Accountability Audit Report King County

Washington State Auditor'S Office

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Washington State Auditor’s Office

Accountability Audit Report






King County



Report Date
June 1, 2009


Report No. 1001690

Issue Date
June 22, 2009



Washington State Auditor
Brian Sonntag



June 22, 2009


County Council and Executive
King County
Seattle, Washington


Report on Accountability

Please find attached our report on King County‘s accountability and compliance with state laws and
regulations and its own policies and procedures.

In addition to this work, we also audit the County‘s financial statements and compliance with federal laws
and regulations. The results of that audit will be included in a separately issued audit report.

Sincerely,

BRIAN SONNTAG, CGFM
STATE AUDITOR


Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021  [phone]  TDD Relay [phone]
FAX [phone]  http://www.sao.wa.gov
Table of Contents

King County
June 1, 2009


Audit Summary .............................................................................................................................................. 1
Description of the County .............................................................................................................................. 5
Audit Areas Examined ................................... 7
Schedule of Audit Findings and Responses ............................... 10
Status of Prior Audit Findings...................................................................................................................... 74
Appendix A – Applicable Criteria, Laws and Regulations by Finding ......................... 77
Appendix B – Roles and Responsibilities ................................................................................................. 102




Audit Summary

King County
June 1, 2009


AUDIT RESULTS

This report contains the results of our independent accountability audit of King County.

Overarching Conclusion

The County operates with decentralized and autonomous departments and divisions.
Departments are managed by the King County Executive. The King County Council authorizes
the budgetary funding of County functions, establishes legislation and provides oversight of
County operations.

Our audit found County officials should improve oversight and safeguards over its cash receipts,
expenditures and assets. In many instances, oversight and safeguards were impaired by a lack of
sufficient monitoring to ensure policies are complete, followed and staff is adequately trained to
operate within those policies.

Further, County officials do not consistently provide or enforce performance measures or
expectations in holding staff accountable. As a result, the County exposes itself to greater risk of
loss, less ability to control expenditures, and increases the risk for non-compliance with laws,
regulations and contractual requirements. Consequently, our audit identified 12 findings. We also
noted certain issues we communicated to County management.

Overarching Recommendation

In order to resolve the conditions noted in our findings, County officials should improve their
oversight of departments and divisions. They should hold top management accountable for the
adherence to County policies and the oversight and safeguarding of cash receipts, expenditures
and assets.

In turn, top management should hold staff accountable to ensure policies and procedures are
followed, monitored and enforced.

In 2007, the County Auditor made a recommendation that the County re-establish its Audit
Committee which has not been pursued. We concur with this recommendation.

Summary of Findings

Our detailed recommendations are contained in the findings summarized below:

Executive (Policy Implementation, Operations and Administrative Management of Executive
Agencies)
Council (Policy Creation, Budget Adoption, Legislation, Oversight)
Construction Management

1. The lack of adequate performance measures and expectations prevent the King
County Executive and Council from providing adequate oversight of construction
activity.
Washington State Auditor‘s Office
1

1A. King County does not have an adequate construction project
management information system.

1B. King County does not have standard construction management
procedures.

1C. King County construction management data, files, and records are not
consistently maintained and are not readily accessible for management
oversight and review purposes.

1D. King County does not provide resources that are adequate to enable the
Executive Audit Services to comply with County policy requiring
construction management audits.

2. The County did not comply with state law governing the use of Real Estate
Excise Tax proceeds.

Executive
Cash Management

3. King County Metro Transit lacks adequate controls over cash fares collected on
its buses and trolleys.

4. The King County Jail‘s Work Education Release Program‘s internal controls are
inadequate, creating the potential for a loss of public funds.

5. The Recorder‘s Office controls over cash-receipting are inadequate. This allowed
an employee to misappropriate public funds and destroy public documents.

Inventory Management

6. The County lacks adequate internal controls to safeguard drug inventory at public
health pharmacies.

7. The County lacks adequate controls to safeguard and account for small and
attractive assets.

Fleet Replacement Funding

8. The King County Fleet Administration Division reserve fund balance for vehicle
replacement is not adequately funded.

Assessor (Policy Implementation, Operations and Administrative Oversight)
Cash Management

9. King County Assessor‘s Office does not have adequate procedures to ensure the
validity of personal property tax refunds.

Sheriff (Policy Implementation, Operations and Administrative Oversight)
Inventory Management

10. The King County Sheriff‘s Office lacks adequate controls to safeguard and
account for inventory.


Washington State Auditor‘s Office
2
Cash Management/Contract Management/Legal Compliance

11. The Sheriff‘s Office does not have adequate internal controls over citations,
forfeited vehicles, and reporting on seized and forfeited property.

District Court (Policy Implementation, Operations and Administrative Oversight)
Cash Management / Records and Systems Management

12. The King County District Court‘s internal controls over processing transactions
and reconciling bail were inadequate.

ABOUT THE AUDIT

We performed audit procedures to determine whether the County complied with state laws and
regulations and its own policies and procedures. We also examined County management‘s
accountability for public resources. Our work focused on specific areas that have potential for
abuse and misuse of public resources.

Areas examined during the audit were selected using financial transactions from July 1, 2007,
through June 30, 2008. For the audit of construction management, we examined from July 1,
2005 through June 30, 2008.

We audit the County‘s operations annually to ensure accountability for public resources and
compliance with laws and regulations. We choose the areas to look at based on public concerns,
prior audit issues, auditor knowledge of entity operations and the internal control environment.

We also selected construction management as a performance audit area as King County spent
approximately $244,817,000 on capital projects from 2005 through 2007. Using lists provided by
King County departments and divisions, we identified 2,046 projects with expenditures of $2.9
billion from July 1, 2005 through June 30, 2008.

Our primary objectives for the construction management audit were:

1. Over the most recent three years, has King County been effective, efficient and
economical at planning, designing and managing construction projects and contracts in
order to:

Minimize all costs associated with the projects, including but not limited to
engineering, land acquisition, environmental review, environmental mitigation,
permitting and construction?

Minimize unnecessary change orders and delays that result in extra costs?

Keep projects on schedule?

Minimize risk by identifying it, eliminating it, minimizing it or sharing it with the
contractor through good contract terms and contractor management?

Obtain the best quality, timeliness, and other value?

2. How effective has King County been at soliciting, procuring and managing engineering,
consulting and construction management contracts in order to minimize costs and
maximize the value and quality of services provided?