A report released by the state auditor on Monday says that King County is mismanaging funds and lacks oversight in a number of areas. But the county disputes some of the claims.

Frank Abe, director of communications for King County Executive Dow Constantine, called the report "overall positive." He notes that the report says, "In most areas, the county complied with state laws and regulations and its own policies and procedures."

The report surveys 18 areas within county government and issued seven findings. Examining data from July 2008 to June 2009, it concludes that county officials should have better oversight over cash receipts, expenditures, and assets. For example, the audit found shoddy record keeping and a lack of review of deposits or cash shortages in the County Elections Department. Cash receipts were not deposited within 24 hours as required by law, the audit found. The key to the cash register—where cash was being stored overnight—was kept in an unlocked drawer under it. The county has amended both practices since the audit. In many instances, the audit found insufficient monitoring to ensure that policies were complete and staff were being trained properly to follow them. Additionally, county officials failed to “consistently provide or enforce performance measures or expectations regarding accountability,” putting the County at a greater risk of loss and lack of control over expenditures, the report says. The County is also at an increased risk for noncompliance with laws, regulations, and contractual requirements, the report says. The 2010 audit seems to reflect past audits, which the County Council attempted to challenge.

“We respect the work of the state auditor but many of his findings simply do not account for controls we already have in place,” Abe says. “Some of his findings also create unneeded costs of bureaucracy without adding any value for taxpayers.”

One of the things that the county council flatly disagrees with in the new audit is that County waivers to bid requirements did not comply with County policy. “This involves only three of more than 100 bid waivers last year, and in each of those three cases the county fully complied with its own policies, contrary to the claims of the auditor," Abe says.

More after the jump.

The audit also found that the county did not have adequate control to ensure that inter-fund transactions were being reported in a timely manner. For instance, the County's 2008 financial statements included a $183 million loan from the Public Transportation fund to the Water Quality fund. The audit found that although the Water Quality fund had been approved to receive the loan in July 2008, the Public Transportation fund was not identified as the lender until Jan. 2009. “The state auditor is trying to hold the county to outdated accounting standards that may have made sense at one time, but not anymore,” Abe says. “Many county governments including ours now combine all cash balances into a central pool, in full compliance with government accounting standards.” Abe added that King County’s inter-fund transfers were consistent with modern banking practices that “reduces needless bureaucracy and save taxpayers money.” “In fact, we recommend the state auditor update his own accounting manual to be more in line with these modern banking practices,” he says. King County Council spokesperson Al Sanders says the presence of a council member on the finance committee—Julia Patterson—guaranteed that transactions were being reported to the County Council in a timely manner.

The audit also says that the County has inadequate controls to ensure spouses, domestic partners, and dependents added to employees’ insurance benefit plans were valid. Abe defends the County’s position, explaining that the County was not going to impose a documentation standard on one group of employees and not others. “That’s fundamentally unfair and an added problem for gay couples,” he says. “And there is no state registration process for all categories of domestic partners. We already require employees to swear, under the threat of discipline or termination, to the eligibility of their spouses, domestic partners, and other dependents. Making employees with domestic partners supply additional proof creates more needless bureaucracy that we feel adds no value for taxpayers.”