Maricopa County June 30, 2005 Report Highlights-Financial Audit

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Maricopa CountyLack of Effective Controls overREPORTHIGHLIGHTS County Healthcare ProgramsFINANCIAL STATEMENT AUDIT Resulted in Audit Opinion Disclaimersand a CAFR Issuance DelaySubjectMaricopa County issuesa Comprehensive Maricopa County, through the Maricopa did not require these organizations toAnnual Financial Report Managed Care Systems (MMCS), have effective systems of internal(CAFR). The County is administered the following programs: controls in place to ensure that paidresponsible for preparing claims were accurate and complete.financial statements, • Arizona Health Care Cost Containment • For one of MMCS’ largest contractorsmaintaining strong System (AHCCCS)—Acute Health used for processing acute careinternal controls, and Care program reported in the Maricopa claims, MMCS did not take thedemonstratingHealth Plan Fund. necessary steps to ensure that thisaccountability for its use• AHCCCS—Arizona Long-Term Care contractor’s claims processing systemof public monies. As theSystem (ALTCS) program reported in was properly designed and fully testedauditors, our job is tothe ALTCS Fund. prior to processing medical claims fordetermine whether theCounty has met its MMCS.responsibilities. For the second consecutive year, auditors •S used its trial balance report toreported material internal control prepare each program’s financialOur Conclusion weaknesses and were unable to statements. However, MMCS did notdetermine whether the information reconcile ...

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Publié par	Imme
Nombre de lectures	57
Langue	English

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Maricopa County

Lack of Effective Controls over REPORT HIGHLIGHTSCounty Healthcare Programs FINANCIAL STATEMENT AUDIT Resulted in Audit Opinion Disclaimers and a CAFR Issuance Delay Subject Maricopa County issues a ComprehensiveMaricopa County, through the Maricopadid not require these organizations to Annual Financial ReportManaged Care Systems (MMCS),have effective systems of internal (CAFR). The County is administered the following programs:controls in place to ensure that paid responsible for preparing claims were accurate and complete. financial statements,  ArizonaHealth Care Cost Containment Forone of MMCS’ largest contractors maintaining strong System (AHCCCS)—Acute Healthused for processing acute care internal controls, and Care program reported in the Maricopaclaims, MMCS did not take the demonstrating Health Plan Fund.necessary steps to ensure that this accountability for its use  AHCCCS—ArizonaLong-Term Carecontractor’s claims processing system of public monies. As the System (ALTCS) program reported inwas properly designed and fully tested auditors, our job is to determine whether theprior to processing medical claims forthe ALTCS Fund. County has met itsMMCS. responsibilities.For the second consecutive year, auditors MMCSused its trial balance report to reported material internal controlprepare each program’s financial Our Conclusion weaknesses and were unable tostatements. However, MMCS did not determine whether the informationreconcile paid claims to the trial A modification of opinion reported in each program’s financialbalance reports to ensure its was expressed on the statements was accurate. This resulted inaccounting records were accurately County’s financial disclaimers of opinions for the Maricopamaintained. statements because we were unable to express PriorHealth Plan Fund and the ALTCS Fund,to fiscal year 2005, MMCS made opinions on thewhich represented two of Maricopasignificant overpayments through its business-type activitiesCounty’s major funds in the County’sOAO claims processing system to and two major 2004 and 2005 CAFRs. A disclaimer ofmedical service providers and did not healthcare funds. opinion was also expressed on theaccurately account for prepayments. However, governmental County’s business-type activities sinceDuring fiscal year 2005, MMCS hired a activities, the discretely these funds were significant to thatrecovery firm to identify overpayments presented component opinion unit. A disclaimer of opinionand outstanding prepayments for 22 unit, other major funds, states that the auditors do not express anpercent of the medical providers’ aggregate remaining opinion as to whether the financialclaims and entered into written fund information and the statements of these two major funds andsettlement agreements with providers Fiduciary Funds were fairly presented.for the remainder; however, MMCSbusiness-type activities are fairly presented in conformity with U.S.may not have identified all likely generally accepted accounting principles.amounts due them. Therefore, MMCS should continue to identify and recover For fiscal year 2005, MMCS’ materialall overpayments and outstanding internal control weaknesses were asprepayments, which represent gifts of follows: publicmonies since there was no 2005 public purpose served and the  MMCScontracted with outside serviceamounts paid to medical providers organizations to process and pay allexceeded the value received. Year Ended June 30, 2005 medical, dental, prescription drug, and group home claims. However, MMCS

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Auditors noted similar internal control weaknesses for the healthcare programs for the year ended June 30, 2004. These deficiencies caused a significant delay in the completion of

Summary of the County’s -

Statement of Net Assets June 30, 2005 Total Governmental and BusinessType Activities Current and other assets$1,135,918,472 Capital assets2,443,478,792 Total assets3,579,397,264 Current and other liabilities269,683,156 Longterm liabilities271,435,574 Total liabilities541,118,730 Net assets Invested in capital assets, net of related debt2,347,299,275 Restricted net assets260,502,317 Unrestricted net assets430,476,942 Total net assets$3,038,278,534

each fund’s financial statements and in the issuance of the County’s CAFRs for both fiscal years.

Assets and Statement of Activities reported e current year Comprehensive Annual ncial Report for the primary government.

Statement of Net Assets presents rmation on all county assets and liabilities, the difference between the two reported as assets. The Statement of Activities presents rmation showing how net assets changed ing the most recent fiscal year.

Statement of Activities Year Ended June 30, 2005 Total Governmental and BusinessType Activities Program revenues: Governmental activities$ 588,850,893 Businesstype activities520,840,533 General revenues, special items, and transfers: Governmental activities1,046,477,531 Businesstype activities(70,715,016) Total revenues, special items, and transfers2,085,453,941 Expenses: Governmental activities1,405,618,226 Businesstype activities583,390,427 Total expenses1,989,008,653 Change in net assets96,445,288 Net assets—beginning, as restated 2,941,833,246 Net assets—ending$3,038,278,534

County Retroactively Reports Infrastructure Assets and Implements New Financial Reporting Standard

On July 1, 2004, the County retroactively reported Flood Control District infrastructure assets owned and acquired from July 1, 1980 to June 30, 2001, to comply with Governmental

Accounting Standards Board (GASB) Statement No. 34,Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments. As a result, the

County restated beginning capital assets balances for governmental activities by $372.5 million, net of accumulated depreciation.

During fiscal year 2005, the County also implemented GASB Statement No. 40,Deposit and Investment Risk Disclosures. This reporting

The County Discontinued Operating Three Healthcare Programs

Maricopa County terminated its contracts for the following healthcare programs:

 SeniorSelect, a medicare/medicaid program contracted with the federal Center for Medicare and Medicaid Services, was terminated as of December 31, 2004.  TheAcute Health Care program and the Arizona Long-Term Care System program contracted with the Arizona Health Care Cost Containment System were terminated as of September 30, 2005.

The County Discontinued Operating the Maricopa Medical Center

The Maricopa Medical Center provides quality health care and professional education to the community. However, for more than a decade, the Medical Center has experienced significant operating losses and cash deficits, which the County has subsidized from the County General Fund since fiscal year 1994. During fiscal year 2005, the County discontinued its operation of the Medical Center.

In November 2003, county voters approved the Maricopa County Special Health Care District and, in November 2004, county voters elected the District’s Board of Directors, who took office on January 1, 2005. As of that date, the Medical Center became part of the Maricopa

standard establishes and modifies the risk disclosures about the County’s deposits and investments. Since it requires only additional disclosures, it had no effect on reported amounts for deposits, investments, net assets, or changes in net assets.

All three programs were administered by the Maricopa Managed Care Systems (MMCS), and the County will be responsible for claims pertaining to services performed prior to each program’s termination date. MMCS was having significant operating problems regarding claims processing in recent years as described on page 1. In addition, these programs had significant operating losses during fiscal years 2004 and 2005.

County Special Health Care District, which is a separate legal, tax-levying entity that is not part of the County’s reporting entity. Certain capital assets and long-term liabilities, which were reported in the Medical Center Fund, a major enterprise fund, remained with the County and were transferred to governmental activities on January 1, 2005. The remaining assets and liabilities of the Medical Center were transitioned to the Maricopa County Special Health Care District. As a result, the County recognized a loss of $108,765,405 for the closure of this business activity. In addition, on June 8, 2005, the County entered into an intergovernmental agreement with the District to assist with certain financing and to help assure the District’s fiscal viability.

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TOOBTAIN MOREINFORMATION

A copy of the full report can be obtained by calling (602)553-0333

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or by visiting our Web site at: www.azauditor.gov

Contact person for this report: Kathleen Wood

The General Fund’s Fund Balance Continues to Increase

The General Fund’s fund balance, General Fund as reported on the County’s fiscal Ending Fund Balance year 2005 Comprehensive Annual Past 5 Years Financial Report, was $431.3 million at June 30, 2005, an$431.3 $450 increase of 36 percent from fiscal$400 year 2004 and 168 percent from $350 $318.3 fiscal year 2001. This increase is$292.7 $300 shown in the figure to the right.$254.1 $250 $200 Property taxes and $161.2 intergovernmental revenues, $150 consisting of state-shared sales$100 taxes and vehicle license taxes, $50 representing more than 90 $0 percent of General Fund2001 2002 2003 2004 2005 revenues from fiscal year 2001 through 2005, have contributed to the increasing fund balance. General Fund Property tax revenues, as Revenues/Other Financing Sources and reported for fiscal year 2005,Expenditures/Other Financing Uses Fiscal Years 2001 through 2005 increased 50 percent from fiscal year 2001, and intergovernmental$1,200 revenues, as reported for fiscal $1,082.9 $970.9 year 2005, increased 46 percent$1,000 from fiscal year 2001. Fund$865.7 $807.2 $840.1 $804.2 $768.7 balance increased $270.1 million$800 $731.7 $731.3 $715.0 from 2001 to 2005. This resulted from revenues and other$600 financing sources exceeding expenditures and other financing$400 uses in each of the 5 fiscal years, as illustrated in the figure to the $200 right. $0 2001 2002 2003 2004 2005 Revenues Expenditures

Maricopa County

REPORT HIGHLIGHTS FINANCIAL STATEMENT AUDIT Year Ended June 30, 2005