SC ready to begin search for origins of $1.8B in misplaced state funds

(Photo illustration by Getty images)

COLUMBIA – South Carolina is ready to start its search for the origins of $1.8 billion in taxpayer funding that sat unidentified and untouched in a bank account for more than five years.

A working group formed by Gov. Henry McMaster — which includes the State Treasurer’s Office , Comptroller General’s Office, State Auditor’s Office, Department of Administration, Attorney General’s Office and the Governor’s Office — will soon aid in a forensic audit to investigate the mystery money and identify how it was supposed to be spent.

State financial officials have said the money was overlooked in the wake of a chaotic, decade-long transition from the state’s old accounting system to a new one. At some point in the switch over, officials lost track of what agency or entity the money had been meant for. And no one alerted lawmakers to the issue.

SC Senate report says $1.8B blunder is Treasurer Loftis’ fault

It came to light as the $1.8 billion became entangled in the fallout from a $3.5 billion accounting error by the state’s former top accountant. That blunder came from a computer coding glitch in which public colleges’ revenue was mistakenly double-counted year after year in the state’s annual financial report it provides to Wall Street investors. The miscalculation accumulated over a decade before a junior staffer in the office of then-Comptroller General Eckstrom discovered it in 2022.

The state expects to hire an independent accounting firm by mid-July to perform a review of all cash and investments held in state coffers.

The state budget approved by the Legislature and sent to McMaster’s desk last week includes $3 million for that audit.

“We recognize the importance of people and agencies working together — collaborating, communicating and cooperating — across boundaries to work for the citizens of our state,” McMaster said in a statement. “ We will continue to build on their hard work and support and count on their aid to the outside accounting firm to conduct what will be a thorough review.”

The working group has spent the last few months laying the groundwork. It has gathered documentation, opened a portal for sifting through thousands of data entries that took place during the accounting system switch, re-ran past checks on financial records to make sure they’re accurate and made a platform to run tests on potential future changes to the accounting system.

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