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Audit finds Office of the State Controller failed to ensure timely financial reporting; material weakness cited
Summary
Auditors told the Legislative Audit Committee the Office of the State Controller did not ensure timely recording of transactions, failed to enforce statutory deadlines, and lacked some IT controls, resulting in a material weakness in internal controls over financial reporting.
Auditors told the Legislative Audit Committee that the Office of the State Controller (OSC) did not ensure timely financial reporting or comply with statutory timeframes, and they classified the finding as a material weakness.
Crystal Dorsey, a financial audit manager with the Office of the State Auditor, presented the OSC finding and described four core problems: late transaction entries, entities failing to correct accounting discrepancies on time, incomplete IT controls for the state's Gravity system, and insufficient monitoring of entity compliance with statutory deadlines.
"Transactions were entered in core after the required deadlines," Dorsey said, pointing to a table in the report that showed 98 transactions totaling $1,100,000,000 were recorded in period 16 — after the September deadline for submitting financial statements to the governor and the general assembly. Auditors also reported over $34,800,000 in fund transfers that statute required be entered in the state's accounting system before June 30 were recorded late.
The auditors said the OSC had not developed an effective process to ensure state entities corrected accounting deficiencies in a timely manner and that the Gravity system's IT policy did not fully meet Office of Information Technology security requirements. Auditors reported training and open-house sessions intended to help newer controllers were poorly attended and had not reduced late or incorrect accounting entries.
"Strong, effective internal controls are critical in order to ensure timely and accurate financial reporting," Dorsey told the committee. The report recommends the OSC establish a corrective-action process to communicate accounting deficiencies to entity controllers and senior management, strengthen training, implement tracking for statutorily required transfers, improve quarterly reporting processes, and enhance Gravity's IT policies and procedures.
State Controller Bob Jaros told the committee the OSC agrees with the auditors' recommendations and described steps the agency will take. "We will start doing that, in terms of the timeliness," Jaros said, adding the OSC will work with Treasury on transfers and improve quarterly reporting and Gravity policies.
Auditors said the late and incorrect accounting entries led to accounting adjustments after the September 20 deadline and delayed parts of the statewide audit, and they advised the OSC to track and monitor corrections to ensure timely financial reporting going forward.
