Auditor Fitzpatrick releases annual report examining state's financial reporting process

Missouri State Auditor Scott Fitzpatrick today released the annual report produced by his office on the state's financial reporting processes. The report examines Missouri's internal controls over annual statewide financial statements, and certain compliance issues, and makes recommendations to ensure accurate financial reporting, which better protects and accounts for taxpayer resources.

In February, the State Auditor's Office issued an audit of the state's Annual Comprehensive Financial Report (ACFR) for fiscal year 2025. The state's financial statements in the ACFR covered approximately $66 billion in assets and $41 billion in expenses. In connection with that audit, auditors tested internal controls, as well as compliance with certain laws and regulations. Those results are included in the report issued today.

"We continue to see our recommendations lead to improvements that ensure more accurate financial reporting, but there are still areas where the state can and should improve to avoid misstatements in the Annual Comprehensive Financial Report. It's also important for the MO HealthNet Division to strengthen its internal controls over the Medicaid and Children's Health Insurance Program receipts that totaled $1.4 billion. I hope these state agencies will take these recommendations to heart and work to improve their level of review so we can avoid significant errors or missing money," said Auditor Fitzpatrick.

Auditors found the Office of Administration (OA) - Division of Accounting (DOA), which has ultimate responsibility for the ACFR, needs to improve controls and procedures over preparation of the report. If various errors had not been identified by auditors and corrected, the Notes to the Financial Statements would have been materially misstated in the ACFR for the year ended June 30, 2025. The audit found an overstatement occurred when the DOA incorrectly reported $29.9 million in Unemployment Compensation Fund reimbursements to the federal government as a change in accounting estimate. The audit also identified understatements totaling over $9 billion that resulted from calculation errors for various fiduciary fund component unit investments that occurred, in part, because the DOA has not automated some calculations in its financial reporting software.

Another finding that was similarly reported in the previous audit of the ACFR details how the Department of Social Services - MO HealthNet Division (MHD) does not have adequate controls to ensure proper management of receipts which totaled approximately $1.4 billion during fiscal year 2025. The MHD does not adequately restrict user access within the receipts and accounts receivable modules in the Medicaid Management Information System (MMIS). In response to audit findings, in August 2024 and September 2025, the MHD implemented some supervisory reviews of entries and changes made in the MMIS by some employees; however, the reviews did not include all activities of all employees whose duties are not segregated and were not adequately documented. Not adequately reviewing all activities of these employees increases the risks of misappropriation and undetected errors. Additionally, the MHD's reconciliations are not sufficient to account for all cash control numbers to ensure all checks and money orders received are properly deposited or returned to senders if the payment cannot be accepted.

The complete report detailing the findings in the Annual Comprehensive Financial Report is available here.