Louisiana treasury faces audit scrutiny over financial reporting failures

(The Center Square) — A recent audit by the Louisiana Legislative Auditor has revealed significant lapses in the Louisiana Department of Treasury’s financial oversight. The audit, part of the 2024 Annual Comprehensive Financial Report, found that the treasury department lacked adequate controls to ensure investment information submitted to the Office of Statewide Reporting and Accounting Policy was accurate and complete. Auditors identified numerous errors, including a $6.5 billion misclassification of investment maturity categories, $980 million in credit risk rating errors, and the omission of $3.2 billion in money market funds from key disclosures. Other issues included missing investment policy details and incomplete fair value measurement data for fiduciary funds. These mistakes, some deemed material, required significant adjustments to the state’s financial statements. The report also highlighted a recurring problem: Untimely bank reconciliations. For the second consecutive year, the treasury department failed to complete these reconciliations promptly, with some regional accounts delayed by up to 121 days and the statewide LaGov system cash balance reconciliation lagging 163 days after the fiscal year-end on June 30, 2024. The delays, attributed to staffing turnover and challenges transitioning to the LaGov accounting system, increase the risk of undetected errors or fraud. Treasury management acknowledged the findings, emphasizing that all state funds were ultimately accounted for. They cited the consolidation of investment reports under new GASB standards and technical issues with LaGov as contributing factors. Corrective plans are underway, with Chief Investment Officer Amy Mathews targeting March 1 to revamp investment reporting processes, while Chief Financial Officer Lindsay Schexnayder oversees bank reconciliation improvements throughout the fiscal year. The audit underscores the need for stronger internal controls to safeguard Louisiana’s financial integrity, with the treasury department pledging to address the issues amid ongoing system and staffing challenges.