State of Wisconsin Single Audit, 2006-07

State of Wisconsin Single Audit, 2006-07

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To view report 08-5An Audit: State of Wisconsin 2006-07 March 2008Report HighlightsIn fiscal year (FY) 2006-07, state agencies administered $9.6 billion in Wisconsin administered $9.6 billion in federal federal financial assistance through more than 1,600 federal programs financial assistance and grants, including 930 research and development grants awarded to in FY 2006-07. the University of Wisconsin (UW) System. We performed an independent audit of compliance with federal grant requirements and followed up on State agencies generally findings in our single audit report for FY 2005-06. complied with federal rules.Our efforts focused on 22 programs that accounted for 69.9 percent of Our auditor’s report Wisconsin’s federal financial assistance in FY 2006-07. Programs were is unqualified. selected for review based on their size and the risk of noncompliance with federal rules. The majority were administered by:Resolution of prior audit concerns at DHFS resulted in the Department of Health and Family Services (DHFS);the receipt of $36.2 million in federal funding the Department of Workforce Development (DWD);in June 2007. The federal government UW System and individual campuses;will work with state agencies to resolve the Department of Transportation (DOT); andaudit findings. the Department of Public Instruction (DPI).We found that, overall, state agencies have properly administered federal grant programs and complied with ...

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To view report 08-5
An Audit:

State of Wisconsin
2006-07

March 2008
Report Highlights
In fiscal year (FY) 2006-07, state agencies administered $9.6 billion in Wisconsin administered
$9.6 billion in federal federal financial assistance through more than 1,600 federal programs
financial assistance and grants, including 930 research and development grants awarded to
in FY 2006-07. the University of Wisconsin (UW) System. We performed an independent
audit of compliance with federal grant requirements and followed up on
State agencies generally findings in our single audit report for FY 2005-06.
complied with federal rules.
Our efforts focused on 22 programs that accounted for 69.9 percent of
Our auditor’s report
Wisconsin’s federal financial assistance in FY 2006-07. Programs were
is unqualified.
selected for review based on their size and the risk of noncompliance
with federal rules. The majority were administered by:Resolution of prior audit
concerns at DHFS resulted in
the Department of Health and Family Services (DHFS);the receipt of $36.2 million
in federal funding
the Department of Workforce Development (DWD);in June 2007.
The federal government UW System and individual campuses;
will work with state
agencies to resolve
the Department of Transportation (DOT); and
audit findings.
the Department of Public Instruction (DPI).
We found that, overall, state agencies have properly administered federal
grant programs and complied with federal requirements.
Our report includes an unqualified audit opinion on the Schedule of
Expenditures of Federal Awards, which provides an inventory of all
federal grants administered by state agencies during the period we
audited. However, we identified a number of audit issues related to the
administration of federal programs.
Legislative Audit Bureau State of Wisconsin
Federal Funding the Unemployment Insurance
program, which is financed primar-
In FY 2006-07, state agencies admin- ily by employer contributions but
Key Facts istered $8.5 billion in cash assistance subject to federal rules, increased
from the federal government, as $62.2 million in FY 2006-07. and Findings
well as $1.1 billion in outstanding
federal loan balances and $47.7 mil-
Five state agencies lion in food commodities and other Programs Administered
administered 95 percent of noncash assistance.
Wisconsin’s federal financial DHFS, DWD, UW System, DOT,
assistance in FY 2006-07. In total, the amount of federal and DPI administered 95 percent
financial assistance administered of the federal cash and noncash
The largest federal grant
by the State has not changed assistance the State expended in program was the $2.8 billion
significantly since FY 2002-03. FY 2006-07. DHFS was responsible Medicaid Cluster, which
However, funding for many of the for the largest share: $3.8 billion, includes Medical Assistance.
programs that provide assistance including $2.8 billion in federal
payments to individuals increased funding for the Medicaid Cluster. We identified ten inmates
who inappropriately received during FY 2006-07. The Medicaid Cluster includes
food stamp benefits Medical Assistance, the largest
while incarcerated. federal program administered by
Federal Financial Assistance
the State of Wisconsin. Additional FY 2002-03 through FY 2006-07In FY 2007-08, the State state funding to support Medical
returned $15.5 million to
$9.6 Assistance totaled $1.9 billion in $9.4 $9.3 the federal government billion$9.2 $9.1 billionbillion billion FY 2006-07. billion because of excess
balances in an internal
Other federal programs adminis-service fund administered
tered by DHFS include the Food by the Department of
Administration. Stamp Cluster, the State Children’s
Insurance Program, Foster Care—
DPI needs to improve Title IV-E, and Adoption Assistance.
reporting and monitoring
of match expenditures for DWD administered $1.5 billion
a grant that funds early
in federal financial assistance in intervention activities
FY 2006-07. DWD administers and scholarships for
the Unemployment Insurance low-income students.
program, as well as the Temporary 2002-03 2003-04 2004-05 2005-06 2006-07
Assistance for Needy Families,
For example, federal funding for the Child Care subsidy, and Vocational
Medicaid Cluster, which provides Rehabilitation programs.
medical assistance to low-income
households, increased $57.5 million UW System disbursed a total
during FY 2006-07, while federal of $1.3 billion in federal funds,
funding for the Food Stamp including $648.5 million in student
Cluster increased $26.4 million. financial aid and $512.9 million in
In addition, expenditures under research and development grants.












Most of the $729.8 million in federal to the State’s records for Medical Excess Internal Service
funding administered by DOT Assistance and the State Children’s Funds Returned
supported the Highway Planning Insurance Program for the period
and Construction program, which from federal fiscal year 1998-99 Under federal rules, billing rates
had FY 2006-07 expenditures of through 2005-06. As a result, for certain centralized services
$638.2 million. DHFS received an additional provided by the State, such as
$36.2 million in federal funds in computer processing services,
June 2007, which were deposited should not generate profits or
into the General Fund. a reserve of more than 60 days’
FY 2006-07 operating expenses. If a reserve
These funds were the principal exceeds that limit or is used for
$688.0 reason the State was able to transfer other purposes, the State is required $729.8
million
million $461.2 million $55.6 million into its rainy day fund to adjust user rates, provide users
at the end of FY 2006-07. DHFS with rebates, or return the federal
intends to draw an additional government’s share.
$4.7 million in federal funds by $1.3 billion
June 30, 2008. For several years, we have
$3.8 billion expressed concern because the
$1.5 billion To ensure that the State receives Department of Administration’s
appropriate federal reimbursements, (DOA’s) billing rates have
our report includes a recommenda- resulted in the accumulation of
tion for DHFS to continue its efforts excess balances. While DOA has
to improve federal financial report- been working with the federal
DPI provided the majority of its ing for the Foster Care—Title IV-E government to resolve this finding,
$688.0 million in federal funding and Adoption Assistance programs. it continues to accumulate excess
to local schools and other entities balances.
for education and child nutrition
programs. Other state agencies Food Stamp Issue In FY 2007-08, the State returned
disbursed another $461.2 million $15.5 million to the federal
in federal funds during FY 2006-07. As part of our audit, we matched government. That amount
data on food stamp benefit represents its share of the excess
recipients with Department of balances, plus interest, through
Improvements in Corrections data. We further June 30, 2005. Since FY 2002-03,
reviewed a selection of 12 inmates the State has returned a total of Financial Reporting
who appeared most likely to have $39.0 million, including interest, to
Overall, state agencies have improperly received food stamp the federal government related to
established adequate policies and benefits. We found that 10 of the the internal service funds.
procedures for the administration 12 inappropriately received food
of federal programs, and they have stamp benefits either as individuals If DOA had lowered billing rates or
taken steps to address concerns we or as part of a household. We provided rebates to state agencies in
raised in the past. include a recommendation for the past, instead of allowing excess
DHFS to implement procedures balances to accumulate, funds
For example, DHFS addressed our to periodically identify inmates that were returned to the federal
prior audit concerns related to receiving food stamp benefits and government could instead have
reconciling benefit expenditures seek recovery of inappropriate been available to the State for other
reported on federal financial reports benefit payments. federal program purposes.Other Audit Issues requirements for the current grant.
We are concerned because during
DWD has taken steps to address FY 2006-07, DPI was required Additional
our prior audit concerns related to to return nearly $2.1 million in
claiming reimbursement from the GEAR UP funds to the federal Information
federal government for vocational government because sufficient
For a copy of report rehabilitation services provided to match had not been provided for
08-5, call (608) 266-2818 individuals who also received the prior grant.
or visit our Web site:federal disability benefits. DWD
received $2.2 million in federal We also found GEAR UP match
funds for claims submitted for reporting errors at UW-Eau Claire,
calendar years 2005 and 2006. and contract administration and
time and effort reporting issues at
UW System substantially complied UW-Milwaukee.

with federal requirements related
to the grants it administers, but we www.legis.wisconsin.gov/lab
make recommendations for several Recommendations
campuses to improve enrollment Address questions regarding
reporting, federal reporting, and Our report includes 27 recommen- this report to:
the calculation of aid to be returned dations related to state agencies’
to the federal government when administration of federal grant Bryan Naab or
students withdraw from school. programs. In addition, we discuss Carolyn Stittleburg
nine internal control concerns (608) 266-2818
We identified errors in DPI’s related to our audit of the State’s
reporting of match expenditures financial statements.

for the Gaining Early Awareness
and Readiness for Undergraduate Agency responses and corrective
Programs (GEAR UP) grant, an action plans are included in our
early intervention and scholarship report. The federal government
program for low-income students. will work with the state agencies
to resolve the questioned costs
We also note that as of February 2008, and ensure that planned corrective
DPI is not meeting federal match actions are sufficient.
Legislative
Audit
Bureau
22 East Mifflin Street The Legislative Audit Bureau is a nonpartisan legislative service agency that assists the
Suite 500Wisconsin Legislature in maintaining effective oversight of state operations. We audit
Madison, WI 53703the accounts and records of state agencies to ensure that financial transactions and
management decisions are made effectively, efficiently, and in compliance with state law, (608) 266-2818
and we review and evaluate the performance of state and local agencies and programs.
Janice MuellerThe results of our audits, evaluations, and reviews are submitted to the Joint Legislative
State Auditor
Audit Committee.

To view report 08-5