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SALT LAKE CITY — A new audit by the Utah Office of the State Auditor found problems with the state's internal control of federal money during fiscal year 2021, when the state spent $8.6 billion in federal funds amid the pandemic.
"I'm deeply troubled by the massive amount of money the federal government has spent during this year of the COVID pandemic. I hope Utah continues to work to be fiscally prudent. The federal government's message that it will bail out states, local governments, businesses and individuals whenever a crisis is anticipated, with money the federal government must borrow is irresponsible," State Auditor John Dougall said in a statement on Wednesday.
Federal funds spent during fiscal year 2021 represented 28.9% of the state's total $29.78 billion in expenditures, according to Dougall's office.
One example of inadequate monitoring of coronavirus relief funds, according to auditors, happened as the state distributed nearly $264 million in pass-through funding, which is funding distributed by the state to applicants. Of 47 agreements between the state and other divisions, 17 did not communicate the key federal grant information, auditors wrote.
And out of those 47 agreements analyzed by auditors, 24 had either insufficient monitoring or no monitoring, according to the report.
"(Governor's Office of Planning and Budget) did not communicate the federal nature of the funds appropriated by the Legislature to the state agencies. State agencies, consequently, were either unaware of internal control and compliance requirements for (Coronavirus Rescue Funds) or failed to ensure their own internal controls functioned effectively to detect and correct errors," auditors said, adding that the governor's office relied "solely" on agency management for internal controls and compliance.
When the Office of Planning and Budget and other state agencies don't communicate key program information, perform evaluations and enforce agreement terms, it can lead to improper spending of federal funds without detection, inaccurate reporting and the potential need to repay federal funds, auditors noted.
Leaders of the Office of Planning and Budget said in a response to the findings that they agree with the findings, but they explained that at the time when they distributed the funding, detailed requirements were not available.
The office "believes nearly all costs that have been questioned will be determined to be eligible expenses if examined by the Department of the Treasury," according to the response.
Auditors say they also found mistakes in general reporting of finances across divisions in the state. For example, in the information provided to the Division of Finance and information prepared by the division as part of the State's Annual Comprehensive Financial Report, which created the need for "multiple adjustments to fairly present" Utah's financial activity.
The division relies on other agencies for information to record financial activity for the report. According to the audit, because the errors were missed, it resulted in problems with the state's balances, including a $44.8 million reduction of income tax revenues and a correction of $52.8 million of capital asset transfers to agencies.
The auditors recommended the Division of Finance should perform "sufficient" reviews of information prepared by state agencies and division workers, as failure to do so could result in major undetected errors in the yearly financial report.
