Maricopa County June 30, 2004 Report Highlights-Financial Audit
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Maricopa County June 30, 2004 Report Highlights-Financial Audit

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Maricopa CountyLack of Effective Controls over CountyREPORTHIGHLIGHTS Healthcare Programs Resulted in Audit OpinionFINANCIAL STATEMENT AUDITDisclaimers and a CAFR Issuance Delay Subject Maricopa County, through the Maricopa approximately $20 million in unresolvedprepayments. As a result, we were unableManaged Care Systems (MMCS),Maricopa County issues a to determine whether prepaid expensesadministered the following programs:Comprehensive Annual and medical expenses were properlyFinancial Report. The County stated. • Arizona Health Care Cost Containmentis responsible for preparing • The records used to track medical claimsSystem (AHCCCS)—Acute Health Carefinancial statements, payment history were not updated forprogram reported in the Maricopamaintaining strong internal negotiated and settled claims, and forHealth Plan Fund.controls, and demonstrating claims paid for incorrect amounts. In• AHCCCS—Arizona Long-Term Careaccountability for its use of addition, paid dates for claims applied toSystem (ALTCS) program reported inpublic monies. As the prepayments were not accuratelythe ALTCS Fund.auditors, our job is to reported. As a result, the MMCS was• Senior Select, a federaldetermine whether the unable to determine an accurate balancemedicare/medicaid program, reportedCounty has met its for medical claims payable at June 30,in the Non-AHCCCS Health Plansresponsibilities. 2004.Fund.• Health Select, a county healthcareBecause of these deficiencies, MMCS’program, ...

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Maricopa County
REPORTLack of Effective Controls over County HIGHLIGHTSHealthcare Programs Resulted in Audit Opinion FINANCIAL STATEMENT AUDIT Disclaimers and a CAFR Issuance Delay Subject Maricopa County, through the Maricopaapproximately $20 million in unresolved Managed Care Systems (MMCS),prepayments. As a result, we were unable Maricopa County issues a to determine whether prepaid expenses administered the following programs: Comprehensive Annual and medical expenses were properly Financial Report. The County stated.  ArizonaHealth Care Cost Containment is responsible for preparing  Therecords used to track medical claims System (AHCCCS)—Acute Health Care financial statements, payment history were not updated for program reported in the Maricopa maintaining strong internal negotiated and settled claims, and for Health Plan Fund. controls, and demonstrating claims paid for incorrect amounts. In  AHCCCS—ArizonaLongTerm Care accountability for its use of addition, paid dates for claims applied to System (ALTCS) program reported in public monies. As the prepayments were not accurately the ALTCS Fund. auditors, our job is to reported. As a result, the MMCS was  SeniorSelect, a federal determine whether the unable to determine an accurate balance medicare/medicaid program, reported County has met its for medical claims payable at June 30, in the NonAHCCCS Health Plans responsibilities. 2004. Fund.  HealthSelect, a county healthcare program, reported in the NonAHCCCSBecause of these deficiencies, MMCS’ Our ConclusionHealth Plans Fund.records were not reliable, and auditors were unable to determine whether medical A modification of opinion was During fiscal year 2004, MMCS did notexpenses, prepaid expenses, and medical expressed on the County’s establish effective internal controls overclaims payable were accurate. These financial statements because these programs to ensure proper claimsdeficiencies resulted in disclaimers of we were unable to express adjudication and accountability foropinion for the Maricopa Health Plan Fund, opinions on the business outstanding claims payable. Auditorsthe ALTCS Fund, and the NonAHCCCS type activities and three noted: HealthPlans Fund, which represent three of major healthcare funds. Maricopa County’s major funds in the However, the governmental  Theclaims processing system did notCounty’s 2004 CAFR. A disclaimer of activities, the discretely always identify duplicate claims, use presented component unit,opinion was also expressed on the County’s proper pay rates, and adjust payments and the Fiduciary Funds businesstype activities as these funds were for enrollees’ share of costs. Also, were fairly presented. significant to that opinion unit. A disclaimer MMCS did not adequately test and of opinion states that the auditors do not document changes made to the express an opinion as to whether the system prior to processing medical financial statements of these three major claims. These deficiencies resulted in funds and businesstype activities are fairly claims paid for incorrect amounts, to presented in conformity with generally ineligible enrollees, for uncovered accepted accounting principles. medical services, more than once for the same services, or overpaid by the enrollees’ shares of cost.The deficiencies noted above caused a 2004the related claims were adjudicated.fund’s financial statements for the year  Theprograms prepaid providers beforesignificant delay in the completion of each The prepayments were not reconciledended June 30, 2004, and resulted in a 15 Year Ended June 30, 2004 to the adjudicated claims for propermonth delay in the issuance of the County’s accountability. Auditors noted2004 CAFR.
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T s
Summary of the County’s
s o T t
Statement of Net Assets June 30, 2004 Total Governmental and BusinessType  Activities Current and other assets$1,098,746,484 Capital assets1,997,063,364 Total assets3,095,809,848 Current and other liabilities276,997,065 Longterm liabilities297,039,104 Total liabilities574,036,169 Net assets Invested in capital assets, net of related debt1,883,725,427 Restricted net assets220,783,631 Unrestricted net assets417,264,621 Total net assets$2,521,773,679
The County Discontinued Operating Three Healthcare Programs
Maricopa County terminated its contracts for the following healthcare programs subsequent to fiscal year 2004:
Senior Select, a medicare/medicaid program contracted with the federal Center for Medicare and Medicaid Services, was terminated as of December 31, 2004. The Acute Health Care program and the Arizona LongTerm Care System program contracted with the Arizona Health Care Cost Containment System were terminated as of September 30, 2005.
ent year Comprehensive Annual Financial ort for the primary government.
Statement of Net Assets presents information ll county assets and liabilities, with the rence between the two reported as net assets. Statement of Activities presents information wing how net assets changed during the most nt fiscal year.
Statement of Activities Year Ended June 30, 2004 Total Governmental and BusinessType  Activities Program revenues: Governmental activities$ 459,300,708 Businesstype activities819,778,442 General revenues and transfers: Governmental activities977,716,456 Businesstype activities59,074,996 Total revenues2,315,870,602 Expenses: Governmental activities1,199,118,770 Businesstype activities896,577,454 Total expenses2,095,696,224 Change in net assets220,174,378 Net assets—beginning, as restated2,301,599,301 Net assets—ending$2,521,773,679
All three programs were administered by the Maricopa Managed Care Systems (MMCS), and the County will be responsible for claims pertaining to services performed prior to each program’s termination date. MMCS was having significant operating problems regarding claims processing in recent years as described on the prior page. In addition, these programs had significant operating losses during fiscal year 2004.
The General Fund’s Fund Balance Continues to Increas
The General Fund’s fund balance, as reported on the County’s fiscal year 2004 Comprehensive Annual Financial Report, was $318.3 million at June 30, 2004, an increase of 9 percent from fiscal year 2003 and 98 percent from fiscal year 2000. This increase is shown in the figure to the right.
Property taxes and intergovernmental revenues, consisting of stateshared sales taxes and vehicle license taxes, representing more than 90 percent of General Fund revenues from fiscal years 2000 through 2004, have contributed to the increasing fund balance. Property tax revenues, as reported for fiscal year 2004, increased 47 percent from fiscal year 2000, and intergovernmental revenues, as reported for fiscal year 2004, increased 20 percent from fiscal year 2000. Fund balance increased $157.5 million from 2000 to 2004. This resulted from revenues and other financing sources exceeding expenditures and other financing uses in each of the 5 fiscal years, as illustrated in the figure to the right.
General Fund Ending Fund Balance Past 5 Years
$350 $318.3 $292.7 $300 $254.1 $250 $200 $161.2 $160.8 $150 $100 $50 $0 2000 2001 2002 2003 2004
General Fund Revenues/Other Financing Sources and Expenditures/Other Financing Uses Fiscal Years 2000 through 2004 $1,000 $900 $865.7 $840.1 $807.2 $804.2 $800 $768.7 $731.7 $731.3 $714.1 $715.0 $698.3 $700 $600 $500 $400 $300 $200 $100 $0 2000 2001 20022003 2004 Rev enuesEx penditures
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TOOBTAIN MOREINFORMATION
A copy of the full report can be obtained by calling (602)5530333
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or by visiting our Web site at: www.azauditor.gov
Contact person for this report: Dennis Levine
Housing Authority Becomes a
Statement of Net Assets June 30, 2004 Housing  Authority Current and other assets$ 5,898,259 Capital assets25,129,430 Total assets31,027,689 Current and other liabilities565,073 Longterm liabilities280,637 Total liabilities845,710 Net assets Invested in capital assets, net of related debt25,129,430 Unrestricted net assets5,052,549 Total net assets$30,181,979
the sole discretion of the County, therefore, a financial benefit or burden exists. A public accounting firm audited the Authority. Our opinion is based on the work of those other auditors.
The tables below present a summarized version of the Housing Authority’s Statement of Net Assets and Statement of Activities reported in the current year Comprehensive Annual Financial Report in the governmentwide financial statements.
Statement of Activities Year Ended June 30, 2004 Housing  Authority Program revenues$15,918,490 Expenses 16,532,616 Change in net assets(614,126) Net assets—beginning, as restated30,796,105 Net assets—ending$30,181,979
The County Substantially Completes Two Jail Facilities
The County substantially completed the 4th Avenue Jail and the Lower Buckeye Jail during fiscal year 2004. These facilities were funded by the 1/5 of one cent sales tax approved by voters for the construction and operation of adult and juvenile detention facilities. The 4th Avenue Jail cost approximately $137
Maricopa County
million and contains 1,360 cells. The Lower Buckeye Jail cost approximately $216.6 million and contains 1,867 cells. These facilities were opened in fiscal year 2005. The total cost of $353.6 million for these two facilities represents 74 percent of the $475 million spent on detention facilities since fiscal year 1999 when the sales tax collection began.
REPORT HIGHLIGHTS FINANCIAL STATEMENT AUDIT Year Ended June 30, 2004