The Comptroller General holds one of five seats on the State Fiscal Accountability Authority, the board that selects the State Auditor.1 One of the first things I plan to do with that seat is encourage the board to modernize how the state audits its agencies, so that every agency in the state can be audited.
Times have changed. An auditor used to pull a sample because reading every transaction was impossible. The tools auditors use today can check an entire set of books. Last year an outside accounting group wrote that auditors can now analyze “entire datasets, rather than relying on sampling,” and catch the odd entry a sample would never turn up.2 Modern tools make modern audits possible, including audits that check every transaction, not just some of them.
When you hear that the state has been audited, you probably picture outside accountants visiting every agency, going through its books, and signing off. The state’s books as a whole do get a full audit every year. The State Auditor and an outside accounting firm go through them together and sign an opinion that the numbers are fairly stated.3
That is not what happens at the agency level. For the year that ended June 30, 2024, 51 state agencies did not get an audit of their own. They got something called agreed-upon procedures.4 It is not an unusual arrangement. But it is not an audit.
In an audit, the accountant decides for himself what to test, tests enough to satisfy himself, and signs his name to a verdict on whether the books are right. In agreed-upon procedures, the agency and the auditor agree ahead of time on a list: pull ten receipts and match them to the ledger, check five bonus payments, look at two months of bank reconciliations. The auditor does what is on the list and writes down what he saw. He does not go past the list. He does not say whether the books as a whole are right, because the engagement never asked him to. Every one of these reports says so: “we do not express such an opinion or conclusion.” Some agencies also agree up front that small errors go unreported, under $1,000 at the Department of Corrections, under $200 at Social Services.5
It is the difference between a home inspection and asking a man to check the roof and the water heater. He checks the roof and the water heater. Nobody has told you what shape the house is in.
These are not small offices. The South Carolina Department of Administration, which runs the state’s central services, gets the lighter review. So does the South Carolina Department of Commerce. It has had the lighter review since 2005, when a sentence in the state budget let it skip the audit the law had required since 1993.6 So does the South Carolina Office of the Adjutant General, which runs the National Guard. So do the South Carolina Department of Health and Human Services, which runs Medicaid, the South Carolina Department of Social Services, and the South Carolina Department of Corrections. So does the State Fiscal Accountability Authority itself. And so does the South Carolina Office of the Comptroller General, the one I am asking you for.7
Then the numbers from every agency, the audited ones and the 51, are sent to the Comptroller General, who compiles them into the state’s annual financial report. The State Auditor and the outside firm audit that report. They test a sample of the compiled numbers, “on a test basis,” in their words, and sign their opinion on the whole.8 That opinion is real. It is an opinion on the compiled report. It does not mean every agency was audited. For 51 of them, nobody was asked to say whether their books are right.
The State Auditor’s office sees part of this. Its 2025 report says the reviews have been checking old transactions, so that by the time a problem turns up, the agency is too late to fix it, and the office is moving the reviews to current transactions.9 Nearly half of last year’s reviews included some.
It is time to modernize how we do state audits. The Comptroller General cannot audit the agencies himself. He keeps the books, and the person who keeps the books does not get to grade them. But he sits on the board that picks the State Auditor, with the Governor, the Treasurer and the two budget chairmen, and a seat at that table is a voice. I am not going to tell you what the new process should be. That takes thought, and it takes the board, the State Auditor and the legislature agreeing to it. What I will do is encourage the members of the board to embrace the tools auditors now have, so the state can check every agency, every year, for about what it spends now.
What that buys is better books. When an agency’s books are checked whole instead of sampled, the mistakes get found the year they happen, and the numbers that reach the state’s annual report have something behind them. I expect it to save money, because a complete check finds the duplicate payment and the idle contract that a sample walks past. And I expect it to improve the service you get from your government, because a manager who knows his books are right can spend his time running his agency instead of reconstructing last year.
You balance your checkbook every month, every line, and you would not sign your name to a year you had only glanced at. For 51 of its agencies, the state checks a few dozen entries and signs no opinion. We can do better than that now, and the tools to do it are on the shelf. We can’t expect to run an excellent government if we don’t have reliable financials.
Next week: Three Things My Office Will Publish in Its First Year.
Last week:
South Carolina Can End the Income Tax Without Raising Another One
This spring the legislature passed a law, H.4216, that sets the income tax on a path to zero. The law sets the goal, but not the schedule. The money to get there has already been flowing into the state’s main account, which took in $7 billion in 2015 and $14 billion in 2025. That is $7 billion more in 2025 than in 2015. In 2025 the income tax accounted …
S.C. Code § 11-7-10: "The State Fiscal Accountability Authority shall select the State Auditor." § 11-55-10(A): the Authority consists of the Governor, the State Treasurer, the Comptroller General, the Chairman of the House Ways and Means Committee and the Chairman of the Senate Finance Committee, all ex officio.
Center for Audit Quality, “Auditors and AI in the New Era of Audit,” by Trevor Barton, Managing Partner, Quality, Risk & Regulatory, Deloitte & Touche LLP, August 11, 2025, thecaq.org: “The ability to analyze entire datasets, rather than relying on sampling, further enhances accuracy and allows for the identification of subtle anomalies that might otherwise go undetected.” The Center for Audit Quality is a public-policy organization of public-company auditors; the article is the author’s, not the state’s.
State of South Carolina, Annual Comprehensive Financial Report for the fiscal year ended June 30, 2025, Independent Auditors’ Report, pp. 18-19, signed jointly by the Office of the State Auditor and Mauldin & Jenkins: “In our opinion, based on our joint audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position ... in accordance with accounting principles generally accepted in the United States of America.” The FY2024 report was audited jointly with CliftonLarsonAllen (State Auditor’s 2025 Accountability Report, p. 1).
S.C. Code § 11-7-20(A): “The State Auditor, to the extent practicable and consistent with his overall responsibility, shall audit or cause to be audited each State agency and entity annually.” Office of the State Auditor, 2025 Annual Accountability Report, p. 1: “Completion of 51 agreed-upon procedures engagements for state agencies covering fiscal year 2024, including 23 engagements that also included procedures covering a portion of fiscal year 2025.” P. 6 describes the work as “attestation engagements of each state agency that is not separately audited, which are focused on internal controls.” Separately audited financial statements for the year ended June 30, 2025 are posted at osa.sc.gov/reports for, among others, the University of South Carolina, Clemson University, the Medical University of South Carolina, the Department of Transportation and the South Carolina Retirement Systems. Agreed-upon procedures engagements are performed under attestation standards of the American Institute of Certified Public Accountants, which each report cites.
The standard language in the agreed-upon procedures reports cited here: the agency’s management “has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose,” and “We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively ... Accordingly, we do not express such an opinion or conclusion.” Department of Corrections report dated August 30, 2024: “Management of the Department has agreed that the following deficiencies will not be included in the State Auditor’s Report on Applying Agreed-Upon Procedures: Errors of less than $1,000 related to cash receipts and non-payroll cash disbursements transactions. Errors of less than $1,000 related to reporting packages.” Department of Social Services report dated October 24, 2024: the same sentence, followed by “Errors of less than $200.” The sample sizes in the body (ten receipts, five bonus payments, two months of reconciliations) are from those two reports. Seven of the eight reports cited in note 7 carry the sentence as quoted; the Office of the Comptroller General’s report, prepared by The Brittingham Group, reads “Accordingly, we do not express an opinion or conclusion.”
S.C. Code § 13-1-50 as enacted by Act 181 of 1993, Section 243: the Department of Commerce “shall be audited ... once each year,” with audited financial statements delivered to the General Assembly by October 15. Proviso 27.25 of the fiscal year 2005-06 Appropriations Act (H.3716, as ratified) first allowed agreed-upon procedures in place of audited statements; it ran as Proviso 27.23 in 2006-07 and 27.22 in 2007-08. Act 353 of 2008, Part 31.B.1, effective July 1, 2008, wrote the sentence into § 13-1-50, which now reads that the department “may undergo an Agreed Upon Procedures audit in lieu of having audited financial statements.” The sentence does not appear in any ratified budget from 2000-01 through 2004-05.
Each is an Independent Accountant’s Report on Applying Agreed Upon Procedures issued by the Office of the State Auditor, and each states that the accountants do not express an opinion or conclusion. Department of Administration: fiscal year ended June 30, 2024 and July 1, 2024 to April 30, 2025, dated June 12, 2025. Department of Commerce: the same periods, dated June 23, 2025. Office of the Adjutant General: fiscal years ended June 30, 2025 and 2024, dated September 5, 2025. Department of Health and Human Services: July 1, 2023 through May 31, 2024 and select procedures for fiscal year 2023, dated October 21, 2024. Department of Social Services: July 1, 2023 to April 30, 2024 and select procedures for fiscal year 2023, dated October 24, 2024. Department of Corrections: fiscal year ended June 30, 2024 and selected procedures for fiscal year 2023, dated August 30, 2024. State Fiscal Accountability Authority: July 1, 2025 to April 30, 2026 and fiscal year ended June 30, 2025, dated August 20, 2026. Office of the Comptroller General: fiscal year ended June 30, 2025, dated February 5, 2026, performed by The Brittingham Group, L.L.P. under contract with the State Auditor (the fiscal year 2024 report, dated January 13, 2025, was performed by the same firm under the same contract). All are posted at osa.sc.gov/reports or its archive.
S.C. Code § 11-7-20(B): “Annually the State Auditor shall audit or cause to be audited the State’s basic financial statements prepared by the Comptroller General of South Carolina.” FY2025 ACFR, Independent Auditors’ Report, p. 19: “Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.” P. 18: the auditors’ opinion is “based on our joint audit and the reports of other auditors,” and the report includes a table of the shares of assets and revenues audited by other auditors.
Office of the State Auditor, 2025 Annual Accountability Report, p. 2: “Recognizing that the historical nature of our agreed-upon procedures engagements does not allow agency management to timely respond to findings, we are shifting focus to procedures performed on more current, rather than historical, financial data and transactions ... Nearly half the engagements completed during the year included procedures around current financial transactions.”