Key Audit Issues 2021 Describes Pandemic Response, Ongoing Financial Control Issues

In spite of the COVID-19 public health emergency, LLA staff members persevered with their work, adjusted as necessary, and continued to keep a watchful eye on the state’s finances, agencies, and programs.

The LLA issued several reports focused on COVID-19 and its impact on the state, and each is summarized in the Annual Report. In addition, staff members provided support to state and local officials by answering questions, reviewing grant and reimbursement applications, and putting together a frequently updated Legal Guidance on COVID-19 document.

The past year also saw the introduction of an LLA podcast, called LLA Reports. The goal of the podcast is to provide legislators, the media, and members of the public with another way to access the content of the LLA’s reports, and the episodes produced last year are summarized in the Annual Report, as well.

As has been noted in previous Annual Reports, three major themes once again dominated the findings in the highlighted reports: the need for strong internal financial controls at state and local government levels; the importance of data collection, tracking, and analysis; and the failure to address the same audit findings year after year.

Repeat findings were the norm for many governmental entities, with some findings showing up for the third, fifth, or ninth consecutive time. This is a concern because it means problems continue to be unaddressed, programs are not as effective as they could be, and state funds are not being used as efficiently as possible.

At the local level, auditors continued to see non-compliance with state budget, public bid, and open meetings laws; failure to reconcile bank accounts; errors in accounting records; misappropriation of money and assets; and other issues.

In addition, the LLA’s list of Fiscally Distressed Municipalities contained 20 names at the end of 2020, signifying the ongoing fragile state of many entities’ finances.

These are not new problems, but addressing them is more important than ever as the state moves forward from the pandemic.

Although the audits summarized in Key Audit Issues 2021 reflect just some of the 3,640 reports released in calendar year 2020, they also 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 $20 billion identified for calendar year 2020 is not necessarily recoverable, available to be spent, or required to be paid back.