Releases Vol. 2 of the annual state audit
FRANKFORT, Ky. (March 22, 2013) – In his annual statewide audit, Kentucky Auditor Adam Edelen found instances where state agencies are not properly monitoring how grant recipients spend federal funds. He released on Friday the second part of the audit of the Commonwealth of Kentucky for fiscal year ending June 30, 2012.
The audit contains 30 findings with recommendations and notes more than $1.9 million in questioned costs.
Federal law dictates an audit of the state’s compliance with federal grant requirements. The amount of federal grant dollars expended in fiscal year 2012 was just under $10 billion. The amount of federal dollars expended in 2011 was $11 billion.
Findings
Lack of oversight of Medicaid MCOs
The audit found a lack of oversight by the Cabinet for Health and Family Services of the Medicaid Managed Care Organizations (MCOs). Auditors found that quarterly reports submitted by the MCOs concerning appeals and grievances for members and providers do not contain enough information to ensure grievances were handled in a timely manner or that federal compliance requirements were met. Auditors also found the Cabinet did not ensure that MCOs followed up on complaints. Without that oversight, grievances could go unresolved and potential fraudulent activity could be undetected.
“I’ve said it before: We can outsource the functions of Medicaid, but we cannot outsource the oversight,” Edelen said. “There are more people on Medicaid than there are children in our public schools. We have to get this managed care system right.”
Chemical stockpile funds
The audit contains a finding that has been repeated since 2008 involving a lack of oversight of federal chemical stockpile emergency preparedness funds by the Department of Military Affairs, resulting in more than $30,192 in questionable expenses.
The finding is the report’s only material weakness, which could lead to a compliance requirement of a federal program not being met.
With chemical weapons housed at the Blue Grass Army Depot in Madison County, Central Kentucky counties receive federal dollars through CSEPP, which is administered through KyDEM. These counties include: Madison, Clark, Powell, Estill, Jackson, Rockcastle, Garrard, Fayette, Jessamine and Laurel. These counties received $11.6 million through the state in 2012.
Auditors questioned $3,439 in reimbursements associated with a trip by two Laurel County employees to a conference in Oregon. Expenses for food, transportation and lodging incurred 300 miles away in California after the conference ended were reimbursed.
Auditors also questioned reimbursement for rent payments, food and cell phone bills to CSEPP counties.
Problems of oversight by KyDEM were first noted in the 2008 state audit and repeated in the 2009, 2010 and 2011 audits. The cause year after year continues to be that KYDEM staff does not review reimbursement forms and supporting documents.
The audit includes 29 findings that are “significant deficiencies” of how state government agencies oversee and monitor federal funds. These findings do not rise to the level of material non-compliance.
Volume one – an audit of Kentucky’s financial statements released in February – contained 55 findings with recommendations related to deficiencies in internal controls over financial reporting.
Click here to download the full Vol. 1 report.
Click here to download the full Vol. 2 report.
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