Rhode Island's $95M Ledger Upgrade Made Its Books Less Accurate
Summary
Rhode Island's Auditor General found 29 problems with the state's fiscal 2025 financial reporting -- one more than the year before -- in the first year the state closed its books on a new accounting system reported to cost more than $95 million. More than 75 individual errors over $1 million each went undetected by the state's own review and had to be caught by the outside audit, including one Transportation Fund line item off by as much as $75 million. Medicaid, the state's single largest expense at $4.3 billion, still tracks $293 million in year-end liabilities through what the auditor calls "an entirely manual process" with no systemic controls. Fully documenting the state's own internal controls -- a requirement under Rhode Island law -- would cost another $3 to $5 million, the state says, and that money isn't funded yet.
A $95 million upgrade, and one more finding, not one fewer
Rhode Island's Office of Accounts and Control began transitioning the state's accounting and financial reporting to a new enterprise resource planning (ERP) system on July 1, 2025⧉, and performed the entire fiscal 2025 year-end closing inside it. The system -- built on Workday software, with Accenture as the state's implementation contractor -- is a multiyear project Rhode Island Current reported at more than $95 million⧉, covering finance, human resources, and payroll. The auditor's own report is direct about what happened next: "the challenges of new ERP system implementation clearly contributed to the volume of misstatements identified."⧉
Rhode Island's fiscal 2024 audit -- the last one closed on the old system -- had already found the state's General Fund operating results materially misstated by $83.6 million⧉, across 28 total findings. The new system was supposed to help fix that. Instead, fiscal 2025's audit reported 29 findings -- 28 material weaknesses or significant deficiencies plus one compliance finding, alongside 14 separate management comments⧉.
View data as table
| FY2024 (before the ERP system) | 28 | 27 material weaknesses/significant deficiencies plus 1 compliance finding |
|---|---|---|
| FY2025 (first year closed on the new ERP system) | 29 | 28 material weaknesses/significant deficiencies plus 1 compliance finding -- and 75+ separate corrections over $1 million each within them |
Six examples, out of more than 75
The audit doesn't itemize all 75-plus corrections by dollar amount, but the ones it does name show the range. In the Intermodal Surface Transportation (IST) Fund alone, individual line items were misstated by amounts from $3 million to $75 million⧉ in the draft financial statements. On the federal side, $52.3 million in adjustments were needed just to stop double-counting federal spending passed through to component units⧉, plus $25.9 million in prior-year highway spending that had been logged against the wrong federal award⧉ and $4.3 million in expenditures that weren't linked, or were wrongly linked, to any federal program at all⧉.
View data as table
| Transportation Fund line item (high end) | 75,000,000 | Top of a $3M-$75M range of misstated line items in that one fund alone (Finding 2025-017) |
|---|---|---|
| Federal duplicate-reporting fix | 52,300,000 | To stop double-counting pass-through federal spending against component units (Finding 2025-007) |
| Highway program reporting correction | 25,900,000 | Prior-year spending moved to its correct federal award listing (Finding 2025-007) |
| Unaccrued Medicaid MCO premium liability | 6,600,000 | A liability the state's own year-end process had not recorded (Finding 2025-005) |
| Mislinked federal accounts | 4,300,000 | Expenditures recorded but not linked, or wrongly linked, to their federal program (Finding 2025-007) |
| Healthcare Systems Transformation Program add | 4,100,000 | Restricted federal funding omitted from the federal-award schedule (Finding 2025-007) |
The Division of Motor Vehicles' own written response to its finding put the obstacle plainly⧉: "With the implementation of the new ERP system we cannot commit to completing the reconciliation prior to the fiscal close."⧉ The DMV collected $114 million in revenue in fiscal 2025, of which $103 million was supposed to reach the IST Fund's Highway Maintenance Account⧉ -- a reconciliation the agency itself says the new software has made harder to finish on time, not easier.
Medicaid: the fund too big to get wrong
Medicaid is Rhode Island's single largest program activity -- about $4.3 billion in spending, roughly 41% of the entire General Fund⧉. The audit found $391 million in provider and managed-care payments and $85 million in recoupments processed through manual transactions, outside the state's Medicaid claims-processing system entirely⧉, plus a $6.6 million managed-care premium liability that had gone unaccrued at year-end⧉.
By June 30, 2025, Medicaid receivables and liabilities stood at $107 million and $293 million, plus $180 million in prepaid managed-care premiums⧉ -- all produced, the auditor writes, by "an entirely manual process involving no systemic controls to ensure the accuracy and completeness of reported amounts."⧉ It is a repeat finding, carried over from the prior year's audit.
The fix costs money too, and it isn't funded
Under Rhode Island General Law section 35-14-3⧉, agency heads are responsible for documenting their own internal controls. Rhode Island still hasn't done it comprehensively: management says hiring a consultant to document controls enterprise-wide would cost between $3 million and $5 million⧉ -- money that, as of this report, has not been provided.
The ERP rollout has already cost one senior official his job. Department of Administration Director Jonathan Womer resigned at Governor Dan McKee's request on March 6, 2026⧉, after repeated problems with the same system's payroll rollout -- including corrected tax forms mailed to state employees that may have exposed their Social Security numbers through the envelope⧉.
- Rhode Island's fiscal 2025 audit reported 29 findings -- up from 28 in fiscal 2024 -- in the first year the state closed its books on a new, $95 million-plus ERP system meant to improve financial reporting.
- More than 75 individual corrections over $1 million each were needed during the FY2025 audit, including a single Transportation Fund line item misstated by as much as $75 million and $52.3 million in federal-reporting fixes to avoid double-counting.
- Medicaid -- $4.3 billion, 41% of the General Fund -- had $293 million in year-end liabilities and $107 million in receivables produced by what the auditor calls "an entirely manual process" with no systemic controls, a repeat finding from the prior year.
- Fully documenting the state's own internal controls, a requirement under state law, would cost another $3-5 million that remains unfunded; the ERP rollout has already cost the Department of Administration's director his job.
This audit covers internal control over financial-statement reporting only. Rhode Island's companion Single Audit Report for fiscal 2025 -- which separately tests compliance with federal program requirements -- was still in progress as of this report's June 24, 2026 issuance and had not yet been released.
Sources(3) ▾
- Office of the Auditor General, State of Rhode Island, State of Rhode Island: Findings and Management Comments Resulting from the Audit of the State's Fiscal 2025 Financial Statements (2026-06-24) — The primary document: Rhode Island's independently elected Auditor General's statutorily required report on internal control over financial reporting, issued alongside the State's fiscal 2025 Annual Comprehensive Financial Report. Source for every FY2025 findings-count, dollar-misstatement, and Medicaid-accrual figure in this piece, plus the audited agencies' own written responses. oag.ri.gov · original document
- Office of the Auditor General, State of Rhode Island, State of Rhode Island: Findings and Management Comments Resulting from the Audit of the State's Fiscal 2024 Financial Statements (2025-03-21) — The prior-year edition of the same statutory report, used here strictly as the year-over-year baseline: it establishes the 28-finding, $83.6 million-misstatement starting point that the FY2025 report's 29 findings must be read against. oag.ri.gov · original document
- Rhode Island Current (States Newsroom), McKee fires Department of Administration director after another payroll system debacle (2026-03-06) — Secondary journalism, used for two facts the audit report itself doesn't state: the ERP project's roughly $95 million-plus contract scale, and Department of Administration Director Jonathan Womer's March 2026 removal after the same ERP rollout's payroll failures -- the labor-side consequence of the reporting failures the audit documents. rhodeislandcurrent.com · original document
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Rhode Island's Auditor General⧉ found 29 reportable problems with the state's fiscal 2025 financial statements⧉ -- one more than the year before -- in the first year Rhode Island closed its books on a new, Workday-based accounting system reported to cost more than $95 million⧉. More than 75 individual corrections, each fixing a misstatement or improper presentation of more than $1 million, were proposed and accepted during the audit⧉ -- errors the state's own review process did not catch before the books closed.