Draft Schedule of Audit Findings

Grant County Public Utility District No. 2
January 1, 2003 through December 31, 2003

The District made unsupported and unauthorized adjustments of accounts
receivable billings.

Description of Condition:

In March of 2003, a retail telecommunication services provider had a
delinquent balance of approximately $400,000. The account was delinquent
for approximately nine months.  The telecommunications staff made credit
adjustments to the company’s accounts receivable balance of approximately
$178,397.54 without sufficient supporting documentation. The adjustments
reduced the balance owed. This action was taken without the District
Board’s approval or a legal review.

Cause of Condition:

The District has procedures to ensure it complies with state laws and
regulations and its own policies addressing accounts receivable write-offs
and other adjustments. However, the District did not perform sufficient
monitoring to ensure these policies and procedures were followed.

Effect of Condition:


Recommendation:

We recommend the District:
	Retain itemized documentation supporting credits and adjustments.
	Require independent review and approval of adjustments made to the accounts as required by District policy and state law. 
	Seek recovery of the adjustments in the amount of $178,397.54.

District’s Response:


Auditor’s Remarks:

We appreciate the steps the District is taking to resolve this issue. We
will review the condition during our next audit.

Applicable Laws and Regulations:


District Customer Service Procedures ( Account Receivable write offs) 

	In order to get to the write off process an account goes through
multiple processes.  After an account t is closed whether by the customer
or for some other reason, such as a disconnect for non-payment, a closing
letter is sent 5 days after the closing event.  If the customer does not
respond within 25 days, a second closing letter is sent.  If we still get
no responses in 60 days after the closing event the account goes into our
write off process, the account’s District credit score is reduced by 200
points and they get assigned to our contracted outside collection agency.

The collection agency attempts to collect the debt owed to the District
for one full year.  At the end of the year, if the account is still
uncollected, a write off packet is prepared.  The write off packet
contains all accounts that fall into the above category and is obtained by
running an accounting system query. At the end of each quarter, the detail
is put together with an analysis and a resolution and is presented to the
Commission for input.  After approval by the Commission, General
Accounting makes the appropriate journal entry based on the resolution.

Although technically written off, the detail of these accounts is still
held in the Customer Information System in the event that the person or
company that has been written off requests service again.  In that evenyt
the person or company would be required to pay the written off amount as
well as any other required deposits before service would be established in
their name.


RCW 42.24.080 states:

All claims presented against any county, city, district…by persons furnishing materials, rendering services or performing labor, or for any other contractual Purposes, shall be audited, before payment, by an auditing office elected or appointed pursuant to statute or in the absence of statute, an appropriate charter 	Provision, ordinance or resolution of the municipal corporation

RCW 43.09.200	Local government accounting--Uniform system of accounting.
	The state auditor shall formulate, prescribe, and install a system
of accounting and reporting for all local governments, which shall be
uniform for every public institution, and every public office, and every
public account of the same class.
	The system shall exhibit true accounts and detailed statements of
funds collected, received, and expended for account of the public for any
purpose whatever, and by all public officers, employees, or other persons.
	The accounts shall show the receipt, use, and disposition of all
public property, and the income, if any, derived therefrom; all sources of
public income, and the amounts due and received from each source; all
receipts, vouchers, and other documents kept, or required to be kept,
necessary to isolate and prove the validity of every transaction; all
statements and reports made or required to be made, for the internal
administration of the office to which they pertain; and all reports
published or required to be published, for the information of the people
regarding any and all details of the financial administration of public
affairs.