For the third time in a row, the state Auditor’s Office issued findings against the Whidbey Island Public Hospital District.

This most recent audit report, however, covers the year 2021, and hospital leaders said they have made necessary structural changes in the administration and policies since then. Earlier this year, Moody’s Investors Service improved the ratings outlook for the hospital.

Yet the audit report offers insight into what went wrong in the past. Last year, the hospital district’s elected board fired the CEO after a new chief financial officer and an accounting firm notified the board that financial problems were much worse than they realized. Since then, the board contracted with a management firm, HealthTech, and hired a new CEO.

One of the findings, that the hospital district lacks internal controls to ensure timely annual financial reports, appeared in three audit reports that cover the fiscal years 2018 to 2021.

Auditors assert that the hospital’s financial decline in recent years was in part due to the lack of accurate, up-to-date financial information required by state law. The newest accountability audit states that the district hired a CPA firm to perform its annual financial statement audit, but the hospital provided incomplete data and it was 190 days late.

“The lack of financial reports deprives citizens, the Legislature and state and federal agencies of a transparent overview of the district’s financial operations,” the audit states. “Having accurate, timely financial reports continues to be essential for the district’s ability to monitor its financial health.”

The audit’s second finding is that the hospital lacked internal controls over the monitoring of theft-sensitive assets, such as computers, televisions, medical devices and other property costing between $1,000 and $4,999. The lack of monitoring means there is a risk of assets being lost or misappropriated without being detected in a timely manner.

Auditors noted that the same finding was found in the last audit report. It explains that the hospital revised its assets policy after the first finding, but officials failed to make all the departments aware of the new procedures.

According to the audit report, hospital officials identified staff turnover as the underlying cause of the findings.