Independent Audits Suggest Waste and Possible Fraud Aren’t Just a Blue-State Problem
In Indiana, auditors found: “30 material weaknesses, including eight so serious that too little evidence was available to make determinations of the full extent of the problems.”
According to The Washington Stand’s Mark Tapscott, all state and local governments are required by law to submit to annual audits of their financial records relating to federal social welfare and other benefit fund programs within their jurisdictions.
These audits, known as “Single Audits,” are conducted by the little-known, Illinois-based, nonpartisan think tank Truth-in Accounting, whose stated mission is to “educate and empower citizens with understandable, reliable, and transparent government financial information.” The organization’s goal is “to cut through politicization and accounting tricks to show the true fiscal condition of each state and city, including the health of pension plans.”
Responding to Tapscott by email, the group’s founder and President, Sheila Weinberg, said the audits are intended to assess how governments have managed federal funds.
In addition to verifying the accuracy of the financial statements, a Single Audit ensures that the government is following applicable state and federal laws and regulations and adhering to the terms of federal grant agreements. The goal is to ensure that taxpayer dollars are used appropriately, that federal programs are managed effectively, and that funds are spent in compliance with the rules that govern them.
Tapscott reported that the most startling takeaway from the 2024 audits (the latest available) was that “the results for the red states are strikingly similar to those of the blue states.” He noted that a sampling of those results “suggests huge waste, fraud, and corruption problems in how blue and red jurisdictions alike manage federal social welfare and other benefit fund programs.”
Few would be surprised that TIA found “multiple signs of distress” in California. In January, TIA reported:
Auditors found that the state had no procedures to ensure that certain child-care providers receiving subsidies were meeting federal health and safety requirements. … And the taxpayer pays the tab.
…
[The Single Audit also] highlighted serious reporting weaknesses in the state’s Unemployment Insurance program, run by the Employment Development Department. Independent auditors found that administrative expense reports submitted to the federal government did not match the state’s official accounting records.
TIA found “serious shortcomings” in Illinois as well.
Independent auditors issued adverse opinions on compliance for two major federal programs, finding that required monitoring and risk assessments were not performed. In both cases, state agencies passed through large sums of federal funds without ensuring they were used for authorized purposes.
The most serious finding involved the COVID-19 Homeowner Assistance Fund (HAF). Auditors reported that the Illinois Department of Human Services failed to conduct any of the federally required monitoring of the Illinois Housing Development Authority, the agency managing the funds. Approximately $177 million in HAF money was distributed without risk assessments or oversight, leading auditors to conclude the program did not comply with federal requirements in all material respects.
TIA also found issues in its audits of Pennsylvania and Oregon.
Wondering if these problems were limited to blue state governments, Tapscott asked TIA to look at audit results in a couple of red states. And he found that waste and potential fraud aren’t just a blue-state problem.
In Texas, TIA found:
Texas Health and Human Services Commission failed to accurately report over $1.07 billion in federal grants awarded to local governments, nonprofits, and other service providers. Programs affected included aging services, mental health, and opioid response. This long-standing problem hindered transparency and compliance with the Federal Funding Accountability and Transparency Act (FFATA), which informs federal oversight and future funding decisions.
In Indiana, auditors found:
30 material weaknesses, including eight so serious that too little evidence was available to make determinations of the full extent of the problems and exposed failures of officials to properly monitor compliance of local officials and other grant recipients of nearly $1.6 billion awarded under the COVID-10 Education Stabilization Fund, Title 1 education grants to local school districts, and Special Education grants.
…
Approximately $334 million in funds passed through to subrecipients were at risk of improper use, raising the likelihood of noncompliance and potential loss of future federal funding.
The 2024 Single Audit findings show that mismanagement, weak oversight, and potential fraud transcend party control and represent systemic vulnerabilities across state and local governments nationwide. Whether in blue states or red, billions in federal taxpayer dollars are flowing through programs with inadequate controls, limited transparency, and little assurance that funds are being used as intended.
Taken together, these audits raise a troubling question: if these are the problems uncovered by mandatory, standardized reviews, how much more waste and abuse remains undetected?
The fraud problem in the U.S. may very well be bigger than any of us would have imagined.
Elizabeth writes commentary for Legal Insurrection and The Washington Examiner. She is an academy fellow at The Heritage Foundation. Please follow Elizabeth on X or LinkedIn.
Donations tax deductible
to the full extent allowed by law.
Comments
I don’t know. I can imagine a lot of fraud.
Of course they aren’t.
Just going ‘red state blue state’ ignores that the fraud is going to primarily take place in blue cities. There’s going to be fraud when a good number of the city officials are in on it.
But the insanity of the fraud taking place in blue states is simply out of control.
Leftists have systematically removed every check on fraud because they wanted to stuff illegals into these programs, so now illegals are in the programs AND fraud is rampant.
And just like in Minnesota, leftists will fight tooth and nail against any attempt to stop the fraud, because ending the fraud will reveal just how many illegals are exploiting these systems on top of the outright fraud.
More and more people are coming around to the fact that these systems aren’t ‘broken’ and don’t need to be fixed. They are functioning EXACTLY as the left wants them to function.
The only solution is ending this nonsense.
Why the hell is the federal government involved in things like providing child care in the first place?
Fraud doesn’t need an internal conspirator. It’s also possible to have fraud because these systems are designed to encourage money for nothing incentives beyond the point of need into desire and greed.
It’s like the dolphin pods that steal part of a fisherman’s catch because it is easy and they can. They don’t even really need it to survive, but they want it.
Two points
A – the big cities in red states are very blue – See Dallas and Houston TX
B – Government jobs at all levels tend to be heavily blue. Even Teachers is rural red counties in red states tend to have a blue tilt.
So it should not surprise anyone that the government fraud is heavy in both Blue and Red states.
Yep, very true. Especially your second point about rural red Counties. Lots of teachers in small towns marry a farmer, rancher, small business owner, Attorney, Dentist… They bring their generous health IN plan to the ‘table’. When the votes and discourse about school choice comes up lots of otherwise solid red voters have a financial incentive to vote against school choice to preserve their Spouse’s job and keep access to the Health IN plan for the Family.
Of course it’s not a red state/blue state problem. There are leftists everywhere, especially in the blue cities that are a cancer on healthy red states.
It’s just so insane
Literally we would have to pay 10% to taxes if there wasn’t such fraud nationwide
They are literally stealing our livelihood and no one will be called to task
No one
The biggest fraud is that so many of these programs exist in the first place.
The issue is the social welfare “system” which rewards employees/supervisors for giving away more money, not the number of people moved to self sufficiency. I know around here during Covid, social workers were going door to door finding everyone possible to sign up for food stamps and rental assistance. Their pitch was basically – you’re neighbor is getting free government sugar, you’re a fool being too proud to accept it as well.
Many of the laws make actually vetting the people getting the money difficult if not impossible. The laws are the root of the fraud.
difference is that the red state people who are red state maga WANT/DEMAND that the fraudsters be jailed..no matter their voting habits etc
blueys>>>not so much as the welfare state is code word for legalized fraud
NO!!!!!! Really?????????
This is what I was on about yesterday. These programs were created in a high trust era where the public/taxpayer could mostly expect the bureaucracy not to allow fraud. Back then they’d still report shenanigans to supervisors who’d call in the cops and arrest the fraudsters. Today? Most of the bureaucracy is either enabling the fraud out of ideological conviction or too scared to report it b/c they’ve seen how other whistleblowers got hammered for sticking their head up. Many of the programs rely on aspects of ‘honor system’ v harsh audits. There’s many programs which offer instant acceptance based on approval for a different program…so if you scam your way into a single program you are automatically eligible for others without any scrutiny. These structures invite fraud.
There’s fraud in ALL our systems in every State and every community no matter red/blue. Imagine a red state with a GoP state official with responsibility over some major program or activity. He knows the program is full of holes but also knows he was in charge when the shenanigans occurred. The question is one of incentives; will he be rewarded for blowing up the shenanigans or vilified? Worse is a long serving official who really can’t come clean b/c his career overlaps too many years of shenanigans. What does this guy do? He digs in and tries to squelch the reports about shenanigans as ‘conspiracy’ and sensationalism, to undermine the credibility of anyone looking at the incomplete data by seizing on any inaccuracy as proof they were wrong/cranks. This is what we.saw with GA and their Sec State re compliance with GA election laws and elections procedures. Not just him but throughout our State/local programs. Let’s say your local elected County Clerk/Voter Registrar who has held the office for decades discovered shenanigans is she gonna come forward today and admit she’s overseen a corrupt system for decades or is she gonna lock that down, circle the.wagons and rebuff attempts to audit?
This makes no sense whatsoever, and is not what Tapscott wrote.
It is not possible that a federal law would require every state and local government to be audited by a private company, let alone one with a name like that, that was founded only about 20 years ago, and that almost no one has heard of. How could anyone think that was really the case? Of course it isn’t, and Tapscott doesn’t claim it is.
Single audits are required of any non-federal entity that spends more than $1M a year of federal money. Each entity hires its own auditor, following federal procurement standards. These audits are submitted to the OMB and are posted online for anyone to look at.
TIA is a private group that looks at these public postings and analyzes them using its own methods and standards, and publishes its conclusions, just like LI or any other blog.
If a guy out west can defraud a bank for $175 million dollars in loans using AI to generate fake emails, imagine what that person can do with your tax dollars. Banks have far greater fraud control than any of these welfare programs.
To channel the NRA:
Red states don’t defraud taxpayers —
Blue programs defraud taxpayers… in all states.
Practically every program needs a ‘reboot’. Clear the rolls, force everyone to reapply in person, with ID. Run them through an improved E verify like database that also spits out basic info like:
John David Smith SS# is valid, he is Caucasian, 6’2, 200lbs and is in his mid 70’s from Nebraska.
This way when someone shows up with a fake ID built on this guy’s SS# but is a 5’5, 150lbs Dominican in their 20’s its easy to call the cops and hold this guy for attempting to defraud the system pending more investigation….and if the clerk doesn’t call the cops we put their ass in jail.
Hey, now that they’ve forced Real IDs on all us law-abiding white people, and they could actually DO something like this, is anything like it actually happening anywhere?
(Frank Nelson voice): “Nnooooooooooo?”