Even after the 2011-2012 state audit found “significant deficiencies” in the financial report of the San Juan Island Public Hospital District, board members and staff breathed a sigh of relief that the dire warnings of the 2009-2010 audit were not repeated.
The latest two-year state audit of the hospital district’s books by the Washington State Auditor reported that financial controls “are inadequate to ensure accurate reporting,” but found no wrongdoing, misappropriation of funds or noncompliance which would require reporting to other government agencies or the legislature.
The report for 2009-2010 had warned that the Inter Island Medical Center was “at risk of not being able to maintain services.” That problem was solved only when the IIMC services were merged into the new Peace Island PeaceHealth Medical Center.
The current audit performed by auditors under the direction of State Auditor Troy Kelley examined all financial documents and records relating to the district’s financial condition, disbursements, payroll and benefits, and contracts and agreements.
The district superintendent and accountant, Pamela Hutchins, and the EMS executive assistant and accountant, Cady Davies, worked with the auditors for several weeks, answering questions and correcting errors in financial statements as they were found. “I’ve gone through these audits before and we have corrected the errors that auditors found and will do everything necessary to make sure the problems will not be repeated,” Hutchins said.
The audit found under-reporting and over-reporting in several financial categories and misclassification of professional services, liabilities and real estate assets, but no funds were missing or wrongfully applied. The report noted that the district corrected all the errors.
The audit document stated: “Our audit identified a significant deficiency in internal controls over financial reporting that could affect the District’s ability to produce reliable financial statements.” The report continued, “During our audit, we noted a large number of errors in the financial statements that individually were not significant but when taken together impair the understandability of the financial report.”
The audit made three recommendations related to staff training, review of accounting information provided by the district’s CPA firm and ensuring accurate preparation and reporting of financial statements.
Dr. Michael Edwards, the district treasurer who has just become the hospital district chairman, said he and the staff “cooperated fully at every stage of the audit and we responded to the recommendations immediately and comprehensively.
“The auditors accepted our commitment to address the issues identified and said they will follow up during the next routinely scheduled audit, which will not occur until the fall of 2015,” he said.
A companion audit addressing issues of “accountability and compliance with state laws and regulation” found no material compliance problems and made no written findings or recommendations.