Report No. 2011-11
Findings in the Fiscal Year 2010 Statewide Single Audit
Single Audit Background
The United States Congress passed the Single Audit Act of 1996 to establish uniform requirements for audits of federal awards administered by states, local governments, and non-profit organizations. The Act requires an audit of the state's financial statements and its use of federal awards.
The Single Audit reports the federal awards spent by all state agencies, except component units of the state, which are audited by other auditors. Single Audit guidelines require audit work be conducted on "major" programs and utilize a risk-based approach to determine which specific programs are major. Using this methodology, for the fiscal year ended June 30, 2010 (FY2010), our Single Audit involved audit work on 30 major programs at 10 departments, encompassing $13.46 billion (91 percent) of the total federal awards spent. The 30 major programs audited also account for approximately 98.5 percent ($2.57 billion) of all American Recovery and Reinvestment Act of 2009 (ARRA) funds spent during FY2010.
2010 Federal Awards
Nineteen different state departments or offices spent federal awards, but 4 state departments spent 91 percent of the federal awards, and 96 percent of the federal awards received came from just 5 federal agencies.
The state spent approximately $14.79 billion in federal awards through 341 different federal programs during FY2010. Included in this figure is approximately $2.61 billion in federal awards through ARRA, expended through 61 programs at 12 state departments. Total state expenditures of federal awards have increased $6.1 billion over the last 4 years.
Monitoring of Recovery Act Funds DESE
As of December 31, 2010, the Department of Elementary and Secondary Eductation (DESE) had not done any monitoring of the ARRA portion of its existing programs. As such, DESE did not know whether the schools understand their requirements and had not identified and addressed any problems that might have existed. DESE disagrees with this finding.
Eligibility Reassessments DHSS
Of the 66 cases reviewed, the Department of Health and Senior Services (DHSS) did not perform mandatory annual reassessment of eligibility for 74 percent of the Medicaid recipients receiving State Plan Personal Care or the Aged and Disabled Waiver program services. As a result, DHSS could not demonstrate payments were only made on behalf of eligible persons..
State Fiscal Stabilization Fund DHE
The Department of Higher Education (DHE) disbursed approximately $134 million of ARRA funds to 23 colleges and universities through the State Fiscal Stabilization Fund to restore state support. DHE had no monitoring policies and procedures in place to ensure compliance with federal regulations and initially was not aware it had monitoring responsibilities.
Child Care Eligibility and Payments DSS-Children's Division
The Department of Social Services (DSS)-Children's Division lacked adequate controls to ensure that payments from the Child Care and Development Fund (CCDF) were proper and benefiting only eligible clients. Of the 60 cases reviewed, 22 percent lacked eligibility documentation, including 6 case files that were missing entirely, and of the 60 payments reviewed, 50 percent lacked adequate documentation and/or were not in compliance with DSS policies. Previous state audits noted similar concerns in the DSS Child Care program, and a recent internal review by DSS of the Child Care program revealed a 43 percent error rate. DSS needs to increase oversight to address the high error rate and poor case record management.
Unallowable Costs and Maintenance of Effort DSS-Family Support Division
The DSS-Family Support Division lacks a formal and comprehensive system for evaluating whether costs charged to or counted toward the Temporary Assistance for Needy Families (TANF) program are allowable. The DSS criteria have changed at least twice in the last 4 years. DSS charged certain state-funded costs as prior approved program costs and used costs related to educational and scholarship programs to meet the maintenance of effort (MOE) requirements, but it appears these costs may not meet the TANF criteria. Once audit staff questioned DSS about these costs, DSS moved the scholarship program costs for fiscal year 2011 from MOE to direct costs, but it still did not determine if the TANF criteria were met.
The audit also found that several agencies (DESE, DHE, the Department of Natural Resources and DSS) lacked the controls and procedures necessary to ensure that required quarterly ARRA reports (Section 1512 reports) are complete and accurate. In addition, DESE did not ensure prevailing wages were paid by subrecipients and did not ensure School Improvement Grant payments were made in accordance with approved budgets or expended appropriately. DHSS did not adequately control voided checks in the Women, Infants and Children (WIC) program, and over 2,000 voided checks were later redeemed. DHE failed to monitor teacher loan forgiveness claim payments for timeliness. The Department of Labor and Industrial Relations (DLIR) is still working to resolve over 2,000 cases of potential restored balances due to overpayments, an issue identified in the 2009 Statewide Single Audit. DLIR was also unable to adequately track ARRA funds and its financial records and reports were inaccurate and untimely; audit staff reviewed payments made to 25 claimants and found that 56 percent contained one or more errors. During FY2010, the DSS-Missouri HealthNet Division and the Department of Mental Health received $26.8 million as the federal share of billed costs for comprehensive waiver services before obtaining formal federal approval, which has now been denied. The federal authority has not yet indicated how it expects to resolve this issue. The Department of Public Safety-Adjutant General did not adequately account for or protect its capital assets. Recommendations were also made to DSS in the areas of cost and payment allocations, documentation and verification of eligibility and participation, management of reimbursements and salary certifications. No findings were made with respect to the Missouri Department of Transportation or the Department of Economic Development.
Because of the compound nature of this audit report, no overall rating is provided.
*The rating(s) cover only audited areas and do not reflect an opinion on the overall operation of the entity. Within that context, the rating scale indicates the following:
The audit results indicate this entity is very well managed. The report contains no findings. In addition, if applicable, prior recommendations have been implemented.
The audit results indicate this entity is well managed. The report contains few findings, and the entity has indicated most or all recommendations have already been, or will be, implemented. In addition, if applicable, many of the prior recommendations have been implemented.
The audit results indicate this entity needs to improve operations in several areas. The report contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. In addition, if applicable, several prior recommendations have not been implemented.
The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.
Complete Audit Report
Missouri State Auditor's Office