Recent scrutiny of federal programs in Minnesota has drawn national attention to serious oversight failures at the state level. Those problems are not isolated. Audits in Georgia and other states reveal similar warning signs that raise broader concerns about accountability, internal controls, and the use of federal funds.

Georgia Receives Disclaimer Opinion

Georgia stands out nationally. The state is unique among states in having received a disclaimer of opinion on portions of its annual financial report (ACFR) every year since 2020, related to its business-type activities and the Unemployment Compensation Fund. A disclaimer means auditors were unable to obtain enough evidence to determine whether the financial information was reliable. In the private sector, this type of audit result would raise serious concerns for investors and lenders and would likely draw scrutiny from regulators such as the SEC and the IRS.

In addition to the financial report audit, because Georgia spends large amounts of federal money, it undergoes a Single Audit. A Single Audit is a comprehensive review of how a state manages federal funds, examining whether money is spent in compliance with federal rules and whether internal controls are strong enough to prevent errors, waste, or fraud.

The 2024 Single Audit of Georgia highlighted serious problems in multiple programs:

• Unemployment Compensation Fund: Auditors found material weaknesses in how overpayments were identified, tracked, and reported, including potential fraud. They could not verify the completeness or accuracy of overpayment data, found inconsistent fraud determinations, and identified cases that went uninvestigated for years. These control failures increased the risk that improper payments were not detected or recovered and led to an adverse audit opinion, the worst type of opinion auditors can issue, meaning the program’s financial reporting and compliance with federal requirements were materially flawed.
• Children’s Health Insurance Program (CHIP): The Georgia Department of Community Health and Department of Human Services did not maintain adequate controls over eligibility determinations for CHIP, which provides medical coverage to low-income children whose families earn too much to qualify for Medicaid. Auditors found that payments may have been made to ineligible recipients, potentially totaling $50 million.
• Coronavirus State Fiscal Recovery Fund (Cash Assistance program): The Georgia Department of Human Services did not follow proper procedures in managing the program, which provided one-time payments of up to $350 to low-income residents on Medicaid, SNAP, TANF, or PeachCare for Kids. DHS failed to obtain required written contract approvals for the contractor handling the cash cards, highlighting the need for stronger contract controls.
• Four Child Nutrition programs, the Community Mental Health Services program, and the Substance Abuse Prevention and Treatment program: Auditors found that these programs did not maintain adequate controls to ensure required federal reporting. Approximately $24 million in first-tier awards were either not reported or reported late, preventing the public from seeing how the funds were spent and demonstrating the need for stronger oversight.

“Weak oversight and inadequate controls create a serious risk that federal and state funds are misused, go unaccounted for, or are not recovered when improper payments occur,” said Sheila Weinberg, founder and CEO of Truth in Accounting. “Georgia’s audit results highlight the urgent need to strengthen internal controls, improve transparency, and make sure taxpayer dollars are spent as intended.”

At Truth in Accounting, our mission is to provide citizens with clear, accurate, and transparent information about government finances. We believe that truthful accounting, free from gimmicks, omissions, and overly optimistic assumptions, is essential for holding elected officials accountable and for ensuring that taxpayer dollars are used responsibly. That's why we closely examine reports like Georgia's Fiscal Year 2024 Single Audit, released in April 2025 by State Auditor Greg S. Griffin. Our analysis of their annual comprehensive financial report showed their  Financial State of the States 2025 report shows Georgia maintaining a healthy Taxpayer Surplus™ of $4,000 per taxpayer, earning a "B" grade and ranking 19th out of 50 states. The Single Audit report uncovers troubling weaknesses in internal controls and compliance that could jeopardize this progress. These issues underscore the ongoing need for full accrual accounting and enhanced oversight to safeguard Georgians from hidden risks and mismanagement.

A Mixed Picture on Financial Statements: Disclaimers Raise Alarms

The single audit, conducted under Government Auditing Standards and the Uniform Guidance, evaluates Georgia's handling of over $47 billion in federal expenditures for the year ended June 30, 2024. On the surface, the state's basic financial statements received unmodified (clean) opinions in most areas, including governmental activities, discretely presented component units, and major funds such as the General Fund and the Higher Education Fund. This aligns with the improvements we've noted in our reports, where Georgia's assets exceeded its bills by $13.6 billion in FY 2024, driven by strong revenues and prudent management of some liabilities.

However, the auditors issued a stark disclaimer of opinion on the business-type activities and the Unemployment Compensation Fund. This means they were unable to obtain sufficient evidence to form an opinion, primarily due to inadequate records or controls in these areas. The Unemployment Compensation Fund, managed by the Department of Labor, is particularly concerning. A disclaimer here signals potential underreporting of obligations. Without reliable data, taxpayers are left in the dark about the true cost of these programs, risking future burdens if claims surge.

Compounding this, the audit identified five material weaknesses in internal controls over financial reporting—deficiencies severe enough to create a reasonable possibility of material misstatements. These include:

• Inadequate controls over cash accounts (Finding 2024-002) at the Department of Community Health, leading to material noncompliance and potential errors in tracking billions in health-related funds.
• Overall accounting control deficiencies (Findings 2024-003 and 2024-006) at both the Department of Community Health and the Department of Labor, repeating issues from prior years and indicating systemic problems in financial management.
• Weaknesses in accounts receivable processes (Finding 2024-004), again at Community Health, which could result in overstated revenues or uncollected funds.
• Outdated financial management systems (Finding 2024-007) at the Department of Labor hinder accurate reporting and compliance.

Additionally, eight significant deficiencies were noted, further underscoring governance lapses. These control failures not only violate auditing standards but also erode public trust. As we've seen in states with poorer grades, such as Illinois (ranked 48th with a massive Taxpayer Burden™), unchecked weaknesses can lead to spiraling debts. Georgia's "B" grade is commendable, but these audit red flags warn that without fixes, the state's surplus could erode.

Federal Program Compliance: Adverse and Qualified Opinions Signal Mismanagement Risks

Georgia's reliance on federal aid, totaling over $47 billion in expenditures, makes compliance critical. Yet the audit paints a concerning picture here as well. The state did not qualify as a low-risk auditee, meaning heightened scrutiny in future audits. Of the major programs tested, one received an adverse opinion, and five others received qualified opinions, indicating material noncompliance that could lead to questioned costs, fund recoveries, or reduced future allocations.

The adverse opinion on the Unemployment Insurance program (ALN 17.225), administered by the Department of Labor, is especially alarming. This program, which provided benefits during and after the COVID-19 pandemic, failed to comply materially with requirements in areas such as eligibility determinations, employer-filed claims, and overpayment reporting (Findings 2024-019 through 2024-023). Auditors noted material weaknesses in controls leading to potential improper payments and fraud risks. With unemployment funds tied to taxpayer-backed liabilities, this noncompliance directly threatens Georgia's fiscal stability, much like the pension shortfalls we calculate in our Taxpayer Surplus™ metric.

Qualified opinions were issued for:

• Child Nutrition Cluster (ALNs 10.553, etc.), due to transparency reporting failures (Finding 2024-014) at the Department of Education.
• Children's Health Insurance Program (ALN 93.767) and Medicaid Cluster (ALNs 93.775, etc.), with issues in eligibility (Finding 2024-017) and allowable costs (Finding 2024-018) at the Department of Community Health.
• Block Grants for Community Mental Health Services (ALN 93.958) and Substance Abuse (ALN 93.959), involving weaknesses in subrecipient monitoring and reporting (Findings 2024-016, 2024-020).
• Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027), with procurement deficiencies (Finding 2024-024) at various agencies.

These qualified programs represent critical services for vulnerable Georgians, from child nutrition to mental health support. Noncompliance here not only risks federal clawbacks, potentially in the millions based on sampled questioned costs, but also inefficient use of taxpayer funds. Our transparency score for Georgia (55/100, ranking 45th nationally) reflects these very issues: incomplete or delayed reporting hides the full picture from citizens.

Material weaknesses in internal controls over major programs were widespread, affecting eligibility, reporting, and special tests across agencies. For instance, in student financial aid (various ALNs), universities such as Georgia Tech and others failed to properly handle returns of Title IV funds or enrollment reporting (Findings 2024-015, etc.), potentially leading to overawards.

The Bigger Picture: Transparency as the Path Forward

While Georgia's overall financial health has improved, moving from a modest surplus in 2023 to $13.6 billion available in 2024, these audit findings reveal cracks in the foundation. Our Financial State of the States methodology, which accounts for all liabilities on a full accrual basis, shows progress, but persistent control weaknesses could reverse gains. Factors like potential reductions in federal aid (we estimate a $7.5 billion drop if levels revert to pre-COVID norms) amplify the risks. The audit's repeat findings, many echoing prior years, suggest a lack of sustained corrective action, a pattern we've criticized in "sinkhole" states.

Truth in Accounting urges Georgia lawmakers and Governor Brian P. Kemp to prioritize reforms:

• Modernize financial systems across key agencies such as Labor and Health to eliminate disclaimers and weaknesses.
• Strengthen eligibility and reporting controls for federal programs to avoid adverse opinions and protect funding.
• Adopt full accrual accounting standards across all reports, ensuring that liabilities such as unemployment and pensions are fully disclosed.
• Enhance transparency by improving online financial dashboards and timely audits—aiming to boost their score in our Transparency Report.

Georgians deserve government finances that are not just balanced but are truthfully presented. By addressing these audit issues head-on, the Peach State can solidify its "B" grade and build a more accountable future.