FY 2019 Annual Report
:
Financial Statements and Federal Single Audit
Report
City of Port Orchard
For the period January 1, 2019 through December 31, 2019
Published December 24, 2020
Report No. 1027482
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (564) 999-0950 Pat.McCarthy@sao.wa.gov
Office of the Washington State Auditor
Pat McCarthy
December 24, 2020
Mayor and City Council
City of Port Orchard
Port Orchard, Washington
Report on Financial Statements and Federal Single Audit
Please find attached our report on the City of Port Orchard’s financial statements and compliance
with federal laws and regulations.
We are issuing this report in order to provide information on the City’s financial condition.
Sincerely,
Pat McCarthy
State Auditor
Olympia, WA
Americans with Disabilities
In accordance with the Americans with Disabilities Act, we will make this document available in
alternative formats. For more information, please contact our Office at (564) 999-0950, TDD
Relay at (800) 833-6388, or email our webmaster at webmaster@sao.wa.gov.
Office of the Washington State Auditor
TABLE OF CONTENTS
Schedule of Findings and Questioned Costs ................................................................................... 4
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards..................................................................................................... 6
Independent Auditor's Report on Compliance for Each Major Federal Program and Report on
Internal Control Over Compliance in Accordance With the Uniform Guidance ........................... 9
Independent Auditor's Report on Financial Statements ................................................................ 12
Financial Section ........................................................................................................................... 16
About the State Auditor's Office ................................................................................................... 35
Page 3
Office of the Washington State Auditor
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
City of Port Orchard
January 1, 2019 through December 31, 2019
SECTION I – SUMMARY OF AUDITOR’S RESULTS
The results of our audit of the City of Port Orchard are summarized below in accordance with Title
2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Financial Statements
We issued an unmodified opinion on the fair presentation of the City’s financial statements in
accordance with its regulatory basis of accounting. Separately, we issued an adverse opinion on
the fair presentation with regard to accounting principles generally accepted in the United States
of America (GAAP) because the financial statements are prepared using a basis of accounting
other than GAAP.
Internal Control over Financial Reporting:
Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over financial reporting that we consider to be significant deficiencies.
Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
We noted no instances of noncompliance that were material to the financial statements of the City.
Federal Awards
Internal Control over Major Programs:
Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over major federal programs that we consider to be significant deficiencies.
Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
Page 4
Office of the Washington State Auditor
We issued an unmodified opinion on the City’s compliance with requirements applicable to its
major federal program.
We reported no findings that are required to be disclosed in accordance with 2 CFR 200.516(a).
Identification of Major Federal Programs
The following program was selected as a major program in our audit of compliance in accordance
with the Uniform Guidance.
CFDA No. Program or Cluster Title
20.205 Highway Planning and Construction Cluster – Highway Planning and
Construction
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
the Uniform Guidance, was $750,000.
The City did not qualify as a low-risk auditee under the Uniform Guidance.
SECTION II – FINANCIAL STATEMENT FINDINGS
None reported.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED
COSTS
None reported.
Page 5
Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
City of Port Orchard
January 1, 2019 through December 31, 2019
Mayor and City Council
City of Port Orchard
Port Orchard, Washington
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the financial statements of the
City of Port Orchard, as of and for the year ended December 31, 2019, and the related notes to the
financial statements, which collectively comprise the City’s financial statements, and have issued
our report thereon dated December 16, 2020.
We issued an unmodified opinion on the fair presentation of the City’s financial statements in
accordance with its regulatory basis of accounting. We issued an adverse opinion on the fair
presentation with regard to accounting principles generally accepted in the United States of
America (GAAP) because the financial statements are prepared by the City using accounting
practices prescribed by state law and the State Auditor’s Budgeting, Accounting and Reporting
System (BARS) manual described in Note 1, which is a basis of accounting other than GAAP. The
effects on the financial statements of the variances between the basis of accounting described in
Note 1 and accounting principles generally accepted in the United States of America, although not
reasonably determinable, are presumed to be material.
As discussed in Note 6 to the financial statements, during the year ended December 31, 2019, the
City adopted new accounting guidance for presentation and disclosure of postemployment benefits
other than pensions, as required by the BARS manual.
As discussed in Note 10 to the 2019 financial statements, in February 2020, a state of emergency
was declared that could have a negative financial effect on the City.
Page 6
Office of the Washington State Auditor
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal
control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the City’s financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
In addition, we noted certain matters that we have reported to the management of the City in a
separate letter dated December 16, 2020.
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free
from material misstatement, we performed tests of the City’s compliance with certain provisions
of laws, regulations, contracts and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However, providing
an opinion on compliance with those provisions was not an objective of our audit, and accordingly,
we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required
to be reported under Government Auditing Standards.
Page 7
Office of the Washington State Auditor
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose. However, this
report is a matter of public record and its distribution is not limited. It also serves to disseminate
information to the public as a reporting tool to help citizens assess government operations.
Pat McCarthy
State Auditor
Olympia, WA
December 16, 2020
Page 8
Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR
EACH MAJOR FEDERAL PROGRAM AND REPORT ON
INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE
WITH THE UNIFORM GUIDANCE
City of Port Orchard
January 1, 2019 through December 31, 2019
Mayor and City Council
City of Port Orchard
Port Orchard, Washington
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM
We have audited the compliance of the City of Port Orchard, with the types of compliance
requirements described in the U.S. Office of Management and Budget (OMB) Compliance
Supplement that could have a direct and material effect on each of the City’s major federal
programs for the year ended December 31, 2019. The City’s major federal programs are identified
in the accompanying Schedule of Findings and Questioned Costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and
conditions of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and the audit
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Those standards and the Uniform Guidance require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
Page 9
Office of the Washington State Auditor
referred to above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about the City’s compliance with those
requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. Our audit does not provide a legal determination on the City’s compliance.
Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2019.
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
Management of the City is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the City’s internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program in order to determine the auditing procedures that are appropriate in the circumstances
for the purpose of expressing an opinion on compliance for each major federal program and to test
and report on internal control over compliance in accordance with the Uniform Guidance, but not
for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over
compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Page 10
Office of the Washington State Auditor
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control
that might be material weaknesses or significant deficiencies. We did not identify any deficiencies
in internal control over compliance that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
Purpose of this Report
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other
purpose. However, this report is a matter of public record and its distribution is not limited. It also
serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.
Pat McCarthy
State Auditor
Olympia, WA
December 16, 2020
Page 11
Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON
FINANCIAL STATEMENTS
City of Port Orchard
January 1, 2019 through December 31, 2019
Mayor and City Council
City of Port Orchard
Port Orchard, Washington
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of the City of Port Orchard, for the year
ended December 31, 2019, and the related notes to the financial statements, which collectively
comprise the City’s financial statements, as listed on page 16.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with the financial reporting provisions of state law and the Budgeting, Accounting
and Reporting System (BARS) manual prescribed by the State Auditor described in Note 1. This
includes determining that the basis of accounting is acceptable for the presentation of the financial
statements in the circumstances. Management is also responsible for the design, implementation
and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
Page 12
Office of the Washington State Auditor
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the City’s preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such
opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Unmodified Opinion on Regulatory Basis of Accounting (BARS Manual)
As described in Note 1, the City of Port Orchard has prepared these financial statements to meet
the financial reporting requirements of state law using accounting practices prescribed by the State
Auditor’s Budgeting, Accounting and Reporting System (BARS) manual. Those accounting
practices differ from accounting principles generally accepted in the United States of America
(GAAP). The differences in these accounting practices are also described in Note 1.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the cash and investments of the City of Port Orchard, and its changes in cash and investments, for
the year ended December 31, 2019, on the basis of accounting described in Note 1.
Basis for Adverse Opinion on U.S. GAAP
Auditing standards issued by the American Institute of Certified Public Accountants (AICPA)
require auditors to formally acknowledge when governments do not prepare their financial
statements, intended for general use, in accordance with GAAP. The effects on the financial
statements of the variances between GAAP and the accounting practices the City used, as
described in Note 1, although not reasonably determinable, are presumed to be material. As a
result, we are required to issue an adverse opinion on whether the financial statements are
presented fairly, in all material respects, in accordance with GAAP.
Page 13
Office of the Washington State Auditor
Adverse Opinion on U.S. GAAP
The financial statements referred to above were not intended to, and in our opinion they do not,
present fairly, in accordance with accounting principles generally accepted in the United States of
America, the financial position of the City of Port Orchard, as of December 31, 2019, or the
changes in financial position or cash flows thereof for the year then ended, due to the significance
of the matter discussed in the above “Basis for Adverse Opinion on U.S. GAAP” paragraph.
Matters of Emphasis
As discussed in Note 6 to the financial statements, during the year ended December 31, 2019, the
City adopted new accounting guidance for presentation and disclosure of postemployment benefits
other than pensions, as required by the BARS manual. Our opinion is not modified with respect to
this matter.
As discussed in Note 10 to the 2019 financial statements, in February 2020, a state of emergency
was declared that could have a negative financial effect on the City. Our opinion is not modified
with respect to this matter.
Other Matters
Supplementary and Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements taken
as a whole. The Schedule of Expenditures of Federal Awards is presented for purposes of
additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance). The Schedule of Liabilities is also presented for purposes of
additional analysis, as required by the prescribed BARS manual. These schedules are not a
required part of the financial statements. Such information is the responsibility of management
and was derived from and relates directly to the underlying accounting and other records used to
prepare the financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the information is fairly stated, in all material respects, in
relation to the financial statements taken as a whole.
Page 14
Office of the Washington State Auditor
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
December 16, 2020 on our consideration of the City’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in
considering the City’s internal control over financial reporting and compliance.
Pat McCarthy
State Auditor
Olympia, WA
December 16, 2020
Page 15
Office of the Washington State Auditor
FINANCIAL SECTION
City of Port Orchard
January 1, 2019 through December 31, 2019
FINANCIAL STATEMENTS
Fund Resources and Uses Arising from Cash Transactions – 2019
Fiduciary Fund Resources and Uses Arising from Cash Transactions – 2019
Notes to Financial Statements – 2019
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Liabilities – 2019
Schedule of Expenditures of Federal Awards – 2019
Notes to the Schedule of Expenditures of Federal Awards – 2019
Page 16
Beginning Cash and Investments
30810 Reserved
30880 Unreserved
388 / 588 Net Adjustments
Revenues
310 Taxes
320 Licenses and Permits
330 Intergovernmental Revenues
340 Charges for Goods and Services
350 Fines and Penalties
360 Miscellaneous Revenues
Total Revenues:
Expenditures
510 General Government
520 Public Safety
530 Utilities
540 Transportation
550 Natural and Economic
Environment
560 Social Services
570 Culture and Recreation
Total Expenditures:
Excess (Deficiency) Revenues over Expenditures:
Other Increases in Fund Resources
391-393, 596 Debt Proceeds
397 Transfers-In
385 Special or Extraordinary Items
386 / 389 Custodial Activities
381, 382, 395,
398
Other Resources
Total Other Increases in Fund Resources:
Other Decreases in Fund Resources
594-595 Capital Expenditures
591-593, 599 Debt Service
597 Transfers-Out
585 Special or Extraordinary Items
586 / 589 Custodial Activities
581, 582 Other Uses
Total Other Decreases in Fund Resources:
Increase (Decrease) in Cash and Investments:
Ending Cash and Investments
5081000 Reserved
5088000 Unreserved
Total Ending Cash and Investments
Total for All
Funds
(Memo Only)
001 Current
Expense
103 Criminal
Justice
104 Special
Investigative
Unit
5,634,777 -513,801 78,461
19,750,584 6,154,119 --
----
11,941,084 10,518,513 256,159 -
537,142 532,192 --
6,666,759 589,321 60,851 -
14,143,346 667,440 --
405,053 266,983 -4,691
1,995,045 408,846 10,675 14,678
35,688,429 12,983,295 327,685 19,369
2,761,661 2,761,661 --
5,875,826 5,381,592 491,209 3,025
7,939,067 ---
2,310,673 1,915,439 --
1,052,073 949,669 --
16,216 16,216 --
671,037 671,037 --
20,626,553 11,695,614 491,209 3,025
15,061,876 1,287,681 (163,524)16,344
1,441,391 ---
9,672,250 ---
----
31,874 2,001 --
100,123 71,839 --
11,245,638 73,840 --
9,447,789 ---
726,977 ---
9,672,250 ---
----
----
44,475 33,675 --
19,891,491 33,675 --
6,416,023 1,327,846 (163,524)16,344
6,630,144 -350,277 94,805
25,171,239 7,481,965 --
31,801,383 7,481,965 350,277 94,805
City of Port Orchard
Fund Resources and Uses Arising from Cash Transactions
For the Year Ended December 31, 2019
The accompanying notes are an integral part of this statement.Page 17
Beginning Cash and Investments
30810 Reserved
30880 Unreserved
388 / 588 Net Adjustments
Revenues
310 Taxes
320 Licenses and Permits
330 Intergovernmental Revenues
340 Charges for Goods and Services
350 Fines and Penalties
360 Miscellaneous Revenues
Total Revenues:
Expenditures
510 General Government
520 Public Safety
530 Utilities
540 Transportation
550 Natural and Economic
Environment
560 Social Services
570 Culture and Recreation
Total Expenditures:
Excess (Deficiency) Revenues over Expenditures:
Other Increases in Fund Resources
391-393, 596 Debt Proceeds
397 Transfers-In
385 Special or Extraordinary Items
386 / 389 Custodial Activities
381, 382, 395,
398
Other Resources
Total Other Increases in Fund Resources:
Other Decreases in Fund Resources
594-595 Capital Expenditures
591-593, 599 Debt Service
597 Transfers-Out
585 Special or Extraordinary Items
586 / 589 Custodial Activities
581, 582 Other Uses
Total Other Decreases in Fund Resources:
Increase (Decrease) in Cash and Investments:
Ending Cash and Investments
5081000 Reserved
5088000 Unreserved
Total Ending Cash and Investments
107 Community
Events
108 Paths &
Trails
109 Real Estate
Excise Tax
111 Impact
Mitigation Fee
135,246 8,457 2,009,946 1,440,068
----
----
115,292 - 1,051,120 -
----
-1,254 - -
----
----
3,738 207 55,584 371,900
119,030 1,461 1,106,704 371,900
----
----
----
- - - 51,043
102,404 - - -
----
----
102,404 --51,043
16,626 1,461 1,106,704 320,857
----
----
----
----
----
----
----
----
- - 660,093 -
----
----
----
--660,093 -
16,626 1,461 446,611 320,857
151,872 9,918 2,456,557 1,760,925
----
151,872 9,918 2,456,557 1,760,925
City of Port Orchard
Fund Resources and Uses Arising from Cash Transactions
For the Year Ended December 31, 2019
The accompanying notes are an integral part of this statement.Page 18
Beginning Cash and Investments
30810 Reserved
30880 Unreserved
388 / 588 Net Adjustments
Revenues
310 Taxes
320 Licenses and Permits
330 Intergovernmental Revenues
340 Charges for Goods and Services
350 Fines and Penalties
360 Miscellaneous Revenues
Total Revenues:
Expenditures
510 General Government
520 Public Safety
530 Utilities
540 Transportation
550 Natural and Economic
Environment
560 Social Services
570 Culture and Recreation
Total Expenditures:
Excess (Deficiency) Revenues over Expenditures:
Other Increases in Fund Resources
391-393, 596 Debt Proceeds
397 Transfers-In
385 Special or Extraordinary Items
386 / 389 Custodial Activities
381, 382, 395,
398
Other Resources
Total Other Increases in Fund Resources:
Other Decreases in Fund Resources
594-595 Capital Expenditures
591-593, 599 Debt Service
597 Transfers-Out
585 Special or Extraordinary Items
586 / 589 Custodial Activities
581, 582 Other Uses
Total Other Decreases in Fund Resources:
Increase (Decrease) in Cash and Investments:
Ending Cash and Investments
5081000 Reserved
5088000 Unreserved
Total Ending Cash and Investments
206 Bond
Redemption
Fund
302 Capital
Construction
304 Street
Capital Projects
401 Water-
Sewer Utilities
-- 1,448,798 -
-348,715 638,302 8,965,285
----
----
----
-287,575 5,397,490 -
----
----
-3,878 56,077 46,872
-291,453 5,453,567 46,872
----
----
----
----
----
----
----
----
-291,453 5,453,567 46,872
----
462,357 197,736 - -
----
----
----
462,357 197,736 --
-536,813 5,072,721 -
462,357 ---
--- 9,012,157
----
----
----
462,357 536,813 5,072,721 9,012,157
-(47,624)380,846 (8,965,285)
-- 1,777,742 -
-301,091 690,204 -
-301,091 2,467,946 -
City of Port Orchard
Fund Resources and Uses Arising from Cash Transactions
For the Year Ended December 31, 2019
The accompanying notes are an integral part of this statement.Page 19
Beginning Cash and Investments
30810 Reserved
30880 Unreserved
388 / 588 Net Adjustments
Revenues
310 Taxes
320 Licenses and Permits
330 Intergovernmental Revenues
340 Charges for Goods and Services
350 Fines and Penalties
360 Miscellaneous Revenues
Total Revenues:
Expenditures
510 General Government
520 Public Safety
530 Utilities
540 Transportation
550 Natural and Economic
Environment
560 Social Services
570 Culture and Recreation
Total Expenditures:
Excess (Deficiency) Revenues over Expenditures:
Other Increases in Fund Resources
391-393, 596 Debt Proceeds
397 Transfers-In
385 Special or Extraordinary Items
386 / 389 Custodial Activities
381, 382, 395,
398
Other Resources
Total Other Increases in Fund Resources:
Other Decreases in Fund Resources
594-595 Capital Expenditures
591-593, 599 Debt Service
597 Transfers-Out
585 Special or Extraordinary Items
586 / 589 Custodial Activities
581, 582 Other Uses
Total Other Decreases in Fund Resources:
Increase (Decrease) in Cash and Investments:
Ending Cash and Investments
5081000 Reserved
5088000 Unreserved
Total Ending Cash and Investments
411 Water Utility
421 Storm
Drainage Utility
431 Sewer
Utility
500 Equipment
Rental and
Revolving
----
- 2,561,520 - 1,082,643
----
----
-4,950 - -
- 330,268 - -
3,113,568 1,694,091 5,091,905 3,576,342
39,067 25,935 68,377 -
523,721 57,028 398,517 43,324
3,676,356 2,112,272 5,558,799 3,619,666
----
----
2,533,833 1,532,093 3,873,141 -
- - - 344,191
----
----
----
2,533,833 1,532,093 3,873,141 344,191
1,142,523 580,179 1,685,658 3,275,475
1,441,391 ---
4,115,438 - 4,896,719 -
----
--29,873 -
8,125 1,200 -18,959
5,564,954 1,200 4,926,592 18,959
1,976,616 636,125 698,748 526,766
56,728 177,764 30,128 -
----
----
----
9,600 1,200 --
2,042,944 815,089 728,876 526,766
4,664,533 (233,710)5,883,374 2,767,668
---28,048
4,664,533 2,327,810 5,883,373 3,822,263
4,664,533 2,327,810 5,883,373 3,850,311
City of Port Orchard
Fund Resources and Uses Arising from Cash Transactions
For the Year Ended December 31, 2019
The accompanying notes are an integral part of this statement.Page 20
308 Beginning Cash and Investments
388 & 588 Net Adjustments
310-390 Additions
510-590 Deductions
Net Increase (Decrease) in Cash and
Investments:
508 Ending Cash and Investments
Total for All
Funds
(Memo Only)Custodial
2,553,945 2,553,945
--
1,392,242 1,392,242
1,322,373 1,322,373
69,869 69,869
2,623,814 2,623,814
City of Port Orchard
Fiduciary Fund Resources and Uses Arising from Cash Transactions
For the Year Ended December 31, 2019
The accompanying notes are an integral part of this statement.
Page 21
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
Note 1-Summary of Significant Accounting Policies
The City of Port Orchard was incorporated on September 1, 1890 and operates under the laws of
the state of Washington applicable to a city. The City is a general-purpose local government and
provides public safety, street improvement, park and recreation, and general administrative
services. In addition, the City owns and operates a water, sewer, and storm drainage system.
The City reports financial activity in accordance with the Cash Basis Budgeting, Accounting and
Reporting System (BARS) Manual prescribed by the State Auditor’s Office under the authority of
Washington State law, Chapter 43.09 RCW. This manual prescribes a financial reporting
framework that differs from generally accepted accounting principles (GAAP) in the following
manner:
x Financial transactions are recognized on a cash basis of accounting as described below.
x Component units are required to be disclosed, but are not included in the financial
statements.
x Government-wide statements, as defined in GAAP, are not presented.
x All funds are presented, rather than a focus on major funds.
x The Schedule of Liabilities is required to be presented with the financial statements as
supplementary information.
x Supplementary information required by GAAP is not presented.
x Ending balances are not presented using the classifications defined in GAAP.
A. Fund Accounting
Financial transactions of the government are reported in individual funds. Each fund uses a
separate set of self-balancing accounts that comprises its cash and investments, revenues and
expenditures. The government’s resources are allocated to and accounted for in individual funds
depending on their intended purpose. Each fund is reported as a separate column in the financial
statements, except for fiduciary funds, which are presented by fund types. The total column is
presented as “memo only” because any interfund activities are not eliminated. The following fund
types are used:
GOVERNMENTAL FUND TYPES:
General Fund
This fund is the primary operating fund of the government. It accounts for all financial resources
except those required or elected to be accounted for in another fund.
Page 22
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
Special Revenue Funds
These funds account for specific revenue sources that are restricted or committed to expenditures
for specified purposes of the government.
Debt Service Funds
These funds account for the financial resources that are restricted, committed, or assigned to
expenditures for principal, interest and related costs on general long-term debt.
Capital Projects Funds
These funds account for financial resources which are restricted, committed, or assigned for the
acquisition or construction of capital facilities or other capital assets.
PROPRIETARY FUND TYPES:
Enterprise Funds
These funds account for operations that provide goods or services to the general public and are
supported primarily through user charges.
Internal Service Funds
These funds account for operations that provide goods or services to other departments or funds
of the government on a cost reimbursement basis.
FIDUCIARY FUND TYPES:
Fiduciary funds account for assets held by the government in a trustee capacity or as an agent on
behalf of others.
Custodial Funds
These funds are used to account assets that the government holds on behalf of others in a custodial
capacity.
B. Basis of Accounting and Measurement Focus
Financial statements are prepared using the cash basis of accounting and measurement focus.
Revenues are recognized when cash is received and expenditures are recognized when paid.
In accordance with state law the City also recognizes expenditures paid during twenty days after
the close of the fiscal year for claims incurred during the previous period.
Page 23
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
C. Cash and Investments
See Note 3, Deposits and Investments.
D. Capital Assets
Capital assets are assets with an initial individual cost of more than $5,000 and an estimated useful
life in excess of one year. Capital assets and inventory are recorded as capital expenditures when
purchased.
E. Compensated Absences
Vacation leave may be accumulated up to 240 hours at year end and is payable upon separation or
retirement. Sick leave may be accumulated up to 960 hours at year end and for all employees
except LEOFF II employees upon separation or retirement employees do not receive payment for
unused sick leave. LEOFF II employees’ (excluding management) sick leave may be accumulated
up to 1040 hours and up to 400 hours is payable upon separation or retirement to the employee’s
respective medical health retirement/voluntary employee’s beneficiary association account
(HRA/VEBA). LEOFF II employees (excluding management) earn 120 hours holiday leave
annually and may carry over 96 hours at year end. Holiday leave is payable upon separation or
retirement up to 96 hours. Payments are recognized as expenditures when paid.
F. Long-Term Debt
See Note 5, Debt Service Requirements.
G. Reserved Portion of Ending Cash and Investments
Beginning and Ending Cash and Investments is reported as reserved when it is subject to
restrictions on use imposed by external parties or due to internal commitments established by
ordinance. When expenditures that meet restrictions are incurred, the City intends to use reserved
resources first before using unreserved amounts.
Reservations of Ending Cash and Investments consist of $6,630,144.
Note 2 – Budget Compliance
A.Budgets
The City of Port Orchard adopts biennial appropriated budgets for all funds. These budgets are
appropriated at the fund level. The budget constitutes the legal authority for expenditures at thatlevel. Biennial appropriations for these funds lapse at the end of biennial period.
Page 24
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
Biennial appropriated budgets are adopted on the same basis of accounting as used for financial
reporting.
The appropriated and actual expenditures for the legally adopted budgets were as follow:
Budgeted amounts are authorized to be transferred between departments within any fund/objectclasses within departments; however, any revisions that alter the total expenditures of a fund, orthat affect the number of authorized employee positions, salary ranges, hours, or other conditions
of employment must be approved by the City’s legislative body.
Fund
Final Appropriated
Biennial Budget
2019-2020
2019
Actual
Expenditures
Variance
Fund: 001 - Current Expense 25,486,196$ 10,663,852$ 14,822,344$
Fund: 002 - City Street Fund 4,502,462$ 1,915,436$ 2,587,026$
Fund: 003 - Stabilization Fund 2,100,000$ -$ 2,100,000$
Fund: 103 - Criminal Justice 1,003,101$ 491,209$ 511,892$
Fund: 104 - Special Investigative Unit 85,461$ 3,025$ 82,436$
Fund: 107 - Community Events 335,246$ 102,403$ 232,843$
Fund: 108 - Paths & Trails 10,457$ -$ 10,457$
Fund: 109 - Real Estate Excise Tax 3,409,946$ 660,093$ 2,749,853$
Fund: 111 - Impact Mitigation Fee 1,720,068$ 51,043$ 1,669,025$
Fund: 206 - Bond Redemption Fund 757,383$ 462,357$ 295,026$
Fund: 302 - Capital Construction 973,715$ 536,812$ 436,903$
Fund: 303 - Cumulative Reserve for Equipment Replacement -$ -$ -$
Fund: 304 - Street Capital Projects 6,603,094$ 5,072,721$ 1,530,373$
Fund: 401 - Water-Sewer Utilities 3,435,558$ 3,426,725$ 8,833$
Fund: 403 - Water-Sewer Cumulative Reserve 5,599,427$ 5,585,431$ 13,996$
Fund: 411 - Water Operating 8,145,079$ 2,773,561$ 5,371,518$
Fund: 412 - Water Stabilization 390,000$ -$ 390,000$
Fund: 413 - Water Capital 8,845,444$ 2,003,216$ 6,842,228$
Fund: 414 - Water Debt Service 130,128$ 56,728$ 73,400$
Fund: 421 - Storm Drainage Utility 5,062,657$ 1,876,056$ 3,186,601$
Fund: 422 - Storm Drainage Stabilization 175,200$ -$ 175,200$
Fund: 423 - Storm Drainage Capital Facil 969,703$ 636,125$ 333,578$
Fund: 424 - Storm Drainage Debt Service 354,754$ 177,764$ 176,990$
Fund: 431 - Sewer Operating 12,143,379$ 4,505,088$ 7,638,291$
Fund: 432 - Sewer Stabilization 606,700$ -$ 606,700$
Fund: 433 - Sewer Capital 10,670,483$ 676,498$ 9,993,985$
Fund: 434 - Sewer Debt Service 30,128$ 30,128$ -$
Fund: 500 - Equipment Rental and Revolving 5,391,677$ 870,957$ 4,520,720$
Page 25
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
Note 3–Deposits and Investments
The City is currently invested in two public funds investment pools, Washington State Local
Government Investment Pool (LGIP) and Kitsap County Investment Pool (KCIP), which are
reported at amortized cost. Investments by type at December 31, 2019 are as follows:
It is the City’s policy to invest all temporary cash surpluses. The interest on these investments is
prorated to the various funds.
Investments in the State Local Government Investment Pool (LGIP)
The city is a voluntary participant in the Local Government Investment Pool, an external
investment pool operated by the Washington State Treasurer. The pool is not rated and not
registered with the SEC. Rather, oversight is provided by the State Finance Committee in
accordance with Chapter 43.250 RCW. Investments in the LGIP are reported at amortized cost,
which is the same as the value of the pool per share. The LGIP does not impose any restrictions
on participant withdrawals.
The Office of the State Treasurer prepares a stand-alone financial report for the pool. A copy of
the report is available from the Office of the State Treasurer, PO Box 40200, Olympia,
Washington 98504-0200, online at www.tre.wa.gov.
Investments in Kitsap County Investment Pool
The city is an involuntary participant in the Kitsap County Investment Pool, an external
investment pool operated by the County Treasurer. The pool is not rated or registered with the
SEC. Rather, oversight is provided by the County Finance Committee in accordance with RCW
36.48.070. The city reports its investment in the pool at amortized cost, which is the same as the
Type of Investment
City's Own
Investments
Investment held by
city as an agency for
other local
governments Total
Cash on Deposit 2,319,774$ 73$ 2,319,848$
Washington State Local Government
Investment Pool (LGIP)19,328,761$ 1,461,401$ 20,790,163$
Kitsap County Investment Pool (KCIP)10,152,849$ 1,162,339$ 11,315,188$
Total 31,801,385$ 2,623,814$ 34,425,199$
Page 26
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
value of the pool per share. The KCIP does not impose liquidity fees or redemption gates on
participant withdrawals.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in event of a failure of a depository financial
institution, the city would not be able to recover deposits or would not be able to recover
collateral securities that are in possession of an outside party. The city’s deposits and certificates
of deposit are mostly covered by federal depository insurance (FDIC) or by collateral held in a
multiple financial institution collateral pool administered by the Washington Public Deposit
Protection Commission (PDPC).
All investments are insured, registered or held by the city or its agent in the government’s name.
Compensating Balances
The amounts reported as cash and cash equivalents also include compensating balances maintained
with certain banks in lieu of payments for services rendered. The average compensating balance
maintained during 2019 was approximately $2,115,079.
Note 4 ဩ3URSHUW\7D[
The county treasurer acts as an agent to collect property tax levied in the county for all taxing
authorities. Collections are distributed at the end of each month.
Property tax revenues are recognized when cash is received by the City. Delinquent taxes are
considered fully collectible because a lien affixes to the property after tax is levied.
The City’s regular levy for the year 2019 was $1.536781 per $1,000 on an assessed valuation of
$1,849,694,593 for a total regular levy of $2,843,025.
Note 5 – Debt Service Requirements
Debt Service
The accompanying Schedule of Liabilities (09) provides more details of the outstanding debt and
liabilities of the City and summarizes the City’s debt transactions for year ended December 31,
2019.
The debt service requirements for general obligation bonds, notes payable, and intergovernmental
loans are as follows:
Page 27
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
Note 6 – OPEB Plans
During the year ended 12/31/2019, the city adopted guidance for the presentation and disclosure
of post-employment benefits other than pensions, as required by the BARS manual. This
requirement resulted in the addition of a post-employment benefit liability reported on the
Schedule of Liabilities.
The LEOFF I Retiree Medical Plan is a closed, single-employer, defined-benefit OPEB plan
administered by the City as required by RCW 41.26. The plan pays for 100% of eligible retirees’
healthcare costs on a pay-as-you-go basis. As of December 31, 2018, the plan had four members,
all retirees. As of December 31, 2019, the city’s total OPEB liability was $2,006,700, as calculated
using the alternative measurement method. For the year ended December 31, 2019 the City paid
$35,211 in benefits.
Note 7 – Pension Plans
A. State Sponsored Pension Plans
Substantially all City’s full-time and qualifying part-time employees participate in the following
statewide retirement systems administered by the Washington State Department of Retirement
Systems (DRS), under cost-sharing, multiple-employer public employee defined benefit and
defined contribution retirement plans: Public Employees’ Retirement System (PERS) and Law
Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF).
The State Legislature establishes, and amends, laws pertaining to the creation and administration
of all public retirement systems.
The Department of Retirement Systems, a department within the primary government of the State
of Washington, issues a publicly available comprehensive annual financial report (CAFR) that
Due Date Principal
Amount
Interest Amount Total Amount
2020 517,632 187,745 705,377
2021 527,897 108,653 636,550
2022 533,168 100,858 634,026
2023 543,447 92,951 636,398
2024 548,732 84,828 633,560
2025-2029 2,821,330 296,623 3,117,954
2030-2034 2,119,566 76,253 2,195,819
2035-2037 328,527 5,784 334,311
Grand Total 7,940,299 953,695 8,893,994
Page 28
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
includes financial statements and required supplementary information for each plan. The DRS
CAFR may be obtained by writing to:
Department of Retirement Systems
Communications Unit
P.O. Box 48380
Olympia, WA 98540-8380
Also, the DRS CAFR may be downloaded from the DRS website at www.drs.wa.gov.
At June 30, 2019, the City’s proportionate share of the collective net pension liabilities, as reported
on the Schedule 09, was as follows:
LEOFF Plan 1
The City also participates in LEOFF Plan 1. The LEOFF Plan 1 is fully funded and no further
employer contributions have been required since June 2000. If the plan becomes underfunded,
funding of the remaining liability will require new legislation. Starting on July 1, 2000, employers
and employees contribute zero percent.
LEOFF Plan 2
The City also participates in the LEOFF Plan 2. The Legislature, by means of a special funding
arrangement, appropriates money from the state general fund to supplement the current service
liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the
Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation
is not mandated by the state constitution and could be changed by statute.
Note 8 – Risk Management
The City of Port Orchard is a member of the Association of Washington Cities Risk Management
Service Agency (AWC RMSA). Chapter 48.62 RCW authorizes the governing body of any one or
more governmental entities to form together into or join a pool or organization for the joint
purchasing of insurance, and/or joint self-insuring, and/or joint hiring or contracting for risk
management services to the same extent that they may individually purchase insurance, self-insure,
Employer
Contributions Allocation % Liability (Asset)
PERS 1 221,728$ 0.030923% 1,189,099$
PERS 2/3 322,804$ 0.039524% 383,912$
LEOFF 1 -$ 0.006643% (131,306)$
LEOFF 2 108,718$ 0.058967% (1,366,084)$
Page 29
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
or hire or contract for risk management services. An agreement to form a pooling arrangement was
made pursuant to the provisions of Chapter 39.34 RCW, the Interlocal Cooperation Act. The AWC
RMSA was formed on January 1, 1989, when 32 municipalities in the State of Washington joined
by signing an Interlocal Governmental Agreement to pool their self-insured losses and jointly
purchase insurance and administrative services. As of December 31, 2019, 100
municipalities/entities participate in the AWC RMSA pool.
The AWC RMSA allows members to establish a program of joint insurance and provides risk
management services to all members. All coverages, with the exception of pollution liability, are
on an occurrence basis. The AWC RMSA provides all risk property, comprehensive crime, general
liability, automobile liability, police liability, public officials’ liability, employee fidelity and
faithful performance, pollution liability, cyber liability, and equipment breakdown insurance
coverage. Equipment breakdown is included with the property insurance carrier and fidelity
(crime), pollution liability, and cyber liability coverages are stand-alone policies, which the AWC
RMSA procures for its members. The AWC RMSA also allows members with airports to group
purchase airport liability coverage.
Members pay an annual assessment to the AWC RMSA. The AWC RMSA is responsible for
payment of all covered causes of loss against the jurisdiction above the stated retention. All
members in the AWC RMSA have $15 million in both per occurrence and aggregate liability
limits. For the first $1 million in liability limits, AWC RMSA is self-insured for its Self-Insured
Retention (SIR) of $250,000, per occurrence, and is reinsured by Great American for the additional
$750,000. The $9 million in excess liability coverage limits is provided through an excess liability
policy purchased from Argonaut Insurance Company. The $5 million in excess liability coverage
limits above the first layer of excess coverage is purchased from Allied World National Assurance
Company. Since AWC RMSA is a cooperative program, there is joint liability among the
participating members. The excess property coverage is purchased through Lexington Insurance
Company and in 2019, AWC RMSA carried a retention of $200,000 and limits up to $250 million.
All commercial policies have been purchased through the Pool’s Broker of Record, Aon.
Members contract to remain in the AWC RMSA pool for a minimum of one year and must give a
one-year notice before terminating participation. Even after termination, a member is still
responsible for contributions to the Pool for any unresolved, unreported, and in-process claims for
the period they were signatory to the Interlocal Governmental Agreement.
The AWC RMSA establishes a loss fund for both reported and unreported insured events, which
includes estimates of both future payments of losses and related claim adjustment expenses.
In accordance with WAC 200.100.02023, the AWC RMSA is governed by a board of directors,
which is comprised of elected officials of participating members.
There have been no settlements in the past three years that exceeded the City’s insurance coverage.
Page 30
CITY OF PORT ORCHARDNotes to Financial Statements
December 31, 2019
Note 9. Joint Ventures
In 1983, the City of Port Orchard and West Sound Utility District (previously the Karcher Creek
Sewer District) amended an intergovernmental agreement relating to the construction and
management of the secondary wastewater treatment facility. In April of 2014 the City and District
signed an interlocal agreement for the management and operation of the joint wastewater treatment
facility for an additional term of 25 years. This joint venture establishes a Sewer Advisory
Committee (SAC) consisting of three representatives from each entity who prepare and monitor
the Facility’s budget. The District and the City share 50% ownership in the facility’s total assets.
The Utility District is responsible for the daily operation of the facility. The participants pay their
share of the expenses based on their portion of flow into the facility. The City and the District pay
the joint venture an amount determined during the budget process to cover maintenance, operation,
capital improvements and debt monthly. The current cost sharing is 49% City and 51% District.
The City was the lead agency on the wastewater treatment plant expansion project, and is the
signatory on two Public Works Trust Fund Loans for the Facility’s expansion. Revenues of the
facility are used to make debt service payments on the two loans. Annually, the facility makes a
payment to the City to cover the debt service on these loans. The SAC recommended and the City
Council and the District Commissioners approved using a portion of Wastewater Treatment
Facility Fees collected by each jurisdiction to help make the annual debt payments. This cost
sharing formula is 50% and in 2019 each entity paid $200,000.
Note 10. Other Disclosures
In February 2020, the Governor of the state of Washington declared a state of emergency in
response to the spread of a deadly new virus. In the weeks following the declaration, precautionary
measures to slow the spread of the virus have been ordered. These measures include closing
schools, colleges and universities, cancelling public events, prohibiting public and private
gatherings, and requiring people to stay home unless they are leaving for an essential function.
At the time of this annual report filing the financial impact to the city is undetermined. However,
the City anticipates an increase in unbudgeted expenditures as well as a reduction in revenue due
to the spread of the virus.
The length of time these measures will be in place, and the full extent of the financial impact on
the city is unknown at this time.
Page 31
ID. No.Description
Beginning
Balance Additions Reductions Ending BalanceDue Date
General Obligation Debt/Liabilities
251.11 G O Debt 5,750,000 - 560,000 5,190,00012/1/2032
5,750,000 -560,000 5,190,000Total General Obligation Debt/Liabilities:
Revenue and Other (non G.O.) Debt/Liabilities
259.12 Compensated Absences 718,108 -9,674 708,434
263.62 Notes Payable 88,450 - 26,600 61,85012/31/2043
264.30 Pension Liabilities 2,111,106 - 538,094 1,573,012
263.82 Drinking Water State Revolving Fund
Loan
1,012,282 1,441,391 - 2,453,67310/1/2038
263.82 Water Quality Loan 245,444 - 10,669 234,7751/2/2037
264.40 OPEB Liabilities 1,921,208 85,492 - 2,006,700
6,096,598 1,526,883 585,037 7,038,444Total Revenue and Other (non G.O.)
Debt/Liabilities:
12,228,4441,145,0371,526,88311,846,598Total Liabilities:
City of Port Orchard
Schedule of Liabilities
For the Year Ended December 31, 2019
Page 32
Federal Agency (Pass-Through Agency)Federal ProgramCFDA NumberOther Award NumberExpendituresPassed through to SubrecipientsNoteFrom Pass-Through AwardsFrom Direct AwardsTotalHighway Planning and Construction ClusterFEDERAL HIGHWAY ADMINISTRATION, TRANSPORTATION, DEPARTMENT OF (via WA State Dept of Transportation)Highway Planning and Construction20.205 STPH-6610(004) / LA-58551,422,954 - 1,422,954 -FEDERAL HIGHWAY ADMINISTRATION, TRANSPORTATION, DEPARTMENT OF (via WA State Dept of Transportation)Highway Planning and Construction20.205 STPE-0166 (008) / LA-616561,895 - 61,895 -Total Highway Planning and Construction Cluster: 1,484,849-1,484,849-Highway Safety ClusterNATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, TRANSPORTATION, DEPARTMENT OF (via WA Traffic Safety Commission)State and Community Highway Safety20.600 n/a 3,534 - 3,534 -Total Highway Safety Cluster: 3,534-3,534-U.S. COAST GUARD, HOMELAND SECURITY, DEPARTMENT OF (via WA State Parks & Recreation Commission)Boating Safety Financial Assistance97.012 n/a 11,616 - 11,616 -Total Federal Awards Expended:1,499,999-1,499,999-City of Port OrchardSchedule of Expenditures of Federal AwardsFor the Year Ended December 31, 2019The accompanying notes are an integral part of this schedule.Page 33
CITY OF PORT ORCHARDNotes to Schedule of Expenditures of Federal Awards
January 1, 2019 through December 31, 2019
NOTE 1. BASIS OF ACCOUNTINGThis Schedule is prepared on the same basis of accounting as the City’s financial statements.
The City uses the cash basis of accounting, in accordance with the Cash Basis Budgeting,
Accounting and Reporting System (BARS) Manual prescribed by the State Auditor’s Office under the authority of Washington State law, Chapter 43.09 RCW.The City converted from GAAP to Cash basis beginning with the year 2018.
NOTE 2. PROGRAM COSTSThe amounts shown as current year expenditures represent only thefederal grant portion of the program costs. Entire program costs including the City’s portion are more than shown. Such expenditures are
recognized following, as applicable, either the cost principles in the OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulation Part 200, Uniform Administration Requirements, Costs Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
NOTE 3. – INDIRECT COST RATEThe City has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
GRANT DESCRIPTION:
US Department of Transportation / WSDOT - Tremont Street Widening Project
This WSDOT grant will widen Tremont Street to provide four continuous lanes between Port Orchard Blvd and SR 16. Including curb, gutter, and sidewalks; intersection modifications; improvements to storm drainage facilities; roundabouts and illumination upgrades; retaining walls and bike paths.
US Department of Transportation / WSDOT - Bay Street Pedestrian PathwayThis WSDOT project constructs a 1-mile long multi-use (bike/pedestrian) pathway between Kitsap
Transits’ Downtown Foot Ferry and the Annapolis Dock Foot Ferry facilities.
US Dept of Homeland Security / Washington State Parks Boating Safety This grant allows funding for additional Police overtime, fuel and maintenance while utilizing our marine vessel to protect the waterfront areas that border the City.
National Highway Traffic Safety Admin / WA Traffic Safety CommissionThese grants were awarded to the City to offset costs of extra DUI, Speeding, and Seatbelt Emphasis
patrols.
Page 34
Office of the Washington State Auditor
ABOUT THE STATE AUDITOR’S OFFICE
The State Auditor’s Office is established in the state’s Constitution and is part of the executive
branch of state government. The State Auditor is elected by the citizens of Washington and serves
four-year terms.
We work with our audit clients and citizens to achieve our vision of government that works for
citizens, by helping governments work better, cost less, deliver higher value, and earn greater
public trust.
In fulfilling our mission to hold state and local governments accountable for the use of public
resources, we also hold ourselves accountable by continually improving our audit quality and
operational efficiency and developing highly engaged and committed employees.
As an elected agency, the State Auditor’s Office has the independence necessary to objectively
perform audits and investigations. Our audits are designed to comply with professional standards
as well as to satisfy the requirements of federal, state, and local laws.
Our audits look at financial information and compliance with state, federal and local laws on the
part of all local governments, including schools, and all state agencies, including institutions of
higher education. In addition, we conduct performance audits of state agencies and local
governments as well as fraud, state whistleblower and citizen hotline investigations.
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, and provide training and technical
assistance to governments, and have an extensive quality assurance program.
Contact information for the State Auditor’s Office
Public Records requests PublicRecords@sao.wa.gov
Main telephone (564) 999-0950
Toll-free Citizen Hotline (866) 902-3900
Website www.sao.wa.gov
Page 35