PROVIDENCE – Government agencies across the board failed to account for a combined $83.6 million in General Fund balance at the close of fiscal year 2024, a result of several accounting errors and omissions that required corrections before the state's financials could be certified, the R.I. Auditor General’s Office concluded its report released Wednesday.
While similar findings have been issued in previous years, R.I. Auditor General David A. Bergantino on Thursday said this most recent audit required more than 50 corrections, one of the highest he has seen in his three decades of government accounting.
Bergantino said the inaccuracies highlighted in the report were not the result of any agency malfeasance. Instead, statewide draft financials initially made the General Fund's balance sheet look worse off than it actually was.
“These findings continued to support a downward trend in the accuracy, completeness, and timeliness of the state’s financial statements," he said. "Management must reverse this trend by addressing the significant internal control deficiencies noted by our audit.”
The report identified 28 significant "control deficiencies" over financial reporting. Most of the misstatements were eventually linked to long-unresolved issues in reporting and accounting practices, staffing, outdated technology, internal redundancies or inter-agency miscommunication.
One example Bergantino found particularly troubling was the state's failure to record liabilities from the impairment of the Washington Bridge in its financial statements, "something that was reported in the news daily," he said.
Other notable corrections were needed from operations of the Intermodal Surface Transportation Fund that accounts for the state’s roads and highway infrastructure construction, which were misstated by $10.4 million and required "extensive adjustments," said Bergantino.
There were also issues related to allowable uses of revenues.
The R.I. Department of Transportation, which received bond proceeds from the transfer of land to the I-195 Redevelopment District Commission, utilized $4.9 million of that money to retire the district's outstanding revenue bonds, a likely violation of federal regulations because that money was restricted to infrastructure projects.
A correction was made. However, Bergantino said if the money had not been properly applied the federal government could have clawed it back in future years.
The state also omitted $93 million in state debt being used to fund a new high school in Central Falls, and revenues from personal income taxes were understated by $43.3 million.
The audit also uncovered an outstanding bill of $4.5 million due to the state Medicaid program which the R.I. Executive Office of Health and Humans Services believed had been previously been paid.
In addition, the R.I. Department of Children, Youth and Families understated health and human services expenditures and related federal revenue by $17.7 million.
The report also said state agencies have systemic vulnerabilities in information systems to mitigate the risk of a security breeches.
Sloppy accounting can be costly in the long run, for example, if bond rating agencies lose confidence in the state’s ability to balance its books, said Bergantino, adding the audit includes many "examples supporting the need for improved controls over financial reporting.”
Calling it another example of the need for a comprehensive overhaul of the states financial reporting system, House Republican Minority Leader Michael W. Chippendale, R-Coventry, said he found the auditor’s report “deeply troubling and wholly unacceptable given the sheer size of our state workforce and the magnitude of taxpayer dollars entrusted to government management.
“It is clear that systemic accountability is lacking,” he said. “Taxpayers expect and deserve responsible stewardship of their money. If we cannot accurately track how public funds are spent, we cannot possibly expect the public to trust us with their money”
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
