The Montana Lottery has encountered a significant financial discrepancy of $18.5 million, according to a report by the state’s Legislative Audit Division. The audit highlighted both overstatements and understatements in the lottery’s accounts, but no fraud was found. Key issues identified were accounting errors and poor internal controls, prompting recommendations for improvements. The report emphasizes the need for the Montana State Lottery to enhance its financial reporting accuracy.
Although the Montana Lottery Commission did not respond to queries on financial mismanagement, insights emerged from public meetings and the audit report. The 2025 audit, focusing on 2023 finances, discovered delays in financial transfers. By state law, the lottery should transfer revenue, not allocated for prizes or expenses, to a scholarship fund and the General Fund quarterly. However, only three transfers occurred in fiscal 2023.
Delays were attributed to the Financial Services director’s unavailability, impacting calculations and financial statement approvals. The unexpected death of Armond Sergeant, the financial services director since 2017, further complicated the situation. His absence led to significant accounting challenges, with the lottery struggling to complete financial statements, justify balances, and meet transfer deadlines.
The audit also uncovered ongoing ledger entry inaccuracies from 2024, exacerbated by insufficient internal controls. The team relied heavily on outdated control procedures and the late director’s institutional knowledge. Auditors noted excessive access among staff members, with three out of five able to log and approve entries, violating state policy on duty segregation.
Moreover, the audit faced “significant delays” in obtaining necessary financial statements, leading to a disclaimer of opinion due to management’s inability to confirm complete and accurate financial reporting. As the Legislative Audit Committee prepares to review the findings, Sen. Emma Kerr-Carpenter expressed disappointment but not surprise, citing recurring financial audit issues.
With limited recourse, the committee may request the lottery to report on progress addressing issues. The audit’s recommendations have been accepted by the lottery, with the governor’s office backing corrective measures. Legislative Audit Committee Chair Rep. Jerry Schillinger anticipates “robust discussion” during the upcoming meeting.
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