State of Ohio’s audit flags more than $1.3M in questionable costs at eight state agencies

CINCINNATI (WXIX) – The state of Ohio’s annual audit flagged 25 findings among eight state agencies that administered federally funded programs from June 2020 to June 2021. according to a formal review of spending released Thursday by Auditor of State Keith Faber.

Of these 25 findings, four included questioned costs of more than $1.3 million, with two additional findings including questioned costs for which amounts could not be determined.

Overall, however, the total number of findings in the “State of Ohio Single Audit” for the fiscal year that ended June 30, 2021, was the lowest it’s been in five years.

“The Single Audit provides a unique opportunity to review the state’s federally funded programs and identify areas of weakness, as we did last year with the deficiencies in the security of our unemployment system,” Faber said in a news release.

“Billions of federal dollars flow through our state for the betterment of Ohioans, and this report demonstrates that accountability and transparency steps have been taken to restore confidence in our state systems.”

The state administered 375 federal programs from 25 federal agencies last year with total spending of $53.9 billion.

The total included $19 billion in additional allocations in response to the coronavirus pandemic, including $12.9 billion in additional coronavirus unemployment assistance, an increase of 35% from FY2020 and 90% from pre-pandemic FY2019.

Funding from the U.S. Department of Health and Human Services topped the state agency expenditure list, reaching about $26 billion, nearly $22.8 billion of which went to Ohio’s Medicaid programs, providing medical care and services for lower-income residents, older adults, individuals with disabilities, pregnant women, infants and children, and others.

Another $15.4 billion came from the U.S. Department of Labor, mostly for unemployment compensation programs. About $5.2 billion came from the U.S. Department of Agriculture, primarily for assistance related to food and nutrition programs.

In addition to 25 federal findings at eight agencies, auditors also identified a finding for recovery of $11,603 against a retired state employee who was overpaid and a material weakness in internal control at the financial statement level related to issues in the Ohio Department of Job and Family Services’ unemployment compensation system, which was targeted by criminals during the influx of pandemic-related claims.

“The combination of high claim volume, lack of effective internal controls, and the increase in imposter fraud negatively impacted the Department’s ability to keep up, creating a backlog of claims pending adjudication.,” the audit states.

“The Department reported to the U.S. Department of Labor Unemployment Compensation overpayments totaling $3.75 billion as of June 30, 2021. Of these total overpayments, $474.6 million was identified as fraud and $3.27 billion as non-fraud relating to regular unemployment as well as federal pandemic unemployment benefits.”

The issues were spotlighted in a report Faber released last fall.

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The latest audit includes qualified opinions on Business-Type Activities and the Unemployment Compensation Fund “because the state, or the service organization it contracted with to process federal pandemic unemployment benefits and claims, did not provide us with sufficient information regarding the proper operation of internal controls related to eligibility for recipient benefits and claims processing during the audit period. We were, therefore, unable to obtain sufficient appropriate audit evidence about the proper processing of federal pandemic unemployment benefits and claims expenses.”

The audit outlines steps taken by state officials and the Ohio Department of Job and Family Services to prevent further fraud, including strengthened verification for residents seeking unemployment compensation payments.

Read the entire 517-page audit here:

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