Oregon — A new Oregon Secretary of State audit report found the state’s financial statements were ultimately accurate and received a clean audit opinion, but auditors identified $2.5 billion in accounting errors requiring correction and questioned whether $15.6 million in federal expenditures complied with federal program requirements.
The fiscal year 2025 “Keeping Oregon Accountable” report, released by the Oregon Audits Division, reviewed the state’s finances, federal grant compliance, and progress addressing previous audit findings. Auditors issued an unmodified, or “clean,” opinion on Oregon’s financial statements, indicating they were fairly presented after adjustments were made.
During the audit, reviewers examined more than $52 billion in assets, $25 billion in liabilities, $46 billion in revenues, and $45 billion in expenditures. Auditors reported 14 findings across 11 state agencies and identified approximately $2.5 billion in accounting adjustments. The report notes these adjustments primarily involved correcting classifications and estimates and did not represent misspent funds.
The audit identified 12 significant deficiencies and two material weaknesses in internal financial controls. Material weaknesses represent the most serious control issues because they could reasonably result in significant misstatements in financial reporting.
Federal grant oversight emerged as a major area of concern. Oregon spent more than $21.1 billion in federal funds during fiscal year 2025, with Medicaid alone accounting for $13.2 billion. Auditors reviewed 16 major federal programs representing nearly 69% of all federal spending and reported 16 findings involving five agencies.
Auditors questioned $15.6 million in federal expenditures, including $8.2 million in directly identified costs and another $7.4 million in projected costs based on sample testing. The largest issue involved the Oregon Health Authority’s Basic Health Program, where auditors identified approximately $15 million in known and likely questioned costs tied primarily to eligibility determination errors.
As a result, auditors issued an adverse opinion on the Basic Health Program, concluding that compliance failures were material and pervasive. The report states that system errors involving both upper and lower income eligibility limits resulted in improper enrollment decisions, leading auditors to recommend that OHA identify affected individuals and reimburse the program.
Auditors also issued a disclaimer of opinion for the Oregon Department of Transportation’s Highway Planning and Construction Program. According to the report, ODOT could not provide expenditure data in a format that allowed auditors to isolate fiscal year 2025 federal expenditures and complete required testing procedures.
The report highlighted several longstanding unresolved findings. A Temporary Assistance for Needy Families (TANF) reporting issue at the Oregon Department of Human Services dates back to 2010 and remains unresolved after 16 years. Auditors also cited recurring Child Care and Development Fund issues dating to 2014 involving childcare copay calculations and authorized care hours.
At the same time, auditors reported progress in addressing previous findings. Fourteen of 20 prior financial audit findings were corrected, while 27 of 66 prior federal compliance findings were resolved during fiscal year 2025. One Medicaid provider eligibility finding that had remained open since 2012 was finally corrected after agencies implemented additional training, updated procedures, and improved documentation requirements.
Secretary of State Tobias Read said the annual report is intended to help Oregonians understand how effectively state agencies manage public resources and whether agencies are following through on audit recommendations designed to improve accountability and performance.
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