Key Audit Issues 2020 Outlines Continuing Problems with Financial Operations; Summarizes $642 Million in Potential Waste and Inefficiencies

This year’s Annual Report paints a clear picture of continuing problems with financial oversight in many of the state’s agencies, municipalities, and other entities.

Three major themes emerged again from the findings in the highlighted reports: the need for strong internal financial controls; the importance of data collection, tracking, and analysis; and the failure to address the same audit findings year after year.

For example, a look through the audits of some of the State’s universities and colleges reveals weaknesses in their internal financial controls. As a result, students sometimes are overcharged or undercharged for tuition and fees, delinquent student accounts are not collected, and computer access for employees no longer working with the institution is not removed in a timely manner, among other things.

At the same time, the audits conducted by the LLA’s Medicaid Audit Unit show the Louisiana Department of Health’s ongoing struggle to use data effectively to make sure the Medicaid program is paying only for services that actually have been delivered and to ensure that only eligible individuals are receiving Medicaid services.

Several other state entities had repeat findings for the second and third consecutive years, indicating they are not addressing the problems cited in their audits.

At the local level, the audit reports continue to detail many concerns with governmental financial operations. These concerns include non-compliance with state budget laws; failure to reconcile bank accounts; errors in accounting records; deficits in general funds and other funds; and misappropriation of money and assets. The overall effect is the loss of much-needed revenue, and, for several cities close to financial collapse, the takeover of their financial operations by a fiscal administrator.

In fact, the increasing level of fiscal distress among the State’s smaller municipalities led to the introduction of the LLA’s “Fiscally Distressed Municipalities” list in November 2019. The goal of the list is to provide an earlier warning to these municipalities and their residents that changes need to be made.

The audits summarized in Key Audit Issues 2020 reflect just a few of the approximately 4,000 reports released in calendar year 2019, but they represent issues, findings, and/or problems the LLA believes are important.

The Annual Report also contains the statutorily required Act 461 Report. Act 461 mandates that the LLA report all audit findings that exceed $150,000 to the Joint Legislative Committee on the Budget quarterly and annually. The more than $642 million identified for calendar year 2019 is not necessarily recoverable, available to be spent, or required to be paid back.