New York State Comptroller Thomas P. DiNapoli announced the following audits were issued during the week ending December 31, 2016
Source: Office of the State Comptroller
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Office of General Services (OGS): Business Services Center Shared Services (2016-S-16)
The state’s 2012-13 budget established the Business Services Center within OGS as a centralized office for processing human resources and finance transactions that are common across state agencies. Auditors found the center has improved the consistency and efficiency of certain services it provides to its customers. Procurement card rebates have increased by over $4 million, and interest paid by the state has decreased by $350,000 since fiscal year 2013-14. Also, the center estimates it has reduced staffing costs for administering these services by $34 million annually.
Department of Health (DOH) Medicaid Payments Made Pursuant to Medicare Part C (Follow-Up) (2016-F-16)
An audit released in May 2014 found the state’s Medicaid program did not have limitations on the amounts it paid for Part C cost-sharing liabilities and could have saved up to $69 million if it limited payments of Medicare Part C cost-sharing liabilities. The audit also identified several scenarios under which Medicare Part C cost-sharing liabilities were improperly paid. In a follow-up report, auditors found DOH officials made progress in addressing the problems identified in the initial audit report. This included developing controls to limit the amounts paid for Medicare Part C cost-sharing liabilities and controls to prevent concurrent payments of Medicaid Advantage premiums and Medicare cost-sharing liabilities on behalf of the same recipient. However, further actions were still needed.
Department of Health (DOH): Overpayments to Managed Care Organizations and Hospitals for Low Birth Weight Newborns (Follow-Up) (2016-F-8)An audit issued in October 2014 identified about $13.9 million in inappropriate or potentially inappropriate Medicaid payments for low birth weight infants that did not meet billing requirements as well as overpayments due to duplicate fee-for-service and managed care claims. At the time the initial audit’s fieldwork concluded, auditors recovered over $7 million of the overpayments identified. In a follow-up, auditors found DOH officials made significant progress implementing the recommendations made in the initial audit report. This included recovering another $2 million in overpayments that were identified in the initial report and strengthening controls that prevented $13 million in improper claims.
An initial audit report, issued in June 2013, examined whether ESD monitors the effectiveness of its international offices and manages payments to foreign representatives to ensure they are made only for authorized contract purposes. Auditors concluded that, while ESD had made significant improvements in managing payments to foreign offices, it did not have an appropriate performance monitoring system in place to evaluate foreign offices’ activities against contract requirements. In a follow-up, auditors found ESD made some progress in addressing the issues identified in the initial audit report; however, further action is needed.
State Education Department: HTA of New York Inc., Compliance with the Reimbursable Cost Manual (2016-S-36)
For the fiscal year ended June 30, 2014, auditors identified $28,952 in ineligible costs that HTA reported for state reimbursement, including $22,207 in other than personal service costs, and $6,745 in personal service costs, which consisted of $4,065 in unsupported staff time, $1,546 in employee compensation that was reported as more than one full-time equivalent and $1,134 in other non-reimbursable costs.
Office of Information Technology Services (ITS): Security and Effectiveness of Department of Motor Vehicles’ (DMV) Licensing and Registration Systems (Follow-Up) (2016-F-15)
An audit report issued in September 2014 found that ITS and DMV were not in compliance with security standards that govern the systems that process credit card transactions. Auditors also found ITS did not comply with state cybersecurity policies and did not establish adequate processes for managing user access of DMV systems. In a follow up, auditors found DMV officials have made some progress in correcting the problems identified in the initial report. However, improvements are still needed. Of the five prior audit recommendations, two recommendations have been implemented and three recommendations have been partially implemented.
New York State Comptroller Thomas P. DiNapoli announced the following audits were issued during the week ending December 20, 2016
Source: Office of the State Comptroller
Audits of Municipal Entities
The board did not audit and approve claims prior to payment. The library’s bylaws do not address the requirement for an audit of claims and the board did not adopt a written claims audit policy. The director reviews and approves invoices and provides them to the library’s senior clerk, who then prepares checks. Checks require two signatures prior to payment – the director and the board president. However, the board president pre-signs blank checks and does not review the claims for which checks are written.
Village officials have established effective procedures that ensure claims are adequately documented and properly supported, for legitimate village purposes and approved prior to payment. The clerk-treasurer receives vendor invoices from a department head or by mail and prepares claim packets. Each board member reviews each individual claim packet and board resolutions approving payment of claims are then passed and documented in the meeting minutes.
The justices properly collected, recorded and reported court money in a timely manner. Court records were current and accurate and reports to the Justice Court Fund were timely and complete. The justices also ensured that court money was deposited in a timely manner.
While the board, by resolution, generally approved abstracts of claims, it did not perform an effective claims audit or establish an adequate process to ensure that transactions were properly authorized and approved or that claims were for proper village purposes. Although all claims reviewed appeared to be reasonable and legitimate, the use of confirming purchase orders circumvents internal controls and weakens the procurement and budget control process. Moreover, when the board does not audit and approve claims prior to payment and has the same person that audits the claims sign checks, there is an increased risk that the village could pay for goods and services that are not proper village expenditures.
The treasurer’s status, as either a library officer or independent contractor, is unclear. While this appointment and the duties attached to this function are indicative of those of a public officer, it appears this individual was engaged to perform the duties of treasurer as an independent contractor. Among the indications of an independent contractor relationship, the treasurer does not take an oath of office, which is a requirement for holding public office, and is not compensated through the payroll, as are other library officers and employees.
Although the board adopted a procurement policy that required obtaining competition for purchases not subject to bidding requirements, village officials did not always ensure that purchases were made in compliance with the requirements. Furthermore, the policy did not include procedures for procuring professional services. Auditors selected a sample of purchases from 30 vendors totaling approximately $1.7 million and found that village officials did not use competitive methods to procure goods and services from six vendors who were paid a total of $196,732 for professional services. In addition, village officials did not competitively bid purchases from four vendors totaling $148,387, as required.
Audits of BOCES and School District
Although the board has adopted a procurement policy that requires competition for purchases not subject to bidding requirements, the policy does not clearly establish procedures for procuring professional services. Also, the purchasing agent and claims auditor did not always ensure that purchases were made in compliance with the policy or require district officials to properly document compliance when they sought competition.
Onondaga-Cortland-Madison Board of Cooperative Educational Services (BOCES) – Managed Technical Support (2016M-299)
BOCES did not properly oversee the managed technical support cooperative service agreement, which resulted in errors in reporting reimbursable expenditures to the New York State Education Department (SED). Specifically, BOCES reported district-based staff who were not eligible for aid reimbursement from SED. As a result, BOCES claimed $2.5 million in additional aid to which it was not entitled.
The board and district officials have not developed adequate written policies and procedures governing the claims processing function. In addition, the board did not develop a comprehensive job description that outlines the claims auditor’s expectations and requirements. The claims auditor compares invoices against only the purchase orders, which does not always provide adequate documentation about the vendors’ prices. The claims auditor does not compare invoices against quotes, bids or government contracts, and there is no policy that requires that these documents be attached to the claims.
The board delegated its responsibility to a claims auditor who generally ensured claims were adequately supported, properly audited before payment and in compliance with district policies. The claims auditor verified that claims were supported by original documentation such as detailed invoices or receipts and that each claim had been properly authorized.
Although the board and district officials reported unrestricted fund balance levels that were in accordance with statutory limits, they have annually appropriated fund balance towards the next year’s budget that was not used due to a practice of overestimating appropriations. This trend is projected to continue through 2015-16. Once the unused appropriated fund balance is included in unrestricted fund balance, the district’s recalculated unrestricted fund balance exceeds the statutory limit, ranging from approximately $2.4 million (12 percent) in 2012-13 to $930,000 (5 percent) in 2014-15. In addition, three reserves totaling approximately $3.8 million were overfunded, and the debt reserve totaling approximately $600,000 has not been used since 2010-11 for related debt principal and interest payments, as statutorily required.