Washington State Auditor’s Office
Accountability Audit Report

Department of Corrections
Audit Period
July 1, 2004 through June 30, 2005
Report No. 6529

Issue Date
March 31, 2006

Washington State Auditor
Brian Sonntag
March 31, 2006

Harold W. Clarke, Secretary
Department of Corrections
Olympia, Washington

Report on Accountability for Public Resources
Please find attached our report on the Department of Corrections’ accountability for public resources and
compliance with state laws and regulations and its own policies and procedures.
In addition to this work, we perform an annual audit of the statewide basic financial statements as
required by state law (RCW 43.09.310). We also annually audit federal programs administered by the
state of Washington for compliance with federal laws and regulations. The results of these audits are
published in reports issued by the Office of Financial Management.
Sincerely,

BRIAN SONNTAG,CGFM
STATE AUDITOR

Insurance Building, P.O. Box 40021 y Olympia, Washington 98504-0021 y (360) 902-0370 y (866) 902-3900 y TDD Relay (800) 833-6388
FAX (360) 753-0646 y http://www.sao.wa.gov

Table of Contents
State of Washington
Department of Corrections
Audit Summary.............................................................................................................................................. 1
Description of the Agency ............................................................................................................................. 2
Audit Areas Examined................................................................................................................................... 3
Status of Prior Audit Findings........................................................................................................................ 4

Audit Summary
State of Washington
Department of Corrections
ABOUT THE AUDIT
This report contains the results of our independent accountability audit of the Department of
Corrections for the period from July 1, 2004 through June 30, 2005.
We evaluated internal controls and performed audit procedures on the financial activities of the
Agency. We also determined whether the Agency complied with state laws and regulations and
its own policies and procedures. Our work focused on specific areas that have potential for
noncompliance, misappropriation or misuse of public resources.

RESULTS
In most areas, the Agency complied with state laws and regulations and its own policies and
procedures.
However, we noted certain matters that we communicated to Agency management.
appreciate the Agency’s commitment to resolving those matters.

We

RELATED REPORTS
Our opinion on the state of Washington’s basic financial statements is included in the state’s
Comprehensive Annual Financial Report. That report is issued by the Office of Financial
Management in December of each year.
In accordance with the Single Audit Act, we annually audit major federal programs administered
by the state of Washington. Rather than perform a single audit of each agency, we audit the
state as a whole. The results of that audit are published in a report issued by the Office of
Financial Management.
In addition to these reports, we issued four reports pursuant to the State Employee Whistleblower
Act (RCW 42.40), which are available on our Web site.

CLOSING REMARKS
We appreciate the Agency’s prompt attention to resolving prior audit issues. We also thank
Agency management and personnel for their assistance and cooperation.

Washington State Auditor’s Office
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Description of the Agency
State of Washington
Department of Corrections
ABOUT THE AGENCY
The Department of Corrections was created in 1981 by the Washington State Legislature. Prior
to 1981, the Agency was a division of the Department of Social and Health Services. The Agency
consists of the Office of the Secretary, the Office of Correctional Operations and the Office of
Administrative Services. The Agency has 8,000 employees who administer and supervise more
than 17,000 offenders housed in 15 institutions and 15 work release facilities. In addition, the
Agency supervises over 29,000 offenders in the community through 92 field offices. In 2003, the
Agency began renting beds in local jails and other jurisdictions to house overflow from the
prisions. The Agency rents nearly 1,000 beds from other jurisdictions. The Agency’s operating
budget for fiscal year 2005 was $642 million and its capital programs expenditures for the period
was $66 million.
The Agency also operates Correctional Industries, a business enterprise, at several of its
institutions. Correctional Industries is committed to maintaining and expanding offender
work/training programs which develop marketable job skills, instill and promote a positive work
ethic among offender workers and reduce the tax burden of corrections.
The Secretary of the Agency is appointed by the Governor.

AUDIT HISTORY
We audit the Agency annually. The past five audits of the Agency have reported six findings.
During that period, the number of findings has ranged from three in 2000 to one each in 2002,
2003 and 2004. These findings have since been resolved.

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Audit Areas Examined
State of Washington
Department of Corrections
In keeping with general auditing practices, we do not examine every portion of the Department of
Corrections' financial activities during each audit. The areas examined were those representing the
highest risk of noncompliance, misappropriation or misuse. Other areas are audited on a rotating basis
over the course of several years. The following areas were examined during this audit period:

ACCOUNTABILITY FOR PUBLIC RESOURCES
We evaluated the Agency’s accountability and compliance with certain state laws and regulations
and its own policies in the following areas:
•
•

Purchase of goods and services
Inmate trust accounting

•
•

Pharmacies
Client service contracting

FINANCIAL
We perform an annual audit of the statewide basic financial statements as required by state law
(RCW 43.09.310). These financial statements are included in the Comprehensive Annual
Financial Report (CAFR) prepared by and available from the Office of Financial Management.
The CAFR reflects the financial activities of all funds, organizations, institutions, agencies,
departments and offices that are part of the state's reporting entity.
We tested the Agency’s account balances and financial activity related to:
•

Depreciable assets

FEDERAL PROGRAMS
Federal grant audit work is performed on a statewide basis, in accordance with the revised Single
Audit Act. We select federal programs for audit using risk-based criteria set forth in the U.S.
Office of Management and Budget Circular A-133.
There were no major federal programs at the Agency.

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Status of Prior Audit Findings
State of Washington
Department of Corrections
The status of findings contained in the prior year’s audit report of the Department of Corrections is
provided below:
1.

The Department of Corrections does not have sufficient internal controls over its
pharmacy inventory to prevent or detect misappropriation or loss.
Statewide Accountability Report, dated March 7, 2005
Background
The Agency operates pharmacies at its eight largest institutions. These pharmacies also serve
the needs of inmates in the other correctional and pre-release facilities. We reviewed the
Agency’s internal controls over pharmaceutical inventory including purchasing, receiving, storage
and distribution at five correction centers. We found weaknesses in controls over non-scheduled
drug inventories, non-scheduled drugs held for destruction, scheduled drugs returned to the
pharmacies and access to scheduled drugs. We also noted a lack of current policies and
procedures, inadequate separation of duties in the ordering and receiving of drugs, and
inadequate control over required federal reporting forms.
Status
The Agency took corrective action on all of the issues except for controls over non-controlled
substances. The Agency has developed a corrective action plan for this area and is in the
process of putting it in place. We are not repeating the finding.

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