State of Idaho Legislative Services Office Management Report A communication to the Joint Finance-Appropriations Committee IDAHO DIVISION OF VOCATIONAL REHABILITATION FY 2009, 2010, 2011, 2012, AND 2013 Report MR52313 Date Issued: March 18, 2015 Serving Idaho's Citizen Legislature
Idaho Legislative Services Office Legislative Audits Division April Renfro, Manager IDAHO DIVISION OF VOCATIONAL REHABILITATION SUMMARY PURPOSE OF MANAGEMENT REVIEW We conducted a management review of the Idaho Division of Vocational Rehabilitation (Division) covering the fiscal years ended June 30, 2009, 2010, 2011, 2012, and 2013. Our review covered general administrative procedures and accounting controls to determine that activities are properly recorded and reported. The intent of this review was not to express an opinion but to provide general assurance on internal controls and to raise the awareness of management and others of any conditions and control weaknesses that may exist and offer recommendations for improvement. CONCLUSION We identified significant conditions or weaknesses in the general administrative and accounting controls of the Division, as described in the findings and recommendations section. FINDINGS AND RECOMMENDATIONS There are three findings and recommendations in this report. Finding 1 Division procedures are not designed or executed to ensure travel expenditures are appropriate and in compliance with Division and State policies. Finding 2 Equipment records in the Client Inventory Tracking System do not contain a link to the Gemini Case Management System which contains evidence of client eligibility, support for equipment purchases, and client agreements. Finding 3 Performance of the Division s policies and procedures related to equipment purchases for clients was not documented. The complete findings are detailed on pages 1 through 5 of this report. PRIOR FINDINGS AND RECOMMENDATIONS There were no findings and recommendations in the prior report. A copy of the prior report is available at http://www.legislature.idaho.gov/audit/auditsummaries.htm or by calling 208-334-4832.
AGENCY RESPONSE The Division has reviewed the report and is in general agreement with the contents. FINANCIAL INFORMATION The following financial data is for informational purposes only. IDAHO DIVISION OF VOCATIONAL REHABILITATION - FISCAL YEAR 2013 Fund Title Beginning Cash/ Appropriations Receipts/ Transfers In Disbursements/ Transfers Out Ending Cash/ Appropriations 0001 General Fund* $ 7,303,000 $ 7,280,800 $ 22,200 0288 Vocational Rehabilitation 1 $ 636,311 604,023 32,289 0346 American Reinvestment Fund 944 9,737 10,681 0348 Federal Fund 1,236,298 13,136,861 13,598,687 774,472 0349 Miscellaneous Revenue Fund 2,565 610,128 612,263 430 TOTAL $ 8,542,808 $ 14,393,037 $ 22,095,773 $ 840,072 * The General Fund had an encumbrance of $17,164 at fiscal year end. The remaining $5,036 was reverted to the State General Fund. OTHER INFORMATION We discussed other issues which, if addressed, would improve internal control, compliance, and efficiency. This report is intended solely for the information and use of the State of Idaho and the Idaho Division of Vocational Rehabilitation and is not intended to be used by anyone other than these specified parties. A copy of this report is available at http://www.legislature.idaho.gov/audit/auditsummaries.htm or by calling 208-334-4832. We appreciate the cooperation and assistance given to us by the Acting Administrator, Jane Donnellan, and her staff. ASSIGNED STAFF Patrick Aggers, CPA, CFE, Managing Auditor Aimee Hayes, CPA, Managing Auditor Suzie Scrivner, In-Charge Auditor Kellie Bergey, Staff Auditor
TABLE OF CONTENTS Findings and Recommendations...1 Agency Response...6 Appendix...8 Organizational Chart...11
FINDINGS AND RECOMMENDATIONS FINDING 1 Division procedures are not designed or executed to ensure travel expenditures are appropriate and in compliance with Division and State policies. Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment and control activities. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions. It provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. State travel policies and procedures require agencies to keep a complete record of all employee travel by maintaining a copy of the travel expense voucher. Travel should be properly authorized and vouchers should document the purpose, dates and beginning and ending hours for each trip. All necessary receipts and explanations should be attached to the travel expense voucher. Each agency is responsible to ensure all expense vouchers are complete, mathematically correct and accurate. Additionally, State fiscal policies indicate that all P-Card purchases related to travel are to be accounted for on a travel voucher. Individuals approving P-Card purchases are responsible for reviewing transactions and ensuring they are properly supported by receipts and/or invoices. In accordance with IRS regulations and guidelines for fringe benefits, employee meal reimbursements are taxable to the employee unless they travel and stay overnight. State moving policies and procedures indicate that an Employee Moving Service Agreement, outlining the terms and conditions associated with the moving expense reimbursement, should be agreed upon between the new employee and the agency director, prior to the new employee incurring any moving expenses. The policy further states that meal per diem is allowed to be reimbursed for the employee and each dependent during a reasonable transit period for a move, plus five days. Condition: We discussed the Division s procedures for processing travel related expenditures with staff. Testing of fiscal year 2012 and 2013 travel expenditures and the related travel vouchers identified exceptions on 8 out of the 30 selected. Our exceptions included: Four travel vouchers were not properly completed. One voucher had boarding passes attached, but no airfare included on the voucher and incorrect meal per diem and mileage rates were used. Three vouchers did not include departure and arrival times necessary to determine whether per diem was properly calculated. One out-of-state travel authorization form was not signed by the administrator and one travel voucher was processed without the supervisor s signature. 1
Four travel vouchers included meal per diem reimbursements that were incorrectly coded as nontaxable. We reviewed the documentation and support for moving expenses reimbursed to the former Administrator. The signed Employee Moving Service Agreement indicated that the Administrator was to be relocated from Washington to Idaho; however, the Administrator was reimbursed for additional expenses totaling $1,832 to relocate items from a second home in California to Idaho. In addition, the spreadsheet documenting the reimbursement contained errors in the calculation of the meal per diem. The move from Washington to Idaho took one day, and the Administrator requested meal reimbursement for an additional two days after arriving. The meal reimbursement should have been $360 (three days at a rate of $30 per day for four people). The Administrator received meal reimbursement of $1,024 for eight days. Cause: The Division s internal control procedures over travel related expenditures are not adequately designed or implemented to prevent or detect errors and noncompliance with State and Division policies. Effect: We were unable to verify whether $1,049 in travel expenditures and $2,496 in moving expense reimbursements were authorized, valid, and/or in compliance with Division and State policies. Additionally, $121 in meal per diem reimbursements should have been coded as a taxable fringe benefit to employees. Recommendation: We recommend that the Division properly execute controls designed to ensure travel-related expenditures are approved, documented, and calculated in accordance with Division and State policies. We also recommend policies and procedures be developed to ensure travel-related P-Card purchases are included with or linked to the related travel voucher. FINDING 2 Equipment records in the Client Inventory Tracking System do not contain a link to the Gemini Case Management System that contains evidence of client eligibility, support for equipment purchases and client agreements. Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment and control activities. Risk assessment is the identification and analysis of various risks entities face because of changing economic, industry, regulatory, and operating conditions. It provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. Equipment purchased by the Division to assist eligible disabled clients in preparing for, securing, retaining, or regaining employment is managed using the Client Inventory Tracking System. 2
Equipment records are linked to a client case in the Gemini Case Management System (Gemini) using the case ID or participant ID. Documentation supporting the authorization of services, approval of payments associated with those services, bids obtained, and client tool agreements are scanned and attached to the client case in Gemini. Condition: We were unable to access the supporting documentation from Gemini for 9 of the 41 equipment records selected for testing. Two items were classified as being assigned to a client and seven were designated as available; however, there was no current or previous case ID available to identify the case in Gemini. Upon further review of the 611 equipment records in the Client Inventory Tracking System, we noticed that 121 (20%) indicated they were assigned or transferred to a client but had no case ID assigned to them which is necessary to locate the support for the equipment purchase. Cause: There is no review performed by Division staff to ensure the equipment records are properly updated and accurate. When equipment is reacquired by the Division, the equipment record should be updated to reflect its availability and the case ID should be removed or changed. In some instances, the equipment was reacquired and the case ID was removed, but the availability was not updated. In other instances the equipment was assigned or reassigned but a case ID was not entered. Additionally, the Client Inventory Tracking System does not retain a history of the case IDs the equipment has previously been assigned. Once the case ID is removed there is no way to identify which client case file contains the supporting documentation. Effect: When the case ID in the Client Inventory Tracking System is deleted or changed, the link necessary to access the documentation in Gemini is no longer available. As a result, we were unable to obtain documentation to support the purchase of the equipment or the management and accuracy of the equipment records. Recommendation: We recommend that the Division implement procedures to monitor the Client Inventory Tracking System to ensure equipment records assigned to a client include a case ID. We also recommend the Division retain a history of the case IDs that equipment records have previously been linked to, in order to provide access to supporting documentation maintained in Gemini. FINDING 3 Performance of the Division s policies and procedures related to equipment purchases for clients was not documented. Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a basis for organizations to design internal control procedures to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Components of this framework include risk assessment and control activities. Risk assessment is the identification and analysis of various risks entities face because of changing economic, 3
industry, regulatory, and operating conditions. It provides a basis to develop appropriate responses to manage those risks. Control activities are policies and procedures that help ensure management directives are carried out and risks are mitigated. Verifications, approvals, reconciliations, authorizations, and segregation of duties are all control activities that support this objective. The Division s Field Services Policy Manual outlines the policies and procedures for the purchase and management of client equipment, including: Obtaining an authorization of services and the approval of payments for those services by separate individuals prior to assigning or purchasing equipment. Obtaining three bids on durable equipment costing more than $300, if enough vendors are available. Items for disability related assistive technology, such as prosthetics, are exempt from the bidding requirement. Obtaining a signed Tool Agreement from clients for durable equipment or reusable supplies having a value greater than $150. If the equipment title is transferred or repossessed, the Tool Agreement is updated and signed by the Regional Manager. Documentation supporting the authorization of services, approval of payments associated with those services, bids obtained, and client tool agreements are scanned and attached to the client case in the Gemini Case Management System (Gemini). Equipment purchased by the Division to assist eligible disabled clients in preparing for, securing, retaining or regaining employment is managed using the Client Inventory Tracking System. Counselors use the system to search for existing equipment that is available to meet client employment goals or whether equipment needs to be purchased. Condition: We tested a sample of 41 equipment records from the Client Inventory Tracking System and identified several exceptions and inconsistencies: Eight equipment records did not include documentation of three bids or reasons for not obtaining bids; three of these did include documentation that at least two bids were solicited. Eight equipment records did not have a signed Tool Agreement or did not reflect the classification indicated on the signed agreement. One equipment record was linked to a closed case and appeared to be unrelated to the employment goal. Documentation necessary to verify the separate authorization of services and the approval of payment for the equipment was not available in Gemini. Scanning the equipment listing, we also noted that 81 equipment records have a type code of unassigned or other. These classifications are not descriptive enough to provide counselors with a view of all the equipment available for clients. We also noted that several items should be included under one of the more specific type codes already established or had enough items to be included using their own type code. 4
Cause: There is no review performed by Division staff to ensure the equipment records are properly updated and accurate, that policies and procedures are consistently followed, or that supporting documentation is properly attached in Gemini. The equipment type code is a required field in the Client Inventory Tracking System. When a new equipment record is created, this field defaults to "Unassigned and does not get changed. Equipment is also entered using the Other type code rather than a more specific or more appropriate type code. In addition, no analysis is performed to determine if there are enough items to create a separate equipment type code. Counselors have access to make changes to the inventory system; however, no one is assigned to monitor it. Effect: Equipment records did not agree to supporting documents or contain documentation to demonstrate that policies and procedures were adhered. In addition, unnecessary purchases may be made for equipment that is not included in a search of the Client Inventory Tracking System due to a non-descriptive type code or miscoding. Recommendation: We recommend that the Division implement policies and procedures to ensure that the information entered into the Client Inventory Tracking System is accurate and complete and that necessary documentation is included in Gemini. We also recommend periodic review and maintenance of the inventory system to ensure equipment records are being properly and adequately classified in order to display an accurate list of available equipment. 5
AGENCY RESPONSE 6
7
APPENDIX HISTORY The first concept of total rehabilitation began in the early twentieth century.the realization that care and education were not enough, and that society must prepare the disabled to become selfsupporting, resulted in the establishment of the State-Federal Vocational Rehabilitation Program on June 2, 1920. This initial program (jointly financed and developed by federal and state governments) provided services for persons with disabilities. These services consisted of special assistance in job training and placement, counseling and guidance, and prosthetic appliances. In 1943, an act was passed that expanded the scope of services provided under the 1920 act, and for the first time authorized the provision of medical services, services to individuals who suffered from psychiatric illnesses, and vocational rehabilitation of the blind. In 1954, the basic provisions of services to people with disabilities were continued and the program was broadened by authorizing a series of changes in professional, fiscal, and technical areas. Some of the provisions included full federal participation in all phases of the program, state agency expansion for better rehabilitation methods, training for more professional personnel, and construction enlargement or alteration of rehabilitation centers. The Idaho Division of Vocational Rehabilitation has grown in line with the federal program. In 1920, Idaho accepted the Federal Vocational Rehabilitation Program. At that time, it was placed under the State Board for Vocational Education. Currently, the Division is organized under the State Board of Education. STATUTORY AUTHORITY Since 1920, Idaho has administered vocational rehabilitation services under the provisions and benefits of the federal act. Acceptance of this act is contained in Idaho Code, Sections 33-2301 through 33-2306, which state, in part: The state of Idaho hereby renews its acceptance of the provisions and benefits of the act of Congress, entitled "An act to provide for the promotion of vocational rehabilitation of persons with disabilities, other than those who are legally blind, and their return to employment," and further accepts "The Rehabilitation Act of 1973," P.L. 93-112, 93rd Congress, and "The Rehabilitation Act Amendments of 1998," P.L. 105-220, 105th Congress, and will observe and comply with all requirements of such acts. ORGANIZATION The Idaho State Board of Education is designated as the agency to administer, supervise, and control the State Vocational Rehabilitation Plan. The Board has authority to appoint such assistants as may be necessary to administer vocational rehabilitation in Idaho. 8
The administrator of the Division reports directly to the executive director of the Office of the State Board of Education. The administrator devotes full time and efforts to Division programs, and has primary responsibility for the direction and administration of the vocational rehabilitation programs. The Division employs additional administrative and professional staff, including rehabilitation counselors. The Division has eight regional offices throughout the state. Regional offices are located in Boise, Caldwell, Treasure Valley Special programs, Coeur d'alene, Idaho Falls, Lewiston, Pocatello, and Twin Falls. Sub-offices are located in Blackfoot, Burley, Moscow, Nampa, Meridian, Orofino, Payette, Preston, Rexburg, Salmon, and Sandpoint. Under cooperative agreements with the Idaho Department of Corrections; the Idaho Department of Juvenile Corrections; the Department of Health and Welfare, Division of Behavioral Health, Adult Mental Health; and numerous school districts throughout the state, additional offices are located where needed. FUNDING The Division receives its funding from the State General Fund, federal funds, and miscellaneous receipts. It administers two programs that are entirely State funded, plus four federal programs. Work Services Community Supported Employment This program was transferred from the State Department of Health and Welfare on July 1, 2004. The program provides remunerative work and support for adults with developmental disabilities, mental illness, traumatic brain injury, and/or significant learning disabilities who lack the skills and experience to obtain and maintain employment in the competitive job market and require long term support assistance. This program comprises Work Services and Community Supported Employment. Council for the Deaf and Hard of Hearing (CDHH) CDHH is an independent agency. This is a flow-through council for budgetary and administrative support purposes only with no direct programmatic implication for the Division. CDHH is dedicated to making Idaho a place where persons, of all ages, who are deaf or hard of hearing, have an equal opportunity to participate fully as active, productive and independent citizens. Basic Support Program This is the Division's largest program. Its purpose is to assist individuals whose disability is a barrier to their current employment, or assist them in finding employment in their current field or in a new, more compatible field. The Division accomplishes this through counseling, medical restoration, training, and job placement. This grant requires a 21.3% State match. In-Service Training This program requires a 10% State match and pays for staff training. Community Based Supported Employment This grant is 100% federally funded and is designed to mainstream the individuals who are most severely disabled, including those working in sheltered employment situations. 9
State Independent Living This grant funds the Statewide Independent Living Council (SILC), appointed by the Governor. The SILC jointly develops, in conjunction with the Idaho Division of Vocational Rehabilitation and the Idaho Commission for the Blind and the Visually Impaired, a statewide independent living plan. It monitors, reviews, and evaluates the implementation of the plan; holds public meetings; coordinates activities with the Vocational Rehabilitation Advisory Council; and submits reports to the Commissioner of Rehabilitation Services. The SILC is also responsible for supporting centers for independent living, conducting studies and analyses, developing model policies and other activities to improve independent living services, and supporting activities to improve current disability service systems. This grant requires a 10% State match. As of July 1, 2004, the SILC was separated from the Division of Vocational Rehabilitation; however, the Division continues to administer the grant. 10
ORGANIZATIONAL CHART 11