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December 9, 2009

DiNapoli's Office Completes State Audits

New York State Comptroller Thomas P. DiNapoli announced today the following audits have been issued:

Higher Education Services Corporation: Tuition Assistance Program: ASA Institute of Business and Computer Technology
During the 2004-2005 through 2006-2007 academic years, ASA Institute of Business and Computer Technology certified more than $38 million in Tuition Assistance Program awards. Auditors disallowed $641,768 of these awards as well as $7,241 for awards that related to other academic years. The total $649,009 was disallowed because students were incorrectly certified as eligible for the awards. For example, several students received awards even though they did not meet matriculation requirements.

Department of Civil Service: New York State Health Insurance Program: Payments Made to Albany Medical Center Hospital Under the Empire Plan
In the New York State Health Insurance Program, the Department of Civil Service administers health insurance programs for active and retired State, local government and school district employees and their dependents. The primary such program is the Empire Plan, which provides services costing more than $5 billion a year. The Department contracts with an insurer (Empire BlueCross BlueShield) to administer the hospitalization portion of the Empire Plan. Between January 1, 2004 and June 30, 2008, one of the participating hospitals, Albany Medical Center Hospital (Albany Med), was paid a total of $112.9 million for health care services provided to Empire Plan members. Auditors reviewed a sample of these payments and found that the payments were generally appropriate. However, auditors identified errors which resulted in a net overpayment of $58,029 to Albany Med (overpayments of $88,563 less underpayments of $30,534). Auditors recommended that the net overpayment be recovered and controls be strengthened to prevent such overpayments in the future.

Empire State Development Corporation: Funding Commitments for Economic Development Projects
The Empire State Development Corporation (ESDC) is a public benefit corporation responsible for managing economic development projects for New York State. It offers grants and loans to businesses, not-for-profit organizations and government entities for projects that create or retain jobs and otherwise promote economic development. As of November 3, 2008, ESDC’s records indicated that its actual and prospective funding commitments on such projects totaled $2.4 billion, of which $570 million had already been expended. Information about ESDC’s funding commitments is maintained on its project tracking system. Auditors tested the accuracy of this information and found that, for most part, it was accurate and reliable for decision-making purposes. However, certain improvements were needed in the accuracy of some of the information. In particular, several projects classified as active were not, and as a result, $2.4 million in State funding was sitting idle waiting for the projects to be completed. Auditors recommend that the funding be returned to the State and steps be taken to improve the reliability of ESDC’s project tracking system.

State Education Department: Higher Education Opportunity Program (Follow-Up Report)
The State Education Department administers the Higher Education Opportunity Program (HEOP), which provides tutoring, counseling, tuition-support and financial assistance to economically and academically disadvantaged students attending private colleges and universities in New York State. Previously, auditors examined the use of HEOP funds at four selected schools that accounted for about a quarter of all program expenditures during the two years covered by our audit. They found the schools appeared to be using HEOP funds solely for their prescribed purposes. Auditors also verified the accuracy of the HEOP student enrollments and verified that a random sample of the schools’ HEOP students met all eligibility requirements. However, auditors noted that certain improvements were needed in program administration. When auditors followed up on these matters with officials at the State Education Department, they found that the audit recommendations generally had not been implemented.

Oversight of the Spinal Cord Injury Research Trust Fund (Follow-Up Report)
The Spinal Cord Injury Research Trust Fund was created to provide scientists, physicians, and other experts with grants for use in finding a cure for spinal cord injuries. The Trust Fund is financed by a surcharge on drivers who receive traffic tickets. Grants are awarded by a special State Board within the Department of Health (DOH) that was created to oversee the Trust Fund. Auditors previously determined that the grant recipients had submitted only 44 percent of their progress reports, 60 percent of their final reports, and none of their statistical/qualitative reports or seminar documentation that was required under the grants to demonstrate their performance. Auditors also found some of the available funding was not being used because of delays in the grant award process and recommended improvements to be made in the Board’s oversight of the grants. When auditors followed up on these matters with DOH officials, they found that significant progress had been made in the implementation of our audit recommendations.

State University of New York: Fashion Institute of Technology: Selected Financial Management Practices (Follow-Up Report)
Auditors previously examined the adequacy of the internal controls over the major areas of financial operations at Fashion Institute of Technology (FIT). Auditors found that there were significant weaknesses in the controls over equipment, purchases were not always made in a manner that allowed for adequate competition, the time and attendance practices of part-time employees were not adequately monitored, and a formal disaster recovery plan had not been developed to ensure the continuity of key business functions. When auditors followed up on these matters with FIT officials, they found that FIT had made significant progress in implementing our audit recommendations.

Division of Parole: Network Security Controls (Follow-Up Report)
The Division of Parole prepares inmates for release from prison and supervises individuals on parole while they are in the community. The Division has created a computer network that helps it perform its duties. Auditors previously examined selected aspects of the security controls in place over this network and found that certain improvements were needed in these controls. When auditors followed up on these matters with Division officials, they found that some progress had been made in the implementation of our audit recommendations, but additional actions were still needed. Due to the sensitivity of the information, our detailed audit findings and recommendations were not included in either our original audit report or our follow-up report.

Department of Health: Duplicate Medicaid Payments for Outpatient Services (Follow-Up Report)
Medicaid claims are processed and paid by an automated system (eMedNY). The system has various automated controls that are intended to identify, and prevent the payment of, duplicate or otherwise inappropriate claims. Previously, auditors determined that the controls could not detect certain types of duplicate claims from certain types of medical providers. Auditors determined that as much as $8.8 million in duplicate payments were made to 718 of these providers over a five-year period. Auditors recommended these potential overpayments be investigated, all overpayments recovered, and controls developed for detecting and preventing such overpayments. When auditors followed up on these matters with Department of Health officials, they found that some progress was made in addressing the problems, but additional action was needed.

State Government Accountability
The Office of the State Comptroller regularly audits state agencies, public authorities and New York City agencies. Auditors ensure that programs achieve their established goals, funds are used efficiently and assets are adequately protected against fraud, waste and abuse. DiNapoli’s office completes approximately 200 state audits and annually identifies hundreds of millions in savings and fraud each year.

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