YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

March 7, 2001

Report No. 2001-17

The State Auditor�s Office has completed an audit of the federal grant programs administered by the State of Missouri.� The state is required by the federal Single Audit Act and U.S. Office of Management and Budget, Circular A-133 to have this audit conducted each year for the benefit of the federal agencies that provide grant funds to the state agencies.� Federal grant funds expended by state agencies totaled $5.5 billion during the year ended June 30, 2000.� The Single Audit noted problems in several different areas related to federal grant funding.� In total, the audit questioned the use of $11,878,143 because the state did not comply with federal requirements. 

�        The Department of Social Services (DSS) incorrectly charged $134,278 of administrative costs to the federal Adoption Assistance program that should have been charged to the state Adoption Assistance program. 

�����The Department of Social Services disbursed $11.8 million to other entities under the Caring Communities and Juvenile Justice programs.� These other entities are subrecipients and should have been audited in accordance with Circular A-133.� However, the Department of Social Services classified these other entities as vendors and did not require them to be audited under A-133. 

���� The audit noted various problems in the eligibility of recipients of the Independent Living, Food Stamps, Medicaid, and Child Care programs as follows: 

����� Various coding errors made by Department of Social Services employees allowed some ineligible recipients to receive services under the federal Independent Living Program. 

����� The audit did a computer match of recipients of Temporary Assistance for Needy Families, Food Stamps, and Medicaid with a record of individuals who received a settlement from the state�s Second Injury Fund.� The match noted some recipients who had not reported the income from the settlements.� As a result, it appears they received Food Stamps and Medicaid benefits they were not eligible for. 

      The Department of Social Services does not require licensed child care providers to submit any attendance records to the state.� As a result, the Department of Social Services has little assurance the state is billed for the correct amount for child care. 

      The Department of Natural Resources (DNR) needs to make various improvements in its procedures for the State Revolving Fund program.� Duties for recording receipts and for custody of receipts need to be adequately segregated.� In addition, the Department of Natural Resources needs to minimize the time elapsing between the receipt of monies and their deposit.� Unused construction funds should be used to reduce the debt from bond issues.� The Department of Natural Resources needs to ensure that participating communities obtain audits as required under Circular A-133. 

���� The Department of Economic Development needs to reconcile its internal accounting system to the statewide accounting system.  

���� The audit also covered the state�s financial statements.� The state began using a new accounting system (SAM II) in fiscal year 2000.� The audit noted various reportable conditions in internal controls over SAM II.� Reports are inaccurate and unreliable, security access procedures are weak, some interagency transactions are not recorded properly, reconciliations are not performed timely, and supporting documentation for expenditures is not always properly filed.