Internal controls at the Secretary of the State’s office were not sufficient to prevent payments without purchase orders, to conduct revenue reconciliations or to accurately track unearned revenue, a recent audit details.
The audit, which covered fiscal years 2023 and 2024, noted nine deficiencies in the department, seven of which were repeats from prior audits.
The Secretary of the State serves as the chief election and business registrar and is the official keeper of public records and documents in Connecticut. The office collects fees for registering businesses, certifying them and handling other commercial transactions.
Close to $57 million is collected annually.
Secretary of the State Stephanie Thomas was elected to the role in November 2022 and was sworn in on Jan. 4, 2023. She took over for Denise Merrill, who resigned in June 2022. Mark Kohler served as acting secretary of the state in the fall of 2022, during part of the audit period.
When auditors reviewed payroll, they found one employee listed as FICA-exempt who was lacking any supporting documentation. This means the department failed to withhold $12,695 in FICA taxes during the person’s 14 months of working there, which can result in penalties and fees due, auditors noted.
Due to a clerical error, the employee’s FICA status had been entered incorrectly, overriding the default withholding settings, officials said. Auditors recommended a biweekly review and verification of FICA-exempt employees.
Department officials in their response said they reviewed all current employees coded as FICA-exempt immediately upon learning of the audit finding, and that the agency now has an approval process that includes new checklists and the fiscal director reviewing and approving all new hire actions to prevent further errors.
Auditors also noted that the department did not perform revenue reconciliations between its cash receipts software, its business registration system, and Core-CT during the audited period, a requirement under the State Accounting Manual. This means the department may not be properly accounting for all receipts, something that has been noted in 10 prior reports, auditors said.
Department officials said the three different systems did not align on deposit and receipt dates, but a system upgrade in late 2025 has resolved this issue and all systems can now integrate and reconcile properly.
Other issues auditors noted were incorrectly reported unearned revenues, incorrect balances on some reporting forms and delays in sending demand notices for late or missing payments.
Department officials say the updated systems and a new deposit logging system along with new supervisory review steps should fix those issues going forward.
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