2025-06-10 City Council Special PacketAgenda
Edmonds City Council
SPECIAL MEETING - AUDIT EXIT CONFERENCE
BRACKETT ROOM
121 5TH AVE N, CITY HALL - 3RD FLOOR, EDMONDS, WA 98020
JUNE 10, 2025, 3:00 PM
Edmonds City Council Agenda
June 10, 2025
Page 1
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1. CALL TO ORDER
2. AUDIT EXIT CONFERENCE
1. 2023 City of Edmonds Audit Exit Report - State Auditor's Office (60 min)
ADJOURNMENT 4:00 PM
City Council Agenda Item
Meeting Date: 06/10/2025
2023 City of Edmonds Audit Exit Report - State Auditor's Office
Staff Lead: Finance
Department: Administrative Services
Preparer: Scott Passey
Background/History
Each year the City of Edmonds is audited by the State Auditor's Office (SAO). This is their report for the
2023 calendar year.
Staff Recommendation
N/A
Narrative
N/A
Attachments:
City of Edmonds Exit Conference Packet
Exit Conference Powerpoint - City of Edmonds
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Packet Pg. 2
Exit Conference: City of Edmonds
The Office of the Washington State Auditor’s vision is increased trust in government. Our mission is to provide
citizens with independent and transparent examinations of how state and local governments use public funds, and
develop strategies that make government more efficient and effective.
The purpose of this meeting is to share the results of your audit and our draft reporting. We value and appreciate
your participation.
Audit Reports
We will publish the following reports:
• Financial statement and federal grant compliance audits for January 1, 2023 through December 31, 2023
– see draft report.
Audit Highlights
We would like to thank the City’s management and staff for their assistance throughout the audit. Specifically, we
would like to thank Kim Dunscombe, Acting Finance Director for provide the information requested throughout
the audit. We would also like to thank Richard Gould, Finance Director, for the professionalism, timely responses
and effort put into getting the audit to the finish line.
We would also like to extend our appreciation to the accountants, including Debra Sharp, Sarah Mager and
Marissa Cain for their assistance and collaborative attitude throughout the audit.
Recommendations not included in the Audit Reports
Exit Items
We have provided exit recommendations for management’s consideration. Exit items address control deficiencies
or noncompliance with laws or regulations that have an insignificant or immaterial effect on the entity, or errors
with an immaterial effect on the financial statements. Exit items are not referenced in the audit report.
Status of Prior Management Letter items
Brief Description Resolved Unresolved
Subrecipient monitoring X
Payroll – leave balances*
* We will follow up on this management letter issue during our next accountability audit, scheduled to occur
later this year.
Financial Statement Audit Communication
We would like to bring the following to your attention:
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• We didn’t identify any material misstatements during the audit.
• Uncorrected misstatements in the audited financial statements are summarized on the attached schedule.
We agree with management’s representation that these misstatements are immaterial to the fair
presentation of the financial statements. However, the conditions that led to these misstatements may result
in more significant misstatements if not corrected.
• The audit addressed the following risks, which required special consideration:
o Due to the possibility that management may be able to circumvent certain controls, standards
require the auditor to assess the risk of management override.
Finalizing Your Audit
Report Publication
Audit reports are published on our website and distributed via email in a .pdf file. We also offer a subscription
service that notifies you by email when audit reports are released or posted to our website. You can sign up for
this convenient service at Sign Up for News & Alerts | Office of the Washington State Auditor.
Management Representation Letter
We have included a copy of representations requested of management.
Audit Cost
At the entrance conference, we estimated the cost of the audit to be $89,000. During the audit, the City experienced
turnover with key finance employees that we were directly working with. We also identified issues in the federal
Single Audit that required additional work. In March 2025, we worked with the City to revise our estimate by
$4,500. Actual audit costs will approximate our revised estimate.
Your Next Scheduled Audit
Your next audit is scheduled to be conducted in summer of 2025 and will cover the following general areas:
• Accountability for public resources for fiscal years 2023 and 2024
• Financial statement audit for fiscal year 2024
• Federal programs for fiscal year 2024
The estimated cost for the next audit based on current rates is $130,000 including travel and other expenses as
needed. This preliminary estimate is provided as a budgeting tool and not a guarantee of final cost.
Working Together to Improve Government
Audit Survey
When your report is released, you will receive an audit survey from us. We value your opinions on our audit
services and hope you provide feedback.
Local Government Support Team
This team provides support services to local governments through technical assistance, comparative statistics,
training, and tools to help prevent and detect a loss of public funds. Our website and client portal offers many
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resources, including a client Help Desk that answers auditing and accounting questions. Additionally, this team
assists with the online filing of your financial statements.
The Center for Government Innovation
The Center for Government Innovation at the Office of the Washington State Auditor offers services specifically
to help you help the residents you serve at no additional cost to your government. What does this mean? We
provide expert advice in areas like Lean process improvement, peer-to-peer networking, and culture-building to
help local governments find ways to be more efficient, effective and transparent. The Center can help you by
providing assistance in financial management, cybersecurity and more. Check out our best practices and other
resources that help local governments act on accounting standard changes, comply with regulations, and respond
to recommendations in your audit. The Center understands that time is your most precious commodity as a public
servant, and we are here to help you do more with the limited hours you have. If you are interested in learning
how we can help you maximize your effect in government, call us at (564) 999-0818 or email us at
Center@sao.wa.gov.
Questions?
Please contact us with any questions about information in this document or related audit reports.
Tina Watkins, CPA, Director of Local Audit, (360) 260-6411, Tina.Watkins@sao.wa.gov
Kristina Baylor, Assistant Director of Local Audit, (425) 951-0290 Kristina.Baylor@sao.wa.gov
Courtney Amonsen, Audit Manager, (425) 510-0478, Courtney.Amonsen@sao.wa.gov
Erika Davies, Assistant Audit Manager, (425) 510-0476, Erika.Davies@sao.wa.gov
Irina Frolova, Audit Lead, (425) 510-0495, Irina.Frolova@sao.wa.gov
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Attachment: Schedule of Uncorrected Misstatements
Description Statement /
Schedule Opinion Unit
Full Accrual (Governmental Activities)
The variance for Lease Payable Ending is $43,522 which is above the floor
of $14,000. The calculation of Active Network includes the fixed payment
through 2027, though the terms are through 2024.
Per City's calculation: Active Network equals $53,771 and it should be
$13,659.
Per city's calculation IAPRO equals $3,410. It should be 0.IAPRO is not a
SBITA.
Statement of Net
Position
Statement of
Activities
Governmental
Activities
Full Accrual (Governmental Activities)
Active Network - Net Right-to-Use (Capital) Asset per City's calculation is
$53,967 and it should be $13,514. The variance of $40,453 is above the
floor of $14,000 for Governmental Activities. The calculation of Active
Network includes the fixed payment through 2027, though the terms are
through 2024.
Per City's calculation, Active Network equals $53,96 and it should be
$13,514.
Per City's calculation IAPRO equals $3,547. It should be 0. IAPRO is not
a SBITA.
Statement of Net
Position
Statement of
Activities
Governmental
Activities
Note 15 Subscription Payable
Note 15 needs to be revised to reflect the changes above. The total
remaining liability should equal $17,687. Per City, it is $61,175
Subscription Asset Value minus Accumulated Amortization should equal
$30,963. Per City, it is $75,178
Notes to Financial
Statement N/A
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Scan to see another great way
we’re helping advance
#GoodGovernment
Financial Statements and Federal Single
Audit Report
City of Edmonds
For the period January 1, 2023 through December 31, 2023
Published June 12, 2025
Report No. 1037488
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Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (564) 999-0950 Pat.McCarthy@sao.wa.gov
Office of the Washington State Auditor
Pat McCarthy
June 12, 2025
Mayor and City Council
City of Edmonds
Edmonds, Washington
Report on Financial Statements and Federal Single Audit
Please find attached our report on the City of Edmonds financial statements and compliance with
federal laws and regulations.
We are issuing this report in order to provide information on the City’s financial activities and
condition.
Sincerely,
Pat McCarthy, State Auditor
Olympia, WA
Americans with Disabilities
In accordance with the Americans with Disabilities Act, we will make this document available in
alternative formats. For more information, please contact our Office at (564) 999-0950, TDD
Relay at (800) 833-6388, or email our webmaster at webmaster@sao.wa.gov.
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Office of the Washington State Auditor sao.wa.gov
TABLE OF CONTENTS
Schedule of Findings and Questioned Costs ................................................................................... 4
Schedule of Federal Award Findings and Questioned Costs .......................................................... 6
Summary Schedule of Prior Audit Findings .................................................................................. 14
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ................................................................................................... 16
Independent Auditor's Report on Compliance for Each Major Federal Program and Report on
Internal Control Over Compliance in Accordance With the Uniform Guidance ......................... 18
Independent Auditor's Report on the Financial Statements .......................................................... 22
Financial Section ........................................................................................................................... 26
Corrective Action Plan for Findings Reported Under Uniform Guidance ................................... 28
About the State Auditor's Office ................................................................................................... 32
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Office of the Washington State Auditor sao.wa.gov
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
City of Edmonds
January 1, 2023 through December 31, 2023
SECTION I – SUMMARY OF AUDITOR’S RESULTS
The results of our audit of the City of Edmonds are summarized below in accordance with Title 2
U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Financial Statements
We issued an unmodified opinion on the fair presentation of the basic financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component units and remaining fund information in accordance with accounting
principles generally accepted in the United States of America (GAAP).
Internal Control over Financial Reporting:
• Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over financial reporting that we consider to be significant deficiencies.
• Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
We noted no instances of noncompliance that were material to the financial statements of the City.
Federal Awards
Internal Control over Major Programs:
• Significant Deficiencies: We identified deficiencies in the design or operation of internal
control over major federal programs that we consider to be significant deficiencies.
• Material Weaknesses: We identified deficiencies that we consider to be material
weaknesses.
We issued an unmodified opinion on the City’s compliance with requirements applicable to its
major federal program.
We reported findings that are required to be disclosed in accordance with 2 CFR 200.516(a).
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Office of the Washington State Auditor sao.wa.gov
Identification of Major Federal Programs
The following program was selected as a major program in our audit of compliance in accordance
with the Uniform Guidance.
ALN Program or Cluster Title
21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
the Uniform Guidance, was $750,000.
The City did not qualify as a low-risk auditee under the Uniform Guidance.
SECTION II – FINANCIAL STATEMENT FINDINGS
None reported.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED
COSTS
See Finding 2023-001.
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Office of the Washington State Auditor sao.wa.gov
SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
City of Edmonds
January 1, 2023 through December 31, 2023
2023-001 The City did not have adequate internal controls for ensuring
compliance with federal requirements for procurement and
subrecipient monitoring and it did not comply with federal
procurement requirements.
Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus
State and Local Fiscal Recovery
Funds
Federal Grantor Name: U.S. Department of the Treasury
Federal Award/Contract Number: N/A
Pass-through Entity Name: Washington Department of
Commerce
Pass-through Award/Contract
Number:
22-96720-210
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF)
program is to respond to the COVID-19 pandemic’s negative effects on public
health and the economy, provide premium pay to essential workers during the
pandemic, provide government services to the extent COVID-19 caused a reduction
in revenues collected, and make necessary investments in water, sewer or
broadband infrastructure.
During 2023, the City spent $3,622,519 in program funds to cover additional costs
it had incurred during the pandemic, including expenditures supporting public
health, household utility relief, and direct assistance payments to local businesses
and nonprofit organizations financially affected by COVID-19. The program funds
also included $886,240 passed through to two subrecipients to fulfill components
of the program’s objectives. The portion of program funds the City passed through
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Office of the Washington State Auditor sao.wa.gov
to the subrecipients provided emergency assistance to households and college
students financially affected by COVID-19.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding program requirements and monitoring the effectiveness of
established controls.
Procurement
Federal regulations require recipients to follow their own documented procurement
procedures, which must conform to the Uniform Guidance procurement standards
found in 2 CFR § 200.318-327. These procedures must reflect the most restrictive
of applicable federal, state or local laws.
When using federal funds to procure goods and services, governments must apply
the more restrictive requirements of federal, state or local laws by either obtaining
quotes or following a competitive procurement process, depending on the estimated
cost of the procurement activity. Competitive bidding may be waived in certain
circumstances, including via a sole source exemption when the purchase is only
available from a single vendor. Governments must document the process and
ensure they comply with applicable laws for waiving competitive bidding.
Additionally, state and federal requirements allow it to bypass normal procurement
laws through a process commonly referred to as “piggybacking.” This process
allows entities to purchase goods and services using contracts awarded by another
government or group of governments via an interlocal agreement or cooperative.
When piggybacking, the entity must enter into an agreement before it purchases
services or goods from another entity’s contract. If the City uses such an agreement,
federal regulations require it to confirm the awarding entity followed all
procurement laws and regulations applicable to the entity when selecting the
contractor.
Subrecipient Monitoring
Whenever the City passes on federal funding to subrecipients, federal regulations
require it to monitor subrecipients to ensure they comply with the terms and
conditions of the federal award. For these subawards, monitoring would include
verifying the subrecipients only provided assistance to participants who met the
program eligibility requirements. Subrecipient requirements also require the City
to verify whether prior year awardees received an audit if they expended more than
$750,000 in federal awards, and to follow up on any findings issued.
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Office of the Washington State Auditor sao.wa.gov
Description of Condition
Procurement
The City’s internal controls were ineffective for ensuring it complied with federal
procurement requirements. Although the City has written procurement policies,
they do not address requirements for piggybacking and purchasing through a
cooperative. Additionally, City’s policy establishes the micro purchase threshold
as $20,000, which is less restrictive than the federal threshold of $10,000.
Further, the City piggybacked onto another agency’s contract to purchase vehicles
and did not retain supporting documentation showing it verified the awarding
agency followed applicable procurement requirements before purchasing. It also
determined the purchase of a software system to be sole source but did not have
documentation showing its rationale and justification for this non-competitive
procurement.
We consider this internal control deficiency to be a material weakness that led to
material noncompliance.
Subrecipient Monitoring
Our audit found the City did not have internal controls in place to adequately
monitor its subrecipients, as federal regulations require. The City awarded program
funds to two subrecipients during the audit period and was required to monitor four
subrecipients with awards from previous fiscal years in the current audit period.
The City did not obtain any documentation from one subrecipient and did not obtain
documentation for the final quarter of its agreement with another subrecipient to
ensure program participants were eligible for assistance. Further, the City did not
determine whether four subrecipients expended more than $750,000 in federal
awards and received an audit when required.
We consider this deficiency in internal controls to be a significant deficiency.
Cause of Condition
Procurement
Procurement activity is decentralized and performed at the department level. The
City experienced turnover in positions responsible for updating procurement
policies and procuring transactions. City employees involved in these purchases
were not provided adequate training to update policies and ensure they understood
procurement requirements. As such, City employees were not aware of all federal
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requirements involved when piggybacking onto another agency’s contract or using
exemptions to competitive procurement for sole source purchases.
Subrecipient Monitoring
The City received a recommendation in the prior audit related to this issue and
began changing its procedures. However, due to timing and staff turnover, it was
unable to perform and document all portions of subrecipient monitoring
requirements for the period under audit.
Effect of Condition
Procurement
Without updated written policies and procedures, the City is at an increased risk of
not complying with the most restrictive of federal, state or local procurement
methods when using federal funds to procure goods and services.
The City did not provide supporting documentation showing the procurement
methods used followed all applicable requirements for the purchase of vehicles and
a software system totaling $719,217. Without effective internal controls, the City
cannot demonstrate it complied with federal procurement requirements, allowed for
full and open competition and received the best price.
Subrecipient Monitoring
The City did not monitor $290,647 expenditures for two subrecipients to ensure
they complied with the terms and conditions of the subaward and appropriately
used federal program funds. Therefore, the City was unable to confirm only eligible
participants received assistance.
Further, the City did not adequately monitor four of its subrecipients to verify they
received single audits when required. Although the City sent letters to three of these
subrecipients to inquire about single audits, it did not follow up with them and it
also did not have evidence that it monitored for audits for the other subrecipient.
Without verifying the subrecipients received single audits when required, the City
would be unaware if any findings were issued relating to program requirements that
would require follow-up action.
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Recommendation
We recommend the City strengthen its internal controls to ensure compliance with
federal requirements. Specifically, we recommend the City:
• Provide training to employees responsible for updating policies and
procurement transactions paid all or in part with federal funds
• Update its written procurement policy to conform to Uniform Guidance
requirements (2 CFR § 200.318-327) for all procurement activities
• Ensure all goods and services charged to federal programs are procured in
accordance with federal regulations and its own policy
• Verify all subrecipients receive single audits when required and retain
sufficient documentation of this verification
• Perform and document sufficient monitoring procedures in accordance with
subrecipients’ risk to verify they are complying with the terms of the award
including providing funding to eligible participants, when applicable
City’s Response
The City acknowledges the audit findings and recognizes the importance of
strengthening internal monitoring practices to ensure full alignment with federal
requirements. While there may be additional context to consider regarding the
specific circumstances, we appreciate the opportunity to clarify those details and
outline the corrective actions that have been taken and are planned.
Subrecipient No.1 – Edmonds College
One of the subrecipients noted in the finding is a public higher education institution
operating under the State Board for Community and Technical Colleges (SBCTC).
The subrecipient administered the Student Emergency Assistance Grant (SEAG) in
accordance with state guidelines that emphasize low-barrier, equity-focused access
to emergency aid. These guidelines intentionally discourage requiring extensive
documentation from students and instead rely on:
• Written applications and student interviews
• Internal verification using the college's ctclink student system
• Program-level data tracking through financial aid systems
• Quarterly reporting to the City, which was submitted
Due to FERPA protections, the college was limited in the level of personal data it
could share externally without student consent. While this model limited the City's
ability to independently audit eligibility at the individual level, it is consistent with
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the state's recognized approach to supporting systemically disadvantaged students
and aligns with SEAG Program principles. The City accepted this structure as
appropriate during the agreement period.
Subrecipient No.2 – Washington Kids in Transition
For the second subrecipient, the City followed its standard internal audit process,
which includes a quarterly review of 10% of submitted invoices to validate
eligibility and ensure federal program compliance. After completing the first-
quarter audit, the City identified concerns related to the supporting documentation
for certain grant disbursements. In response:
• The City escalated oversight and required the subrecipient to submit
documentation for 100% of invoices from May through July, encompassing
both Q2 and Q3.
• Concurrently, the City became aware that the subrecipient had not initiated or
completed a Single Audit for FY2023. Upon learning that the audit would not
be submitted by the federal deadline (September 30), the City immediately
ceased all grant funding and closed the program.
• Though additional invoices were received in August and September, the City
determined that the heightened audit activity from May through July had
addressed the prior concerns. Q3 was considered to have been appropriately
audited, and no further audit was conducted for the final period. The City has
not resumed any partnership with this entity since September 2024.
• The subrecipient ultimately declined to obtain the required Single Audit for
FY2023 and FY2024.
Review of Prior Year Subrecipient Audit Requirements
As part of the City's monitoring efforts for subrecipients from previous fiscal years,
the Deputy Director of Finance at the time requested Single Audit reports directly
from the two college subrecipients and was ultimately able to obtain the reports
through the Federal Audit Clearinghouse (FAC). While the City does not have
documentation to confirm this process, it was discussed during internal meetings
that the reports had been reviewed, and this task was considered complete at the
time.
Of the four subrecipients referenced in the audit, the third was a nonprofit
organization for which the Deputy Director reviewed publicly available financial
records. Based on that review, it was determined the organization did not meet the
$750,000 federal expenditure threshold and was therefore not subject to a Single
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Audit. The fourth subrecipient, the entity that did not complete the required audit,
was addressed in the corrective actions outlined above.
Planned and Ongoing Corrective Actions
To strengthen subrecipient oversight moving forward, the City is implementing the
following corrective actions:
• Updated Subrecipient Agreements: All future contracts will include specific
and detailed language regarding audit thresholds, access to documentation,
and monitoring expectations, including reference to Uniform Guidance
requirements.
• Audit Verification Procedures: The City will implement a documented protocol
for tracking and verifying Single Audits for any subrecipient receiving
$750,000 or more in federal funds.
• Monitoring Documentation: The City will maintain written records of all
monitoring activities, including eligibility reviews, audit follow-up, and
subrecipient communication.
• Staff Training and Process Improvements: Staff responsible for subrecipient
oversight will receive updated training on monitoring standards,
documentation expectations, and federal compliance protocols.
These actions will be implemented prior to any future program launches involving
subawards of federal funds and will also apply to the monitoring of any current
active grants. Although no additional funding of this type was issued in 2024, the
City will be subject to audit for this period and will ensure compliance with all
applicable requirements, including collecting the FY2024 Single Audit reports as
required.
Corrective Action Plan – Procurement
The City's Purchasing Policy addresses requirements for "piggybacking" and
purchasing through a Cooperative in section 13.0 lnterlocal Agreements. However,
the City should update the Purchasing Policy section 11.0 Procurement Using
Federal Funds to include the same language that specifies the process of Interlocal
and Cooperative agreements, or “piggybacking”.
• As stated in the auditor's draft notification, state and federal requirements
allow it to bypass normal procurement laws through a process commonly
referred to as "piggybacking". This process allows entities to purchase goods
and services using contracts awarded by another government or group of
governments via an interlocal agreement or cooperative. When piggybacking,
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the entity must enter into an agreement before it purchases services or goods
from another entity's contract. If the City uses such an agreement, federal
regulations require it to confirm the awarding entity followed all procurement
laws and regulations applicable to the entity when selecting the contractor.
To ensure compliance, although the City did confirm that the vendor followed their
own bid law requirements, the City will do a better job documenting that
verification in any future equipment purchases using federal funding.
Auditor’s Remarks
We thank the City for its commitment to resolving this issue. We will follow up on
the status of this finding during our next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement
standards, establishes requirements for written procedures and requirements for
maintaining records sufficient to detail the history of procurement.
Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to
be followed, establishes requirements for procuring with Federal funds by
nonfederal entities.
Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for
passthrough entities, establishes the requirements for subrecipient monitoring and
management requirements for pass through entities.
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SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
City of Edmonds
January 1, 2023 through December 31, 2023
This schedule presents the status of findings reported in prior audit periods.
Audit Period:
2022
Report Ref. No.:
1033990
Finding Ref. No.:
2022-001
Finding Caption:
The Edmonds Public Facilities District, a component unit of the City of Edmonds did not
have adequate internal controls ensuring accurate reporting of its financial statements.
Background:
Our audit found a significant internal control deficiency. Specifically, the District did not
have a process in place to adequately research and implement new accounting standards. The
District did not implement GASB Statement No. 87, Leases and as a result, the District
underreported its lease receivable, deferred inflows balances and its lease interest revenue
and it overstated its rent revenue.
Status of Corrective Action: (check one)
X Fully
Corrected
☐ Partially
Corrected ☐ Not Corrected ☐ Finding is considered no
longer valid
Corrective Action Taken:
We acknowledge the audit finding regarding our component unit's failure to implement
GASB 87 accounting for leases. Upon receiving the finding, I met with the Executive Director
of the District to thoroughly discuss the issue, understand the reasons for non-compliance,
and determine the necessary steps to rectify the situation.
Cause of Non-Compliance: The primary cause of the non-compliance was a turnover in the
district's accounting staff. This turnover led to a significant loss of institutional knowledge
and the capacity to train new staff effectively in the implementation of GASB 87.
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Corrective Actions Taken: Since the audit finding, the district has taken several steps to
ensure compliance moving Forward:
1. Training: The district has provided comprehensive training to its accounting staff on
GASB 87, focusing specifically on lease accounting requirements.
2. Policy Implementation: New policies have been established to address and manage
lease and subscription accounting in alignment with GASB 87 and related standards.
Additional Support Offered: To further support the district's compliance efforts, I
researched and proposed the creation of a subaccount within our Debt Book profile that
could assist with the calculation and tracking of leases and subscriptions under GASB 87.
This tool was intended as a backup measure to provide additional assurance in maintaining
compliance. However, the District decided to utilize its own spreadsheets for this purpose,
which they have integrated into their compliance processes.
Plan for Year-End 2023: The District has expressed confidence in their revised processes
and tools, which have been designed to ensure compliance with GASB 87 by the year-end
2023. We will continue to monitor their progress and offer support as needed to ensure full
compliance and prevent future findings of this nature.
Should you require any further information or documentation regarding the steps taken to
address this finding, please do not hesitate to contact me.
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INDEPENDENT AUDITOR’S REPORT
Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
City of Edmonds
January 1, 2023 through December 31, 2023
Mayor and City Council
City of Edmonds
Edmonds, Washington
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component units and remaining fund information of the City of Edmonds, as of and for
the year ended December 31, 2023, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements, and have issued our report thereon
dated June 10, 2025.
REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal
control over financial reporting (internal control) as a basis for designing audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the City’s financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
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Our consideration of internal control was for the limited purpose described above and was not
designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist
that were not identified.
Given these limitations, during our audit we did not identify any deficiencies in internal control
that we consider to be material weaknesses.
REPORT ON COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the financial statements. However, providing an opinion on compliance with
those provisions was not an objective of our audit, and accordingly, we do not express such an
opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required
to be reported under Government Auditing Standards.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose. However, this
report is a matter of public record and its distribution is not limited. It also serves to disseminate
information to the public as a reporting tool to help citizens assess government operations.
Pat McCarthy, State Auditor
Olympia, WA
June 10, 2025
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INDEPENDENT AUDITOR’S REPORT
Report on Compliance for Each Major Federal Program and Report on Internal
Control over Compliance in Accordance with the Uniform Guidance
City of Edmonds
January 1, 2023 through December 31, 2023
Mayor and City Council
City of Edmonds
Edmonds, Washington
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM
Opinion on Each Major Federal Program
We have audited the compliance of the City of Edmonds, with the types of compliance
requirements identified as subject to audit in the U.S. Office of Management and Budget (OMB)
Compliance Supplement that could have a direct and material effect on each of the City’s major
federal programs for the year ended December 31, 2023. The City’s major federal programs are
identified in the auditor’s results section of the accompanying Schedule of Findings and
Questioned Costs.
In our opinion, the City complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2023.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America (GAAS); the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States; and the
audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)
are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our
report.
We are required to be independent of the City and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audit. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on
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compliance for each major federal program. Our audit does not provide a legal determination on
the City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the
design, implementation, and maintenance of effective internal control over compliance with the
requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements
applicable to the City’s federal programs.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of
assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS, Government Auditing Standards and the Uniform Guidance will always
detect a material noncompliance when it exists. The risk of not detecting a material noncompliance
resulting from fraud is higher than for that resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements referred to above is considered material, if there
is a substantial likelihood that, individually or in the aggregate, it would influence the judgement
made by a reasonable user of the report on compliance about the City’s compliance with the
requirements of each major federal program as a whole.
Performing an audit in accordance with GAAS, Government Auditing Standards and the Uniform
Guidance includes the following responsibilities:
• Exercise professional judgment and maintain professional skepticism throughout the audit;
• Identify and assess the risks of material noncompliance, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the City’s compliance with the compliance
requirements referred to above and performing such other procedures as we considered
necessary in the circumstances;
• Obtain an understanding of the City’s internal control over compliance relevant to the audit
in order to design audit procedures that are appropriate in the circumstances and to test and
report on internal control over compliance in accordance with the Uniform Guidance, but
not for the purpose of expressing an opinion on the effectiveness of the City’s internal
control over compliance. Accordingly, no such opinion is expressed; and
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• We are required to communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit and any significant deficiencies
and material weaknesses in internal control over compliance that we identified during the
audit.
Other Matters
The results of our auditing procedures disclosed an instance of noncompliance which is required
to be reported in accordance with the Uniform Guidance and which is described in the
accompanying Schedule of Federal Award Findings and Questioned Costs as Finding 2023-001.
Our opinion on each major federal program is not modified with respect to these matters.
City’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s
response to the noncompliance findings identified in our compliance audit described in the
accompanying Schedule of Federal Award Findings and Questioned Costs. The City’s response
was not subjected to the other auditing procedures applied in the audit of compliance and,
accordingly, we express no opinion on the response.
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed. Our consideration of internal
control over compliance was for the limited purpose described in the Auditor’s Responsibilities
for the Audit of Compliance section above and was not designed to identify all deficiencies in
internal control over compliance that might be material weaknesses or significant deficiencies in
internal control over compliance and therefore, material weaknesses or significant deficiencies
may exist that were not identified.
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However, we identified certain deficiencies in internal control over compliance that we consider
to be material weaknesses and significant deficiencies. In the accompanying Schedule of Federal
Award Findings and Questioned Costs, we consider the deficiencies described in Finding 2023-
001 to be a material weakness and the deficiencies described in Finding 2023-001 to be a
significant deficiency.
City’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s
response to the internal control over compliance findings identified in our audit described in the
accompanying Schedule of Federal Award Findings and Questioned Costs. The City’s response
was not subjected to the other auditing procedures applied in the audit of compliance and,
accordingly, we express no opinion on the response.
Purpose of this Report
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other
purpose. However, this report is a matter of public record and its distribution is not limited. It also
serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.
Pat McCarthy, State Auditor
Olympia, WA
June 10, 2025
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INDEPENDENT AUDITOR’S REPORT
Report on the Audit of the Financial Statements
City of Edmonds
January 1, 2023 through December 31, 2023
Mayor and City Council
City of Edmonds
Edmonds, Washington
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinions
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund and the aggregate discretely presented component units
and remaining fund information of the City of Edmonds, as of and for the year ended December
31, 2023, and the related notes to the financial statements, which collectively comprise the City’s
basic financial statements as listed in the financial section of our report.
In our opinion, the accompanying financial statements referred to above present fairly, in all
material respects, the respective financial position of the governmental activities, the business-type
activities, each major fund and the aggregate discretely presented component units and remaining
fund information of the City of Edmonds, as of December 31, 2023, and the respective changes in
financial position and, where applicable, cash flows thereof, and the respective budgetary
comparison for the General, Street Construction and Edmonds Rescue Plan funds for the year then
ended in accordance with accounting principles generally accepted in the United States of
America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS) and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are required to be independent of
the City and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinions.
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Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America, and
for the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the City’s
ability to continue as a going concern for twelve months beyond the financial statement date,
including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and
Government Auditing Standards will always detect a material misstatement when it exists. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control. Misstatements are considered material if there is a substantial
likelihood that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the financial statements.
Performing an audit in accordance with GAAS and Government Auditing Standards includes the
following responsibilities:
• Exercise professional judgment and maintain professional skepticism throughout the audit;
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements;
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion
is expressed;
• Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements;
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• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City’s ability to continue as a going
concern for a reasonable period of time; and
• Communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis and required supplementary information listed in the
financial section of our report be presented to supplement the basic financial statements. Such
information is the responsibility of management and, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during
our audit of the basic financial statements. We do not express an opinion or provide any assurance
on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements. The accompanying Schedule of
Expenditures of Federal Awards is presented for purposes of additional analysis as required by
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). This
supplementary information is not a required part of the basic financial statements. Such
information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated, in all material respects, in relation to the
basic financial statements as a whole.
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OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
June 10, 2025 on our consideration of the City’s internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the effectiveness of the City’s internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City’s internal control over financial reporting and
compliance.
Pat McCarthy, State Auditor
Olympia, WA
June 10, 2025
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FINANCIAL SECTION
City of Edmonds
January 1, 2023 through December 31, 2023
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis – 2023
BASIC FINANCIAL STATEMENTS
Statement of Net Position – 2023
Statement of Activities – 2023
Governmental Funds Balance Sheet – 2023
Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position –
2023
Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental
Funds – 2023
Reconciliation of Governmental Funds Statement of Revenues, Expenditures and
Changes in Fund Balance to the Statement of Activities – 2023
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and
Actual – General Fund – 2023
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and
Actual – Street Construction Fund – 2023
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and
Actual – Edmonds Rescue Plan Fund – 2023
Statement of Net Position – Proprietary Funds – 2023
Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds
– 2023
Statement of Cash Flows – Proprietary Funds – 2023
Notes to Financial Statements – 2023
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the Total OPEB Liability and Related Ratios – Firemen’s Pension
Fund Other Post-Employment Benefits - 2023
Schedule of Changes in the City’s Net Pension Liability and Related Ratios – Firemen’s
Pension Fund – 2023
Schedule of City Contributions – Firemen’s Pension Fund – 2023
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Schedule of Proportionate Share of Net Pension Liability – PERS 1, PERS 2/3, LEOFF 1,
LEOFF 2 – 2023
Schedule of Employer Contributions – PERS 1, PERS 2/3, LEOFF 2 – 2023
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards – 2023
Notes to the Schedule of Expenditures of Federal Awards – 2023
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CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER
UNIFORM GUIDANCE
City of Edmonds
January 1, 2023 through December 31, 2023
This schedule presents the corrective action planned by the City for findings reported in this report
in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance).
Finding ref
number:
2023-001
Finding caption:
The City did not have adequate internal controls for ensuring
compliance with federal requirements for procurement and
subrecipient monitoring and it did not comply with federal
procurement requirements.
Name, address, and telephone of City contact person:
Richard Gould, Finance Director
121 5th Ave N
Edmonds, WA 98020
(425) 275-4688 ext. 1293
Corrective action the auditee plans to take in response to the finding:
Corrective Action Plan - Subrecipient Monitoring Finding
The City acknowledges the audit findings and recognizes the importance of
strengthening internal monitoring practices to ensure full alignment with federal
requirements. While there may be additional context to consider regarding the specific
circumstances, we appreciate the opportunity to clarify those details and outline the
corrective actions that have been taken and are planned.
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Subrecipient #1 – Edmonds College
One of the subrecipients noted in the finding is a public higher education institution
operating under the State Board for Community and Technical Colleges (SBCTC). The
subrecipient administered the Student Emergency Assistance Grant (SEAG) in
accordance with state guidelines that emphasize low-barrier, equity-focused access to
emergency aid. These guidelines intentionally discourage requiring extensive
documentation from students and instead rely on:
• Written applications and student interviews
• Internal verification using the college's ctclink student system
• Program-level data tracking through financial aid systems
• Quarterly reporting to the City, which was submitted
Due to FERPA protections, the college was limited in the level of personal data it could
share externally without student consent. While this model limited the City's ability to
independently audit eligibility at the individual level, it is consistent with the state's
recognized approach to supporting systemically disadvantaged students and aligns with
SEAG Program principles. The City accepted this structure as appropriate during the
agreement period.
Subrecipient #2 – Washington Kids in Transition
For the second subrecipient, the City followed its standard internal audit process, which
includes a quarterly review of 10% of submitted invoices to validate eligibility and
ensure federal program compliance. After completing the first-quarter audit, the City
identified concerns related to the supporting documentation for certain grant
disbursements. In response:
• The City escalated oversight and required the subrecipient to submit
documentation for 100% of invoices from May through July, encompassing both
Q2 and Q3.
• Concurrently, the City became aware that the subrecipient had not initiated or
completed a Single Audit for FY2023. Upon learning that the audit would not be
submitted by the federal deadline (September 30), the City immediately ceased all
grant funding and closed the program.
• Though additional invoices were received in August and September, the City
determined that the heightened audit activity from May through July had
addressed the prior concerns. Q3 was considered to have been appropriately
audited, and no further audit was conducted for the final period. The City has
not resumed any partnership with this entity since September 2024.
• The subrecipient ultimately declined to obtain the required Single Audit for FY2023
and FY2024.
Review of Prior – Year Subrecipient Audit Requirements
As part of the City's monitoring efforts for subrecipients from previous fiscal years, the
Deputy Director of Finance at the time requested Single Audit reports directly from the
two college subrecipients and was ultimately able to obtain the reports through the
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Federal Audit Clearinghouse (FAC). While the City does not have documentation to
confirm this process, it was discussed during internal meetings that the reports had been
reviewed, and this task was considered complete at the time.
Of the four subrecipients referenced in the audit, the third was a nonprofit
organization for which the Deputy Director reviewed publicly available financial
records. Based on that review, it was determined the organization did not meet the
$750,000 federal expenditure threshold and was therefore not subject to a Single
Audit. The fourth subrecipient, the entity that did not complete the required audit, was
addressed in the corrective actions outlined above.
Planned and Ongoing Corrective Actions
To strengthen subrecipient oversight moving forward, the City is implementing the
following corrective actions:
• Updated Subrecipient Agreements: All future contracts will include specific
and detailed language regarding audit thresholds, access to documentation,
and monitoring expectations, including reference to Uniform Guidance
requirements.
• Audit Verification Procedures: The City will implement a documented
protocol for tracking and verifying Single Audits for any subrecipient
receiving $750,000 or more in federal funds.
• Monitoring Documentation: The City will maintain written records of all
monitoring activities, including eligibility reviews, audit follow-up, and
subrecipient communication.
• Staff Training and Process Improvements: Staff responsible for subrecipient
oversight will receive updated training on monitoring standards,
documentation expectations, and federal compliance protocols.
These actions will be implemented prior to any future program launches involving
subawards of federal funds and will also apply to the monitoring of any current active
grants. Although no additional funding of this type was issued in 2024, the City will
be subject to audit for this period and will ensure compliance with all applicable
requirements, including collecting the FY2024 Single Audit reports as required.
Corrective Action Plan – Procurement
"The City's internal controls were ineffective for ensuring it complied with federal
procurement requirements. Although the City has written procurement policies, they do
not address requirements for piggybacking and purchasing through a cooperative."
Our response to the auditor's statements regarding the vehicles purchased with
ARPA funds are as follows.
"The City's internal controls were ineffective for ensuring it complied with federal
procurement requirements. Although the City has written procurement policies, they
do not address requirements for piggybacking and purchasing through a
cooperative."
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• The City's Purchasing Policy addresses requirements for
"piggybacking" and purchasing through a Cooperative in section
13.0 lnterlocal Agreements. However, the City should update the
Purchasing Policy section 11.0 Procurement Using Federal Funds
to include the same language that specifies the process of Interlocal
and Cooperative agreements, or “piggybacking”.
• As stated in the auditor's draft notification, state and federal
requirements allow it to bypass normal procurement laws through a
process commonly referred to as "piggybacking". This process allows
entities to purchase goods and services using contracts awarded by
another government or group of governments via an interlocal agreement
or cooperative. When piggybacking, the entity must enter into an agreement
before it purchases services or goods from another entity's contract. If the
City uses such an agreement, federal regulations require it to confirm the
awarding entity followed all procurement laws and regulations
applicable to the entity when selecting the contractor.
To ensure compliance,
• Although the city did confirm that the vendor followed their own bid law
requirements, the City will do a better job documenting that verification in any
future equipment purchases using federal funding.
Anticipated date to complete the corrective action: Completed
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Office of the Washington State Auditor sao.wa.gov
ABOUT THE STATE AUDITOR’S OFFICE
The State Auditor’s Office is established in the Washington State Constitution and is part of the
executive branch of state government. The State Auditor is elected by the people of Washington
and serves four-year terms.
We work with state agencies, local governments and the public to achieve our vision of increasing
trust in government by helping governments work better and deliver higher value.
In fulfilling our mission to provide citizens with independent and transparent examinations of how
state and local governments use public funds, we hold ourselves to those same standards by
continually improving our audit quality and operational efficiency, and by developing highly
engaged and committed employees.
As an agency, the State Auditor’s Office has the independence necessary to objectively perform
audits, attestation engagements and investigations. Our work is designed to comply with
professional standards as well as to satisfy the requirements of federal, state and local laws. The
Office also has an extensive quality control program and undergoes regular external peer review
to ensure our work meets the highest possible standards of accuracy, objectivity and clarity.
Our audits look at financial information and compliance with federal, state and local laws for all
local governments, including schools, and all state agencies, including institutions of higher
education. In addition, we conduct performance audits and cybersecurity audits of state agencies
and local governments, as well as state whistleblower, fraud and citizen hotline investigations.
The results of our work are available to everyone through the more than 2,000 reports we publish
each year on our website, www.sao.wa.gov. Additionally, we share regular news and other
information via an email subscription service and social media channels.
We take our role as partners in accountability seriously. The Office provides training and technical
assistance to governments both directly and through partnerships with other governmental support
organizations.
Stay connected at sao.wa.gov
• Find your audit team
• Request public records
• Search BARS Manuals (GAAP and
cash), and find reporting templates
• Learn about our training workshops
and on-demand videos
• Discover which governments serve you
— enter an address on our map
• Explore public financial data
with the Financial Intelligence Tool
Other ways to stay in touch
• Main telephone:
(564) 999-0950
• Toll-free Citizen Hotline:
(866) 902-3900
• Email:
webmaster@sao.wa.gov
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Exit Conference
City of Edmonds
June 10, 2025
1
Disclaimer: This presentation is intended to be viewed in conjunction with the complete packet of exit materials provided. A copy of those
materials may be requested by contacting the presenters listed or by emailing PublicRecords@sao.wa.gov.
Kristina Baylor, Assistant Director
Courtney Amonsen, Audit Manager
Erika Davies, Assistant Audit Manager
Irina Frolova, Audit Lead
2.1.b
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2
Results that Matter
Increased trust in government
Independent, transparent
examinations
Improved efficiency and
effectiveness of government Pat McCarthy
State Auditor
2.1.b
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Federal Grant Compliance Audit
Results
3
•Opinion issued on the City’s compliance
with requirements applicable to its
major program
•Audit conducted in accordance with
Government Auditing Standards and the
Uniform Guidance
Unmodified
Opinion Issued
•We identified and reported significant
deficiencies in internal control
•We identified deficiencies that we
consider to be material weaknesses
•We noted no instances of
noncompliance that are required to be
reported
Internal Control
and Compliance
over Major
Programs
January 1, 2023 through December 31, 2023
2.1.b
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Major Programs Selected for
Audit
4
ALN Program or Cluster Title Total Amount
Expended
21.027 COVID-19 – Coronavirus State and
Local Fiscal Recovery Funds
$3,622,519
These costs amount to approximately 84 percent of the total federal
expenditures for 2023
2.1.b
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Coronavirus State and Local
Fiscal Recovery Funds - Finding
2023-001: The City’s did not have
adequate internal controls were
inadequate for ensuring
compliance with federal
requirements for procurement and
subrecipient monitoring and it did
not comply with federal
procurement requirements.
5
Please see page 10 of
your exit packet to view
the details of this
recommendation
2.1.b
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Financial Audit Results
6
•Opinion issued in accordance with U.S.
GAAP
•Audit conducted in accordance with
Government Auditing Standards
Unmodified
Opinion Issued
•We no significant deficiencies in internal
control
•We identified no deficiencies that we
consider to be material weaknesses.
•We noted no instances of
noncompliance that were material to the
financial statements of the City
Internal Control
and Compliance
over Financial
Reporting
January 1, 2023 through December 31, 2023
2.1.b
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Financial Audit Results
7
•We did not identify any material
misstatements during the audit.
•Uncorrected misstatements have been
provided for review.
Required
Communications
The audit addressed the following risks, which required special
consideration:
Management override of controls
2.1.b
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Summary Schedule of Prior
Audit Findings
8
•Status of City’s Corrective
Action Taken: Fully
Corrected
•Specific corrective actions
taken are described in
schedule on page 18 of
your packet
2.1.b
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9
Financial Intelligence Tool (FIT)
•Unique profiles
for Washington’s
2,200 local
governments
•Explore by dollars
collected and
spent
•Easy comparisons
and rankings
Publicly accessible and user-friendly
2.1.b
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Financial Intelligence Tool (FIT)2.1.b
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Related Audit Work
•Use of public funds to maintain flow splitter in
Perrinville Creek
•Concerns unsubstantiated as Hearing Examiner
has made further rulings on the matter
Citizen Hotline
Referrals
•City was not compliant with the Open Public
Meetings Act governing executive sessions
•Concerns substantiated in part
Citizen Hotline
Referrals
•City Council is not properly approving
expenditures in accordance with state law or City
Code.
•Concerns unsubstantiated
Citizen Hotline
Referrals
11
2.1.b
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Closing Remarks
•Audit costs are in alignment with our revised estimate
•Next audit: Summer 2025
•Accountability for public resources
•Financial statement
•Federal programs
An estimated cost for the next audit has been provided
in our exit packet
12
2.1.b
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Report Publication
Audit reports are published on our
website.
Sign up to be notified by email when
audit reports are posted to our website:
https://sao.wa.gov/about- sao/sign-up-
for-news-alerts/
Audit Survey
When your report is released, you will
receive an audit survey from us.
We value your opinions on our
audit services and hope you
provide feedback.
13
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Thank You!
We would like to thank the City’s management and staff for their assistance
throughout the audit. Specifically, we would like to thank Kim Dunscombe, Acting
Finance Director for provide the information requested throughout the audit. We
would also like to thank Richard Gould, Finance Director, for the professionalism,
timely responses and effort put into getting the audit to the finish line.
We would also like to extend our appreciation to the accountants, including Debra
Sharp, Sarah Mager and Marissa Cain for their assistance and collaborative attitude
throughout the audit.
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Questions?
Contact Courtney Amonsen, Audit Manager
Courtney.Amonsen@sao.wa.gov
(425) 510-0477
1515
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