Audit of the Operational Services Division

This is a Massachusetts State Auditor performance audit of the Operational Services Division, covering July 1, 2011 through December 31, 2017.

“In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of the Operational Services Division (OSD), an agency within the Executive Office for Administration and Finance, for the period July 1, 2011 through December 31, 2017.”

The audit looked at whether OSD properly reviewed financial reports from human-service vendors that provide services for the state.

“Has OSD adequately reviewed the Uniform Financial Statements and Independent Auditor’s Reports (UFRs) submitted by human-service vendors providing services to the Commonwealth?”

If these reports are not reviewed well enough, the state may miss problems with vendor spending and may lose money it could recover.

“Further, insufficient monitoring can result in revenue lost to the Commonwealth.”

The auditor concluded that OSD had not adequately reviewed the vendor financial reports covered by the audit.

“No; see Finding 1”

The auditor recommended that OSD do enough reviews to check compliance and create clear rules for how those reviews should happen.

“OSD should implement policies and procedures for conducting UFR desk reviews, which should include such things as frequency of reviews, criteria for review selection, and what is to be reviewed.”

The report says OSD’s detailed reviews dropped sharply, including no desk reviews in 2015, 2016, or 2017, which reduced assurance that vendors followed fiscal rules.

“Substantially reduced prescreening6 reviews, combined with a shift away from detailed desk reviews,7 provide less assurance that financial statements are prepared in accordance with OSD’s fiscal policies and that any instances of noncompliance with applicable regulations and policies are effectively detected.”

A UFR is a required financial report submitted by certain providers; a desk review is a more detailed check of that report and related audit documents.

“A desk review is a more detailed review of a vendor’s UFR and related documents to ensure that the vendor’s independent auditor’s reports on financial statements, internal control, compliance, and required provider information are uniform and that they conform to generally accepted government auditing standards.”