Montana Secretary of State Chief Deputy Angela Nunn appears before the Legislative Audit Committee on Jan. 15, 2026 (Photo screen shot by Montana Public Access Network).
A new audit report by the Legislative Audit Division said ongoing accounting issues at Montana Secretary of State Christi Jacobsen’s office are so problematic the financial statements for 2023 cannot be trusted, and those from 2024 can only be trusted with explanation.
At a meeting Thursday of the Legislative Audit Committee, state Sen. Tom McGillvray, R-Billings, characterized the report as the Secretary of State’s office “flunking,” a description that auditors confirmed, even though a representative from the office disputed that, calling it a model for other agencies.
Jacobsen did not appear before the committee, and Deputy Secretary of State Angela Nunn did not explain her absence.
At the heart of the failed report, state auditors found the Secretary of State used incorrect estimates of a software program to make the financial report look better to legislators, and then failed to document its rationale even though Nunn insisted the department was not trying to mislead the public.
The Secretary of State’s Office also misrepresented and mischaracterized accounting mistakes so persistently that it could not stand by the financial numbers for Fiscal Year 2023, one of the two years auditors were tasked with checking. Furthermore, when the auditors tried correcting the misstatements so entries would accurately reflect the accounting, the office rewrote them four times and said the final statement was still “misleading.”
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The Legislative Audit Division staff puts out a podcast that details some of its findings about the Montana Secretary of State’s Office.
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At that point, auditors said the state had no other choice but to close the books for the year, but it means that neither the public or lawmakers have an accurate, fact-supported picture of Jacobsen’s office for 2023. Auditors noted that while staff members had previously tried to shift blame to other departments and staff, it was Jacobsen and her management team that ultimately bore the responsibility of getting the information correct — an opinion shared by the lawmakers.
“During the audit, we found instances where office management did not maintain responsibility for outcomes when external parties were engaged,” the audit said. “We also found that weak controls and misapplied polices have undermined the accuracy and reliability of the office’s financial reporting.”
A 20-year software program
Though often technical in nature, the fiscal or financial audit of the Secretary of State’s Office yielded several problems, which Nunn said have already been fixed. One of those was the large purchase of the state’s new election software, ElectMT.
Jacobsen’s office reported that the software would last 20 years without needing any maintenance, upgrade or replacement. However, state policy instead directs agencies to select a default of a four-year lifespan to better reflect reality. By not adhering to policy, the Secretary of State’s Office spread the cost of the software out across 20 years, which gave the appearance that the office was actually in better financial condition.
Nunn didn’t dispute state agencies often face the irritation of lawmakers because such a large expenditure — in this case, nearly $4 million for the software — would only last four years and not longer, but instead offered that an IT expert on staff said the software program would last 20 years in his experience. Yet, auditors noted even that explanation was not backed up by any documented evidence.
“Management searched for evidence to support their position rather than going out and finding data and using that as the basis,” said auditor Steven Althoff, who was the lead staff member on the report for the Legislative Audit Division.
Auditors instead surveyed the state’s software systems to better understand the lifespan, finding that the longest any software had reached was 16.6 years, with the shortest at 3.8 years. The median lifespan was 7.5 years.
Auditors told lawmakers the result of the 20-year depreciation schedule will cause a ripple effect, making the Secretary of State’s Office books somewhat inaccurate for two decades.
“This could result in modification of opinions in future financial schedule audits,” the report said.
By not reporting the large expense more accurately, auditors explained the overall financial health of the department is difficult to ascertain, and the numbers in their own financial statements cannot be seen as reliable.
“Office management was unable to provide documentation to support policy interpretations or accounting treatment decisions,” the report to the Legislature said. “Without adequate documentation, the office may be unable to demonstrate accountability for its decisions. We view this as a material weakness in the office’s internal controls.”
Try, try again, try again, try again
Another problematic finding by auditors revealed that the Secretary of State’s Office was supposed to enter notes on its year-end statements that described its methods or differences.
In one case, officials from the Department of Administration noted “misstatements” in the journal entires and asked staff to correct them to reflect reality.
“When management first submitted draft note disclosures to auditors, many required elements were missing and corrections were presented in the aggregate,” the audit report said. “Management said it used professional judgment to decide what information was necessary for readers. However, they were unsuccessful in meeting the office’s responsibility to provide complete financial information.”
Instead, auditors characterized the office as writing statements that were not appropriate for financial statements and ones that seemed more fitting for press releases and public relations.
“The first draft of the notes was written with a focus on taxpayers rather than the office’s operations and financial schedules, as Generally Accepted Accounting Principles requires,” the report said. “This approach omitted critical context about how activities related to the office’s finances produced a tone more suited to public relations than to financial disclosure.”
Auditors told the lawmakers on Thursday the journal entries were sent back four times and even on the final time, there were misstatements, but auditors said they had little recourse other than to close the books, but noted those statements cannot be trusted.
“Material misstatements persisted in each subsequent drafts,” the report stated.
Auditors also criticized the lag between the journal entries because they were so late, diminishing their value to lawmakers and the public. Althoff said ultimately the errors led the auditors to the conclusion that there were so many misstatements it would make it impossible for the Legislature to read them and get an accurate picture.
“They were inadequate and when they were rewritten, they introduced new errors,” Althoff said.
That year, 2023, received an “adverse” auditor’s opinion; the 2024 financials received a “modified” opinion, which means readers can trust the numbers, but only with the limitations or notes highlighted by the audit staff.
Another concern
Although not likely as serious as other portions of the audit report, staff from the Legislative Audit Division also noted errors that were likely clerical — in one case, the result of a mistyped account — but which misstated expenses related to the SOS Enterprise software Jacobsen’s office uses for business registration and other management.
The issue was how the Secretary of State’s Office categorized software maintenance — the costs associated with keeping the software system current. Some costs had been attributed to development expenses not to software. Those classification errors ranged from $40,000 to $327,000.
Auditors also noted the errors occurred in Fiscal Years 2021 and 2022, but weren’t corrected until 2024.
Nunn pushed back that the report was not as severe as audit staff had made it.
“You say you don’t agree with me that you’re flunking, so what part do you disagree with?” McGillvray asked Nunn.
“I don’t believe we’re flunking,” Nunn responded, acknowledging there were problems with previous audits. “We did the best we could and characterized what an expert on our staff with expert knowledge told us. We didn’t agree with how that was characterized. They did not quite capture that in a way that reflects reality.”
However, Nunn failed to provide additional information beyond what had already been discussed.
“We agree that documentation was lacking,” Nunn said. “We will improve.”
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