(The Center Square ) — The Louisiana Office of Student Financial Assistance did not have adequate controls over financial reporting to ensure their financial statements were accurate and complete.
The Louisiana Legislative Auditor’s Office reviewed the financial statements of the Student Tuition Assistance and Revenue Trust Program, or START, for the year ending Dec. 31, 2023. The auditors found six office failures resulting in overstatements and material disclosure errors.
First, the securities lending note disclosure contained language that failed to describe the current securities lending agreement and related investment risks. Instead, the office described the prior securities lending agreement and related risks that was last applicable in the Dec. 31, 2021, audit report.
The office eventually provided an accurate version of the disclosure and other information showing that they completed this note accurately during the compilation process, but failed to update their report template for the new language.
Second, the interest receivable was overstated on the financial statement by $5.5 million, and cash and participant deposit receivable were understated by $2.71 million and $2.79 million, respectively.
This happened because the office essentially switched them, misclassifying cash and participant deposit receivables as the interest receivable.
Additionally, participant deposit receivables and participant deposit additions were further understated by nearly $1.9 million because deposits that occurred or were effective on December 29, 2023 were not recorded until the following month.
Third, cash and the net increase in fair value of investments were overstated by $3.09 million for errors in posting.
The office’s journal entry was calculated accurately. However, the full entry was not recorded to the financial statements due to other errors in the compilation.
Fourth, $4.08 million of manual adjustments were made to the supplementary information schedules moving cash from the START column to the K-12 column. This happened without adequate support or documented reason why.
For the fifth error, multiple instances were found in which the financial statements, note disclosures, and schedules did not agree to one another and had footing errors.
To make all of this worse, the last issue found were problems from previous audits that weren’t properly fixed. Ultimately it was determined the prior-year audit adjustments accepted by management were not reflected in the current year statements, causing repeat adjustments once again.
