Audit enforcement bill dies in committee as governor’s office accumulates years of unaddressed findings

DENVER — A bipartisan bill that would have created Colorado’s first financial penalty for state agencies that ignore audit recommendations was postponed indefinitely in the House State, Civic, Military, & Veterans Affairs Committee, a panel that former state legislator Ramey Johnson calls “the killed committee.”

HB26-1254, sponsored by Representative Max Brooks, Representative Don Suckla, Senator Lisa Frizell, and Democrat co-sponsor Representative Jennifer Bacon, would have allowed the state controller to restrict 3% of a noncompliant agency’s general fund appropriations after a multi-step review process.

Johnson, a Colorado Union of Taxpayers board member and former Lakewood city councilwoman, discussed the bill’s demise on The Kim Monson Show on March 19.

“It was going to put some teeth into government oversight, because we need a way of making departments comply with their audits,” Johnson said.

Governor’s office leads in unaddressed audits

Johnson pointed to the governor’s office as the most significant concern.

“Two years ago, he had 20 audits. A year ago, he had 20 audits. And this year, six. And he has not responded,” Johnson said.

The pattern of noncompliance predates the current session. A December 2022 Colorado Politics investigation found the governor’s office had 17 serious unimplemented recommendations, with IT control failures in the Colorado Unemployment Benefits System, the Colorado Automated Tax System, and the Colorado Labor and Employment Applicant Resource system at the Department of Labor and Employment dating back to 2009. Six of those carried material weakness classifications, the most serious level of internal control deficiency.

From July 2016 to June 2021, state auditors issued 1,523 recommendations across all agencies. While agencies implemented 93% of the recommendations they agreed to act on, 46 high-priority recommendations remained unresolved, some outstanding for more than five years.

Health care agency also flagged

Johnson also cited the Department of Health Care Policy and Financing, which administers Colorado’s Medicaid program.

“Their budget is five and a half billion dollars. Two years ago they had four audits, a year ago four, and this year so far one, and neither one of them have really responded or complied,” she said.

The concern carries federal implications. Johnson noted that Colorado is among approximately five states facing increased federal scrutiny over Medicaid fraud, particularly in light of fraud investigations in Minnesota.

No penalties for noncompliance

Colorado currently has no financial consequence for agencies that ignore audit findings. Deputy State Auditor Marissa Edwards confirmed this to the Legislative Audit Committee during the FY2025 statewide single audit review, testifying that statutory timelines for audit compliance “do not carry additional prescribed penalties beyond reporting.”

The FY2025 audit reviewed roughly $65.9 billion in state assets, $56.3 billion in expenses, and $20.8 billion in federal expenditures. State Auditor Kerri Hunter warned in 2022 that material weakness findings in federally funded programs can trigger sanctions under the federal single audit act, potentially costing Colorado access to federal dollars.

Why the bill died

Johnson said the bill was assigned to a committee where legislation goes to die.

“The reason why it’s called that is that all of the representatives that are on that particular committee are in very safe districts so they can vote no, and there’s no repercussions for them,” she said.

The bill’s death prompted Johnson to question whether the governor’s office played a role. “Call me skeptical, but I’m wondering if the governor’s office had a way of making sure that this one did not make it through,” she said.

The Kim Monson Show previously reported on HB26-1254 when it was introduced, with CUT Vice President Rob Knuth calling the 3% penalty insufficient. “What’s disturbing to me is they’re fighting even 3%,” Knuth said at the time.