Health, Department of
An Audit Report on Contract Administration at Selected State Agencies - Phase Four
September 1996
Report Number 97-002
Overall Conclusion
Questionable expenditures identified at additional Texas Department of Human Services (DHS) and Texas Department of Protective and Regulatory Services (DPRS) contractors reinforce concerns regarding weaknesses in contract administration previously cited in our Office's February 1996 report (Contract Administration at Selected Health and Human Services Agencies - Phase Three, SAO Report No. 96-047). Until these weaknesses are adequately addressed, contractors can continue to enrich themselves at the expense of both taxpayers and the clients who are eligible to receive quality services. Both the Texas Department of Housing and Community Affairs (TDHCA) and the Texas Juvenile Probation Commission (TJPC) have implemented adequate contract administration systems, although specific aspects of these systems need to be strengthened.
Key Facts and Findings
We identified $614,374 in questionable expenditures included on contractor cost reports during reviews at ten DHS nursing facility contractors, and $386,507 in questionable expenditures included on contractor cost reports during reviews at five DHS primary home care contractors.
We identified $1,062,686 in questionable expenditures included on contractor cost reports during reviews at five DPRS residential treatment center contractors. In addition, during our review period, DPRS did not limit the portion of the payment rate that child placing agency contractors could retain prior to paying foster care families. In response to our February 1996 report, DPRS began implementing a corrective action plan.
TDHCA needs to strengthen its oversight of contractors through formalization and expansion of certain monitoring procedures, enhanced coordination between the agency's program divisions and its Compliance Division, and through combined monitoring of multiple programs.
TJPC needs to strengthen contract administration controls when TJPC funds flow from local juvenile probation departments or judicial districts to subcontractors. TJPC also needs to formalize its existing financial monitoring procedures to avoid instances in which financial discrepancies go undetected, as well as enhance specific controls within its existing program monitoring procedures.
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