The state Auditor’s Office issued two findings against the Whidbey Island Hospital District in a just-released audit report covering Jan. 1, 2019 through Dec. 31, 2020.
The audit found that the hospital district is two years behind in submitting complete and accurate annual financial reports, as required by state law.
In addition, the district doesn’t have adequate controls to prevent the misappropriation or misuse of “theft-sensitive assets.”
The auditor had noted the problems repeatedly in previous audits, the report indicates.
Jennifer Reed, the hospital’s director of finance, said that staff turnover prevented the district from fully addressing concerns from previous years, but that new staff has been hired and the district is making good progress in addressing the concerns.
The report states that the public hospital district submitted its fiscal year 2019 annual report by the required deadline, but it “contained significant errors and was incomplete.” The district has subsequently updated the report multiple times as late as June 18, 2021, but it’s still incomplete.
The district also filed an incomplete 2020 annual report.
The district contracts with an accounting firm to perform the annual financial statement audit, but it still hasn’t completed audits for 2019 and 2020 because of incomplete data.
“The district has not prioritized the preparation of accurate and complete financial statements,” the report states.
“Additionally, turnover in key staff positions has affected the district’s ability to submit annual reports by the statutory deadline.”
As a result, the audit states, district management cannot accurately assess the district’s financial condition in making business decisions or detecting problems.
Hospital commissioners, however, receive up-to-date reports on the hospital’s financial position at monthly board meetings.
In addition, the audit found that the hospital doesn’t adequately track and inventory theft-sensitive assets, such as medical devices, computers, communication equipment and cameras.
The district has taken steps over the last four years to address the issue. But the audit noted that a list of such assets in 2019 only included 69 items, valued at $236,000, with no changes for subsequent purchases.
The auditors selected 12 items from the list, but the district was unable to locate 10 of the 12 items.
“As a result, the district is at an increased risk for property loss because staff cannot identify theft-sensitive assets,” the report states, “and does not know if assets have been misappropriated or purchased for personal use.” The weaknesses were also reported in 2016, 2017 and 2018.
In its response, the district said there are plans to update its policies to reflect the auditor’s recommendation and put controls in place.
Reed pointed out that the state auditor’s website has a portal, portal.sao.wa.gov/tracker, where people can see updates of where government organizations are with resolving any findings.