Here is the transcript of a letter dated March 18, 1998 addressed to Dr. Ginny Tresvant, Superintendent from Nestor E. Newman of SAO. (The copy I was provided was too poor to duplicate.)

Management Letter

In planning and performing our audit of the financial statements of Snohomish School district for the period September 1, 1996 through August 31, 1997, we noted weaknesses in the District's controls for ensuring compliance with State bidding and prevailing wage requirements. While not detailed in our audit report, this matter is presented to assist you in improving the District's internal controls.

The State Auditor's report dated March 18, 1998, will contain our report on the District's compliance with laws and regulations. This letter does not affect that report or our report on the financial statements of the District. This letter intended solely for the use of management and should not be used for any other purpose or be considered a public document until the date the official audit report is issued.

We will review the status of this matter during our next audit. We have already discussed this matter with District personnel, and we would be pleased to discuss it in further detail at your convenience, or to assist you in making the necessary corrections.

We would also like to take this opportunity to extend our appreciation to your staff for the cooperation and assistance given during the course of the audit.

Sincerely,

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MANAGEMENT LETTER

Contracts Administration-Public Works

Our audit included tests of the District's compliance with public works bid and prevailing wage requirements. We tested five public works transactions with payments from $19,281 to $80,180. Our tests disclosed that the District does not have effective internal controls to provide reasonable assurance of compliance with public works bid and prevailing wage requirements.

Bid Law Compliance: Our audit of the District's public works transactions disclosed that the contracts we tested were not bid as required by statute. A summary of those contracts follows:

Carpeting ­ The District utilized a vendor it had identified as the sole source for a low toxic carpet two year previously. District officials were unable to provide support indicating the vendor continued to be the sole source of low toxic carpet for the transaction tested.

Paving Contracts ­ The District utilized a single vendor for a number projects at different schools. Original estimates on these individual projects were that the costs would be below the dollar threshold requiring bids. Subsequent review disclosed that the actual costs were in fact at or above the bidding threshold and these projects should have been competitively bid.

Bulldozing Services ­ The District utilized a contractor to provide bulldozing services who was a sub-contractor on an adjacent District project without going out for competitive bids. It appears this decision was made without considering the required bidding status because the contractor was "on site" and it was convenient to utilize his service on the adjacent land.

Based upon the facts we have been able to gather, it does not appear that the District knowingly avoided bid law compliance, but it appears that the managers involved with those projects were unfamiliar with the statutes governing public works projects and were too focused upon expediting the various projects.

Failure to comply with the statutory bid requirements increased the District's risk of litigation and/or may result in higher costs for its public works projects.

Prevailing Wage Requirements: Although our tests indicate the contractors paid prevailing wages, the District does not have internal control procedures in place to obtain "Statements of Intent to Pay Prevailing Wages" and "Affidavits of Prevailing Wages Paid" required by statute.





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The District's failure to verify its compliance with prevailing wage requirements exposes it to the risk it could incur a legal obligation to pay workers the difference between the prevailing wage and actual wages paid.

The District could improve its internal controls over its public works projects be reviewing the statutory requirements pertaining to public works bidding and prevailing wages in RCW 21A.335.190 and RCW 39.12.040 respectively.


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THE FOLLOWING IS EXCERPTED FROM: SCHOOL VIEWS, Sept. 1998. Page 2, From the Superintendent: Welcome to the 1998099 school year--the start of my sixth and final year as Superintendent of Snohomish Schools. As I review the past five years. I am amazed by what all of the constituencies of our school district have accomplished together:..., a clean record of budget audits conducted by the state without any findings,....

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