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.