After $1.8B accounting error, SC looks to change independent auditor
Because of a $1.8 billion accounting error, lawmakers are looking to move on from the outside independent auditor who would work with the state auditor’s office in reviewing the state’s financial records.
An AlixPartners report found the state auditor, treasurer, comptroller general and outside auditing firm CliftonLaresenAllen all were aware of a $1.8 billion accounting issue on the state’s books for years, but no one tried to fix it or figure out the origins of the listing. The forensic audit eventually found that almost $1.6 billion did not exist.
In January, after the AlixPartners report was released, state Rep. Chris Murphy, R-Dorchester, said the contract with the outside auditor should not be renewed.
The contract with CliftonLaresenAllen has been renewed once every five years. The state auditor was worked with CliftonLarsenAllen for 20 years and is up for renewal this year.
Under a bill approved the House Ways and Means Committee, the outside auditing firm contract would be up every five years, but the state auditor would not be allowed to work with the same external auditing firm that was hired in the previous five years without prior review by the Joint Bond Review Committee.
It’s a clause that would allow the state to move on from CliftonLarsenAllen as the independent outside auditor.
State Rep. Micah Caskey, R-Lexington, emphasized the language in the legislation is not directed at CliftonLarsenAlenn.
“It’s directed at eliminating a relationship that has begat problematic reports over the last five years,” Caskey said. “I realize that there may be like a semantic distinction without a real difference, but I think what we’re saying in the bill is that we need to do things differently with respect to our auditing process, and that includes the folks who are involved externally with the auditing process.”
After the disclosure of accounting issues in the state’s books, previous comptroller general, Richard Eckstrom, resigned in 2023 and State Auditor George Kennedy resigned earlier this year.
The legislation also calls on the treasurer to reconcile state bank accounts by fund, a recommendation from the AlixPartners that could have caught the $1.8 billion error sooner.
“Through all of the provisions in the bill, what we’re seeking to do is to make clear what some say is clear and some say is unclear, and we want to remove any of that, that doubt,” Caskey said.
Lawmakers are moving forward with other changes suggested by AlixPartners after its forensic audit.
The Senate approved a bill to have the governor appoint the state auditor, instead of the five-person State Fiscal Accountability Authority, which includes the treasurer and comptroller-general who could have influence over the auditor’s decisions.
