SALEM — Since its financial woes came under scrutiny in early 2015, the state’s geology department has improved its financial controls, according to a state audit report released Wednesday.

But the Secretary of State’s Office recommended the Department of Geology and Mineral Industries, often referred to as DOGAMI, continue to update how it reports and records federal money.

The department, for its part, says all the recommended changes have been made or are in progress.

DOGAMI, which maps the state’s geology and natural hazards and regulates mining and resource exploration, gets a decent chunk of its revenue every budget cycle from federal agencies such as the Federal Emergency Management Agency (FEMA) and the U.S. Geological Survey.

The department anticipates receiving $6.8 million in federal funding in the current biennium, which ends June 30, 2017. Its total estimated revenue in that period is about $18.6 million, though the department expects that total will ultimately be higher due to unanticipated grant awards.

Auditors focused on financial controls pertaining to the department’s federal revenues in fiscal years 2015 and 2016.

According to the secretary of state’s audit report, the department didn’t manage grants it received from the federal government properly.

Among other red flags, auditors took issue with the department’s practice of drawing down federal funds before spending any money on the attendant project to help its cash flow, a practice the department has since ceased, according to DOGAMI director Brad Avy.

Avy has been at the helm of the agency since Dec. 1, 2015.

Auditors also found the department inaccurately reported federal expenditures, which is also being addressed, according to a response Avy wrote to auditors that was also released Wednesday.

Auditors found that some of the department’s “minor” expenditures may have been inappropriately charged to federal programs.

DOGAMI is now tracking federal expenditures in alignment with state policy, recording the indirect costs of projects and has developed a system for organizing contracts.

The department is still formalizing policies and procedures for reporting federal revenue and expenditures, a process it expects to be complete by the end of the year, according to Avy’s letter.

The department is also working on updating its payroll practices; it stopped using paper timesheets in early 2016 and now uses the Department of Administrative Services’ e-payroll system.

In a statement Wednesday, the secretary of state’s office said that “significant turnover” in leadership and fiscal staff at DOGAMI created “critical” financial challenges. New management, including Avy, who requested the audit, has helped make needed improvements, the secretary of state said.

DOGAMI recently underwent review by FEMA. According to the audit report, FEMA did not issue any findings pertinent to eight FEMA grants that DOGAMI received and managed. FEMA routinely audits agencies whose activities its funds support.