AUDIT SUMM - SINGLE AUDIT FY03

State Of Rhode Island

Description

S TATE OF R HODE I SLAND-GENERAL A SSEMBLY OFFICE of the AUDITOR GENERAL AUDIT SUMMARYERNEST A. ALMONTE, CPA, CFE AUDITOR GENERAL INTEGRITY ♦ RELIABILITY ♦ INDEPENDENCE ♦ ACCOUNTABILITY [e-mail] Settlement Financing Corporation (the DECMMBER 2004 Corporation) early implemented new accounting technical guidance. As a SINGLE AUDIT REPORT result, the Corporation changed its FISCAL YEAR ENDED JUNE 30, 2003 method of accounting for it’s purchased interest in tobacco settlement revenues We completed our Single Audit of the which focus on the individual parts of State and the State changed its presentation State of Rhode Island (the State) for the government with a focus on current available of the Corporation from a discretely resources and their use. presented component unit to a blended fiscal year ended June 30, 2003. This audit is required by both State and Federal component unit. We also highlighted law. The Single Audit Report includes the We concluded that the State’s that, as permitted by current State’s basic financial statements, a government-wide financial statements accounting standards, the State has schedule of federal program expenditures, present fairly the State’s net assets and the included only capital outlays for and findings and recommendations results of its operations for the fiscal year infrastructure since July 1, 2001 as pertaining to the financial ...

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• Publié par: Zoum
• Nombre de lectures: 13
• Langue: English

Extrait

E RNEST A. A LMONTE , CPA, CFE A UDITOR G ENERAL [e-mail]

S T A T EO F R H O D E I S L A N D  G E N E R A L A S S E M B L Y O F F I C Eo ft h eG E N E R A LA U D I T O R USMMIDTURA I N T E G R I T Y ♦ R E L I A B I L I T Y ♦ I N D E P E N D E N C E ♦ A C C O U N T A B I L I T Y

DECMMBER 2004 SINGLE AUDIT REPORT F I S C A L Y E A R E N D E D J U N E 3 0 ,2 0 0 3

 Wecompleted our Single Audit of the State of Rhode Island (the State) for the fiscal year ended June 30, 2003.This audit is required by both State and Federal law. TheSingle Audit Reportincludes the State’s basic financial statements, a schedule of federal program expenditures, and findings and recommendations pertaining to the financial statements and federal programs.It also includes a corrective action plan prepared by the State’s management to address each finding and provide a timetable for implementation. TheSingle Audit Report was provided to federal funding agencies in November 2004 as a condition of continued federal assistance. Financial Statements  TheState’s basic financial statements include comprehensive information on the State’s financial activities during fiscal 2003. Thegovernment–wide financial statements provide a broad and longer term view of the State’s finances including capital assets and longterm liabilities. The governmentwide financial statements are presented in sections – Governmental Activities (includes most of the State’s basic services supported by taxes and grants), BusinessType Activities (Lottery, Convention Center, Employment Security) and Discretely Presented Component Units (entities that are legally separate but for which the State is financially accountable). Financialstatements are also presented for major funds of the State

which focus on the individual parts of State government with a focus on current available resources and their use.  Weconcluded that the State’s governmentwide financial statements present fairly the State’s net assets and the results of its operations for the fiscal year ended June 30, 2003 except for the effects of such adjustments, if any, as might have been required had we been provided sufficient evidence regarding the completeness of the furniture and equipment, and building improvement categories of capital assets.We also concluded that, except for the omission of encumbrances outstanding as a reserved component of fund balances within the governmental funds, the State’s major funds are fairly presented.Our report on the financial statements also highlighted two matters for readers of the State’s financial statements. TheState’s Tobacco

Settlement Financing Corporation (the Corporation) early implemented new accounting technical guidance.As a result, the Corporation changed its method of accounting for it’s purchased interest in tobacco settlement revenues and the State changed its presentation of the Corporation from a discretely presented component unit to a blended component unit.We also highlighted that, as permitted by current accounting standards, the State has included only capital outlays for infrastructure since July 1, 2001 as capital assets.Infrastructure outlays from prior years will be included in future financial statements.  Netassets of the State (exclusive of discretely presented component units) decreased by $64.5 million during fiscal 2003 to $82.3 million at June 30, 2003. Fundbalance of the State’s general fund at June 30, 2003 was $171.8 million of which $129.2 million was reserved (budget reserve and appropriations carried forward) and $42.6 million was unreserved and available for appropriation.

A UDIT H IGHLIGHTS  We expressed a qualified opinion on the State’s governmentwide financial statements and major governmental fund statements.  General fund revenues and other sources exceeded expenditures and other uses by $8 million.  We reported significant deficiencies in the State’s controls over financial reporting.  Total expenditures of federal awards were more than $2.2 billion in fiscal 2003.  The State generally complied, in all material respects, with requirements applicable to federal programs; however, we did report instances of material noncompliance and other findings where controls can be improved to enhance compliance.

A UDIT S UMMARY – PAGE 2 S INGLE A UDIT R EPORT F ISCAL 2003  Wereported 18 significant deficienciesreimbursement from the federal government.through the electronic benefit delivery in the State’s internal control proceduressystem for Food Stamp and Temporary over financial reporting.Of theseFederal assistance is mostly cash awardsAssistance For Needy Families (TANF) deficiencies, 11 were deemed materialthat are used to fully or partially fund federal programs. Dataused to determine weaknesses. Wereported significantprograms. Forexample, the federal eligibility for the TANF program is weaknesses in controls over the generalgovernment funds approximately 54% of matched to data contained in other ledger, interfund transactions, investmentMedicaid program costs with the Statefederal and state computer systems. transactions and classification offunding the remaining share.The MedicaidWe found that discrepancies resulting expenditures. Additionally,bank program,which pays for medical care forfrom data matches were not always reconciliations were not performed duringneedy individuals is the single largest federalinvestigated or resolved promptly the fiscal year which represented a seriousprogram administered by the State.Total whichweakens controls over the weakness in control over cash receiptsprogram costs approximated $1.5 billion for determination of eligibility and benefit and disbursements.We also reported thatfiscal 2003 with the federal government’s levels for the TANF program. the State needs to improve controls overshare totaling $831 million. the recording of federal revenue, longtermChild Support Enforcement needs obligations, significant accountingFor many of the programs tested, weto enhance control procedures to estimates, escrow liability balances, andfound that the State complied in all material ensure that medical coverage electronic funds transfer receipts at therespects with applicable compliance information is obtained and recorded Division of Taxation.The State also lacksrequirements. Wedid report instances within its computer system on a timely a comprehensive systems security plan where the State should improve controls tobasis when the Court has ordered an and controls need to be improved over ensure compliance with federalabsent parent to provide medical access to key computer systems. requirements. Forexample, federal fundssupport.  passedthroughto subrecipients must be  Wealso found that controls are stillmonitored by the State to ensure complianceThe State also needs to implement deficient over the tracking and recording ofwith applicable federal programcentralized monitoring controls to capital assets. The State conducted anrequirements. Wefound that, for several ensure it draws federal funds in insufficient number of physical inventoriesprograms, the State needs to improve its reimbursement of program costs at the during the year and overall efforts tosubrecipient monitoring procedures,appropriate time.We found that, in accumulate costs for certain categories ofincluding cash advanced to subrecipients formany instances, the State does not capital assets remained incomplete.program expenditures.draw cash quickly enough, which Because of these control weaknesses weadversely impacts its own cash could not completely satisfy ourselves asWe reported that the State needs tomanagement. to the completeness of furniture and improve oversight of its fiscal agent that equipment and building improvementsprocesses claims for the Medicaid program. Other findings reported include the reported by the State.We also reported Additional financial monitoring procedures need to strengthen controls to ensure that controls need to be improved toare necessary to ensure that effectivethe allowability of program ensure proper identification and recordingcontrols are in place over programexpenditures, eligibility for certain of capital assets within the accounting disbursements and that financial data is federal programs and reporting of system. beingaccurately reported for presentation in program expenditures.  theState’s financial statements.Other Federal Awards The audit report contains 56 findings reported for the Medicaid program  addressareas such as controls over billingfindings related to the administration of  Federalassistance is provided to the for homemaker services, identification of federal programs.A corrective action State under approximately 400 programs claims where a third party might be liable, plan, prepared by the State’s each with specific objectives andfederal reporting, program overpayments,management, is also included which requirements. Compliancerequirements and the allowability of certain administrative addresses each finding and provides a vary for each program, however, most costs. timetablefor implementation.A programs have federal requirements summary schedule of prior audit relating to (1) costs which are allowable for We found other instances where controls findings is also included which reports reimbursement, (2) individuals who may should be improved to ensure compliancethe status of findings from prior audits. be eligible for benefits, (3) reports withfederal requirements.For example, Copies of the Single Audit required to be submitted to the federal controls need to be strengthened over Report can be obtained by calling government, (4) cost sharing or matchingaccess to the computer systems which are 2222435 or by visiting our website provisions, and (5) the timing of used to authorize and deliver benefits at www.oag.ri.gov.