Minnesota Office of the Legislative Auditor
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Report Summary
Department of Human Services

Financial Audit
For the Fiscal Year Ended June 30, 1998

 

Public Release Date: March 12, 1999 No. 99-17

Agency Background

The Department of Human Services (DHS) administers a variety of programs that provide financial and medical assistance to eligible Minnesotans. The department administers an annual budget of nearly $5 billion, including over $2 billion of federal funds. The largest program, Medical Assistance, is the state's Medicaid program. The department provides other aid as cash benefits or food stamps. Mr. Michael O'Keefe was named the new commissioner in January 1999.

Audit Scope and Conclusions

Our audit scope was limited to the activities material to the State of Minnesota's general purpose financial statements for the year ended June 30, 1998. Our primary audit objective was to render an opinion on the State of Minnesota's financial statements. We also performed audit procedures to determine whether the Department of Human Services complied with the types of compliance requirements applicable to each of its major federal programs. The scope within the department included health care program grants (Medical Assistance, General Assistance Medical Care, and MinnesotaCare), income maintenance programs (Temporary Assistance to Needy Families and Food Stamps), other grants (Community Social Services, Chemical Dependency Treatment, Child Support Enforcement, Substance Abuse Prevention, Social Services Block, and Programs for the Aging), as well as material department revenue programs (Residential Treatment Center and Chemical Dependency Cost of Care Revenues, the Medical Provider Surcharge, and Child Support Collections).

We qualified our report, dated December 1, 1998, on the State of Minnesota's general purpose financial statements because insufficient audit evidence exists to support the State of Minnesota's disclosures with respect to the year 2000. Auditing the state's year 2000 compliance efforts was not an objective of this audit. As a result, we do not provide assurance that the Department of Human Services is or will be year 2000 ready, that its year 2000 remediation efforts will be successful in whole or in part, or that parties with which the Department of Human Services does business will be year 2000 ready.

For the areas audited, the Department of Human Services' financial activities were fairly presented in the general purpose financial statements of the State of Minnesota's Comprehensive Annual Financial Report for the year ended June 30, 1998. However, we found that the department did not ensure that certain legally required fund transfers were made.

For the federal programs tested, we found several instances of noncompliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 1998. We found that the department did not audit the required number of nursing homes during fiscal year 1998, submitted inaccurate food stamps reports to the federal government, did not have a sufficient system to account for the Drug Rebate Program, did not have a process to determine suspended or debarred vendors, did not resolve subrecipient audit reports timely, and did not accurately calculate outstanding interest on federal cash.

In its response, the Department of Human Services agreed with the report's findings and recommendations and is taking corrective actions to resolve the issues.

More Information

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