Oregon State Auditors Uncover Millions in Questioned Costs

In a recent report released by the Oregon Audits Division, state auditors have uncovered millions of dollars in questioned costs and identified serious control weaknesses in several programs that receive federal funds. The report, titled “Keeping Oregon Accountable,” summarizes the findings from the Annual Comprehensive Financial Report and Statewide Single Audit for fiscal year 2022.

The federal government mandates these audits to ensure the state’s financial statements’ accuracy and its compliance with federal program requirements. Historically, Oregon has received federal assistance ranging from $11 to $12 billion annually. However, due to the pandemic, federal funding has surged, reaching $21 billion in fiscal year 2022.

Audits Director Kip Memmott emphasized the critical role of these financial audits in maintaining accountability within the Oregon government. He stated, “Our financial audits are a critical part of keeping Oregon government accountable to its people. This year’s statewide audits found some significant issues that we think are important to bring to the attention of Oregonians, the Governor, and the Legislature.”

Two key findings stand out in this year’s audits. Firstly, the number of questioned costs has substantially increased. Questioned costs are program expenses that may or may not be eligible for payment using federal funds. In fiscal year 2021, auditors identified $10 million in questioned costs. However, for fiscal year 2022, this figure surged by more than $20 million, totaling $35.2 million across ten programs in five different agencies. Of this amount, $9.1 million were clearly identifiable costs, while the remainder were likely errors, as determined through sample testing.

Secondly, auditors reported far more modified opinions regarding control weaknesses in the audited programs. These modified opinions indicate concerns about the programs’ ability to maintain proper financial controls and accountability.

Tracey Gates, a principal auditor with the division, explained the significance of questioned costs, stating, “It serves as a flag for federal funding agencies to review the findings and then decide whether the costs are allowable.”

The release of this report underscores the importance of maintaining financial accountability in the face of increased federal funding and serves as a call to action for Oregon’s government and its agencies to address the identified issues promptly. Oregonians, as well as state officials, will be closely monitoring the steps taken to rectify these concerns and ensure the proper utilization of federal funds in the coming years.