Summary of Report 01-021

March 2001

Report Number 01-021

Over the last ten years, the State Auditor's Office, the Department of Health's (Department) internal auditor, and others have reported findings concerning the Department's business and financial practices. Many of the previous findings are similar to those identified in the current audit. The issues identified in these findings affect the Department's accountability and hinder its ability to provide reliable financial information. The consistency with which these issues continue to appear raises questions about the Department's ability to implement the comprehensive and long-term policy, operational, and technical solutions necessary to fix and prevent recurrent problems. The Department has not fully met all state and federal requirements and lacks an effective compliance monitoring process. Other concerns include the recurrent use of adjustments to correct accounting errors, incorrect expenditure coding, and inadequate information systems.

• �The Board of Health (Board) delegates its oversight responsibility by authorizing the Department to adjust appropriation transfers at the Department's discretion to meet the financial obligations of the Department. As a result, the Department has made million-dollar adjustments to approved appropriation transfers without additional review.
  
  
• According to the Department's 1999 Fee Resource Manual, in 22 of 47 programs that require fees to cover program costs, total expenditures exceeded revenues by more than $5 million. The Department indicates that the Board has authority to change fees for 11 of the 22 programs, and other fees are subject to control of external parties.
  
  
• The Department may have incurred an interest liability under the federal Cash Management Improvement Act as a result of its handling of federal funds.
  
  
• Errors in the Department's Indirect Cost Recovery Plan for fiscal year 2001 may result in overcharges to the federal government.
  
  
• The Department makes recurrent adjustments to its accounting systems to correct bookkeeping errors. The need to make recurrent corrections raises concerns about the accuracy of other accounting transactions.
  
  
• Inadequate maintenance of user access for both the Department's and the State's accounting systems could result in intentional or unintentional damage to financial information.

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