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.
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