State Auditor Determines Federal COVID-19 Funds a High-Risk Issue

This week, California State Auditor Elaine Howle designated the state’s management of federal funds allocated in response to the ongoing COVID-19 pandemic a “high-risk statewide issue.” The State Auditor made her determination based on a series of factors including but not limited to the significant amount of funding granted to the state, the expansion of or changes to programs’ eligibility requirements, program changes that could necessitate additional outreach by departments to ensure awareness of and access to available funds, past audit findings on management of federal funds by state departments that will receive or expect to receive these funds, and the rapid nature of the allocation and urgent need of the funding.

The State Auditor identifies 18 state agencies that will each be responsible for managing a portion of the federal COVID-19 funds. The State Auditor’s Office maintains a “High Risk Government Agency Audit Program” that enables the Auditor to take specified actions to prevent an adverse outcome among an agency or department that is at risk of suffering or producing waste, fraud, abuse, and mismanagement or major challenges associated with economy, efficiency, or effectiveness. The Auditor’s report identifies all state agencies and departments and federal funding received to respond to the COVID-19 pandemic. State agencies and departments had the opportunity to respond to the State Auditor’s finding, and most indicated the management of such funds is not a high-risk issue for a variety of reasons, citing existing financial management practices and processes. Despite the responses of the state agencies and departments, the State Auditor’s Office maintains its assessment and conclusion to add the state’s management of federal COVID-19 funds as an issue on the state high-risk list.

The full State Auditor report on federal COVID-19 funding is available here.