As the country’s labor crunch was at its peak in 2021, the city of Vancouver encountered its own hurdles — a reality reflected in a recent state audit identifying deficiencies in the city’s financial statements.
The Washington State Auditor’s office found slight “material weaknesses” in the city’s 2021 financial statements, including overstatements and incorrect journal entries, as outlined in the agency’s Dec. 29 review.
In response, the city attributed its errors to a significant staff turnover in its accounting department.
“While we don’t take anything lightly, these are pretty isolated, relatively small items that we are absolutely confident that we can assure are addressed before the auditor takes a look at the next fiscal year,” Vancouver City Manager Eric Holmes said.
Vancouver’s accounting department has five employees and a manager. From this staff, three employees and the manager were new in 2021, meaning the bulk of the team was unaccustomed to the city’s “complex and sophisticated financial structure,” Holmes said.
The state auditor’s assessment from Jan. 1 to Dec. 31, 2021, showed city staff overstated a loan in its park impact fees fund by $263,933 to properly adjust previous entries they believed were incorrect.
There was an additional overstatement of $300,350 in parking funds, as $150,125 was incorrectly moved to earned revenue instead of unearned.
The agency also found the city transferred $117,596 from its American Rescue Plan Act Fund to cover general payroll costs for COVID-19 leave, which was taken out before the fund’s specified timeline for eligible use, March 3, 2021.
Other statements contained errors and omissions that the auditor classified as “individually insignificant,” but, in its entirety, impaired a financial report’s understandability.
The auditor recommended that the city’s accountants dedicate “sufficient time and resources to preparing and reviewing” documents moving forward, which the city agreed to improve, according to the report.
Holmes said the city’s accounting team is now more established and has satisfied the auditor’s recommendations.
He compared the city’s high staff turnover as being consistent with a nationwide labor force shortage, particularly in the financial professional sector. The U.S. Chamber of Commerce reported in August 2021 that the country was experiencing a record low labor force since 2000.
Within the city’s accounting department, some staff members had worked for the city for decades and decided to retire, Holmes said, whereas others decided to pursue other career opportunities.
“And during a pandemic and a declared emergency, it was kind of a perfect storm,” he said.
