SC’s state auditor resigns from job amid controversy over state’s $1.8B accounting error
State Auditor George Kennedy III, who has been caught in the middle of the state’s accounting issues, including over whether a mysterious $1.8 billion existed, resigned from his job Thursday.
Kennedy has been auditor since October 2015. In a recent report by AlixPartners, the outside forensic auditors said his office was aware of the $1.8 billion listing in the state’s books even though most of it did not exist.
“It has been both an honor and a privilege to serve the State of South Carolina during the past nine years,” Kennedy wrote in his resignation letter obtained by The State. “However, I believe that it is in the best interest of the Office of State Auditor that I resign from my position as state auditor effective today.”
McMaster accepted Kennedy’s resignation.
A phone call to Kennedy, who earned $187,200 a year, was not immediately returned.
The state auditor’s office reports to State Fiscal Accountability Authority, which is composed of the governor, treasurer, comptroller general, Senate Finance chairman and House Ways and Means chairman.
One of the recommendations by AlixPartners was to have the auditor independent and not report to the treasurer and comptroller general.
In 2023, previous comptroller-general Richard Eckstrom resigned after he disclosed he inflated the state’s cash balances by $3.5 billion over ten years.
Senate Finance committee members have blamed Treasurer Curtis Loftis for the $1.8 billion accounting error, but Loftis has continued to battle with lawmakers.
Amid the accounting errors the state has disclosed, the state’s financial books are under investigation by the U.S. Securities and Exchange Commission.
State Rep. Micah Caskey, R-Lexington, who sits on the budget writing House Ways and Means Committee and is part of a panel investigating the $1.8 billion error, said the state’s financial reporting structure needs to be fixed.
“What matters to me is that we correct the system so that our state auditor is not put in a position of conflict of interest,” said Caskey, who said he learned of the resignation Thursday morning.
Caskey said he was not surprised by Kennedy’s move, as his office, the external auditor that works with the state auditor’s office, the treasurer’s office and comptroller general office were aware of the accounting issue.
“The testimony has certainly been that they were all aware of the decisions at the outset and then (their) collective affirmative decisions to continue the path that they were on from that initial point,” Caskey said.
Whether the state continues its relationship with external auditor CliftonLarsenAllen also is an open question, budget writers have indicated.
This story was originally published January 23, 2025 at 12:36 PM.
