Washington State Auditor Brian Sonntag

September 25, 2009 Mayor and Council City of Langley PO Box 366 Langley, WA 98260

Management Letter In planning and performing our accountability audit of the City of Langley for January 1, 2007 through December 31, 2008, we noted some areas in which the City’s controls over disbursements could be improved. While these items are not significant enough at this time to include in our report, we believe our recommendations will assist you in improving the City’s controls. We will review the status of these comments during our next audit. We have already discussed these comments and made suggestions for improvements to City officials and personnel. If you have any further questions, please contact Casey Dwyer at (425) 257-2137. We would also like to take this opportunity to extend our appreciation to your staff for the cooperation and assistance given during the course of the audit. Sincerely,

Casey Dwyer, Audit Manager Attachment

Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021 (360) 902-0370   TDD Relay (800) 833-6388 Insurance Building, P.O. Box 40021  Olympia, Washington 98504-0021 (360) 902-0370 TDD Relay (800) 833-6388 FAX (360) 753-0646 http://www.sao.wa.gov FAX (360) 753-0646  http://www.sao.wa.gov

Management Letter City of Langley January 1, 2007 through December 31, 2008 Oversight for payroll and vendor warrants The City’s control structure relies on the City Council and the Mayor to provide oversight of payments to vendors and City employees to ensure they are allowable and to safeguard against misappropriation of public funds. We reviewed the Council’s approval of vendor and payroll warrants and noted: Seven instances in which a series of warrants (251 warrants total) were not documented on the blanket claim voucher or in the meeting minutes. We were able to trace the total approved to the warrant list provided in the Council packet. The Council did not approve three months of payroll expenditures totaling $230,726 (12 percent of total payroll for 2007 and 2008). We also reviewed 16 payments to vendors totaling $216,437, 15 of which, totaling $216,242, were manual warrants that were issued before Council approval. The City’s process requires the Mayor to pre-approve manual warrants and that all warrants be approved at the next scheduled Council meeting. We found: Twelve manual warrants totaling $200,033 were not submitted for approval at the next Council meeting, but at later meetings. Fifteen manual warrants totaling $216,242 did not have documentation of the Mayor’s approval on the claim voucher or as a signer on the warrant. Eight manual warrants totaling $214,046 did not appear to be a reasonable use of the manual warrant process, including a payment of $165,275 to a construction contractor and a $20,000 bond payment. Two warrants totaling $56 were paid for City employee birthday cakes. This is not an allowable expenditure. We recommend the City ensure: All expenditures, including manual warrants and payroll, are submitted to the City Council for review. Manual warrants are approved by the Mayor before they are paid. Adopt a policy to help ensure warrants are used only for reasonable and legal purposes.

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