summary of significant audit findings for mental health ... · management letter, ... reconciled...

Summary of Significant Audit Findings for Mental Health and Mental

Retardation Community Centers for Fiscal Year 2015

As Required By Texas Health and Safety Code, Section 534.068(f)

Health and Human Services Commission February 2017

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Contents 1. Executive Summary ...................................................................................................................1

2. Introduction ................................................................................................................................13. Background ................................................................................................................................14. Independent Auditor's Findings Summary .............................................................................1

4.1 Abilene Regional MHMR dba Betty Hardwick Center .........................................................14.2 Anderson-Cherokee Community Enrichment Services dba ACCESS...................................24.3 Andrews Center ......................................................................................................................2

Finding 2015-001 Reconciliations of Account Balances ........................................................ 2Finding 2015-002 Credit Balances in Accounts Receivable ................................................... 3Finding 2015-003 Deficit in Benefit Fund Balance ................................................................ 3Finding 2014-001 Reconciliations of Account Balance .......................................................... 4Finding 2014-002 Credit Balances in Accounts Receivable ................................................... 4Finding 2014-003 Deficit in Benefit Fund Balance ................................................................ 4Significant Audit Findings....................................................................................................... 5

4.4 Austin-Travis County MHMR dba Austin Travis County Integral Care ...............................5

Finding 2015-1 ........................................................................................................................ 5Finding 2015-2 ........................................................................................................................ 7Finding 2015-3 ........................................................................................................................ 8Finding 2015-4 ........................................................................................................................ 9Finding 2015-5 ...................................................................................................................... 10Finding 2015-6 ...................................................................................................................... 11Finding 2014-1 ...................................................................................................................... 12

4.5 Bluebonnet Trails Community Services ..............................................................................134.6 Border Region Behavioral Health Center ............................................................................134.7 Burke Center ........................................................................................................................134.8 Camino Real Community Services ......................................................................................134.9 Center for Health Care Services ...........................................................................................14

Finding No. 2015-001 – Procurement ................................................................................... 14Finding No. 2014-001 – Federal and State Programs – Schedule of Expenditures of Federal and State Awards ................................................................................................................... 15Finding No. 2014-002 – Federal and State Programs – Semi-Annual Certifications ........... 16Finding No. 2014-003 – Medicaid Assistance Program ........................................................ 17Finding No. 2014-004 – Capital Asset Inventory.................................................................. 17

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4.10 Central Texas MHMR Center dba Center for Life Resources ...........................................18

4.11 Central Counties Center for MHMR Services ...................................................................194.12 Central Plains Center ..........................................................................................................194.13 Coastal Plains Community Center .....................................................................................194.14 Dallas Metrocare Services ..................................................................................................19

Item 2015-001: Significant Deficiency Relating to Controls over Major Program Compliance ............................................................................................................................ 19

4.15 Denton County MHMR ......................................................................................................21Financial Stability .................................................................................................................. 21

4.16 El Paso Center for Mental Health/Intellectual Disabilities dba Emergence Health Network224.17 Gulf Bend Center ...............................................................................................................224.18 Gulf Coast Center ...............................................................................................................22

Incorrect Disbursement .......................................................................................................... 224.19 Harris Center for Mental Health and IDD ..........................................................................23

4.20 Heart of Texas Region MHMR ..........................................................................................234.21 Helen Farabee Centers .......................................................................................................234.22 Hill County Community MHMR Center dba Hill Country Mental Health and Developmental Disabilities Centers ...........................................................................................234.23 Lakes Regional Community Center ...................................................................................24

Current year comments: ......................................................................................................... 244.24 MHMR Authority of Brazos Valley ...................................................................................244.25 MHMR of Nueces County dba Behavioral Health Center of Nueces County ...................254.26 MHMR Services for the Concho Valley ............................................................................25

Reconciliation of Medicaid Accounts Receivable and Journals ........................................... 25Payroll Approval and Allocations ......................................................................................... 25Recording Expenses in the Correct Period ............................................................................ 26

4.27 MHMR Services of Texoma dba Texoma Community Center ..........................................264.28 MHMR of Tarrant County .................................................................................................264.29 Pecan Valley Centers for Behavioral and Developmental Healthcare ...............................26

4.30 Permian Basin Community Centers for MHMR ................................................................274.31 Sabine Valley Regional MHMR Center dba Community Healthcore ...............................274.32 Spindletop Center ...............................................................................................................27

Finding 2015-001 .................................................................................................................. 274.33 Starcare Specialty Health System dba Lubbock Regional MHMR Center ........................284.34 Texana Center ....................................................................................................................29

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4.35 Texas Panhandle Centers Behavioral and Developmental Health .....................................29

4.36 Tri-County Behavioral Healthcare .....................................................................................29Allowance for Doubtful Accounts ......................................................................................... 29Construction Accounting ....................................................................................................... 29Capitalization Threshold ........................................................................................................ 30Custodial Credit Risk – Bank Deposits ................................................................................. 30

4.37 Tropical Texas Behavioral Health ......................................................................................304.38 West Texas Centers ............................................................................................................30

5. Conclusion ................................................................................................................................31List of Acronyms ..........................................................................................................................32

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1. Executive Summary

Each Community Mental Health Mental Retardation Center, now referred to as Local Mental Health Authorities (LMHAs), that expends $500,000 or more in a year in federal and state awards shall have a single audit conducted in accordance with Office of Management and Budget Circular No. A-133 or the Uniform Grants Management Standards. The Single Audits are submitted to the Health and Human Services Commission's Office of Inspector General (IG) for review. The IG submits agency finding letters to HHSC when findings are noted in each Single Audit Report. HHSC is responsible for resolution of these issues and submitting the enclosed report to the Governor, Legislative Budget Board, and Legislative Audit Committee.

This report summarizes the independent auditor’s findings of 38 LMHAs and their responses.

2. Introduction

This report is submitted pursuant to the Texas Health and Safety Code Section 534.068 (Audits) which provides in part: “As a condition to receiving funds under this subtitle, a local mental health and mental retardation authority other than a state facility designated as an authority must annually submit to the department a financial and compliance audit prepared by a certified public accountant or public accountant licensed by the Texas State Board of Public Accountancy. To ensure the highest degree of independence and quality, the local mental health or mental retardation authority shall use an invitation-for-proposal as prescribed by the department to select the auditor.”

3. Background

HHSC is required to submit a report annually, summarizing significant findings identified during the review of independent financial and compliance audits conducted on Community Centers. The reports pertain to the 38 centers’ financial activity. This report summarizes auditor’s findings, and both financial statements and compliance requirements, as described within the Office of Management and Budget Circular A-133 and the State of Texas Single Audit Circular. Also noted are fiscal year 2014 findings, questioned costs, and corrective plans. In addition, follow up on prior year findings and any relevant comments, as outlined in the auditor’s management letter, are included. All findings, comments and corrective action are reproduced verbatim from the independent audit reports and are not modified HHSC.

4. Independent Auditor's Findings Summary

4.1 Abilene Regional MHMR dba Betty Hardwick Center

City: Abilene County: Taylor Type of Report on Financial Statement: Unqualified1 Type of Report on Compliance: Unqualified

1 An unqualified opinion states that the financial statements present a fair and accurate picture of the company and comply with generally accepted accounting principles.

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Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.2 Anderson-Cherokee Community Enrichment Services dba ACCESS

City: Jacksonville County: Cherokee Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.3 Andrews Center

City: Tyler County: Smith Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs:

Finding 2015-001 Reconciliations of Account Balances

Criteria: The Center is responsible for maintaining records for the preparation of financial statements that are fairly presented in accordance with generally accepted accounting principles.

Condition: Detailed account records were not reconciled to the general ledger at year end for Receivables, Fixed Assets, Deferred Revenue, Revenues, General Fund Balance, and Self Insurance Fund accounts. Also, three bank reconciliations were not properly reconciled at year-end.

Cause of Condition: The Center failed to follow their internal control procedures in reconciling and reviewing the general ledger detail and related accounts.

Effect: Adjusting entries were made to several accounts to correct the balance when the Center reconciled the accounts.

Recommendation: We recommend that management follow their policy of reconciling and reviewing detailed accounts to the general ledger in a timely manner and to record adjustments as necessary to reflect the accounts at their correct amounts.

Management’s Response: Andrews Center has implemented a monthly reconciliation process of all accounts and will ensure they are complete as of year-end. We are currently reviewing the

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monthly reports that are generated by our accounting system and have established a protocol for retaining these documents for a period of two years. This will help us maintain accuracy and integrity of data as we reconcile financial accounts on a monthly basis.

Finding 2015-002 Credit Balances in Accounts Receivable

Criteria: Accounts Receivable balances should represent current collectible accounts receivable.

Condition: Client accounts receivable balances included old credit balances on the general ledger.

Cause of Condition: Charges and payments are not being properly applied and or refunded to individual client accounts receivable accounts.

Effect: Potential understatement on the financial statements of accounts receivable and accounts payable.

Recommendation: The Center should research and determine the appropriate disposition of old client credit balances.

Managements Response: Andrew’s Center will review the policy regarding client balances and will revise it if necessary to include refunds to clients that have credit balances. Monthly monitoring of client balances will be conducted by the Business Office as well as ongoing reconciliation of Client Accounts Receivable.

Finding 2015-003 Deficit in Benefit Fund Balance

Criteria: The fund balance for each fund should have a positive balance.

Condition: The Benefit Fund balance had deficit fund balance at year end.

Cause of Condition: The prior year had a deficit and the current year income was not sufficient to restore the balance.

Effect: The Benefit Fund should be funded by the General Fund to reduce deficit in the fund so that it is no longer in a deficit position.

Recommendation: We recommend the Center reconcile and review Benefit Fund prior to any year-end adjustments to ensure it does not incur a deficit fund balance.

Managements Response: Andrew’s Center will reconcile all accounts relating to the Benefit Fund prior to year-end and will ensure there is not a deficit balance at year end.

Follow-up on Prior Year Findings:

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Finding 2014-001 Reconciliations of Account Balance

Criteria: The Center is responsible for maintaining records for the preparation of financial statements that are fairly presented in accordance with generally accepted accounting principles.

Condition: Several detailed account records were not reconciled to the general ledger at year-end for Receivables, Fixed Assets, Deferred Revenue, Revenues, General Fund Balance, and Self Insurance Fund accounts.

Cause of Condition: The Center failed to follow their internal control procedures in reconciling and reviewing the general ledger detail and related accounts.

Effect: Adjusting entries were made to several accounts to correct the balance.

Recommendation: We recommended that management follow their policy of reconciling and reviewing detailed accounts to the general ledger in a timely manner and to record adjustments as necessary to reflect the accounts at their correct amounts.

Current Year Status: This is still a finding as noted in Finding 2015-001.

Finding 2014-002 Credit Balances in Accounts Receivable

Criteria: Accounts Receivable balances should represent current collectible accounts receivable.

Condition: Client accounts receivable balances included old credit balances on the general ledger.

Cause of Condition: Charges and payments are not being properly applied and or refunded to individual client accounts receivable accounts.

Effect: Potential understatement on the financial statements of accounts receivable and accounts payable.

Recommendation: The Center should research and determine the appropriate disposition of old client credit balances.


Finding 2014-003 Deficit in Benefit Fund Balance

Criteria: The fund balance for each fund should have a positive balance.

Condition: The Benefit Fund balance had deficit fund balance at year-end.

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Cause of Condition: The prior year had a deficit and the current year income was not sufficient to restore the balance.

Effect: The Benefit Fund should be funded by the General Fund to reduce deficit in the fund so that it is no longer in a deficit position.

Recommendation: We recommended the Center reconcile and review Benefit Fund prior to any year-end adjustments to ensure it does not incur a deficit fund balance.


Independent Auditor's Management Letter:

Significant Audit Findings

Difficulties Encountered in Performing the Audit

All accounts were not reconciled timely which caused a delay in receiving some of the information required for the audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. The attached schedule summarizes uncorrected misstatements of the financial statements. The following material misstatements detected as a result of audit procedures were corrected by management: Adjustments Fixed Assets, Deferred Revenues, Medicaid Receivables, Operating And Payroll Bank Accounts, and Allowance for Uncollectible Accounts Receivable.

Corrective Action Plan: See Management’s Responses for Findings 2015-001, 2014-002, and 2015-003

4.4 Austin-Travis County MHMR dba Austin Travis County Integral Care

City: Austin County: Travis Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs:

Finding 2015-1

Material Weakness

Criteria or Specific Requirement:

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Either monthly or quarterly, the human resources and/or the payroll accounting department is responsible for reconciling certain general ledger accounts to supporting documentation. Subsequent to the completion of the reconciliation, the Director of Accounting Services is to review the reconciliations to ensure that the general ledger accounts are in support of documentation.

In addition, quarterly payroll reports and payment of payroll taxes are required to be submitted and paid timely to the Internal Revenue Service and the Texas Employment Commissioner.

Condition:

When comparing the payroll related liability accounts to prior year end balances and testing of account balances, we noted that several of the fiscal year 2014 balances had zero balances, compared to debit balances or some immaterial credit balances (that should have been zeroed out) in these accounts at August 31, 2015.

In addition, the accrued compensated absences (vacation and holiday accrual) balances on the general ledger did not agree to the ‘Employee Accrual Balance and History Report’ and there was not reconciliation performed to ensure that the amounts were in agreement at August 31, 2015. The general ledger accrued balance for the Community Action Network (‘CAN’) and the Integrated Care Collaborative (‘ICC’) was also not in agreement with the ‘Employee Accrual Balance and History Report’ and no adjustments were made between these funds for the entire year. The general ledger balance for CAN and ICC at August 31, 2015 was the same balance from August 31, 2014.

Finally, when reviewing the 941 Employer’s Quarterly Federal Tax Return reports and the Texas Employment Commissioner (‘TEC’) Quarterly payroll reports, there was no indication of review and timely filing of the reports due to a lack of signature and date by the person preparing the report or the supervisor reviewing the report.

Cause and Effect:

Personnel in either the human resources and/or the payroll accounting department was not reconciling the balances in the various payroll related general ledger accounts to supporting documentation.

In addition, there was no evidence that the Director of Accounting Services was ensuring that proper reconciliations were being performed on the payroll and related liability accounts and that the Director of Accounting Services was reviewing any reconciliations performed to ensure that the reconciliations were in agreement with the general ledger.

Finally, there was no evidence of timely preparation, payment of payroll taxes and filing of the quarterly reports due to the lack of dating and signing of the reports.

Recommendation

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We recommend responsible ATCIC staff in the human resources and/or the payroll accounting departments, as applicable, be required to reconcile each of the payroll related general ledger accounts to supporting documentation monthly and immediately follow up on all the balances for which documentation to support the payroll related general ledger balances is not readily available. Reconciling of the accounts will ensure that any necessary adjusting entries will be recorded timely.

In addition, we also recommend that the Director of Accounting Services review the reconciliations prepared by the ATCIC staff in the human resources and/or the payroll accounting department to ensure that the general ledger accounts are in support of documentation and in agreement to the general ledger.

Finally, we recommend that the Director of Accounting Services sign and date the quarterly payroll reports on the date that the taxes are paid and the reports are filed to provide supporting documentation for review and timely filing of the reports. Prior to the submission of the payroll quarterly reports, the person preparing and completing the reports should also sign and date the reports on the date they are complete and ready for reviewing and filing with the appropriate agency.

Views of Responsible Officials and Planned Corrective Actions:

ATCIC concurs with the audit finding and will review reconciliation processes with appropriate staff for all payroll related liability accounts and all payroll related tax returns. Review of processes will include detail of contribution and deduction reconciliation between payroll and invoices as well as appropriate documentation of signatures of staff completing reconciliations and documented review of reconciliations and payroll related tax returns by Director of Accounting Services prior to filing. In addition, ATCIC is changing payroll systems to a system which will incorporate a direct feed from the benefit plans to the payroll system which will simplify the process going forward. This process will be implemented immediately.

Finding 2015-2

Significant Deficiency

2015-2: Maintaining and updating of Fixed Asset Schedules


The Governmental Accounting Standards Board (‘GASB’) Statement No. 34 requires that all government entities use accrual accounting and depreciate their capital assets. Capital assets with updated records should be maintained for all property and equipment and should be distinguished between non-depreciable and depreciable assets. In addition, ATCIC is required to calculate depreciation expense on property, plant and equipment when preparing the government-wide financial statements.

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Condition:

During the current year audit testwork of fixed assets, we noted that the accounting staff did not maintain and update the fixed asset schedules for additions, deletion and depreciation expense on a timely basis. We received the fixed asset schedules on November 10, 2015 but these schedules did not include the additions for any new capital leases entered into in fiscal year 2015. Subsequent to November 10, 2015, we received updated fixed asset schedules three additional times with the latest corrected and updated schedules dated January 6, 2016.

Cause and Effect:

ATCIC did not have proper oversight of accounting staff to ensure completion of the fixed asset schedules. As a result, the fixed asset schedules were not prepared timely and were not ready for audit.

Recommendation:

We recommend that the fixed asset listing and schedules be monitored and maintained on a regular basis. As new assets are acquired, they should be added to the listing and as assets are disposed of, they should be removed from the listing. Assets should also be categorized properly as either non-depreciable (land and construction in progress) or depreciable assets (property, furniture and equipment, etc.). This process should be performed timely to ensure that comparison of capital expenditures made monthly are entered into fixed asset detail records and the schedules are completed and ready for audit and in compliance with GASB 34.


ATCIC concurs with the audit finding. The fixed asset schedule will be updated on an ongoing basis and the Director of Accounting Services will review the fixed asset schedule on a monthly basis to ensure appropriate additions and deletions are being recorded by comparing to capital expenditures from the general ledger. A signed and dated copy of each review will be kept in the files to show timely review of the fixed asset schedule. This process will be implemented immediately.

Finding 2015-3

Significant Deficiency

2015-3: Maintaining and updating of Capital and Operating Leases


The Governmental Accounting Standards Board (‘GASB’) Statement No. 34 requires that all government entities use accrual accounting and account for their long-term debt on the government-wide financial statement. A lease is a financial transaction called a capital lease if it meets any one of four specified criteria; if not, it is an operating lease. Capital leases are treated

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as the acquisition of assets and incurrence of obligations by the lessee. Operating leases are treated as current operating expenses.

Condition:

During the current year audit testwork of operating leases, we noted that the accounting staff did not maintain and update timely the operating lease schedule for new leases. We received the operating lease schedule on December 16, 2015. Adjustments were made by ATCIC accounting staff to reclassify principle and interest payments made on the capital leases as all capital lease payments had been expensed throughout the fiscal year. ATCIC accounting staff did not perform a lease analysis to make the determination if any new leases entered into in fiscal year 2015 were capital leases.

As stated in finding 2015-2, the capital lease additions were not included in the initial fixed asset schedules we received on November 10, 2015. We received updated fixed asset schedules with the capital lease additions on December 17, 2015

Cause and Effect:

ATCIC did not have proper oversight of accounting staff to ensure completion of the operating lease schedule and proper guidance has not been given to the accounting staff on how to accurately account for capital leases. As a result, the accounting for the capital leases and the preparing of the schedules for the operating leases were not prepared timely and were not ready for audit.

Recommendation:

We recommend that the accounting schedules for capital and operating leases be monitored and maintained on a regular and timelier basis. We also recommend that the accounting staff carefully review all lease arrangements and complete an analysis of all new leases to determine the proper accounting treatment (operating versus capital) under generally accepted accounting principles.


ATCIC concurs with the audit finding. The Director of Accounting Services will review all new leases to determine if the lease is an operating lease or a capital lease. For all ongoing capital leases and anew capital lease, the Director of Accounting Services will supply the Accounts Payable Department with a payment schedule that breaks down each payment by the amount of principle and interest in order to timely and efficiently record the capital lease appropriately. This process will be implemented immediately.

Finding 2015-4 Program Name: Health Community Collaboratives (HCC) State and/or Federal Award Numbers: 030

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Grant Period: July 1, 2014 to August 31, 2015 Type of Finding: Non-compliance

Name of Compliance Requirement: Equipment and Real Property Management and Reporting

Condition: ATCIC’s Property Inventory Form (Form GC-11) was not completed and submitted by the contract’s required deadline date of October 15, 2015.

Criteria or Specific Requirement: The contract states that the “Contractor shall maintain an inventory of real property (encumbered under this contract), equipment and supplies defined as controlled assets, and property described in the Other Tangible Property section of Article XIII and submit an annual cumulative report of the equipment and other property on Form GC-11 (Contractors Property Inventory Report) to the Department’s Contract Oversight and Support Section no later than October 15th of each year”.

Questioned Costs: Not applicable

Possible Asserted Cause and Effect: The Budget and Finance department has encountered some turnover in key positions in the current fiscal year. The individual responsible for this particular contract left ATCIC’s employment and his/her workload was distributed to others to complete. The additional workload added to the remaining staff caused the late filing and/or lack of completion and submission of the GC-11 Report by the required deadline date.

Recommendation: We recommend that ATCIC complete and submit timely, the Contractors Property Inventory Report, Form GC-11 as required by the contract.

Views of Responsible Officials and Planned Corrective Actions: ATCIC concurs with the audit finding. The Budget and Financial Analyst Director will maintain a listing of all filing deadlines related to contracts and will ensure timely filling of the Property Inventory Report, Form GC-11 as required by contract.

Finding 2015-5

Program Name: Health Community Collaboratives (HCC) State and/or Federal Award Numbers: 030 Grant Period: July 1, 2014 to August 31, 2015 Type of Finding: Non-compliance

Name of Compliance Requirement: Equipment and Real Property Management and Procurement and Suspension and Debarment

Condition: Section 8.03.03 of the Center’s Purchasing Policies and Procedures were not followed by ATCIC staff for the purchase of four (4) vehicles costing in excess of $25,000 each.

Criteria or Specific Requirement: ATCIC’s Purchasing and Policy Procedures, which follows the State of Texas Uniform Grants Management Standards handbook issued by the Governor’s

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Office of Management and Planning, states that purchases made between $25,000 and $100,000 must follow certain purchasing and policy processes which includes (but not limited to) a written invitation for bid plus a minimum of three vendors who provide the good or services must be located and included in the purchase documentation. The results must be recorded in writing and included with the submitted purchase requisition. There must also be documentation of efforts to obtain the proper bids and justification for selection of other than low bid must be provided with the purchase requisition and maintained in accordance with the Center’s documentation retention requirement. This documentation must also include (but not limited to) vendors contacted, Historically Underutilized Business (HUB) information (if applicable), agents contacted, awarded vendor and statement of reasons for award. Written bids and HUB verification must be attached to the purchase requisition. Documentation of efforts to obtain the proper bids and justification for selection of other than low bid must be provided with the purchase requisition.

Questioned Costs: $223,656

Possible Asserted Cause and Effect: Policies and procedures are in place to ensure compliance with the requirements of the purchase of equipment but ATCIC did not follow the required processes due to time constraints. ATCIC staff received approval for the vehicle expenses in July/August 2015 from the Department of State Health Services (DSHS). The contract period ended on August 31, 2015, thus ATCIC staff was unable to follow all the specific requirements in the purchasing and policy procedures manual, specifically Section 8.03.03, thus required documentation for these purchases was not on file or complete. The cost of the vehicles may be disallowed.

Recommendation: We recommend that ATCIC staff follow the Center’s Purchasing Policies and Procedures for any and all purchases.

Views of Responsible Officials and Planned Corrective Actions: ATCIC concurs with the audit finding. ATCIC will add additional documentation and review to ensure all appropriate purchasing policies and procedures have been followed prior to purchase.

Finding 2015-6

Program Name: State General Revenue – Behavioral Health – Adult and Child Grants and Intellectual & Developmental Disabilities Grant State and/or Federal Award Numbers: 030 Grant Period: September 1, 2014 to August 31, 2015 Type of Finding: Non-compliance

Name of Compliance Requirement: Equipment and Real Property Management and Reporting

Condition: ATCIC’s Property Inventory Form (Form GC-11) was not completed and submitted by the contract’s required deadline date of October 15, 2015. The filing date of the report was not November 18, 2015.

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Criteria or Specific Requirement: The contract states that the “Contractor shall maintain an inventory of real property (encumbered under this contract), equipment and supplies defined as controlled assets, and property described in the Other Tangible Property section of Article XIII and submit an annual cumulative report of the equipment and other property on Form GC-11 (Contractors Property Inventory Report) to the Department’s Contract Oversight and Support Section no later than October 15th of each year”.

Questioned Costs: Not applicable

Possible Asserted Cause and Effect: The Budget and Finance department has encountered some turnover in key positions in the current fiscal year. The individual responsible for this particular contract left ATCIC’s employment and his/her workload was distributed to others to complete. The additional workload added to the remaining staff caused the late filing of the GC-11 Report by the required deadline date.

Recommendation: We recommend that ATCIC complete and submit timely, the Contractors Property Inventory Report, Form GC-11 as required by the contract.

Views of Responsible Officials and Planned Corrective Actions: ATCIC concurs with the audit finding. The Budget and Financial Analyst Director will maintain a listing of all filing deadlines related to contracts and will ensure timely filing of the Property Inventory Report, Form GC-11 as required by contract.


Finding 2014-1

Program Name: Medicaid and ECI Medicaid Administrative Claiming State and/or Federal Award Numbers: 529-09-0032-0050 and 529-09-0032-0034; CFDA #93.778 Grant Period: July 1, 2013 to June 30, 2014 Type of Finding: Non-compliance

Name of Compliance Requirement: Allowable/Unallowable Activities and Reporting

Criteria of Specific Requirement: The Medicaid and ECI Medicaid Administrative Claiming (MAC) program provides public entities such as Mental Health and Mental Retardation (MHMR) Centers in Texas the opportunity to submit reimbursement claims for administrative activities that support the Medicaid program.

We obtained a listing of the MAC claims submitted during the fiscal year ended August 31, 2014. We selected the 4th quarter (July 2014 – September 2014) submission for ECI Medicaid Administrative Claiming and the 3rd quarter (April 2014 – June 2014) submission for Medicaid Administrative Claiming. We traced the expenses claimed on the reports to supporting documentation and recalculated the claims.

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The expense amount included for depreciation expense for the 3rd quarter claim was overstated by $362,863 in the General and Administrative (G&A) Allocation expense. The G&A allocation is used in calculating the claim reimbursement and is allocated among Time Study Participants, Director Support Staff and Unstudied Staff. A recalculation of the claim with the corrected depreciation expense resulted in the 3rd quarter claim being overstated by $15,998.

Corrected Action Plan: Corrective action was taken.

Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: See findings above.

4.5 Bluebonnet Trails Community Services

City: Round Rock County: Williamson Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.6 Border Region Behavioral Health Center City: Laredo County: Webb Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.7 Burke Center

City: Lufkin County: Angelina Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.8 Camino Real Community Services

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City: Lytle County: Atascosa Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No management letter included Corrective Action Plan: No findings/comments requiring corrective action

4.9 Center for Health Care Services

City: San Antonio County: Bexar Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs:

Finding No. 2015-001 – Procurement

Type of Finding: Significant Deficiency in Internal Control Over Compliance

Criteria: State law requires that purchase and/or contracts for goods and (certain) services, in excess of $100,000, to be procured via competitive procurement procedures (Uniform Grant Management Standards); and, that the procurement decisions for professional and consulting services, to be based on the vendor’s demonstrated competence, knowledge, and qualifications; and, on the reasonableness of the proposed fee for the service (Texas Government Code 2254.027). The Center’s local procurement policy requires a competitive bid or proposal solicitation process for the purchase of goods and services that are expected to exceed $25,000, except for professional services, which should be based on the vendor’s demonstrated competence and qualifications for the type of services to be performed, and fair and reasonable prices.

Condition: Our testing of procurement for ten (10) vendors in the current year, denoted four (4) instances in which the Center considered the vendor to be exempt from competitive bidding since they were procured to provide professional services; and, one (1) instance in which a vendor was paid $111,445 with no indication of competitive procurement.

Additionally, in three (3) instances, documentation was not available to demonstrate that the Center verified that the vendors were not suspended or debarred.

Questioned Costs Possible questioned costs of $1,066,822 and $395,178 in State and Federal funding, respectively.

Effect: Noncompliance with State and Federal requirements.

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Cause: Unknown

Recommendation: We recommend that the Center consider establishing a centralized procurement department with the personnel dedicated with the responsibility of ensuring compliance with local, state, and federal procurement requirements. We further recommend the Center consider increasing its local procurement threshold to alleviate the administrative burden of personnel responsible for ensuring compliance with procurement requirements.

Views of Responsible Officials and Planned Corrective Actions: The Center’s Contracting & Procurement (‘C&P’) Department hired an additional mid-level staff in FY2016; a majority of this staff’s time will be dedicated to procurement activity, including ensuring compliance with local, state, and federal procurement requirements. The C&P Department will work with the Center’s Fiscal Division to identify out-of-contract vendors and vendors whose payments exceed competitive procurement thresholds. Additionally, the C&P Department will implement measures to verify that vendors have not been suspend or debarred and that any procurement exemptions are strictly construed and adhered to bay all Center divisions. Finally, a request to revise the Center’s procurement policy (allowing for, among other things, an increased procurement threshold) has been submitted to the Board of Trustees of consideration by the Office of General Counsel.


Finding No. 2014-001 – Federal and State Programs – Schedule of Expenditures of Federal and State Awards

Program: Various State/Federal

CFDA No: Various State/Federal Criteria: In accordance with OMB Circular A-133 and the State of Texas Single Audit Circular, the Center is responsible for identifying in the Schedule of Expenditures of Federal and State Awards (SEFSA) all awards provided by federal and state agencies in the form of grants, contracts, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, or direct appropriations.

Condition: The initial SEFSA provided by the Center differed significantly from the final version provided due to various modifications made: such as, adding and removing programs; and, reclassifying programs between state and federal awards.

Questioned Costs: None

Effect: Since the SEFSA is an integral part of our compliance audit, receiving significantly different versions caused difficulties in the determination of major federal and state programs and resulted in auditing program(s) unnecessarily and determining the need to audit other programs late in the audit process.

Cause: Unknown.

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2015 Status: Similar difficulties were encountered in the current year (2015); including, the reclassification of a program from federal to state awards, correcting a federal identification number, and the addition of two (2) federal programs not included in the original SEFSA.

Recommendation: As in the prior year, we recommend that the Center carefully review all grant agreements/contracts to ensure they are properly classified and reported as federal and/or state awards in the SEFSA. The proper classification and inclusion of programs in the SEFSA will provide for a more efficient compliance audit and reduce the possibility of being noncompliant with federal and/or state requirements.

Views of responsible officials and planned corrective actions: Center staff and the Texas Council CFO Consortia is working with state officials to determine the appropriate classifications of funding sources between State and Federal funds, as funding from the State is identified vaguely in the general performance contract currently.

Finding No. 2014-002 – Federal and State Programs – Semi-Annual Certifications

Program: Various State/Federal

CFDA No: Various State/Federal

Type of Finding: Noncompliance and Significant Deficiency in Internal Control over Compliance

Criteria: In accordance with OMB Circular A-133 and the State of Texas Single Audit Circular, employees who work solely on a single federal or state award; or, cost objective, are required to support their salaries and wages by preparing periodic certifications that demonstrate the employee worked solely on the respective single federal or state award: or, cost objective, for the period covered by the certification. These certifications should be prepared at least semi-annually and signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee.

Condition: Semi-annual certifications were not prepared for personnel who worked on a single federal or state program; or, cost objective.


Effect: Noncompliance with federal and state requirements.

Cause: Staff responsible for overseeing various programs operated by the Center may not be aware of the periodic certification compliance requirements.

Recommendation: We recommend that staff responsible for overseeing programs operated by the Center receive training on compliance requirements applicable to the respective program(s) to ensure the Center is compliant with all federal and state requirements.

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2015 Status: The prior year (2014) finding and recommendation are repeated.

Views of responsible officials and planned corrective actions: CHCS program directors will coordinate with Fiscal to ensure programs requiring semi-annual certifications are identified and being conducted.

Finding No. 2014-003 – Medicaid Assistance Program

2014 Type of Finding: Significant Deficiency in Internal Control Over Compliance 2015 Type of Finding: Immaterial Instance of Noncompliance with State and Federal Requirements

Program: Medicaid Administrative Claiming (MAC)

CFDA No: 93.778 United State Department of Health and Human Services

2014 Finding

Condition: Our testing of the MAC program indicated that MAC revenues were allocated to the fiscal department, which does not provide health related services to clients; and, therefore, an unallowable cost.

In addition, our testing of the 2014 second quarter Mental Health MAC claim identified inconsistencies in the methodology used by the Center to prepare the claim and HHSC requirements, as follows:

• Depreciation expense for buildings/equipment is included but equipment outlay is not; and, in accordance with HHSC requirements, equipment outlay should be reported and depreciation expense should not be reported.

• State revenue was incorrectly included in the MAC claim as part of federal general administrative revenue, which per the calculation, decreases the computed reimbursement.


2015 Status: MAC revenues for 2015 were properly allocated to only those units that provide health-related services. As a result, this portion of the prior year (2014) finding is considered to be satisfactorily addressed. The remainder of the prior year (2014) finding regarding depreciation expense, capital outlay, and under claiming of MAC revenues is reported in a separate letter to the Center as an immaterial instance of noncompliance with federal and state requirements.

Finding No. 2014-004 – Capital Asset Inventory

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2104 and 2015 Type of Finding: Significant Deficiency in Internal Control (Financial Statement Finding); Significant Deficiency in Internal Control Over Compliance (Federal and State Award Finding)

Program: Various State Programs

CFDA No: Various State

Criteria: It is a federal and state requirement, and sound internal control over financial reporting practice, for a physical inventory of capital assets be taken and the results reconciled with the property records at least once every two years.

Condition: The last physical inventory conducted by the Center occurred in fiscal year 2010.


Effect: Noncompliance with federal and state requirements, and possibility that capital assets recorded in the financial statements could be misstated.

Cause: Unknown.

Recommendation: We recommend that the Center conduct a physical inventory of capital assets at least once every two years and that it be reconciled to the property records to support the amount reported in the financial statements.

2015 Status: The prior year (2014) finding and recommendation are repeated.

Views of responsible officials and planned corrective actions: Center staff is currently reviewing two options to conduct the physical inventory within the next 6-12 months. The first option is to use an external vendor and the second is to hire additional staff and purchase software to conduct the physical inventory as required.

Independent Auditor's Management Letter: No management letter included Corrective Action Plan: See findings above.

4.10 Central Texas MHMR Center dba Center for Life Resources

City: Brownwood County: Brown Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

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4.11 Central Counties Center for MHMR Services

City: Temple County: Bell Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.12 Central Plains Center

City: Plainview County: Hale Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.13 Coastal Plains Community Center

City: Portland County: San Patricio Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.14 Dallas Metrocare Services

City: Dallas County: Dallas Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs:

Item 2015-001: Significant Deficiency Relating to Controls over Major Program Compliance

Major Program:

Supportive Housing Program U.S. Department of Housing and Urban Development (HUD) –

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CFDA 14.235

Criteria: To be eligible to receive assistance under the Supportive Housing Program an individual must be homeless, as defined in 24 Code of Federal Regulations (CFR) section 583.5. The eligibility of those tenants who were admitted to the program should be determined by obtaining (1) signed applications that contained all of the information needed to determine eligibility, income, rent and order of selection; and, (2) when appropriate, third party verifications or documentation of expected income, assets, unusual medical expenses, and any other pertinent information.

Condition: Complete documentation required for determining HUD program eligibility is not always obtained for consumers.


Context: We tested 40 consumer files for the HUD Supportive Housing Program. During this test we found all 40 consumers to be documented as homeless. During this test we found eight consumers without documentation of current financial assessment; 12 consumers without documentation of rent reasonableness in comparison to other units; 13 consumers without documentation of resident rent calculation; One consumer without documentation of disability; 19 consumers without documentation of current IFSP; and 16 consumers without documentation of current inspection/habitability review. In order to determine the eligibility of consumers admitted to the program the Center should obtain all documentation required by the program.

Effect: HUD consumers do not have complete documentation required to determine eligibility.

Cause: The Center does not have procedures in place to assure all documentation required by the HUD Supportive Housing Program is obtained during the intake and eligibility determination process and is properly documented in the consumer file.

Recommendation: The Center should establish procedures that assure all documentation required for program eligibility is obtained for consumers. This information should be utilized to determine eligibility for admission to the program.

Management Response: We have currently established the recommended policies and procedures needed to establish the process for determining eligibility for Supportive Housing pursuant to 24 CFR section 583.5, and to ensure that all required documentation is obtained during the intake and eligibility determination process. Additionally, the policies and procedures will require the use of standardized forms to obtain all documentation required to determine eligibility and require signoff by the Program Manager and Housing Operations Coordinator. Documentation for the Individual Family Service Plan ("IFSP") has been maintained electronically, and going forward, a hard copy of the IFSP will be in all participant's files.

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Targeted Completion Date: All standardized forms and checklists to be completed by February 24, 2016; assigning all Housing Programs to Quality Management department to review the process to ensure objective/internal audit of all programs within the Housing Department by April 1, 2016; Quality Management Staff will audit a random sample of every housing programs files on an ongoing basis; and the Housing Operations Coordinator staff will audit every active housing participant file internally with identified corrections addressed by April 30, 2016.

Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.15 Denton County MHMR

City: Denton County: Denton Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: See Independent Auditor’s Management Letter Independent Auditor's Management Letter:

Current year comments

We have no management letter comments for the current year other than the follow-up on last year’s comment that follows:

Follow-up on prior year comments:

Financial Stability

During 2015, overall fund equity in the general fund increased by $1,182,737. At the end of the year, overall fund balance was $4,316,128 and unassigned fund balance was $4,169,533. These two amounts represent 17.2% and 16.7%, respectively of the 2015 total expenditures in the general fund. These percentages translate into 63 and 61 “days of operation” available in fund balance at the end of the year.

The Department of Aging and Disability Services (DADS) recommends that community centers maintain 60 “days of operation” in fund balance. The Center has been improving fund balance over the past few years and at year-end the Center is now in compliance with the DADS recommendation. We consider this item to be resolved.

Corrective Action Plan: No findings/comments requiring corrective action

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4.16 El Paso Center for Mental Health/Intellectual Disabilities dba Emergence Health Network

City: El Paso County: El Paso Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No management letter included Corrective Action Plan: No findings/comments requiring corrective action

4.17 Gulf Bend Center

City: Victoria County: Victoria Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: Corrective Action Plan: No findings/comments requiring corrective action

4.18 Gulf Coast Center

City: Galveston County: Chambers Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter:

Incorrect Disbursement

In testing disbursements for intellectual and developmental disabilities, we noted that an employee was reimbursed $778.75, instead of $78.75. This error was due to a failure to accurately review approved vouchers. The Center is attempting to recover the overpayment.

Recommendation: We recommend that management review disbursements more closely for accuracy.

Management Response: Management will review disbursements more carefully prior to approval.

Corrective Action Plan: See Independent Auditor’s Management Letter

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4.19 Harris Center for Mental Health and IDD

City: Houston County: Harris Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No management letter included Corrective Action Plan: No findings/comments requiring corrective action

4.20 Heart of Texas Region MHMR

City: Waco County: McLennan Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.21 Helen Farabee Centers

City: Wichita Falls County: Wichita Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action 4.22 Hill County Community MHMR Center dba Hill Country Mental Health and Developmental Disabilities Centers

City: Kerrville County: Kerr Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

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4.23 Lakes Regional Community Center

City: Terrell County: Kaufman Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter:

Current year comments:

Recommended Days of Operation (Repeat from prior year) During 2015, overall fund equity in the general fund increased by $426,230. At the end of the year, overall fund balance was $4,121,990 and unassigned fund balance was $4,021,890. These two amounts represent 12.3% and 11.9%, respectively of the 2015 total expenditures (excluding capital outlay of $1,044,019) in the general fund. These percentages translate into 44 and 43 “days of operation” available in fund balance at the end of the year.

The Department of Aging and Disability Services (DADS) recommends that community centers maintain 60 “days of operation” in fund balance. In addition, fund balance will be an important tool for community centers as they begin to operate in more of a managed care environment and experience the swings in cash flows that occur as a result of 1115 waiver programs.

We recommend that the Center budget and plan to achieve surpluses in order to build fund balance and comply with the DADS recommendation of 60 days of operation.


4.24 MHMR Authority of Brazos Valley

City: Bryan County: Brazos Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter:

Follow-up on prior year recommendations

Our prior year advisory comment to management included the recommendation to implement an additional review over payroll allocations. We reviewed the status of this commend during our audit engagement for the year ending August 31, 2015 and are satisfied that our recommendation has been implemented.

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4.25 MHMR of Nueces County dba Behavioral Health Center of Nueces County

City: Corpus Christi County: Nueces Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.26 MHMR Services for the Concho Valley

City: San Angelo County: Tom Green Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter:

Reconciliation of Medicaid Accounts Receivable and Journals

In testing accounts receivable for Medicaid, there were unexplained variances between the accounts receivable journal, the revenue journal and the cash receipts journal. This is due to previous years’ reconciliations that had not been performed and were still unresolved. This is a recurring comment.

Recommendation: We recommend that management review the cash receipts journal, revenue journal and accounts receivable journals to ensure that all relevant transactions have been posted, and that the information reconciles to the general ledger.

Management Response: Management will review and update its journals to ensure that records are accurate and reliable.

Payroll Approval and Allocations

A test of payroll revealed one IDD employee whose cost center on the pay register was 5100 (MR Service Coordination) but whose approved cost center was 4400 (MRLA). His salary was properly coded to 4400.

Recommendation: We recommend that the Center update all primary cost centers in the payroll software to reflect the most recently approved primary cost center.

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Management Response: Management will update cost centers in its software to match approved primary cost centers.

Recording Expenses in the Correct Period

In testing disbursements, it was noted that two disbursements recorded as FY 2015 expenditures were for services that were provided in August of 2014.

Recommendation: We recommend closer review by management of expenditures and how they are recorded to ensure recording in the proper period.

Management Response: Management will review expenditures and their recording more carefully to avoid future errors.

Corrective Action Plan: See Independent Auditor's Management Letter above 4.27 MHMR Services of Texoma dba Texoma Community Center

City: Denison County: Grayson Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Corrective Action Plan: No findings/comments requiring corrective action

4.28 MHMR of Tarrant County

City: Fort Worth County: Tarrant Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No management letter included Corrective Action Plan: No findings/comments requiring corrective action

4.29 Pecan Valley Centers for Behavioral and Developmental Healthcare

City: Granbury County: Hood Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None

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Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.30 Permian Basin Community Centers for MHMR

City: Midland County: Midland Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.31 Sabine Valley Regional MHMR Center dba Community Healthcore

City: Longview County: Gregg Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No management letter included Corrective Action Plan: No findings/comments requiring corrective action

4.32 Spindletop Center

City: Beaumont County: Jefferson Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs:

Finding 2015-001

State Program: General Revenue Mental Health Adult

Type of Finding: Control Deficiency and Noncompliance

Compliance Requirement: Allowable Costs

Criteria or Specific Requirement: Allowable costs are recorded in the correct period.

Condition and Context: Of the 25 disbursements selected for testing for the Mental Health Adult, one invoice was a duplicate payment from an invoice in the prior year. The amount was $1,800 and was recorded twice. Once found a refund check was requested and the cost

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was removed from the grant. Regarding controls at the entity over disbursements we expanded our sample size to 60 disbursements and believe the control deficiency is isolated.


Cause: The invoice was approved twice.

Effect: A cost for duplicate payment was charged to the grant.

Recommendations: The Center should consider implementing a duplicate invoice system prevention control to help mitigate the risk of duplicate payments occurring in the future.

Views of Responsible Officials and Planned Corrective Action: All funds in question were immediately corrected upon identification.

Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No management letter included Corrective Action Plan: No findings/comments requiring corrective action

4.33 Starcare Specialty Health System dba Lubbock Regional MHMR Center

City: Lubbock County: Lubbock Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

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4.34 Texana Center

City: Rosenberg County: Fort Bend Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.35 Texas Panhandle Centers Behavioral and Developmental Health

City: Amarillo County: Potter Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.36 Tri-County Behavioral Healthcare

City: Conroe County: Montgomery Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter:

Current year comments

Allowance for Doubtful Accounts During our review of accounts receivable and the related allowance for doubtful accounts, we noted that the allowance for doubtful accounts has remained at $60,000 for the past three years. Over the last three years the account receivable balances have been increasing. We recommend that the Center establish a process for evaluating the adequacy of the allowance for bad debts based on historical collection percentages by payment source. The allowance for doubtful accounts should be adjusted periodically based on this analysis.

Construction Accounting During our review of the construction project for the Panther Lane facility, we noted that there was some degree of disconnect between the supporting information used to pay costs associated with the project and the actual accounting for the construction cost. As a result, it took, considerable effort on the part of Center staff to provide the audit information necessary to

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review this construction activity. Since we are aware that the Center will likely have a significant new construction project in 2016, we recommend that the process of accounting for and documenting construction costs be reviewed and improved.

Capitalization Threshold Based on discussions with Center staff members, the administrative burden associated with capital asset accounting could be improved by raising the capitalization threshold to $5,000. Many community centers we audit have gone to this higher threshold. One way this can be accomplished without losing any control over smaller, less expensive items is to maintain a list of items under the threshold that is reviewed, inventoried and updated periodically. This list would be kept separately from the capital asset depreciation schedule maintained for general ledger accounting purposes. Accordingly, changes in these assets would no longer require entries on the Center’s books, which in turn would reduce the cost associated with recording capital asset activity.

Follow-up on prior year comments:

Custodial Credit Risk – Bank Deposits At August 31, 2015, Center bank deposits in the amount of $1,457 were not covered by federal deposit insurance or by a collateral pledge agreement which is clearly not material in amount. On the other hand, at August 31, 2014, Center bank deposits in the amount of $14,322 were not covered by federal deposit insurance or by a collateral pledge agreement. The Center has continued to decrease the amount that is not insured or collateralized over the last two years. We encourage the Center to continue this process until all deposits are insured and/or collateralized.


4.37 Tropical Texas Behavioral Health

City: Edinburg County: Hidalgo Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

4.38 West Texas Centers

City: Big Spring County: Howard Type of Report on Financial Statement: Unqualified Type of Report on Compliance: Unqualified Schedule of Findings and Questioned Costs: None Follow-up on Prior Year Findings: None Independent Auditor's Management Letter: No findings/comments Corrective Action Plan: No findings/comments requiring corrective action

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5. Conclusion

This report summarizes the independent auditor’s findings of 38 LMHAs and their responses.

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List of Acronyms

Acronym Full Name C&P Contracting & Procurement

CAN Community Action Network

DADS Department of Aging and Disability Services

dba Doing Business As

DSHS Department of State Health Services

G&A General and Administrative

GASB Governmental Accounting Standards Board

HCC Health Community Collaboratives

HUB Historically Underutilized Business

HUD U.S. Department of Housing and Urban Development

ICC Integrated Care Collaborative

IDD Intellectual and Developmental Disabilities

IFSP Individual Family Service Plan

IG Office of Inspector General

LMHA Local Mental Health Authority

MAC Medicaid Administrative Claiming

SEFSA Schedule of Expenditures of Federal and State Awards

TEC Texas Employment Commissioner

summary of significant audit findings for mental health ... · management letter, ... reconciled...

Documents