Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Department of Human Services

Financial Audit
For the Fiscal Year Ended June 30, 1997

 

Public Release Date: March 20, 1998 No. 98-20

Agency Background

The Department of Human Services (DHS) administers a variety of programs that provide financial and medical aid to eligible Minnesotans. The department's commissioner, Mr. David Doth, oversees the administration of nearly $5 billion, including over $2 billion of federal funds, for needy persons. The largest program, Medical Assistance, is the state's Medicaid program. Other aid is provided as cash benefits or food stamps. Administration of these programs in accordance with state and federal regulations is complex and dynamic. The department deals with volumes of federal regulations, interactions with local levels of government, welfare reforms, and changing technology.

Audit Scope and Conclusions

Our audit scope was limited to those activities material to the state of Minnesota's Comprehensive Annual Financial Report or the Single Audit of federal programs for the year ended June 30, 1997. We found that the department fairly presented its financial information in the state's financial report, in accordance with generally accepted accounting procedures. Except as stated below, DHS complied, in all material respects, with the federal requirements governing the programs tested.

We found the following instances of noncompliance with federal regulations for the Medical Assistance program. The department did not accurately report expenditure data to the federal government. DHS did not routinely monitor overrides of certain edits designed to deny medical payments. Also, DHS continued to pay for costly medical procedures without first verifying prior approval. Finally, DHS continued to have an inadequate system of accounting for the Drug Rebate program.

We also found the following instances of noncompliance with other federal requirements. DHS failed to promptly change its federal cash requests for the income maintenance programs as a result of changes in the federal participation rate. In addition, we found that DHS had not fully implemented prior recommendations concerning the processing and accounting for receipts. The department did not have adequate controls to ensure that federal funds were not used to purchase goods or services from entities suspended or debarred by the federal government. Finally, we found that DHS was not current in its review of subrecipients.

In its response to the report, DHS indicated that it agrees with the findings and is implementing corrective action.

 

Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155