The Washington State Auditor’s Office has issued two findings against the city of Langley in an accountability and financial audit.
The report, which covered the period from Jan. 1, 2021, through Dec. 31, 2022, found that the city’s internal controls were inadequate for ensuring accurate financial reporting and the city lacks adequate internal controls to ensure that it does not exceed its appropriated budget.
The audits identify the cause of the conditions as “significant turnover in key positions responsible for preparing the financial statements and related schedules” and that the city “did not provide adequate training for new staff who took over these duties.” Langley had different finance directors in 2020 and 2022 and different mayors in 2021 and 2023.
Kelly Beech, who was involved in the audit as a contractor and is now Langley’s newest finance director, outlined the report to the city council this week. As a consultant, she was hired to identify the cause of numerous misstatements in the city’s financial reports and to correct them.
Some of the factors contributing to these misstatements include reporting internal activity, which caused the expenditures and revenues to be overstated; missing transactions in the initial report, specifically transactions tied to vendors who were subsequently inactivated; and inaccurate data in tables, schedules and notes.
Beech plans to provide monthly reports for the city’s citizen-led Finance and Personnel Legislative Commission and quarterly reports for the city council. These reports will include budgets and tie fund balances to actual balances in the bank to ensure the city is operating within normal parameters.
Errors were also made in calculating the city’s benefit liability. The state auditor provides calculators for this, which Beech said she would make sure more than one person knows how to use.
Beech said there was also a problem with the city’s budget process in the past.
“We’re required to have public notice,” she said. “We’re required to have the budget available on certain dates to the public, and we weren’t able to show that we met those date requirements for the ‘21 and ‘22 fiscal years.”
Beech, Mayor Kennedy Horstman and Interim Deputy Clerk Kristen Abraham have been working to establish a budget calendar to meet those deadlines.
Auditors also gave the city a management letter, which doesn’t rise to the level of a finding but is still important. The letter regards Open Public Meetings Act requirements and the city’s commissions. Auditors found problems with Langley’s monitoring of recording meetings, publishing minutes and properly noticing the meetings. Beech acknowledged that it is a significant strain on staff time to meet the OPMA requirements for the number of commissions that Langley has.
Councilmember Gail Fleming said all the commissions she’s been part of have always correctly posted their agendas and minutes. Beech responded that auditors did find 103 documentation issues in 2021 and 2022.
Councilmember Rhonda Salerno said she felt confident Langley was in good hands with Beech as finance director and Horstman as mayor.
Councilmember Chris Carlson agreed and said the findings reinforce the city’s urgent need for an updated financial system that will help produce accurate and consistent reports.
“It is old and antiquated and not used very much around Washington State anymore,” Beech said of the current software.
