STATE HOUSE – The annual Single Audit of the State of Rhode Island for the fiscal year ended June 30, 2019, resulted in 68 findings. Many of the findings (36) related to the state’s key operations and controls over financial reporting while the remainder (32) related to the administration of federal programs — principally human service programs such as Medicaid, Temporary Assistance to Needy Families and the Supplemental Nutrition Assistance Program.

The Single Audit Report, prepared by Auditor General Dennis E. Hoyle, was recently released by the Joint Committee on Legislative Services. The annual audit is required by both state and federal law as a condition of continued federal assistance.

The state’s fiscal 2019 expenditures of federal awards totaled $4.4 billion (including component units) under a wide variety of more than 450 individual programs. Federal assistance consists of both direct cash and noncash awards (e.g., loan and loan guarantee programs and donated food commodities). Many programs are jointly financed with federal and state funding.

Financial statement related findings — The auditors previously communicated (in a separate report released in March 2020) 36 findings related to the state’s controls over financial reporting. These findings addressed issues such as the state’s need to complete a strategic plan to coordinate needed enhancements to its key statewide financial and administrative systems, accounting for Medicaid program financial activity, assessing information technology risks, and identifying the resources needed to effectively manage and administer the OPEB (retiree healthcare) system. Those financial statement related findings are also included in the Single Audit Report as required by federal regulation.

A link to that separate report, which also includes 14 management comments (not included in the single audit report), is included here: www.oag.ri.gov/reports/2019_FinStmt_FindingsMC.pdf

Federal program findings — Consistent with federal guidelines, the auditors tested 69% of the total expenditures of federal awards as major programs following risk-based criteria established in the federal Uniform Guidance.

The auditors reported material noncompliance with certain federal program requirements for the Medicaid, Children’s Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Child Care and Development Fund (CCDF) and Unemployment Insurance programs.

The RIBridges system is used to administer several federal programs including Medicaid, CHIP, TANF, SNAP and CCDF programs. While auditors found it to be improved in fiscal 2019, the system continued to negatively impact federal program compliance for these programs.

The auditors reported that data discrepancies between the systems used to determine Medicaid and CHIP eligibility (RIBridges) and the claims/capitation payment system (MMIS) continued to negatively impact controls to ensure that payments were made only on behalf of eligible individuals during fiscal 2019.

The Executive Office of Health and Human Services (EOHHS) lacks strong oversight procedures regarding fiscal monitoring and contract settlement for its managed care organizations (MCO’s) which represent nearly 60% of Medicaid benefit expenditures. More stringent audit and financial monitoring procedures should be employed. Further, EOHHS needs to reassess all activities considered surveillance utilization review services performed within the Medicaid program to comply with federal regulations and amend the State Plan to accurately reflect the state’s current practices.

The state is not currently in compliance with Medicaid regulations for the screening, enrollment and revalidation of providers used in MCO networks.

The RIBridges eligibility system does not currently meet all the functional requirements of an automated data processing system as outlined in federal SNAP regulations. The system is also not producing reports to allow daily reconciliation of electronic benefits authorized and disbursed and to ensure accurate and timely completion of federal reports.

The auditors found that the Department of Behavioral Healthcare, Developmental Disabilities and Hospital’s administration costs were allocated to the Medicaid program through a departmental cost allocation plan that was not federally approved. Improvements in policies and procedures related to Medicaid claiming for patients at Eleanor Slater Hospital are needed to ensure compliance with federal requirements.

The Department of Children, Youth and Families did not utilize updated residential time study results when allocating payments for residential placements to Medicaid.

The RIBridges eligibility system lacked effective income validation controls during fiscal 2019 which impacted CCDF program eligibility determinations and the amount of required parent cost-sharing amounts.       

The auditors recommended the tracking and monitoring of locally-held program income generated by Community Development Block Grant activities be enhanced by the Office of Housing and Community Development (OHCD). OHCD should improve procedures to ensure federal reports are retained and adequately supported by underlying records.

The Department of Environmental Management can enhance controls over time and effort reporting to ensure payroll cost allocations and reimbursements for the Performance Partnership Grants are adequately supported.

Management’s response and planned corrective actions are included within the Single Audit Report. A Summary Schedule of Prior Audit Findings, which reports the status of findings from prior audits, is also included. The state’s management has implemented corrective action on some findings previously reported. Incremental progress is noted in our findings when recommendations have not been fully implemented but corrective actions are underway.

The state’s Single Audit Report was submitted to a federal clearinghouse for such reports —this data is then made available to all federal funding agencies. The Single Audit Report and related Audit Summary are available on the Auditor General’s website – www.oag.ri.gov.