The state of Iowa’s chronic lateness in producing financial reports threatened to disrupt the flow of federal funds to Iowa’s universities this year, documents obtained by Bleeding Heartland show.

For the third year in a row, the state will be more than six months late to publish its Annual Comprehensive Financial Report (ACFR), which the Iowa Department of Administrative Services compiles. As of June 26, only six states had not published their comprehensive financial reports for fiscal year 2022 (see appendix 2 below).

The delay has pushed back the publication of Iowa’s statewide Single Audit, a mandatory annual report for non-federal entities that spend a certain amount of federal dollars.

To address concerns raised by the U.S. Department of Education, state auditors worked out an arrangement to produce individual FY2022 Single Audit reports for Iowa’s three state universities by the end of June. The State Auditor’s office released the first of those reports, covering the University of Iowa, on June 27.

Going forward, state auditors will prepare separate Single Audit reports for each Iowa university by March 31, the federal deadline for providing such documentation.

A notice posted in January on the EMMA website, the leading source for data and documents related to municipal bonds, did not clarify why Iowa’s ACFR would be late again. Tami Wiencek, public information officer for the Department of Administrative Services, has not replied to inquiries about the reason for the extended delay. Records indicate that staff turnover at the agency has derailed what was for many years a smooth process.

More than four months after the usual publication date of December 31, Iowa’s Annual Comprehensive Financial Report (ACFR) for the fiscal year that ended on June 30, 2021 is nowhere in sight.

It’s the second straight year that the detailed report on state finances is far behind schedule. The ACFR must be completed before many other annual audits of state government entities can be conducted.

For decades, Iowa routinely published the report within six months of the end of the previous fiscal year. That time frame earned the state a Certificate of Achievement for Excellence in Financial Reporting from the leading organization for government finance officers.

CAUSE OF DELAY STILL UNCLEAR

The report for fiscal year 2020 was delayed for about nine months, mostly because of accounting problems at Iowa State University. But the university told Bleeding Heartland in January that ISU “submitted all year-end financials, responded to audit questions and completed recommended changes for the final financial statements by Nov. 12, 2021.” That’s only about six weeks after the deadline for most state government entities to send fiscal year-end data to the Iowa Department of Administrative Services.

For the second straight year, the state of Iowa missed a deadline for releasing a detailed report on state finances. Officials publicly acknowledged the delay last week but have not explained why the Annual Comprehensive Financial Report for fiscal year 2021 is not complete.

Staff at the Iowa Department of Administrative Services, which compiles this report, have not responded to five inquiries from Bleeding Heartland about the matter over the past two weeks. Staff at the Iowa Department of Management, which prepared a public notice about the late report, likewise ignored three attempts to clarify the source of the problem.

More than nine months behind schedule, the state of Iowa has released its Comprehensive Annual Financial Report for the fiscal year that ended on June 30, 2020. The report was posted to the Iowa Department of Administrative Services website on October 5.

Under normal circumstances, the state would have published this report in late December 2020. However, Iowa State University has had significant accounting problems since switching to the Workday computer system for financials at the beginning of the 2020 fiscal year. State government entities typically submit their fiscal year-end financials to the state by October 1, but ISU was still sending supplemental pieces six months later.

Deputy State Auditor Marlys Gaston told the Iowa Board of Regents last month that state auditors anticipated sending an internal control letter to ISU regarding misstatements or erroneous information in some of the university’s financial statements.

Accounting problems at Iowa State University have delayed not only Iowa’s Comprehensive Annual Financial Report for fiscal year 2020, but also dozens of annual reports on state government entities.

The ongoing issues at ISU have pushed other audit work months behind schedule, Deputy State Auditor Marlys Gaston explained during a 20-minute presentation to the Iowa Board of Regents on September 15. In addition, Gaston told the governing body for Iowa’s state universities the State Auditor’s office expects to issue an internal control finding to ISU. That rarely happens for the Regents institutions and indicates that ISU’s financial statements for FY2020 included inaccurate information.

ISU switched to the Workday computer system for accounting at the beginning of the 2020 fiscal year. The subsequent challenges raise questions about what will happen when most state government agencies transition to Workday for accounting, which is supposed to occur during the summer of 2022.

Iowa still has not finalized its Comprehensive Annual Financial Report for the fiscal year that ended on June 30, 2020. That report is typically published by the end of December, but Iowa State University was more than six months late in providing its year-end financial data to the Iowa Department of Administrative Services, which compiles the annual reports.

ISU’s problems with extracting financial data coincided with the university’s switch to the Workday computer system for accounting, which happened on July 1, 2019–the beginning of the 2020 fiscal year. Although many people spent months trying to submit ISU’s fiscal year 2020 data to the state, the university submitted “incomplete and very draft financial statements” in February 2021, more than four months after the normal time frame for state government entities to send complete, auditable data to the Department of Administrative Services.

Governor Kim Reynolds has been lucky at key points in her political career. Terry Branstad passed over more experienced contenders to select her as his 2010 running mate, allowing a little-known first-term state senator to become a statewide elected official. Six years later, Donald Trump won the presidency and named Branstad as an ambassador, setting Reynolds up to become governor without having to win a GOP primary first.

Most important, Reynolds has enjoyed a Republican trifecta her entire four years as governor. Not only has she been able to sign much of her wish list into law, she has not needed to worry that state lawmakers would closely scrutinize her administration’s work or handling of public funds.

During the legislative session that wrapped up last month, the GOP-controlled House and Senate rejected every attempt to make the governor’s spending decisions more transparent. They declined to hold even one hearing about questionable uses of federal COVID-19 relief funds or practices at state agencies that disadvantaged thousands of Iowans.

The state of Iowa should be able to pay the remainder on its contract to acquire the Workday software system once Governor Kim Reynolds signs the final appropriations bill lawmakers approved before adjourning on May 19.

Senate File 615, the so-called “standings” bill, allocates $23.23 million from the state’s general fund to the Office of Chief Information Officer during the current fiscal year, which ends on June 30. That money is to be used for “implementation of a new state central personnel, accounting, and budget system.”

The state of Iowa’s Comprehensive Annual Financial Report for the 2020 fiscal year may be finalized by the end of June, six months later than the usual publication date.

Staff at the Iowa Department of Administrative Services compile the report using data provided by state government entities, and for many years have completed that work by December 31. However, Iowa State University (ISU) struggled to provide accurate, auditable data for the fiscal year that ran from July 2019 through June 2020. The reporting problems coincided with the year the university switched to the Workday computer system for accounting.

While other state government units sent their year-end financials by the usual deadline of October 1, 2020, ISU completed that process more than six months later, in early April.

Editor’s note from Laura Belin: The Governmental Accounting Standards Board and the Government Finance Officers Association now discourage use of the common acronym for this report, because when pronounced it sounds like a racial slur. Bleeding Heartland will avoid using the acronym in the future. Original post follows.

Challenges in obtaining auditable financial data from Iowa State University continue to delay the publication of the state’s Comprehensive Annual Financial Report (CAFR) covering the fiscal year that ended June 30, 2020. The Iowa Department of Administrative Services compiles the CAFR and typically publishes it by December 31. The latest edition has been held up because ISU was unable to submit its year-end financial data on the usual timetable.

The university switched to using the Workday computer system for accounting at the start of the 2020 fiscal year. While Iowa’s public universities have long sent year-end data to the Department of Administrative by October 1, ISU is still working on some “supplemental pieces” six months later.

Editor’s note from Laura Belin: The Governmental Accounting Standards Board and the Government Finance Officers Association now discourage use of the common acronym for this report, because when pronounced it sounds like a racial slur. Bleeding Heartland will avoid using the acronym in the future. Original post follows.

The state of Iowa missed a deadline for publishing a key report on its finances because Iowa State University was unable to provide the data on time.

Iowa’s public universities have typically submitted their financial information to the state by October 1, allowing the state to complete its Comprehensive Annual Financial Report (CAFR) by December 31. But ISU is more than four months behind schedule in submitting data for fiscal year 2020.

The delay stems from the university’s transition to a new accounting method using Workday software, raising concerns about the functionality of the computer system state government committed to in 2019.

Governor Kim Reynolds erred in directing that $21 million in federal funding from the Coronavirus Aid, Relief and Economic Security (CARES) Act be used to cover the cost of a software system purchased before the COVID-19 pandemic, according to State Auditor Rob Sand.

Sand announced on October 19 that he and the U.S. Treasury Department’s Inspector General “have advised Iowa Governor Kim Reynolds that her decision to use millions of CARES Act dollars to help implement a new software system for state government was not an allowable use of the funds.” The Treasury Department and governor’s office did not respond to requests for confirmation and comment.

Sand also described as “questionable” the use of CARES Act funds to pay the governor’s permanent staff. Bleeding Heartland was first to report last month that Reynolds directed $448,449 in COVID-19 relief funds to pay a portion of salaries and benefits for 21 of her staffers from mid-March through June 2020. Sand warned that a federal audit may eventually determine that the payments did not meet requirements, so reallocating the funds to purposes clearly allowed under the CARES Act would be less risky for taxpayers.