Legislative audit finds nearly $1B DOT accounting error

Wisconsin’s annual audit of state finances has revealed a nearly $1 billion accounting error at the Department of Transportation, as well as ongoing information technology security deficiencies and statutory noncompliance at the Department of Administration.

Legislative Republicans said the just-released report by the nonpartisan Legislative Audit Bureau (LAB) on the state’s 2024-25 financial statements raises red flags about inadequacies that have gone uncorrected for years. 

In a joint statement, State Senator Eric Wimberger (R-Oconto) and Representative Robert Wittke (R-Caledonia) specifically called attention to the Department of Transportation (DOT) error and to a material weakness in internal controls over financial reporting.

For one, the audit found that the DOT incorrectly reported an $896.5 million increase in infrastructure capital assets after modifying its estimation methodology without fully complying with applicable accounting standards.

In addition to the DOT finding, the audit flagged short-comings in the Department of Administration’s (DOA) oversight of state information technology systems, issues the auditors say have persisted for more than a decade.

After the report’s release, Wimberger and Wittke said the report underscored the need for additional staffing in the LAB. In June, the lawmakers stated, the Legislature approved four additional auditors to assist the state auditor in accountability work in the 2025-27 biennial state budget, but all four positions were removed by Governor Evers’s partial veto of the bill.

“The Wisconsin DOT made a nearly $1 billion mistake, and it was only caught because of the oversight by legislative auditors,” Wimberger and Wittke said. “This highlights the critical oversight role that the Legislature provides for the people of Wisconsin, and once again proves how short-sighted Governor Evers’s veto of four new auditor positions was.”

Wimberger and Wittke said the veto undercut legislative oversight efforts, particularly in light of the audit’s findings.

$1 billion estimation error

According to the audit, DOT is responsible for administering transportation infrastructure projects statewide, including the development and maintenance of roads and bridges. 

As part of that role, the audit stated, the agency compiles information on infrastructure capital assets, which are included in the state’s Annual Comprehensive Financial Report prepared by the DOA.

DOT originally established its infrastructure historical cost estimates in fiscal year 2001-02 and developed a methodology to determine which road and bridge construction costs should be capitalized and which should be expensed under generally accepted accounting principles, the report continued.

During fiscal year 2024-25, auditors found, DOT changed the assumptions the department used in its methodology for certain project codes. In so doing, the DOT capitalized costs that historically were expensed and then applied the changes retroactively.

The DOT did not fully consider relevant accounting standards when making those changes, the LAB concluded, and failed to classify the adjustment properly as a change in accounting estimate, which it said should be applied prospectively rather than retroactively.

As a result, the report stated, DOT initially reported an $896.5 million increase in infrastructure capital assets. After auditors requested an assessment, DOT determined the two project codes should have continued to be treated as expenditures and removed the reported increase.

Auditors attributed the error to multiple factors, including insufficient historical documentation, misinterpretation of technical data by financial staff, and inadequate consideration of applicable accounting standards.

IT security and oversight concerns

Wisconsin statutes assign the DOA responsibility for establishing information technology (IT) policies and monitoring executive branch agencies’ compliance with those policies, the report stated. Auditors reported significant deficiencies, including insufficient documentation of access reviews and weaknesses in the IT policy exception process.

The audit noted that DOA has been cited for similar concerns since the fiscal year 2014-15 audit and has yet to fully address them. Though DOA took some steps to address prior findings, auditors found that the agency did not adequately document whether supporting materials reviewed during agency assessments demonstrated compliance with IT security controls.

“Given the connections among agencies in the state’s network, IT weaknesses at one agency can affect IT security for other agencies,” the report stated. “… Because these audit concerns have not been fully resolved, there continues to be an increased risk that the state’s IT systems are not being properly controlled.”

Auditors recommended that DOA report quarterly in 2026 to the Joint Legislative Audit Committee on its progress in providing oversight and monitoring of executive branch IT operations, as required by statute.

Wimberger and Wittke said the findings are a cause for worry.

“State agencies must be good stewards of taxpayer dollars, and providing accurate and complete financial statements is a major part in good governance,” the lawmakers said. “We understand that mistakes happen, but the same mistakes happening year after year raises significant concerns. We look forward to following up with agency leaders to ensure their full compliance with state law.”

Statewide financial overview

Beyond agency-specific findings, the audit provides an overview of Wisconsin’s overall financial position.

The state’s General Fund balance declined from $4.5 billion as of June 30, 2024, to $3.9 billion as of June 30, 2025. The largest component of that balance is the committed fund balance, LAB stated, which is made up of the balance held in the statutory Budget Stabilization Fund, commonly known as the rainy-day fund. The rainy day fund balance increased by $91.7 million during the fiscal year, largely due to interest income, bringing the committed fund balance to $2 billion.

Total state revenue increased by $292.8 million to $38.7 billion in the fiscal year, driven by a $934.5 million hike in tax revenues. That gain was partially offset by a $525.5 million decrease in federal revenues.

Total expenditures jumped by $459.8 million to $36.4 billion, largely because of increased spending on Medical Assistance programs, higher shared revenue payments to local governments, and expanded tax relief.

The unassigned General Fund balance totaled $1.1 billion at the end of the fiscal year, indicating that more resources were available than were obligated in the short term.

The audit also found that the state’s long-term debt declined from $11.6 billion to $10.9 billion, as debt repayments exceeded new bonding. During the fiscal year, Wisconsin issued $1.8 billion in new general obligation bonds and notes, including $666.9 million for University of Wisconsin System facilities and $403 million for transportation projects.

Auditors concluded that while the state’s overall financial position remains stable, unresolved agency-level control deficiencies continue to pose risks and warrant ongoing legislative oversight.

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.