A recent accountability audit of Timberland Regional Library, which serves a multi-county area of Southwest Washington including Thurston County, has resulted in a letter to the library district outlining some problems that were discovered and recommendations to correct them.
The audit period ran from Jan. 1, 2019 to Dec. 31, 2021.
An accountability audit, according to the state Auditor’s Office, evaluates whether a local government has adhered to applicable state laws, regulations and its own policies and procedures.
“We audit records to ensure public funds are accounted for and controls are in place to protect public resources from misappropriation and misuse,” the Auditor’s Office website reads. “We are required to examine the financial affairs of all local governments at least once every three years.”
Although the library district received a clean financial audit over the same period, the accountability audit resulted in a management letter that was addressed to the Board of Trustees on Feb. 28, 2023. It outlined three problem areas in public works procurement and prevailing wage compliance, improvements to city-owned property and perhaps the most surprising: loss of public funds during an electronic transfer.
The Olympian was unable to reach the library district’s executive director Cheryl Heywood, but she did make some brief comments about the audit to the board on March 22 and again to a facilities committee on March 30. Both of the meetings can be watched online via Timberland’s website.
Heywood acknowledged to the trustees that the library system has some things to address with regard to the accountability audit, but she also pointed out they received a clean financial audit during a time that included the pandemic.
“We are super proud of the work we did,” she said.
Loss of Funds
In the letter, the state says that since 2016, Washington governments have lost $28 million in public funds to cyberfraud.
“Our audit found the district did not have adequate internal controls over electronic payments to protect public funds,” the letter reads. “In 2020, the district made a vendor payment totaling $120,968 to a fraudulent bank account. The district did not take sufficient corrective action to improve its internal controls after the event, and it experienced a second loss in 2022 totaling $2,675, which was related to payroll.”
Among the Auditor’s Office recommendations: Strengthen its controls to ensure verification procedures are required and followed to protect electronic funds transfers from internal and external threats.
Public works procurement and prevailing wage compliance
In this category, the Auditor’s Office says the library district did not:
• Have procedures for securing quotes and awarding contracts using the small works roster method.
• Provide evidence that invitations for quotes included the required elements or that it obtained the required number of quotes. As a result, auditors could not verify the district awarded contracts to the lowest responsible bidder.
• Maintain a list of the contractors contacted and the contracts awarded for the previous 24 months.
• Include the required prevailing wage language requirements in the contract, or verify the contractor filed Statements of Intents to Pay Prevailing Wages and Affidavits of Wages Paid with the state Department of Labor & Industries.
Under state law, using the small works roster process to solicit bids requires the district to obtain quotes from at least five contractors, or three if the value of the contract is under $50,000.
The district must also maintain a list of the contractors contacted and the contracts awarded for the previous 24 months, and for public works projects, the district must include the prevailing wage language requirements in its contracts.
Improvements to City-Owned Property
The Auditor’s Office cited the district’s own policy, which allows “for financial assistance with maintenance and/or health and safety projects at city-owned libraries.”
However, the value of such projects is not to exceed $10,000 and on two occasions it did: The district spent $21,000 on a restroom renovation project and $41,000 on a flooring project, according to the letter.
This one aspect of the accountability audit was discussed by the library system’s facilities committee on March 30.
Heywood acknowledged the board approved the projects that went beyond $10,000 as part of an annual budget process.
The recommendation she made at the meeting was to remove “formal request from the city not to exceed $10,000” from the district’s policy.
“And we have to make a change because it’s not jibing with the actual reality of what we’re doing,” she said, pointing out the district spent more than $10,000 on a building project in Ilwaco.
She said the district should make that change before the Auditor’s Office returns this fall.
