Missouri State Auditor Scott Fitzpatrick today released his office’s review of how Missouri state agencies managed and spent approximately $20.9 billion in federal funds during fiscal year 2023. This year’s Statewide Single Audit reviewed 16 major federal programs administered by 8 state agencies.
“With the immense amount of federal funds flowing into and through our state budget each year, it’s imperative that we closely examine how this money is allocated and to ensure it is used in a fiscally responsible way,” said Auditor Fitzpatrick. “Last year’s single audit was able to help save the state $10 million per year, and this year’s audit has identified another half million dollars in savings, along with several other areas where our state departments can run their programs more efficiently and effectively, and in compliance with federal requirements. This year’s audit also provides recommendations to the Child and Adult Care Food Program that could prevent hundreds of thousands of dollars in erroneous reimbursements.”
The audit of the state’s expenditures of federal awards for the fiscal year ended June 30, 2023, contains 18 findings, which is an increase from the prior year’s 9 findings. Six of the findings are repeat findings from previous audits. The current audit report contains findings related to various federal programs, including Medicaid, Children’s Health Insurance Program (CHIP), Adoption Assistance, Coronavirus State and Local Fiscal Recovery Funds (SLFRF), Child and Adult Care Food Program (CACFP), and Child Care.
The audit found the Department of Health and Senior Services (DHSS), which oversees the CACFP, does not have sufficient controls and procedures to ensure reimbursements to child and adult care facilities and sponsors are allowable and supported with sufficient documentation. The audit also found DHSS subrecipient risk assessment and monitoring procedures are not sufficient to ensure CACFP subrecipient compliance with program requirements. As a result, significant unallowable and unsupported reimbursements are made without being prevented or detected on a timely basis, and monitoring reviews have identified significant issues and claim errors, including some potentially fraudulent activity, and led to over 15 contract terminations in recent years. A randomly selected sample of 60 DHSS monitoring reviews conducted for 58 CACFP facilities/sponsors during the year ended June 30, 2023, noted DHSS disallowances (overclaims/underclaims) in 41 of 58 (71 percent) reviews for which meal reimbursement claims were tested. Overclaims totaled $50,954 (36 reviews) and underclaims totaled $280 (5 reviews), with a net overclaim of $50,674, or at least 11 percent of claims tested by the DHSS. While the DHSS adjusted subsequent claims to recoup or reimburse for the identified overclaims/underclaims, unallowable costs could be significant if similar errors were made on the remaining population of CACFP meal reimbursements totaling approximately $74.6 million. The audit report notes the DHSS disagrees with the State Auditor’s Office recommendations and believes their procedures are sufficient and in compliance with federal regulations. Until the DHSS acknowledges there are weaknesses in its existing procedures and takes action to strengthen those procedures, significant improper payments to facilities and sponsors will likely continue.
A significant finding similar to one from last year’s Statewide Single Audit could save the state more than half a million dollars annually in state taxpayer funds. The audit found the Department of Social Services (DSS) did not have sufficient procedures and controls to prevent and/or detect errors with the allocation of some administrative costs to federal programs. In total, for Fiscal Year 2023, costs totaling approximately $1.08 million were incorrectly allocated to six programs. The identification of this issue will allow DSS to pay for these services with federal funds rather than state funds – saving the state approximately $546,000 each year. The previous audit detected a similar error that saved the state approximately $10 million per year.
The audit also found a $1 million error made by the DSS. Because the DSS does not have adequate internal controls and procedures related to adoption savings requirements, the amount of adoption savings reported in the federal fiscal year 2022 Annual Adoption Savings Calculation and Accounting Report was overstated by approximately $1 million. If the error had not been identified during the audit, the DSS would have had to demonstrate approximately $1 million in additional expenditures for required services.
Of the 18 findings contained in the Statewide Single Audit, 9 are related to the administration of the Medicaid and CHIP programs by the DSS and the DHSS. These programs accounted for 64 percent of the state’s total federal expenditures. One finding notes how the DSS – MO HealthNet Division (MHD) does not have sufficient controls to ensure benefits are terminated for participants no longer eligible for Medicaid and CHIP. A review found a death match was not operating in the Medicaid Eligibility Determination and Enrollment System during the year ended June 30, 2023. Additionally, for 2 of the 60 participant cases sampled, the DSS received information requiring participant case termination but did not manually terminate the participants’ eligibility in the applicable eligibility system.
A significant finding that has appeared in three previous audits notes the MHD has not fully implemented the Medicaid National Correct Coding Initiative (NCCI) edits in the Medicaid Management Information System (MMIS) as required. The failure to fully implement the NCCI edits increases the risk that coding errors or irregularities will go undetected, and improper payments will be made.
Additionally, the audit found the MHD did not review and remove access rights for the MMIS in a timely fashion for users no longer employed in positions needing access. A sample of 40 MMIS users found 2 terminated users whose access had not been removed for 9 and 13 months.
The audit found the MHD does not have adequate controls in place to ensure the proper management of receipts. During a count of undeposited items and a review of related receipt records on December 11, 2023, auditors noted numerous omitted cash control numbers. Failure to properly account for cash control numbers increases the risk of misappropriation. The audit also found, as it did in two previous audit reports, that the DHSS did not perform Medicaid facility survey procedures within the required timeframes.
Another audit finding recommends the Department of Elementary and Secondary Education (DESE) strengthen controls over the Child Care program’s subsidy payments to childcare providers to ensure correct rates are paid. A sampling of 60 monthly payments to providers for child care found the DESE overpaid providers for 2 of the payments. The audit recommends the DESE strengthen and enforce internal controls and review payments to ensure the correct Child Care subsidy rates are paid.
Additionally, the audit found the DESE needs to strengthen internal controls related to Federal Funding Accountability and Transparency Act reporting; the statewide Schedule of Expenditure Awards was not prepared timely by the Office of Administration (OA) because of insufficient controls and procedures; and the OA has not established policies and procedures regarding monitoring subrecipients of the SLFRF program.
A complete copy of the Statewide Single Audit for fiscal year 2023 is available here.
