All state funds are audited independently at the end of the year. Regular reviews of government's financial activities are essential to ensure that services are delivered effectively and efficiently and to increase public confidence that government is working smoothly, under the control of elected officials, and operated transparently. Annual audits and financial reports are one important step in this process. The two most important annual reports from this process are the Comprehensive Annual Financial Report (CAFR) and the single audit.

OSF prepares the CAFR each year. It is a complete financial report on all state financial operations, including sources and amounts of revenue, spending by function and agency, assets owned by the state and amounts the state owes to others. The report is prepared under national standards created by the Government Accounting Standards Board, so Oklahoma's results can be compared fairly to those of any other government that uses these standards. The annual financial reports and the transactions leading to it are audited each year by the State Auditor and Inspector (SAI). This official is elected for a four-year term and manages a staff of accountants and auditors. They visit agencies during and after the fiscal year to be sure laws, policies, and procedures have been followed, that internal controls exist to protect public assets, and that all financial activities are accounted for properly. They follow Government Auditing Standards created by the federal government in this process. At the conclusion of their work, they produce an opinion (included in the CAFR) on whether the financial statements fairly present what actually happened during the year.

The State Auditor and Inspector also prepares the single audit report each year. This is a required audit of all activities that involve federal grant money. Similar auditing techniques are used to ensure agencies are using federal money legally and appropriately, that any required state matching money is used and correctly reported,  and that agencies have procedures in place to help make sure federal funds are handled and accounted for correctly. This process concludes with the annual single audit report, which totals the money spent under each federal grant program, recommends improvements in policies and procedures and reports on whether previous recommendations have been followed.

Oversight and accountability of government finances and operations continues on a year-round basis. In addition to the annual reports and audits already described, there are several other ways to make sure government is working and using public money the way it should. These include:

• Performance audits: The State Auditor and Inspector conducts performance audits of many state programs and activities. These go well beyond financial considerations to determine if the program is meeting its goals, if it is using all of its resources effectively, and whether additional funding could produce better outcomes. Reports are prepared and made available to all interested persons, along with agency management's response to the reports. The SAI also prepares follow-up reports to determine if recommended improvements have been made.
• Strategic planning and measurement: OSF manages a program under which all agencies must prepare a five-year strategic plan that spells out the agency's mission, goals, and specific plans for accomplishing these goals. The plans include measurable objectives. Agencies are required to track and submit performance measures each year so the Legislature, Governor, OSF, SAI, media, and interested public can track progress toward meeting the goals.
• Federal agency oversight: Federal agencies that make grants to the state monitor performance on each grant. They require reports each month or quarter on what money has been spent and what it has accomplished. They require agency personnel to manage grants and carry out their program activities to attend training on grant processes and procedures. They frequently send staff to Oklahoma to review records, make field visits to programs financed by grants, and recommend improvements in how grants are managed. Passage of the stimulus bill (The American Recovery and Reinvestment Act of 2009) creates new oversight challenges. The bill includes additional funding for inspectors general who will investigate state spending and both the national and Oklahoma governments have pledged to create systems for taxpayers to monitor how the stimulus is being used.
• Legislative oversight: Legislative committees invest significant time in determining whether state programs are working effectively. They hold hearings on agency activities, use the budget process to determine what is working well and what needs improvement, and conduct interim studies to identify needed improvements. Occasionally the Legislature retains outside consultants and experts to conduct a complete performance audit of agencies they feel need examining. Recent audits have examined the Department of Corrections and the child welfare program of the Department of Human Services.
• Specialized state oversight of the state's share of funding from the federal stimulus bill: The Governor created a 15-member American Recovery and Reinvestment Act (ARRA) Coordinating Council, which brings together Cabinet Secretaries and agency directors with primary responsibility for implementing the myriad provisions of the stimulus bill. The state also has created a web site to explain and track the progress of stimulus programs.

Like any operation that involves billions of dollars and tens of thousands of people, Oklahoma's government makes mistakes, either unintentional or through outright fraud. The audit and evaluation system is in place to help minimize those mistakes and to identify and correct them wherever possible. Effective audit and evaluation helps make sure public money is used as effectively as possible.

Go to the Office of State Finance to see recent comprehensive annual financial reports
Go to the State Auditor and Inspector to see audit reports

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