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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Page Two
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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Page 3
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,....