New Louisiana accounting system kept Treasury from finishing state bank reports on time

BATON ROUGE, La. (BRPROUD) — Auditors found that the Department of Treasury did not complete, review and approve bank reconciliations in a timely manner for the fiscal year that ended June 30, 2023.

Auditors looked at several bank reconciliations under the Annual Comprehensive Financial Report of the State of Louisiana throughout the year. Auditors found that some reconciliations were not completed, reviewed and approved until 37 to 354 days after the pertinent month-end.

“Failure to complete and review bank reconciliations in a timely manner increases the risk that errors and/or fraud could occur and not be detected in a timely manner and increases the risk of inaccurate financial reporting,” the audit said.

There were issues with bank reconciliations not being completed, reviewed and approved during the following periods in September, November and July of 2022 and in March and May of 2023.

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Reconciliations for September 2022, November 2022 and March 23 were not completed, reviewed and approved until May 2023, according to the audit.

The reconciliations for July 2022 and May 2023, were not completed, reviewed and approved until July 2023.

The state’s 2023 cash balance was not fully reconciled until Dec. 15, 2023, according to the audit.

The LLA noted that all state agencies moved into LaGov, the current financial accounting system at the start of 2023. It tracks all deposit and revenue transactions.

With the ongoing changes, the auditors found that the Department of Treasury worked with the Office of Technology Services to ensure correct reporting guidelines were created for the monthly data. Changes to the available process in the system kept several monthly reconciliations from being finished sooner. The treasury office could not offer proof that these had been completed throughout the year.

According to the audit, the Department of Treasury recognized that the LaGov system balances that agencies in the state were using were not accurate. Those agencies had to re-run the necessary reports once the issues were fixed at the end of the fiscal year so the treasury could reconcile the year-end cash balances fro Louisiana.

The audit reads, “these state agencies did not identify the issue with their system balances at any point during the fiscal year to prompt investigation and correction in a timely manner.”

According to the audit, management should have made sure that the following bank reconciliations were to be completed, reviewed, and approved in a timely manner. Auditors noted a lack of communication and understanding about how the new financial system operates.

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In response to the audit’s finding, Louisiana State Treasurer John Fleming said the Department of Treasury worked with the LaGov team during the transition.

“The Department worked diligently with the LaGov team to ensure a smooth transition,” said Fleming. “During this collaboration, numerous unforeseen issues were identified and eventually resolved. Throughout this process, all state funds were properly accounted for.”

He said there was a lack of specialized training before the transition into the system. Also, some changes to programming meant they had to redo previously completed work, creating delays.

Fleming added that the Department of Treasury will “continue to complete, review, and approve all bank reconciliations in a timely manner using the LaGov accounting system.”

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