Former Delaware Chief Administrative Auditor Kathleen A. Davies held a senior position in the government agency responsible for overseeing financial audits of the state lottery and its associated gaming operations. An examination of archival records from 2013 through 2017 has established her official position, identified documents prepared by independent auditing firms, and uncovered a legal decision that may help reconstruct how audit responsibilities were assigned within the agency.
Kathleen A. Davies: A Senior Position in Government Auditing
In January 2015, the Delaware Office of Auditor of Accounts issued an official announcement concerning the inauguration of R. Thomas Wagner Jr. for another term as State Auditor.
The press release identified Kathleen Davies as Chief Administrative Auditor of the agency.
Her name appeared alongside several professional credentials, including CPA-PA, CISA, CGFM, and CGAP, which relate to accounting, governmental financial management, information systems auditing, and public-sector audit practices.
This confirms that Davies held a senior administrative position within the Delaware Office of Auditor of Accounts.
However, she was not the elected State Auditor of Delaware. During the period under examination, that position was held by R. Thomas Wagner Jr.
This distinction is fundamental to the investigation.
Holding a senior position within a government auditing agency may involve significant professional responsibilities, but it does not, by itself, establish participation in every audit engagement undertaken by the organization.
Consequently, determining whether Kathleen Davies had any direct involvement in auditing gambling-related revenue requires an examination of specific documentary evidence.
Why the Delaware State Lottery Is Relevant
In Delaware, financial oversight of the state lottery is mandated by law.
Under 29 Delaware Code § 4816, the State Auditor must conduct an annual post-audit of the accounts and transactions of the State Lottery Office.
The Delaware State Lottery's activities extend beyond the sale of traditional lottery tickets.
They encompass regulated gambling operations, including slot machines, casino table games, sports betting, and online casino gaming.
Therefore, during Davies's employment, the Office of Auditor of Accounts was responsible for overseeing the auditing process for the financial statements of an organization that accounted for substantial gambling-related government revenue.
However, an institutional connection to the agency does not establish personal participation in the auditing of gambling revenue.
To determine individual responsibility, it is necessary to identify who assigned audit teams, approved audit plans, communicated with outside accounting firms, and reviewed audit findings.
These are the records of primary interest in this investigation.
Archives From 2013–2017: Which Audits Were Conducted?
An examination of the official Office of Auditor of Accounts archives confirms that Delaware State Lottery financial statements were audited throughout the period under review.
The following publications have been identified:
| Publication Date | Document |
|---|---|
| November 26, 2013 | Lottery Financial Audit for Fiscal Years 2012–2013 |
| October 27, 2014 | Financial Audit for Fiscal Years 2013–2014 |
| December 9, 2015 | Financial Audit for Fiscal Years 2014–2015 |
| October 24, 2016 | Financial Audit for Fiscal Years 2015–2016 |
| November 13, 2017 | Financial Audit for Fiscal Years 2016–2017 |
| December 22, 2017 | Comprehensive Annual Financial Report (CAFR) for Fiscal Years 2016–2017 |
These are document publication dates. They do not mean that all auditing procedures were performed on the dates the reports were released.
The existence of these reports confirms that financial oversight occurred regularly.
However, publicly available lists of audit reports generally contain the titles of audits, reporting periods, and final publications rather than complete rosters of government employees assigned to each engagement.
Therefore, publication dates alone cannot establish Kathleen Davies's personal responsibilities.
Independent Auditing Firms: KPMG and Gunnip & Company
The next stage of the investigation concerns the organizations that performed the financial audits.
KPMG LLP, an international accounting and auditing firm, appears in Delaware State Lottery documents covering fiscal years 2013 and 2014.
In its independent auditor's report, KPMG stated that it examined the Lottery's financial statements, including statements of financial position, revenues, expenses, and cash flows.
Responsibility for preparing the financial statements rested with Lottery management, while KPMG's role was to express an independent professional opinion.
A different accounting firm, Gunnip & Company LLP, appears in documentation for fiscal years 2016 and 2017.
An official State of Delaware announcement dated December 22, 2017, confirms that Gunnip & Company performed the audit under the direction of the Office of Auditor of Accounts.
The announcement identified R. Thomas Wagner Jr. as State Auditor.
Kathleen Davies was not named in that announcement.
This does not establish that she never interacted with the independent auditors.
At the same time, it provides no basis for attributing responsibility for the Lottery audits to her.
Such a conclusion would require documents showing how professional responsibilities were assigned within the agency.
A KPMG Report Addressed Directly to Kathleen Davies
A separate document deserves particular attention.
A KPMG report published in 2014 concerned bank reconciliation procedures performed for the Delaware Office of the State Treasurer.
The document was titled Independent Accountants' Report on Applying Agreed-Upon Procedures and covered the quarters ended March 31 and June 30, 2014.
Its addressee section explicitly identified:
Kathleen Davies — Chief Administrative Auditor, Office of Auditor of Accounts, State of Delaware.
The report described procedures agreed upon with the Office of the State Treasurer and the Office of Auditor of Accounts to assess bank account reconciliations.
This is a significant primary source.
It demonstrates that KPMG addressed an official report concerning financial procedures directly to Kathleen Davies in the context of governmental financial oversight.
Her name therefore appears not only in agency press releases but also in a professional accounting report.
However, the subject of that report is critically important.
The KPMG document concerns bank reconciliations performed for the Delaware State Treasurer, not an audit of the Delaware State Lottery.
Accordingly, it confirms Davies's involvement in institutional communications relating to government financial oversight but does not establish her personal participation in audits of casinos or gambling revenue.
Nevertheless, the document illustrates the kinds of records that may provide evidence of specific government auditors' responsibilities.
These include report addressee sections, agreed-upon procedures documentation, official assignments, and correspondence between government agencies and external accounting firms.
A 2018 Legal Decision: An Unexpected Source of Information
One of the investigation's most significant findings came not from the Lottery's financial archives but from the Delaware Merit Employee Relations Board, a state body that handles certain employment disputes involving government employees.
The relevant case is:
Kathleen Davies v. Office of the Auditor of Accounts, Docket No. 17-12-680.
On June 25, 2018, the Board issued an Order of Document Production.
The proceeding arose from an employment dispute between Kathleen Davies and her former employer, the Office of Auditor of Accounts.
During the proceedings, Davies requested various documents relating to the agency's internal operations.
Request No. 39 is particularly significant.
It sought a list of audit projects maintained in the TeamMate system, including team members and reporting relationships.
The original request covered the period from January 1, 2010, through May 17, 2016, and included completed, incomplete, and reworked projects.
In its decision, the Board overruled certain agency objections and ordered the production of relevant documents for a narrower period:
2015 through May 17, 2016.
Why does this matter?
TeamMate is an audit management software system used to organize and document auditing engagements.
Records identifying projects, assigned personnel, and reporting relationships can help establish which employees were responsible for particular audits.
If the responsive records include Delaware State Lottery projects, examining them could help determine whether Davies had direct responsibility for organizing, supervising, or reviewing those engagements.
However, an important limitation must be recognized.
The published Board decision does not contain the actual TeamMate project list, nor does it state that Kathleen Davies was assigned to a Lottery audit.
It establishes only that the records were requested and that the agency was ordered to produce certain materials during the employment proceedings.
Therefore, the decision cannot itself be treated as proof that Davies participated in auditing the gambling industry.
Why May 17, 2016, Matters
The employment proceedings also identify May 17, 2016, as the date Kathleen Davies was placed on administrative leave.
This matters when examining events in 2016 and 2017.
For example, the Lottery's financial audit for fiscal years 2015–2016 was published on October 24, 2016, while the report for fiscal years 2016–2017 was released in November 2017.
However, an audit report's publication date does not automatically identify the individuals who participated in earlier stages of the engagement.
Determining Davies's possible role would require establishing the actual dates of audit planning, assignment of responsibilities, performance of audit procedures, and internal review of findings.
It is also important not to confuse questions about professional responsibilities with her employment dispute.
The existence of that dispute does not establish any wrongdoing in Lottery audits or in the financial operations of Delaware casinos.
Questions That Remain Unanswered
The documents examined so far establish Kathleen Davies's professional status and confirm the auditing activities of the government agency where she worked.
However, they do not resolve several important questions.
It has not been established whether Davies served as an engagement manager, supervisor, or designated reviewer for any Delaware State Lottery audit.
No documents have been identified confirming that she approved gambling-related audit reports, examined casino revenue calculations, or supervised the verification of payments owed to the state.
The investigation has also found no credible evidence establishing that she personally held a commercial interest in the gambling industry, owned a casino, or received income from operating gambling businesses.
The absence of such information in the documents examined does not prove that no connection could have existed.
It means that the relevant claims remain unsubstantiated by the available documentary evidence.
The Next Source of Evidence: Internal Audit Agency Records
For further investigation, the most useful materials would be records identifying the officials responsible for Lottery audits and documenting their interactions with independent accounting firms.
Relevant evidence may include existing audit plans, approval records, contracts with KPMG and Gunnip & Company, internal assignment documents, and TeamMate project data.
Records covering 2015 through May 17, 2016, are particularly important because this period is specifically addressed in the Merit Employee Relations Board's decision.
These materials may be requested to the extent permitted under Delaware's Freedom of Information Act (FOIA).
The official public records request email address for the Delaware Office of Auditor of Accounts is:
However, access to internal working documents may be limited by statutory exemptions protecting confidential information, personal data, and certain audit-related materials.
The existence of the 2018 document production order does not automatically make all responsive records available to members of the public.
Conclusion: The Professional Connection Is Established, but a Personal Role in Gambling Audits Remains Unconfirmed
The investigation establishes several significant facts.
Kathleen A. Davies held a senior administrative position within the Delaware Office of Auditor of Accounts.
During her employment, the agency oversaw mandatory financial audits of the Delaware State Lottery, a government organization responsible for accounting for revenue from regulated gambling operations.
Independent auditing firms, including KPMG and Gunnip & Company, appear in official documentation relating to Lottery financial audits.
In addition, a separate KPMG report from 2014 was identified as being addressed directly to Kathleen Davies. This confirms her involvement in the official exchange of audit-related documentation concerning a different government entity: the Delaware Office of the State Treasurer.
Finally, the Delaware Merit Employee Relations Board's June 25, 2018, decision identifies a potential source of further evidence: TeamMate records documenting audit projects and the assignment of personnel during 2015–2016.
Yet the central question remains unanswered: Did Kathleen A. Davies personally participate in auditing the Delaware State Lottery and examining gambling industry revenue?
Based on the published documents reviewed to date, an affirmative conclusion cannot be supported.
Establishing such involvement would require records explicitly identifying Davies as a participant, engagement manager, reviewer, or responsible official for a specific Lottery audit.
Until such evidence is obtained, her connection to the auditing of gambling revenue should accurately be characterized as institutional, arising from her employment in the government auditing agency, rather than as proven personal participation in specific casino or gambling revenue audits.
Documentary Sources
- Official State Announcement, January 6, 2015 — Kathleen Davies Identified as Chief Administrative Auditor.
- Delaware Office of Auditor of Accounts — Archived Audit Reports.
- KPMG — Delaware State Treasurer Bank Reconciliation Procedures, 2014: Official Report Addressed to Kathleen Davies.
- KPMG — Delaware State Lottery Comprehensive Annual Financial Report, FY2013–2014.
- Official Announcement of the Delaware State Lottery Financial Audit for FY2016–2017, December 22, 2017.
- Delaware Merit Employee Relations Board — Kathleen Davies v. Office of Auditor of Accounts, Order of Document Production, June 25, 2018, Docket No. 17-12-680.
- Delaware Office of Auditor of Accounts — Official FOIA Request Information.
This article presents a documentary investigation based on publicly available official sources. Prepared November 5, 2026.