing Authority,” The News Tribune reported Monday.

And it happened because the housing authority didn’t have adequate internal controls in place to safeguard public funds.

“Any agency that gets money from the public needs to be audited,” McCarthy said last month during an interview with The Herald Editorial Board.

While it’s common for her office to issue findings following audits that report lapses in accounting and record-keeping, breaches of public trust such as happened at the Pierce County agency are fortunately rare. But it makes a strong case for the transparency and accountability that the state Auditor’s Office enforces for state agencies and all levels of local government, about 2,300 local governments and special taxing districts.

Seeking to improve the accessibility to that information about how tax dollars are being used and safeguarded, the Auditor’s Office has been rolling out new tools on its website that anyone can use.

One tool, called Tracker, is scheduled to available on the auditor’s website — sao.wa.gov — early in the new year. It will consolidate current and past audit reports for a particular local government — searchable by name or a map — for the last six years, detailing recent findings and even reporting current information about how any deficiencies found have been corrected, McCarthy said.

“It’s good information, it’s accurate and it’s real-time,” and it allows local governments to show how they’ve responded to accountability issues, said McCarthy, who before winning election to the statewide office served as Pierce County executive and county auditor.

Beyond those regular audits, the auditor’s website also offers general reports about specific local governments’ financial stability, called the Financial Intelligence Tool. Along with tutorials, the searchable database provides a basic snapshot of a local government’s general financial outlook and links to detailed data on revenue, expenses and past audits.

The website also offers a clearinghouse for past and current performance audits. Established by state voters in 2005 through Initiative 900 — and arguably the most constructive initiative launched by Tim Eyman — the performance audits provide a broader review of a subject, judging the effectiveness of a particular program and suggesting potential improvements.

One recent performance audit looked at the scheduling of lunch periods and recess at state elementary schools and suggested ways to reduce food waste and increase nutrition for children. The performance audit found that on average children had only about 13 minutes in the cafeteria to eat their lunches before rushing out to recess. The audit recommended adjusting schedules to allow at least 20 minutes for lunch and moving recess before lunch, recommendations that the state Superintendent of Public Instruction is now working with districts to implement.

Another audit related to student health — expected to be released soon — is looking at common barriers to parents’ compliance with student immunization requirements.

And there’s great interest in an audit that is examining the oversight and management of Sound Transit projects, specifically ST3’s construction of light rail and bus rapid transit projects in Snohomish, King and Pierce counties. That report is expected in late spring or early summer next year.

All in all, McCarthy said, local governments are doing what’s expected of them to safeguard public money and use those funds effectively.

“I was in local government and you want to be able to say ‘We’re being good stewards,’” she said. “Sometimes things happen that you don’t realize.”

Watchdogs, such as the state Auditor’s Office, the news media and the public, itself, need to make use of these tools to help assure that stewardship and throw up a red flag when there’s a problem that could let $7 million walk out the door.