State auditors point to problems with town’s reporting

Published 1:30 am Friday, September 26, 2025

State auditors identified two significant deficiencies while examining the town of Coupeville’s books.

At a special meeting at the Coupeville Library last week, officials from the Office of the Washington State Auditor met with Coupeville Town Council — sans an excused Pat Powell — to review an inaccuracy in reporting of the town’s financial statements and an oversight regarding proper verification of a contractor.

A financial statement audit for fiscal years 2022 and 2023, as well as a “single audit” for fiscal year 2023, were conducted. A single audit is an organization-wide audit for non-federal entities.

Upon review of financial statements, auditors said they noticed a grant missing which, when included, put spending of federal money over a $750,000 threshold necessitating a single audit. Further, the town did not verify whether all companies involved in three contracts it paid with federal money had been suspended or debarred.

Mayor Molly Hughes explained what happened regarding the financial statement inaccuracy during the meeting and elaborated on the matter afterwards for the News-Times.

Coupeville received federal funds for the operation of a water plant constructed in town by the Navy. Hughes said the town had been “instructed” that such funding was not considered grant money, guidance later questioned by auditors leading to “back and forth” with the Navy to untangle the money’s categorization. Ultimately, it should have been reported as grant money.

Clerk Treasurer Corine Jackson noted 2023 was the first full year Coupeville received the money.

Regarding contractor verification, the auditors reported that the town is required to assure contractors paid with at least $25,000 in federal funds that have not been suspended or debarred. Verification can be done through the addition of certain language to contracts, by securing a certificate directly from the contractor or by checking online, auditors clarified.

“It’s federal money,” Hughes said. “They want to make sure that the company you’re doing business with has the right to do business. They’re very careful.”

Auditors reported two of three contractors the town paid with federal funds had sufficient language in their contracts while one did not, and there was no other evidence the town verified the other contractor online or with a certificate. Luckily for Coupeville, the auditors confirmed the contractor had not been debarred.

As part of this finding, the auditors recommended Coupeville update the procurement policies and procedures to conform with uniform guidance; Hughes said the town is in the process of incorporating these suggestions.

“We’re just putting it on all of our public works contracts so we won’t forget it,” she said.