Washington State Auditor’s Offi ceAU

DITOR OF STATE

W

A S H I N G T O NNOV 11, 1889

2016 Annual ReportJanuary 11, 2017

Introduction and Table of Contents

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The mission of the Washington State Auditor’s Offi ce The State Auditor’s Offi ce holds state and local governments accountable for the use of public resources. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously. We provide training and technical assistance to governments and have an extensive quality assurance program.For more information about the State Auditor’s Offi ce, visit www.sao.wa.gov.

Americans with DisabilitiesIn accordance with the Americans with Disabilities Act, this document will be made available in alternative formats. Please email Communications@sao.wa.gov for more information.

State Auditor’s Offi ce contactsMain Offi ce 360-902-0370

To request public recordsPublic Records Offi cer360-725-5617, PublicRecords@sao.wa.gov

Contents2016 Continuous Quality Improvement .....................................................................3

Performance Audit ..............................................................................................................7

Local Government Performance Center ...................................................................11

Local Government .............................................................................................................12

State Government .............................................................................................................14

Investigations .....................................................................................................................16

Quality Assurance .............................................................................................................17

Th e State Auditor’s Offi ce is pleased to have this opportunity to present our annual report for 2016. Th is report will demonstrate our commitment to our values of objectivity, independence, respect, accountability, integrity and transparency. We produce our work with those values in mind, which helps us work with state and local governments to move toward our vision of government that works for citizens. In this report, you will fi nd a recap or our areas of audit and investigation as well as a list of major accomplishments for the year. In addition, we hold ourselves accountable for our use of public resources by using continuous improvement principles to better our own performance. We are proud that our Offi ce off ers the unique value of an independent auditor who provides expertise, transparency and accountability in government.

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2016 Continuous Quality Improvement

For information on training and technical assistance: www.sao.wa.gov/local/Pages/LGPC.aspx

To explore our resource database: portal.sao.wa.gov/PerformanceCenter/

Th e State Auditor’s Offi ce is responsible for auditing all units of government in Washington. Th at puts us in a unique position not only to see where fi nancial, compliance or performance problems exist, but also to provide recommendations, training and guidance to help government offi cials fi x them. In 2015, we developed a detailed Operational Plan to ensure that our agency is operating effi ciently, eff ectively and transparently, and in 2016 we reported quarterly on our progress toward our agency goals. It is not enough to simply audit governments. Our Offi ce also uses what it learns in the audits it conducts to help all governments improve, fi nd solutions and adopt best practices. Th e Local Government Performance Center helps local governments reduce costs and improve results by applying the lessons we learn from our audits. It off ers training and technical assistance to local government elected offi cials, managers and staff who want their organization to improve its performance, eff ectiveness, effi ciency, customer satisfaction or transparency. To learn more, visit our web pages, listed at right. To further extend its reach, the Performance Center has collaborated with the Municipal Research and Services Center to create many resources for local governments, such as utility and bid law guidance, and we work closely with MRSC to develop training materials that address open data and public meetings among many other topics. Also, working with MRSC and the University of Washington at Tacoma, we helped establish the Government Performance Consortium. It serves as a forum for local government leaders to share best practices and explore the next horizon for the modern government organization.In line with our responsibility to help reduce risk to government, our Performance Audit division continued an ongoing, long-term examination of information technology (IT) security risks in state and local governments. In 2016, we increased our capacity for performing IT security audits, and used the results of our statewide risk assessment to help us develop our IT audit strategy. A third performance audit examining the state’s IT security posture is under way, as are six local government IT security audits. We expect to continue working with the state’s Chief Information Offi cer, state agencies and local governments to examine and review IT security, with a goal of reducing risk to government.

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We know that state and local offi cials are our partners in making government work better, cost less, deliver higher value and earn greater public trust.

2016 Key Outcomes • Emphasized customer service training to ensure that our team members

always “show up” representing the values of our organization.• Expanded the agency’s social media presence on Facebook, Twitter,

LinkedIn and YouTube to increase transparency and accessibility.• Released signifi cant performance audits of major state programs and

systems. Increased the number of audits in progress and increased our emphasis on state and local government IT cybersecurity.

• Leveraged partnerships for better government by collaborating with other organizations to streamline state government processes and to provide much needed resources.

• Continued to refi ne the online fi ling process for local governments and conducted extensive training in all 39 Washington counties.

• Th rough a wide variety of audit work – including accountability and performance audits, whistleblower investigations and IT reviews, the Comprehensive Annual Financial Report and State of Washington Single Audit – we worked with 68 state agencies to improve their controls over public resources, and published the results through our website.

• Reported on 40 investigations of misappropriation from state and local governments totaling more than $800,000.

• Further improved timeliness of whistleblower investigations. In 2016, we received 178 whistleblower complaints and published 27 investigative reports, all well within the statutory timeline.

• Improved our results in the annual Statewide Employee Engagement survey. Our results showed between 2 percent and 9 percent improvements in targeted areas as well as improvements across the board. A very high 84 percent of our employees participated in the survey.

• Partnered with the Washington Finance Offi cers Association to promote awareness of career opportunities in government.

• Partnered with the Department of Commerce to eliminate duplicate debt reporting for local governments.

• Th e National Association of State Auditors, Comptrollers, and Treasurers awarded our Financial Intelligence Tool (FIT) the NSAA Excellence in Accountability Award for using data to help local government offi cials understand complex fi nancial information.

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Stewardship Awards: Eleven presented statewide in 2016Th e State Auditor’s Stewardship Awards are presented in recognition of outstanding accomplishment in the stewardship of public resources as we pursue our shared goals. Eleven were presented to the cities of Mill Creek, Lake Forest Park, Vancouver, Mount Vernon and Olympia as well as Kitsap Fire District No.  18, Wenatchee Housing Authority, Snohomish Conservation District, Ellensburg School District, Pierce College and the Offi ce of Superintendent of Public Instruction.

City of Lake Forest Park City of Mill Creek

City of Olympia

Offi ce of Superintendent of Public Instruction

Kitsap Fire District No. 18

Pierce College

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City of Mount VernonEllensburg School District

City of Vancouver

Wenatchee Housing Authority

Snohomish Conservation District

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Performance Audit

Th e Performance Audit division’s work includes a blend of long-term audits of major state programs and shorter evaluations designed to give policymakers options to help them meet the state’s challenges. We published 15 performance audits in 2016, as well as our Progress Report. We will follow up on progress made by audited agencies and programs as they implement our recommendations in our next Performance Audit Progress Report.

EducationWorkforce Development: Identifying CTE Student Outcomes Th is performance audit asked what Washington’s data could tell us about the characteristics of high school students who participated in Career and Technical Education (CTE) courses and those who did not, and their achievements aft er graduation. By following graduates’ post-secondary paths, we found that CTE students graduating in 2012 or 2013 were more likely to be enrolled in community or technical college, entered into an apprenticeship or employed, than non-CTE students. Further, among graduates who did not enter higher education, CTE students were signifi cantly more likely to achieve in terms of employment and apprenticeships. However, the data we reviewed is subject to restrictions on how and by whom it may be used. Our recommendations suggest ways the Offi ce of Superintendent of Public Instruction and the Education Research and Data Center can work together to help school districts apply for and use the data.

Alternative Learning Experience (ALE) in Washington For the fi rst full report in a long-term study of educational outcomes for students enrolled in ALE programs, performance auditors visited 10 programs associated with higher student outcomes and reviewed student data. Interviews with program staff and participants provided many insights into the way such programs serve students and the challenges they may face. Our review of student data, however, has been aff ected by continuing data quality problems, and we made recommendations to the Offi ce of Superintendent of Public Instruction that could help improve data reliability.

Government OperationsAssessing Implementation of the Regulatory Fairness ActTh is performance audit, the fourth in a series exploring aspects of regulatory reform, off ered suggestions to help agencies meet the requirements of the Regulatory Fairness Act, a law designed to help mitigate any disproportionate costs of regulation on small businesses. We also identifi ed materials that can help agencies meet all the Act’s requirements and posted them on our website. Th ey include a copy of the Department of Health’s training Powerpoint, a spreadsheet calculator to help agencies with required cost calculations, and a sample of a template for a Small Business Economic Impact Statement.

Read about additional work in the Workforce Development audit series on our website at www.sao.wa.gov/state/Pages/work forcedevelopment.aspx

Read about additional work in the ALE audit series on our website at www.sao.wa.gov/state/Pages/PA_ALEstudy.aspx

View the additional materials we posted for this audit, and read more about the Regulatory Reform audit series, on our website at www.sao.wa.gov/state/pages/RegReform.aspx

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The Effect of Public Records Requests on Washington’s State and Local Governments At the request of the Legislature, this performance audit examined the effect of public records requests on state and local governments. We found that a changing public records environment and a Public Records Act (PRA) that has not kept pace with present-day issues pose challenges that, if not addressed, may undermine the original intent of public records laws and hinder other essential government services. The state and local governments that responded to our statewide survey reported spending more than $60 million to fulfill more than 285,000 public records requests in the most recent year alone. Requesters pay only a small portion of the costs (less than 1 percent) involved in fulfilling public records requests. Our research shows that a combination of statewide policy changes and better information management and disclosure practices is needed to keep pace with changing times. We identified policies the Legislature can consider to address public records issues. We also identified practical solutions that can help state and local governments continue to improve their records management and disclosure processes.

Continuing Opportunities to Improve State and Local Government Information Technology Security – 2016 We published two IT security audits in 2016, which included three state agencies and one city. We worked with subject matter experts to conduct assessments of organizational IT infrastructure and applications, and we compared state and local practices to leading practices. For the state IT security audit, we consulted with the state’s Chief Information Security Officer at WaTech’s Office of Cyber Security. Our audits found each had taken significant measures to protect their IT systems from risk, but we also made detailed recommendations on how to better protect their systems and resources.

Ensuring Economical and Efficient Printing for Washington This performance audit (a follow-up to one conducted in 2011) considered the progress made by state agencies, including the Department of Enterprise Services’ Printing & Imaging (P&I) program, in reducing statewide printing costs. We found that P&I needs more vendor-pricing and performance information to fully demonstrate its print prices are competitive with the private sector. DES is promoting print management strategies to state agencies, although few have implemented any strategies. We estimate savings of up to $3.9 million to $11.7 million, but we were unable to estimate how much of this amount the state has already saved through partial implementation.

Administrative Appeals Administrative appeals offer people and businesses a way to dispute agency decisions without resorting to the courts. This performance audit found that these hearings are functioning as intended, but striking the proper balance between implementing agency policy and providing a fair process is challenging. Our recommendations address two issues in particular: clarifying the role of informal guidance from agency management to administrative judges and clarifying the nature of communications permitted between agency and judges. We also made recommendations directly to some of the agencies whose processes we reviewed.

View the additional materials we posted for this audit on our website at www.sao.wa.gov/state/Pages/PA_RecordsStudy.aspx

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Human Services and SafetyImproving Staff Safety in Washington’s Prisons Following the death of a corrections officer in 2011, Washington’s Department of Corrections implemented a series of initiatives designed to improve the safety of staff working in the state’s prisons. Our performance audit found that while no other state has developed and implemented such a comprehensive effort to improve staff safety, opportunities for improvement exist. While each prison had implemented the initiatives to some degree, not all have been fully or consistently put in place in all facilities. Our recommendations, and the detailed information about leading practices, address areas that can help the Department further improve.

Barriers to Home Care Aide Certification Through a survey of applicants who did not become certified, we found that almost two-thirds dropped out due to barriers, many facing problems when signing up for training or the exam. Respondents said they could not find course times that fit their schedule or a training location or testing site close to home. Respondents who did not speak English would often find language barriers insurmountable and leave the program. Many said it was difficult finding training and exams in their preferred language. The departments of Health and Social and Health Services have taken steps to address these barriers working with their partners to try to increase the number of locations that offer training and exams.

Medical Discipline in Washington This performance audit examined the processes around medical discipline in Washington applied by the Medical Quality Assurance Commission (MQAC) and the Board of Osteopathic Medicine and Surgery. Despite similarities in the professions they serve and the issues they review, we found a number of differences in how the two boards manage their affairs and regulate their providers. Our key recommendation, to merge these two boards, would address many of the issues we found and promote consistency. We also noted other areas for improvement, including better communicating their presence and purpose to the public and interacting with complainants. Finally, we identified some elements in the statutes that govern medical discipline that the Legislature and the boards should consider addressing.

Washington State Patrol Radio Narrowbanding Project Washington State Patrol opted to meet a federal mandate by using digital narrowband radio equipment and by entering into an agreement with the Department of Justice to use its Integrated Wireless Network (IWN), built by Motorola. We found the Patrol could have benefited from the knowledge provided by an engineering study before designing its narrowband system, while soliciting competitive proposals could have helped it better assess the best project approach. While it has likely maintained coverage where it was already good, and partnered successfully with other agencies to address coverage issues, it has likely lost coverage in areas that had poor but usable sound quality before converting to narrowband.

Read about additional work in the I-1163 audit series on our website at www.sao.wa.gov/state/Pages/LongTermCare WorkerCertification.aspx

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I-1163: Long-term Care Worker Certification Requirements 2016 This performance audit continues our series of reports mandated by Initiative 1163. We found the Department of Health and the Department of Social and Health Services have continued to identify and address barriers to home care aide certification. Key improvements include: sharing data to identify trends and monitor applicant progress through certification, helping applicants with limited English proficiency, and streamlining the application itself.

Costs and Sustainability at the Washington Health Benefit Exchange The Health Benefit Exchange helps customers buy health insurance plans and determines whether they are eligible for subsidies that help pay for them. The Legislature required the State Auditor’s Office to examine the Exchange’s operating costs. We found the Exchange has not been fully reimbursed by the state and federal Medicaid program for nearly $90 million in services provided on behalf of the Health Care Authority; we recommend the Exchange and HCA work together to ensure proper payment allocations. We also found the Exchange’s operating expenses appear reasonable, and that joining the federal health exchange program now would increase the Exchange’s overall costs. Finally, we made recommendations that can help the Exchange manage its financial self-sustainability in the future.

TransportationWashington State Department of Transportation: Improving the Toll Collection System While WSDOT’s toll collection system has been operational since 2011, our performance audit found that the system lacks critical functions and has other operational limitations that affect toll processing, collection and managerial reporting. Missing or incomplete functions limit the Toll Division’s ability to assess performance, write off outstanding debt, or correct billing information efficiently. We also found that WSDOT has been unsuccessful in its efforts to enforce the toll system vendor’s compliance with information security standards, which could put customer information at risk. Finally, the agency has paid only limited attention to management activities that could improve its ability to effectively develop and operate this complex system.

Read about additional work in the I-1163 audit series on our website at www.sao.wa.gov/state/Pages/LongTermCare WorkerCertification.aspx

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Local Government Performance Center

It is exciting to be able to help governments through the work we do, not just point out the problems we find. The Local Government Performance Center was established to do just that. It helps local governments solve problems, reduce costs and improve the value of their services to citizens by offering resources such as training, tools and technical assistance. In 2016, the National Association of State Auditors, Comptrollers and Treasurers (NASACT) awarded the Center an Excellence in Accountability Award for its Financial Intelligence Tool (FIT).

Government Performance ConsortiumThe Government Performance Consortium is a forum for local government leaders to collaborate, share best practices and explore the next horizon for the modern government organization.The Government Performance Consortium is a joint project of the Performance Center, Municipal Research Services Center of Washington and the University of Washington (Tacoma). Its goal is to inspire creativity and build capacity in local governments by sharing insights into successes as well as current and future challenges. It offers a venue to discuss possible solutions among emergent leading practices and examples from multiple management disciplines. Current Consortium projects include forums on a variety of topics as well as a Data Collection and Comparison Project.

Open Government and Transparency trainingsTo help meet the increasing demand for trainings and presentations with innovative solutions, the Center developed an Online Training Library on our website that contains many eLearning trainings, with a focus on local government needs. Lean and process improvement classes are among the most popular.

Helping local governments become fiscally fitThe Performance Center continued its work with local government officials, associations and other stakeholders, developing a fiscal health tool to help local governments in their role as stewards of financial resources. Our Financial Intelligence Tool (FIT):

• Provides standard, transparent, understandable and easily accessible financial information

• Guides financial decision makers of any experience level• Helps officials tell their government’s financial story

In 2016, we made FIT available to most GAAP governments.

Local Government Performance Center: Growth over five years2012 2013 2014 2015 2016

Training classes 22 61 86 98 175

Local government employees trained 82 2,373 2,567 2,940 3,466

Types of training classes offered 5 10 12 14 16

Lean Academy workshops 0 4 14 24 24

Lean trainings 20161,384 attendees

805 course hours7,711 total training hours

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Local Government

Reports issued by type of audit

2014 2015 2016

Accountability 1,321 1,277 1,246

Financial & Federal 450 468 408

Financial 407 391 410

Special 46 107 79

Investigations 13 7 12

Attestation engagements – 147 59

Total 2,397 2,397 2,214

We take our statutory responsibility to examine the fi nancial aff airs of all local governments statewide very seriously. Th ere are more than 2,275 individual local governments statewide, covering 36 government types including cities, counties, school districts, ports, fi re districts, public utility districts, and many more. In 2016, our Offi ce conducted 2,214 audits of local governments.

2016 audit highlights in local governmentLack of internal controls in key fi nancial systems and not complying with federal grant requirements continue to account for the majority of audit issues. To help local governments to better assess their own internal controls and compliance with federal grant requirements, we provided the following new resources and tools.

Lack of internal controls in key fi nancial systems Two new tools were created to assist local governments with key areas of struggle:

• Checklist for Accounting Standards Changes – One of the primaryareas local governments struggle with is the proper implementation of accounting standard changes. Our Offi ce created a customizable checklist to help local governments meet new Government Accounting Standard Board standards by ensuring they perform suffi cient research to correctly and timely implement changes to the standards.

• Checklist for Preparing Cash Basis Financial Statements – Anotherkey area local governments struggle is implementing internal controls toensure accurate and complete fi nancial reporting. Our Offi ce created aneasy-to-use checklist which employs a series of questions to deliver usefulinformation and best practices that help local governments evaluate anddevelop control activities to address areas of defi ciencies most oft en foundin fi nancial statement preparation.

Accounting Standards Changes checklist is on our website at portal.sao.wa.gov/PerformanceCenter/#/address?mid=6&rid= 18505

Preparing Statements checklist is on our website at portal.sao.wa.gov/PerformanceCenter/#/address?mid=6&rid= 18507

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Noncompliance with federal grant requirements In 2016 the new federal grant requirements known as the “Federal Uniform Guidance” raised the threshold requiring an audit of the federal funds from $500,000 to $750,000 in federal expenditures. Th is resulted in fewer single audits in 2016. However, adequate internal controls and compliance with federal grant requirements continues to be a signifi cant area of reportable audit concern. As a result, we partner with the Washington Finance Offi cers Association to provide federal grant trainings across the state, including at its annual conference.

Audits of school district Alternative Learning Experience programsIn 2013, the state Legislature passed ESSB 5946, which has been codifi ed into RCW 28A.232.010(3)(c). It requires school districts to receive biennial audits of their Alternative Learning Experience (ALE) programs.Our audits examined a district’s compliance with state laws and regulations as well as with its own policies and procedures. School districts received $445 million in ALE funding for the school fi scal years 2013, 2014 and 2015.For school fi scal year 2013, we audited 39 percent of ALE enrollment statewide, examining 49 ALE programs in 18 school districts. In nine of the 18 audited districts, we questioned a total of $493,806 in ALE funding.For school fi scal year 2014, we audited 60 percent of ALE enrollment statewide, examining 174 ALE programs in 106 school districts. In 22 of the 106 audited districts, we questioned a total of $1.5 million in ALE funding.For school fi scal year 2015, we audited 46 percent of ALE enrollment statewide, examining 85 ALE program in 54 school districts. In 27 of the 54 audited districts, we questioned a total of $650,091 in ALE funding.Th e primary causes of questioned funding included:

• Reporting greater FTEs than hours identifi ed in the student plan • Counting students before a written student learning plan was in place • Reporting students for funding prior to district release and/or aft er the

student has left the program • Not conducting and/or documenting required monthly evaluations of

student progress • Not obtaining signed statements from parents certifying they understand

the diff erence between ALE and home-based instruction • Off ering high school programs that did not generate credits toward a high

school diploma

Read our audits of the ALE programs in individual school districts, and additional work by the Schools Team, on our website at www.sao.wa.gov/local/Pages/SchoolsProgram.aspx

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State Government

Comprehensive Annual Financial Report (CAFR) for fi scal year 2016Financial statement audits are crucial for government transparency, for bond ratings, and for monitoring fi nancial health and sustainability.We completed the 2016 CAFR audit, which covered the fi scal year that ended on June 30, 2016, and issued our “unmodifi ed” opinion on the report on November 1, 2016. Th at was just 124 days aft er year’s end, the second fastest completion time for any state in the nation. Th e “unmodifi ed” opinion means that in our professional judgment these fi nancial statements fairly present the state’s fi nancial position. Each year, following this audit, we also publish the CAFR Summary, a fi ve- to 10-page document that serves as a “snapshot” of the state’s fi nancial position, including revenues, expenditures, cash balances and debt. It summarizes the lengthy fi nancial statements, and presents some of the fi nancial challenges facing the state, including the unfunded liabilities associated with the Workers’ Compensation Program, state pension plans and post-employment benefi ts.

State of Washington Single Audit (SWSA)Governments that annually spend at least $750,000 in federal funds must obtain an audit in accordance with the federal Single Audit Act of 1984 (amended 1996). Our Offi ce provides this service for the state of Washington and performs a statewide single audit in accordance with generally accepted government auditing standards. Th e audit objective is to determine whether the state complied with federal requirements that could have a direct and material eff ect on a major federal program.Washington’s comprehensive single audit report is published by the Offi ce of Financial Management in March every year, and is available on OFM’s website. We are in the process of completing our audit for the fi scal year that ended on June 30, 2016.2015 SWSA audit resultsIn state fi scal year 2015, Washington received more than $17 billion in federal fi nancial assistance. We audited 31 programs, administered by 14 state agencies that received $12.3 billion – about 72 percent of all federal dollars the state received.We issued 56 audit fi ndings that identifi ed internal control defi ciencies, material non-compliance with federal requirements and questionable payments that totaled approximately $28.6 million.

Read the most recent CAFR and SWSA reports on our website at www.sao.wa.gov/resources/Pages/AnnualReports.aspx

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State agency accountability audits in 2016Accountability audits assess whether agencies have adequate internal controls in place to safeguard public resources and comply with legal requirements. We do not examine every transaction, activity or area. Instead, our audits focus on identifying and examining those activities or areas that pose the highest risk of noncompliance, abuse or misuse.In 2016, we performed 45 individual accountability audits for state agencies, which includes institutions of higher education. We issued seven audit findings that reported significant non-compliance with legal requirements or identified areas where agencies need to improve their internal controls to better safeguard public resources. Here, we briefly summarize the more significant issues we found.

Employment Security DepartmentWe conducted an accountability audit to identify people receiving unemploymentbenefits while in a county jail in Washington. We looked at individuals in eightof the 57 jails in the state and identified 1,911 potential overpayments worth approximately $656,000 over a 15-month period.

Department of Social and Health ServicesThe Department lacked internal controls to ensure payments made to a union trust fund for individual provider medical benefits were accurate and supported. We estimate the Department paid $1.2 million in unallowable payments and $66 million more that was not adequately supported.

Financial statement auditsFinancial statement audits provide an opinion on whether financial statements are presented fairly, in all material respects, in accordance with generally accepted accounting principles (GAAP). These audits do not attempt to confirm the accuracy of every amount, but search for errors large enough to affect the conclusions and decisions of a financial statement user. In 2016, we performed 28 financial audits for state agencies, universities, and community or technical colleges. We issued five audit findings at five different organizations that identified areas where they need to improve their internal controls to ensure accurate reporting. A majority of the significant issues identified were related to a lack of accurate tracking and reporting of capital assets.

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Investigations

Our Offi ce conducts three types of investigations: fraud, Citizen Hotline and state employee whistleblower. Th is section features highlights of our 2016 investigations.

FraudIn 2016, we reported on 42 investigations of misappropriation from local and state governments, totaling $897,504. Our largest investigations in 2016 involved two local governments:

• A development authority employee misappropriated more than $143,000from various systems, including cash receipts, payments, payroll andcredit cards.

• An emergency radio system employee used multiple systems,including payments and credit cards, to make personal purchases. Th emisappropriation totaled more than $190,000.

Our Offi ce also performs extensive educational outreach, providing presentations and trainings throughout the state at conferences held by government accounting and auditing professional associations.

Citizen HotlineOur Offi ce operates a Hotline for citizens to report assertions of government fraud, waste and abuse. It is also a place to report government effi ciency or outstanding achievement.In 2016, we received 449 Hotline submissions and opened investigations into 278 of them. Hotline submissions are typically received through our website. However, if people want to leave a voice message about their concern, they can call our toll-free number at 866-902-3900.

Whistleblower ProgramOur Offi ce is responsible for conducting whistleblower investigations of suspected improper governmental action. State law aff ords confi dentiality to whistleblowers and protection from retaliatory actions.In 2016, we received 178 whistleblower complaints and published 27 investigative reports. In 10 of those investigations, we found reasonable cause to believe a state employee engaged in improper governmental action. Information about the State Employee Whistleblower Program can be found on our website.

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Quality Assurance

It’s reasonable to ask “Who audits the auditor?”We are committed to continuously improving how effi ciently we carry out our work and hold ourselves to the highest standards of quality in the audit work we do.

Peer reviews Our Offi ce is subject to external peer reviews every three years to ensure our audits satisfy government auditing standards. Th ese peer reviews are conducted by the National State Auditors Association, which is affi liated with the National Association of State Auditors, Comptrollers and Treasurers (NASACT). Th is review focuses on our system of controls to ensure we are following auditing standards. Our last review was in 2016 and we received a “Pass,” which is the highest rating possible.

Offi ce of Financial Management reviewState statute requires a regular audit of our agency’s fi nancial compliance, which takes place every two years. Such audits generally focus on our administrative operations. Th e Offi ce of Financial Management (OFM) contracts with a private CPA fi rm to conduct this audit. Our last audit was conducted in 2016 and a summary of that audit is available on the OFM website. Like all state agencies, we are required to report on how we plan to resolve any audit issues, and the Director of OFM issues an annual report on the audit resolution status. Th ese reports are also available to the public on the OFM website.

HUD reviewPeriodically a federal agency may review our work on their federal funding. During 2016 we had a review by the federal Department of Housing and Urban Development. Th ey had recommendations for us, which we are implementing.

Whistleblower auditState statute requires a performance audit of the State Whistleblower Program. Th is recently completed audit found the program was in compliance with state law.