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Management review says state treasurer’s office has cleared up gas card, limo issues, finds no new problems

The office of state Treasurer Ron Crane received a clean bill of health in a new management audit out today from Idaho’s state auditor’s office. The new management review, which covers fiscal years 2011, ’12 and ’13, is a turnaround from the previous three-year report, which highlighted three concerns that state auditors reported to the Idaho Attorney General having to do with gas card purchases, staff time and state funds supporting a program that wasn’t specifically authorized by the Legislature, and travel costs for annual bond rating trips to New York, including the use of stretch limos to transport Idaho’s delegation there.

All three of those have been “satisfactorily closed,”  the new management audit reports.

Crane welcomed the new audit, saying, “I am extremely proud of our office and my staff!” which he said runs “a clean, efficient and smooth operation for the benefit of taxpayers in Idaho.” Said Crane, “We strive to provide the best service possible through innovation and to protect the state’s assets by applying prudent and ethical banking and investment practices.”

The gas card issue dealt with Crane charging nearly $8,000 on a state credit card for gas for his commutes from his Canyon County home to the Capitol; while auditors thought that violated the state’s travel policy, the Attorney General later found that it didn’t. Nevertheless, Crane stopped charging the state for gas for his commute, and now pays for his own.

The second finding involved the “Smart Money, Smart Women” conference that Crane’s office has been sponsoring annually around the state. The Joint Finance-Appropriations Committee now authorizes $10,000 in annual expenditures specifically for that conference in Crane’s budget.

The third, dealing with the New York trips, prompted changes in how travel costs are accounted for in the annual bond rating trips to New York. Also, Crane said the Idaho delegation now is transported in SUVs rather than stretch limos.

The three-year review is required by state law; the state Audits Division, which falls under the Idaho Legislature, conducts the management reviews for all agencies. They are online here. The management reviews are separate from the statewide Comprehensive Annual Financial Report and Internal Controls Report, online here, which is required under governmental accounting standards and examines financial details; it is completed every year for all state agencies. That financial audit is the one that highlighted issues with Crane’s shifting of investments from one investment pool to another, which the audit said cost state taxpayers $10 million; a 90-day follow-up to that audit issued at the end of June said auditors still haven’t received documentation of a full review to show whether there were other such issues.

 

Idaho state treasurer defends record, calls critical state audits ‘politically motivated’

In his 16 years as Idaho’s state treasurer, Ron Crane has built up the state’s credit rating, launched a popular college savings program and a free annual control-your-finances conference for women, and helped create a bond bank that lets local school bonds and other local-government debt take advantage of the state’s favorable interest rates, potentially saving property taxpayers millions. But he’s best known for a series of critical state audit findings over the past five years, the most recent suggesting that Crane made an inappropriate transfer between two funds that cost the state’s taxpayers more than $10 million.

Crane vigorously disputes the audit finding, contending his office did nothing wrong and made reasonable decisions based on what it knew at the time. “As to the charges of the audit, I maintain and will maintain that they were politically motivated,” Crane said in an interview. “We think there’s an excellent explanation for each one. When voters understand what the real explanation is, they will agree with our position.”

The audit findings have prompted a longtime Twin Falls CPA, Deborah Silver, to challenge Crane in this year’s general election. “I would absolutely follow the auditors’ suggestions, no argument, no excuses,” said Silver, a Democrat who taught accounting at the College of Southern Idaho for five years and has operated a CPA firm with her husband in Twin Falls for nearly three decades. “This is a job that I can do.”

The Spokesman-Review asked David Burgstahler, the Julius A. Roller Professor of Accounting at the University of Washington, to review the audit finding about the fund transfer and Crane’s detailed response. “I found the auditor’s conclusions pretty convincing,” Burgstahler said. You can read my full story here at spokesman.com.

Auditors: State Treasurer Crane hasn’t documented reviews after inappropriate transfer

Here’s a news item from the Associated Press: BOISE, Idaho (AP) — Auditors with the Idaho Legislature say State Treasurer Ron Crane has not provided enough evidence that a full review was conducted following an inappropriate money transfer. The auditors found earlier this year Crane's office overrode internal controls meant to contain financial risk and the transfer resulted in a loss of at least $10.2 million loss of taxpayer money. The 90-day follow-up audit says Crane's office asserts it has reviewed its securities lending transactions but has only provided state officials with documentation for two specific transactions. Crane, a four-term treasurer, has disagreed with the report's findings. He did not immediately return calls from The Associated Press. The report also says state auditors will assess the effectiveness of Crane's office reorganization in a later review.

Click below for a full report from AP reporter Kimberlee Kruesi.

Medicaid costs need better oversight, audit says

OLYMPIA — The state needs to a better job of checking its Medicaid managed care programs for cost overruns, the state auditor's office said today.

A limited audit of the Health Care Authority's system to check doctors and other specialists in eight high-risk areas showed overpayments estimated at $17.5 million in 2010. Other tests showed billing error rates for administrative costs of 8 percent and 12 percent in samples from two of the largest organizations.  Those overpayments could have raised the costs to those managed care organizations, but they also could have cost the state more for higher premium rates in 2013 when the rates are calculated based on past costs. 

Because the audit was limited, and there were underpayments as well as overpayments within the areas examined the auditor's office couldn't say if the net result was an overpayment in the systems as a whole. "We cannot conclude that 2013 premiums paid by the state were higher or lower than they should have been," the audit says.

The Health Care Authority needs contracts with its managed care organizations that allow the agency to monitor data thoroughly, and to recover overpayments when they are found, auditors said. It should also give the organizations clearer guidance on the data it sends to an actuary and have a more comprehensive monitoring system.

Better controls are becoming more important, auditors said, because Medicaid coverage is expanding under federal health care reforms and most of the people being added to the system will have managed care. The audit studied services that predated the Affordable Care Act.

State could have sold computers with personal data

OLYMPIA — Some state agencies failed to wipe old computers clean of sensitive or personal data before sending them to be sold as surplus, a new state audit says. 

Random checks of computers that agencies sent to the state's surplus warehouse last summer revealed about 9 percent of them had information that was supposed be be removed before clearing them for sale. The information included Social Security numbers, medical or psychiatric histories of clients, and in one case an employee's tax return forms.

On one computer, auditors found a Post-it note that had the machine's sign-in and password, which still worked.

Auditors found flaws in the system, but no sign personal data that's protected by law was ever compromised.

State Auditor Troy Kelley said today those agencies were notified and their surplus sales of computers were frozen during the audit while procedures were changed, and there's no evidence that any private information had been compromised. He questioned whether the state should continue its practice of selling its obsolete computers.

"If we're getting very little money, and there's high risk, I think we  have to stop," Kelley said. 

A study is being done to answer whether the risks outweigh the value of selling surplus computers, Michael Cockrill, the state's chief information officer, said.

"The state has received no reports of any data from PCs being compromised," he said. . . 

To read the rest of this item, or to comment, continue inside the blog.

 

Feds: Idaho H&W spent welfare funds correctly

An official with the U.S. Department of Health and Human Services says an Idaho agency spent $2.5 million in leftover welfare funding correctly, contrary to the findings of a state audit, the AP reports. Idaho's Legislative Services Office released an audit last week that examined how state agencies spent federal money. In the report, the auditors concluded that the Idaho Department of Health and Welfare wrongly used the money left over from the 2008 budget for Temporary Assistance for Needy Families to cover salaries instead of using it to help pay for food, housing and other assistance.

But department officials contested the auditors' finding, saying that federal rules changed at the start of fiscal year 2009 to allow states to spend leftover funds on all services that help keep needy families together — including the costs of providing those services, like salaries. The department used the money to cover part of the salaries of social workers who focused on keeping the state's poorest children out of foster care by placing them with extended family members when their parents could not care for them. After the audit was released, state welfare officials sought guidance from the federal agency to see if they'd done the right thing.Yes, said Karen Code in an email sent to the state; click below for a full report from AP reporter Rebecca Boone.

State treasurer revamps expense accounting after audit

Here's a news item from the Associated Press: BOISE, Idaho (AP) — Idaho Treasurer Ron Crane has revamped how he documents some of his office's expenses, after concerns raised by state auditors last year. A 2012 audit of Crane's office determined expenses from his annual bond-rating trips to New York, including limousine transportation, weren't properly reported. Auditors also questioned Crane's use of a state credit card to buy $8,000 in gas for his personal car, and his office's funding of a women's financial conference. In a report released Tuesday, auditors say Crane buttressed record-keeping for the New York trips, requiring employees to document specific expenses. He now tracks gas purchases, reimbursing Idaho for personal trips. And while auditors contend Crane is still inappropriately funding the women's conference, he has revamped its nonprofit board — to distance its leaders from the treasurer's office.

Saturday’s highlights

Pasadena Park Elementary volunteer Cheri Reed helps third-grader Grace Peters find the perfect gift for her family at the Scholar Dollar Christmas store, which she organizes. SR photo/Bart Rayniak

Now that we’re all up on this fine Monday morning and on our first (or second) cup of coffee, it’s time to take a look at some highlights from Saturday’s Valley Voice in case you missed it. Spokane Valley Fire is heading up a new ambulance contract that includes nearly every fire department and district in the county. Response times are down and some tweaks are being made to the contract to make it better.

A volunteer grandma at Pasadena Park Elementary spends her December running the Scholar Dollar store for children who have earned points by reading. They can spend their points on Christmas gifts. Spokane Valley Partners is not having a Season of Sharing this year due to budget cuts.

An audit of 2009 records shows no problems for the City of Spokane Valley, according to auditors. However, the city is dealing with a criminal case against a former employee for theft of city money. Millwood residents will see increases in their water and sewer rates beginning Jan. 1. And at Tuesday’s Spokane Valley council meeting, deputy mayor Gary Schimmels will recommend that the council appoint the mayor’s half-brother to the planning commission.

Spokane Valley audit exit conference

Representatives from the Washington State Auditors Office have been auditing the City of Spokane Valley for several weeks. The exit conference is scheduled for 10:30 a.m. Wednesday in the council chambers at City Hall, 11707 E. Sprague. Council members are expected to attend the meeting, which is open to the public. An official audit report will be released at a later date.