ANNAPOLIS, Md. — Maryland’s Office of the Secretary of State failed to properly verify millions of dollars in collections, did not adequately oversee charitable donations and allowed errors in its public charity database to remain undetected, according to a new state audit.
The Office of Legislative Audits reviewed the agency’s operations from Nov. 16, 2021, through Nov. 30, 2025, and released its findings July 29, 2026.
Auditors identified three primary deficiencies involving charitable organization records, oversight of the Maryland Charity Campaign and controls over money collected by the office.
Several collection-control problems had previously been raised in audits dating back to 2011 but had not been sufficiently corrected, the report states.
Charity Records Transferred With Errors
The Secretary of State’s Office regulates charitable organizations and maintains a public registry used by Marylanders to review their status before making donations.
The office transitioned its charity records from a legacy database to Maryland OneStop in August 2022. Auditors found the agency could not document that the transferred information had been thoroughly tested for accuracy.
A review of 20 organizations found errors involving three.
One organization that had been ordered to stop soliciting donations in 2013 was incorrectly listed as current after the migration. That record was not corrected until January 2025, more than two years after the new system launched.
Another organization was listed as non-current even though it was exempt from registration requirements. As of April 2026, that record and the record of a third organization had not been corrected, according to the audit.
The office reported 23,683 active registered organizations as of January 2026 and collected approximately $2.9 million in registration fees, renewal fees and fines during fiscal year 2025.
The Secretary of State’s Office said it has since corrected every inconsistency specifically identified by auditors and manually reviewed all 11 organizations that were under cease-and-desist orders as of April 14.
The agency plans to conduct a broader review of more than 29,000 records transferred during the original migration and complete that work by the end of 2026.
Oversight Lacking For $1.7 Million Charity Campaign
Auditors also found that the office did not independently verify whether the vendor administering the Maryland Charity Campaign properly distributed employee and retiree donations to designated charities.
The workplace-giving program collected approximately $1.7 million between April 2024 and March 2025.
The office did not maintain an independent record of contributions and the amounts owed to each charity. It also did not directly confirm with participating organizations that all reported payments had been received.
Auditors were able to verify that certain amounts reached the charities, but said they could not determine whether all contributed funds were properly distributed because complete supporting records were not readily available.
The audit also found that the office did not initially obtain financial statement audits required under the vendor’s contract. Those audits were later provided after auditors requested them.
Additionally, the office did not obtain sufficient documentation to verify administrative fees retained by the vendor.
Those fees totaled approximately:
- $242,000 for the 2022 campaign
- $229,000 for the 2023 campaign
- $304,000 for the 2024 campaign
The contract allowed the vendor to retain up to 20% of the previous year’s pledged donations to cover actual expenses. Auditors found that $59,760 of the expenses reported for the 2024 campaign were estimates rather than actual costs, which was inconsistent with the contract.
The Secretary of State’s Office said it has no indication that donations failed to reach their intended charities or that the administrative fees were excessive or unsupported.
The agency agreed to strengthen its verification procedures by obtaining records directly from the comptroller and independently comparing those records with information provided by the campaign vendor. The new review process is expected to be in place by June 2027.
$374,000 Could Not Initially Be Verified
The audit found additional weaknesses involving approximately $15.5 million collected by the office during the review period.
That total included approximately $9.9 million in electronic payments and $5.6 million in checks and money orders.
The office did not consistently reconcile electronic payments processed by its third-party credit card vendor with state bank records.
Auditors examined transactions from 21 selected days totaling approximately $510,000. During the audit, the office could not provide bank statements showing that approximately $374,000 had been credited to a state account.
The agency later obtained the records and said all $374,000 was properly deposited and fully accounted for.
The audit did not state that the money was missing. It found that the office lacked the documentation and independent reconciliation needed to verify the deposits when requested.
Checks Left Unsecured, Deposits Delayed
Auditors also observed unendorsed and unrecorded checks left in an unsecured bin accessible to office personnel.
State accounting procedures require checks to be immediately recorded, restrictively endorsed and safeguarded upon receipt.
The employee responsible for verifying deposits could also prepare deposits, modify collection records and void transactions without independent approval.
The office processed 1,011 voided transactions during the audit period. Auditors reviewed 11 voids totaling approximately $51,000 and found four totaling $775 that lacked adequate supporting documentation.
In one instance, a void reduced a deposit by $250, but the office could not provide documentation explaining or justifying the adjustment.
Auditors also found delayed deposits. A review of collections from 21 selected days showed that approximately $39,000 received on five days was not deposited until eight to 15 days later.
State policy generally requires collections to be deposited by the next business day.
Similar weaknesses involving deposit verification and voided transactions had been reported in four previous audits dating back to 2011. The failure to verify that credit card payments reached state accounts had also appeared in three previous reports dating back to 2015.
The office previously said the issues would be corrected by June 2022, but told auditors staffing shortages and system changes prevented full implementation.
Agency Agrees To Correct Findings
Secretary of State Susan C. Lee said the office agreed with the audit’s recommendations and is implementing corrective measures.
The agency said it recently hired additional staff who will independently monitor and verify collections.
It also plans to:
- Immediately record and restrictively endorse checks
- Store unprocessed checks in an onsite safe
- Require documentation and independent review of voided transactions
- Verify that electronic and check payments reach state accounts
- Ensure receipts are deposited on time
Most of the collection-related changes are expected to be completed by Aug. 31, 2026.
The audit also contained a cybersecurity-related finding, but the details were removed from the public report as required by Maryland law. State officials responsible for implementing corrective action received the unredacted version.
Read the full Maryland Secretary of State’s Office audit report below:
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