CT Secretary of State Misreported $43.6M in Unearned Revenue

Connecticut's Office of the Secretary of the State -- the elected officer who runs the state's elections and registers every business that wants to operate in Connecticut -- told the state's own Comptroller it was holding $53.2 million in unearned revenue as of June 30, 2024.▸ A statutory audit by Connecticut's Auditors of Public Accounts⧉ checked that number against the office's own voucher records and calculated the real figure at $9.6 million -- a $43.6 million gap, about 5.5 times the recalculated amount, and equal to roughly 76.6% of the $56.9 million the office collected in business filing fees that same year. The audit, issued June 16, 2026 and covering fiscal years 2023 and 2024, found nine problems in total; seven were repeats from the prior audit.

The unearned-revenue figure is inflated because the office has been reporting essentially all the money it takes in during the year as "unearned," instead of isolating the portion actually owed back to filers -- refunds and overpayments sitting in more than 142,000 pending vouchers, most of them more than ten years old.▸ In its own response, the office said 84% of those vouchers are over a decade stale and none is less than five years old. It tried to get legislative authority to simply expire them: Section 22 of 2023's Senate Bill 1119 would have let the office treat overpaid fees as no longer refundable a year after they accrued, but the bill failed to pass. The office now says it will expire the vouchers administratively instead.

The unearned-revenue error traces back to a more basic failure: the office runs three separate recordkeeping systems -- FinSys for cash receipts, the Business Registration System for filer accounts, and Core-CT, the state's official ledger -- and the state's own Accounting Manual requires every agency to reconcile them.▸ The audit found the office simply never performed that reconciliation during fiscal 2023 or 2024, even as it collected $56,961,428 and $56,905,488 respectively in business filings through those systems. This is not a new complaint: the same finding has been repeated in the last ten audit reports, covering fiscal years 2000 through 2022. Counting the current report, Connecticut's Secretary of the State has now been told to fix this in 11 consecutive audits over 24 years.

A parallel finding covers accounts receivable -- fees and penalties owed by out-of-state businesses that operated in Connecticut without registering.▸ The office reported receivable balances of $1.52 million (FY2023) and $1.39 million (FY2024) to the Comptroller; auditors' own recalculation put the true balances at $4.79 million and $8.85 million, understatements of $3.26 million and $7.46 million that widened as the audit period went on. In both years the office reported zero receivables as uncollectible, while auditors calculated $2.76 million and $5.10 million, respectively, that should have been written off. The mechanics behind the gap show up in the demand-letter process meant to chase these debts down: in one tested case a second demand letter went out 18 months late, and in three cases final demand letters were sent 14 to 23 months after they were due, on a caseload auditors found held roughly 430 outstanding accounts totaling $4.23 million as of June 30, 2024.

The office's own explanation, offered across several of its written responses, is staffing churn: it went eight months without a fiscal director during the audited period and, in its response to a separate finding on inventory controls, said it has cycled through four different fiscal directors in short succession -- each new hire inheriting unfinished corrective action from the last.▸ That instability shows up in smaller findings too: a sample review of five publications the office sells to the public found Core-CT listed 172 copies worth $12,192 at retail: an actual physical count turned up 61 items worth $2,463, with no annual inventory ever performed to catch the difference. Not every finding was a repeat, though -- two recommendations from the prior audit were resolved outright, including a fix to how the office terminates employee leave balances and a completed physical inventory that corrected its equipment records, evidence the office can close a finding when it stays open long enough for someone to finish the work.