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State single audit delayed; auditors flag financial‑statement and controllers' office weaknesses
Summary
Contract auditors reported the FY2023 single audit months late, citing repeated trial-balance revisions and widespread accounting adjustments; they warned the controllers' office must strengthen reconciliations, analytical close procedures and staffing to restore timely, reliable statewide financial reporting.
Contract auditors and Legislature staff briefed the Audit Subcommittee on the statewide FY2023 single audit, which was issued well past the statutory deadline after multiple revised trial balances and 22 audit adjustments.
The audit: ID Bailey presented the single audit. The state's financial statements received an unmodified opinion, but auditors reported 36 federal-compliance findings and multiple material weaknesses and repeat items tied to controllers'‑office reconciliations and department-level accounting records. Auditors also highlighted long delays: the single audit was due March 31, 2024 but was not issued until September 2025; the firm said repeated trial-balance corrections and extensive follow-up work drove the delay. "It's more important to us as an auditor to have accurate financial reporting than faster financial reporting that is inaccurate," one contract auditor told the panel.
Key issues: Auditors found material errors in areas including taxation receivables, forestry fire-suppression receivables, inventory recording in the Department of Administration, Medicaid capitation accounting, and Department of Transportation capital projects. Controllers' office disclosures and reconciliations had multiple adjustments; auditors reported a $75 million unreconciled variance at one point that ultimately was investigated and corrected. Auditors urged stronger month-end analytical procedures, more robust variance analysis, and improved training and staffing at the controllers' office and reporting departments.
Legislative concern: Lawmakers pressed auditors and controller-office representatives for a plan to restore timeliness. Contract auditors and LCB staff said the combination of staff turnover, a large ERP transition and pandemic-era disruption produced knowledge gaps and delayed financial close processes.
Outlook: ID Bailey said it has begun FY2024 fieldwork but emphasized that corrected opening balances and robust close procedures at the controllers' office are necessary to avoid repeating the delay. The subcommittee asked for continued updates and recommended controller and department improvements to reconcile and document year‑end adjustments promptly.
Quote: "We put a lot of pressure on the controllers' office and the agencies to provide information that we can ultimately conclude on is accurate," a contract auditor said. "There needs to be a heavy emphasis and improvement for that information."
