September 22, 2013

Summaries of selected reports and information published by New York State's Comptroller Thomas P. DiNapoli

Summaries of selected reports and information published by New York State's Comptroller Thomas P. DiNapoli
New York State Comptroller Thomas P. DiNapoli issued the following audit reports during the week ending September 21, 2013. Click on text highlighted in bold to access the full report.

An initial issued in September 2010, examined whether selected home health care providers properly used Medicaid funds for the recruitment, training and retention (RTR) of direct care staff and whether DOH was effectively overseeing this funding. Auditors were unable to fully account for providers' use of RTR funds because the funds were comingled with other funds. In a follow-up report, auditors found DOH had not implemented the four recommendations made in the initial report and further actions are still needed.

The New York State Health Insurance Program provides health insurance coverage to active and retired state, participating local government and school district employees and their dependents. The Empire Plan is the primary health benefits plan for the Program. The state Department of Civil Service contracts with United HealthCare to process medical claims for services provided to Empire Plan members. In an initial audit, auditors estimated United overpaid as much as $6,487,932 to providers who billed at a higher paying code than the service actually merited. In a follow-up, auditors found United completed a major project to review claim payments for evaluation and management services. As a result, United recovered more than $1 million in overpayments.

An initial audit report issued in September 2010 examined whether DOH effectively recovered accounts receivable when Medicaid overpaid providers. For the period Jan. 1, 2006 through Feb. 18, 2010, auditors found DOH needed to act more effectively to collect about $37 million of accounts receivable. Auditors also found DOH needed to act more promptly to recover amounts repaid to the federal government for receivables that eventually became uncollectible and, therefore, were written-off. In a follow-up, auditors found DOH and the Office of the Medicaid Inspector General have made progress in correcting the problems identified in the initial report. All four prior audit recommendations have been partially implemented.

The New York City Department of Consumer Affairs issues licenses and permits for certain businesses operating and collects associated fees. For the fiscal year ended June 30, 2013 the department collected $8.1 million in license fees, $10 million in franchise fees, and fines totaling $14.3 million. Auditors found that the methods used to identify unlicensed businesses were not sufficient, and that some businesses continued operating many years after their licenses expired. The department could likely generate additional revenue if it used better methods to identify businesses that operate without a required license. In a follow-up, auditors found department officials have made significant progress in addressing the matters identified in the initial report as all five prior audit recommendations have been implemented.

The New York City Health and Hospitals Corporation operates 11 acute care hospitals, four skilled nursing facilities, six large diagnostic and treatment centers, and more than 70 community health or school-based clinics. HHC provides non-emergency transportation to patients who require it for healthcare-related services. In an initial report, auditors identified a number of weaknesses in the system, including a lack of documentation for physician authorization of patient transportation and instances where trips were not billed at the correct rates. Auditors also found that three of the 14 drivers working for one of the providers had criminal histories. In a follow-up, auditors found HHC officials have made progress in addressing the problems identified in the initial report. Of the seven prior audit recommendations, six recommendations have been implemented.

At the time of the audit, the university had 36 electronic devices ready for disposal through the Office of General Services’ surplus unit. Seven of the computer hard drives still contained data, even though University at Albany had provided OGS with certifications indicating all information had been removed.
Two of these hard drives contained personal, private or sensitive information including social security numbers, dates of birth, home addresses and financial information. One of these two hard drives also contained potentially inappropriate photographs that could be considered offensive for the work place.
The other five hard drives also contained retrievable data that included resumes, personal vacation photos, research information and student term papers. One of the seven hard drives was taken from a laptop computer, which should have required more stringent security controls and been encrypted.

DOCCS employed an average of about 250 inmates and 50 State employees to operate its farming operations. As part of the 2009-2010 state budget process, DOCCS was directed to close these farm operations to generate cost savings. While auditors could not precisely determine the nature and extent of all the equipment and livestock on hand at the time of the farm closures in 2009, they did identify more than 3,300 farm equipment items and almost 300 head of cattle that had been publicly sold or transferred to other state agencies. These transactions generated almost $570,000 of one-time revenues. DOCCS has also leased a significant portion of its former farm land via public bidding and is earning approximately $125,000 annually from this effort.

As part of a statewide initiative to determine whether the use of travel money by selected government employees was appropriate, auditors selected seven Binghamton employees for audit with travel expenditures totaling $839,204, but were only able to audit the expenses incurred for these seven employees from June 14, 2009 and March 31, 2011 totaling $548,262 because the university, as allowed by state record retention policies, had purged documentation prior to June 14, 2009. Most of the travel expenses examined were appropriate. However, university officials failed to ensure that lodging expenses were within allowable rates in 24 instances allowing a total of $2,258 to be spent in excess of federal per diem lodging rates. University officials also allowed employees to pay back $36,880 of unused travel advances in installments long after the ten day accounting and reconciliation requirement.

Auditors examined the travel costs of one employee whose travel costs totaled $115,797. They found that while the travel expenses for the employee were supported, they need to be further reviewed to determine whether Internal Revenue Service "tax home" rules may apply and may result in taxable income.  In addition, Judicial Travel Rules were sometimes not complied with.

The village is incurring higher costs than necessary for goods and services. Auditors found purchases were not formally bid or awarded by the village board, quotes were not always obtained, and village officials did not determine if they received the correct state or county contract pricing.

The town supervisor did not maintain accurate and complete accounting records to properly document assets, liabilities, fund balances, results of operations, or prepare accurate reports that would allow the board to adequately monitor the town’s financial operations. As a result, town officials lacked assurance that fund balance was available to fund budgeted appropriations.

The town board repeatedly adopted budgets with inaccurate revenue and expenditure estimates, which led to the accumulation of significant surplus funds. In addition, the town’s procurement policy does not require the solicitation of written proposals or quotes for the acquisition of professional services. In 2011 and 2012 the town paid $314,781 to seven professional service providers without soliciting competition.

While the district does have adequate financial policies, it does not have certain financial procedures in place. For example, the district treasurer submits a budget-to-actual financial report to the board only at the end of the fiscal year and has not filed the required annual financial report with the Office of State Comptroller since the 2008. In addition, the board contracts with an independent auditor to perform an annual audit of the treasurer’s records; however, the last completed audit was performed in 2010.

The village board has consistently adopted budgets with unrealistic estimates of revenues, expenditures and the amount of fund balance to be used to fund operations. From 2007 through 2012, the board appropriated $3.73 million in fund balance for the general and sewer funds, but did not use $2.9 million of this amount. Consequently, the village accumulated $833,139 of unexpended surplus funds in the general fund and $522,373 in the sewer fund.

Town of White Creek – Board Oversight of Financial Activities (Washington County)
The town supervisor did not adequately oversee and monitor the work of the budget officer who served as the town’s bookkeeper and maintained the town’s accounting records. Due to the poor condition of the town’s financial records and reports, the town board was unable to determine the town’s true financial condition or effectively monitor financial operations.


Subsequent court and administrative rulings, or changes to laws, rules and regulations may have modified or clarified or vacated or reversed the decisions summarized here. Accordingly, these summaries should be Shepardized® or otherwise checked to make certain that the most recent information is being considered by the reader.
New York Public Personnel Law Blog Editor Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
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