Board discusses surge in delinquent school audits and possible federal‑fund enforcement

Mississippi Department of Education officials told the State Board on Dec. 18 that dozens of school districts are missing annual financial audits and that the backlog has increased across fiscal years.

Sam Atkinson, who oversees internal audit and subrecipient monitoring at MDE, described FY22–FY24 backlogs and dozens of audits that were more than a year late. Atkinson said the state auditor's office would restrict future contracting for CPA firms that carry large numbers of outstanding audits without written permission, effective January 2026, and that shrinking competition and audit cost pressures complicate the workload.

MDE staff reviewed federal requirements that drive the March 31 deadline for single audits and cited state law obligations. Kim Wiggins and other presenters outlined a draft enforcement framework leveraging federal grant enforcement (2 CFR citations discussed in the presentation): identification and notice of substantial noncompliance, 15 days to respond, imposition of corrective conditions and enhanced monitoring for up to 365 days, and, as a last resort after additional notice and due process, suspension of funds for up to 60 days followed by indefinite withholding until compliance is achieved.

Board members probed consequences for students and local services, noting that withholding federal funds can affect student services. MDE staff said the federal regulations also permit selective disallowance of administrative costs to avoid cutting academic services directly. Several members urged districts to prioritize audits to avoid escalation; the board tabled a separate item (updated internal audit chart) for fuller consideration in January.