Auditor of Public Accounts flags local reporting gaps, Tangier fiscal concerns and major state audit findings

Stacy Henshaw, the Auditor of Public Accounts, and her deputy Zach Borgerding presented the APA's recent work on local governments, statewide financial statements and federal funds audits. Henshaw told commissioners that the APA published its draft comparative local‑government report on Feb. 15 and that the draft was missing data from 49 localities; by the final April draft 30 localities were still missing. She warned that some localities have not posted the statutorily required public notices explaining reporting delays.

Henshaw highlighted fiscal‑distress monitoring and described Tangier as a recent example: the town had missed vendor payments and federal pandemic reporting and had missed a debt payment to the Virginia Resources Authority. Tangier completed an APA assessment and paid the bills — Henshaw said the town relied on a community loan to do so — but the APA flagged a recent $10 million federal shoreline grant and said it will follow up to ensure appropriate financial controls if the funds are routed through state or local channels.

"About that time, we also received information from the department of accounts that Tangier had not submitted some reporting on COVID related pandemic funding that they have received, and it could jeopardize them being able to keep those funds," Henshaw said, describing the triggers that produce fiscal‑distress outreach. She added the town has since completed its assessment and the APA is reviewing results.

Borgerding summarized statewide audit themes for FY24: grants management and federal awards produced the top category of findings (26 areas needing improvement); information‑technology findings were numerous (56 of 107 total findings), particularly in configuration management, access control and risk assessment; and several agencies required significant financial adjustments. He cited three material weaknesses in the Department of Social Services audit (IT governance, subrecipient monitoring, and inaccurate federal performance reporting) and large audit adjustments at the Department of Health (over $456 million), and told the commission these issues are tied largely to turnover, weak policies, and succession‑planning gaps.

Members asked for clarification on what the APA meant by "overreliance on third‑party service providers." Borgerding said the concern is insufficient oversight — for example, not reviewing a service organization's control reports or performing adequate due diligence — which led to reporting errors in some programs.

Henshaw and Borgerding urged succession‑planning, stronger documented policies and risk‑based oversight as mitigation steps; they also noted that some smaller towns are not statutorily required to submit audits and that APA lacks the authority to compel audits in many cases. The commission took no formal action; APA staff said they would continue follow‑up and publish findings as their reviews conclude.