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Department of Public Health and Human Services for the Two Fiscal Years Ended June 30, 2017

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Department of Public Health and Human Services for the Two Fiscal Years Ended June 30, 2017 A REPORT TO THE MONTANA LEGISlaTURE FINANCIal-COMPLIANCE AUDIT Department of Public Health and Human Services For the Two Fiscal Years Ended June 30, 2017 NOVEMBER 2017 LEGISlaTIVE AUDIT DIVISION 17-14 Financial-Compliance Audits Legislative Audit Committee Financial-compliance audits are conducted by the Legislative Audit Division to determine if an agency’s financial operations Representatives are properly conducted, the financial reports are presented Kim Abbott fairly, and the agency has complied with applicable laws and [email protected] regulations. In performing the audit work, the audit staff uses Dan Bartel standards set forth by the American Institute of Certified Public [email protected] Accountants and the United States Government Accountability Randy Brodehl Office. Financial-compliance audit staff members hold degrees [email protected] with an emphasis in accounting. Most staff members hold Tom Burnett, Vice Chair Certified Public Accountant (CPA) certificates. [email protected] Virginia Court The Single Audit Act Amendments of 1996 and the Uniform [email protected] Administrative Requirements, Cost Principles, and Audit Denise Hayman Requirements for Federal Awards require the auditor to issue [email protected] certain financial, internal control, and compliance reports in addition to those reports required by Government Auditing Senators Standards. This individual agency audit report is not intended Dee Brown to comply with these reporting requirements and is therefore [email protected] not intended for distribution to federal grantor agencies. The Terry Gauthier Legislative Audit Division issues a statewide biennial Single Audit [email protected] Report which complies with the above reporting requirements. Bob Keenan The Single Audit Report for the two fiscal years ended June 30, [email protected] 2015, was issued March 29, 2016. The Single Audit Report for the Margaret MacDonald two fiscal years ended June 30, 2017, will be issued by March 31, [email protected] 2018. Mary McNally, Chair [email protected] Gene Vuckovich [email protected] Members serve until a member’s legislative term of office ends or until a successor is appointed, Audit Staff whichever occurs first. Jeane Carstensen-Garrett John Fine Natalie H. Gibson Alexa O’Dell §5-13-202(2), MCA Delsi Osmanson Nolan Preeshl Jill Sharp Fraud Hotline Reports can be found in electronic format at: (Statewide) 1-800-222-4446 http://leg.mt.gov/audit (in Helena) 444-4446 [email protected] LEGISLATIVE AUDIT DIVISION Angus Maciver, Legislative Auditor Deputy Legislative Auditors Deborah F. Butler, Legal Counsel Cindy Jorgenson Joe Murray November 2017 The Legislative Audit Committee of the Montana State Legislature: This is our financial-compliance audit report on the Department of Public Health and Human Services for the two fiscal years ended June 30, 2017. Included in this report are 13 recommendations related to improvements in internal controls and compliance with federal regulations, and errors in the financial records. Federal program recommendations include overarching policies and procedures as well as recommendations specific to five of the federal programs administered by the department. As noted in the department’s response starting on page C-1, the department does not concur with two of the recommendations in the report. For each recommendation #3 and #12, the department’s response does not contain any information not already considered during the audit. As such, we maintain our position as reported. We thank the Director and her staff for their cooperation and assistance throughout the audit. Respectfully submitted, /s/ Angus Maciver Angus Maciver Legislative Auditor Room 160 • State Capitol Building • PO Box 201705 • Helena, MT • 59620-1705 Phone (406) 444-3122 • FAX (406) 444-9784 • E-Mail [email protected] i Table of Contents Figures and Tables ....................................................................................................................iii Appointed and Administrative Officials ..................................................................................iv Report Summary ...................................................................................................................S-1 CHAPTER I – INTRODUCTION ��������������������������������������������������������������������������������������������������������������1 Audit Scope ...............................................................................................................................1 Background �������������������������������������������������������������������������������������������������������������������������������1 Changes in Social Services ................................................................................................4 Organizational Structure ..................................................................................................4 Prior Audit Recommendations ..................................................................................................7 CHIMES System Controls ...............................................................................................7 System Access ....................................................................................................................7 Foster Care Contracts ......................................................................................................8 CHAPTER II – FINDINGS AND RECOMMENDATIONS ������������������������������������������������������������������11 Federal Programs ....................................................................................................................11 Cost Allocation ...............................................................................................................11 Indirect Cost Pools ....................................................................................................12 Limitations in Grant Awards.....................................................................................13 Summary ������������������������������������������������������������������������������������������������������������������14 Cash Management ..........................................................................................................14 Non-TSA Awards ......................................................................................................15 TSA Awards �������������������������������������������������������������������������������������������������������������15 Summary �����������������������������������������������������������������������������������������������������������������16 Unallowable Costs ..........................................................................................................17 Medicaid .........................................................................................................................19 Provider Agreements ................................................................................................19 Referrals to the Medicaid Fraud Control Unit .........................................................20 Automated Data Processing (ADP) Monitoring .......................................................22 Quarterly Reporting .................................................................................................23 Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) ....24 Payment for Voided Food Instruments .....................................................................24 Disposition of Food Instruments ..............................................................................25 Temporary Assistance for Needy Families.......................................................................26 Child Care Development Fund Procedures for Recovering Fraudulent Overpayments ..27 Vocational Rehabilitation ...............................................................................................28 Revenue Estimates ������������������������������������������������������������������������������������������������������������������29 INDEPENDENT AUDITOR’S REPORT AND DEPARTMENT FINANCIAL SCHEDULES Independent Auditor’s Report ............................................................................................... A-1 Schedule of Changes in Fund Equity & Property Held in Trust for the Fiscal Year Ended June 30, 2017 ................................................................................ A-5 Schedule of Changes in Fund Equity & Property Held in Trust for the Fiscal Year Ended June 30, 2016 ................................................................................A-6 Schedule of Total Revenues & Transfers-In for the Fiscal Year Ended June 30, 2017 ................................................................................ A-7 17-14 ii Montana Legislative Audit Division Schedule of Total Revenues & Transfers-In for the Fiscal Year Ended June 30, 2016 ................................................................................A-8 Schedule of Total Expenditures & Transfers-Out for the Fiscal Year Ended June 30, 2017 ................................................................................A-9 Schedule of Total Expenditures & Transfers-Out for the Fiscal Year Ended June 30, 2016 .............................................................................. A-10 Notes to the Financial Schedules .......................................................................................
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