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April 29, 2017
Audit Provides Insight to State's Management Problems by Senator Kathleen Vinehout
Posted On: Apr 13, 2012

Audit Provides Insight to State’s Management Problems

 

How well did state government manage the $15 billion in federal money received last fiscal year? This is the subject of the annual “single” audit.
The nonpartisan Legislative Audit Bureau released their analysis of the state’s activities related to federal money. The audit provides insight into the management challenges within state government.
Three major problems came to light as I read the nearly 300 page document. All are related. State agencies computer systems do not adequately provide needed oversight; systems to adequately monitor those who receive federal dollars are either not in place or not followed; turnover in state employment is exceptionally high which leaves gaps in critical jobs.
In many programs auditors found documents missing; needed oversight not performed; compliance with federal rules not assured and inaccurate figures in reports. The inability to reconcile numbers between different accounting systems is a reoccurring theme.
Some state agencies were disbanded and employees laid-off or transferred. Auditors did not find records associated with the transferred programs. For example, records formerly held by the Department of Commerce (an agency disbanded by Governor Walker) were not available. When auditors were not provided adequate documents, they could not assure compliance with federal rules.
Errors existed in many reports. In one case a $40,000 error resulted from counting state money as federal money. In another case missing vendor payments for the Energy Assistance Program left an $800,000 understatement of federal money spent.
In the Department of Children and Families auditors found errors in reports due to staff turnover and limited review of work. For example, staff errors in data entry and miscalculations resulted in a claim of more than $96,000 in foster care services that were never performed. As a result of inaccurate reporting in first quarter of last year DCF over-charged the feds $1.9 million in foster care - money that had to be repaid.
A lack of oversight of state contractors and grant award recipients also plagues state government. Auditors found the state was not compliant with the federal Davis-Bacon Act that requires wages paid to certain workers to be no less than the US Department of Labor ‘prevailing wage’.
At the Department of Health Services, auditors found 1 in 5 audits of federal grant recipients were not performed on time. The Department said the delay was due to staff turnover and workload increase.
Similarly, other parts of state government failed to adequately monitor those receiving federal funds. For example, the Department of Transportation (DOT) awarded over $6 million in grants for transportation services to needy citizens. DOT failed to provide adequate oversight to these grant recipients, including any of the required site visits. Auditors found inaccurate financial reporting in all 13 financial reports submitted in April, 2011. Officials said staff turnover led to these inaccurate reports.
DOT also did not follow procedures or keep complete records on vehicles purchased under the federal transit programs. Officials blamed the lack of staff and promised to fill a position vacant since last February. Due to the lack of oversight, DOT could not be assured funds were being spent for the purposes of the transit program.
The errors in oversight can result in fines, sanctions or money returned to the federal government. In several cases, the state returned money to the federal government because mistakes were made and rules broken. For example, the Department of Health received a $2.7 million fine because a contract extension was not approved.
The state must provide careful management and oversight of money coming from the federal government through the state to local governments and contractors and vendors in the private sector. When the state fails to properly manage these funds, penalties and sanctions take precious money from state coffers to pay fines.
When state government functions are not adequately staffed, staff not adequately monitored and when proper systems are not in place, necessary oversight does not happen.
The single audit is complex because it reflects the complexity of federal programs. But the insight gained by studying the audit provides a blueprint we can use to ensure adequate oversight and management of state government.


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