Indiana law change reduces state audits of local government

Local governments will see fewer audits due to a recent change in Indiana state law.

The State Board of Accounts used to audit cities and counties every year, and audit school corporations every two years. Now those audits will be conducted every four years unless there are red flags.

"The statute on frequency of audits changed last year from annual or biannual to a risk-based approach," said Todd Caldwell, director of audit services for the State Board of Accounts. "The longest length of time between (examiners) being somewhere is four years."

Almost 200 field examiners routinely work in all 92 counties in Indiana. But budget limitations and the sheer number of entities that require auditing means there's too much work and not enough people to do it, Caldwell told The Muncie Star Press.

Local officials confirmed this week that Delaware County and the city of Muncie haven't been audited for three years.

State audits are important because they can uncover costly financial mistakes, wrongdoing by officials and other issues that local governments can correct.

In recent years, audits by the State Board of Accounts have found problems with the Muncie Sanitary District's finances and then-Delaware County Treasurer John Dorer, who resigned in February 2015 after pleading guilty to a charge over the mishandling of funds.

Even though the state audits have been cut back, the State Board of Accounts is able to get involved if local governments' budgets and spending reports show irregularities.

Caldwell said the state considers risk factors, including new and untested elected officials, as well as figures submitted by fiscal officers of governments and schools through the state's Gateway budget and spending reporting system. He said state auditors also can be sent in to investigate if a local official or private citizen reports something that doesn't seem right.

"Calls from citizens would increase our risk factor or we would go in right away," Caldwell said.

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