Audit of Costs and Reporting of Funds Under the Public Health Preparedness and Response for Bioterrorism

DEPARTMENT OF HEALTH & HUMAN SERVICES OFFICE OF INSPECTOR GENERAL OF AUDIT SERVICES 150 S. INDEPENDENCE MALL WEST SUITE 3 16 PHILADELPHIA, PENNSYLVANIA 19 106-3499 JUN 2 1 2005 Report Number: A-03-04-003 53 Ms. Monica Lamboy, Chief Operating Officer District of Columbia Department of Health Office of the Director 825 North Capitol Street N.E. Washington, D.C. 2000 1 Dear Ms. Lamboy: Enclosed are two copies of the Department of Health and Human Services (HHS), Office of Inspector General (OIG) final report entitled "Audit of Costs and Reporting of Funds Under the Public Health Preparedness and Response for Bioterrorism Program District of Columbia Department of Health." A copy of this report will be forwarded to the HHS action official noted below for review and any action deemed necessary. The HHS action official will make final determination as to actions taken on all matters reported. We request that you respond to the HHS action official within 30 days. Your response should present any comments or additional information that you believe may have a bearing on the final determination. In accordance with the principles of the Freedom of Information Act (5 U.S.C. § 552, as amended by Public Law 104-23 1, OIG reports issued to the Department's grantees and contractors are made available to members of the press and general public to the extent the information is not subject to exemptions in the Act which the Department chooses to exercise (see 45 CFR part 5) Page 2 - Ms. Monica Lamboy, Chief Operating Officer If you have any questions or comments about this report, please do not hesitate to contact me at (21 5) 861-4470 or through email at stephen.virbitsky@oig.hhs.gov or Robert Baiocco, Audit Manager, at (21 5) 86 1-4486 or through email at robert.baiocco@oin.hhs.~ov. Please refer to report number A-03-04-00353 in all correspondence. Sincerely yours, Stephen Virbitsky Regional Inspector General for Audit Services Enclosure Direct Reply to HHS Action Official: Analysis Management Team Lead Management Analysis and Services Office Office of the Chief Operating Officer Centers for Disease Control and Prevention 1600 Clifton Road, N.E., MS E- 1 1 Atlanta, Georgia 30333  Department of Health and Human Services OFFICE OF INSPECTOR GENERAL AUDIT OF COSTS AND REPORTING OF FUNDS UNDER THE PUBLIC HEALTH PREPAREDNESS AND RESPONSE FOR BIOTERRORISM PROGRAM DISTRICT OF COLUMBIA DEPARTMENT OF HEALTH DANIEL R. LEVINSON Inspector General JUNE 2005 A-03-04-00353  Office of Inspector General http://oig.hhs.gov The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the health and welfare of beneficiaries served by those programs. This statutory mission is carried out through a nationwide network of audits, investigations, and inspections conducted by the following operating components: Office of Audit Services OIG’s Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting audits with its own audit resources or by overseeing audit work done by others. Audits examine the performance of HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are intended to provide independent assessments of HHS programs and operations in order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout HHS. Office of Evaluation and Inspections OIG’s Office of Evaluation and Inspections (OEI) conducts short-term management and program evaluations (called inspections) that focus on issues of concern to HHS, the Congress, and the public. The findings and recommendations contained in the inspections reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. OEI also oversees State Medicaid fraud control units, which investigate and prosecute fraud and patient abuse in the Medicaid program. Office of Investigations OIG’s Office of Investigations (OI) conducts criminal, civil, and administrative investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by providers. The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil monetary penalties. Office of Counsel to the Inspector General The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering advice and opinions on HHS programs and operations and providing all legal support in OIG’s internal operations. OCIG imposes program exclusions and civil monetary penalties on health care providers and litigates those actions within HHS. OCIG also represents OIG in the global settlement of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, develops compliance program guidances, renders advisory opinions on OIG sanctions to the health care community, and issues fraud alerts and other industry guidance. Notices THIS REPORT IS AVAILABLE TO THE PUBLIC at http://oig. hhs.gov In accordance with the principles of the Freedom of Information Act (5 U.S.C. 552, as amended by Public Law 104-231), Office of Inspector General, Office of Audit Services reports are made available to members of the public to the extent the information is not subject to exemptions in the act. (See 45 CFR Part 5.) OAS FINDINGS AND OPINIONS The designation of financial or management practices as questionable or a recommendation for the disallowance of costs incurred or claimed, as well as other conclusions and recommendations in this report, represent the findings and opinions of the HHSIOIGIOAS. Authorized officials of the HHS divisions will make final determination on these matters. EXECUTIVE SUMMARY BACKGROUND States and major local health departments receive Centers for Disease Control and Prevention (CDC) funding to improve bioterrorism preparedness and response capabilities under the Public Health Preparedness and Response for Bioterrorism Program (program). Program funding awarded to the District of Columbia Department of Health (District) has increased from $135,000 in 1999 to $11,492,799 in 2004. As of August 30, 2004, cumulative funds awarded to the District totaled $24,456,357. OBJECTIVES The objectives of our audit were to determine whether the District: • recorded and reported program funds awarded, expended, obligated, and unobligated by focus area in accordance with its cooperative agreement with CDC; • ensured that program funds were used for necessary, reasonable, allocable, and allowable costs in accordance with the terms of the cooperative agreement; and • did not supplant current State or local funding with program funds. SUMMARY OF FINDINGS We found that the District: • did not track program funds by focus area, and did not provide an accurate financial status report (FSR) for the period October 2001 to September 2003; • had unobligated program funds of $11,821,490 as of August 30, 2004, representing 48 percent of the $24,456,357 awarded; • improperly charged or did not adequately document $76,432 in program funds, and erroneously charged $162,105 in employee overtime pay to program funds; and • did not use program funds to supplant other State or local expenditures. iRECOMMENDATIONS We recommend that the District: 1. record, summarize, and report program funds awarded, expended, obligated, and unobligated by focus area in accordance with the cooperative agreement; 2. revise and resubmit the September 30, 2003, FSR to CDC; 3. ensure program activities are funded in a manner to minimize unobligated fund balances and to achieve program goals; and 4. refund to CDC $238,537 representing $76,432 in improperly charged or inadequately documented costs, and $162,105 in erroneously charged overtime pay. DISTRICT’S COMMENTS The District concurred with our first three recommendations. We adjusted our fourth recommendation after the District provided documentation to support $66,301 in expenditures in response to our draft report. The District essentially met the intent of our fourth recommendation by agreeing to adjust its FSRs to account for the remaining $238,537 in improperly charged and inadequately documented expenditures. The full text of the District’s comments is included as an appendix. iiTABLE OF CONTENTS Page INTRODUCTION .......................................................................................................................... 1 BACKGROUND ..................................................................................................................... 1 Public Health Preparedness and Response for Bioterrorism Program ............................. 1 District Funding................................................................................................................ 1 OBJECTIVES, SCOPE, AND METHODOLOGY................................................................. 2 FINDINGS AND RECOMMENDATIONS................................................................................... 3 RECORDING, SUMMARIZING, AND REPORTING PROGRAM FUNDS ...................... 4 The District Did Not Track Program Funds by Focus Area............................................. 4 UNOBLIGATED FUND BALANCES 5 As of August 30, 2004, the District had $11.8 million or 48.3 percent of Program funds unobligated. ...................................................................................................................... 5 ALLOWABILITY OF PROGRAM COSTS........................................................................... 6 The Di