State of Arizona June 30, 2010 Highlights - Financial Statement and Single Audit

Office Of The Auditor General

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• Publié par: Effo
• Nombre de lectures: 20
• Langue: English

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State of Arizona
REPORT General Fund Reports a Fund Balance DeficitHIGHLIGHTS
FINANCIAL STATEMENT AND
The State’s General Fund ended the year with a deficit of $755 million. This was a SINGLE AUDITS
decrease of $224 million from the prior year’s deficit of $979 million. The increase in
Subject fund balance was the result of the following changes in revenues and other financing
sources and expenditures and other financing uses between fiscal years:The State of Arizona issues
a Comprehensive Annual
Financial Report (CAFR) and General Fund revenues and other amount of corporate income taxes
a Schedule of Expenditures financing sources increased $2.2 billion, collected during the fiscal year.
of Federal Awards annually. or 10.7 percent, between fiscal years
The State is responsible for • Transfers in from other funds 2009 and 2010, primarily as a result of preparing the CAFR and decreased by $194 million, primarily the following:schedule, maintaining strong
due to a decrease in sweeps from internal controls,
other funds to address budget demonstrating accountability • Long-term borrowing increased by
for its use of public monies, shortfalls.$910 million due primarily to the
and complying with federal
issuance of $425 million in Lottery program requirements. As General Fund expenditures and other bonds and $999 million in the auditors, our job is to
financing uses increased by $672 million, determine whether the State Department of Administration
or 3 percent, between fiscal years 2009 has met its responsibilities. certificates of participation. Proceeds
and 2010, primarily as a result of the from these debt instruments were Our Conclusion following:transferred to the General Fund to
pay appropriated expenditures for The information in the
• Health and welfare expenditures State’s financial statements the State during fiscal year 2010.
is fairly stated in all material increased by $1.1 billion due to
respects and the Schedule • Intergovernmental revenues increased enrollment in the Arizona
of Expenditures of Federal increased by $2.2 billion due Health Care Cost Containment
Awards is fairly stated in all primarily to the receipt of federal System’s (AHCCC S) programs. material respects in relation
stimulus monies from the American to these financial • Education expenditures decreased Recovery and Reinvestment Act and statements. A summary of
by $173 million compared to fiscal this information is presented an additional increase in federal
year 2009. The decrease can be on page 4. However, monies received for health and
auditors identified internal primarily attributed to a decrease in welfare programs of $591 million.
control weaknesses and state assistance for kindergarten
noncompliance with federal • Sales tax revenues decreased by through 12th grade and university
program requirements, as $299 million. Sales taxes paid by operating expenditures to address summarized on pages 2
retail stores and construction budget shortfalls.and 3.
contractors decreased by 7 percent
• Intergovernmental revenue sharing and 37 percent, respectively, when
decreased by $136 million compared compared to fiscal year 2009 sales
to fiscal year 2009. This is primarily tax receipts.
due to the decrease in sales and
• Income tax revenues decreased by income tax revenues received.
$332 million from the previous year 2010 • Transfers out decreased by $89 as a result of the 66,000-person
million. This was primarily due to a decrease in the number of individuals
Year Ended June 30, 2010 decrease in appropriation transfers employed and a decrease in the
made to other funds.Summary of Audit Findings
For the financial statement audit, auditors identified eight internal control weaknesses over financial
reporting, including two material weaknesses. For the federal compliance audit, auditors tested 31
major federal programs, including 17 program clusters, under the guidelines established by the Single
Audit Act and found that the State did not always have adequate internal controls and did not always
comply with certain federal requirements. For 8 of the programs, the instances of noncompliance
were considered material. The Single Audit Report includes further details and auditor
recommendations to help correct these deficiencies. The material weaknesses over financial reporting
and the instances of material noncompliance with federal requirements are summarized below.
Financial Statement Findings the eligibility verification system. Further, the
(material weakness)— DES identified one instance of an employee
manipulating the eligibility verification system,
which resulted in nutrition assistance and
benefit fraud of $1,725. Questioned costs were The Department of Economic Security (DES)
$20,936.did not have adequate internal controls to help
ensure the Unemployment Insurance F und’s
financial activities and account balances
reported in the financial statements were Unemployment Insurance—The DES did
accurately presented in accordance with not submit accurate Unemployment Insurance
generally accepted accounting principles. As a reports during fiscal year 2010. In addition, the
result, significant audit adjustments were DES failed to recover F ederal Additional
required to liabilities, revenues, and expenses. Compensation benefit payments resulting from
fraud and overpayments since it did not record
overpayments totaling $6,713,291 on its
financial accounting system. These findings The W ater Infrastructure Finance Authority did
affected American Recovery and Reinvestment not have adequate internal control policies and
Act (ARRA) monies. Questioned costs were procedures over the year-end closing process,
$6,713,291.and as a result, significant audit adjustments
were required to loans receivable and interest
payable.
Vocational Rehabilitation Cluster—The
DES did not always determine if applicants
were eligible within the specified time period. Federal Award Findings—
This finding affected ARRA monies. No
questioned costs resulted from this finding.
Department of Economic Security
Department of Education
Supplemental Nutrition Assistance
Program Cluster—The DES did not always
Title I, P art A Cluster—The Arizona follow its policies and procedures for
Department of Education (ADE) passed safeguarding its inventory of electronic benefits
through a significant amount of federal funding cards. In addition, the DES did not ensure all
to its Local Educational Agencies (LEAs); required recipient eligibility documentation was
however , the ADE did not always follow its included in the recipients’ case files and that
policies and procedures to monitor the LEAs. this information was accurately transferred into
page2Specifically , the ADE did not ensure that the the CCR, were also presented for this program.
LEAs eliminated excess cash balances in a Questioned costs resulting from these findings,
timely manner, submitted statements ensuring if any, could not readily be determined.
compliance with federal requirements,
registered with the Central Contractor
Registration (CCR), and corrected audit Educational Technology State Grants
findings. Questioned costs resulting from these Cluster—The ADE administered this program
findings, if any, could not readily be determined. under the same controls as the Title I, P art A
These findings affected ARRA monies. Cluster. As a result, the same findings for
subrecipient monitoring noted above for the
Title I, P art A Cluster , were also presented for
Special Education Cluster (IDEA)—The this program. Questioned costs resulting from
ADE did not have policies and procedures in these findings, if any, could not readily be
place to identify the amount of financial determined. These findings affected ARRA
resources the State made available for special monies.
education and related services for children with
disabilities. As a result, the ADE was not able to
demonstrate that the State maintained financial Department of Health Services
effort at the same level as the prior fiscal year.
F urther , the ADE did not adequately monitor
P ublic Health Emergency federal funding passed through to its LEAs.
Preparedness—The Department of Health Specifically , the ADE did not ensure that the
Services (DHS) did not perform sufficient LEAs eliminated excess cash balances in a
monitoring procedures to ensure that timely manner, registered with the CCR, and
subrecipient expenditures and amounts corrected audit findings. Questioned costs
contributed by subrecipients to meet matching resulting from these findings, if any, could not
requirements were allowable and supported. In readily be determined. These findings affected
addition, the DHS did not have adequate ARRA monies.
policies and procedures to demonstrate and
document compliance with maintenance of
effort requirements for public health security. As Improving T eacher Quality State
a result, the DHS could not provide support that Grants—The ADE administered this program
it had met the maintenance of effort with under the same controls as the Title I, P art A
nonfederal expenditures for the fiscal year. Cluster. As a result, the same findings for
Questioned costs resulting from these findings, subrecipient monitoring noted above for the
if any, could not readily be determined.