State audit review finds repeated control failures, deteriorating finances at some Florida local governments

The Auditor General’s office reported to the Joint Legislative Auditing Committee on a review of local government audit reports for fiscal year 2022–23, saying the office found recurring control weaknesses, budget noncompliance and a group of entities meeting statutory financial‑emergency indicators.

The presentation detailed why the report matters: repeated and material problems in some municipalities, county agencies and special districts can signal risks to creditors, employees and residents and can trigger statutory notification to the Governor’s Office for potential technical assistance or declaration of a financial emergency.

Derek Noonan, an audit manager with the Auditor General’s office, told the committee staff reviewed 1,603 audit reports filed with the office as of July 31, 2024, covering 1,874 entities. Of the reports reviewed, 17 contained modified audit opinions; 1,575 reports contained no findings and 298 reports reported a total of 585 findings. Noonan said 164 of those findings were material weaknesses in internal control, 46 were reportable instances of noncompliance under Government Auditing Standards and 117 were financial‑statement significant deficiencies.

Noonan said the most common categories of findings were separation of duties (noted in county agencies, municipalities and special districts, frequently in payroll and vendor payment functions), inadequate budgetary controls (including unbudgeted funds and overexpenditures), inadequate accounting records (missing subsidiary ledgers, unreconciled general‑ledger control accounts), debt administration problems (missed debt‑service payments or reserve noncompliance), and deficiencies in revenue, cash and capital‑asset controls. He described 126 “other” findings that included deteriorating financial condition, deficit fund balances, failure to follow policies and information‑technology weaknesses.

On financial‑trend measures, Noonan said auditors reported going‑concern uncertainty for two entities named in the report and identified 20 special districts meeting one or more financial‑emergency indicator conditions found in state law. He told the committee the five‑year trend of entities meeting financial‑emergency indicators has generally decreased since the Great Recession, though the office continues to see a group of recurring problem entities.

Committee members asked about the notification and follow‑up process. Noonan said the Auditor General’s office notifies the committee and the Executive Office of the Governor of entities that meet statutory indicators (statutory references provided by the Auditor General included Section 11.45 and Section 218.503 of the Florida Statutes). He said the Governor’s office typically contacts the entity and the entity generally has a statutory period to respond; if the entity requests help the Governor’s office can declare a financial emergency and offer technical assistance. Noonan also told the committee that many repeat findings persist because of resource constraints at small entities and a nationwide shortage of qualified auditors and accountants that delays audit preparation and performance.

Noonan summarized additional trend data: 82 audited special districts reported cash and investments insufficient to cover current liabilities for 2022–23; 161 entities reported net deficits in combined fund equities; and the state’s reported long‑term governmental activities debt rose to about $29.3 billion for 2022–23, an increase of about $1.9 billion compared with the 2017–18 baseline — changes that may partially reflect accounting standard changes.

The committee discussed possible legislative or administrative remedies, including faster enforcement or statutory changes to compel more timely responses. Noonan and committee members noted limits on the Auditor General’s authority and flagged shared revenues withholding and Department of Commerce court actions as existing enforcement tools for persistent noncompliance.

Less urgent details include the office’s finding‑reporting quality issue — about 30% of findings did not include one or more required elements (criteria, condition, cause, effect and recommendation) — and a summary of pension‑plan funding levels across local plans.

The Auditor General’s staff said the full summary report is published and available, and committee members asked staff to compile recommendations on tools or statutory changes to accelerate compliance and address repeat offenders.