Auditor General issues Single Audit Report for the fiscal year ended June 30, 2022

 

STATE HOUSE – The annual Single Audit of the State of Rhode Island for the fiscal year ended June 30, 2022, resulted in 75 findings related to the administration of federal programs and the State’s key financial operations. Expenditures of federal programs totaled $6.9 billion for fiscal 2022, of which $1.6 billion was COVID-related. An extensive array of services to individuals and costs to support pandemic response and recovery efforts were reimbursed under various programs. Total expenditures in 2022 decreased from 2021 by $1.5 billion, which was largely attributable to the ending of pandemic-related unemployment insurance benefits in September 2021.  Pandemic-related unemployment benefit payments totaled $325.1 million in fiscal 2022 as compared to $1.7 billion in fiscal 2021.

The Single Audit Report, prepared by Auditor General David A. Bergantino, 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 Single Audit Report also includes a detailed schedule of federal award expenditures and audit reports outlining internal control deficiencies and noncompliance relating to financial reporting and the administration of federal programs.  The report includes the State’s financial statements which were previously communicated in the State’s Fiscal 2022 Annual Comprehensive Financial Report.

Federal assistance is received under approximately 500 individual programs.  Many programs are jointly financed with federal and State funding.  Medicaid is the single largest program with fiscal 2022 expenditures totaling approximately $3.5 billion - the federal government shared $2.4 billion of that cost. 

Of the 75 findings included in the report, 39 relate to the administration of federal programs and the remainder to the State’s controls over financial reporting.

Expanded pandemic unemployment benefits continued during fiscal 2022 (through September 2021), exceeding $300 million.  The Department of Labor and Training estimated an additional $10 million in fraudulent claims were paid in fiscal 2022 prior to the end of expanded benefits in September 2021.

Controls over the processing of unemployment insurance claims were ineffective to sufficiently prevent fraudulent unemployment insurance benefit payments.  Controls were also ineffective to ensure compliance with the documentation of self-employment income for the Pandemic Unemployment Assistance program.

The State did not materially comply with Children’s Health Insurance Program eligibility requirements during fiscal 2022.  The RIBridges integrated eligibility system is not fully evaluating all eligibility criteria to ensure compliance with federal regulations.

Within Medicaid, premium payments to managed care organizations (MCOs) represent approximately 60% of Medicaid benefit expenditures. The Executive Office of Health and Human Services needs to improve controls over managed care financial activity to ensure compliance with allowable cost principles for related program expenditures.

The State should improve controls relating to the identification of third-party (TPL) insurance coverage to ensure that, when appropriate, Medicaid is the payor of last resort by (a) ensuring that TPL reported in the Medicaid Management Information System is accurate and up to date, and (b) ensuring that MCOs are effectively identifying TPL insurance coverage for Medicaid recipients and cost avoiding for claims covered by other insurance.

Controls need to be improved to ensure that critical external data interfaces are operating as designed within the RIBridges system.

RIBridges controls over eligibility determinations, income validation, and calculation of required parent cost-sharing amounts require strengthening within the Child Care and Development Fund Cluster programs.  Controls to improve the documentation of eligibility, specifically, need improvement to support compliance with federal regulations.

The State implemented an administrative assessment on certain pandemic-related federal programs without seeking and receiving federal approval for the allocation of the costs.  The assessment was designed to eventually fund the State’s costs of administering new federal programs relating to the COVID-19 public health emergency.  Uniform Guidance requires allocation methodologies for administrative costs to be approved by the federal government prior to implementation.

The Department of Transportation needs to improve internal controls over the administration of the Highway Safety Cluster to ensure compliance with Level of Effort – Maintenance of Effort (MOE), Earmarking, Period of Performance, Federal Reporting, and Subrecipient Monitoring federal requirements.  Documentation supporting compliance with federal requirements was found lacking for the above compliance requirements.

The State has not implemented adequate subrecipient monitoring activities to ensure material compliance with federal regulations.  For several federal programs, State agencies that pass-through federal funds to other entities did not perform subrecipient monitoring activities required by federal regulations. 

The Rhode Island Public Transit Authority did not account for CARES Act operating expense reimbursements in accordance with generally accepted accounting principles and did not adequately document CARES Act operating expense reimbursements.  Recommendations were made to improve controls and enhance compliance by the Rhode Island Public Transit Authority in their use of Federal Transit Cluster funds.

Rhode Island College and the University of Rhode Island need to improve their policies and procedures to ensure compliance with federal grant reporting requirements for the Education Stabilization Fund program.

The auditors previously communicated (in a separate report released in March 2023) findings related to the State’s controls over financial reporting.  A link to that separate report, which also includes 10 management comments (not included in the Single Audit Report) is shown below: 

Findings and Management Comments- 2022 State Financials (ri.gov)

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 Single Audit Report was submitted to the Federal Single Audit Clearinghouse - this information is then made available to all federal funding agencies.  The Single Audit Report and related Audit Summary are available on the Office of the Auditor General’s website:

State of RI Single Audit Report, FY Ended June 30, 2022

State of RI Single Audit Report, FY Ended June 30, 2022 (Summary)

 

 

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