Legislative auditors report fewer long‑outstanding findings, warn of audit delays after late financials

April Renfro, director of Legislative Audits at the Legislative Services Office, told the Joint Finance and Appropriations Committee on Jan. 7 that the office’s uncorrected findings report now spans four years rather than five and that 70% of open findings stem from reports in the current reporting period.

The information matters, Renfro said, because audit findings inform budget oversight and agency accountability and can affect how the Legislature allocates future funding. “We are required to present a report annually to the legislature of uncorrected findings,” Renfro said, describing the report the committee will receive that day.

Renfro summarized the audit office’s scope and processes: the office performs the annual audit of the State’s Annual Comprehensive Financial Report (ACFR), issues an internal‑control report tied to that opinion, prepares the statewide single audit (the Schedule of Expenditures of Federal Awards, SEFA), and conducts accountability reviews of state agencies at least once every three years. She described two standard follow‑up paths: for opinion audits (ACFR and single audit) the audited entity must provide a prior‑audit summary and supporting documentation; for accountability reports the office performs follow‑up visits at about 90 days, 1 year and 2 years to test corrective action.

Renfro said the office classifies follow‑up outcomes as corrected, partially corrected or uncorrected and explained common causes for delayed correction: annual reporting cycles, complex matters requiring legislation or reprogramming, training and policy development, or technical issues that require system changes. She noted that findings persist for a mix of reasons, not only agency inaction: “For most findings, I would say…that is why we set the 90 day period as we feel like that is enough time to put those procedures in place and to train your employees,” she said.

She highlighted examples from recent reports to show the range of audit concerns. An older accountability finding at the Department of Fish and Game involved noncompliance with state travel policy and incomplete documentation; initial corrective steps were implemented but later work tied to a transition to a new system (LUMA) left the finding unresolved as of the office’s most recent follow‑up.

Renfro described a more sensitive, qualitatively significant finding in the Department of Health and Welfare’s FY2023 accountability review concerning qualified residential treatment program (QRTP) placements for youth. In testing 19 QRTP placements, auditors found documentation problems across several measures: in the sample 10% lacked a completed assessment required for placement, 5% did not include all required details, 21% lacked a located court order, 5% of placements were not made within 60 days of the placement start date, 84% lacked a retained notice of placement with the court that identifies placement date and level of care, and 42% of cases did not show required case consultations every 30 days. Renfro said the shortfall stemmed primarily from inconsistent internal controls, record retention and documentation processes; she framed the issue as significant because it affects children placed in higher levels of care.

She also described common systemic control weaknesses in larger IT‑driven programs, such as lack of segregation of duties, undocumented approval of annual benefit‑matrix updates and insufficient review of system changes. For example, the auditors identified an absence of documented review and approval for annual updates to the Low Income Home Energy Assistance Program benefits matrix, which increases the risk of undetected errors even when no current monetary errors were found.

Renfro alerted the committee that audit issuance timelines for FY2023 are delayed because the State Controller’s Office did not provide the draft financial statements until Dec. 30, 2024—well after the expected November delivery. Because the audit office must reconcile agency schedules, test populations and IT controls, Renfro said the audit team now estimates completing the ACFR audit around March 13–14 and that the single audit is unlikely to meet the March 31 deadline. She said the office will proactively contact the federal cognizant agency (HHS) about the delayed single audit because federal grantors are vigilant about timely single audits.

Committee members pressed Renfro on causes and consequences. Members were told that consequences range from requiring additional internal controls (for example, dual sign‑offs) to, in rare cases, criminal investigation. One committee co‑chair said withholding funding until corrective action is taken has been used in the past as a tool to secure compliance. Renfro reiterated that disagreements with findings are uncommon but occasionally occur—most often in complex federal programs where agencies may negotiate a differing interpretation with the federal grantor.

Renfro said the office would send the uncorrected‑findings report to the co‑chairs in advance and then to all committee members that day. She urged JFAC members to use the report and the audit links on the legislative budget website when considering agency budgets in work groups, so members can track unresolved findings tied to the agencies they oversee.

The auditors’ next steps are to continue work on the FY2023 ACFR and single audit, complete remaining accountability reports and issue the uncorrected findings report to the committee. Renfro said staffing levels—30 financial and IT auditor positions plus support—remain a constraint and the office is actively filling vacancies.

Ending: The committee took no formal action during the hearing but members said they will use the audits and the open‑findings list in work groups as they consider agency budgets this session. The audit office and JFAC co‑chairs will continue communications with federal grantors about the delayed single audit and will monitor agency corrective actions.