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Senate approves compliance monitor after forensic audit finds $1.8 billion accounting discrepancy
Summary
The Senate adopted a joint resolution to require a third‑party compliance monitor and implementation reporting after a forensic audit found that a $1.8 billion balance in treasury records did not represent available cash. The committee amendment was agreed and the measure passed second reading 43‑0.
The South Carolina Senate agreed to a joint resolution directing state agencies to implement recommendations from a forensic audit that examined an unresolved $1.8 billion ledger balance in state treasury records. The chamber adopted the finance committee’s amendment and gave the resolution a second reading by a 43‑0 roll call.
Why it matters: The forensic firm Alex Partners concluded in its review that most of the $1.8 billion did not exist as cash on hand; that finding contributed to a Securities and Exchange Commission inquiry and prompted state leaders to seek corrective measures. The joint resolution tasks the Comptroller General, State Treasurer and State Auditor to implement non‑statutory recommendations, requires monthly reporting to a third‑party compliance monitor and directs the monitor to produce a comprehensive status report for the Joint Bond Review Committee within one year.
Committee findings and remedy: The forensic audit — contracted after the comptroller general raised concerns about a fund balance — reported that roughly $1.56 billion of the ledger balance never existed as cash and the remainder had been appropriated and spent. The audit produced 25 recommendations; the resolution implements the non‑statutory ones immediately and funds a compliance monitor using previously appropriated monies. Senator Grooms (Berkeley), sponsor of the resolution, summarized the audit on the floor: “Their conclusion was the $1,800,000,000 does not exist,” he said.
Money and next steps: The budget had set aside $1.2 million (Proviso 117.186) for compliance assistance; the committee amendment authorizes the Department of Administration to use that appropriation to contract for a compliance monitor. The resolution also directs monthly progress reports from the three agencies to the monitor and, no later than one year after enactment, a comprehensive status report to the Joint Bond Review Committee; JBRC may extend the reporting schedule if needed. On the floor Senator McCollum and others questioned likely costs: the audit contract to Alex Partners exceeded $3 million, and the attorney general’s office has spent more than $3 million defending related investigations and projected another $5.5 million in potential legal costs.
Formal actions: - Committee amendment adopting monitor/reporting structure: agreed to on the floor. - Second reading of the joint resolution (S.253): passed 43‑0 by roll call; the measure proceeds to third reading for final action.
Why lawmakers moved quickly: Audit authors and contract counsel advised that a visible, independent compliance monitor and clear, rapid policy changes by the Treasurer, Comptroller and Auditor would reduce legal risk and establish a documented remediation path. Sponsors said the move is intended to restore public confidence and produce an auditable record for the SEC and other oversight entities.
What happens next: The Department of Administration will solicit a compliance monitor under the limit set by the appropriation; the monitor will evaluate agency progress and report to JBRC. The Senate subcommittee that reviewed the audit will continue oversight and expects to issue a consolidated final report with statutory recommendations later in the session.
