State audit finds control failures at Island Transit, prompts reforms

The State Auditor’s Office released an accountability audit on November 28, 2025, identifying two significant findings at Island Transit for the audit period January 1 through December 31, 2024. Auditors reported that the agency "lacked the proper oversight and internal controls to ensure inventory assets were properly safeguarded." The review found that a parts coordinator had been tracking purchases and inventory on a computer outside the formal inventory system, producing discrepancies between actual stock and official records.

Auditors selected items for testing and found five that did not match inventory records, "including items that could easily be recycled for cash." The audit also cited inadequate controls to avoid conflicts of interest, noting that an employee in the parts department was immediately related to a staff member who processed accounts payable without independent oversight. In a separate federal awards review, auditors concluded Island Transit did not have adequate internal controls and did not comply with federal procurement, suspension and debarment requirements.

The issues were brought to the Auditor’s Office after Island Transit’s executive director Melinda Adams, who joined the agency in October 2024, requested an internal review on joining the agency. Adams and the transit board proactively shared the internal findings and planned corrective actions with the Auditor’s Office. Island Transit has engaged consulting firm Clark Nuber to assess the finance and parts departments, initiated restructuring, and is implementing parts management procedures intended to strengthen controls. The agency described the audit as an opportunity to improve operations and financial integrity.

For Island County residents the findings carry practical implications. Weak inventory controls and conflicts of interest increase the risk of loss of parts and of financial exposure, which in turn can drive up costs or disrupt maintenance and service reliability. Noncompliance with federal procurement rules raises the possibility of jeopardized grant funding that supports operations and capital projects. The situation spotlights governance and oversight practices at a publicly funded agency and underscores the role of board supervision and transparent reporting.

Going forward, the effectiveness of the reforms and the Auditor’s Office follow up will determine whether Island Transit can restore internal control confidence and protect federal funds. Community members and elected officials will need to weigh audit outcomes when considering future budgets and oversight measures.