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Home My WebLink About2021/11/29 - Briefing Packet MASON COUNTY COMMISSIONER BRIEFING INFORMATION FOR WEEK OF November 29, 2021 In the spirit of public information and inclusion, the attached is a draft of information for Commissioner consideration and discussion at the above briefing. This information is subject to change, additions and/or deletion and is not all inclusive of what will be presented to the Commissioners. Please see draft briefing agenda for schedule. ��9oN co 1854 To be in compliance with Proclamation by the Governor 20-25.14 and Order of the Secretary of Health 20-03.3, in-person attendance is restricted. Our Commission meetings are live streamed at http://masonwebtv.com/ and we will accept public comment via email msmith(&masoncount)wa.gov; or mail to Commissioners Office, 411 North 5th Street, Shelton, WA 98584; or call 360-427-9670 ext. 419. If you need to listen to the Commission meeting via your telephone, please provide your telephone number to the Commissioners'office no later than 4 p.m. the Friday before the meeting. BOARD OF MASON COUNTY COMMISSIONERS DRAFT MEETING AGENDA 411 North Fifth Street, Shelton WA 98584 Week of November 29, 2021 Monday Noon WA State Association of Counties Zoom Meeting* Virtual Assembly Monday and Thursday 8:00 A.M. Area Command Meeting* Public Works Meeting Room A 100 Public Works Way *This is being noticed as a Special Commission Meeting because a quorum of the Mason County Commission may attend this event and notification is provided per Mason County Code Chapter 2.88.020 - Special Meetings Monday, November 29, 2021 Commission Chambers Times are subject to change, depending on the amount of business presented BRIEFING 9:00 A.M. Administrator— Mark Neary SPECIAL MEETING 9:30 A.M. Public Hearing to certify to the County Assessor the amount of taxes levied for County purposes. Tabled from November 23, 2021 BRIEFING 10:30 A.M. State Auditor Exit Conference Commissioner Discussion — as needed Briefing Agendas are subject to change,please contact the Commissioners'office for the most recent version. Last printed 11/24/21 at 1:17 PM If special accommodations are needed,contact the Commissioners'office at ext.419,Shelton#360-427-9670;Belfair #275-4467,Elma#482-5269. Mason County Administrator oK co 411 North 5t� Street Shelton, WA 98584 360.427.9670 ext. 419 lBS.{ MASON COUNTY COMMISSIONER BRIEFING ITEMS FROM ADMINISTRATOR November 29, 2021 • Specific Items for Review o Reminder of 2022 Budget Hearing on Monday, December 6, 9 a.m. -Jenn o Final Commission briefing will be December 20; final Commission business meeting will be December 21. Continue meeting every-other-Tuesday in 2022? - Diane o Emergency Management Staffing—Diane o EMPG Grant for Emergency Management—Diane o YMCA offer— Mark o Interim Human Resources Director- Mark • Commissioner Discussion J:\DLZ\Briefmg Items\2021\2021-11-29.docx MASON COUNTY BRIEFING ITEM SUMMARY FORM TO: BOARD OF MASON COUNTY COMMISSIONERS FROM: Diane Zoren DEPARTMENT: Central Services EXT: 747 BRIEFING DATE: November 29, 2021 PREVIOUS BRIEFING DATES: If this is a follow-up briefing, please provide only new information ITEM: Replace a temporary position with a permanent position in Emergency Management and to retain the temporary position until the permanent position is filled. EXECUTIVE SUMMARY: Mason County Division of Emergency Management (DEM) provides emergency management services to unincorporated Mason County and the City of Shelton. Emergency management is a vital process of organization and management of resources and responsibilities for dealing with all aspects of emergencies, including mitigation, preparedness, response, and recovery. This process involves the plans, processes, structures, systems and arrangements established to engage the endeavors of government, volunteer, and private agencies to respond to the entire spectrum of emergency management needs in a comprehensive and coordinated manner. Put simply, emergency management is a system. It is a process designed to bring stability to a crisis and manage the impact on a community. The Emergency Management staff is the focal point for emergency management within the county. However, emergency management responsibilities extend beyond this office, to all county/city government departments/agencies, non-governmental, private, and ultimately, to each individual citizen. At this time, there is very little redundancy in the Emergency Management Department and during a disaster or emergency is not the time to try and train a new staff person. The current Emergency Management staffing is 1 FTE and a .33 FTE Manager (vacant). When the COVID pandemic struck it became obvious that additional help was necessary in order to respond to the immense task. A temporary FTE was created for COVID-19 related work. The COVID workload has shifted to Public Health and this temporary position is finishing out 2021 by using EMPG supplemental funding to work on the Continuity of Operations Plans (COOP). The COOP identifies the vital services in an emergency plan and is only successful if it is properly trained and exercised and it important to continue this work. The request is to fill this temporary FTE with a permanent Training and Exercise Coordinator position. This position will assist County departments to development their COOP and countywide COG planning and exercising. In addition, they will assist in planning, organizing, coordinating and exercising the emergency management programs for Mason County and perform a variety of support activities. Briefing Summary 11/24/2021 If the temporary position is not replaced, Emergency Management will be severely understaffed with 1 FTE in 2022. BUDGET IMPACTS: Total wages and benefits - $74,157. The EMPG grant of $35,738 can be used for the Training and Exercise Coordinator. This grant is anticipated in the 2022 budget. RECOMMENDED OR REQUESTED ACTION: Authorization to replace a temporary position with a permanent position in Emergency Management and to retain the temporary position until the permanent position is filled. Briefmg Summary 11/24/2021 _A. JOB DESCRIPTION . ; J. Title: Emergency Management Training Department: Support Services—Department of Exercise Coordinator Emergency Management Affiliation: AFSCME Reports to: Emergency&Info Services Manager Exempt: Non-Exempt:_X Supervises/Directs: NA Risk Class:Clerical 5306-07 Established Date:2006 Revision Date:8/31/16 HR Approval Date: Union Approval Date: GENERAL DESCRIPTION: Assists in planning,organizing and coordinating the emergency management program for Mason County and performs a variety of support activities. ESSENTIAL JOB FUNCTIONS: (Any one position may not include all of the duties listed nor do the listed examples include all tasks,which may be found in positions of this class.) Coordinates and presents emergency management training and education programs for County staff,volunteer groups and the public;and coordinates and evaluates operational training exercises. Assists in providing training and exercise leadership,direction and development of short and long-range plans,goals and objectives for program operations;coordinates program activities with other County departments and outside governmental agencies. Maintains office files and records and performs other office support duties. Works with various committees and special interest groups;makes presentations and provides technical advice and assistance regarding emergency management activities to civic groups,volunteer groups and the general public. Assists in evaluating the County's Comprehensive Emergency Management Plan(CEMP)in accordance with state and federal regulations. Coordinates the planning,training and exercising of each County department with Continuity of Government(COG)planning. Coordinates County departments with the functions of records management pursuant to the Local Government Common Records Retention Schedules(CORE). Coordinates the acquisition,documentation and use of manpower,equipment and supplies for program support during Emergency Operations Center(EOC)activations. Assists in developing and coordinating a variety of systems including communications, shelters,and hazards and disaster analysis; operating and staffing the EOC during periods of disaster or emergencies; insuring the maintenance of emergency communications systems including warning,recording and reporting at the Emergency Operations Center and mobile communications van. May prepare and distribute information regarding natural disasters,hazardous materials and other related subjects. Serves as 24/7 contact(duty officer)on a rotational basis. OTHER JOB FUNCTIONS: Performs other related duties as assigned. c:\users\dlz\appdata\local\microsoft\windows\inetcache\content.outlook\g5113hrd\dem-emergency services training exercise coord 08-3 1-20 1 6.doc JOB DESCRIPTION WORKING CONDITIONS: Duties are primarily performed in an office environment. During emergencies,the employee can be exposed to a variety of physical hazards such as floods,landslides,earthquakes,fire or other uncontrollable elements. Exposure to a variety of weather conditions may occur while driving or conducting field investigations and inspections. May be exposed to physical hazards from falling objects,obstacles, cramped surroundings,heights and climbing steps and ladders.Subject to 24-hour call back for emergencies,to include alternate prolonged sifts during EOC activations. Work is performed in an office environment while sitting at a computer or desk operating general office equipment. May lift or move up to 20 pounds. QUALIFICATIONS Knowledge of - Emergency Management principles and practices. - Local,state and federal regulations regarding emergency management and response. - Federal emergency management and disaster preparedness program objectives. - Safety standards,procedures,and precautions used in emergency response activities. - Effective training programs and methods. - Homeland Security Exercise Evaluation Program(HSEEP)and other federally mandated programs - Mason County resources,residents and local government services. Ability to - Develop and conduct effective training courses for volunteers and staff. - Work with key staff and stakeholders to develop and implement on-going exercise program as outlined in HSEEP - Recognize potential hazards in the County. - Plan,organize and oversee assigned work programs,including monitoring and evaluating the work of volunteer workers. - Assist in developing departmental goals and objectives and conducting planning activities. - Analyze and evaluate operations,develop and recommend corrective actions. - Establish and maintain effective working relationships with employees,County Commissioners,other agencies, volunteer groups and the general public. - Communicate effectively,both orally and in writing,with individuals and groups. - Develop and implement programs and services in area of assignment. - Operate a command center during a disaster or emergency conditions. - Physical ability to perform the essential functions of the job. - Maintain the confidentiality of sensitive and confidential information. - Coordinate and implement loss control training programs. Education and Experience-Any equivalent combination of education and experience which provides the applicant with the knowledge, skills,and abilities required to perform the job. A typical way to obtain the knowledge and abilities would be: Two years of progressively responsible emergency management experience. Completion of required National Incident Management System(NIMS)-Incident Command System (ICS)training courses(currently—100,200,700.800,300,and 400). Licenses,Certificates and Other Requirements: A valid driver's license is required for this position. c:\users\dlz\appdata\local\microsoft\windows\inetcache\content.outlook\g5l l3hrd\dem-emergency services training exercise coord 08-31-2016.doc MASON COUNTY BRIEFING ITEM SUMMARY FORM TO: BOARD OF MASON COUNTY COMMISSIONERS FROM: Tammi Wright DEPARTMENT: Emergency Management EXT: 800 BRIEFING DATE: 11-08-2021 PREVIOUS BRIEFING DATES: If this is a follow-up briefing, please provide only new information ITEM: FY21- Emergency Management Performance Grant (EMPG) contract E22-136 EXECUTIVE SUMMARY: (If applicable, please include available options and potential solutions): This grant originates from the US Department of Homeland Security to Washington State Military Department to State EMD then to us at the county level. The EMPG grant is a yearly reimbursable grant we have been receiving since 2007. The purpose of EMPG is to assist with the enhancement, sustainment and improvement of state, local, and tribal emergency management programs. This grant will assist with Continuity of Operations Planning (COOP) and Continuity of Government (COG) planning for County offices and the exercising of these plans. The 2021 amount is close to the same from 2020 (+$97). We will be receiving $35,738 for the 2021 grant. There is a 50% match to the grant, which comes from the 2021 DEM salaries and supplies budget lines. BUDGET IMPACTS: DEM Budget Revenue $35,738 for FY 2021, RECOMMENDED OR REQUESTED ACTION: Approve the signing of the FY21 EMPG contract E22-136 pending review by Asst. PA Tim Whitehead. ATTACHMENTS: FY21 EMPG grant contract E22-136 face sheet Briefing Summary 11/19/2021 Washington State Military Department EMERGENCY MANAGEMENT PERFORMANCE GRANT AGREEMENT FACE SHEET 1.Subrecipient Name and Address: 2.Grant Agreement Amount: 3. Grant Agreement Number: County of Mason $35,738 E22-136 Division of Emergency Management(DEM) 100 W Public Works Drive Shelton,WA 98684-9714 4. Subrecipient Contact,phone/email: 5.Grant Agreement Start Date: 6, Grant Agreement End Date: Tammi Wright,360-427-9670 x800 June 1,2021 September 30,2022 tam miw co.mason.wa.us 7.Department Contact, phone/email: 8. Data Universal Numbering System(DUNS): 9. UBI#(state revenue): John Hollingsworth,253-512-7044 069580761 232.002-101 ohn.hollin sworth mil.wa. ov 10. Funding Authority: Washington State Military Depart ent the"DEPARTMENT')and the U.S. Department of Homeland Security DHS) 11. Federal Award ID#(FAIN): 12. Federal Award Date: 13.Assistance listings#(formerly CFDA)&Title: EMS-2021-EP-00007-501 08130/2021 1 97.042 21 EMPG 14.Total Federal Amount: 15. Program Index#&OBJ/SUB-OBJ: 16. EIN: $7 582 922 713PT NZ 1 91-6001354 17. Service Districts: 18. Service Area by County(ies): 19.Women/Minority-Owned,State (BY LEGISLATIVE DISTRICT): 35 Mason Certified: ® N/A ❑ NO (BY CONGRESSIONAL DISTRICT): 6,10 ❑ YES, OMWBE# 20.Agreement Classification: 21. Contract Type(check all that apply): ❑ Personal Services ❑ Client Services ® PubliclLocal Gov't ❑ Contract ® Grant ® Agreement ❑ Research/Development ❑ A/E ❑ Other ❑ Intergovernmental RCW 39,34 ❑ Interagency 22.Subrecipient Selection Process: 23. Subrecipient Type(check all that apply): ® "To all who apply&qualify" ❑ Competitive Bidding ❑ Private Organization/Individual ❑ For-Profit ❑ Sole Source ❑ A/E RCW ❑ N/A ® Public Organization/Jurisdiction ❑ Non-Profit ❑ Filed w/OFM? ❑ Advertised? ❑ YES ❑ NO ❑ CONTRACTOR ® SUBRECIPIENT❑ OTHER 24. PURPOSE& DESCRIPTION: The purpose of the Fiscal Year(FY) 2021 Emergency Management Performance Grant(21EMPG) program Is to provide U.S. Department of Homeland Security (DHS)1Federal Emergency Management Agency (FEMA) Federal award funds to states to assist state, local, territorial, and tribal governments in preparing for all hazards through sustainment and enhancement of those programs as described in the Work Plan. The Department is the Recipient and Pass-through Entity of the 21 EMPG DHS Award Letter for Grant No. EMS-2021-EP-00007- S01,which is incorporated in and attached hereto as Attachment C and has made a subaward of Federal award funds to the Subrecipient pursuant to this Agreement.The Subrecipient is accountable to the Department for use of Federal award funds provided under this Agreement and the associated matching funds. IN WITNESS WHEREOF,the Department and Subrecipient acknowledge and accept the terms of this Agreement, including all referenced Attachments which are hereby Incorporated In and made a part hereof, and have executed this Agreement as of the date below. This Agreement Face Sheet;Special Terms&Conditions(Attachment A);General Terms and Conditions(Attachment B);21 EMPG Award Letter EMS-2021-EP-00007-S01 (Attachment C); Work Plan (Attachment D); Timeline (Attachment E); Budget (Attachment F); and all other documents expressly referenced and incorporated herein contain all the terms and conditions agreed upon by the parties and govern the rights and obligations of the parties to this Agreement. No other understandings, oral or otherwise, regarding the subject matter of this Agreement shall be deemed to exist or to bind any of the parties hereto. In the event of an inconsistency In this Agreement, unless otherwise provided herein, the inconsistency shall be resolved by giving precedence in the following order: 1. Applicable Federal and State Statutes and Regulations 4. Special Terms and Conditions 2. DHS/FEMA Award and program documents 6. General Terms and Conditions,and, 3. Work Plan,Timeline,and Budget 6. Other provisions of the Agreement incorporated by reference WHEREAS,the parties hereto have executed this Agreement on the day and year last specified below. FOR THE DEPARTMENT: FOR THE SUBRECIPIENT: Signature Date Signature Date Regan Anne Hesse,Chief Financial Officer Jennifer Beierle, Budget Manager Washington State Military Department Mason County BOILERPLATE APPROVED AS TO FORM: APPROVED AS TO FORM (if applicable): Dawn C. Cortez [August 10,2021] Assistant Attorney General Subrecipient's Legal Review Date DHS-FEMA-EMPG-FY21 Page 1 of 35 Mason County DEM, E22-136 MASON COUNTY BRIEFING ITEM SUMMARY FORM TO: BOARD OF MASON COUNTY COMMISSIONERS FROM: Mark Neary DEPARTMENT: Administrator EXT: 530 BRIEFING DATE: November 29, 2021 PREVIOUS BRIEFING DATES: If this is a follow-up briefing, please provide only new information ITEM: YMCA - Gift EXECUTIVE SUMMARY: Clara Robbins, Membership and Wellness Director for the South Sound YMCA is offering county employees a complementary pass that will grant the employee and their family a free visit to the YMCA. Each employee will also receive a letter that will waive the joining fee if they sign up for a membership. BUDGET IMPACTS: None RECOMMENDED OR REQUESTED ACTION: Accept the offer from the YMCA to provide Mason County employees a complementary day pass for them and their family to visit our local YMCA. If the employee signs up for a membership, the YMCA joining is waived. Briefing Summary 11/24/2021 .4*43t1f:l,�S,,rt Office of the A-Vashington State Auditor ff, Pat McCartl Exit Conference: Mason County The Office of the Washington State Auditor's vision is increased trust in government. Our mission is to provide citizens with independent and transparent examinations of how state and local governments use public funds,and develop strategies that make government more efficient and effective. The purpose of this meeting is to share the results of your audit and our draft reporting. We value and appreciate your participation. Audit Reports We will publish the following reports: • Financial statement and federal grant compliance audit for January 1,2020 through December 31,2020— see draft report. • Accountability audit for January 1, 2020 through December 31, 2020—see draft report. Audit Highlights We appreciate the county responding promptly to our requests and providing all documents necessary to complete the audit in a timely manner. The weekly status update meetings allowed for increased communication and kept the audit running smoothly. In addition, all County staff were professional and courteous throughout the audit. Recommendations not included in the Audit Reports Management Letters Management letters communicate control deficiencies, non-compliance or abuse with a less-than-material effect on the financial statements or other items significant to our audit objectives. Management letters are referenced, but not included,in the audit report.We noted certain matters that we are communicating in a letter to management related to classification of fiduciary fund Exit Items We have provided exit recommendations for management's consideration.Exit items address control deficiencies or non-compliance with laws or regulation that have an insignificant or immaterial effect on the entity, or errors with an immaterial effect on the financial statements. Exit items are not referenced in the audit report. Communications required by audit standards In relation to our financial statement audit report,we would like to bring to your attention: 0 There were no uncorrected misstatements in the audited financial statements. • There were no material misstatements in the financial statements corrected by management during the audit. Finalizing Your Audit Report Publication Audit reports are published on our website and distributed via e-mail in an electronic .pdf file. We also offer a subscription service that allows you to be notified by email when audit reports are released or posted to our website. You can sign up for this convenient service at: https://portal.sao.wa.gov/SAOPortal. Management Representation Letter We have included a copy of representations requested of management. Audit Cost At the entrance conference, we estimated the cost of the audit to be $90,000 and actual audit costs will approximate that amount. Your Next Scheduled Audit Your next audit is scheduled to be conducted in summer 2022 and will cover the following general areas: • Accountability for Public Resources • Financial Statement • Federal Programs The estimated cost for the next audit based on 2022 rates is $92,600 plus travel expenses. This preliminary estimate is provided as a budgeting tool and not a guarantee of final cost. Working Together to Improve Government Audit Survey When your report is released you will receive an audit survey from us. We value your opinions on our audit services and hope you provide feedback. Local Government Support Team This team provides support services to local governments through technical assistance, comparative statistics, training, and tools to help prevent and detect a loss of public funds. Our website and client portal offers many resources, including a client Help Desk that answers auditing and accounting questions. Additionally this team assists with the online filing of your financial statements. The Center for Government Innovation The Center for Government Innovation of the Office of the Washington State Auditor is designed to offer services specifically to help you help the residents you serve at no additional cost to your government. What does this mean? We provide expert advice in areas like Lean, peer-to-peer networking and culture-building to help local governments find ways to be more efficient, effective and transparent. The Center can help you by providing assistance in financial management, cybersecurity and more. Check out our best practices and other resources that help local governments act on accounting standard changes, comply with regulations, and respond to recommendations in your audit. The Center understands that time is your most precious commodity as a public servant, and we are here to help you do more with the limited hours you have. If you are interested in learning how we can help you maximize your effect in government, call us at (564) 999-0818 or email us at Centernsao.wa.gov. Questions? Please contact us with any questions about information in this document or related audit reports. Tammy Lane,Audit Lead, (360)845-1482,Tammy.Lane(a,sao.wa.gov Cheryl Friesen,Assistant Audit Manager,(360)845-1491, Cheryl.Friesen(-,sao.wa.gov Amy Strzalka,CPA,Audit Manager,(360)845-1476,Amy.Strzalka(asao.wa.gov Tina Watkins,CPA,Assistant Director of Local Audit, (360)260-6411 Tina.Watkins(i,sao.wa.gov Kelly Collins,CPA,Director of Local Audit, (564)999-0807,Kelly.Collins(i�sao.wa.gov r t 1� 9D r Pat McCarthy io. Office of the Wasliimgton State Auditor Financial Statements and Federal Single Audit Report Mason County Now For the period January 1, 2020 through December 31, 2020 0 CL 1 4 M a. in C I maw Published(Inserted by OS) �,,' Find out what's new at sAo Re port No. 1029441 .� by scanning this code with P ;f your smartphone's camera V,, .. f � Office of the Washington State Auditor Pat McCarthy O Issue Date—(Inserted by OS) is 30 0 Board of Commissioners aMason County A Shelton, Washington �i Report on Financial Statements and Federal Single Audit 19 Please find attached our report on Mason County's financial statements and compliance with federal laws and regulations. AWW 9L We are issuing this report in order to provide information on the County's financial condition. 3 ,W Sincerely, 0 O -, Pat McCarthy, State Auditor Olympia, WA C am E now A Americans with Disabilities In accordance with the Americans with Disabilities Act, we will make this document available in alternative formats. For more information, please contact our Office at(564) 999-0950, TDD Relay at(800) 833-6388, or email our webmaster at webmasterasao.wa.gov. Insurance Building,P.O.Box 40021 •Olympia,Washington 98504-0021 • (564)999-0950• Pat.McCarthy@sao.wa.gov TABLE OF CONTENTS Schedule of Findings and Questioned Costs...................................................................................4 Schedule of Audit Findings and Responses.................................................................................... 6 Schedule of Federal Award Findings and Questioned Costs........................................................ I l •� Summary Schedule of Prior Audit Findings.................................................................................. 15 4 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards................................................................................................... 21 Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance With the Uniform Guidance ......................... 24 Independent Auditor's Report on the Financial Statements.......................................................... 27 .� Financial Section........................................................................................................................... 31 CL Corrective Action Plan for Findings Reported Under Uniform Guidance................................... 32 About the State Auditor's Office................................................................................................... 35 tL CL a Office of the Washington State Auditor sao.wa.gov 'SCHEDULE i 1 QUESTIONED COSTS Mason County January 1, 2020 through December 31, 2020 SECTION I — SUMMARY OF AUDITOR'S RESULTS amThe results of our audit of Mason County are summarized below in accordance with Title 2 U.S. 0 Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost IPrinciples, and Audit Requirements for Federal Awards(Uniform Guidance). .m i *w Financial Statements sm 20 We issued an unmodified opinion on the fair presentation of the County's financial statements in ,W accordance with its regulatory basis of accounting. Separately, we issued an adverse opinion on i the fair presentation with regard to accounting principles generally accepted in the United States 1� of America (GAAP) because the financial statements are prepared using a basis of accounting other than GAAP. 0 Internal Control over Financial Reporting: 0 • Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over financial reporting that we consider to be significant deficiencies. • Material Weaknesses: We identified no deficiencies that we consider to be material C' weaknesses. I We noted no instances of noncompliance that were material to the financial statements of the a. County. 10 Federal Awards .= Internal Control over Major Programs: • Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over major federal programs that we consider to be significant deficiencies. IL • Material Weaknesses: 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 its major federal program. Office of the Washington State Auditor saoma.gov We reported findings that are required to be disclosed in accordance with 2 CFR 200.516(a). Identification of Major Federal Programs The following program was selected as a major program in our audit of compliance in accordance with the Uniform Guidance. CFDA No. Program or Cluster Title 21.019 COVID-19—Coronavirus Relief Fund The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by the Uniform Guidance,was $750,000. The County did not qualify as a low-risk auditee under the Uniform Guidance. A� M W SECTION II — FINANCIAL STATEMENT FINDINGS See Finding 2020-001. r SECTION III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 0 See Finding 2020-002. r i 'L K� i. Office of the Washington State Auditor sao.wa.gov '[SCHEDULE OF 1IT FINDINGS AND ' Mason County January 1, 2020 through December 31, 2020 ,= 2020-001 The declining financial conditions of the Belfair Sewer Fund and '6 Rustlewood Water and Sewer Fund put the utilities at risk of not 0 meeting their financial obligations. 4 IBackground The Belfair Sewer Fund began operating in 2012, and it is currently charging customers $96 per month for each Equivalent Residential Unit(ERU). The Belfair Sewer project was financed through loans issued through Department of Ecology and a general obligation bond. The Belfair Sewer Fund generated $1.0 million of operating revenues in 2020. At the end of 2020, it had $8.6 million in outstanding debt. The Rustlewood Water and Sewer Fund began operating in the early 1970s, and it is currently charging customers $96 per month for each ERU. The Rustlewood C Water and Sewer project was financed through loans that the Department of Ecology issued and a general obligation bond. The Rustlewood Water and Sewer Fund generated$250,978 of operating revenues in 2020.At the end of 2020, it had $1.2 million in outstanding debt. r 9. The County received findings in the prior five audits regarding the declining financial conditions of the Belfair Sewer Fund and Rustlewood Water and Sewer Fund. Description of Condition C Belfair Sewer Fund IThe Belfair Sewer Fund still does not generate enough revenue to meet scheduled one debt payments. The County subsidized the Belfair Sewer Fund in 2020 with $1.25 million in Real Estate Excise Taxes (REET) and sales tax revenues to help make the required debt payments of $912,170. Including the 2020 transfer, the County has used$5.5 million in REET and sales tax revenues to support the Belfair Sewer Fund since 2016. In 2019,the County worked with an outside financial consulting firm to determine the best method for expanding the current system so it could become self-sufficient. Office of the Washington State Auditor saoma.gov The plan included potential paths to becoming self-sustaining, including higher rates, more ERUs and some combinations of the two. The County has determined that expansion is the best path to pursue in order to become self-sufficient. The County is currently in the process of completing a General Sewer Plan to develop the plan and design for the expansion.The County has secured$2.5 million in Commerce grants and up to $8 million in a Commerce Loan designed to construct a sewer extension and increase the number of ERUs. The County plans i" to have the General Sewer Plan completed by the end of 2021. O dr Rustlewood Water and Sewer Fund Rustlewood Water and Sewer Fund's utility piping is about 50 ears old and at the � YPp g Y end of its useful life.The Fund has not generated enough revenue and does not have adequate reserves to complete the needed capital improvements. Without the use of WREET funds, Rustlewood Water and Sewer Fund would not generate enough revenue to cover operating expenditures. To maintain a positive fund balance, the County has subsidized a total of$977,500 with REET funds since 2017, including $60,000 in 2020. Additionally, the table below shows that Rustlewood Water and Sewer Fund's C operating expenditures and debt service costs have continued to exceed revenues. 0 Fiscal year 2017 2018 2019 2020 Operating Revenues $267,402 $254,017 $255,669 $250,978 Operating Expenses $228,678 $306,992 $269,778 $299,495 Debt Service $75,532 $37,765 $70,796 $90,704 Net gain(loss) $(36,808) $(90,740) $(84,905) $(139,221) i The County has not yet adopted a formal financial plan for the Rustlewood Water and Sewer Fund. However,the County used REET funding to add water meters in = 2019, and it is in the process of implementing a usage-based system for water ' charges instead of the current flat monthly fee. The County projects this change will result in lower operating costs through reduced consumption and more prompt identification of leaks. The County plans to have this usage-based system fully implemented by the end of 2021. Office of the Washington State Auditor sao.wa.gov Cause of Condition Belfair Sewer Fund • In 2012, the Belfair Sewer project anticipated more customers than actually materialized. In 2015, the County created a financial plan to improve the Belfair Sewer Fund's financial condition and expand the number of customers to make it self-sustaining by 2018. However, the goals of this plan were not met, and the County had to develop a new one. Additionally, the COVID-19 pandemic caused Q significant delays in the process. 4 Rustlewood Water and Sewer Fund 40 Before 2017, County officials were not aware of the Fund's declining financial 12 condition and, therefore, did not monitor or implement a financial plan to ensure the aging system would be able to continue. Once County officials became aware of the declining financial condition,they began taking steps to address it.However, progress has been slow, and the COVID-19 pandemic caused additional delays in implementing a plan. Effect of Condition Belfair Sewer Fund If its financial position continues to decline,the Belfair Sewer Fund will not be able q to repay the $8.6 million of debt or pay for significant maintenance or repairs. a. Additionally,the Fund will not be able to support its operations without continued subsidies from REET and sales tax revenues. At the end of 2020, the fund had an ending cash balance of$409,639. Rustlewood Water and Sewer Fund If its financial position continues to decline,the Rustlewood Water and Sewer Fund will not be able to repay the$1.2 million of debt or pay for significant maintenance ` or repairs. Additionally,the Fund will not be able to support its operations without K.�. continued subsidies from REET revenue. At the end of 2020, the fund had an ending cash balance of$76,526. Office of the Washington State Auditor saoma.gov Recommendation We recommend the Board of County Commissioners continue to: • Update the formal financial plan for the Belfair Sewer Fund to reflect actual planned activity and to address how it will improve its financial condition and expansion • Address the Rustlewood Water and Sewer Fund's financial condition by i implementing a usage-based system and developing a plan as needed to ensure that the desired results are achieved ��- County s Response per Belfair M We concur with the Auditor's finding. FCS Group updated the Belfair Financial .e Plan February 2020. Based on the FCS Group Financial Plan update, staff made S recommendations to Commissioners in March 2020 to take the following actions to improve Belfair's financial position. • Increase the Belfair 2020 sewer rate to$108.14 per ERUwith a 3%annual 0 increase thereafter. Status: Commissioners requested additional information and staff will re present rate proposal early 2022. • Ensure CFCs are set aside for future capital rather than debt service or operating expenses. Status: A capital expenditure reserve will be established to match CFC revenue. • Maintain reserves in 0.09 and REET funds to minimize economic cyclicality impacts and ability to repay loans. Status: This has been accomplished * through finance policy and the annual budget process. • Produce quarterly financial reports noting any changes to the February S, 2020 updated Belfair Sewer System Financial Analysis assumptions and ,C including a report on number of new ERUs as compared to target growth of 28 ER Us per year. Status: Quarterly financial reports are presented. } CFC growth was little as expected, but 2021 and 2022 will see significant i� change. ICL • Continue partnership and financial agreement work with City of Bremerton and Port of Bremerton. Status:Bi-weekly meetings are held. Office of the Washington State Auditor sao.wa.gov Rustlewood We concur with the auditor's finding. The County has made extensive efforts to resolve this issue. The County will continue to utilize all available resources to meet its obligation. ' Auditor's Remarks V We appreciate the County's commitment to resolving this finding and thank it for i Q its cooperation and assistance during the audit.We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations 'q Government Auditing Standards, July 2018 Revision, paragraphs 6.40 and 6.41 di establish reporting requirements related to significant deficiencies or material weaknesses in internal control, instances of fraud, and noncompliance with ' provisions of laws,regulations,contracts, or grant agreements. 44 0 a� EL e Is CL Office of the Washington State Auditor sao.wa.gov SCHEDULE 1 ' 1 FINDINGS AND QUESTIONED COSTS Mason County January 1, 2020 through December 31, 2020 2020-002 The County improperly charged the Coronavirus Relief Fund 0 program for expenditures incurred outside the period of 1 performance. CFDA Number and Title: 20.019 COVID-19 Coronavirus Relief �e Fund Federal Grantor Name: U.S. Department of Treasury K Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract 20-6541C-023 Amend A Number: Questioned Cost Amount: $121,598 Background The purpose of the Coronavirus Relief Fund program is to provide payments to state, territorial, tribal and certain eligible local governments to cover necessary expenditures incurred because of the COVID-19 pandemic. The County used the Coronavirus Relief Fund program funds to provide financial assistance to citizens and small businesses affected by COVID-19, and to cover additional costs the County and its subrecipients incurred due to the pandemic, including payroll and M supplies. During fiscal year 2020, the County spent $6,835,990 in Coronavirus Relief Fund program funds, including $2,051,451 that it passed through to subrecipients. K— Federal regulations require every subaward to specify the period of performance start and end date. Eligible program costs must be incurred during that time period. The contract between the Department of Commerce and the County specified the period of performance for this award was March 1, 2020, through November 30, 2020. Office of the Washington State Auditor sao.wa.gov Description of Condition The County had adequate internal controls for ensuring it materially complied with the period of performance requirement.However,the County charged payroll costs to the program that were incurred outside of the performance period. After a long union contract negotiation in June 2020, the County made a total of$116,845 in retroactive payments due to its public safety employees for payroll costs that were incurred between January 2019 and February 2020, which was before the performance period. Additionally, one of the County's subrecipients claimed $4,754 in payroll costs on its final invoice that were incurred in the two weeks after the performance period ended. The issue was not reported as a finding in the prior audit. Cause of Condition County staff s review of the payroll expenditures charged to the program was not sufficiently detailed for detecting costs that were incurred outside of the performance period. 44 Effect of Condition and Questioned Costs We tested$6,350,450 out of$6,835,990 in expenditures the County charged to the program. We are questioning the $121,598 in payrolls costs that were incurred outside of the performance period that the County charged to the program. r Federal regulations require the State Auditor's Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the County has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation ' We recommend the County improve its monitoring of the costs it charges to federal programs to ensure they are incurred during the performance period. County's Response The County appreciates the work and assistance of the State Auditor's Office during this engagement. While we agree there were$121,598 costs included in our reimbursement requests that were incurred outside the period of performance Office of the Washington State Auditor sao.wa.gov erroneously, there were also an additional$265,759 documented eligible costs not claimed within the performance period as detailed below: 1)ISSUE: Public Safety Payroll - Our original reimbursement request included retro pay in our payroll report for wages earned between 11112019-1213112020 in the amount $116,845 that were paid on 611012020. This is part of the$3,552,301.86 of Public �. Safety wages claimed on the A19 #2 for paychecks dated 3/25/2020-8/25/2020 for 0 hours worked 31112020-811512020. or In our A19#3 claim of Public Safety wages we provided documentation for �i $305,005.35 for wages earned between 8116-3112020 and only claimed$39,246.73 00 for reimbursement. Wages in the amount of$116,845 were not eligible on A19 #2, however, we + provided documentation for Public Safety payroll on the A19#3 for $265,759 beyond what we claimed. We also have wages from 91112020-1113012020 that are eligible for reimbursement. Wo RESPONSE: 0 C We immediately contacted the granting agency (Commerce) after learning A19#2 0 had expenses outside the period of performance. Commerce responded that it was a documentation issue at this point since we had additional eligible expenses that had not been claimed and to notify them if any additional discrepancies arise. r 9. We have changed our payroll report request process to exclude retro pay types in all future reimbursement requests. i � 2)ISSUE: Subrecipient - The Grant Administration Support reimbursement to EDC _ (Economic Development Council) of$25,000 for 60 business forgivable loans E totaling$550,000 included their payroll costs for 1211512020 on the invoice. The F. period of performance ended on 1113012020, therefore costs incurred between 1211-1112020 in the amount of$3,993.16 were not eligible for reimbursement. The i EDC incurred eligible administrative costs exceeding the amount noted above prior to 1112412020. RESPONSE: We will notes the granting agent- Commerce. Request additional documentation from the EDC to document administrative costs incurred within the period of performance. Office of the Washington State Auditor sao.wa.gov Auditor's Remarks We appreciate the County's quick response and commitment to resolving this finding. We thank it for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR)Part 200, Uniform Administrative 0 Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 200.1 defines the Period of Performance. M CL 44 EL Office of the Washington State Auditor sao.wa.gov r SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Mason County .i January 1, 2020 through December 31, 2020 This schedule presents the status of findings reported in prior audit periods. Audit Period: Report Ref. Finding Ref. No.: 2019-001 1/1/2019— 12/31/2019 No.: 1027119 IL Finding Caption: The declining financial conditions of the Belfair Sewer Fund and Rustlewood Water and Sewer Fund put the utilities at risk of not meeting their financial obligations. 0 Background: Belfair Sewer Fund continues to not generate enough revenue to meet scheduled debt payments. The County subsidized Belfair Sewer Fund in 2019 with $1.25 million in Real Estate Excise Taxes(REET)and sales tax revenues to help make the required debt payments. Including the 2019 transfer, the County has used $4.2 million in REET and sales tax revenues to support Belfair Sewer Fund since 2016. Rustlewood Water and Sewer Fund:Rustlewood Water and Sewer Fund has not generated � enough revenue and does not have adequate reserves to make the capital improvements needed. Without the use of REET funds, Rustlewood Water and Sewer would not generate enough revenue to cover operating expenditures. To maintain a positive fund balance, the County has subsidized a total of$917,500 in REET funds since 2017. Status of Corrective Action: (check one) y ❑ Fully ® Partially ❑ Not Corrected ❑ Finding is considered no longer Corrected Corrected valid Office of the Washington State Auditor sao.wa.gov Corrective Action Taken: 2020 Belfair Sewer Fund 0 The County utilized a Commerce grant and loan to design a sewer extension aimed at expanding customer base. This resulted in new development proposals of an additiona1126 MF ER Us and 144 SF ER Us. a The County presented a Legislative request for $500,000 in "rate relief' to reduce debt which will be received late 2021 or early 2022. • The County restructured existing debt. • A consultant recommended operational improvements to reduce costs which are being implemented in 2021. a Operators have increased skill and proficiency. Corrective Action Taken: 2020 Rustlewood Water and Sewer Fund ■ ■ A summary of operational improvements to reduce costs has been prepared, some of which are being implemented in 2021. 'R ■ Operators have increased skill and proficiency. ■ Water rates have been prepared for Board consideration upon installation of a handful of remaining water meters. V Audit Period: Report Ref. No.: Finding Ref. No.: 44 0 1/1/2018— 12/31/2018 1024703 2018-001 Finding Caption: The declining financial conditions of the Belfair Sewer Fund and Rustlewood Water and Sewer Fund put the utilities at risk of not meeting their financial obligations. CL Background: 9 Belfair Sewer Fund: The Sewer continues to not generate enough revenues to meet scheduled debt payments.The County subsidized Belfair Sewer in 2018 with 1.25 million iin Real Estate Excise Taxes and sales tax funds to help make the capital and debt payments. Including the 2018 transfer,the County has used$2.5 million in REET and sales tax funds to support Belfair Sewer Fund since 2016. Rustlewood Water and Sewer Fund: Rustlewood Water and Sewer Fund has not ' generated enough revenue and does not have adequate reserves to make the capital improvements needed. Without the use of REET funds, Rustlewood Water and Sewer 1 would not generate enough revenue to cover operating expenditures. • Status of Corrective Action: (check one) ❑ Fully ® Partially ❑ Not Corrected ❑ Finding is considered no longer Corrected Corrected valid Office of the Washington State Auditor sao.wa.gov Corrective Action Taken: 2020 Belfair Sewer Fund • The County utilized a Commerce grant and loan to design a sewer extension aimed at expanding customer base. This resulted in new development proposals • of an additional 126 MF ERU's and 144 SF ERUs. • The County presented a Legislative request for $500,000 in "rate relief' to reduce debt which will be received late 2021 or early 2022. • The County restructured existing debt. • A consultant recommended operational improvements to reduce costs which are being implemented in 2021. • Operators have increased skill and proficiency. 'i Corrective Action Taken: 2020 Rustlewood Water and Sewer Fund 00 • A summary of operational improvements to reduce costs has been prepared, some go of which are being implemented in 2021. • Operators have increased skill and proficiency. • Water rates have been prepared for Board consideration upon installation of a handful of remaining water meters. +wr 0 C Audit Period: Report Ref. No.: Finding Ref. No.: 0 1/1/2017— 12/31/2017 1022235 2017-002 Finding Caption: The Belfair Sewer and Rustlewood Water and Sewer funds' declining financial condition puts the utilities at risk of not meeting their financial obligations. Background: Belfair Sewer Fund: The Sewer has not generated enough revenues to pay back its debt. The County subsidized Belfair Sewer Fund in 2017 with $700,000 in Real Estate Excise Taxes and sales tax funds to help make the capital and debt payments. Rustlewood Water and Sewer Fund: The Water and Sewer has not generated enough �= revenue to cover expenses and has was subsidized with $317,500 in REET funds. It has '� also not generated enough revenue to have adequate reserves to make the capital one improvements needed. 2. Status of Corrective Action: (check one) ❑ Fully ® Partially ❑ Not Corrected ❑ Finding is considered no longer Corrected Corrected valid Corrective Action Taken: 2020 Belfair Sewer Fund • The County utilized a Commerce grant and loan to design a sewer extension aimed at expanding customer base. This resulted in new development proposals Office of the Washington State Auditor sao.wa.gov of an additional 126 MF ERU's and 144 SF ERUs. • The County presented a Legislative request for S500,000 in "rate relief'to reduce debt which will be received late 2021 or early 2022. • The County restructured existing debt. • A consultant recommended operational improvements to reduce costs which are ro being implemented in 2021. • Operators have increased skill and proficiency. Q Corrective Action Taken: 2020 Rustlewood Water and Sewer Fund h • A summary of recommended operational improvements to reduce costs has been prepared, some of which are being implemented in 2021. ,*�-, • Operators have increased skill and proficiency. • Water rates have been prepared for Board consideration upon installation of a handful of remaining water meters. �i CL x� M �yy W CL M t� CL Office of the Washington State Auditor sao.wa.gov 411 N nth Street . Paddy McGuire PO Box 4,0 Mason CountyA editor Phme1384)427-96070 0 Fax 13601427.1753 i! 3 i SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Mason County V 01/01/2020 through 12/31/2020 Z This schedule presents the status of findings reported in prior audit periods. Audit Period: Report Reference No.: Finding Ref. No.: CFDA Number(s): 1/1/2019-12/31/2019 1027119 2019-002 10.665 Federal Program Name and Granting Pass-Through Agency Name: Agency: Washington State Treasurer Schools and Roads—Grants to States— '�' Department of Agriculture C Finding Caption: The County did not have adequate internal controls to ensure compliance RA Z3 with federal reporting requirements. Background: The County received $155,044 in federal schools and road funds during 2019, which includes Raw $23,092 in Title III funds. Federal regulations require the County to submit an annual Certification of Title III Expenditures and Unobli ated Funds financial report to the granting .� P g P � g agency certifying the County spent the funds received for authorized purposes.The certification must also include a description of the use of amounts spent and the amount of Title III funds not obligated by September 30 of the previous year. The County did not have adequate internal controls in place to ensure compliance with this reporting requirement. The County did not Caccurately prepare its certification of expenditures and unobligated funds report, did not adequately support amounts reported, and did not ensure the report included all accounts, activity and netted items. On the 2019 certification the county reported unobligated funds of $65,876 and amounts CL expended of$29,537 but the actual amounts were $33,076 and$37,426 respectively. Status of Corrective Action: (check one) ® Fully ❑ Partially ❑ Not Corrected ❑ Finding is considered no Corrected Corrected longer valid Office of the Washington State Auditor sao.wa.gov Corrective Action Taken: New review/reporting with two party authorization for reporting on Title III(DEM Manager and Budget Manager) to ensure that the correct balances are reported and backed up with • Munis expense and revenue reporting. 0 Ci V 44 0 �3 [1. 1. s� K� Office of the Washington State Auditor sao.wa.gov AUDITOR'S REPORT Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .= Mason County January 1, 2020 through December 31, 2020 a Board of Commissioners Mason County Shelton, Washington We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of Mason County, as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the County's financial statements, and have issued our report thereon dated November 29, 2021. We issued an unmodified opinion on the fair presentation of the County's financial statements in t� accordance with its regulatory basis of accounting. We issued an adverse opinion on the fair t presentation with regard to accounting principles generally accepted in the United States of America (GAAP) because the financial statements are prepared by the County using accounting practices prescribed by state law and the State Auditor's Budgeting, Accounting and Reporting ° System(BARS)manual described in Note 1,which is a basis of accounting other than GAAP.The effects on the financial statements of the variances between the basis of accounting described in � Note 1 and accounting principles generally accepted in the United States of America,although not reasonably determinable, are presumed to be material. As discussed in Note I to the financial statements, during the year ended December 31, 2020, the County implemented new accounting guidance for classification of cash and investment balances, as required by the BARS manual. As discussed in Note 9 to the financial statements, during the year ended December 31, 2020, the County implemented new accounting guidance for fiduciary fund reporting, as required by the BARS manual. As discussed in Note 10 to the financial statements, the full extent of the COVID-19 pandemic's direct or indirect financial impact on the County is unknown. Office of the Washington State Auditor sao.wa.gov Our report includes information about the status of the County's financial condition. This information is more fully described in Finding 2020-001 in the Schedule of Audit Findings and Responses. The County's response to the finding was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. INTERNAL CONTROL OVER FINANCIAL REPORTING aIn planning and performing our audit of the financial statements, we considered the County's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County's internal control. Accordingly, we do not express an opinion on the effectiveness of the County's ' internal control. W A deficiency in internal control exists when the design or operation of a control does not allow management or employees,in the normal course of performing their assigned functions,to prevent, Ior detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the County's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of 0 deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. 16 However, material weaknesses may exist that have not been identified. In addition, we noted certain matters that we have reported to the management of the County in a T separate letter dated November 29, 2021. K COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the County's financial statements are free from material misstatement, we performed tests of the County's compliance with certain provisions of laws,regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly,we do not express such an opinion. Office of the Washington State Auditor sao.wa.gov The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and _ compliance and the results of that testing,and not to provide an opinion on the effectiveness of the V1 County's internal control or on compliance.This report is an integral part of an audit performed in 0 accordance with GovernmentAuditing Standards in considering the County's internal control and compliance.Accordingly,this communication is not suitable for any other purpose.However,this report is a matter of public record and its distribution is not limited. It also serves to disseminate .i information to the public as a reporting tool to help citizens assess government operations. Signature Here (Please do not remove this line) W -� *0 Pat McCarthy, State Auditor 44 Olympia, WA November 29, 2021 is 9L 1 ICL r� �i Office of the Washington State Auditor sao.wa.gov INDEPENDENT AUDITOR'S REPORT Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance in Accordance with the Uniform Guidance Mason County January 1, 2020 through December 31, 2020 L 0 Board of Commissioners Mason County Shelton, Washington REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL W PROGRAM We have audited the compliance of Mason County, with the types of compliance requirements described in the U.S. Office of Management and Budget(OMB)Compliance Supplement that could `3 have a direct and material effect on each of the County's major federal programs for the year ended 44 December 31, 2020. The County's major federal programs are identified in the accompanying Schedule of Findings and Questioned Costs. 0 is Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and CL conditions of its federal awards applicable to its federal programs. I Auditor's Responsibility aZV. Our responsibility is to express an opinion on compliance for each of the County's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the �= United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. Office of the Washington State Auditor sao.wa.gov We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination on the County's compliance. Opinion on Each Major Federal Program In our opinion, the County complied, in all material respects, with the types of compliance �r# requirements referred to above that could have a direct and material effect on each of its major 'q federal programs for the year ended December 31, 2020. i Other Matters The results of our auditing procedures disclosed an instance of noncompliance with those requirements, which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying Schedule of Federal Award Findings and Questioned Costs as Finding 2020-002. Our opinion on each major federal program is not modified with respect to these matters. CL County's Response to Findings '0 The County's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Federal Award Findings and Questioned Costs.The County's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. REPORT ON INTERNAL CONTROL OVER COMPLIANCE Management of the County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the County's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program in order to determine the auditing procedures that are appropriate in the = circumstances for the purpose of expressing an opinion on compliance for each major federal � program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of the County's internal control over compliance. CL A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over Office of the Washington State Auditor saoma.gov compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. { Our consideration of internal control over compliance was for the limited purpose described in the i` first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses.However,material weaknesses may exist that have not been identified. Purpose of this Report K W The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.However,this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess c government operations. 0 Pat McCarthy, State Auditor Olympia, WA November 29, 2021 K— Office of the Washington State Auditor saoma.gov ,INDEPENDENT AUDITOR'S REPORT Report on the Financial Statements Mason County January 1, 2020 through December 31, 2020 Board of Commissioners Mason County Shelton, Washington 'C REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of Mason County, for the year ended W December 31,2020, and the related notes to the financial statements,which collectively comprise the County's financial statements, as listed on page 31. "� Management's Responsibility for the Financial Statements *? Management is responsible for the preparation and fair presentation of these financial statements Cin accordance with the financial reporting provisions of state law and the Budgeting, Accounting 0 and Reporting System (BARS) manual prescribed by the State Auditor described in Note 1. This i�► includes determining that the basis of accounting is acceptable for the presentation of the financial statements in the circumstances. Management is also responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States c of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the County's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of Office of the Washington State Auditor sao.wa.gov expressing an opinion on the effectiveness of the County's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 0 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 0 Unmodified Opinion on Regulatory Basis of Accounting (BARS Manual) As described in Note 1,Mason County has prepared these financial statements to meet the financial reporting requirements of state law using accounting practices prescribed by the State Auditor's Budgeting, Accounting and Reporting System (BARS) manual. Those accounting practices differ from accounting principles generally accepted in the United States of America (GAAP). The ,. differences in these accounting practices are also described in Note 1. W In our opinion, the financial statements referred to above present fairly, in all material respects, the cash and investments of Mason County, and its changes in cash and investments, for the year = ended December 31,2020, on the basis of accounting described in Note 1. V Basis for Adverse Opinion on U.S. GAAP • Auditing standards issued by the American Institute of Certified Public Accountants (AICPA) require auditors to formally acknowledge when governments do not prepare their financial statements, intended for general use, in accordance with GAAP. The effects on the financial statements of the variances between GAAP and the accounting practices the County used, as described in Note 1, although not reasonably determinable, are presumed to be material. As a result, we are required to issue an adverse opinion on whether the financial statements are presented fairly, in all material respects, in accordance with GAAP. Adverse Opinion on U.S. GAAP The financial statements referred to above were not intended to, and in our opinion they do not, present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of Mason County, as of December 31, 2020, or the changes in financial position or cash flows thereof for the year then ended, due to the significance of the �. matter discussed in the above"Basis for Adverse Opinion on U.S. GAAP"paragraph. Matters of Emphasis As discussed in Note 1 to the financial statements, in 2020, the County adopted new accounting guidance for classification of cash and investment balances as required by the BARS manual. Our opinion is not modified with respect to this matter. Office of the Washington State Auditor saoma.gov As discussed in Note 9 to the financial statements, in 2020, the County adopted new accounting guidance for fiduciary fund reporting as required by the BARS manual. Our opinion is not modified with respect to this matter. As discussed in Note 10 to the financial statements, the full extent of the COVID-19 pandemic's direct or indirect financial impact to the County is unknown. Our opinion is not modified with respect to this matter. ;6 As discussed in Note 11 to the financial statements and described in Finding 2020-001 in the Schedule of Audit Findings and Responses, two of the County's enterprise funds have suffered recurring losses from operations and receive subsidies from other funds to make required debt payments and continue operations. Management's evaluation of the events and conditions and management's plan to mitigate these matters are also described in Note 11. Our opinion is not modified with respect to this matter. Other Matters ' County's Response to Finding The County's response to the finding identified above is described in the accompanying Schedule *I of Audit Findings and Responses. The County's response was not subjected to the auditing c procedures applied in our audit of the financial statements and accordingly,we express no opinion 0 on the response. Supplementary and Other Information r ia. Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The Schedule of Expenditures of Federal Awards is presented for purposes of C additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The Schedule of Liabilities is also presented for purposes of additional analysis, as required by the prescribed BARS manual. These schedules are not a required part of the financial statements. Such information is the responsibility of management It and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including IL comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements taken as a whole. Office of the Washington State Auditor sao.wa.gov OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated November 29,2021 on our consideration of the County's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to „� provide an opinion on internal control over financial reporting or on compliance.That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County's internal control over financial reporting and compliance. W Pat McCarthy, State Auditor Olympia, WA November 29, 2021 40 z 0 [L e 4� CL Office of the Washington State Auditor sao.wa.gov FINANCIAL SECTION Mason County January 1, 2020 through December 31, 2020 FINANCIAL STATEMENTS 0 Fund Resources and Uses Arising from Cash Transactions—2020 Fiduciary Fund Resources and Uses Arising from Cash Transactions—2020 Notes to the Financial Statements—2020 w_ SUPPLEMENTARY AND OTHER INFORMATION Schedule of Liabilities—2020 Schedule of Expenditures of Federal Awards—2020 Notes to the Schedule of Expenditures of Federal Awards—2020 0 ei I Office of the Washington State Auditor sao.wa.gov CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER UNIFORM GUIDANCE Mason County January 1, 2020 through December 31, 2020 This schedule presents the corrective action planned by the County for findings reported in this report in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Finding ref Finding caption: number: The declining financial conditions of the Belfair Sewer Fund and 2020-001 Rustlewood Water and Sewer Fund put the utilities at risk of not meeting their financial obligations. Name,address,and telephone of County contact person: Richard Dickinson Deputy Director, Utilities and Waste Management 100 West Public Works Drive Shelton, WA 98584 (360)427-9670 ext. 652 Corrective action the auditee plans to take in response to the finding: Belfair Sewer Fund Corrective actions taken in 2020 and 2021 are reducing financial risk. Actions include: • Restructured debt. • Requested/received additional debt relief from Legislature. • Budgeted reserves in REST and 0.09 Sales Tax Funds to ride out economic cyclicality. • Designed sewer expansion with grant funding, which raised developer confidence and spurred applications for 144 lot subdivision and 238-unit apartments. • Accepted Commerce loan to fund sewer expansion. • Permitted developer system expansion, thereby reducing anticipated county indebtedness for expansion. • Continued partnership with City and Port of Bremerton. Office of the Washington State Auditor saoma.gov Corrective action the auditee plans to take in response to the finding: Corrective actions will continue in 2022 according to the Financial Plan. Planned actions and expected results include: • Construct sewer extension under the Navy rail and north to serve north Belfair UGA and future portion of south Puget Sound Industrial Center(PSIC). • Connect new apartment ERUs. The ERU projection is well above the Finance Plan growth estimate of 28 ER Us per year. Rustlewood Water and Sewer Fund Corrective actions taken in 2020 and 2021 included strategic maintenance aimed at improving system reliability, thereby reducing overtime and emergency service costs. Operator knowledge/skills increased improving efficiency. Corrective actions planned for 2022 include: • Implement metered rates sufficient to eliminate financial risk. • Utilize ARPA funds for capital improvements, rather than REET. Anticipated date to complete the corrective action: Belfair Sewer Fund: Financial balance projected to be achieved in 2034 based on February 2020 Finance Plan assumptions. Rustlewood Water/Sewer Fund.• December 2022 Office of the Washington State Auditor sao.wa.gov Paddy McGuire ��,eIim�t P VIA 84 Masoli County,Auditor Fax(360f 427-1753 CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER UNIFORM GUIDANCE Mason County January 1, 2020 through December 31, 2020 This schedule presents the corrective action planned by the County for findings reported in this report in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Finding ref Finding caption: number: The County improperly charged the program for expenditures incurred 2020-002 outside the period of performance. Name,address,and telephone of County contact person: Leo Kim, CFO Mason County,Auditor's Office Financial Services P.O. Box 400, Shelton, WA 98584, 360-427-9670 Ext 472 Corrective action the auditee plans to take in response to the finding: We have changed our payroll report request process to review all pay types in the future for eligibility and most likely always exclude retro pay types. Anticipated date to complete the corrective action: Immediate Office of the Washington State Auditor sao.wa.gov ABOUT THE STATE AUDITOR'S The State Auditor's Office is established in the Washington State Constitution and is part of the executive branch of state government. The State Auditor is elected by the people of Washington and serves four-year terms. We work with state agencies, local governments and the public to achieve our vision of increasing trust in government by helping governments work better and deliver higher value. In fulfilling our mission to provide citizens with independent and transparent examinations of how state and local governments use public funds, we hold ourselves to those same standards by continually improving our audit quality and operational efficiency, and by developing highly engaged and committed employees. As an agency, the State Auditor's Office has the independence necessary to objectively perform audits, attestation engagements and investigations. Our work is designed to comply with professional standards as well as to satisfy the requirements of federal, state and local laws. The Office also has an extensive quality control program and undergoes regular external peer review to ensure our work meets the highest possible standards of accuracy, objectivity and clarity. Our audits look at financial information and compliance with federal, state and local laws for all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits and cybersecurity audits of state agencies and local governments, as well as state whistleblower, fraud and citizen hotline investigations. The results of our work are available to everyone through the more than 2,000 reports we publish each year on our website, www.sao.wa.gov. Additionally, we share regular news and other information via an email subscription service and social media channels. We take our role as partners in accountability seriously.The Office provides training and technical assistance to governments both directly and through partnerships with other governmental support organizations. Stay connected at sao.wa.crov Other ways to stay in touch • Find your audit team Main telephone: • Request public records (564) 999-0950 • Search BARS manuals G( AAP and cash),and find reporting templates • Toll-free Citizen Hotline: • Learn about our training workshops (866) 902-3900 and on-demand videos • Email: • Discover which governments serve you webmasterksao.wa.gov —enter an address on our map • Explore public financial data with the Financial Intelligence Tool Office of the Washington State Auditor saoma.gov }7 Auditor Pat McCarthy J� 4J ux V 0 Accountability Audit Report Mason County For the period January 1, 2020 through December 31 2020 P rY � � a w 0 C7M Now ZS etS ICE I !!i C I E� Published (Inserted by OS) M 91 Find out what's new at SAO by scanning this code with Report No. 1029437 ❑�a6JAXyour smartphone's camera n t« Office of the Washington State Auditor Pat McCarthy 0 Issue Date—(Inserted by OS) 13 20 Board of Commissioners Mason County ,o Shelton, Washington ai ;! Report on Accountability 0 Thank you for the opportunity to work with you to promote accountability, integrity and openness in government. The Office of the Washington State Auditor takes seriously our role of providing am state and local governments with assurance and accountability as the independent auditor of public 9. accounts. In this way,we strive to help government work better,cost less,deliver higher value and '0 earn greater public trust. 4W 0 Independent audits provide essential accountability and transparency for County operations. This '0 information is valuable to management, the governing body and public stakeholders when �Q, assessing the government's stewardship of public resources. Attached is our independent audit report on the County's compliance with applicable requirements and safeguarding of public resources for the areas we examined. We appreciate the opportunity to work with your staff and value your cooperation during the audit. vSincerely, LN C E� l� Pat McCarthy, State Auditor Olympia, WA C Americans with Disabilities In accordance with the Americans with Disabilities Act, we will make this document available in alternative formats. For more information, please contact our Office at(564) 999-0950, TDD Relay at(800) 833-6388, or email our webmaster at webmasterkc ao.wa.gov. Insurance Building, P.O. Box 40021 •Olympia,Washington 98504-0021 • (564)999-0950• Pat.McCarthy@sao.wa.gov FABLE OF i AuditResults................................................................................................................................... 4 • Related Reports............................................................................................................................... 5 Information about the County......................................................................................................... 6 About the State Auditor's Office..................................................................................................... 7 0 �i via w 0 C 0 r CL i r Office of the Washington State Auditor sao.wa.gov Page 3 AL.'DIT RESULTS Results in brief ■ This report describes the overall results and conclusions for the areas we examined. In those selected areas, County operations complied, in all material respects, with applicable state laws, regulations, and its own policies, and provided adequate controls over the safeguarding of public resources. i 0 However, during the audit certain matters came to our attention that are currently under 1 investigation. ... In keeping with general auditing practices, we do not examine every transaction, activity,policy, ,F internal control, or area. As a result, no information is provided on the areas that were not examined. K About the audit This report contains the results of our independent accountability audit of Mason County from January 1,2020 through December 31, 2020. Management is responsible for ensuring compliance and adequate safeguarding of public resources from fraud, loss or abuse. This includes the design, implementation and maintenance of internal controls relevant to these objectives. This audit was conducted under the authority of RCW 43.09.260,which requires the Office of the Washington State Auditor to examine the financial affairs of all local governments. Our audit involved obtaining evidence about the County's use of public resources, compliance with state laws and regulations and its own policies and procedures, and internal controls over such matters. The procedures performed were based on our assessment of risks in the areas we examined. Based on our risk assessment for the year ended December 31, 2020, the areas examined were those representing the highest risk of fraud, loss, abuse, or noncompliance. We examined the following areas during this audit period: 4� • Accounts payable—general disbursements • Payroll—gross wages, overtime,extra pay, retroactive pay and accreditation pay • Procurement—professional services and public works • Compliance with public works projects—prevailing wages and change orders • Jail—cash receipting • Use of restricted funds—hotel/motel taxes • Compliance with housing and lodging tax contracts Office of the Washington State Auditor saoma.gov Page 4 RELATED REPORTS Financial • Our opinion on the County's financial statements and compliance with federal grant program requirements is provided in a separate report, which includes the County's financial statements. That report is available on our website, http://portal.sao.wa.gov/ReportSearch. That report includes a finding regarding the declining financial condition of two of its utility funds. 0 Federal grant programs We evaluated internal controls and tested compliance with the federal program requirements, as applicable, for the County's major federal program, which is listed in the Schedule of Findings and Questioned Costs section of the separate financial statement and single audit report. That ' 3 report includes a federal finding regarding period of performance. That report is available on our website, http://portal.sao.wa.siov/ReportSearcii. V 44 tY. t� Office of the Washington State Auditor sao.wa.gov Page 5 INFORMATION ABOUT THE COUNTY Mason County serves approximately 61,800 citizens. • The County operates under an elected, three-member Board of Commissioners, which is responsible for the adoption of the annual budget and establishment of local ordinances and policies. Additional elected officials include Assessor, Auditor, Clerk, Coroner, Prosecutor, Sheriff, Treasurer and judges for the District and Superior Courts.Nearly 350 County employees provide an array of services including public safety, District and Superior Courts, health, water 0 and sewer utilities, solid waste transfer sites, planning, roads, public works, building, fair, parks and other general governmental services. The County had total expenditures of$92 million in 2020. Contact information related to this report W Mason County 411 N. 5th Street Address: P.O. Box 400 Shelton, WA 98584 Contact: Leonard Kim, Chief Financial Officer Telephone: (360)427-9670 X472 �- Website: www.co.mason.wa.us Information current as of report publish date. Audit history IV You can find current and past audit reports for Mason County at �C http://portal.sao.wa. ov/ReportSearch. rt� r Office of the Washington State Auditor sao.wa.gov Page 6 ABOUT THE STATE AUDITOR'S OFFICE The State Auditor's Office is established in the Washington State Constitution and is part of the executive branch of state government. The State Auditor is elected by the people of Washington and serves four-year terms. Le 0 We work with state agencies, local governments and the public to achieve our vision of increasing trust in government by helping governments work better and deliver higher value. In fulfilling our mission to provide citizens with independent and transparent examinations of how 0 state and local governments use public funds, we hold ourselves to those same standards by 4 continually improving our audit quality and operational efficiency, and by developing highly engaged and committed employees. As an agency, the State Auditor's Office has the independence necessary to objectively perform audits, attestation engagements and investigations. Our work is designed to comply with professional standards as well as to satisfy the requirements of federal, state and local laws. The Office also has an extensive quality control program and undergoes regular external peer review to ensure our work meets the highest possible standards of accuracy, objectivity and clarity. CL Our audits look at financial information and compliance with federal, state and local laws for all V local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits and cybersecurity audits of state agencies C and local governments, as well as state whistleblower, fraud and citizen hotline investigations. 0 Z The results of our work are available to everyone through the more than 2,000 reports we publish each year on our website, www.sao.wa.gov. Additionally, we share regular news and other tZ information via an email subscription service and social media channels. We take our role as partners in accountability seriously.The Office provides training and technical assistance to governments both directly and through partnerships with other governmental support organizations. I�. Stay connected at sao.wa.gov Other ways to stay in touch • Find your audit team • Main telephone: • Request public records (564)999-0950 `E • Search BARS manuals G( AAP and mmo cash. , and find repotting templates • Toll-free Citizen Hotline: ip • Learn about our training workshops (866) 902-3900 L and on-demand videos • Email: • Discover which governments serve you webmasterasao.wa. og_v —enter an address on our map • Explore public financial data with the Financial Intelligence Tool Office of the Washington State Auditor saoma.gov Page 7 Office of the Washington State Auditor Pat McCarthy r November 29,2021 Its yo �. Board of Commissioners Mason County Shelton, Washington 1i Management Letter Im 'S This letter includes a summary of specific matters that we identified in planning and performing our financial/single audit of Mason County from January 1,2020 through December 31,2020. We believe our recommendations will assist you in improving the County's internal controls in these IL areas. w We will review the status of these matters during our next audit. We have already discussed our 6 comments with and made suggestions for improvements to County officials and personnel. If you C have any further questions,please contact me at(360) 845-1476. .3 This letter is intended for the information and use of management and the governing body and is not suitable for any other purpose. However, this letter is a matter of public record and its distribution is not limited. 1 We would also like to take this opportunity to extend our appreciation to your staff for their cooperation and assistance during the audit. L Sincerely, r IL Amy Strzalka, CPA,Audit Manager Attachment Insurance Building, P.O. Box 40021 •Olympia,Washington 98504-0021 • (564)999-0950•Pat.McCarthy@sao.wa.gov Manaszement Letter Mason County January 1,2020 through December 31,2020 External Investment Pool Classification Countymanagement is responsible for designing and following internal controls that provide g p g g g reasonable assurance financial statements, related schedules and notes are reliable and fairly presented.Our audit found the County did not have adequate controls in place to ensure its external O investment pool was properly classified on the financial statements and disclosed in the notes to it the financial statements. IIn fiscal year 2020, the Budgeting, Accounting and Reporting System (BARS) manual guidance am regarding fiduciary fund reporting changed. The changes included modifications to the criteria for existing fiduciary fund types and the addition of a new fiduciary fund type. The County did not implement the changes and incorrectly classified investments of$144,601,958 in the Custodial Fund rather than an External Investment Pool. Additionally, the County did not include the required External Investment Pool note disclosure. The County corrected these errors during the audit. We recommend the County strengthen its internal controls to ensure BARS manual changes are r. implemented and financial statements and notes are accurate and complete. 0 r 9L 1 im t� r LETTER OF REPRESENTATION TO BE TYPED ON CLIENT LETTERHEAD November 29,2021 Office of the Washington State Auditor 451 SW Sedgwick Road Suite 200 Port Orchard, WA 98367 To the Office of the Washington State Auditor: We are providing this letter in connection with your audit of Mason County for the period from January 1, 2020 through December 31, 2020. Representations are in relation to matters existing during or subsequent to the audit period up to the date of this letter. Certain representations in this letter are described as being limited to matters that are significant or material. Information is considered significant or material if it is probable that it would change or influence the judgment of a reasonable person. We confirm,to the best of our knowledge and belief,having made appropriate inquires to be able to provide our representations,the following representations made to you during your audit. If we subsequently discover information that would change our representations related to this period,we will notify you in a timely manner. General Representations: 1. We have provided you with unrestricted access to people you wished to speak with and made available all relevant and requested information of which we are aware, including: a. Financial records and related data. b. Minutes of the meetings of the governing body or summaries of actions of recent meetings for which minutes have not yet been prepared. c. Other internal or external audits, examinations, investigations or studies that might concern the objectives of the audit and the corrective action taken to address significant findings and recommendations. d. Communications from regulatory agencies, government representatives or others concerning possible material noncompliance, deficiencies in internal control or other matters that might concern the objectives of the audit. e. Related party relationships and transactions. f. Results of our internal assessment of business risks and risks related to financial reporting, compliance and fraud. 2. We acknowledge our responsibility for compliance with requirements related to confidentiality of certain information, and have notified you whenever records or data containing information subject to any confidentiality requirements were made available. 3. We acknowledge our responsibility for compliance with applicable laws, regulations, contracts and grant agreements. 4. We have identified and disclosed all laws, regulations,contracts and grant agreements that could have a direct and material effect on the determination of financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds. 5. We have complied with all material aspects of laws, regulations, contracts and grant agreements. 6. We acknowledge our responsibility for establishing and maintaining effective internal controls over compliance with applicable laws and regulations and safeguarding of public resources, including controls to prevent and detect fraud. 7. We have established adequate procedures and controls to provide reasonable assurance of safeguarding public resources and compliance with applicable laws and regulations. 8. Except as reported to you in accordance with RCW 43.09.185, we have no knowledge of any loss of public funds or assets or other illegal activity, or any allegations of fraud or suspected fraud involving management or employees. 9. In accordance with RCW 43.09.200, all transactions have been properly recorded in the financial records. 10. We are responsible for,and have accurately prepared,the summary schedule of prior audit findings to include all findings, and we have provided you with all the information on the status of the follow-up on prior audit findings. 11. We are responsible for taking corrective action on audit findings and have developed a corrective action plan. Additional representations related to the financial statements: 12. We acknowledge our responsibility for fair presentation of the financial statements and believe financial statements are fairly presented in accordance with the Budgeting, Accounting and Reporting Standards Manual(BARS Manual),which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. 13. We acknowledge our responsibility for establishing and maintaining effective internal control over financial reporting. 14. The financial statements properly classify all funds and activities. 15. Revenues are appropriately classified by fund and account in accordance with the BARS Manual. 16. Expenses are appropriately classified by fund and account,and allocations have been made on a reasonable basis. 17. Ending cash and investments are properly classified as nonspendable, restricted, committed, assigned, and unassigned. 18. Significant assumptions we used in making accounting estimates are reasonable. 19. The following have been properly classified, reported and disclosed in the financial statements. as applicable: a. Interfund, internal, and intra-entity activity and balances. b. Related-party transactions, including sales, purchases, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. c. Joint ventures and other related organizations. d. Guarantees under which the government is contingently liable. e. All events occurring subsequent to the fiscal year end through the date of this letter that would require adjustment to, or disclosure in,the financial statements. f. Effects of all known actual or possible litigation, claims, assessments, violations of laws,regulations, contracts or grant agreements and other loss contingencies. 20. We have accurately disclosed to you all known actual or possible pending or threatened litigation, claims or assessments whose effects should be considered when preparing the financial statements. We have also accurately disclosed to you the nature and extent of our consultation with outside attorneys concerning litigation, claims and assessments. 21. We acknowledge our responsibility to include all necessary and applicable disclosures required by the BARS Manual, including: a. Description of the basis of accounting, summary of significant accounting policies and how this differs from Generally Accepted Accounting Principles(GAAP). b. Disclosures similar to those required by GAAP to the extent they are applicable to items reported in the financial statements. c. Any additional disclosures beyond those specifically required by the BARS Manual that may be necessary for the statements to be fairly presented. 22. We acknowledge our responsibility for reporting supplementary information(the Schedule of Liabilities and the Schedule of Expenditures of Federal Awards) in accordance with applicable requirements and believe supplementary information is fairly presented, in both form and content in accordance with those requirements. 23. We have disclosed to you all significant changes to the methods of measurement and presentation of supplementary information, reasons for any changes and all significant assumptions or interpretations underlying the measurement or presentation. 24. We believe there are no uncorrected misstatements that would be material individually and in the aggregate to the financial statements taken as a whole. 25. We acknowledge our responsibility not to publish any document containing the audit report with any change in the financial statements, supplementary and other information referenced in the auditor's report. We will contact the auditor if we have any needs for publishing the audit report with different content included. 26. We considered the qualifications of the WA Office of the State Actuary (OSA) to create an electronic tool for determining the County's liability for PEBB and LEOFF 1 other post- employment benefits (OPEB) under the GASB 75 alternative method and agree with the results of the electronic tool, which are reflected in financial statement amounts and disclosures.In using the tool,we input correct and complete information into the electronic spreadsheet, and did not enter any inaccurate information with respect to the amounts or assumptions, or modify cells in the OSA spreadsheet, in an attempt to change the outcome of the calculation. Further,we are not aware of any other external matters that would have had an impact on the appropriateness of using the alternative method or assumptions used by the OSA's tool. We confirm that we are a PEBB and LEOFF 1 employer and we had fewer than 100 plan members(active and retired)as of the beginning of the reporting period and are,therefore, eligible to use the tool. Additional representations related to expenditures under federal grant programs: 27. We acknowledge our responsibility for complying, and have complied, with the requirements of 2 CFR § 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards. 28. With regards to your audit of federal grant programs, we have made available all relevant and requested information of which we are aware, including: a. All federal awards and related grant agreements (including amendments, if any), contracts with pass-through entities, service organizations and vendors, and correspondence. b. All communications from federal awarding agencies,vendors,service organizations or pass-through entities concerning possible noncompliance. c. All information regarding corrective actions taken and management decisions or follow-up work performed by federal or pass-through agencies on any findings reported in the past. d. All documentation related to the compliance requirements, including information related to federal program financial reports and claims for advances and reimbursements. e. Interpretations or other support for any situations where compliance with requirements might be questionable or unclear. 29. We have identified and complied with all direct and material compliance requirements of federal awards. 30. Management is responsible for establishing effective internal control and has maintained sufficient control over federal programs to provide reasonable assurance that awards are managed in compliance with laws, regulations, contracts or grant agreements that could have a material effect on each of our federal awards. 31. Federal program financial reports and claims for advances and reimbursements are supported by the accounting records from which the financial statements have been prepared, and are prepared on a basis consistent with the Schedule of Expenditures of Federal Awards. 32. Copies of federal program reports provided to you are true copies of the reports submitted, or electronically transmitted,to federal agencies or pass-through agencies, as applicable. 33. We are responsible for, and will accurately prepare, the auditee section of the Data Collection Form as required by the Uniform Guidance. Additional representations related to federal grants passed through to subrecipients: 34. We have advised our subrecipients of requirements imposed on them by Federal laws, regulations, contracts or grant agreements as well as any supplemental requirements we impose as a condition of receiving Federal awards. 35. We have monitored the activities of our subrecipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws,regulations,contracts or grant agreements. Paddy McGuire, Leo Kim, County Auditor Chief Finance Officer County Commissioner Mark Neary, County Administrator