YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

May 16, 2002

Report No. 2002-39

The United States Congress passed the Single Audit Act of 1996 to establish uniform requirements for audits of federal awards administered by states, local governments, and non-profit organizations.� The State Auditor's Office has completed an audit of the federal grant programs administered by the state.� The state is required by the Single Audit Act and 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.� State agencies expended $6.2 billion of federal grant funds during the year ended June 30, 2001. �The single audit requires an audit of the state's financial statements and expenditures of federal awards. 

As stated in numerous previous reports, the audit noted several instances where Food Stamps and Temporary Assistance for Needy Families benefits were provided to ineligible recipients.� The audit noted the state provided improper benefits to deceased persons, prisoners incarcerated in state correctional facilities, parents of children in state custody, lottery winners, sponsored aliens, and persons with outstanding felony warrants.� These benefits totaled more than $740,000. 

The audit recommended the state resolve the questioned costs with the federal grantor agencies, investigate the cases with improper benefits, establish recoupment claims where appropriate, and implement policy and procedure changes to ensure that improper payments do not occur.�  

The state made unnecessary managed care payments of at least $111,312 for Medicaid and State Children's Insurance Program (SCHIP) recipients that moved out of the state.� �During July 2001, there were 1,987 recipients eligible for Medicaid or SCHIP that had out-of-state addresses in the state's computer system. 

Of the 838,000 recipients eligible for Medicaid and SCHIP benefits, nearly 57,000 did not have a valid social security number in the state's computer system.� Federal regulations require the state to obtain the social security number for each recipient.� Computer matches performed by the state with other database records cannot be effective if the recipient social security numbers are not consistently entered into the state's computer systems. 

The state does not perform eligibility redeterminations on Medicaid and SCHIP recipients on a timely basis as required by federal regulation.� The audit tested a sample of 185 recipients and found that a redetermination had not been performed for 25 (13 percent) of the recipients. �Without timely redetermination of recipient eligibility, there is increased risk these programs are paying medical costs for ineligible individuals. 

The state is incurring unnecessary Medicaid costs because spenddown program policies are not in compliance with federal regulations.� Based on the average of claims tested, the state could have incurred at least $18 million in unnecessary costs during the 18 month period reviewed. 

The state did not meet various federal standards for the Child Support Enforcement Program.� The state failed to take the required actions to establish paternity on 46 percent of the cases tested and to establish an order of support on 40 percent of the cases tested. 

Child support monies in a State Treasurer's account are not being reconciled to Division of Child Support Enforcement accounting records.� In addition, interest totaling $994,383 has accumulated in the Family Support Trust Fund account since October 1999, but should have been disbursed to the state's general revenue fund and the federal government. 

The audit also covered the state's financial statements.� The Office of Administration (OA) has issued a Comprehensive Annual Financial Report (CAFR) for about 20 years.� The OA typically issues the CAFR within six months (by December 31) after the end of the state's fiscal year. However, the OA has not been able to issue the CAFR by December 31 for the past two years.� The OA cited several reasons for the delay in completion of the state's CAFR.� While there may be valid reasons for certain delays, the audit recommended the OA complete the state's CAFR by December 31.

Following the implementation of a new accounting system (SAM II) in fiscal year 2000, the OA requested state agencies to submit an internal control plan to the OA.� However, only five state agencies had submitted their internal control plan.  

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