Full Text
Accountability Audit Report City of Kennewick Benton County For the period January 1, 2012 through December 31, 2013 Published November 24, 2014 Report No. 1013023 ---PAGE BREAK--- Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 TDD Relay (800) 833-6388 November 24, 2014 Mayor and City Council City of Kennewick Kennewick, Washington Report on Accountability Thank you for the opportunity to work with you to promote accountability, integrity and openness in government. The State Auditor’s Office takes seriously our role of providing state and local governments with assurance and accountability as the independent auditor of public accounts. In this way, we strive to help government work better, cost less, deliver higher value and earn greater public trust. 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. The attached comprises our report on the City’s compliance and safeguarding of public resources. Our independent audit report describes the overall results and conclusions for areas we examined. We appreciate the opportunity to work with your staff and we value your cooperation during the audit. Sincerely, TROY KELLEY STATE AUDITOR Washington State Auditor Troy Kelley ---PAGE BREAK--- Washington State Auditor’s Office Page 3 TABLE OF CONTENTS Audit Summary 4 Status Of Prior Audit Findings 5 Related Reports 6 Information About The City 7 About The State Auditor’s Office 8 ---PAGE BREAK--- Washington State Auditor’s Office Page 4 AUDIT SUMMARY Results in brief In the areas we audited, City operations complied with applicable requirements and provided adequate safeguarding of public resources. The City also complied with state laws and regulations and its own policies and procedures in the areas we examined. About the audit This report contains the results of our independent accountability audit of the City of Kennewick from January 1, 2012 through December 31, 2013. Management is responsible for ensuring compliance and adequate safeguarding of public resources from fraud, loss or abuse. This includes the design, implementation and maintenance of internal controls relevant to these objectives. Our audit involved performing procedures to obtain evidence about the City’s uses of public resources, compliance with state laws and regulations and its own policies and procedures, and internal controls over such matters. In keeping with general auditing practices, we do not examine every transaction, activity or area. Instead, the areas examined were those representing the highest risk of fraud, loss, abuse, or noncompliance. The following areas were examined during this audit period: • Procurement – change order • Procurement – on-call contracts • Cash receipting • Third party cash receipting • Cost allocation • Utilities • General disbursements • Payroll disbursements • Police Department • Emergency medical services narcotics ---PAGE BREAK--- Washington State Auditor’s Office Page 5 STATUS OF PRIOR AUDIT FINDINGS The status of findings contained in the prior years’ audit reports of the City of Kennewick is provided below: 1. The City of Kennewick did not follow state procurement laws, limiting competition and its ability to receive the best possible price. Report No. 1009465, dated March 25, 2013 Background Local governments are required to comply with state laws for public works procurement. State laws provide an open and competitive public forum for bidders. The purpose is to enable governments to obtain the best work at the most reasonable prices and to prevent fraud, collusion, or favoritism in awarding public contracts. In January and February 2011, the City issued a public request for proposals (RFP) to build a new sports pavilion at the Southridge Complex. The RFP specified a "Sprung Instant Structure" (www.sprung.com) as the primary structure. In February 2011, the project was awarded to the lowest bidder for $3,288,380. Subsequently, the contractor and City negotiated a "No Cost Change Order" to change the structure to a pre-engineered steel building, which changed the original specifications of the building. The change order also increased the size of the building from 22,000 square feet to 30,000 square feet, including all materials, fixtures and labor, at no additional cost to the City. The City and the contractor negotiated and approved the change order before the project started. Status The condition reported in the 2010-2011 audit has been resolved. Management is aware of bid law requirements. ---PAGE BREAK--- Washington State Auditor’s Office Page 6 RELATED REPORTS Financial Our opinion on the City’s financial statements and compliance with federal grant program requirements is provided in a separate report, which includes the City’s financial statements. Federal grant programs We evaluated internal controls and tested compliance with the federal program requirements, as applicable, for the City’s major federal program, which is listed in the Federal Summary section of the financial statement and single audit report. ---PAGE BREAK--- Washington State Auditor’s Office Page 7 INFORMATION ABOUT THE CITY The City of Kennewick serves approximately 68,870 citizens in Benton County. The City provides an array of services including water, sewer, police, fire, parks and recreation, senior center, public improvements and planning and economic development. The City contracts for solid waste collection and disposal services and the Mid-Columbia Regional Library District provides library services. The Toyota Center Coliseum and Toyota Arena are also owned by the City. An elected, seven-member Council governs the City. The Council then selects one of its members to serve as Mayor. The Council also appoints a Manager to oversee the City’s daily operations as well as its approximately 350 full- and part-time employees. The City had two- year adjusted budgets of approximately $251 million for 2013-2014 and $232 million for 2011- 2012. Contact information related to this report Address: City of Kennewick P.O. Box 6108 Kennewick, WA 99336 Contact: Dan Legard, Finance Director Telephone: (509) 585-4200 Website: www.ci.kennewick.wa.us Information current as of report publish date. Audit history You can find current and past audit reports for the City of Kennewick at http://portal.sao.wa.gov/ReportSearch. ---PAGE BREAK--- Washington State Auditor’s Office Page 8 ABOUT THE STATE AUDITOR’S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. We work with our audit clients and citizens to achieve our vision of government that works for citizens, by helping governments work better, cost less, deliver higher value, and earn greater public trust. In fulfilling our mission to hold state and local governments accountable for the use of public resources, we also hold ourselves accountable by continually improving our audit quality and operational efficiency and developing highly engaged and committed employees. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments as well as fraud, state whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously, and provide training and technical assistance to governments, and have an extensive quality assurance program. Contact information for the State Auditor’s Office Deputy Director for Communications Thomas Shapley [EMAIL REDACTED] (360) 902-0367 Public Records requests (360) 725-5617 Main telephone (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Website www.sao.wa.gov