SPOKANE, Wash. – An audit report has uncovered significant financial misclassifications in Spokane funds, revealing millions of dollars in errors. However, both the report and the city said this misreporting was not the result of fraud or corruption.
In a Monday meeting, CFO Matt Boston says Spokane addressed the issues, and the money is now accounted correctly.
The Office of the Washington State Auditor explained that a state receiving two findings is rare, but the audit is designed to reveal these issues so they can be addressed quickly and all financial statements are accurate.
The audit revealed an understatement of $18.6 million in the general fund, with overstatements in several other funds. Additionally, there was an understatement in international balances of $56.3 million and an overstatement of government expenses by $32.8 million.
The city attributed these errors to one individual who no longer works for the city.
Despite the errors, the audit report confirmed that “the city subsequently corrected these errors.”
The audit reports findings were presented in a meeting on Monday.
“Again, they were all there,” City of Spokane CFO Matt Boston said. “They were just in the wrong spot. We moved it around and we fixed that.”
The audit also highlighted issues with Spokane’s procurement process. By state requirement, the City is required to run a disbarment and suspension check on specific contracts where they are paying more than $25,000. Spokane has occasionally utilized a method called piggybacking, where they add their items to contracts the state has already entered into.
“When we were procuring things, in this specific example, we relied on the state’s suspension and disbarment check that was done previously with state,” Boston said. “What the SAO has told us is that we have to redo that.”
This issue had been identified in previous audits, but the city now claims to have implemented the necessary checks.
Director of Communications for the City of Spokane said in a statement,
“The findings in the audit make clear that there is no evidence of fraud or misuse of funds. Instead, the issues identified were related to how funds were reported. Much of this was holdover practice from prior leadership, and corrective measures have already been implemented by this administration to ensure accurate reporting moving forward.”
