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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Fiscal Management Post-Payment Audit Report Summary
Health and Human Services Commission
Fiscal 2012 Second Quarter

Audit scope

A sample of the Health and Human Services Commission’s (HHSC) payroll, purchase and travel transactions that processed through the Uniform Statewide Accounting System (USAS) and the Standardized Payroll/Personnel Reporting System (SPRS) during the period beginning June 1, 2010, through May 31, 2011, was audited.

In addition, limited samples of payment card transactions, consumables, refunds of revenue, grants and Medicaid disbursement transactions were also reviewed.

Each transaction was audited to determine compliance with applicable state laws.

Payroll transactions and deductions

Payroll transactions were audited for compliance with the General Appropriations Act (GAA), Texas Payroll/Personnel Resource and other pertinent statutes.

The audit identified:

  • Two instances in which employees eligible for benefit replacement pay were not receiving it.
  • Three underpayments of longevity as a result of four missing prior state service verifications.
  • One missing state service resulting in underpayment of longevity pay.
  • Three payments paid incorrectly for accrued vacation times.

A sample of voluntary deductions was audited.

  • No issues were identified.

Purchase transactions

Purchase transactions were audited for compliance with the GAA, eXpendit, the State of Texas Procurement Manual and other pertinent statutes.

The audit identified:

  • Three transactions missing the purchase agreement necessary to determine if the payments were valid.
  • Three duplicate payments made to vendors.

Consumable transactions

Consumable transactions were audited for compliance with the GAA, eXpendit, the Procurement Manual and other pertinent statutes.

The audit identified the following procurement deficiencies:

  • Term contract not utilized
  • Control weakness over received goods
  • Best value not received for P.D. Morrison Enterprises Inc. (PDME) transactions

Payment card transactions

Payment card transactions were audited for compliance with the GAA, eXpendit, the Procurement Manual and other pertinent statutes.

The audit identified:

  • HHSC did not verify vendor holds for payment card transactions over $500 for 15 transactions.
  • Procurement deficiencies in PDME transactions for 114 payment card transactions.

Grants/Medicaid disbursement transactions

The audit included a limited review of HHSC’s transactions relating to grant and disbursement transactions. The review of these payments did not include an investigation of HHSC’s procedures for awarding the grants or monitoring payments for Medicaid disbursements; therefore, an opinion on those procedures is not being offered.

The audit identified:

  • One duplicate payment made for a grant transaction.

Refund of revenue transactions

The audit included a limited review of HHSC’s transactions relating to refunds of revenue. These reviews consisted of verifying the documentation provided reconciled with the payment amount in the sample.

  • No issues were identified.

Travel transactions

Travel transactions were audited for compliance with the GAA, Textravel and other pertinent statutes.

The audit identified:

  • Two transactions for which HHSC did not consider the opportunities to conserve state funds.

Prompt payment law and scheduling rules

HHSC’s compliance with the prompt payment law and scheduling rules was audited. During the audit period, HHSC paid $18,012.70 in prompt payment interest to its vendors.

The audit identified:

  • Two purchase transactions and 29 travel transactions for which interest was not paid even though it was due to the vendors.
  • HHSC paid its vendors too early on 11 purchase transactions, 17 travel transactions, four payment card transactions and one consumable transaction, resulting in interest loss to the State Treasury.

Security

The audit included a security review that entailed identifying any HHSC employees with security in USAS, SPRS, the Texas Identification Number System (TINS) or on the voucher signature cards who were no longer employed or whose security had been revoked. Upon termination or revocation, certain deadlines must be observed so that security can be revoked in a timely manner.

The audit identified:

  • HHSC did not ensure that the Comptroller’s office received notification in a timely manner on the termination of one employee listed on HHSC’s signature cards.

Internal control structure

HHSC’s internal control structure was reviewed. The review was limited to obtaining an understanding of HHSC’s controls sufficient to plan the audit and did not include tests of control policies and procedures.

The review identified:

  • Five employees who can adjust payment instruction in TINS and approve vouchers.
  • Three employees who can pick up warrants from the Comptroller’s office and approve vouchers.

Fixed assets

The audit included a limited number of fixed assets acquired by expenditures during the audit period to test for accurate reporting in the State Property Accounting system (SPA) and to verify existence of the assets. During the audit period, HHSC had nine stolen and 14 missing assets reported to SPA, with a total net book value of $2,980.27.

The audit identified:

  • All assets tested were in their intended location and properly recorded in SPA.
  • HHSC filed police reports for four missing or stolen items at the time of the incidents. Copies of the reports were obtained as a result of the audit.

Direct deposit authorization forms

A review was conducted of HHSC’s procedures to comply with the federal mandate to properly identify and handle payments involving the movement of funds internationally.

The audit identified:

  • An outdated version of the direct deposit set-up form that did not adhere to the National Automated Clearing House Association (NACHA) rules requiring the identification of a direct deposit payment if it is an International Automated Clearing House Transaction (IAT).

Additional auditor observation

During the audit, certain grant and Medicaid disbursement payments were identified for which HHSC utilizes different systems to track detail information from vendors and service providers to comply with various federal and state regulations. As a result, batch transactions at summary levels are interfaced or manually entered into USAS for payment.

HHSC does not review those transactions prior to releasing the payments, but reconciliations are performed for cash draw for the federal funds. Due to the large volume of the transactions, there is the possibility that an error in the payment process could go undetected.

Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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