At some point, slashing the internal auditing function at the state Department of Social Services might have seemed like a good idea.
Clearly it wasn’t.
A new report by the state’s independent auditors reveals that the agency, which has grown into the state’s highest spending department, has failed to pursue about $25 million it is owed over the years while its auditing staff has been reduced over 15 years from 10 auditors to two.
The slimmed-down auditing staff failed to review the audits of the nonprofits it contracts with and didn’t claim indirect costs for its administration of federally funded programs.
While the report did not identify a specific dollar amount in unclaimed indirect costs, it noted that the DSS expended more than $47.7 million in federal funds for 25 of 48 federal programs it administers, and 21 of those programs had federal money available to the state for administrative and fringe benefit costs associated with staff to run the programs.
It also reveals that DSS did not adequately monitor the use of its cashbook, which in 2006 processed approximately $4.15 billion.
The instinct to find cost savings in the department was solid. But the long-term effect of shrinking the auditing staff has actually cost the state money.
The department should re-establish an internal auditing unit that will make sure it is receiving all the money coming to it. DSS can surely find other places within its budget to cut.
