SC treasurer’s office paid for crisis communications help amid $1.8B accounting error
The South Carolina Treasurer’s office spent more than $47,000 on crisis communications in 2024, with a most of the expenditures taking place as a forensic audit was performed over a yearslong $1.8 billion accounting error, according to documents released by the Senate Finance Committee.
The treasurer’s office started paying Infinity Marketing, a Greenville-based firm that provides crisis communication services, in March 2024. The office also hired William Holder of the University of Southern California as a consultant in November and December, paying him $14,865.
“This is a very important issue,” said Clarissa Adams, the chief of staff at the Treasurer’s office. “It would not be unusual to ask for guidance on communication, on cash position, on various things.”
Disclosure of the expenditures came Tuesday during a hearing front of a Senate Finance Committee panel investigating the state’s financial reporting issues that occurred when the state converted accounting systems.
Adams said Infinity Marketing coached her on her responses ahead of Tuesday hearing that Treasurer Curtis Loftis did not attend because he was on a previously scheduled camping trip.
In his place, Adams spent more than two hours answering questions from lawmakers.
Adams defended the hiring of Holder, a previous member of the Governmental Accounting Standards Board who has expertise in putting together annual comprehensive financial reports, which is prepared by the comptroller general’s office.
“We wanted to get some outside expertise,” Adams said.
Holder’s final charge was for more than two-and-half hours to participate in a meeting with state treasury officials and AlixPartners during the forensic audit.
“We were able to secure or have help from subject experts to help us with this,” Adams said.
A forensic audit, performed by Washington,D.C., firm AlixPartners, found most of the $1.8 billion never existed and said knowledge of the account listing was shared responsibility of the comptroller general’s, state auditor and treasurer’s offices.
Previous Comptroller General Richard Eckstrom resigned in 2023 after he admitted to inflating the state’s books by $3.5 billion over the course of a decade. State Auditor George Kennedy resigned this year after the AlixPartners report came out.
Loftis remains defiant and has vowed to stay in office.
Outside auditors ClifltonLarsenAllen also was aware of the $1.8 billion accounting issue. But none of the parties brought the issue up to the general assembly.
“Hindsight is 2020. We never want to keep anything from the General Assembly,” Adams said. “And I know it sounds over simplistic to say that a journal conversion entry lived there for that long, and that all these people, not just me, but comptroller general’s office, state auditor’s office, Clifton Larson, all were comfortable with it, but in hindsight, would we tell you? Absolutely we would.”
Just the existence of hiring an outside firm was troublesome for the senators on the panel.
“You had to go pay Infinity to coach you to come and tell the truth. There’s a problem there,” said state Sen. Margie Bright Matthews, D-Colleton.
During her remarks, Adams said the recording of $1.8 billion was incorrectly recorded during an accounting system conversion by the Comptroller General’s office.
“It’s not to point fingers at all,” Adams said. She added more than one entity had access to the fund.
But the current Comptroller General Brian Gaines later in the hearing objected to that assessment, saying the activity that takes place in the funds where the comptroller’s office makes adjustments without affecting individual state agencies books. Gaines said that practice is the core function of the comptroller’s office.
Gaines said the treasurer’s office made conversions that should not have taken place.
“They do not hold real money. So what the (AlixPartners) report is saying is that the error that occurred was the conversion,” Gaines said.
Gaines also responded to previous assertions by Loftis that the comptroller general’s office said the money was real allowing it generate interest income. But Gaines said that assertion was concerning.
“I think (Loftis has) made it very clear that he’s the bank and I’m the accountant, and so he’s relying on the accountant to tell him what is cash in the bank,” Gaines said.
Gaines added in a letter to Loftis he said $1.8 billion listed in the flow-through fund would appear to anyone who looked at it that it was real cash.
“That letter further said you as the state treasurer, need to further research and determine what that is, and secondly, make the General Assembly aware,” Gaines said.
