Recently, the Washington State Auditor’s Office (SAO) presented the results for the 2024 audit of Grays Harbor County to the Board of County Commissioners.

Commissioners Georgia Miller and Rick Hole, County Administrator Sam Kim, Clerk of the Board Wendy Chatham, and Chief Deputy Auditor Ricardo Espinoza were in attendance in person, Budget Director Andree Harland appeared via Zoom, while Vickie Raines was excused. Lisa Carrell, the audit manager for the SAO’s Team Olympia, along with audit lead Alisha Alkire and audit supervisor Melissa Dixon, delivered the presentation, also via Zoom. The full report was published on Dec. 22.

“They typically look for whether or not we’re following the BARS (Budgeting, Accounting and Reporting System) Manual, which gives step-by-step instructions on how to pass the audit,” Kim said. “There are many ways to execute the requirements of the state law. They look to see if we have a policy on something, if we don’t, then are we following the state law. If we do have a policy, then are we following our own policy? In my opinion, it’s very basic, very fundamental. I’ve been through a lot of these audits and I find them to be incredibly helpful.”

According to the report, under Financial Statements, the SAO “issued an unmodified opinion on the fair presentation of the County’s financial statements in accordance with its regulatory basis of accounting.”

“We are pleased to report that we are issuing an unmodified clean audit opinion on the county’s financial statements. This is the opinion you want to receive and provides assurance that the financial statements are stated fairly and are materially correct,” Alkire said during the presentation. “We did identify concerns in the county’s processes that were required to be brought to your attention. Our audit identified concerns during our financial statement audit that will be included in our report as an audit finding.

“During our audit, we found deficiencies in internal controls over accounting and financial reporting that affect the county’s ability to produce reliable financial statements, which resulted in delays in the audit process and errors throughout the financial statements. … the county subsequently corrected the significant errors identified in the financial statements.”

The published report stated, “we issued an adverse opinion on the fair presentation with regard to accounting principles generally accepted in the United States of America (GAAP) because the financial statements are prepared using a basis of accounting other than GAAP. We identified deficiencies in the design or operation of internal control over financial reporting that we consider to be significant deficiencies. 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 County.”

The report stated that “State law requires the county to submit an annual report with accurate, summarized financial information and supporting schedules to the State Auditor’s Office within 150 days after the end of its fiscal year; these reports must be ready for audit. … The county did not submit the required annual reports to our office within 150 days of fiscal year-end. While it filed its annual report only 11 days past the deadline in the online filing system, the county subsequently informed us that the statements were not ready for audit. The county confirmed that its statements were ready for audit on September 18, 2025, 100 days later. … The county’s process for preparing and reviewing the financial statements submitted for audit was ineffective for ensuring accurate and timely reporting and identifying reporting errors.“

County responds

“We were 11 days late when we were supposed to turn in our first financial report, and then when the audit started we found out we didn’t have the material ready. These were early warning signs,” Kim said. “During the audit they found things were not recorded properly and there were discrepancies. We corrected all of them, but these are the things based upon our experience and sense of responsiveness, we should not have made these kinds of mistakes.”

Throughout the presentation, Alkire identified other issues and pointed out recommended improvements the county needs to make ahead of future audits.

“Throughout the audit, county staff lacked urgency in fulfilling requests or responding to communications. Specifically, we encountered this during our financial statement audit, which led to delays in the audit and ultimately resulted in the county missing their single audit deadline,” Alkire said. “Additionally, current county staff have limited experience in financial statement preparation, which results in significant delays in the audit timeline and increased audit costs. We recommend that the county implement processes to ensure timely responses over audit requests to prevent future delays and increase in audit costs in future audits.”

Kim said that corrective action will be taken ahead of the next audit cycle.

“Clearly, we can’t have a repeat of what happened, things that are within our control such as doing the reports in a timely manner and being responsive to the requests, and then knowing where all the documents and all the players are. That needs to be done upfront, not in response to the auditor’s requests,” Kim said. “We’ll be looking at the resources and have a plan, and by April 1 be able to fully execute that we are ready for a pre-audit, that we have everything lined up, we know who all the players are, and have some confidence that (the next) audit will go a lot smoother.”

Under federal awards, the SAO, “reported no deficiencies in the design or operation of internal control over major federal programs that we consider to be significant deficiencies. We identified no deficiencies that we consider to be material weaknesses. We issued an unmodified opinion on the County’s compliance with requirements applicable to each of its major federal programs. We reported no findings that are required to be disclosed.”

Kim gave credit to Budget Manager Andree Harland for this positive audit result.

“When it comes to the federal audit requirement, that was pristine. That was done by our budget manager,” Kim said. “That shows that experience and sense of urgency makes the total difference in how we can pass certain parts of the audit.”

“We are pleased to report that we are issuing an unmodified clean audit opinion on the county’s compliance with federal grant requirements,” Alkire said. “Again, this is the opinion you want to receive and provides assurance that the funds were extended in accordance with their intended purposes, and that all requirements have been largely met.”

Kim said that negative audit findings could affect the county’s ability to land grant awards in the future.

“The biggest risk to the county is that all the grant dollars could dry up. So many of our departments rely on grants, so many other areas of the county also rely on grant dollars from the state, the federal government and from other agencies and even some of the NGOs (non-government organizations),” Kim said. “All these grantors want to make sure that we are treating their dollars in the way that the grant requirements were meant to be.”

The county also received a clean bill of health with its accountability audit results which covers compliance with applicable laws and county policies and the safeguarding of public resources.