Colorado's 2025 Single Audit identified 48 findings across state agencies, highlighting recurring weaknesses in financial reporting, cybersecurity, internal controls, and oversight of federal grant programs. While auditors noted that agencies had made progress in some areas, they also found that many longstanding problems remained unresolved.
One of the audit's largest findings involved the state's year-end financial reporting process. After the statutory deadline for closing the state's books had passed, auditors identified 501 accounting adjustments totaling $24.1 billion. This raises concerns about the timeliness and reliability of the state's financial reporting process and the effectiveness of its financial controls.
This is similar to balancing your household budget, declaring it complete, and then discovering hundreds of transactions that still need to be corrected afterward. While many of the adjustments involved accounting estimates rather than new spending, they show the state's financial picture was still changing after the books were officially closed.
A substantial share of those late adjustments came from the Department of Labor and Employment. Auditors found weaknesses in the department's methodology for estimating unemployment insurance revenues, expenditures, and bad debt expense, resulting in approximately $10.6 billion in post-closing accounting entries. Accurate estimates and documented review procedures are essential because they help ensure that the state's financial statements fairly reflect its financial position.
Other agencies also struggled with financial reporting. The Department of Local Affairs incorrectly recorded $158.5 million in revenue after several grant awards were improperly recorded in the state's accounting system. Auditors also found that a separate accounting error caused the Coronavirus Capital Projects Fund to overstate both revenues and expenditures by $3.3 million before the issue was identified.
At the Department of Personnel and Administration, auditors found that an extended office lease was not properly recalculated after its terms changed, as required by government accounting standards. As a result, the state's financial statements understated both its lease assets and lease liabilities by $50.4 million until auditors identified the error.
Oversight of federal grant programs remained a recurring concern. Auditors found that the Department of Public Health and Environment failed to submit required federal transparency reports for approximately $15.2 million in funding. Other agencies struggled with untimely reporting, inadequate documentation, incomplete monitoring of grant recipients, and reporting errors that increased the risk of noncompliance with federal requirements.
Beyond the largest findings, auditors identified recurring issues across three major areas:
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Technology and cybersecurity (19 findings): Auditors identified incomplete information security policies; outdated user access procedures; missing IT governance documentation; insufficient oversight of third-party service providers; and that the state still hadn't fixed several problems identified in earlier audits. While agencies had begun addressing many of these issues, several corrective actions were still incomplete or not yet operating effectively by the end of the fiscal year.
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Financial reporting (17 findings): Recurring issues involved accounting calculations; lease accounting; inventory and payroll reporting; the tracking of grant money; the failure of bills paid matching the accounting records; and year-end financial statement preparation. Many findings pointed to weaknesses in supervisory review, employee training, reconciliations, and documented procedures, which required significant corrections before the state's financial statements could be finalized.
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Federal grant administration (11 findings): Auditors found untimely federal reporting, unsupported grant expenditures, incomplete monitoring of grant recipients, missing transparency reports, reporting inaccuracies, and flaws in the oversight of federal funds to ensure they were spent in accordance with program requirements. These issues affected multiple agencies and increased the risk of additional federal oversight or compliance actions.
Colorado's public colleges and universities were also the subject of nine audit findings. Because these are state institutions that receive state and federal funding, colleges and universities are included in the state’s single audit report. Auditors identified problems involving financial reporting, student financial aid reporting, cybersecurity planning, and oversight of third-party financial service providers.
At Fort Lewis College, for example, auditors found that an $11.8 million bond issued to purchase student and staff housing was not accounted for in accordance with governmental accounting standards. The errors were corrected during the audit after auditors identified them.
Colorado's 48 audit findings point to recurring deficiencies in financial reporting, documentation, cybersecurity, employee training, supervisory review, and compliance monitoring. Strengthening these internal controls could help improve the accuracy of the state's financial reporting, safeguard public resources, and reduce the risk of future errors and federal compliance issues. But perhaps most importantly, it would reassure federal taxpayers that their tax dollars are being used appropriately in Colorado.