Legislative auditors report audit delays and uncorrected findings, flag gaps in foster-care and travel controls

April Renfro, director of legislative audits at the Legislative Services Office, told the Joint Finance and Appropriation Committee on Jan. 7 that the office is seeing both timing delays in statewide financial reporting and a set of uncorrected audit findings that warrant legislative attention.

Renfro said the office is required to audit the State’s Annual Comprehensive Financial Report (ACFR) and single‑audit filings and to publish an annual report of uncorrected findings. She told the committee the audit shop currently staffs about 30 financial and IT auditors and that it plans roughly 28 reports per year, including about 21 accountability reports that examine agency internal controls.

The auditors are behind this year after late receipt of agency financial statements tied to the state’s new accounting system (referred to in the hearing as LUMA). “We didn't receive them until December 30,” Renfro said, and the office now estimates completion of the ACFR audit around March. She warned the delay will likely push the single audit past the March 31 deadline and said her office plans to contact federal grantors, including the federal agency that serves as the state’s cognizant reviewer, to explain the schedule.

Why it matters: timely financial statements and single audits are used by credit raters, federal grantors and legislators to assess fiscal condition and compliance. Renfro said her review of other states that delayed ACFRs did not show immediate credit‑rating impacts, but she identified federal grantor communications as the main risk from late single audits.

Renfro also summarized the office’s uncorrected findings work. She said the number of open findings has narrowed to items spanning the last four reporting years, and that “70% of our uncorrected findings are from the current reporting period” (meaning many are too new to have received follow‑up testing). Still, about 30% represent older items that remain uncorrected after follow‑up visits.

She gave three concrete examples to illustrate the types of findings the office flags:

- Department of Fish and Game (travel). An accountability review (issued for fiscal year 2020) found travel expenditures “not properly documented in accordance with state travel policy.” Renfro said the audit team found missing or incomplete travel vouchers and supporting receipts. The agency’s 90‑day corrective actions were incomplete and later follow‑up showed the finding reverted to “uncorrected” because the auditor could not obtain the documentation from the agency’s new financial system.

- Department of Health and Welfare (foster‑care placements). In the agency’s FY2023 accountability report auditors reviewed 19 qualified residential treatment program (QRTP) placements and found that 10 lacked required placement assessments, 21% of sampled cases lacked a located court order, and 84% did not retain a notice of placement that included placement dates and recommended level of care. Auditors also found case consultations required every 30 days were missing in 42% of sampled cases. Renfro described these as qualitatively significant because they concern children placed at high levels of care.

- Low‑Income Home Energy Assistance Program (LIHEAP) controls. The 2023 single‑audit work identified an internal‑control weakness: the review and approval of annual updates to the LIHEAP benefits matrix were not documented. Renfro said auditors found no direct payment errors in that sample, but the missing documentation raises the risk that future errors could go undetected.

Renfro described the office’s follow‑up process: opinion audits (ACFR and single audit) require agencies to provide prior‑audit summaries and corrective documentation; accountability reports receive a 90‑day follow‑up, then first and second annual visits if problems persist. Finding statuses are marked corrected, partially corrected or uncorrected depending on evidence the corrective actions both existed and worked.

Committee members pressed about why some findings remain open. Renfro said common causes are technical timing (reports or actions that occur infrequently), the need for legislative or rule changes, or business‑process changes that require time to implement and train staff. One committee co‑chair said JFAC has previously withheld funding or taken statutory action when agencies repeatedly failed to correct findings.

Renfro emphasized the office’s role in accountability: “We’re not just gonna take their word for it that it's fixed,” she said, describing auditor re‑testing and documentation reviews. She closed by noting several agency accountability reports were still in process and reiterated the staff’s heavy workload given late financial statements.

The committee did not take formal action during the hearing but members were reminded the uncorrected‑findings report would be circulated to committee members and is linked to agency budget materials for use in upcoming work groups.

Ending: Renfro said the office will continue follow up work and will notify federal grantors about the expected timing for single‑audit delivery; committee members asked work groups to review outstanding findings for agencies they cover when developing budget recommendations.