Auditor Completes Yearly Audit of State Agencies and Federal Money

Department of Human Services and Prison Industries among agencies with significant findings

Several Mississippi state agencies failed to meet legal requirements to spend public money and do not have adequate safeguards to prevent fraud according to a report released today by State Auditor Shad White.

These findings came from the Auditor’s newly released FY 2018 Single Audit Report, which includes an audit of federal dollars spent by Mississippi’s state agencies. The report also includes an audit of the internal controls—the rules and systems to prevent fraud—and operations of selected state agencies.

“These audits represent months of difficult but important work by my finance and compliance audit division,” said Auditor White. “This is a critical yearly report that, unfortunately, shows there are serious issues in some of our state agencies.”

The Department of Human Services (DHS) was the subject of several significant findings in the report. The report notes that DHS

• Did not certify whether multiple childcare centers met health and safety standards
• Did not monitor recipients of several grants to determine whether grant money was spent in accordance with the law
• Did not compile basic, required documents, like a comprehensive list of grant recipients
• Did not follow federal reporting guidelines, submitting some federal paperwork nearly two years late
• Did not follow all legal requirements for ensuring beneficiaries of large programs like Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and Child Care and Development Fund (CCDF) were actually eligible for the programs
• And did not or could not ensure childcare centers receiving CCDF funds accurately counted children in the centers.

Several of these DHS findings have been repeatedly identified by the Auditor’s office since 2014 with no corrective action completed.

Findings listed in the Single Audit Report can affect the amount of federal funding Mississippi receives.

Mississippi Prison Industries Corporation, a non-profit created by the state to provide work programs for inmates, also drew serious findings. After a cash shortage and subsequent management change, the accounting office at Prison Industries has experienced a staff shortage. Without necessary staffing levels, job duties have not been properly separated. When too few employees have too much control over the finances of an office, the risk for fraud and theft increases.

Several state agencies have also created fraud risk by the way they utilize the software designed to manage payroll and purchasing. The Statewide Payroll and Human Resources System (SPAHRS) is the program used by the state to keep track of agency employees and their pay. If employees have too much individual control over an agency’s files on SPAHRS, the agency could be at risk for fraud. For instance, an employee with a great deal of control could create “ghost employees” to secretly funnel money to themselves. Auditor White recommended some agencies limit unnecessary access to SPAHRS and separate responsibility for recording entries in the system among multiple employees to prevent this situation.

Auditor White made similar recommendations regarding Mississippi’s Accountability System for Government Information and Collaboration (MAGIC), the accounting and procurement software for the state.

Finally, auditors noted the overall level of expertise among accounting staff in multiple state agencies was insufficient. The State Auditor’s office recommends the Department of Finance and Administration continue training programs for accounting personnel in all state agencies.

The full 300-page report can be viewed online at www.osa.ms.gov under the “Reports” tab.

“My hope is that the agencies with the findings listed in the audit report will take swift action to remedy the problems we highlighted,” White said. “The taxpayers deserve to know that money is being spent appropriately, in accordance with the law, and that the proper safeguards to prevent fraud are in place.”

State Auditor Shad White Press Release

7/22/2019