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State audit finds fault with Sequim school report
Under new standards developed by the American Institute of Certified Public Accountants, state auditors found fault with Sequim School Districts notes to its financial report from September 2006-August 2007.
The auditors findings, released on May 27, details deficiencies in the design or operation of internal control over financial reporting and calls them significant deficiencies, based on the Statement on Auditing Standards or SAS 112.
Brian Lewis, Sequims district business manager, said the auditors findings are accurate but seem to be the growing pains of the new auditing standard.
In Sequims case, state auditors found that while the school districts financial report was in order, the notes that accompany them had some minor errors. The notes do not reflect the districts change of calculating paid vacation and sick leave and do not reconcile the districts schedule of federal awards spending.
State auditors also expressed concern that Sequims schools used only one person to prepare and review the financial notes, but Lewis noted thats not an uncommon practice.
This is the first time in nine years Ive had a finding on one of my reports, said Lewis, who worked on similar reports from 15 different school districts while an employee for the Office of Educational Service District that serves Clallam, Jefferson, Kitsap and Mason counties.
Lewis began working for
Sequim schools last August.
Its not something I take lightly, Lewis said. This is becoming a statewide issue.
Officials from the states Office of Financial Management further Lewis sentiment.
The general consensus on a national level is that very likely SAS 112 will result in more findings, according to a state OFM report.
SAS 112, the states Office of Financial Management notes, finds that agencies such as schools trigger significant deficiencies much easier than in years past and that those errors trigger an automatic written report from the auditor to the agency.
Lewis said the new accounting standard is going to be an issue for small school districts with just one or two business employees. They may have to hire out to an outside accountant to avoid similar reports of significant deficiencies.
Serious violations of financial reports, Lewis said, could mean a school district forfeiting funds or, in the case of fraud by an employee or employees, a criminal investigation and/or charges. But thats clearly not the case with Sequims report, he said.
Each of Washingtons 296 school districts has to file financial reports and accompanying notes to the state auditors office for the fiscal year.