Stevens County Accountability Audit

March 1, 2019

The State Auditor’s Office conducted an independent accountability audit on Stevens County for the period January 1, 2016 – December 31, 2017. The audit’s purpose was to determine compliance with applicable requirements and safeguarding of public resources. Their findings were published in an Accountability Audit Report No. 1023305, dated February 21, 2019.  Not every transaction was examined, the report explains, but only those representing the highest risk of fraud, loss, abuse or noncompliance.

One of the areas examined was “Use of restricted funds – hotel/motel taxes, homelessness and veteran’s relief.”  In 2017, the County deposited $217,000 into the fund and spent $196,000 of it that year. Local non-profit service providers apply for funding approval from the Commissioners yearly for homeless housing, housing assistance and a warming shelter. Between 2015 and 2018, the Commissioners approved, and the County paid $121,000 in homeless housing and assistance funds for the following requests:

  • Relocated a house foundation due to erosion – $30,326. Audit finding: “Because the homeless housing plan only allows for minor repairs and alteration for single-family, owner-occupied housing, the owner’s request did not fall within the plan’s allowed activities and therefore constitutes an unallowable gift of public funds.
  • Constructed a new residence – $90,893. This money was requested to help construct a transitional home for multi-family living of people with spinal cord injuries and their families. The spokesman for one of the non-profits was permitted to live in the home. Audit finding: “Washington State Constitution prohibits governments from gifting funds unless it is to the “poor and infirm” and that non-profits do not meet the definition of “poor and infirm” under Article VIII Section 7 and therefore is an unallowable use of these restricted funds.

The Audit Report concluded that the expenditures were made for activities not specified in the County’s homeless housing plan and are considered an unallowable use of restricted funds and were therefore a gift of public funds.

The County’s response (included in the Audit Report) disputes the facts of the Audit Report, in part saying that, “There is no legal or accounting principle that mandates establishment of written guidelines,” and “There is no requirement for the County to adopt a formal approval process.” The County also disagrees with the Auditor’s interpretation of Washington State Constitution, Article VIII, Section 7, Credit Not To Be Loaned, which reads:

“No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stocks in or bonds of any association, company or corporation.”

The State Auditor’s Office made the following recommendations to the County:  1) establish a process and criteria for application and approval of direct homelessness funding, 2) Consult with legal counsel before approving extraordinary or unusual expenditures of homelessness funds, and 3) Ensure all homelessness expenditures are specifically allowed by its homeless housing plan or revise the plan’s eligible activities.

The County agreed to incorporate the recommendations. However, there is still the matter of the $121,000 that was considered unallowable use of public funds. Homelessness is not a small matter in Stevens County, and citizens may want to see these funds used to help as many people as possible. What do you think? Write us at loonlaketimes@gmail.com.

The full Audit Report can be found here: https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1023305&isFinding=false&sp=false.