After reviewing the $26.2 billion in federal fund Colorado spent in the 2021 fiscal year, state auditors have uncovered 81 compliance issues and roughly $364,000 in total “questioned costs.” 

The majority of issues arose out of deficiencies in internal controls, which the Colorado Office of the State Auditor regards as the “least serious level of internal control weakness.”

Auditors conducted the review to assess Colorado agencies’ compliance in major federal programs, as well as evaluate progress in implementing prior audit recommendations. Overall, the largest expenditures went to unemployment insurance, Medicaid, food stamps, and student aid, according to state auditors. 

Notably, state auditors found the following:

• Department of Labor and Employment did not fully implement a previous recommendation that arose of “significant problems” in the agency’s compliance with federal unemployment insurance program requirements.
• Department of Health Care Policy and Financing did not have sufficient internal controls to prevent or detect a potential fraud – instances of Social Security numbers tied to more than one state ID. That, auditors said, resulted in $67,235 in “known questioned costs.”
• Department of Human Services did not report sub-awards totaling $5.77 million in a federal reporting system for three grant programs auditors looked at. The agency also overstated $63.5 million in COVID-19 Pandemic EBT program spending because of miscommunication, it also misreported $8.7 million in Child Care and Development Block Grant program.
• Department of Local Affairs lacked sufficient internal controls over costs charged to newly-received federal funds, including funds through the Property Owners Preservation Program. Auditors said the agency could not provide support for four of 60 transactions charged to the program, resulting in $5,407 in “questioned costs.” The agency also could not provide support for some tenant files reviewed. 

Notably, auditors said they found roughly 100 Social Security numbers that appeared to be inappropriately associated with about 200 state IDs. These IDs represented about $67,000 in Medicaid claims the state paid from December 2020 through June 2021. 

“This could indicate that the department determined eligibility without a beneficiary furnishing the correct SSN and, as a result, made claims payments on behalf of ineligible beneficiaries or the SSNs could be valid, but with more than one state ID, a provider could submit and have a claim paid for the same services under both State IDs,” the audit report said. 

Auditors said more than half of the Social Security numbers been corrected, but the department said the rest had yet to be fixed because reconciling the numbers with the IDs is time consuming. 

Agencies flagged by state auditors largely agreed with the latter’s recommendations. However, the Department of Health Care Policy and Financing pushed back at the suggestion that it should research payments identified during the audit to determine if they were properly made.

The agency told auditors such their recommendation is “administratively impractical and not an efficient use of limited state resources.”

Instead, the agency said, it would continue with its “existing proactive approach.”

“The department will continue the existing process to address duplicate SSNs, which is working since 58% of the SSNs had already been corrected through the existing process during the audit work,” the department said. 

The agency also disagreed with the “questioned costs” that auditors identified, arguing the latter’s testing “failed to determine which member case was incorrect.”

Finally, the health department said it cannot recover state payments made to providers since the issue is not related to services provided.

“When a provider checks a member’s eligibility on the day of service and finds the member eligible through the Department’s system, that provider is guaranteed payment if they render an authorized service,” the agency said.