Comptroller: $1.8 billion tied to conversion entries; office will reverse entries, move $245 million to general fund

Comptroller General Brian Gaines told the state Senate constitutional subcommittee on finance that the state's accounting conversion process mistakenly included "act for" business areas in the cash conversion, creating about $1.8 billion in unreconciled balances in Treasury fund 30350993 and related act-for business areas.

Gaines said Alex Partners validated the CGO's finding that the conversion team treated top-level act-for business-area adjustments as bank transactions, which "was the primary reason the conversion account did not net to 0" and produced the large unreconciled balance. "As it stands right now, within the state treasury, there still exist $1,800,000,000 in unreconciled differences," Gaines told the subcommittee.

Why it matters: the conversion error helped mask a larger set of accounting adjustments that led the state to restate its annual comprehensive financial report (ACFR). Gaines told senators the total 2022 restatement netted $3.5 billion after three components were combined, and that correcting the conversion entries is a prerequisite to reconciling cash positions and finalizing the financial statements.

Key findings and plan outlined to the panel

- Cause: Gaines described the error as the conversion team's inclusion of act-for business areas (top-level compilation accounts the Comptroller General uses to make statewide accrual adjustments) in the SCISS banking and investment conversion. Treating those…