As if the City of Seattle isn’t already having a hard enough time with its finances, the state released an audit Monday that identifies problems with how the city prepares its financial statements. The bulk of it seems to be errors caused by the city’s Accounting Services Division.
Conducted through 2009, the audit found deficiencies in internal controls, which compromises the city’s ability to produce reliable and timely financial statements. It called for more involvement on the part of the accounting division, which it said lacked detailed knowledge of accounting practices of other departments.
The report found that the accounting division failed to conduct thorough reviews to catch mistakes in handling of certain loans and capital expenditures. The audit caught errors in the city’s financial statements, including liabilities reported in the wrong year and underreported in the General, Transportation, and Parks funds. Errors in the General Fund liabilities came to about $747,000. Erroneous journal entries for the Low Income Housing Fund caused its assets and liabilities to be underreported by more than $22 million. Expenses of $2.4 million in federal funds were also inaccurately reported.
However, the audit adds that the city corrected its errors in its final financial statement, preventing any real damage. But it serves as a warning, telling the city to clean up its act.
Weird to read this today as I just got to government accounting in my CPA exam review. I feel like I should point out that fund accounting is weird as shit with tons of seemingly extraneous journal entries and, as one might imagine, a fuck-ton of nonsensical arcana (my favorite so far is the required but “optional” disclosure of budget to actual variance, guh-what?). Basically, this is par for the course and why auditors exist. I would also guess that the city’s functional departments have very few trained accountants and rely on the central accounting department to correct their mistakes. The system appears to have worked just fine. Of course, they could have done it right the first time, but that would probably have required hiring many more accountants (which I support wholeheartedly, of course.) Probably not the beat use of tax dollars, though, considering that the professionals got it right in the end. In sum, nothing to see here, move along.
It’s an auditor’s job to find deficiencies. No accounting system is without them.
Obviously, the only correct conclusion is that we can’t afford to build the Billionaires’ Tunnel.
It’s worth pointing out that Seattle Public Schools has been slammed by the state auditor several times, and yet they sail serenely on screwing up the budget year after year. I guess when the superintendent is a Rock Star, the numbers don’t matter.
I love it. The Stranger must be short on material to report on this week. Wait a minute, The Stranger??? What the fuck? Since when is the Stanger poaching Wall Street Journal’s hunting grounds. Next thing you know, the Christain Science Monitor will be doing Personals and seeling Escort Services.
Leave the financial reporting to those who can distinguish between what is material and what is insignificant. Stick to the tattoo art and the sensationalism you’re so good at.