Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the State Accounting Discrepancy topic
No spam. Unsubscribe anytime.
Alex Partners tells Senate panel $1.8 billion imbalance stemmed from conversion entries and shared responsibilities, not a single office
Summary
Consultants from Alex Partners told the Senate Finance constitutional subcommittee that the $1.8 billion balance in fund 30350993 grew out of conversion transfers and entries involving State Treasurer's Office staff, SKIS personnel and consultation with the Comptroller General's Office, rather than solely one office's error.
Consultants from Alex Partners told the Senate Finance constitutional subcommittee that the $1.8 billion balance found in fund 30350993 during accounting conversions was not the result of a single office's action but rather arose from a series of transfers and entries made in the conversion process that involved staff in the State Treasurer's Office, SKIS team members assigned to the treasurer, and consultation with the Comptroller General's Office.
"We believe that it was joint responsibility," said Susan Merkel of Alex Partners, describing the firm's findings. David Bly, also of Alex Partners, told senators that the initial entries were recorded by the Comptroller General's Office business areas but that the problem emerged when those balances were transferred into fund 30350993. "Those transfers... were not recorded or not directly attributable to any CGO employee," Bly said, identifying four usernames associated with the transfers: Catherine Kipp, Martin Taylor, Doug Cooper and a system 'BATCH' entry.
Alex Partners emphasized that their scope included reconciling cash and bank account balances at the account level but that the discrepancy appears at the fund level. "If you only reconcile at an account level... you would not see the components by fund," Bly said, recommending the treasurer report at both account and fund granularity.
Senators pressed consultants on timing and disclosure. Committee members said auditors first raised reconciliation problems in November 2017. Consultants said entries in the conversion process occurred on Nov. 2 and Nov. 7 (in different years) and that the conversion account should have netted to zero but did not; subsequent actions in 2018 classified balances as a liability rather than a prior‑period adjustment after advice from the Comptroller General's Office and external auditors.
Alex Partners said the treasurer's office had participated in interviews and meetings during the engagement — "he attended three of those meetings," Merkel said — but the consultants reported limited direct commentary from the treasurer in those sessions. The consultants also disputed public characterizations that blamed only the Comptroller General's Office. "That is not reflected in our report nor is our opinion that it was solely the responsibility... of the Comptroller General's Office," Bly said.
The consultants told the committee they found that the account‑level bank reconciliations the treasurer's office performed were "agnostic to fund" and therefore could obscure fund‑level misallocations. Alex Partners recommended changes to reconcile at the fund level and to strengthen coordination between offices to prevent recurrence.
Committee members repeatedly asked whether the general assembly should have been notified earlier. Senators described the omission of a timely disclosure about a multi‑billion dollar unexplained balance as a central concern; Alex Partners said their report documented accounting weaknesses but did not opine on political responsibility.
The subcommittee did not make a formal finding at this hearing but received the consultants' report and extensive questioning from senators on who knew what and when; senators asked staff for follow‑up documentation and clarified that further oversight and statutory fixes were under consideration.
