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Statewide Auditing and Financial Accountability

Scope and objectives | September 2026

Project coordinator: Zack Freeman
Stephanie Hoffman, deputy legislative auditor; Eric Thomas, legislative auditor
Contact information

Why we are doing this study

The 2026 Legislature directed the Joint Legislative Audit and Review Committee (JLARC) to review auditing, accountability, and risk management practices across Washington's state agencies. The study mandate directs JLARC to consider a sample of state programs that administer grants, loans, and contracts.

Read the study mandate ➜
ESSB 5998, section 103(6) (2026)

Background

Washington promotes financial stewardship and accountability through a combination of state and federal laws, audit and accounting standards, and agency policies.

  • The Office of Financial Management (OFM) sets state accounting standards, including requirements for agency internal controls. OFM also determines which agencies must maintain an internal audit program.
  • The State Auditor's Office (SAO) audits federally funded programs, state expenditures, and agency compliance with state and federal law and internal policies. SAO also investigates allegations of fraud involving state employees. *
  • State agencies are responsible for designing and implementing internal controls, recording financial transactions, conducting internal audits, and investigating allegations of fraud. Internal controls are rules, policies, and procedures used to safeguard public resources and support financial management.

The Legislature directed JLARC to evaluate current audit and accountability practices and to identify options to strengthen oversight of state programs.

* SAO operates under the direction of the separately elected state auditor. It is a separate entity from JLARC. JLARC is a legislative agency that serves as the Legislature's nonpartisan performance auditor.

Study scope

This study will focus on statewide audit and financial accountability practices and requirements. The study will:

  • Examine OFM's role in establishing and overseeing the state's accounting standards, including requirements for internal controls and internal audits.
  • Evaluate SAO's role and how its work fits within the broader audit and accountability system.
  • Include case studies to assess agencies' internal control and fraud prevention practices.

While this study will examine existing fraud prevention and investigation practices, it will not investigate or attempt to uncover specific instances of fraud in state programs. However, if warranted, we will follow state laws that require all agencies, including JLARC, to notify SAO of known or suspected loss of public funds, illegal activities, or fraud.

Internal controls and accountability practices that are not related to finances, such as data security controls and audits, are outside the scope of the legislative mandate.

Study questions

The study will address the following questions. They reflect our preliminary outreach, research, and analysis of potential racial equity considerations per RCW 44.28.076.

  1. How do OFM and SAO set statewide accounting and internal control requirements and ensure agency compliance?
  2. How do agencies design, implement, and monitor their internal controls and internal audit programs?
    1. Are their audit and accountability efforts consistent with best practices and/or standards set by OFM and SAO? If not, why?
    2. How do agencies balance internal controls with goals like operational efficiency and equitable access to state programs and services?
  3. How do Washington's fraud prevention, risk management, and financial accountability practices compare to those from other states and established best practices?

What's next

  • Preliminary report: September 2027
  • Proposed final report: December 2027

Learn more about our study process ➜

Study team

Carl Backen, research analyst, (360) 786-7863
Hope Thompson, research analyst, (360) 786-7982