FIRST ON DAILY SIGNAL – Maryland officials struggled to keep track of hundreds of millions of dollars in federal funding, according to an analysis of state financial data.
An audit found the state’s transportation department misreported $417 million, the Department of Human Services poorly tracked more than $200 million in funding, and other agencies committed similar accounting errors.
The fiscal watchdog group Truth in Accounting, which first shared its findings with the Daily Signal, based its analysis primarily on the 2025 Single Audit and Independent Auditor Report. The single audit is a required review for states receiving federal funding.
“Taxpayers deserve to know exactly where their money is going and whether it’s being handled responsibly,” the watchdog’s analysis said.
The findings come as states have faced growing scrutiny over their stewardship of federal taxpayer dollars following high-profile fraud cases in Minnesota and California. Truth in Accounting contends that single audits could be a key tool for the federal government as it ramps up anti-fraud efforts.
The Maryland audit did not find that money was unaccounted for; rather, it gave numerous examples of how federal funds were incorrectly reported or classified.
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“Until Maryland addresses these root causes, the risks to accurate reporting and accountable governance will remain high,” the analysis stated.
One of the audit’s biggest findings involved the Maryland Department of Transportation, or MDOT, which was forced to reverse $417 million in reported revenue that didn’t qualify under accounting rules.
“The department recorded approximately $417 million of revenue that did not meet MDOT’s availability criterion policy (collection within 60 days) and subsequently required an audit adjustment to reduce revenue and increase unavailable revenue by approximately $417 million,” the state’s single audit says.
Maryland Department of Transportation spokeswoman Meredith Devereux said that after the adjustment, under the government-wide financial statements, “there was no impact to MDOT’s overall financial position or the amount ultimately received from the federal government.”
“Following discussions with the independent auditors, MDOT refined its methodology to recognize only amounts collected within a 60-day availability period for the governmental fund statements,” Devereux told the Daily Signal.
Reporting problems were significant enough that the Department of Human Services had to reclassify more than $208 million in federal spending, a mistake that “had an impact on the major program determination,” the audit said.
Maryland Department of Human Services spokeswoman Lilly Price said the issues cited in the audit “did not, ultimately, result in the state of Maryland losing any revenue.”
“The department reclassified and corrected the misallocations, which were caused by a technical issue,” Price told the Daily Signal. “Safeguarding taxpayer dollars remains a top priority for the agency, and we have put new safeguards in place to prevent similar accounting issues from recurring in the future.”
The audit also found the state’s Department of Emergency Management failed to properly report $132 million in grant payments to subrecipients, while the Department of Labor failed to properly report more than $36 million in similar payments.
“This isn’t about one isolated mistake. It is a pattern across multiple state agencies, characterized by weak controls, poor documentation, staffing shortages, and outdated systems,” the Truth in Accounting report said. “Together, these problems increase the risk of errors, unsupported spending, and potential waste or noncompliance with federal rules, all at the expense of Maryland taxpayers.”
Maryland agencies also didn’t closely monitor grant money to nonprofit organizations. “When oversight fails, there’s little assurance that federal dollars handed to outside entities are being spent as intended or used in compliance with federal requirements,” the report said.
Allison Foster, spokeswoman for Maryland’s Department of Housing and Community Development, said the 2025 Single Audit found administrative documentation gaps in the monitoring of subrecipients, not a failure to monitor their actual use of federal funds.
“The department does not rely solely on single audits for oversight of pass-through federal funding,” Foster said. “In addition to reviewing applicable single audit reports, the department conducts supplemental monitoring activities such as desk reviews, reimbursement reviews, compliance testing, risk-based monitoring, technical assistance, and on-site monitoring visits depending on the nature of the program and identified risks.”
Maryland’s Unemployment Insurance Trust Fund lacked a reliable system for tracking its finances and enough experienced accountants to maintain accurate records during the year, according to the audit.
“We observed that the Maryland Unemployment Insurance Trust Fund (the UI Fund) does not employ a general ledger system to record the financial results of the UI Fund,” the single audit says.
“During the course of the fiscal year, management did not reconcile certain cash accounts, accounts receivable or benefits payable and rather reconciled and adjusted such balances after year-end,” the single audit continued.
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