Updated with comments from the state controller’s spokesman.

Errors in statements by the Office of the State Controller – previously identified more than two years ago – are still present and account for just short of $1 billion that did not correspond with financial reports from state agencies, an auditor’s report found.

The findings were part of the first half of the state auditor’s review of Colorado’s financial books for 2020. .

In 2019, State Auditor Dianne Ray and her staff released a scathing report that raised “serious issues in the Office of the State Controller’s preparation of the State’s financial statements.” That audit, which looked at the state’s Comprehensive Annual Financial Report – the same report reviewed Tuesday – found millions of dollars in errors as well as numerous misstatements. It blamed a lack of internal controls and appropriate processes within the state controller’s office, led by Bob Jaros.

At the time, Jaros pledged to the audit committee that “the next time we meet, and the next time there’s an audit review, there’s won’t be a repeat of these findings.” 

The audit on Tuesday reported significant errors are still taking place, and that recommendations from the 2019 audit to fix those problems have not been implemented.

For example, one error could have misled a reader of the state’s financial reports to overestimate a depreciation expense by more than $1 trillion, the audit found. A typographical error discovered by auditors overstated pledged revenue by $700 million for one higher education institution. The audit identified a total of 37 errors in the controller’s financial reports that affected various sections of the annual report. 

In total, there were $944 million in revisions done by the controller’s staff that did not gel with exhibits submitted by state agencies, and so the controller’s staff changed the numbers in the exhibits rather than getting corrected figures from the state agencies. 

Tuesday’s audit said the state controller’s office does not have “effective internal controls in place over its Fiscal Year 2020 financial reporting.” The OSC “did not appropriately design, or require staff to follow, its procedures or otherwise ensure that the Financial Statements, Annual Report, and SEFA [a report on spending of federal awards] were prepared and reviewed appropriately, and that errors were identified and corrected.”

The audit said that the lack of internal controls and procedures could lead to errors in the state’s financial statements and the annual report. That could lead those who use those reports, such as the governor and the General Assembly, “to make decisions based on inaccurate information.”

The OSC corrected the errors when the auditors brought them to their attention. 

Doug Platt, spokesman for the Department of Personnel and Administration, where the state controller’s office is housed, told Colorado Politics that even the auditors’ report noted that the financial statements in their final forms were correct. The audit looked at preliminary versions of the Comprehensive Annual Financial Report, and the auditor is part of looking at all of those versions, Platt said. When the auditor identifies errors, it’s in the draft versions of the CAFR and then corrected. The final published CAFR did not have errors, Platt said. 

The controller is always committed to continually improving processes in his office, Platt added. 

Ray told Colorado Politics that the continued problems with internal controls in the OSC has been going on now since 2018, and that it appears these problems are being “pushed down the road.”

Of the five material weaknesses in OSC controls identified in the 2019 audit, three were to be implemented by December 2020; two more are not due to be completed until December 2022, and the most serious, strengthening the policies and procedures for preparing and reviewing the State’s financial statements and the annual report, did not list a date for compliance. 

The audit was presented to the Legislative Audit Committee on Tuesday morning. Also at that meeting, Ray issued an unheard-of “no opinion” on the health of the state’s unemployment trust fund, reporting that the staff could not verify the numbers for the fund, which claimed to be short $510 million in receivables and overspent by $872 million as of June 30, 2020.