State of Arizona June 30, 2008 Report Highlights-Financial and Single Audit

State of Arizona June 30, 2008 Report Highlights-Financial and Single Audit

-

Documents
4 pages
Lire
Le téléchargement nécessite un accès à la bibliothèque YouScribe
Tout savoir sur nos offres

Description

State of ArizonaREPORT General Fund FinancialHIGHLIGHTSFINANCIAL AND SINGLE AUDITS Condition DeclinesSubjectThe State of Arizona issues aDuring fiscal year 2008, General Fund General Fund expenditures and otherComprehensive Annual Financialrevenues and other financing sources financing uses increased $1.7 billion, orReport. The State is responsiblefor preparing financial totaled approximately $20 billion, and 8.3 percent, between fiscal years 2007statements, maintaining strong expenditures and other financing uses and 2008, primarily as a result of theinternal controls, demonstrating totaled approximately $21.6 billion. following:accountability for its use of Revenues and other financing sourcespublic monies, and complying increased $436 million from fiscal year • Education expenditures increasedwith federal program 2007, but the increase was not large $310 million, or 5.9 percent,requirements. As the auditors, enough to offset the $1.7 billion increase compared to fiscal year 2007. Theour job is to determine whetherin expenditures and other financing uses. increase can be primarily attributed tothe State has met itsAs a result, the fund balance of the additional state assistance forresponsibilities.State’s General Fund declined $1.6 kindergarten through 12th gradebillion from the prior fiscal year. This operating expenditures to support aOur Conclusionrepresents a decrease of approximately student enrollment increase of 26,756The information in ...

Sujets

Informations

Publié par
Nombre de visites sur la page 68
Langue English
Signaler un problème

State of Arizona
REPORT General Fund FinancialHIGHLIGHTS
FINANCIAL AND SINGLE AUDITS Condition Declines
Subject
The State of Arizona issues a
During fiscal year 2008, General Fund General Fund expenditures and otherComprehensive Annual Financial
revenues and other financing sources financing uses increased $1.7 billion, orReport. The State is responsible
for preparing financial totaled approximately $20 billion, and 8.3 percent, between fiscal years 2007
statements, maintaining strong expenditures and other financing uses and 2008, primarily as a result of the
internal controls, demonstrating totaled approximately $21.6 billion. following:
accountability for its use of Revenues and other financing sources
public monies, and complying increased $436 million from fiscal year • Education expenditures increased
with federal program 2007, but the increase was not large $310 million, or 5.9 percent,
requirements. As the auditors,
enough to offset the $1.7 billion increase compared to fiscal year 2007. Theour job is to determine whether
in expenditures and other financing uses. increase can be primarily attributed tothe State has met its
As a result, the fund balance of the additional state assistance forresponsibilities.
State’s General Fund declined $1.6 kindergarten through 12th grade
billion from the prior fiscal year. This operating expenditures to support aOur Conclusion
represents a decrease of approximately student enrollment increase of 26,756
The information in the State’s 81 percent. and a 2 percent inflation adjustment.
financial statements is fairly stated Furthermore, the fiscal year 2008
in all material respects and the General Fund revenues and other budget provided for an additional $80
financial statements can be relied
financing sources increased $436 million in a new Kindergarten “Groupon. However, auditors identified
million, or 2.2 percent, between fiscal B” Weight funding for the second year36 deficiencies in internal control
years 2007 and 2008, primarily as a of a 2-year phase-in. Additionally,over financial reporting, including
result of the following: programs supported by federal grant10 material weaknesses. In
monies increased approximately $27addition, the State maintained
adequate internal controls over, • Intergovernmental revenues increased million during the fiscal year.
and complied with, the federal $999 million, or 12.7 percent, because • Health and welfare expenditures
compliance requirements for 2 of of an increase in monies received for increased $1.2 billion, or 13.1 percent,
the 29 federal programs tested. health and welfare programs from the because of increased enrollment in
However, for 27 federal programs federal and local governments. the Arizona Health Care Cost
tested, auditors found that the • Sales tax revenues decreased $217 Containment System’s (AHCCCS)
State did not maintain adequate
million, or 3.8 percent because of the programs and associated providerinternal controls or comply with
economic downturn. Sales taxes paid reimbursement increases. Overallone or more of the compliance
by retail stores and construction program enrollment in the variousrequirements. See pages 3 and 4
contractors decreased by $120 million AHCCCS programs increased 5.1for further information.
and $112 million, respectively, when percent, primarily because of growth
compared to fiscal year 2007 sales tax in the Social Security Act Title XIX
receipts. Overall, collections in other Waiver Group childless adults, Title
sales tax categories increased slightly. XIX families and children, and long-
• Income tax revenues decreased $454 term care program populations. Also,
million, or 9.8 percent. This decrease capitation rates were increased by a
was due to a gradual reduction in the weighted average of 6.7 percent for2008 individual income tax rates, a new the contract period of October 2007 to
formula used to compute the tax September 2008.
Year Ended June 30, 2008 liability for multi-state corporations and
a decline in Arizona’s economy.The graph to the right shows the General
General Fund Balance
Fund’s fund balance had increased from Past 5 Fiscal Years
2004 through 2006 by approximately $1.5
$2,400 billion. However, the fund balance has $2,266
decreased the past 2 years by $1.9 billion, $2,100
$1,923 ending with an unreserved fund balance of
$1,800 $109 million and a reserved fund balance
of $253 million. Included in the $253 million $1,500
$1,310 reserved fund balance is $147 million for
$1,200
the Budget Stabilization Fund. The Budget
$900 Stabilization Fund is a form of “Rainy Day $747 $674 $651 Fund” the Legislature established in 1991. $600
$362
$300 $161 $147
$14
$0
2004 2005 2006 2007 2008
Total Fund Balance Budget Stabilization Fund
Expenditures of Federal Monies
Increased by $873 Million
During fiscal year 2008, the State spent $10.6 State Agencies that Administer Federal Awards
(In Millions)billion of federal monies. As shown in the chart
to the right, six entities administered 96 percent
Health Services
Other Agenciesof these monies. $377
$414
TransportationOverall, expenditures increased $873 million, or
$574
9 percent, from the $9.7 billion expended in AHCCCS
Education
$5,210 fiscal year 2007. The largest increase occurred $930
in the Unemployment Insurance program and
Universitiesthe Medicaid, Child Nutrition, Food Stamp, and
$1,048
Highway Planning and Construction Clusters.
Economic
Combined expenditures for these programs Security
$2,052 increased by $856 million. This increase was
attributable to inflationary increases in
Federal Programs Expenditures
healthcare costs, enrollment increases in
Fiscal Years 2006-2008
healthcare and child nutrition programs,
$12,000accelerated highway construction, and
$10,605
$11,000increases in unemployment payments because
$9,732$10,000of the economic downturn. The largest $9,367
$9,000increase, $452 million, occurred in federal
$8,000monies expended for the Medicaid Cluster by
$7,000the AHCCCS. As shown in the graph to the
$6,000right, expenditures of federal monies have
$5,000increased $1.2 billion between fiscal years 2006
$4,000and 2008. Expenditures for the Unemployment
$3,000Insurance program and the Medicaid, Child
$2,000Nutrition, Food Stamp, and Highway Planning
$1,000and Construction Clusters accounted for all but
$0
$63 million of the increase.
2006 2007 2008
page2
(In Millions)
(In Millions)The State Did Not Always Comply
with Federal Program Requirements
Auditors identified and tested 29 federal were considered to be material. As a result, our
programs, including 11 program clusters, under audit opinion on federal compliance was
the guidelines established by the Single Audit modified because of noncompliance with
Act. Audit tests included evaluating the State’s federal requirements for the following programs
compliance with each program’s federal or clusters: Food Stamp Cluster, Child Nutrition
regulations generally related to expending, Cluster, Cooperative Forestry Assistance, WIA
monitoring, matching, and reporting federal, Education and Human Resources,
awards. Auditors noted internal control Migrant Education—State Grant Program,
weaknesses or instances of noncompliance Rehabilitation Services—Vocational
with program requirements for 27 of the Rehabilitation Grants to States, Temporary
programs tested. For 11 of the 27, the internal Assistance for Needy Families, Child Support
control weaknesses and instances of Enforcement, Homeland Security Cluster, and
noncompliance with program requirements Research and Development Cluster.
The Department of Economic Security Did
Not Materially Comply with Program
Requirements for Five Programs
The Arizona Department of Economic Security • The Division of Benefits and Medical Eligibility,
receives federal monies to help administer Family Assistance Administration offices did
assistance programs to recipients throughout the not materially comply with federal
State of Arizona. For the period July 1, 2007 requirements applicable to the TANF program,
through June 30, 2008, the Department received since they did not always retain documents
almost $2.1 billion in federal financial assistance. supporting the verification of wage and
However, for the audit period, the Department did unemployment compensation through the
not materially comply with federal requirements for data exchange process or document the
five of its programs. Our report indicates that the effect of its verification on eligibility and benefit
following programs had material internal control determinations from its review.
weaknesses and material instances of • The Division of Employment and Rehabilitation
noncompliance with federal requirements. Services, Rehabilitation Services
Administration did not materially comply with
• The Division of Benefits and Medical Eligibility, federal requirements for the Rehabilitation
Family Assistance Administration offices did not Services—Vocational Rehabilitation Grants to
materially comply with federal requirements States program because it did not always
applicable to the Food Stamp Cluster and the determine if applicants were eligible within the
Temporary Assistance for Needy Families specified time period.
(TANF) program, since they did not always • The Division of Child Support Enforcement did
follow the internal control policies and not materially comply with federal
procedures for activating and issuing electronic requirements applicable to the Child Support
benefits transfer (EBT) cards. In addition, three Enforcement program for establishing support
employees manipulated the eligibility computer obligations, enforcing medical support
system to issue EBT cards for personal use. obligations and interstate services, and
This resulted in unallowable costs of $265 in establishing new cases.
food stamp benefits and $10,010 in TANF • The Division of Employment and Rehabilitation
support service payments. The Department Services did not materially comply with federal
referred these matters to the Office of the reporting and monitoring requirements for the
Attorney General for further investigation and WIA Cluster.
prosecution.
page3Ten Material Weaknesses Were
Identified in Internal Control
over Financial Reporting
Auditors identified 36 deficiencies in • Arizona State University did not have
adequate controls over payrollinternal control over financial reporting.
expenses and its new humanTen of these deficiencies were material
resources and payroll computerweaknesses. A material weakness is a
system. weakness in internal controls that could
lead to a material misstatement of the

State’s financial statements. The more
effective access, program change,
significant material weaknesses were and disaster recovery controls for its
as follows: financial accounting system. It also
did not have effective security,
• The Department of Administration’s access, and change management
Director lacked the authority to controls for its new student
enforce rules over financial reporting. information and human resources
and payroll computer systems.
• The Department of EconomicTTOO OOBBTTAAIINN
MORE INFORMATION Security’s Division of Developmental • Northern Arizona University did not
Disabilities did not ensure its have adequate controls over access
A copy of the full report financial statements were accurate and application software changes for
can be obtained by calling and did not follow the AHCCCS- its computer systems.
approved method to estimate its(602) 553-00333
accrued long-term care costs.
or by visiting
our Web site at:
www.azauditor.gov
Contact person for
this report:
Rick Meyer
Single Audit Fact Sheet
 Thirty-six weaknesses in financial reporting internal controls, including 10
material weaknesses.
 Thirty-one findings identifying weaknesses in federal compliance internal
controls, including 17 material weaknesses.
 Thirty-one findings identifying violations of federal program compliance
requirements, including 14 material violations.
 Program costs totaling $634,123 were questioned as a result of our audit.
REPORT
HIGHLIGHTSState of Arizona
FINANCIAL AND SINGLE AUDITS
Year Ended June 30, 2008
page 4